Bits Bucket for August 12, 2012
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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“In Washington, a slower increase in spending is tantamount to a spending cut.”
A quote from Ernest Hemingway.
http://quotationsbook.com/quote/11780/
As I side note, I left a Cuban cigar on his grave in Idaho. Had to dig through the snow to find it.
Dan,
Nice quote and so true.
Ever heard of Stone Face Tavern on the north side of town? I have been known to stop by every once in a while when I’m in Alb on a biz trip.
Lip
Sorry, I am traveling through airports today and I just arrived in Phoenix. Yes, I have heard of it but I have never gone there. So what do you like most about it?
Good food, good brew, close to the hotel where I stay and bartenders/waitresses in bikini tops on Wed.
We could have a HBB party there someday.
From Ernest Hemingway:
The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.
All too true.
It’s time to fire up the coffee pot.
I can hear the fresh brew pouring into the pot in the other room…
I just put on the coffee pot .
Anyway ,everybody knows how much I hate Globalism ,but I was thinking last night that the idea of having other low wage Countries producing our products , as well as service us, was nothing more than a means to enrich the one percenters and Monopoly Corporations and middle men at the expense of USA workers ,and pollution world wide, with a greater amount of toxic products being produced that end up in the land fills sooner .
Did the Powers that be think that every American was rich enough to have slave labor World wide produce all their products and Americans had the luxury to not have jobs with wages that
would support our cost of living here ?
American Corporations or middle men should pay a tax penalty for any job or manufacting that they take outside this Country as a penalty for taking cash flow and tax base outside the Country . They have to pay for what they have cost the USA citizens in jobs and cash flow and tax base .Currently the destruction of the American job base is only enriching the Corporations and middle men ,or other Country job base .
Can you imagine the Founding Fathers of this Country giving tax breaks to USA Corporations and middle men who would take cash flow out of America . Also tariffs should be such that they level out the playing field ,rather than the current situation that creates
Monopolies World wide in which USA workers can’t compete world wide with slave labor .
This mistake must be correctly immediately ,
Basically this was a act of traitorism by the Politicians to allow
this to take place and if anything it has increased World wide instability in allowing the Capitalist and Money Powers to simply think the World is their oyster to exploit in any way paossible for greater profits ,that the actual workers aren’t getting the benefits .
All this Globalism has done is it has insured the growth of Monopolies based on the exploiting of slave labor world wide in which the savings have gone in the pockets of the money powers ,
In fact, its suicide for any Country to do what we have done ,but no doubt all the other Countries ,that think we are nuts ,will welcome the jobs we give them ,especially in Countries that are
overpopulated ones that have a employment problem .
Further jobs overseas erode our Social Security program that is
based on employers paying a share and the USA employee paying a share . It even erodes our Medical insurance system that is in part dependant on employers paying part of the medical costs .
Globalism is the single biggest factor that is cracking our USA economy and financial systems ( along with the absurd housing mania and increase in debt )
Unless the Political discussion goes the way of solving this problem I mention above ,which would mean going up against the Powers that are controlling Politicians now ,this Country is going down the drain fast .
Now I don’t know about you ,but I happen to not want to see the demise of America ,especially when its enriching to few hands at the expense of many . Don’t make any mistake about the fact that the MOney Powers know how to get their way with the current crooks that are our Politicians today . It’s shameful really ,and
the Public wasn’t really watching the foxes in the hen house to the point they should of been ,and neither were our so-called regulatory agencies . As long as the Politicians aren’t talking about these issues in a serious manner just accept the fact that you are being conned and misdirected from the true issues .
“This mistake must be corrected immediately”
By whom? By the same people now in power who made the mistake in the first place?
No ,the people in Political power right now are to corrupt to correct anything . Fire all the bums as quickly as possible because there aren’t very many that are operating with the best interest of the USA at heart .
It could mean that the only option is for people to simply boycott all the Monopolies and start doing business on a local level between themselves . Because there are so many Monopolies that people depend on now ,it makes it difficult to operate outside the systems that has come about . Wall Street is decoupled from Main Street American anyway .
I think that the Powers in Control are counting on people just accepting the status quo ,which will take us slowly ,or quickly, more and more down .
I know people that are preparing for a total collaspe of the systems ,as in buying guns and food ,I’m not doing any of that ,but I can see how some people are thinking that is what it is coming to .
“Fire all the bums as quickly as possible …”
Great idea! But just how do you propose to do this?
Somehow it can be done if the people get behind doing it ,which means that people need to realize that they have no chance of being represented given the current circumstances. Maybe everybody should just write in a name when they go to vote instead of going along with
a choice of 2 Politicians that aren’t going to do anything for them in the final analysis .
I would like the lobby system to be put on hold somehow for 10 years as a emergency measure in the interest of saving America.
Combotechie …Your saying we are stuck with no way out ,other than letting the POWERS THAT BE destroy everything and than maybe we can arise from the ashes down the road after they do their damage .
Well,i don’t exactly trust the level of damage that they can
do as time goes by ,and by the time that people see that
their interest were betrayed ,it might be to late . The time is now to change this around .
HW:
can anyone provide proof that the 20 somethings are making things better? I dont see any new talk show hosts, spokespersons not any great artists writers….musicians ok they are writing aps…but what else?
Where are the protest songs, the current bands didn’t even show up at OWS it was just the old 60’s anti war people…
I also find the new EDM Dubstep to be nothing but corporate music…aimed to dumb down the masses…let the dj make millions…let them think they are putting one over on the PTB.
Let Skrillex come out for Ron Paul and donate the proceeds of 5 gigs to the campaign…..Neva Happen
Housing Wizard - The best course I can come up with is to try to figure what the PTB is up to and then take evasive action. I do not expect any of them to act in my interests so I am left to act in my own interests - act in my own interests and in the interests of those close to me.
If this sounds like surrender than it probably is. Maybe resignation would be a better word. Or acceptance.
But if a critical mass of people get screwed ,than you get screwed also Combo ,so the education of the critical mass needs to take place somehow . It reaches the point were
even the sheep will know it when they are starving no matter how brainwashed they have been .
Combo and everybody ,i know a lot of people that think nothing can be done about this course that we are on ,and
I understand the point about young people not exactly knowing what they are doing .Any movement that crops up is either hijacked or its diverted or suppressed ,or not even covered correctly in the Media to gain traction .
I have never really seen this degree of distraction from the real issues in my life time .All I can think is that the Money Powers are doing a good job of keeping the status quo going . But you would think eventually that people would just start to realize that it’s all BS designed to keep the
masses quieted and hopeful as they slowly go downhill . They don’t put a lot of different opinions on Main street Media .But it would take a critical mass that is not divided to change things ,and they would have to have the proper solutions also instead of any crazy stuff .
“But if a critical mass of people get screwed then you get screwed also, Combo…”
This is absolutely true but it is also absolutely beyond my influence and control.
“… so the education of the critical mass needs to take place somehow.”
This, too, is absolutely true and this too is beyond my influence and control. I am lucky if I can get ten people to listen to me, let alone an entire population.
“It reaches the point when even the sheep will know it when they are starving no matter how brainwashed they have been.”
And this is the point when they will begin to listen.
Unfortunately it is also the point when a “Savior” emerges and capture their hearts and what little is left of their minds.
What we need is, say, a Senator who will have the courage to stand up before Congress and make a public declaration that he will not vote to increase the nation’s debt ceiling.
This is a guy that I would vote for if he were to ever run for President.
Combo ,I can understand why you feel the way you do ,but I am hopeful that the chain of events can go a better way .
Didn’t people already see that Obama wasn’t the Savior that they thought they were getting ? I would think by now that people would be burned out on the Savior Complex need ,and they need to save themselves .
But I can see why you are apathetic at this point because it looks pretty dismal . But events can change and perceptions can change ,or unknown factors can come about that have not been calcuated before .
“I would think by now that people would be burned out on the Savior Complex need, and they need to save themselves.”
“… and they need to save themselves.”
Which is my point.
“But I can see why you are apathetic at this point because it looks pretty dismal.”
Oh, I am not in the least apathetic, in fact I find all of this sort of interesting as in the context of Interesting Times being sort of interesting. And to me it isn’t all that dismal - at least not anymore.
It WAS dismal about six-or-so years ago because that was when it appeared that the country - the entire world - was going off a cliff. But beginning six-or-so years ago the trend began to reverse itself and that is what the trend is still doing, reversing itself.
to NYCdj above, it’s not happening, they’re too worried about someone “liking’ their sh*t on facebook to actually create anything new…
Goon i would like to see some 20 somethings post here..what would happen???
This is whats not being promoted…why?
Tank Delafoisse- Memories
http://www.youtube.com/watch?v=EEES_vM3lbY
Tank and the Zydeco Codebreakerz- Deuces
http://www.youtube.com/watch?v=r8tneYF1LSg
Housing Wizard wrote:
Can you imagine the Founding Fathers of this Country giving tax breaks to USA Corporations and middle men who would take cash flow out of America . Also tariffs should be such that they level out the playing field ,rather than the current situation that creates
Monopolies World wide in which USA workers can’t compete world wide with slave labor .
It’s justice to shoot down a statist meme (a ploy by Polly-types who love government to brainwash you).
There was NO corporate tax until 1894 in the US. Not one of the founding fathers was alive for it. in fact the corporate income tax enacted in 1894 was ruled unconstitutional in 1909. There was an income tax from 1860 to 1870 on the wealthy to pay for the civil war. But the tax was repealed because Congress had intelligent people in it who knew their power to lay and collect taxes was only for EMERGENCIES. We’ve had the US Income tax since 1913. There was no Capital Gains tax until after 1913.
http://en.wikipedia.org/wiki/Corporate_tax_in_the_United_States#History
Statists want you all to think taxation is American. It is not. Taxation is UNAMERICAN. However Housing Wizard is correct in saying we should have tariffs. That is exactly how the federal government was funded for the most part into the early 20th century.
P.S. Since most of the funding of government was via tariffs, it was a huge disadvantage for corporations to outsource to other countries anyway.
Essentially, tariffs were taxes put on other nations and used as insurance to fund the military in case foreigners attacked the U.S.
The so-called “progressives” changed that 100% with the 16th amendment and its “progressive” agenda: Tax the American producer instead of foreign nations. This went into a frenzy more recently by Clinton signing in NAFTA which also was a promise not to impose tariffs on other nations.
The unintended consequence was the outsourcing of our jobs while at the same time increasing taxes on the remaining employed Americans, the American corporations, and American investors.
I am no conspiracy theorist, but this Wilson doctrine of spreading democracy (I mean Mob Rule) to other nations, milking the American producer to finance the Wilson doctrine all adds up. It’s nearly 100 years old. Without the Income Tax, corporate tax, and capital gains taxes, which are also about 100 years old, America would not be world cop. The U.S. citizen would not be a target for terrorists because of blowback upon America for its foreign intervention.
I really agree with you on this one Bill . Its seems to me like Clinton was the one that signed off on Glass- Steagall repeal ,and he was the one that signed on NAFTA.
Anyway ,i think enough time has gone by to realize the consequences of the policy decisions that have been so destructive ,as least to the worker bee majority they have been destructive .
Regarding NAFTA:
“Following diplomatic negotiations dating back to 1986 among the three nations, the leaders met in San Antonio, Texas, on December 17, 1992, to sign NAFTA. U.S. President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each responsible for spearheading and promoting the agreement, ceremonially signed it. The agreement then needed to be ratified by each nation’s legislative or parliamentary branch.
Before the negotiations were finalized, Bill Clinton came into office in the U.S. and Kim Campbell in Canada, and before the agreement became law, Jean Chrétien had taken office in Canada.
The proposed Canada-U.S.trade agreement had been very controversial and divisive in Canada, and the 1988 Canadian election was fought almost exclusively on that issue. In that election, more Canadians voted for anti-free trade parties (the Liberals and the New Democrats) but the split caused more seats in parliament to be won by the pro-free trade Progressive Conservatives (PCs). Mulroney and the PCs had a parliamentary majority and were easily able to pass the Canada-US FTA and NAFTA bills. However, Mulroney himself had become deeply unpopular and resigned on June 25, 1993. He was replaced as Conservative leader and prime minister by Kim Campbell. Campbell led the PC party into the 1993 election where they were decimated by the Liberal Party under Jean Chrétien, who had campaigned on a promise to renegotiate or abrogate NAFTA; however, Chrétien subsequently negotiated two supplemental agreements with the new US president. In the US, Bush, who had worked to “fast track” the signing prior to the end of his term, ran out of time and had to pass the required ratification and signing into law to incoming president Bill Clinton. Prior to sending it to the United States Senate, Clinton introduced clauses to protect American workers and allay the concerns of many House members. It also required US partners to adhere to environmental practices and regulations similar to its own.”
The Founding Father were also EXTREMELY anti-corporation. After all, they had just fought a war against the East India Co., er, I mean England.
Also, the first 100 years of this country was a roller coaster of depression after depression and the re-valuation of the national currency over and over.
With corporations once again rising in prominence, some kind of control had to be created. Taxes were just a part of the solution.
If the founding fathers were anti-corporation, they certainly would have taxed them wouldn’t they?
There were almost NO corporations left operating in the former colonies. You can’t tax what doesn’t exist.
From http://www.reclaimdemocracy.org/corporate_accountability/history_corporations_us.html (a summery of verified history)
When American colonists declared independence from England in 1776, they also freed themselves from control by English corporations that extracted their wealth and dominated trade. After fighting a revolution to end this exploitation, our country’s founders retained a healthy fear of corporate power and wisely limited corporations exclusively to a business role. Corporations were forbidden from attempting to influence elections, public policy, and other realms of civic society.
Initially, the privilege of incorporation was granted selectively to enable activities that benefited the public, such as construction of roads or canals. Enabling shareholders to profit was seen as a means to that end.
The states also imposed conditions (some of which remain on the books, though unused) like these:
* Corporate charters (licenses to exist) were granted for a limited time and could be revoked promptly for violating laws.
* Corporations could engage only in activities necessary to fulfill their chartered purpose.
* Corporations could not own stock in other corporations nor own any property that was not essential to fulfilling their chartered purpose.
* Corporations were often terminated if they exceeded their authority or caused public harm.
* Owners and managers were responsible for criminal acts committed on the job.
* Corporations could not make any political or charitable contributions nor spend money to influence law-making.
they certainly would have taxed them wouldn’t they?
That’s what the tariffs were. Taxes on businesses/corporations. The little guys weren’t importing silk and porcelain from China, rum from the Caribbean, and slaves from Africa. That was done by big trading companies.
Income taxes were essentially impossible to collect in a nation of subsistence farmers with no real income, where travel from city to city took weeks or even months in inclement weather, mail delivery was spotty, and half the population lived in the boonies.
So the Founding Fathers chose to tax businesses/corporations instead.
Wrong. Another statist lie that repeated makes people think it is truth. Tariffs are by definition taxes on FOREIGN businesses.
“Can you imagine the Founding Fathers of this Country giving tax breaks to USA Corporations and middle men who would take cash flow out of America .”
This is EXACTLY what the American Revolution was about. The East India Co was bleeding the colonists dry.
“The East India Co was bleeding the colonists dry.”
Would that be Megabank, Inc’s predecessor?
Exactly.
ecofeco..Very interesting information about Corporations . I think it’s interesting how the early Americans sought to control and regulate Corporations and not let them get to much power . Now they are doing the opposite today ,with the Supreme Court actually giving Corps more power to influence elections and treating them like a person .
I find that Corporations have the potential to be very destructive ,especially if they get really big and monopolistic . Way to much power .
The home nobody wants: Neither owners, bank, nor HOA can take over Boynton fixer-upper
Posted: 5:48 p.m. Saturday, Aug. 11, 2012
http://www.palmbeachpost.com/news/business/real-estate/the-home-nobody-wants/nQ4HM/ -
The city will take it for unpaid taxes and auction it off.
$11.4 million and they can’t pay for a $119,000 house?
“If I had the choice I’d rather have my husband and my old life,” Matilda Sangounchitte told a newspaper reporter in 2006 when a Palm Beach County jury awarded her and her husband, Sam, $11.4 million for the failed surgery. “No money in the world could bring that back for us.”
The Sangounchittes bought the home in what was then a newly built Boynton Beach development for $119,000 and 20 percent down. There is no guard gate. Instead, a curving road lined with healthy St. Augustine grass guides you into the neighborhood. She was 44 years old; he was 37
“1018 Fairfax Circle West, Boynton Beach, FL”
Looking at the place from Google maps it is a scale of a real suburban neighborhood; everything is smaller, e.g., the homes and streets and yards, all reduced in size. This compact living scheme shouts RENTAL, not something to sink money into for 20 or 30 years.
“1992: Sam and Matilda Sangounchitte buy home in new Boynton Beach development for $119,000. –snipped– 2005: $232,000 mortgage taken out on home, followed by another one for $42,000.”
However, they were smart enough to sell it to a giddy lender, twice!
“2006: The couple wins $11.4 million judgment against hospital.”
Phuc ‘da mortgage…take the money and run!
Looks to me like another case of crooks, dumping the property after skimming off the 2005 “market appreciation”.
If you follow the time line:
Bought in 1990’s for 119,000. paid down 20%.
In 1999 husband becomes “disabled” after surgery.
2005 they take out $274,000 in “loans”.
I must assume that the husband was collecting SS disability payments since 1999, so for 6 years they did just fine. No pending foreclosure.
Some would say medical bills. I doubt it.
They probably never paid any medical bills. The husband just took the money and they started a lawsuit for pain and suffering.
In 2006 they win the award from the hospital.
In 2008 they are notified for the first foreclosure.
Since it was taking 2 to 3 years to get foreclosures filed at this time, I suspect they never paid back a dime for the “borrowed” money.
Now, he is in Thailand, where he should have gone for his operation, but with a suitcase full of American dollars to re-establish his life in his homeland.
Another “immigrant” success story.
Downside: Apparently needs a cane to walk. So do my parents, but they don’t get any disability checks and didn’t get to sue anybody.
How can you assume they were collecting disability? And if you think an SS check means you are “doing just fine” you really have no idea what it’s like.
As for your parents, is it age or was it caused by someone else’s negligence? That makes a difference.
I’m watching the tropics. Wondering if the weather gods will mess with the Repub convention here in Tampa. Maybe I’m hoping a wee bit, too.
Another racist comment by palmetto!!!
Do not spell Racist® without the ® or capitalization. Racist® is a copyrighted brand name owned by Race Hustlers, Inc®. Please proceed to Diversity Training and pick up your COEXIST sticker on your way out
After I get a “coexist” bumper sticker, can I stop by Starbucks for a latte??? I want to hob-nob with my friends to discuss our mother Gaia and how we are all “one”.
I’ve promised to bring a deck of IChing cards and my buddy is bringing some Tarot cards so we can assess the astral plane……..
By the way, we are both economists, so our astrological meanderings should give us some sense of respectability with the gang at the coffee shop.
Respectability? Hell, you would have a clear advantage over the rest of those witch doctors!
Oh, i forgot, I’m getting one of those “EQUAL” stickers to put up next to the coexist sticker and a Fish sticker with DARWIN; that way I can be seen as an “intellectual”.
I’m just not sure about my dress. Are glasses with the big rims and a pocket protector (saying Nerd) back in vogue of the intellectual crowd?? I’m thinking bow-tie for sure, though.
No. It’s the thick rimmed square glasses now and a VERY conspicuous and large smart phone.
You forgot “uncalled for.”
Wouldn’t that potentially interfere with the coronation of the prom king candidates?
Romnama better get his talking points straightened out before the convention.
Politics
In VP Stumble, Romney Echoes Obama
Mitt Romney announced Rep. Paul Ryan as his candidate for vice president Saturday, but not before describing him as “the next president.” The faux pas was eerily similar to one made by Barack Obama four years ago.
8/11/2012 12:36:57 PM0:36
I was just thinking - if Romney is elected with a super majority in the house and a filibuster proof senate.
Can he go on and blame obama for 4 years of failure and will the liberals here defend that logic…?
R&R have already promised to take responsibility for whatever happens.
Perhaps they could start by outlining the ways the current mess we are in are due to certain of our last Republican president’s acts:
1) Blew the fiscal surplus he inherited from Clinton by passing a massive tax cut for the wealthy plus starting two or so wars in Islamic countries.
2) Oversaw the start of a recession in December 2007 which put the U.S. economy in a deep hole out of which it has only just begun to climb.
Will R&R acknowledge the role of their putative Republican predecessor in creating the current mess, or will they start off their duplicitous campaign of hypocrisy by blaming it on Obama?
Amazingly - 4 years of obama and he had NO responsibility for anything!
It gets so old.
No, no — you totally missed my point. So let me try to state it in simpler terms, so simple that even most Republican party operatives can understand them:
1) R&R have promised to assume responsibility where responsibility should be assumed.
2) The current economic mess we are in started with a Republican presidency that lasted for eight long years.
3) They could make their campaign to better take responsibility far more convincing by acknowledging that most of the problems which have made Obama’s term in office so challenging started before Obama was in office.
Is that simple enough for you, or do I have to break it down even further? I’m fairly patient, so please tell me if you still don’t get it, and I will try to make it simple enough for a complete moron to grasp.
People who cannot do simple math should not deride anyone about “responsibility”.
I take the refusal to do simple math as a standard Republican propaganda technique. It’s not that they can’t figure out the guns&butter equation — rather it doesn’t serve their efforts to pull the wool over the eyes of the sheeple.
Not unless he can get the House and Senate to pass a TRILLION dollar “stimulus” package before he gets into office.
If that can be achieved, then he can spend a couple of years claiming he is desperately trying to “fix” things, but he inherited too large a mess.
Providing “bundlers” with pork-laden projects is an economic program with excuses built-in.
Go for the pork, and pass it around!!
I don’t know about you, but I’m tired of bein’ “porked” by “backdoor” “stimulus”.
Meet the new boss - same as the old boss. Both candidates and both parties have been completely captured by Wall Street.
http://www.guardian.co.uk/business/2012/aug/10/illinois-workers-bain-outsourcing
‘I’m sick to my stomach’: anger grows in Illinois at Bain’s latest outsourcing plan
The Sensata plant in Freeport is profitable and competitive, but its majority owner, Bain Capital, has decided to ship jobs to China – and forced workers to train their overseas replacements
It’s another interesting story that tries to paint Romney as the problem because he worked for Bain some 12 years ago.
Obama, the finger-pointer, has been pointing fingers and saying if he is re-elected he’ll make companies that ship jobs overseas, PAY.
Well, gee, Mr. finger-pointer, i can do a better job, government chief executive…………you’ve been in the White House for 4 years. Where’s your “Initiative” with your buddies in the Senate to make any kind of inroads to this supposed problem??
WHO put the GE CEO in charge of your one of your economic teams? GE, the company that spells GLOBAL and pays NO TAXES.
Same story. It will be worse if the other guy gets in.
He has NOT been office for 4 years.
As for the tax problem:
http://www.reuters.com/article/idUSTRE68R40I20100928
http://www.reuters.com/article/politicsNews/idUSN1249465620080812
When will all the short sellers and foreclosure victims be back in the housing market in droves with 0 down loans?
Are you suggesting they aren’t currently?
P’gould home buyers could soon lose Rural Development loan option
Home buyers in the Paragould city limits could lose eligibility for USDA Rural Development home loans after Oct. 1 because the city’s population exceeds the rural designation limit of 25,000.
By Wallace Fortner
Special to The Daily Press
Published: Sunday, August 5, 2012 12:06 PM CDT
In the very near future, it may become much more difficult for many individuals and families to purchase homes in the City of Paragould. This is because on Oct. 1, barring any changes in federal regulations, Paragould will no longer qualify for the single-family home loan programs offered through the U. S. Department of Agriculture’s Rural Development Agency.
…
“People may have to consider other financing options, such as FHA or conventional loans,” she said.
In contrast to the zero down Rural Development loans, the typical down payment for an FHA loan is 3.5 percent of the purchase price while the down payment for a conventional bank loan is 5 percent. Stallcup said higher credit scores would be required for financing home loans and first-time home buyers would be the most likely to suffer from the changes in Rural Development eligibility.
However, those in the business of selling homes would also suffer significantly from the loss of eligibility and agree that it would be much more difficult to purchase a home in the absence of Rural Development loans.
…
Is this Paragould, Arkansas? It’s almost an Oil City, with a dozen houses in the $70K range. Now they need $2500 down? boohoo.
I had a great time in Paragould and Jonesboro one time. Got treated like rock stars even though we were only an Army rock band :-). One of my old bandmates even ended up married to one of the girls we met there…
Not today. Housing Demand is at 15 year lows and falling.
I guess you haven’t heard about the army of all-cash buyers out there outbidding end-users who just want a home to live in on foreclosure deals?
“army of all-cash buyers” armed with loads of OPM desperately searching for a reurn.
(So Ca)
In the retail housing market, the financed buyer is outbidding the cash buyer. As a realt*r told me last week, with the low interest rates price is unimportant. It’s the howmuchamoth vs. rent. Disregard maintenance, black swans, etc…, calling it minutiae.
At the auction, the cash buyer for a primary has it over the infestor. A parasite infestor told me they have to net minimum $50K and only hold the house 2 months.
“Not today. Housing Demand is at 15 year lows and falling.”
Of course it is. If you were living in a house you hadn`t had to make a payment on in years, would you be looking for a place to live?
On my foreclosure subscription website, I’ve seen live frees for 6-7 years. Tomorrow a home we like is up for auction. NOD filed 4 yrs ago. It will probably be postponed like most. Seeing the actual data is eye opening, to say the least.
“Seeing the actual data is eye opening, to say the least.”
Try looking at the actual Deadbeats.
Awaiting..
Are you referring to RealtyCrack or Whoreclosure.com?
When I was in the real estate business, we used to do what we called “drive-by” appraisals. You could get a good idea of what the house would likely sell for by a quick tour of the neighborhood.
That was then. This is now.
I could pretty well know that a house that had been current on mortgages and had a maintained exterior and lawn was probably going to show in at least average condition, if not better.
NOw? Lived in for YEARS, with the knowledge that you won’t be staying or paying? The whole interior may need replacement. That’s where the money goes.
“Are you referring to RealtyCrack or Whoreclosure.com?”
Housing In A Massive Loss
I belong to Foreclosure Radar. Sean O’Toole, the CEO, is a straight shooter.
Here is some news that was predicted early and often on the HBB.
The Congress may be fractious and dysfunctional, but not so much that they can’t respond to NAR lobbying pressure. Maybe the fiscally conservative candidates, R&R, could weigh in on whether this extension of IRS largesse to homeowners would help or hurt their efforts to close the budget gap?
Senate panel backs extension of mortgage debt relief law
The law spares homeowners who receive principal reductions on their mortgages from being hit with hefty federal income taxes on the amounts forgiven.
By Kenneth R. Harney
August 12, 2012
WASHINGTON — Here’s some encouraging news for financially stressed homeowners across the country: The Senate Finance Committee has approved a bipartisan bill that would extend the Mortgage Forgiveness Debt Relief Act through 2013.
Why is this important? Several reasons: The debt relief law spares homeowners who receive principal reductions on their mortgages from being hit with hefty federal income taxes on the amounts forgiven. Without it, millions of owners who go through foreclosure or leave their homes following short sales would experience even more financial stress.
The law, which is set to expire Dec. 31, has also provided relief to thousands of people who have debt balances written off as part of loan-modification agreements and is crucial to the $25-billion federal-state robo-signing settlement with large banks. Some Capitol Hill analysts predicted that, along with a host of other special-interest tax benefits, an extension might have trouble making it through the partisan gantlet in an election year.
But the Senate committee managed to pull together enough votes Aug. 2 to pass the debt relief extension, after heavy lobbying by the National Assn. of Realtors and the National Assn. of Home Builders. The bill, which now moves to the full Senate for possible action next month, also would extend tax write-offs for mortgage insurance premiums for 2012 and through 2013 and continue some energy-efficiency tax credits for remodelings and home construction.
The mortgage debt relief extension could affect millions of families who are underwater on their loans, delinquent on their payments and heading for foreclosure, short sales or deeds-in-lieu of foreclosure settlements. Under the federal tax code, all types of forgiven debt are treated as ordinary income, subject to regular tax rates. When an underwater homeowner who owes $300,000 has $100,000 of that forgiven as part of a modification or other arrangement with the bank, the unpaid $100,000 balance would normally be taxable.
But in 2007, Congress saw the fast-mounting distress in the housing market on the horizon and agreed to temporarily exempt certain mortgage balances that are forgiven by lenders. The limits are $2 million in debt cancellation for married individuals filing jointly and $1 million for single filers. This special exemption, however, came with a time restriction. Without a formal extension by Congress, starting Jan. 1 all mortgage balances written off by banks would be fully taxable — a nightmare scenario that has had financially stressed homeowners worried for months.
Their apprehension increased when some policy analysts predicted that a Congress as fractious and dysfunctional as the current one would never get its act together to pass any tax bills until the closing moments of the lame-duck session expected after the November election. Even then, with issues like the mounting federal debt and draconian spending cuts scheduled for Jan. 1 taking precedence, smaller tax extensions such as mortgage debt relief might well be lost in the dust storms, experts predicted.
…
Keep that hope alive.
I am sure glad all on the HBB hates those tea-baggers.
And support the dems who CONTROL the senate.
Oh wait…
A few Republican policy strategists, including Douglas Holtz-Eakin, a former Congressional Budget Office director and economics advisor to Sen. John McCain’s presidential campaign, speculated that tea party freshmen in the House might oppose the debt relief extension because they see it as another costly bailout funded by taxpayers. The estimated revenue cost to the Treasury for a two-year extension is $2.7 billion.
Talk is the cheapest commodity on earth. I’ll start to become convinced the Republicans might cut back on real estate subsidies when I hear R&R propose them on the campaign trail. But even then I will maintain a healthy skepticism until I see follow through; actions speak louder than words on my planet.
But in the mean time you will be a kool-aid drinker supporter of the dems because all that increased spending and debt at least is not cheap talking!
Ignoring the earlier rant about how the government is all corrupt and we need to replace it and straighten everything out, you have just summarized why that is nearly impossible.
Politicians tend to get elected for promising stuff to various groups.
No one wants to vote for the Grinch. So, there you have it.
You defy the politicians to say they specifically want to CUT BACK on ‘benefits’, so you can accuse them of “starving children”, “putting granny out on the street”, ‘destroying educational opportunities”, etc, etc, etc.
There’s no way to win.
The country needs a massive reduction in “benefits”, at ALL LEVELS, city, county, state and federal, and no one wants to face the facts. There’s always some magic fairy going come to the rescue with a magic wand and fairy dust.
There’s always some magic fairy going come to the rescue with a magic wand and fairy dust.
True dat.
I predict the R&R budget slashing exercise will somehow overlook opportunities to eliminate massive subsidies to homeowners. More generally, I expect their efforts to turn into an excuse to slash spending on anything that doesn’t suit their political agendas, while protecting programs that do. I most certainly don’t expect anything like across-the-board fairness in the cuts they propose.
From Harney’s article:
Real estate subsidies are a sacred cow to Republicans. Don’t expect them to be cut, no matter what else they slash and burn.
Wouldn’t voting to end the tax rebate count as raising taxes, something most Teapartiers and Repubs have sworn on the Norquist Bible not to do?
Do you ever wonder if the myriad all-cash buyers who somehow survived the Great Recession intact with wads of cash to snap up foreclosures aren’t really just proxies for Megabank, Inc armed with the Fed’s ZIRP money?
I certainly do wonder about that.
House hunter discovers cash is king in Las Vegas
David Cleveland/Las Vegas Review-Journal
Aaron Kessler, a mortgage-backed buyer, stands in front of a Las Vegas home he lost to a higher bid. Kessler has become so frustrated by failed attempts to purchase a house that he launched http://www.pleasejustsellmeahousealready.com to publicize his plight. David Cleveland/Las Vegas Review-Journal
By Jennifer Robison
LAS VEGAS REVIEW-JOURNAL
Posted: Aug. 5, 2012 | 2:02 a.m.
Updated: Aug. 5, 2012 | 4:57 p.m.
Aaron Kessler’s a desperate man.
The Las Vegan has made nine propositions since February. He’s hired professionals to help him find the right one. He’s even taken to the Internet to advertise his ideal prospect and beg for help with his hunt.
Kessler’s quarry? A house.
Don’t tell Kessler Las Vegas is a homebuyers’ nirvana. Four banks have prequalified him. He has a longtime job in the sports book at the Golden Nugget. He’s paid off his debts and has a little money saved. Yet, every time he’s made an offer, someone else has swooped in - usually an investor with cash, often with a much higher bid - to snatch the property from his clutches. In one case, Kessler offered $138,500 for a $124,900 house and got rejected. His bid was the third-highest.
“I’ve been getting outbid by cash offers fairly consistently, and it’s a very frustrating process,” Kessler said. “When people say this is a buyers’ market, I start to wonder if they’re delusional, because that couldn’t be farther from the truth.”
…
I think a lot of people on this blog have predicted in the past that the investors would swoop in and the regular end users for real estate wouldn’t get the really good deals .
I just saw a investor buy a property in my area that was foreclosed on and than turn around without doing anything to the property in 6 months make a 30% profit by selling to a end user .
I think this is happening even more quietly than you think. There are bulk buyers of REO that are getting an opportunity to buy homes before the homes even hit the market…and this goes around the traditional brokerage community as well. Banks direct to buyers.
I think this is happening even more quietly than you think. There are bulk buyers of REO that are getting an opportunity to buy homes before the homes even hit the market…and this goes around the traditional brokerage community as well. Banks direct to buyers.
Having the banks buy back their MERS encubered houses with taxpayer money will clean up that mess, at least.
Same thing with failing to extend the loan forbearance subsidy. It will have the benefit of discovering how many people are “strategic defaulters”, and how many acutually can’t afford the house.
Call it the “Blood from Turnips Act of 2013″.
From what I see, the money is private, with some banks lending after the homes are rented. From what I see, it is not coming from banks (some groups I know had a hell of a time getting banks to even lend 60% of cost on rental homes).
However, what I understand is coming is:
1. Financial innovation–sigh–securitizing rental income streams…crazy; and
2. The GSEs providing debt to the rental market.
Cato Institute: Defense Spending Cuts are Good for the Economy
http://www.policymic.com/articles/12487/defense-spending-cuts-are-good-for-the-economy/190612
Kickin’ da can.
Nothing proposed is ever proposed in terms of now; It’s always proposed for some time later.
These guys in Congress don’t think in terms of “solving” problems, they think in terms of “coping” with problems.
If you solve the problem then the problem goes away. If you cope with the problem then the problem never goes away.
Kinda the same way they approach medicine these days
by putting people on Pharma Drugs long term ,which doesn’t cure or solve the underlying disease but just masks the symptoms .
If you cope with the problem then the problem never goes away.
Many problems in the real world can only be coped with, not solved. Terrorism, war, murder, criminality, the irrationality of markets- these things can’t be ’solved’, in a general sense. They’ll always be with us, just as they always have been.
You cope with them.
Correct me if I am wrong, but my impression was that Romney would ramp up defense spending as soon as possible if elected.
Would that qualify as “proposed in terms of now” by your definition of “now”?
Spending is proposed in terms of now but paying for this spending is proposed in terms of later.
If something is worth spending money on then it should be worth paying for. But because of the seemingly existence of the Tooth Fairy spenders can continue to spend forever and nobody will ever have to do the paying.
“Spending is proposed in terms of now but paying for this spending is proposed in terms of later.”
Perhaps you already saw my extreme example of this phenomenon from close to home on which I already posted a couple of times last week.
Got financial innovation?
Monday, August 06, 2012 9:53 PM
Ponzi Financing in Poway California Based on Massively Rising Property Values
Mike Shedlock
Poway California, population 47,811 as of 2010, has placed an enormous bet on rising home prices and tax revenues. Poway borrowed $105 million but will not start to pay that amount back until 2033 at which time they will owe $877 million in interest.
Clearly this would be fiscal insanity anywhere, but it is especially true in California given Proposition 13 that caps property taxes.
The Voice of San Diego reports Where Borrowing $105 Million Will Cost $1 Billion: Poway Schools
Essential Math
Think growth will bail out Poway? Think again.
From Poway City Data the population of Poway shrank by .5% between 2000 and 2010.
The current upfront cost of this $1 billion proposal would be $2196 per every man, woman, and child.
By the time Poway starts paying the bill, the cost will be $20,916 per every man, woman, and child.
Given the average household size is 2.9, the cost per household when the debt is due will be $60,656.
…
This sounds like a typical Democrat-run town. I would be greatly surprised to hear differently.
I got off the phone just an hour ago with a friend in Jacksonville Beach. Jacksonville is another Democrat run town.
It seems the Pensioners in Jacksonville Beach, like most other municipalities are a little light in their funding, which of course, the City promised to pay when the stock and housing manias pushed up tax revenues.
Proposed solution: raise property taxes.
Residents in agreement: all those welfare recipients in public housing, collecting free food and health benefits.
The “press” said local residents “approved” of the idea.
What PROPERTY OWNER is going to approve of higher taxes to pay from someone else’s retirement??
Retirement or welfare? Pick one because NOBODY will ever willing starve to death.
As for retirement, it was a contract made. Too bad it’s become inconvenient, but that’s the purpose contracts.
“Pick one because NOBODY will ever willing starve to death.”
Where?
“Too bad it’s become inconvenient, but that’s the purpose contracts.”
Inconvenient contracts were made to be broken.
Africa. An entire continent is wracked with rebellion and civil strife due to economics.
Yep contracts are sacred unless you’re rich enough to change or break one because you’re being inconvenienced.
I’ve been over that idiotic concept of a “contract” between a union and government on a short-term lease for citizens.
It’s really simple, but you don’t seem to comprehend it.
The Mayor, or council, or whoever is in office at the time, has no right or authority to offer to pay a “contract” in perpetuity for the benefit of so-called public workers. It is not a contract with the citizens, because neither I, nor you were a party to it.
You could argue that the City has the right to make the contract and “the city” is therefore responsible to pay it, and by the taxing authority, they have some assumed right to bankrupt the citizens of the city for the benefit of their buddies.
When we vote in NEW government, then we have a right to rescind any of the previous government’s rules and regulations.
That’s why we have voting…..the GET um OUT because they robbed up. You are suggesting that we are stuck, in perpetuity, until filing bankruptcy, with the deal.
A number of courts have so ruled, but courts make mistakes all the time. they have also ruled that the City may act like any other corporation and pursue bankruptcy.
The solution is simple: 401k’s and Pension funds that are self-invested or pooled, but that provide NO fixed income except as an Annuity upon retirement, based on current rates and the amount in the fund. Just like Everyone else on the planet, if you didn’t save for retirement, you don’t get to rob other people because some dumbass “economist” said the fund would pay back 8 to 10% per annum in perpetuity, and it didn’t.
Screw Public Sector Pension funds that are NOT self supporting.
I suggest you are wrong. I believe it is wracked with problems because it is full of Africans.
The same results happen when they become a majority population in just about any place they occupy. Look around.
Seen Haiti?
The people elected are empowered by law, to act on what they think is in the best interests of all the citizens they represent.
Some of those citizens will never like it. Tough for them. They can only try and change it by voting.
Contracts are contracts and must be renegotiated if one party no longer likes the terms.
That’s how it works.
“…because it’s full of Africans?” My, my, how telling.
“Contracts are contracts and must be renegotiated if one party no longer likes the terms.”
Did you really mean to say that?
That’s not how it works, unless the contract specifies that is the deal. If one party no longer likes the terms of a written agreement, tough luck.
Some of these contracts can be thrown out/restructured through bankruptcy processes. One party to a contract can’t simply decide they don’t like the deal anymore.
Obama and Ryan have tangled repeatedly
His budget spends 15 percent less than Mr. Obama would over the next decade, and he would rack up $3.1 trillion in cumulative new deficits during that time, which is less than half of the deficits the White House says Mr. Obama’s budget would produce.
http://www.washingtontimes.com/news/2012/aug/11/obama-and-ryan-have-tangled-repeatedly/
While his budget might not be perfect, show me another that is even talking about attaining anywhere near this level of reduction in spending.
“While his budget might not be perfect, show me another that is even talking about attaining anywhere near this level of reduction in spending.”
He is talking of racking up “$3.1 trillion dollars in new cumulative deficits”, no? And this, in your view, is the best choice of all the choices being offered?
Look closely at all this and you will maybe get close to the root of the problem.
‘Rep. Paul Ryan made a name for himself as the chairman of the House Budget Committee as someone willing to put forth deep cuts in government spending. Last year he authored a spending bill that was advertised as slashing $38 billion in government spending, even though the Congressional Budget Office found he would actually only cut $325 million overall, which is which is inconsequential enough to the overall budget for it to have not happened at all.’
‘Republican chairman of the House Armed Services Committee, Howard “Buck” McKeon, told Newsweek’s Daily Beast he has worked closely with Ryan to come up with ways to avoid making any significant cuts to defense. Specifically, to avoid sequestration cuts, which Ryan and other hawks have described has too deep, but which would only cut defense spending back to 2007 levels.’
‘As Danielle Pletka, vice president for foreign and defense policy studies at the hawkish American Enterprise Institute, told the Daily Beast, “Unlike a lot of fiscal conservatives, one of the great things about Paul Ryan is he is not omni-directionally a budget cutter,” meaning he knows better than to cut a red cent from America’s enormous and wasteful defense budget.’
‘The Daily Beast has also confirmed that Ryan has been receiving briefings from Elliot Abrams, former Reagan apparatchik and George W. Bush’s former Middle East director at the National Security Council. Fred Kagan, a leading neo-conservative and “one of the architects of the military surges in Iraq and Afghanistan,” has also been meeting with Ryan to coach him on foreign policy.’
http://news.antiwar.com/2012/08/11/romneys-paul-ryan-vp-pick-pleases-war-hawks/
‘Republican chairman of the House Armed Services Committee, Howard “Buck” McKeon, told Newsweek’s Daily Beast he has worked closely with Ryan to come up with ways to avoid making any significant cuts to defense.’
The sales pitch to fix the U.S. fiscal hole appears to be a smoke screen for a massive reallocation of federal spending towards the Military Industrial Complex. As in other Third World countries, an ever-increasing defense sector is necessary to protect the assets of the few, the proud, the privileged.
I read it to mean that it will be $3.1T less than the current trend/guess and I don’t have the time right now to review.
How much does Obama want to cut and how is he going to do it.
Shh…
To democrats - unless he can balance the budget in a year he is a phony and just as BAD (in fact, even worse) that obama’s $1 trillion deficits PER YEAR and borrowing 40 cents of every dollar spent…
And if he attempts to cut ONE insane entitlement program by even a LITTLE bit - why then he is starving children and throwing grandma in the street.
Stop spreading propaganda bullshit here, or we will suspect you are a Republican party operative.
I would LOVE to compare the Ryan budget to the budget of the senate democrats.
That way we could look at the logic, benefits and flaws of each and have a rational discussion.
But the democrats who CONTROL the senate and who can PASS a budget with a SIMPLE MAJORITY and have failed to do so for OVER 1200 DAYS!!!
Democrat logic - Attack and attack the other guys budget but put nothing on the table of your own. Well - at least no one can blame you for staving kids and throwing grandma in the street.
————————-
Democrats punt on Senate budget bill for third year
The Washington Times
Tuesday, April 17, 2012
In a stunning backtrack that virtually guarantees Congress for the third year will be unable to produce a budget, Senate Democrats’ top budget writer Tuesday canceled this week’s expected votes on a 2013 fiscal blueprint.
More Washington Times BS, just like the first article on Obama and Ryan ’scrapping’.
Why do you waste our time?
“$1 trillion deficits PER YEAR and borrowing 40 cents of every dollar spent…”
That`s not true?
And yet the other day in Denver, Romney said that we shouldn’t have any spending cuts in 2013.
The budget cutting promises are just fluff. They won’t happen, and even if they do cut “entitlements”, they’ll more than make up for it with increased military spending. Invading Iran won’t be cheap, after all.
Reallocation, yes; cuts, only to programs they don’t like.
Exactly, the last Republican prez to reduce spending was who, Eisenhower?
I note that Ronald Reagan, one of Romney’s touted fiscal heroes, along with Bill Clinton, snowed the country with a similar deficit hawk sales pitch, only to blow a hole in the budget by reducing taxes on the rich and ramping up spending on the Military Industrial Complex.
It really does get old, 2banana.
I can’t remember any Republican presidents over the past half century who actually cut spending to match their rhetoric. But I can think of a couple whose two-term presidencies precipitated financial calamities. Everyone knows by now that the Great Recession started in December 2007, more than a full year from the end of George W. Bush’s second term in office, and nearly a year before a financial collapse on Wall Street nearly sent the global financial system up in smoke.
I wonder how many readers here recall a similar financial meltdown that occurred in 1987, the penultimate year of Ronald Reagan’s two-term presidency?
Even so, Republicans are financially smarter, cause 2banana and Eddie say so.
The entire false dichtomy of the two parties and Banana’s work is to keep the the public believing there is a difference between they.
They are a distinction without a difference.
“…show me another that is even talking about…”
Talk is cheap. He gotta walk the walk that goes with the talk; otherwise we will have to conclude this guy is just another Republican propagandist.
Everybody talks in terms of budget ,budget ,budget . I talk in terms of how to have more revenue, revenue, revenue . How do you get that ? More good paying USA jobs for starters . Tariffs to level out the playing field to crush slave wage Monopolies of foreign or domestic means . More taxes on the rich and Corporations/Wall Street casino games ( at least for a 10 or twenty year period of time until we can get this mess corrected .) More tax penalities on anything that undermines
jobs being created in the United States ,or penalities that will
force manufacturing to come back to America .
Basically this solves a lot of the budget ,budget ,budget problems,because of more revenue, revenue ,revenue . Proper tariffs come into the necessary corrections ,as well as some sort of acknowledging of BORDERS and serious attention to stopping illegal immigration .
No doubt a serious look has to be taken at what our Military
expense is getting us and why we spend so mcuh in this area and for whom does it benefit .
Basically you have to go back to what we were before we became what we don’t want to be .
HW,
No offense intended, but if you ever choose to use proper English punctuation, it will be far easier for most of us to focus in on, and comprehend, your often salient points -
with the free money policies of this administration there seems to be asset, consumer, and “wage” inflation but only in the realm of the super rich.
it’s not sustainable for these policies of transfer of wealth to the SUPER RICH and MONOPOLIES and Money Men to continue . It’s no different than having dictator Kings really .
The 1% and Monopolies think that their self-serving systems that have gained so much power these days are sustainable because
the suffering of mankind is not their concern . Profits and Power
is the main agenda .
What counts is how well a Country functions in terms of the majority of the population having a reasonable lifestyle ,and opportunity to thrive . Otherwise all you get are the conditions
that we have witnessed in Third World Countries in which you have 2 classes ,which are rich and poor .
I don’t think it serves us very well to say that at least our poor in the USA live better than the poor in Third World Countries ,the very people that are being exploited so rich men and Corporations can get richer .
Look ,this slow gradual hijacking of America by Powers ,that have to much power really and bad motives, is destructive and doesn’t
correct World problems .The more Power these forces get ,the more it puts the GLobe at risk for highly destructive things occurring .Now these Power forces might think that killing off 5 billion people by one means or another is a social goal worthy of
doing ,but I think that is something that reminds me of a Hilter type thing . WHO IN THE HELL DO THEY THINK THEY ARE ? They are actually preventing Countries from solving their own problems really .
with the free money policies of this administration ??
Wow…What a revelation…I did not know that the presidency controlled the money supply in the USA…Thanks for the new facts…
Good grief man. You really so need to get your head out of the sand…or some other place you have it stuck.
Thats not much of a counter….Please enlighten me then…
Let me guess, by “free money policies” he means “foodstamps” and “unemployment benefits”
“$1 trillion deficits PER YEAR and borrowing 40 cents of every dollar spent…”
Then why not call it “deficit spending policies”?
It’s time that Austin give taxpayers a break
The city’s proposed budget includes $13.6 million to give 9,274 regular mployees a 3 percent across-the-board pay raise. And the budget also includes $6.2 million to pay employees longevity bonuses on top of pay raises.
That excludes police officers, firefighters and paramedics, whom the city is obligated by contract to pay 3 percent pay raises for 2012-13.
Twenty bucks doesn’t seem like a lot of money, right? That’s what Ott and City Council members will tell you. But as officials well know, the city is not alone in taxing Austin and Travis County residents.
Last week, for instance, the Travis County Commissioners Court raised taxes, about $20 more a year, to pay for 3.5 percent pay raises for all employees and elected officials.
Add to that the other tax bills paid by Travis County residents, from the Austin or other school districts, Austin Community College and the Central Health hospital district. Then calculate new fees the City of Austin is charging for electricity, water and other services, and that $20 increase looms large.
The cumulative effect has been huge: The property tax bill for a typical Austin home rose 38 percent between 2000 and 2010, adjusting for inflation, while the median income remained stagnant.
“while the median income remained stagnant”
Huh? I though the streets were paved with gold in Texas.
Uh, public employees and elected officials are taxpayers as well.
11 Things That Can Happen When You Allow Your Country To Become Enslaved To The Bankers
The Economic Collapse Blog | 08/12/2012 | Michael Snyder
Why are Greece, Spain, Italy, Portugal and so many other countries experiencing depression-like conditions right now? It is because they have too much debt. Why do they have too much debt? It is because they allowed themselves to become enslaved to the bankers. Borrowing money from the bankers can allow a nation to have a higher standard of living in the short-term, but it always results in a lower standard of living in the long-term. Why is that? It is because you always have to pay back more money than you borrowed. And when you get to the point of having a debt to GDP ratio in excess of 100%, you are basically drowning in debt. Huge amounts of money that could be going to providing essential services and stimulating your economy are now going to service your horrific debt. Today, citizens in Greece, Spain, Portugal and Italy are experiencing a standard of living far below what they should be because the bankers have trapped them in endless debt spirals. Sadly, the vast majority of the people living in those countries have absolutely no idea what is at the root cause of their problems.
But this is what happens when you allow the bankers to trap your country in debt. The central banking systems of the world are designed to be endless debt spirals that systematically transfer wealth from the people through the governments and into the hands of the ultra-wealthy.
Just look at what is happening in the United States. The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.
#1 At some point nations that are drowning in debt must implement “austerity measures” in an attempt to stay solvent.
This causes economic slowdown and unemployment skyrockets. We are seeing this happen in Greece, Spain and a whole bunch of other nations right now.
Over the past four years, the Greek economy has contracted by close to 25 percent. Just this week it was announced that the unemployment rate in Greece has risen to 23.1 percent.
A year ago it was just 16.8 percent
In Spain, the unemployment rate is even higher. It has hit 24.6 percent, and some analysts expect it to eventually reach 30 percent.
This would have never happened if these nations had not gotten into so much debt.
#2 Economic progress can actually go backwards in a debt-based system.
In Greece, a very large number of citizens have actually been giving up their cars and have gone back to riding bikes….
The high cost of road tax, fuel and repairs is forcing Greeks to ditch their cars in huge numbers. According to the government’s statistics office, the number of cars on Greek roads declined by more than 40 percent in each of the last two years. Meanwhile, more than 200,000 bikes were sold in 2011, up about a quarter from the previous year.
#3 Your banking system will inevitably melt down at some point.
Every debt bubble eventually bursts, and authorities all over Europe are desperately trying to keep the European banking system from completely imploding.
But despite their efforts, people are pulling money out of banks in southern Europe at a staggering pace. Just check out the slow motion bank run that is unfolding in Spain….
Capital outflows from Spain more than quadrupled in May to €41.3 billion ($50.7 billion) compared with May 2011, according to figures released on Tuesday by the Spanish central bank.
In the first five months of 2012, a total of €163 billion left the country, the figures indicate. During the same period a year earlier, Spain recorded a net inflow of €14.6 billion.
#4 In all countries with a debt-based system, eventually your taxes will be raised to ridiculous levels.
When the income tax was introduced in the United States back in 1913, the vast majority of Americans were in the 1 percent tax bracket.
Throughout the years there have been countless promises that taxes would be limited, but those promises always end up getting broken.
Even when they give us “tax cuts” with one hand, they usually end up raising taxes ten different ways with the other hand.
In the United States today, we are literally taxed in dozens and dozens of different ways.
Our politicians love to come up with new and inventive ways to tax us without us really even feeling it.
In the end, they are going to take as much away from us as they can possibly get away with.
Just look at what is happening in France.
The newly elected socialist president of France says that his party plans to raise the top tax rate in France to 75 percent.
But even though our politicians tax us to death, they still manage to run up gigantic mountains of debt on top of that.
#5 Your currency slowly but steadily becomes worthless.
Most people don’t realize that inflation is a tax. Every dollar you currently have in the bank is constantly losing value. That is because in a debt-based system like we have, the total amount of money and the total amount of debt is supposed to keep perpetually expanding.
Since the Federal Reserve was created, the U.S. dollar has declined in value by well over 95 percent.
This did not happen by accident. Every other major currency around the globe has been steadily declining in value as well.
#6 When things get bad enough, there will be rioting in the streets.
A few weeks ago, a total of more than a million public employees took to the streets in more than 80 different Spanish cities. You can view footage of some of the violent clashes with police that took place right here.
#7 When a debt-based economy crashes, money becomes very tight and shortages tend to happen.
Just look at what is happening in Greece. Medicine shortages have become a tremendous problem. The following is from a recent Bloomberg article….
Mina Mavrou, who runs a pharmacy in a middle-class Athens suburb, spends hours each day pleading with drugmakers, wholesalers and colleagues to hunt down medicines for clients. Life-saving drugs such as Sanofi (SAN)’s blood-thinner Clexane and GlaxoSmithKline Plc (GSK)’s asthma inhaler Flixotide often appear as lines of crimson data on pharmacists’ computer screens, meaning the products aren’t in stock or that pharmacists can’t order as many units as they need.
“When we see red, we want to cry,” Mavrou said. “The situation is worsening day by day.”
The 12,000 pharmacies that dot almost every street corner in Greek cities are the damaged capillaries of a complex system for getting treatment to patients. The Panhellenic Association of Pharmacists reports shortages of almost half the country’s 500 most-used medicines.
#8 Your population will eventually become so desperate that they will start banding together to loot food and supplies from stores.
When people have no work and they cannot feed their families they often find themselves doing things that they never imagined that they would do. Just check out what is happening in Spain right now….
Unemployed fieldworkers and other members of the union went to two supermarkets, one in Ecija (Sevilla) and one in Arcos de la Frontera (Cadiz) and loaded up trolleys with basic necessities. They said that the people were being expropriated and they planned to “expropriate the expropriators”.
The foodstuffs, including milk, sugar, chickpeas, pasta and rice, have been given to charities to distribute, who say they are unable to cope with all the requests for help they receive. Unemployment in the Sierra de Cadiz is now 40%.
#9 If things get bad enough, even essential services may start shutting down.
Authorities in Greece are legitimately concerned that there may be interruptions in the supply of natural gas and electricity. Suppliers are leaving bills unpaid for extended periods of time, and one day millions of Greeks may wake up to find that the power to their homes has been cut off….
Greece’s power regulator RAE told Reuters on Friday it was calling an emergency meeting next week to avert a collapse of the debt-stricken country’s electricity and natural gas system.
“RAE is taking crisis initiatives throughout next week to avert the collapse of the natural gas and electricity system,” the regulator’s chief Nikos Vasilakos told Reuters.
RAE took the decision after receiving a letter from Greece’s natural gas company DEPA, which threatened to cut supplies to electricity producers if they failed to settle their arrears with the company.
#10 In an economic depression, many people begin to totally lose hope.
An increasing number of parents in southern Europe are facing such desperate situations that they are actually abandoning their babies.
The following is from a recent CNBC article….
According to SOS Villages, a European charity that attempts to help families in financial hardship before abandonment occurs, in the last year alone 1,200 children in Greece and 750 in Italy have been abandoned. That is almost double the 400 children abandoned in Italy a year ago, and up from 114 children abandoned in Greece in 2003.
#11 Just like we saw during the Great Depression of the 1930s, there is a spike in suicides when an economy crashes.
Sadly, most Americans do not even realize how we got into this mess. The following is from a recent article by Professor Steven Yates….
It should have been clear that the country—indeed, Western civilization itself—was on the wrong trajectory as governments and central banks, working in tandem, severed ties between their currencies and precious metals, allowing massive credit expansion to run rampant and the national debt to skyrocket—making, e.g., the pseudo-prosperity of the roaring 1990s possible. Nixon had “closed the gold window” on August 15, 1971; our national debt was around $400 billion. Slightly over ten years later, the debt crossed the $1 trillion threshold. Ten years after that, it reached $6 trillion. When George W. Bush left office having been the biggest spending Republican in U.S. history, it had risen to over $11 trillion. Today, under the watch of the catastrophic Obama presidency, by the time this reaches print the national debt might have surmounted $16 trillion with no end in sight.
2Banana..The situations in other Countries that you describe above are exactly the situations that I would like to have the United States avoid .
This advancement of debt Worldwide was no doubt a big factor in creating the situation we have today .
It’s really a scary situation in which people are suffering ,and the
Spain unemployment rate is more like 40% and they are downplaying the real numbers . The young are fleeing like crazy from Spain to try to go anywhere they can get into that might have jobs .
Spain (and Greece’s) problem is that they never had real economies. They blew bubbles and borrowed money.
The Germans, on the other hand, understand the importance of actually making stuff that can be traded with other countries (as opposed to offshoring everything in sight). They run huge trade surpluses and have a high standard of living, while having “socialist” programs like socialized medicine and affordable higher education.
Boy doesn’t that tell us how a Country should be run by the German example .
…..and, of course, our solution was to “save the banks” and award Goldman Suchs, who has worked WORLD_WIDE to provide all kinds of fake certificates of funds to provide a ponzi finance scheme.
the “world Bank” , International Monetary Fund, and the FED in conjunction with the other “central banks” are a CABAL of particular people who are helping themselves to a big fat schmorgasbourg of other peoples labor and possessions.
They have infiltrated the US government and have a revolving door with the whitehouse. what can we do?
Ben Bernnake is printing money and Paul Krugman, the voice of the NYT is goading him on, supported by Larry Summers, Rahm Immanuel, Alan Greenspan, Woody Allen, Robert Rubin, DOminic Strass Kahn, Rube Goldberg, Lloyd Blankfein, Bernie Maddoff, Metro-goldwyn myers, and the massive host of supporting characters.
So, the National Debt is “5000 times larger” since the founding of the Federal Reserve
In dollars, that have “lost 95% of their value” in the same period.
Someone do the math for me, but it sounds like we got a whole bunch of stuff for free.
We got ten trillion dollars worth of spending, for approx. 232 billion 1913 dollars.
Sounds like a bargain!
Back-to-school shoppers in no mood to splurge
Yahoo Finance | August 11,2012 | Dhanya Skariachan
Teenager Fanta Bagayoko personifies U.S. retailers’ worst nightmare this back-to-school season.
“I feel like the economy is messed up,” the 18-year-old said while shopping at a Walmart in New Jersey, for herself and her niece. “Money wise, I still feel like we are in a recession.”
It has been more than three years since the official end of the brutal U.S. recession, but Bagayoko and several other U.S. shoppers said they are not feeling better about the economy or their own finances, and are spending only on essential items. That does not bode well for U.S. retailers that are hoping for a much-needed sales boost after posting lackluster results in the first half of the year. Back-to-school is the second-biggest selling time of the year for U.S. retailers, behind the winter holiday season.
Weak income and employment growth are weighing heavily on Americans, especially younger shoppers.
Teen employment is at its lowest level since 1964, making more teenagers reliant on their parents to fund their back-to-school shopping, said Jharonne Martis-Olivo, director of consumer research at Thomson Reuters.
“I feel like the economy is messed up.”
School hasn’t even started yet and he’s already getting an education.
“No child left behind”. See? It’s working.
This teenager is restricted to spending money on “essential items”, which infers she is not spending money for nonessential items. But such thinking screws up a consumer-based economy because after all the essential items she needs are bought what else is left to spend money on if not non-essential items?
And one doesn’t need to buy non-essential items because they are, uh, non-essential. So the part of our consumer-based economy that supplys non-essential items gets to be a bit hosed if consumers won’t - OR CANNOT - buy these non-essential items.
And they cannot buy because they do not have the money. This used to not be a problem, this not having the money, because what money they used to not have they used to be able to borrow. But they cannnot do this borrowing so easily anymore so these folks have to learn to do without the non-essentials and stick with finding out ways to buy only the essentials.
And what percentage of our economy is based on consumer spending? And what percentage of this consumer spending is spent on non-essentials?
High percentage on non- essentials . What is going to happen to the non-essential markets as time goes by . More jobs lost
no doubt .Than people not buying as many essential items such as clothes . People not going out to eat because its not really necessary ( however fast foods might not take a dip ) .
Recreation expense is going to suffer also ,more jobs lost .
This is really a unraving of our consumer based economy . People incomes will go to food ,shelter ,health care and
transportation,and taxes and insurance . People not having the ability to save will also effect that market of jobs reliant
on savings .Doesn’t seem like the luxury item market is going down these days .
I think that one thing we have to admit: and that is that a consumer based economy did create a bunch of jobs ,until they shipped those jobs and manufacturing elsewhere creating part of the problem .
“What is going to happen to the non-essential markets as time goes by .”
The Chinese will have to lay off the factory workers that make them?
infersimpliesFull disclosure: I’m not an English teacher.
infer 1. to derive by reasoning; conclude or judge by premises or evidence. 2. to guess; speculate; surmise
“Implies” will work but I’ll stick with “infers”.
“…which infers she is not spending money for nonessential items.”
I’m not an English teacher, but I do know that ‘infers’ is a verb whose use implies human action. By contrast, facts can ‘imply’ something, but they cannot ‘infer’ it.
“‘infers’ is a verb whose use implies human action.”
And the human action inferred by the the use of this verb is her not spending money for non-essential items.
“…human action inferred by…”
Language, like driving, is among the most democratic of human institutions. You are free to write or drive as you please. It’s up to your reader or fellow motorist to cope.
An inference is what you make of an implication.
“An inference is what you make of an implication.”
Inferences can be made from facts. However, facts do not autonomously make inferences; active human involvement is implied by the use of the term.
“And what percentage of our economy is based on consumer spending?”
75%
But the PTB have decided that our consumer based economy doesn’t need, consumers.
OK you`ve got a billion $ U.S. Navy destroyer that can put a guided-missile in a shoe box a thousand miles away and it runs into an oil tanker. How does that happen?
US Navy ship collides with oil tanker in Gulf
2 hours ago
MANAMA, Bahrain — One of the U.S. Navy’s guided-missile destroyers suffered minor damage when it collided with an oil tanker early Sunday just outside the strategic Strait of Hormuz.
The collision left a gaping hole in the starboard side of USS Porter, but no one was injured on either vessel, the U.S. Navy said in a statement. The collision with the Panamanian-flagged bulk oil tanker M/V Otowasan occurred at approximately 1 a.m. local time.
The cause of the incident is under investigation, the Navy said, adding that there were no reports of spills or leakages from either the USS Porter or the Otowasan.
“How does that happen?”
In July of 1988 the USS Vinennes fired missles at and shot down an Iranian airliner, killing all 190 people on board, because those in charge mistook the airliner for an attacking F-14 Tomcat.
A commercial Airbus being mistaken for an attacking F-14?
“How does that happen?”
“…..1 am local time…..”
The mid-watch guys on the destroyer were probably half asleep/not alert.
The guys on the tanker were probably dozing figuratively, if not literally.
See “Stockholm-Andrea Doria” collision.
…and have just ended their careers.
SNAG, SNARP
HAMP, HARP
Hit em` high, Hit em` low
Where the hell`d Solyndra go?
Public unions - bankrupting America one city and state at a time.
$100,000 meter maids.
Well - at least public unions are non-partisan “public servants” and only want what is best for the taxpayers…
————————-
One of the latest examples comes from the California coastal city of Hermosa Beach, where some community service staffers who collect money from parking meters and manage their operations – positions once widely known as “meter maids” – are making nearly $100,000 a year in total compensation, according to city documents.
http://briancalle.ocregister.com/2012/08/10/hermosa-beach-meter-maids-making-nearly-100k/
“total compensation”
That word may not mean what you think it means. You may think it means the meter maids get to take home $100,000 every year. My bet is they don’t.
Correction: That word “total” may not mean what you think it means.
Total =
-Health insurance
-Pension plan contributions
-All other benefits. (Uniforms? Life insurance? Pens to write tickets?)
(price increases of which employers have been justifying nobody getting any raises for 10 years).
Don’t know what the complaint is. If there is such thing as a government “producer”, it’s gotta be someone who writes parking tickets.
The only thing good about government jobs is that at least
they are spending the money locally and paying the taxes
locally ,which creates other jobs locally . Everybody knows that the wages and benefits are much better than the private sector were giving . The thing I never liked was that some Government pensions were based on overtime rather than the regular salary ,somehow I thought that was taking advantage. There are a lot of government jobs that are really needed actually . All this cutting is making me a little nervous in that what is it going to create.
For instance ,if we cut the Military ,how much unemployment is that going to create ? Not that I like the Military budget at all ,but that will create a lot of unemployed people and we should be prepared to
place them in the private sector in the USA . All the more reason to have more jobs .
Think poisoned dog food, baby formula, dangerous buildings, poisoned toothpaste, unsafe water, fraud and graft, robosigning, etc.
The list is long.
“Bobko also wrote in a memo that the retirement costs for these 10 employees “from [fiscal year 2011-12] through their retirement age at 62 was nearly $1.6 million, and the medical costs for these employees from this fiscal year to their retirement at age 62 would be $1,353,827.” Excluding salaries, the [retirement] contributions and medical costs for the 10 employees performing parking enforcement will cost, on average, nearly $300,000 apiece.””
“We have seen increased revenues with the private company operating the meter program,” Newport Councilwoman Leslie Daigle said.”
Privatizing law enforcement?
Nope, no corporate communism here! Nope. No sirree!
Wait until they find out how the company and the city were colluding to defraud the taxpayer. Do I know this for a fact? No. But with almost EVERY contract of this kind, across the nation, that has been the case.
“All this cutting is making me a little nervous in that what is it going to create.”
The want to blast us back to the dark ages. Fine.
At some point the pillagers won’t be able to cross the street.
SHTF moment in Greek bailout
Debt crisis: Germany ready to block Greek aid if country misses targets
Germany will block any new aid to ailing Greece if Athens does not fully comply with the terms of previous rescue packages, even if other countries support unlocking funds, a senior lawmaker said Sunday.
Germany will block any new aid to ailing Greece if Athens does not fully comply with the terms of previous rescue packages, even if other countries support unlocking funds, a senior lawmaker said Sunday.
Germany, Europe’s biggest economy, is waiting with eurozone partners for the report on Greece from a so-called troika of inspectors. Their verdict, which is expected by mid-September, will determine if Athens receives the next installment of €31.5bn in rescue funds. Photo: REUTERS
4:14PM BST 12 Aug 2012
Laura He, Contributor
I write about Chinese entrepreneurs and China’s economic landscape.
8/10/2012 @ 1:46PM
China’s Credit Crisis Triggers Concerns About A Great Bubble Bursting
HUAIBEI, CHINA
A new credit crisis is erupting in China’s richest province, triggering concerns about the domino effect on the vast banking sector and economy at large. Analysts are concerned that China is on the verge of a great credit bubble, which may blow up if the country continues suffering from difficult trade conditions and declining property prices.
A New Credit Crisis
In July, 600 private enterprises in Zhejiang Province, just south of Shanghai, signed a petition appealing to local governments for a bailout to ease their credit woes, because banks had recalled or cancelled their loans, according to a news report by Guangzhou-based 21st Century Business Herald.
Meanwhile, non-performing loans in Zhejiang have increased significantly as firms struggle to cope with a lingering credit crunch. The outstanding non-performing loans in the province climbed more than 35% in the first half of 2012 to $11.9 billion (75.9 billion yuan), according to the latest statistics released by the Zhejiang Banking Regulatory Bureau. In the province’s entrepreneurial hub, Wenzhou, banks’ non-performing loan ratio surged to 2.69% at the end ofJune, the highest in a decade.
This marks the beginning of a new credit crisis in China’s third richest region after Beijing and Shanghai, following a private loan crisis that erupted in Wenzhou last year. Alerted by the crisis, government officials in Zhejiang have reportedly held meetings with banks to search for effective ways to stem a possible chain reaction of corporate collapses.
…
Toronto condo prices to cool, not crash - RBC report
Royal Bank of Canada
Tue Jul 24, 2012 2:29pm IST
* Demographics, housing constraints will prevent crash
* Condo prices seen cooling 2-7 percent by next year
* Two-tier market seen forming
TORONTO, July 24 (Reuters) - Prices will cool in Toronto’s booming condominium market in the year ahead, but concern about a bubble is overblown as demographics and strong investor demand will insulate the market from a crash, economists at Canada’s largest bank said on Tuesday.
The research department at Royal Bank of Canada waded into the debate over whether Toronto’s roaring real estate sector represents a bubble with a seven-page report predicting prices in the city’s condo market will cool by between 2 percent and 7 percent in the next year but will not collapse.
“The historic condominium apartment boom in the Toronto-area market is not necessarily a sign of excess or of a bubble,” RBC senior economist Robert Hogue wrote in a research note.
He said the condominium market in Canada’s largest city still has a lot of strengths, pointing to a rising population, a shift in the mix of available housing, rising rental demand, and strong interest in buying condos as investments.
Still, recent changes to mortgage insurance rules and looming interest rate increases will reduce the flow of buyers into the market, and there are risks that the type of units bought by investors may not match future demand, Hogue said.
“If we are not in the presence of a bubble, does it mean that prices will keep going up in the Toronto area? Not necessarily. In fact, we expect the current upward pressure on home prices to ease substantially by next year, with condo prices possibly coming down a notch or two,” easing by 2 percent to 7 percent from quarterly peak to trough.
…
Enjoy the Slow Ride on the Highway to Hell.
But if only R&R can get elected, all the economic problems facing the U.S. will magically disappear.
Aug. 12, 2012, 12:01 a.m. EDT
U.S. economy downshifting but not stalled
Growth prospects dim as businesses, consumers turn cautious
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — Call it the 2% (or less) economy: The U.S. is still expanding, but at a lukewarm pace that’s unlikely to heat up before the end of the year.
The causes of slack growth after a burst of winter activity are well known by now. American consumers cut spending in the spring — particularly after gas prices spiked — while export markets for U.S. goods softened. Businesses responded by scaling back hiring plans and putting off major investments, worried about another false start in the nation’s effort to break out of its economic straitjacket. See charts on growth, productivity and employment.
That result is a holding pattern in which U.S. unemployment remains high, consumers stay on edge and companies are uncertain about how to proceed.
“You’ve got more forces pulling growth down than pushing it up,” said Steve Blitz, chief economist at ITG Investment Research in New York. “We’ve downshifted from second gear back to first.”
…
Most of the 1% types around here are cutting/freezing hiring and capital spending, convinced that they will get a “better deal” if Romney is elected.
If not, well no big deal. The wretched refuse will be even more appreciative of the scraps, after they’ve been out of work for another 6 months.
The only construction going on locally:
Commercial- Financial and health care.
Residential: finishing out abandoned 2007-2009 projects.
And the new candy bar factory……built with $9.1 million dollars of taxpayer money/incentives, including 180 acres free and clear. This place isn’t going to need 180 acres.
They had the first “briefing session” on how to apply for positions later in the year…..300-400 positions max, first session had 2000 people attending.
(I guess that’s progress…..two years ago, 8000 people would have showed up.)
Around 2008 we had 2000 people show up to apply for 100 jobs (most of them menial) at a new Embassy Suites here in town.
Damned lazy welfare slackers!
Oh wait…
Fascinating footnote to the Youtube “Highway to Hell” video:
Highway to hell music video with Bon Scott just 10days before he died on February 19th 1980. one of my most favorite songs of all time. This music video was filmed on Spanish TV in Spain on February 9th 1980. This video can be found on AC/DC Family Jewels Disc 1.
Reminds me of how perpetually impressed I am by Mick Jagger’s long-term survival, as rockers have a pronounced tendency to do themselves in at an early age with drugs and alcohol.
Maybe it’s because Mick studied at the London School of Economics before embarking on his rock band career? Studying economics tends to lengthen one’s planning horizon.
“Das Leben ist kurz, aber die Kunst ist lang.”
Saying from my college German textbook…
Seems a great case in point that the most famous AC/DC video, which was made a matter of days before the lead singer’s death, continues to grow in fame.
I agree Bear. Bon Scott AC/DC is as good as it gets imo.
Old ZZ Top too!
http://dailycaller.com/2010/02/14/paul-ryan-explains-his-votes-for-tarp-auto-bailouts-and-tax-on-aig-bonuses/
Paul Ryan: Neo-con Keynesian water-carrier for the statists and banksters.
You gotta admire how the Republimentalists have framed the debate.
Payments/support for the poor and unemployed are considered “wealth transfers to the non-producers”
Under the table payments/tax breaks/infrastructure improvements demanded by business owners are considered “incentives”..
And don’t get me started about pro sports….
http://tinyurl.com/8qxun7b
“…pro sports…”
Shake-and-bake!
Romney, Ryan rally supporters in NASCAR country
Video: GOP presidential candidate Mitt Romney campaigned with his new running mate, Rep. Paul Ryan, Sunday in Mooresville, N.C..
By Felicia Sonmez and Emily Heil, Updated: Sunday, August 12, 1:41 PM
HIGH POINT, N.C. — Republican presidential candidate Mitt Romney and running mate Rep. Paul Ryan (R-Wis.) cemented their new partnership at high-energy campaign stops in North Carolina on Sunday, where the addition of Ryan seemed to rev up the crowds — and put Romney more at ease than he has previously looked on the trail.
Campaign officials estimated that 10,000 people showed up for a rally in a showroom of the Absolute Style furniture company. The crowd was so large that many had to wait outside or in an overflow area.
The 42-year-old Wisconsin Republican is the chairman of the House Budget Committee.
If Mitt Romney wins the White House in November, Rep. Paul Ryan of Wisconsin will join a long line of U.S. vice presidents who came to the office after spending time at the other end of Congress.
Both candidates appeared to feed off their supporters’ enthusiasm. On their way into the event, Romney approached a group waiting in the summer heat and exchanged high fives with about a dozen of them; Ryan did, too.
“All right, guys, take it easy,” Ryan said as they headed into the venue.
Inside, thousands who had been waiting for three hours or longer leapt to their feet for the candidates.
Earlier, the duo appeared before a crowd of 1,700 cheering supporters at a raucous rally in Mooresville, N.C. at the NASCAR Technical Institute. Thousands of others waited in overflow areas.
“We feel as your fellow citizens, that we owe you a choice,” Ryan told the crowd. “A choice between two futures.”
…
The mealtime prayer in that movie ranks with my all-time favorite comedy scenes.
Dumb question of the day: Was Will Farrell and/or the screenwriter doing his (their) best in that scene to mock southern Christian conservatives (aka the Republican base) to within an inch of their lives?
Or did I miss the point?
I find the idea of Yankee rich boy politicans Romney and Ryan pandering to the 99% NASCAR share of the Republican base pretty damn hysterical. I can’t wait to see what Jon Stewart and Stephen Colbert do with this material.
Praise Gawd for providing political humorists with such rich subject matter!
Romney/Ryan 2012 Means We’ll Ignore the Biggest Issue of Our Time
By Matthew Yglesias
Posted Saturday, Aug. 11, 2012, at 11:45 AM ET
Apologies for being late on the scene, but Mitt Romney chose to announce his VP pick on the first day of my vacation in Maine, and I had some travel snafus last night. At any rate, I am not a fan of Paul Ryan, but it’s easy to see why both conservatives and the Obama campaign are fans of this pick. They’re fans for the same reason, because putting Ryan on the ticket tends to cement the idea of the 2012 election as a choice between two competing ideological visions. Romney and Ryan will run on the principle that federal revenue should stay at its long-term historical average, even if that means completely abrogating the federal government’s longstanding commitment to the living standards of the elderly and to playing a certain role in financing of infrastructure and education nationwide. Obama and Biden will run on the principle that we should try to more or less find ways to keep meeting the programmatic commitments the federal government has upheld for the past 50 years.
There’s an ineluctable math built into the current federal budget that is forcing choices onto the table that make everyone think their own plan is moderate and their rivals are wild-eyed radicals. Never overestimate the impact of a vice presidential pick on a presidential campaign, but insofar as choosing Ryan makes a difference, the difference is to further focus attention on this choice.
But attention is to an extent a zero-sum game. And focusing attention on the big-picture disagreement between Democrats and Republicans about long-term fiscal policy means we won’t be focusing attention on what ought to be the most pressing economic policy issue of our time—mass unemployment and the tragic waste of human and economic potential it represents. To be sure, politicians will still talk about this. But obviously Obama would prefer at this point to talk about long-term vision and the contrast between his “balanced approach” and the GOP’s cut-cut-cut approach. With Ryan on the ticket, he more and more gets his way. Which means conservatives also get their way. Romney doesn’t just run as “Mr Fix-It” who’ll clean up the mess, he’s running as an ideological candidate with a major vision for changing the country. But that means the terrible economic performance since 2009 and the large jobs deficit built up during that period are going to receed further into the rearview mirror. Romney is essentially conceding that the past 18 months of 150,000 jobs per month are good enough to get Obama re-elected, and he needs to wage a campaign about something bigger.
Which means that, a bit weirdly, the issue that ought to dominate the campaign is going to fade into obscurity.
…
ft dot com
August 12, 2012 6:54 pm
A principled but doomed running mate
By Jacob Weisberg
Introducing his running mate against the backdrop of the USS Wisconsin on Saturday, Mitt Romney flubbed his easiest line: “Join me in welcoming the next president of the United States.” There is no way to avoid reading this as a Freudian slip. Mr Romney’s chief problem as a candidate has been his substantive vacuity, his failure to stand for much beyond flexibility itself. In choosing Paul Ryan, he opted to outsource the content of his campaign to his opposite: a principled, conservative ideas man. Mr Ryan is now the head of the Republican ticket, Mr Romney the body.
Given the options he had left himself, this was probably the best choice for Mr Romney to make. Mr Ryan stands for a clear proposition – the radical scaling back of the federal government’s social commitments – and through his pick, Mr Romney now represents that as well. Usually, a vice-presidential candidate scrambles to fall into line with the top of the ticket. In this case, it is Mr Romney who will, not for the first time, adjust his views. Instead of attacking Barack Obama for cutting Medicare, Mr Romney must now charge him, as Mr Ryan does, with not cutting it enough.
Curiously, both conservatives and liberals profess to be pleased with the choice – the former because Mr Ryan represents their beliefs and the latter because he offers clear positions that they can challenge. Though both cannot be right about the political impact of the selection, the campaign itself will benefit from Mr Romney’s choice. Mr Ryan’s presence on the ticket makes this a better and more interesting election. It forces the debate the country needs to have about entitlement spending and ensures that the remaining months will be more than an argument about whose negative ads are more disgusting.
It is hard to see it, however, as improving Republican chances. Until now, Mr Romney has been a poor candidate running a clumsy campaign, which pointed towards losing a winnable race. Mr Ryan changes that narrative, but only by reframing the election the way Mr Obama’s team wishes to, as a choice between two visions of the social contract as opposed to a referendum on Mr Obama’s economic performance. Instead of teasing out the implications of Mr Romney’s tax cuts, Mr Obama can now directly challenge Mr Ryan’s stated positions in favour of privatising social security and turning Medicare into a voucher programme. Florida, a must-win state for Mr Romney, just moved closer to Mr Obama’s column.
…
“principled”….. lmao
So long as the U.S. stock market keeps going up, who cares about the rest of the global economy?
GLOBAL ECONOMY-Dog days of August spell calm but no relief
Sun Aug 12, 2012 3:00pm EDT
* Markets face soft data, waiting game on euro zone policy
* Euro zone GDP set to contract as Japan, Asia weaken
* U.S. best of a bad bunch; all eyes on retail sales
By Alan Wheatley, Global Economics Correspondent
LONDON, Aug 12 (Reuters)- Weakness, weakness almost everywhere with only the odd pocket of resilience. That’s been the state of the global economy for a while, and this is unlikely to be the week when things change for the better.
Consumers and businesses are hanging fire because of doubts over U.S. tax and spending policies, how aggressively Beijing will respond to slowing Chinese growth and, above all, how the euro zone’s debt and banking crisis will unfold.
“All of the data releases are still affected by the environment of uncertainty which is holding back activity across Europe,” said Peter Westaway, chief economist for Europe at Vanguard Asset Management in London.
And with the dog days of August upon us, the next decisive moves on the euro front are probably three or four weeks away.
“While the resolution of the sovereign debt crisis is still unclear, it’s going to be very difficult for the economy to pick up,” Westaway said.
Figures on Tuesday are expected to show that the 17-nation euro area economy shrank by 0.2 percent in the second quarter.
Germany, the bloc’s biggest economy, is forecast to have eked out 0.2 percent growth, but that may be cold comfort.
The more timely ZEW survey for July is projected to show a downturn in both economic sentiment and current conditions.
The government said the euro zone crisis was making companies cautious. “The outlook for the German economy is therefore cautious and carries significant risks,” the economy ministry said in a blunt statement released ahead of the data.
Markets have taken heart from a promise by Mario Draghi, the president of the European Central Bank, to do whatever it takes to preserve the euro.
The betting - certainly the hope - is that Spain will start the ball rolling next month by asking the euro zone’s rescue fund to buy some of its bonds at auction, a step that analysts expect would be followed by secondary-market purchases by the ECB.
Nevertheless, confidence is so fragile, and the end-game still so far off, that Bank of America Merrill Lynch now expects the euro zone to shrink 0.7 percent both this year and next. The 2012 forecast is unchanged, but previously the bank had pencilled in a flat 2013.
ASIA STRUGGLES
The festering euro crisis continues to rub off in Asia.
After poor July export data from Taiwan and South Korea, China’s shipments to the European Union last month dropped 16 percent last month from a year earlier. India’s 1.8 percent drop in industrial production in the year to June was “shocking”, according to Robert Prior-Wandesforde with Credit Suisse in Singapore.
…
It should be interesting to watch the IEM presidential election futures market this week, to see how the choice of Ryan as Romney’s running mate affects prices. So far, the “Winner-takes-all” market is predicting an Obama landslide victory.
Michael Dwyer
Futures markets get forecasts on the nose
PUBLISHED: 11 hours 42 MINUTES AGO | UPDATE: 7 hours 47 MINUTES AGO
…a research paper from the Wharton School’s Justin Wolfers, California Institute of Technology’s Erik Snowberg and Dartmouth College’s Eric Zitzewitz argues that prediction markets are under-utilised, particularly when it comes to economics.
Market prices in the form of gambling odds, the authors note, have been used to forecast events since at least the beginning of the 16th century.
The Iowa Electronic Market run by researchers at the University of Iowa since 1988 has proven to be more accurate at predicting US election outcomes than Gallup polls, with half the forecast error.
…
Aug. 12, 2012, 8:14 p.m. EDT
Japan economy shows anemic Q2 growth
By Michael Kitchen, MarketWatch
LOS ANGELES (MarketWatch) — Japan’s economy grew an annualized 1.4% in the April-June period, the Cabinet Office reported Monday, with the result marking a sharp cooling from the upwardly revised 5.5% advance in the previous quarter.
The result compared with expectations for 2.7% gross domestic product growth, according to a Dow Jones Newswires survey, as a strong Japanese yen hurt the country’s trade account, a centerpiece of the economy.
Quarter-on-quarter, the economy grew 0.3%, slowing from 1.3% the previous quarter and missing a 0.7% forecast. The annualized gain for January-March was marked upward to 5.5% from 4.7% previously.
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Aug. 12, 2012, 9:55 p.m. EDT
Hong Kong stocks track Shanghai lower; BoCom falls
By V. Phani Kumar
HONG KONG (MarketWatch) — Hong Kong shares posted modest losses early Monday, tracking the performance on mainland Chinese bourses after Beijing didn’t announce any growth-stimulating measures over the weekend, with resource stocks and financials leading the decline.
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Japan Post-Quake Rebound Wanes as Spending Nears Stall: Economy
By Keiko Ujikane - Aug 12, 2012 7:46 PM PT
Why the Worst May Not Be Over for Japan
Japan’s reconstruction-fueled rebound waned in the second quarter as consumer spending growth almost stalled and export gains diminished, increasing the chance for monetary and fiscal stimulus.
Gross domestic product advanced an annualized 1.4 percent in the three months through June, less than the median estimate of 2.3 percent in a Bloomberg News survey of economists and down from 5.5 percent the previous quarter, a Cabinet Office report showed in Tokyo today. Unadjusted for prices, GDP contracted at a 0.6 percent annual pace.
Consumption rose the least since households cut spending in the immediate aftermath of the March 2011 earthquake, signaling a fading boost from government incentives that have supported domestic demand. With yen strength and Europe’s crisis curbing exports, today’s report escalates pressure on policy makers to head off a deeper slowdown in the world’s third-largest economy.
“Drafting a supplementary budget is already a done deal, as the Japanese economy can anticipate little support from overseas demand and the government has no other choice but to mobilize fiscal spending,” said Hiroshi Watanabe, a senior economist at SMBC Nikko Securities Inc. in Tokyo. “Political pressure on the Bank of Japan will probably intensify as deflation is expected to remain entrenched, just as today’s GDP deflator indicates.”
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If R&R make it to the WH, you can expect a lot more oil price hikes as they ramp up Mideast tensions.
Meanwhile, I look forward to the R&R campaign team to continue to play the blame game card against Obama for all economic problems, including high gas and oil prices, regardless of where on the global policy stage the problem originated.
Brent hits 3-month top above $114 on supply worries
An attendant prepares to refuel a car at a petrol station in Rome January 4, 2012. REUTERS/Max Rossi
By Manash Goswami
SINGAPORE | Sun Aug 12, 2012 11:42pm EDT
(Reuters) - Brent crude rose above $114 per barrel to a more than three-month high on Monday on renewed fears of supply disruption as Israel’s latest comments on stopping Iran from proceeding with a disputed nuclear programme stoked tension in the region.
Prime Minister Benjamin Netanyahu said on Sunday that most threats to Israel’s security were “dwarfed” by the prospect of Iran obtaining nuclear weaponry. Those comments overshadowed recent forecasts of a further slowdown in oil demand growth due to a weak economic outlook in the United States and Europe.
Brent crude rose $1.02 to $113.97 a barrel by 0331 GMT, gaining for six out of the past seven sessions. It hit $114.28 earlier in the session — its highest since May 4.
U.S. oil rose 73 cents to $93.60, after settling 49 cents lower at $92.87.
“We are seeing prices rise despite weak growth outlook numbers on Friday,” said Ben Le Brun, a Sydney-based market analyst at OptionsXpress. “The Israeli comments, what you see in Israeli media, is a concern. A major concern.”
The debate in Israel whether to go to war against Iran over its nuclear programme intensified during the weekend, worrying oil investors who see it as defying appeals by U.S. President Barack Obama to allow more time for international diplomacy.
“We will continue to see tensions in the Middle East underpin oil prices,” Le Brun said.
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€ Crisis August 9, 2012, 7:00 pm
First Recession, Then Crime and Fear
By DIDI KIRSTEN TATLOW
A man waves an Irish nationalist flag as police hold back anti-austerity protesters marching on the Parliament in Dublin on July 18. During the protest, International Monetary Fund officials speaking at a nearby hotel announced that Ireland would be expected to cut its welfare payments as part of wider efforts to slash its deficits and resume normal borrowing on bond markets.Shawn Pogatchnik/Associated PressA man waves an Irish nationalist flag as police hold back anti-austerity protesters marching on the Parliament in Dublin on July 18. During the protest, International Monetary Fund officials speaking at a nearby hotel announced that Ireland would be expected to cut its welfare payments as part of wider efforts to slash its deficits and resume normal borrowing on bond markets.
DUBLIN — A woman’s cries for help pierced the sunny afternoon, alerting me that something was wrong — though what wasn’t immediately clear. This was Blackrock, after all, a posh Dublin suburb of tended lawns and expensive houses sheltered behind stone walls lining narrow lanes. But Marie was lying on a sidewalk where seconds earlier, a man had sprayed mace in her eyes, shoved her into a spiky hedge and grabbed her purse, she said, crying in shock.
The perpetrator of this almost-certainly random crime — Marie had seen her attacker walk into, then quickly leave, a nearby house in an apparently failed burglary attempt — sped away in a silver car with an accomplice, driving past me.
They were dressed to blend in, the driver in a white shirt and dark tie with neatly combed hair, like an insurance salesman or banker; Marie’s attacker in workmen’s clothes. He covered his eyes as he drove by.
Marie’s experience illustrated a nasty truth — in Ireland’s deep recession, where most crime is dropping (partly, perhaps, because money is leaving the economy, but also, police say, because tougher anti-gang measures are having an impact) one type of crime is soaring: burglary. And it’s affecting everyone.
Marie’s experience also illustrated another truth for this long-term resident of Beijing: the kind of crime that Marie was victim of is far rarer in Beijing and other cities in China, as well as major Asian cities such as Hong Kong, Singapore or Tokyo, than in some major cities of the West. The low-level fear that accompanies daily life here — pulling a bag tightly to your body, setting the house alarm when you leave, scanning the street in poor areas — is largely absent in China, even if people remain cautious about the possibility of crime. The reasons are multiple, and may include a complex social code rooted in Confucian precepts, still-strong family support networks and a social ethic that says those who study and work really hard will rise in society. In China, too, the power of an authoritarian government may contribute to keeping people more tightly in check.
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THE MORNING LINE — August 10, 2012 at 9:16 AM EDT
As Negative Attacks Pile Up, Romney’s Favorability Ratings Go Down
By: Christina Bellantoni and Terence Burlij
Mitt Romney’s favorability ratings were on the upswing ever since he locked down the Republican nomination in April, but there are growing signs that a torrent of negative attacks from President Obama and his Democratic allies have affected voter impressions of the GOP hopeful.
The latest indication of that slide came Thursday with the release of a CNN/Opinion Research poll that showed Romney’s favorable/unfavorable split going from 48/42 percent last month to 47/48 now.
The president, meanwhile, is viewed favorably by 56 percent of respondents, while 42 percent have an unfavorable opinion of him.
A good deal of the criticism directed at Romney by Democrats has centered on his business experience and personal wealth, including his refusal to release additional years of tax returns. That strategy, aimed at undercutting his standing with middle-class Americans, appears to have had some success.
Sixty-four percent of voters said they thought Romney generally favored the rich over the middle class or poor. Forty-two percent of respondents said Mr. Obama favored the middle class, and 34 percent said he tilted toward the poor.
The president holds a 52 percent to 45 percent lead over Romney among registered voters nationally, according to the survey. But when respondents were asked who they thought would win in November, regardless of their personal preference, 63 percent picked the president, while 33 percent named Romney.
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The Fed’s rock-bottom interest rates are distorting the pension liability picture considerably. Do they realize their interest rate policy is driving many pension plans towards the brink of collapse?
FedBiz Talk
Pension liabilities: Market driven or new reality?
Washington Business Journal by Jill R. Aitoro, Senior Staff Reporter
Date: Friday, August 10, 2012, 11:02am EDT -
Last Modified: Friday, August 10, 2012, 2:00pm EDT
What a difference a decade makes. In May 2002, I wrote an article about IBM shareholders’ rejection of a resolution that would tie executive pay to performance. The argument was that company bigwigs shouldn’t profit from IBM Corp.’s pension fund surplus — which was treated as income, but couldn’t be touched.
Pension fund surplus? Seems that’s gone the way of the dinosaurs, as explained in Friday’s issue of Washington Business Journal about Lockheed Martin Corp.’s eye-popping pension liabilities and a recent blog post on the possibility that defense contractors will terminate their plans.
As noted in the Business Journal story, a January report by Credit Suisse Group AG estimated that 97 percent of the pension plans of S&P 500 companies were underfunded at the end of 2011, with liabilities exceeding assets by $458 billion.
Ironically, IBM closed its pension plan to new employees at the end of 2004 and froze benefits for participants a few years later.
The truth is that the numbers — while pretty alarming — reflect a cyclical market. IBM froze its pension plan soon after the stock market began to tank and interest rates went down, which in turn drove up pension liabilities. The market recovered a bit later that decade, trimming liabilities for a lot of companies, then tanked again in 2008.
And now here we are again: Record-low interest rates are driving up liabilities, and a new crop of companies are getting pegged as candidates for freezing or terminating pension benefits, most recently by Moody’s Investors Services Inc.
But is such a suggestion jumping the gun? Lockheed’s chief financial officer, Bruce Tanner, would argue yes. He told me that “we’re in unprecedented times in terms of low interest value, [which] has the effect on liabilities of making them somewhat artificially high.” Should interest rates rise from Lockheed’s assumed 4.5 percent currently to 7.75 percent, the unfunded liability would be zero.
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This story about not contributing enough to pensions during the good years leading to underfunding during the bad years seems to be fairly ubiquitous across America.
So much for the false theory that it’s just a California problem.
State pension reforms to get first vetting Tuesday
By Eric Boehm
PA Independent
Posted: 08/10/12 09:43 am
HARRISBURG — Lawmakers in Pennsylvania may be ready to take a small first step toward reforming the state’s pension systems.
A joint hearing of the House State Government Committee and the House Finance Committee — scheduled Tuesday morning — will begin the process of reforming state pension systems. Nine bills are on the agenda, but no votes are expected during a session that is likely to focus on building consensus on how to address the $40 billion — and growing — public pension liability.
Two proposals by state Rep. Warren Kampf, R-157th of Tredyffrin, figure to highlight Tuesday’s meeting.
Kampf wants to create a system modeled after the 401(k) plans more commonly found in the private sector.
“The state government has demonstrated its inability to properly manage a pension fund,” he told PA Independent on Thursday. “We are significantly underfunded not just because the economy is down, but because very generous benefits were granted in 2001 and then really not adequately funded anywhere near where they should have been.”
His proposals would move all future state and school district employees into the so-called “defined contribution plan” and give current workers a bonus if they chose to leave the existing system for the new plan.
In Kampf’s plan, the state would have a set contribution rate of 4 percent for new workers, but current workers could opt to join the new system in return for a 7 percent contribution from the state.
In the current defined benefit system, the state contribution varies from year to year while employees also contribute a share of their pay toward benefits, with investment earnings filling in the rest.
Starting in 2001, the state artificially set its contributions lower than necessary to divert that spending elsewhere in the hope that investment returns would make up the difference. That approach may have worked if not for the 2008 crash, in which the pension funds lost about 40 percent of their value.
As a result, contributions from the state are set to explode in coming years – from about $1.6 billion this year to more than $4 billion by 2016. Put another way, the state contribution will climb from 8 percent of payroll this year to more than 25 percent by 2016 to make up for the years of underfunding.
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What kind of investments are Massachusetts and Utah pension fund managers making to return 7.5% or more in the current investing climate?
The bold sentence in the article posted below reveals the reporter’s cluelessness about the relationship between expected rate of return and pension liability. “Could” needs to be replaced with “would” to fix the sentence.
Massachusetts’ drop to pension gains could cost taxpayers, benefit holders
By Joey Ferguson, Friday, August 10, 2012 at 3:55 pm MST
Sources: Bloomberg, Deseret News
Some states are getting less optimistic about their pension portfolios.
Massachusetts, a state with $50 billion in pension-fund assets, said it might be lowering its 8.25 percent expected rate of return on investment to 8 percent with an option to go lower, according to Bloomberg.
Steven Grossman, the state’s treasurer, is working towards legislative support on a bill that would cut the rate.
“I will predict right now with a fair degree of confidence that we will be using the 8 percent number for our expected return,” Grossman, 66, told Bloomberg in an interview.
The move will better reflect current market trends, but could increase the state’s unfunded pension liabilities due to a lack of return, according to Bloomberg. It may also mean taxpayers and covered workers will have to make up the $1.7 billion unfunded portions.
“Whatever increase in our unfunded liability is more than made up for by the increased confidence from the rating agencies and investment community in our willingness to reflect reality and common sense,” Grossman told Bloomberg.
Utah Retirement Systems, which manages roughly 104,000 pension holders, lowered its 7.6 percent expected rate of return to 7.5 percent in 2011. The state’s funding ratio, or the amount of pension liabilities that have been covered, dropped by 4 percentage points to 78 percent between 2010 and last year.
That means the state has $5.8 billion in unfunded pension liabilities.
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It seems many pension plans are assuming much better future returns on their funds than what were recently realized.
I’m not sure for how long a pension plan can assume 8% returns but realize around 1% returns before it collapses.
Massachusetts Treasurer Sees 8% Pension Gains Shunned by Calpers
Michael McDonald
Updated 11:01 a.m., Friday, August 10, 2012
Aug. 10 (Bloomberg) — Massachusetts Treasurer Steven Grossman wants to reduce the assumed rate of return on the state’s $50 billion in pension-fund assets, currently at 8.25 percent and among the highest for U.S. public retirement plans.
Grossman, a former Democratic National Committee chairman, said he’s gathering legislative support for a cut to 8 percent, with an option to go lower. That would put Massachusetts more in line with other states, yet the move would cost taxpayers and covered workers $1.7 billion to maintain funding commitments.
“I will predict right now with a fair degree of confidence that we will be using the 8 percent number for our expected return,” Grossman, 66, said in an interview. The rate is set by law, and the earliest it could be changed would be next year.
More than a third of 126 state and municipal pensions, including the California Public Employees’ Retirement System, the largest with $238.5 billion in assets, have cut investment assumptions since 2008 as returns have lagged behind historical averages, according to the Public Fund Survey. Wilshire Associates said this week that the median return for public systems was 1.15 percent for fiscal 2012 as the European debt crisis and a slowing global economy curbed equity gains.
While a lower rate of return may better reflect current market trends, the change may stir controversy. It can increase the Massachusetts system’s unfunded liability, or the difference between projected assets and amounts owed to beneficiaries, pegged at about $19 billion in January 2011. A lower return assumption can also force higher contributions from the state, cities and workers to meet funding commitments.
Confidence Booster
“Whatever increase in our unfunded liability is more than made up for by the increased confidence from the rating agencies and investment community in our willingness to reflect reality and common sense,” Grossman said of the change he’s seeking. The state plans to fully fund its retirement plan by 2040.
“In the wake of the big market downturn in 2008 there’s a new-found appreciation for volatility,” said David Driscoll, the national head of public-sector services at Buck Consultants in Boston. “That’s fundamentally what people are trying to avoid,” he said, calling it one of the “consequences of negative surprises.”
Massachusetts is one of nine retirement systems, out of 126 tracked by the Public Fund Survey, that assume investment earnings of 8.25 percent a year. Most, 44, forecast 8 percent. More than half, 68, project less than 8 percent.
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Boomergeddon in Virginia: Retirement Benefits
Posted on August 9, 2012 by James A. Bacon
“Looks like it’s rice and beanie-weenies from here on out, Harry.”
When the editorial writers and talking heads speak of the looming retirement crisis in state government, they usually are referring to massive unfunded pension liabilities. This is a major concern and should by no means be underestimated. But the problem is actually bigger than pensions. Most of the 50 states have what’s known in actuary speak as “Other Post-Employment Benefits” (OPEB) such as life and health insurance. Until the Government Accounting Standards Board issued standards in 2004 requiring full disclosure, state governments rarely revealed these obligations.
In Virginia, those liabilities total $5 billion, according to the “Report of the State Budget Crisis Task Force.” That’s on top of $22 billion in the unfunded state employee pension liabilities that have been widely discussed, debated and legislated.
Unlike some states, Virginia moved aggressively this year to deal with its pension liabilities: (1) requiring teachers and local government employees to pay 4% of their salary toward their defined benefit plans with a 1% match from their employers, (2) establishing a mandatory 401(k)-style retirement plan for most employees (3) reducing Cost of Living adjustments for employees with less than five years of service, and (4) requiring the state to contribute funds at rates certified by the Virginia Retirement System Board of Trustees over the next three biennial budgets.
Moody’s Investment Service estimated that the reforms would lower total unfunded liabilities for state and local employee plans by nearly $9 billion by 2031.
Wow, all those changes, and Virginia shaved only $9 billion off its future liabilities? That still leaves $13 billion — just for the pension — that someone else has to tackle. Either employees will have to chip in more… or taxpayers will.
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Since California is not yet in a deep enough pension hole, some Democratic law makers in the state are trying to dig it a bit deeper.
Critics blast state retirement for private workers
By JUDY LIN Associated Press
Posted: 08/08/2012 04:41:38 PM PDT
Updated: 08/08/2012 05:57:10 PM PDT
SACRAMENTO, Calif.—Opponents of a bill that would create the nation’s first state-run retirement program for private-sector workers testified Wednesday that California taxpayers cannot afford to take on the potential for billions of dollars in new liabilities at a time when the state’s public pension systems already are facing massive shortfalls.
Businesses, insurance companies and financial services firms criticized SB1234 by Democratic Sen. Kevin De Leon of Los Angeles. His bill would establish the California Secure Choice Retirement Savings Program for nearly 7 million low-income workers whose private employers don’t offer retirement plans.
The bill’s fate was uncertain after it was held by the Assembly Appropriations Committee. It had earlier passed the Senate, where it had the backing of the Senate leader, President Pro Tem Darrell Steinberg, D-Sacramento.
“We all know that markets are volatile, and if the projections that are associated with the investment returns of this program come up short, then the state or the employer will be on the hook for the shortfall,” said Nicole Rice, representing the California Manufacturers and Technology Association. “I don’t think it’s a stretch of the imagination to acknowledge this fact given that we currently have an outstanding pension debt that we owe to public employees at the tune of billions of dollars.”
The California Public Employees’ Retirement System posted a 1 percent return on its investments last fiscal year, well below its long-term annual target of 7.5 percent. The current long-term unfunded liability for CalPERS is estimated at about $85 billion, and the California State Teachers’ Retirement System is short by about $64.5 billion.
Rice added that California also faces billions of dollars in projected budget shortfalls.
De Leon introduced the bill earlier this year in response to what he called the “looming retirement tsunami” as millions of low-wage workers face financial hardship in their retirement years. He says the program would act as a supplement to Social Security by offering private-sector workers a portable savings plan with a guaranteed return.
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Stockton bankruptcy leads to pension clash
By: Peter Henderson and Jim Christie | 08/13/12 4:00 AM
kevin bartram/reuters
‘Declaration of war’: Wall Street may end up going after union benefits in Stockton.
Two bond insurers have challenged Stockton’s eligibility for bankruptcy, arguing that the city can cut pension benefits — a move that could have profound implications for the entire state.
The court filings set a roadmap for a battle, in or out of bankruptcy court, in which Wall Street takes on the largest public U.S. pension fund, the California Public Employees’ Retirement System, as troubled cities and counties watch closely.
A unit of MBIA Inc. told the court that the city’s failure to ask for concessions from its biggest creditor, CalPERS, showed that it had not negotiated in good faith, and it argued that the city’s plan for recovery was doomed because it did not touch pensions.
Assured Guaranty, in a separate filing, also contended that the city undermined its case by favoring CalPERS and said Stockton had not proven insolvency.
CalPERS has used warnings of court battles to dissuade municipalities from considering pension cuts, but retiree benefits are constricting many cities. San Bernardino also faces major pension obligations and is following Stockton’s bankruptcy path.
“It’s the equivalent of a declaration of war,” said Karol Denniston, a San Francisco lawyer who helped draft California’s bankruptcy-process law.
Mushrooming pension liabilities also loom on the horizon for many other California cities, even those nowhere near declaring bankruptcy, such as San Francisco and Oakland.
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