Bits Bucket for November 23, 2012
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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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Boehner comments show tough road ahead for “fiscal cliff” talks
Thu Nov 22, 2012 5:09pm EST
* Boehner: U.S. can’t afford “Obamacare” law, given debt
* Says law “has to stay on the table” as parties discuss debt
* Analysts say “Obamacare” a non-starter in fiscal cliff talks
* Boehner comments could be “bargaining chip” in negotiations
By Roberta Rampton
WASHINGTON, Nov 22 (Reuters) - New comments from top Republican lawmaker John Boehner slamming health care reforms illustrate how hard it will be for Washington to reach a deficit reduction deal when talks resume next week, analysts said on Thursday.
President Barack Obama and the U.S. Congress will begin negotiating next week on a plan that could avert tax hikes and spending cuts set to begin in January that economists worry could push the U.S. economy over the “fiscal cliff” and into recession.
Boehner did not explicitly mention the “fiscal cliff” talks in an opinion piece published in the Cincinnati Enquirer on Wednesday. But he argued the nation cannot afford the costs of Obama’s 2010 health care reform law, given the United State’s sluggish economy and massive $16 trillion debt.
“That’s why I’ve been clear that the law has to stay on the table as both parties discuss ways to solve our nation’s massive debt challenge,” said Boehner, who is a key player in the talks.
Boehner’s comments show it won’t be easy to reach a deal on the thorny tax and spending issues, said Greg Valliere, chief political strategist at Potomac Research Group in Washington.
“There’s an enormous gulf between the two parties on the details,” he said, noting it is still possible that Obama and Congress may agree by January to broad spending and tax measures, and then take months afterwards to iron out details.
“Plunging off the cliff, then passing a tax cut in January that excludes the rich — is still a very live option,” Valliere said.
…
why will this time be different? just have the bernak print some more cash and buy treasuries and lets move a long folks.
Is QE counted as part of “federal spending”? For instance, would the federal deficit decrease by $480 bn / year if the Fed stopped pumping $40 bn / month into MBS purchases?
The way printing press money factors into this equation remains a big mystery to me…
good question and I dont know the answer either.
All I know is they make a big deal about the fiscal cliff when we all know what will happen.
US treasury sells bonds to 20 primary dealers and then the FED buys them and puts them on the balance sheet. I dont see any limit as to how high the balance sheet can grow.
we should be talking about the FEDs balance sheet and not the fiscal cliff.
Do you realize japans debt is approaching 1 quadrillion dollars or 1000 trillion?
azdude:
“Do you realize japans debt is approaching 1 quadrillion dollars or 1000 trillion?”
What is your source for this info?
From Wikipedia;
In 2011 Japan’s public debt was about 230 percent of its annual gross domestic product[1], the largest percentage of any nation in the world. In numbers, the public debt of Japan was $13.64 trillion, only second to the United States
PB, I believe the answer is “no.”
The reason is that the Fed’s profit or losses _do_ flow through to the US Treasury. But their balance sheet does not.
So the “profits” (ha!) from QE do flow through, and actually reduce the deficit. And any future losses will in fact flow through, and increase the deficit (at least to the extent that they exceed future QE profits)—though to be clear I believe the odds of that happening are very low, since they can just manufacture up some profits to offset any future losses.
But the money itself, which they create out of thin air, shows up on the balance sheet only. And that doesn’t flow through.
This leads to a follow-up question:
Why can’t fedgov simply issue debt (similar to MBS, student loan debt securities, etc) to cover all of its programs, then have the Fed step up to buy whatever portion thereof the market does not want to ingest at the interest rate the FOMC chooses to set in order to fund all federal programs and maintain the current low-rate environment. Whatever debt the Fed eats can remain buried on its balance sheet indefinitely. The fiscal cliff problem would be solved.
Where is the downside to this approach?
“Whatever debt the Fed eats can remain buried on its balance sheet indefinitely.”
“Where is the downside to this approach?”
The downside is you’re flooding the market with new money without an increase in economic activity to justify it. Heavy inflation would follow devaluing the treasuries being held by real investors. Eventually they would all drop out leaving the Fed as the only buyer. Voila hyperinflation.
then have the Fed step up to buy whatever portion thereof the market does not want to ingest
This is commonly referred to as “monetizing the debt”. It is a common approach, and has been tried many times in history.
Where is the downside to this approach?
The downside is that it would destroy the dollar in short order. Once everyone acknowledges that monetizing is what is occurring, no one would want to hold the dollars that would be flooding the markets. The Fed can only continue its current approach to the extent that the markets pretend that what they are currently doing is not a small-scale execution of what you suggest—even though it is.
We’ll be on this road for as long as the markets wink-wink-nudge-nudge go along with it.
Voila hyperinflation.”
gee what would that do to house prices ?
gee what would that do to house prices ?
It would certainly help “support” them…
“The downside is you’re flooding the market with new money without an increase in economic activity to justify it.”
You’d certainly get a lot more economic activity with a flood of money than with crippling austerity.
Of course, if the Republican game plan is still to crash the economy and blame it on Obama, then I guess I understand…
“You’d certainly get a lot more economic activity with a flood of money than with crippling austerity.”
Did you miss the part where the logical conclusion is hyperinflation? That tends to cripple an economy. And flooding the economy with money tends to produce malinvestment, like too many houses and scrap booking shops.
Personally I’m not for QEing our way to hyperinflation, nor am I for austerity. It’s too late for austerity to work (passed that fiscal tipping point quietly years ago.) Partial default is the way to go, focussed on foreign treasury holders.
You’d certainly get a lot more economic activity with a flood of money than with crippling austerity.
Yeah, people definitely rush to cause economic activity in the face of hyperinflation. Mostly they do this because they have to spend the day’s wages before it loses its buying power tomorrow.
Picture people running around with wheelbarrows full of cash. That’s not the kind of economic activity that we need.
Don’t look now, but QE1, QE2 and QE3 apparently monetized the debt, and this has been going on since March 2009 or so.
How long will it take for your ’short order’ dollar destruction to occur?
“Picture people running around with wheelbarrows full of cash.”
No need for any of that in the electronic printing press era…
No need for any of that in the electronic printing press era…
Fair point. But they would rush to spend them electronically just the same…
Potomac Research Group
?? Well that’s a new think tank. I had to look them up. Founded in 2008, it’s about 6 analysts with heavy credentials. They sound old-school conservative.
Looks like Boehner is still trying to fulfill his promise of repealing Obamacare, monetarily if he has to. That’s going to be a huge fight.
@SF Bay Area
you said:
In theory the Congress holds the sole power to change the charter and hence the mandate of the Fed. However, it might be seen as a loss of independence of the Fed if they ever did that.
they’ve already changed the mandate of the FED. the FED’s original mission was just to prevent runs on banks. then it was mandated to keep GPL stable. then came what in my opinion was the disastrous dual mandate. they added what some people call ‘eternal prosperity’, more formally known as keeping unemployment low. and now they’re supposed moderate long term interest rates as well. the disaster comes when they apply keynesian solutions to the dual mandate. keynesians believe lowering interest rates lowers unemployment. obviously, it doesn’t. they also believe that keeping interest rates low raises GPL. it does, but not the way they think it does. they also perversely believe that rising GPL is good for the economy. but rising GPL is never good for the economy. they’ve even changed their definition of inflation to accommodate this belief. they formerly defined inflation as +rocGPL, but their modern definition is +rorocGPL (acceleration).
In total the Fed is attempting to create more “Fed money” due to the decrease in “bank money” aka “hot money” which is created by the reserve multiplier when the banks lend money.
but banks have to actually lend out the money for it to get into the system. if no one borrows, it just sits there. and no one can make anyone borrow. so the FED’s attempt to create money looks to be rather feckless. no one has much wish to borrow money in this environment.
“keynesians believe lowering interest rates lowers unemployment. obviously, it doesn’t. ”
Normally it would. But it gets to the point where the interest rates are so low that diminishing returns kick in. Basically, if the money supply is too low then interest rates will be high, and the resultant high cost of capital will prevent business start ups and expansions. The failure of the gold standard is from this. Start ups that would have created jobs never happen. I’m supportive of making efforts to keep prime interest rates below 8%.
On the flip side, pushing rates down with loose monetary policy creates a low cost of capital that encourages investment in businesses. As the cost of capital gets lower and lower, however, the tendancy is to get increasing malinvestment. Examples include far more houses than people to live in them and a scrap booking shop in every strip mall. Also, as we have seen, very low rates encourages speculation. I believe that keeping prime interest rates above 4% would minimize speculation and malinvestment.
I’d endorse a monetary system that allows market forces to set rates between 4 and 8% and yet has control measures to minimize deviation outside this range. I’m just not sure how such a system would work. I suppose this recommendation would somewhat fit with the dual mandate, although in a structured manned as apposed to the current “do whatever you want that will help your buddy bankers” approach.
The other form of monetary system that is worth considering is one where the market determine interest rates, although I suspect it could produce rather violent swings in the economy.
low rates are fueling a housing recovery.
Yeah it’s great earning 0.1% APY on our credit union savings account. F* the Bernank!
I hear you dude but its the way it has to be to get some more home equity for folks .
low rates are fueling a housing recovery.
recovery from what? low rates made the housing bubble happen in the first place. it could have never got started otherwise. so now the FED is again trying to pump up housing prices to bubble levels? why? so regular people can’t afford a home, or at least not as much of a home as they could afford if not for bubble prices? home prices are still too high. that mean’s this can’t be called a recovery.
to save the banks balance sheets and get folks some home equity.
Do not try and fight a printing press.
low rates made the housing bubble happen in the first place ??
It wasn’t the rates….It was the underwriting….If you give every Tom, Dick & Harry a 100% mortgage on a stated income application what do think is going to happen…
It wasn’t the rates….It was the underwriting….
low interest rates fueled the appetite for the underwriting.
low interest rates fueled the appetite for the underwriting ??
No it didn’t…The underwriters would have written those loans at any interest rate…The underwriters were focused on one thing only…Underwrite, bundle and sell as fast as you can and thats exactly what they did…Do you really think that those buyers of un-built condo’s and houses gave a rats a$$ about what the interest rate was…Nobody did…
The underwriters would have written those loans at any interest rate…The underwriters were focused on one thing only…Underwrite, bundle and sell as fast as you can and thats exactly what they did
bad underwriting has just about always been around. but it used to be rare. ask yourself when the bad underwriting became rampant. it became rampant after greenspan starting hold rates low.
Do you really think that those buyers of un-built condo’s and houses gave a rats a$$ about what the interest rate was…Nobody did…
this was after the mania started. you do remember back before the bubble, when EVERYONE cared what their interest rates were, don’t you?
Low rates and bad underwriting aren’t mutually exclusive explanations.
ask yourself when the bad underwriting became rampant. it became rampant after greenspan starting hold rates low ??
I believe it became rampant due to this;
During that time he spearheaded efforts to pass banking deregulation laws, including the landmark Gramm-Leach-Bliley Act in 1999, which removed Depression-era laws separating banking, insurance and brokerage activities….
I believe it became rampant due to this;”
It became rampant when big investment banks could buy insurance against mortgages going bad and yet make damn sure it did go bad by buying the equity tier ( most risky tier in theory it was all bad due to crooked math ) and selling the rest of the junk to stupid investment funds, governments, whatever who believed if the smartest folks were buying the worst slice of the mortgage then they were safe.
So what are they going to game next ?
A housing recovery is dramatically lower prices by definition. Thus, housing is recovering.
“…it gets to the point where the interest rates are so low that diminishing returns kick in.”
Great Depression era Fed chairman Marriner Eccles coined the phrase ‘pushing on a string’ to describe this situation.
Basically, if the money supply is too low then interest rates will be high, and the resultant high cost of capital will prevent business start ups and expansions.
this is what would happen if we had a free market in money. having the FED set interest rates is what’s causing this mess. no one is omniscient enough to set interest rates, only the market should be doing that.
Start ups that would have created jobs never happen.
yes, but you must consider that many jobs shouldn’t happen. zirp has set in motion the misallocation of capital, so we get housing bubbles and other forms of malinvestment.
I’m supportive of making efforts to keep prime interest rates below 8%.
i’m not. i’m against ANY targeting of interest rates. they should be allowed to float to any level that they need to be. but if we had a thriving economy, interest rates would be very low. i believe much less than 8%.
I believe that keeping prime interest rates above 4% would minimize speculation and malinvestment.
compared to where they are now, yes. but how do you know that they shouldn’t be 5% or 6% or higher? you’re in the same trap that the bernank is in. he also believes he knows where interest rates should be. but he obviously doesn’t know. no one on earth is smart enough to know. that’s why the market should set the rates.
The other form of monetary system that is worth considering is one where the market determine interest rates, although I suspect it could produce rather violent swings in the economy.
there it is!! i answered above before i read this. yes, let the market set rates. no, it will not cause violent swings in the economy. it will cause the best allocation of capital, which will strengthen and expand the economy. we used to let the market set the rates. there’s no problem with it at all. we got away from it when the FED thought it could set rates better than the market and now we see the results. actually, we’ve seen the results before when the FED tried to set rates and it was disastrous and they went back to market rates. so we’ve had the same lesson at least twice, but we never seem to really learn.
” we used to let the market set the rates. there’s no problem with it at all.”
Here’s the thing tj, there were booms and busts before there were central banks. So there certainly were problems. People can swing from greed to fear and back again quite well without assistance from any sort of central planner.
Imagine there was a shock to the economy that caused a broad based round of job losses. The workers that survive will tend to cut back on spending imagining that they are next. They fear. Because they cut back on spending, increase savings, and more jobs are lost. An increase in savings and cut spending slows the velocity of money, which pushes up interest rates and deters investment. The whole thing is self reinforcing. A central bank is not required for this to happen.
A central bank system has the potential to work against such natural self reinforcing cycles. Both the easing of monetary conditions and confidence people might take in knowing that efforts are being made to correct the situation can minimize and offset the fear.
The problem is that central bankers are corrupt or incompetent, or possibly both. I’d prefer a central bank that is more automated. For instance, when interest rates hit 7.8% a QE would kick in.
there were booms and busts before there were central banks. So there certainly were problems.
yes to both.
People can swing from greed to fear and back again quite well without assistance from any sort of central planner.
irrationality can take over any market. it will happen less if there’s no central planning.
Because they cut back on spending, increase savings, and more jobs are lost.
the increased savings will bring back more jobs than were lost. when? when the fear subsides. people would learn that in a free market, jobs are constantly lost and created. it’s just that with central planning, more jobs are lost than can be created. obamacare is about to prove this in spades.
An increase in savings and cut spending slows the velocity of money, which pushes up interest rates and deters investment.
what are the units in ‘the velocity of money’? if you say ‘dollars’, are the units in the ‘velocity of tulips’, tulips? how is the rate described?
money that just changes hands faster, doesn’t do anything. and higher interest rates just encourage better and wiser investing.
The problem is that central bankers are corrupt or incompetent, or possibly both.
yes, but i think more corrupt than incompetent. why are they corrupt? because government offers its unconstitutional powers for sale. powers it never should have taken. powers that make corruption possible.
I’d prefer a central bank that is more automated.
me too, but i don’t know how it can be done.
For instance, when interest rates hit 7.8% a QE would kick in.
we don’t need anything like that and it would be asking for disaster. the moment things like that are implemented, the boom bust cycles start to increase in amplitude and the interval between them starts to shorten until the system shakes itself apart. it’s what’s happening now.
what are the units in ‘the velocity of money’? if you say ‘dollars’, are the units in the ‘velocity of tulips’, tulips? how is the rate described?
So you think the velocity of a car is describe in terms of cars?
Uhhmmmm…..
No.
Velocity is described in terms of distance per unit time. The units are terms of distance divided by time. Feet-per-second. Miles-per-hour.
Velocity of money should be described in terms of the distance that it goes and the time that it takes to go it; obviously _physical_ distance is unimportant, but the number of times that it changes hands is important. Time on its own still makes sense.
How many transactions did a particular dollar flow through in a day; in month; in a year?
Extra credit: velocity also is often used to describe the average velocity of any given dollar that is in circulation in a given year. Did each dollar change hands once? Twice? Thrice?
Velocity of money should be described in terms of the distance that it goes and the time that it takes to go it;
people talk about ‘velocity of money’ as though they know the units. i’m asking what the units are. do you know?
but the number of times that it changes hands is important.
extra credit: WHY?
money that just changes hands faster, doesn’t do anything. ”
it gets taxed more and governments like this
i’m asking what the units are. do you know?
transactions per unit time.
Did you even read what I wrote?
Re: extra credit: average transactions per year over the outstanding money supply.
but the number of times that it changes hands is important.
extra credit: WHY?
Transactions are the life-blood of an economy. If the money is changing hands, then goods are being sold, people are working, etc etc. Each of these transactions increases the total “good” of the economy—people’s needs are being met.
If money is not changing hands, nothing good is happening in the economy; people’s needs are NOT being met.
Does that make sense?
Average velocity of money * money supply = GDP
When an exogenous shock slows the velocity of money and the money supply stays fixed, GDP falls. Falling GDP creates fear which tends to slow the velocity of money, causing GDP to fall. Eventually the cycle stops, but the economy can be quite the mess by then.
Al - “For instance, when interest rates hit 7.8% a QE would kick in.”
tj - “we don’t need anything like that and it would be asking for disaster. the moment things like that are implemented, the boom bust cycles start to increase in amplitude”
There is no reason why the boom bust cycle would be magnified by this approach. When rates are drifting too high because people are becoming fearful, QE would give incentive to invest.
If the money supply was programmed to tighten when interest rates dropped to the 4% level, it would work against any bubbles that are forming.
What we’ve mostly seen from central banks is they are always trying to stimulate the economy into booming. A slight hiccup which is a natural part of the economy and they drop rates, even when the economy is doing well enough. Current practices magnify the boom bust, but the programmed response I outlined should work against it.
Transactions are the life-blood of an economy.
transactions are good, but no, they’re not the life-blood of an economy. the life-blood is production, and in theory it doesn’t even need transactions to work.
If the money is changing hands, then goods are being sold, people are working, etc etc. Each of these transactions increases the total “good” of the economy—people’s needs are being met.
yes, i’ve said many times on this forum that trade increases wealth. but it doesn’t increase ’statistical’ wealth. trade increases wealth in the sense that it makes life easier and more survivable. simply, trade enriches all of us without affecting the number of products there are in the world.
If money is not changing hands, nothing good is happening in the economy;
not true.
people’s needs are NOT being met.
for the most part, true, but barter would soon be taking place.
@al-
in all the time here, i’ve always avoided ‘the velocity of money’. i don’t know why i tried to talk about it now. it’s a long argument that has been going on since about the 60’s i believe. there have been theories attempting to prove it has meaning. but it keeps failing over time. maybe they will prove it has usefulness. in the meantime, i’m unconvinced. if you want to believe it’s useful, go ahead. nobody’s made a dime off it yet.
nearly everyone thinks GDP is the economy too. i one of the very few who doesn’t believe that either. but at least that would be easier to talk about than the velocity of money.
When rates are drifting too high because people are becoming fearful, QE would give incentive to invest.
how do you know when rates are too high? how do you know rates haven’t drifted to where they’re supposed to be?
what you’re saying is that someone knows what the correct rate should be. but they don’t. the correct decision is to let the market decide.
Asked yesterday;
Does anyone else remember TxChic66 (or something like that) ??
Last I emailed with her was probably a couple of years ago…Her & husband were just completing the purchase of a house…Outside of Dalles I believe…
I remember Txchick57 well.
It’s funny to me how things are forgotten about various posters. This person was banned at least a dozen times before I made it permanent. There was never a more nasty, personal attack poster on this blog. A lot of it you may not remember because I had to delete so many posts. And then the people responding with similar nasty, personal attacks.
Like the alad poster so many miss. Jeebus, the moods and outbursts I had to read through every line, looking for some over-the-top attack and decide if it should be approved. I kinda liked him, but was not really sorry he left for where-ever. It was exhausting to moderate for these people.
By contrast, there are many people here who I never have to worry about what they post; it’s always civil, polite, constructive/interesting. Always.
never a more nasty, personal attack poster on this blog
Yes I do remember T-Chick being over-the-top many, many times Ben and you admonished her many times…I had forgotten that you banned her permanently…I thought she just disappeared…
As I recall, she asked a question on the board that I was able to answer because it revolved around something in my area…We emailed a few times after that but I haven’t heard from her in years…I think she was a lawyer….
“I think she was a lawyer….”
And apparently a fairly typical one at that…
I think she worked at a law firm at one time doing BK work. I exchanged emails with her on a couple of occasions re: doing some BK work. We used to give a perspective of the Dallas market and all the condos going up over here, plus the fairly large price increases in the neighborhoods close to downtown.
I don’t remember the attacks that Ben is talking about. I didn’t know that he banned her either. I thought the blog was much more civil back in 2005 when most were on the same page about the impending housing collapse.
As an attorney, I’m not a huge fan of attorneys, but I’m not a big fan of painting all attorneys with a broad stroke, either. I know quite a few good ones.
TxChick was some kind of day trader I think
I know of no day traders who last longer than a few years at it but who knows maybe she is still day trading ?
You did a great job of moderating, Ben, because I remember lad as adamant but civil to the end. Tex, though wonderfully nasty (and impressively astute in her prognostications) was very kind to me personally, and tracking her observations actually helped me to make a fair chunk of change on a couple of occasions.
I suppose, as in all things, there is much that goes on behind the public face. So many unsolved mysteries over the course of this blog.
BTW, it’s really nice to see some of the old timers here this weekend. Hope all are well.
Okay, back to my kitchen….
@rudekarl, I’m married to an attorney, and use them quite a bit in business. In my experience, good ones are worth their weight in gold, OK ones are worth their bill (barely), and bad ones give the rest a bad name.
In my experience, the “good and OK” outnumber the “bad” about 10 to 1. Thank goodness…
“As an attorney, I’m not a huge fan of attorneys, but I’m not a big fan of painting all attorneys with a broad stroke, either. I know quite a few good ones.”
I have similar feelings about economists. Too bad the ones with access to the mainstream bully pulpit largely appear to be a band of group-thinking propagandists.
Polls offer little guidance for politicians tackling ‘fiscal cliff’
By Rosalind S. Helderman and Scott Clement, Thursday, November 22, 3:10 PM
Politicians tasked with negotiating a deal next month to avoid the “fiscal cliff” can be thankful that their talks are taking place immediately after a clarifying national election that laid out exactly how the public wants Washington to deal with debt and deficits.
Or not.
In one of the most enduring features of Washington’s two years of gridlock over fiscal issues, a flood of pre- and post-election polling shows little change in the public’s divided — and at times conflicted — attitudes about what should be done to avert the $500 billion in tax hikes and spending cuts set to start taking effect in January.
The surveys form a confusing backdrop that makes deal-making difficult and allows partisans on both sides to claim support for their positions.
In general, many surveys show that people think the government is too big. But they often oppose cuts to the programs that will be the largest drivers of the debt in future years.
They say they want politicians to balance the budget — but also want more done to create jobs, which might involve new spending.
“Everybody has this view that we want you to rescue us from the fiscal cliff. But when you propose specific items, they say, ‘We didn’t think you meant that,’ ” said Rep. Steven C. LaTourette (R-Ohio), who hopes to vote for a big deficit-reduction deal that includes both spending cuts and tax hikes before retiring from Congress in January.
On one thing, public opinion seems pretty clear: People favor asking the wealthy to pay more in taxes, a major position staked out by President Obama and his Democratic allies.
…
Nov. 20, 2012, 12:22 p.m. EST
Recession in Europe is bad news for U.S.
By John Nyaradi
In spite of Monday’s flashy rally in U.S. indexes, Europe has slipped into a double-dip recession, and this can only be bad news for U.S. investors.
On Nov. 15, Eurostat reported that third-quarter GDP fell by 0.1% in the euro zone. The news sent major European stock indices into a tailspin as most investors realized that the current result followed a 0.2% contraction in the second quarter, officially qualifying Europe for a double-dip recession.
Furthermore, the economies of the euro zone’s “core” nations are beginning to exhibit symptoms of weakness. Industrial production is slowing in Germany, and on Monday, Moody’s Investors Service downgraded France’s credit rating to Aa1 from Aaa, and so another “Triple A” nation bites the dust.
Why should you care?
…
Japan’s Exports Reach Three-Year Low as Recession Looms: Economy
By Andy Sharp and James Mayger - Nov 20, 2012 10:38 PM PT
Japan Nears Recession After Fifth Export Decline
Japan is suffering its worst year for exports since the global contraction in 2009 as Europe’s crisis, China’s slowdown and a diplomatic dispute with the Chinese hurt manufacturers and deepen the risk of a recession.
Enlarge image Japan’s Fifth-Straight Export Decline Adds to Risk of
Shipments totaled 53.5 trillion yen ($653 billion) for January through October, down 2.3 percent from the same period in 2011, according to data compiled by Bloomberg from Finance Ministry figures released in Tokyo today. The trade deficit for 2012 so far is a record 5.3 trillion yen.
The so-called hollowing out of Japan’s export champions, highlighted by a cut in Panasonic Corp. (6752)’s debt rating to one step above junk status by Moody’s Investors Service yesterday, underscores the urgency of kindling domestic demand. Japan’s political parties are facing off ahead of an election next month on how hard to press the central bank to boost stimulus.
“There’s no doubt that Japan’s economy is already in a recession,” said Kiichi Murashima, chief economist at Citigroup Inc. in Tokyo. “Political pressure for further monetary easing is building, and we expect the BOJ to take additional measures in January.”
…
We saw this movie tonight. It was not a turkey!
Tom Silva
James Bond’s Toughest Foe? The Great Recession
Posted: 11/21/2012 9:57 am
The 23rd James Bond film, Skyfall , has turned into a bonanza at the box-office, becoming the most successful entry in the franchise in just 10 days. In the new film, Bond is asked by his adversary what his favorite hobby is. “Resurrection,” the superspy answers. Which is the truth since the character was effectively dead in 2010. What killed him? Not a megalomaniac seeking world domination but the crippling recession. There is no question that the credit crunch hit Bond very hard and set off a series of austerity cuts. At around $150 million, Skyfall is way cheaper than the previous Bond picture, Quantum of Solace (the first Bond film, Dr. No, was made for pennies — $1 million); where the initial script called for shooting in six countries, they ended up with a film largely shot in London and the nearby highlands of Scotland. What’s more, they signed a $45 million product placement deal with Heineken, which gets Skyfall into beer ads worldwide. That’s a third of the budget from one product-placement deal. Other deals were inked with Omega, OPI Nail-polish, Coke Zero and Swarovski.
But, for 007, it could have been much worse. He could have gone the way of Lehman Brothers. At the height of the recession in 2010, producers Barbara Broccoli and Michael G. Wilson issued a statement saying that the franchise was “suspended… indefinitely”. For those of us who follow the capital markets, the story of how Bond came back from the credit crisis is every bit as exciting as the rooftop chase of the new film. And if Bond is any indication, it may signal a new era of cost cutting in film that brings a human scale back to Hollywood films.
…
Most visually astute movie. Director has an eye.
He also quite neatly quotes a ton of classic movies. How many did you spot?
The Story of the Last Chrysanthemums (Zangiku monogatari)
Purple Noon
Apocalypse Now
Very clever.
Faster where do we get good suet in nyc???
Ottomanelli on Bleecker.
Ol’-school butcher. Call ahead of time though.
Any ol’-school butcher in the five boroughs will source it for you if you call ahead of time.
Geez my friend works there…..and lives down the street…in a rent controlled apt…..yes rent controlled on Bleecker…thanks
Well, fiddle-dee-dee!
“…fiddle-dee-dee!”
Did you catch the same rerun of Gone With the Wind that wifey was watching a couple of nights back?
Very common thing in the movies and theatre to reference other works.
Most visually astute movie. Director has an eye.
I think is less the director and more cinematographer Roger Deakins. Also DP on lots of Coen Brothers films.
awesome movie. daniel craig is the best bond ever.
No. George Lazenby was the best Bond ever.
http://en.wikipedia.org/wiki/George_Lazenby
What is this the sequel?
Posted: 6:00 a.m. Friday, Nov. 23, 2012
Bulk buy at City Palms condo buoys downtown
By Kimberly Miller
Palm Beach Post Staff Writer
WEST PALM BEACH —
A sluggish recovery in downtown West Palm Beach’s condominium market found new momentum this month in a 165-unit bulk buy by billionaire Palm Beacher Jeff Greene.
The one-time Breakers busboy who now manages his companies from the island’s former post office _ a historic building he picked up for $3.7 million in 2011 _ purchased the remaining unsold units at the City Palms condominium for $34 million.
Greene said City Palms is a good five- to 10- year investment that will pay off as the burgeoning downtown catches up its infrastructure and the market fully recovers. The waterfront makeover, new restaurants on Clematis, and such mainstays as the Kravis Center for the Performing Arts led to the decision to buy the City Palms units.
Realtor Anthony Pizzarelli, who specializes in downtown, said the number of condominiums in foreclosure or short sale has shrunk from 17 percent to less than 2 percent, setting up the area for a rapid rebound in prices.
“It’s going to feel like West Palm Beach condominium prices have doubled overnight,” he said.
But not everyone is convinced.
Peter Zalewski, a principal at Condo Vultures, said the downtown West Palm Beach market hasn’t seen the same activity as Miami and Fort Lauderdale, which have sold out their boom-time units and are now building more.
Foreign buyers who find it easier to fly into Fort Lauderdale or Miami, and who can’t buy single-family homes near those downtown areas for prices comparable to condominiums, are two big reasons for the faster turnaround.
http://www.palmbeachpost.com/news/business/bulk-buy-at-city-palms-condo-buoys-downtown/nTChW/ -
Black Friday …when white folks can bum rush stores and act like thugs
http://www.youtube.com/watch?v=YfGLB8LO1aM
At least most of them pay for the merchandize they cart out of the store, albeit with plastic…
Black Friday always makes me proud to be an American.
The news here locally (in Orlando) was following a family that camped out together for over 125 hours, waiting for Best Buy to open. You can always rely on the legacy media to pick up the flag for one market or another, when it isn’t real estate it’s retail.
a family that camped out together for over 125 hours, waiting for Best Buy to open ??
Which prompts the question; Do you have a job ??
The Best Buy closest to me has had people camping out since 11/16. They had been getting local news coverage daily that whole time. Another Best Buy out of state evicted a bunch of campers & told them they couldn’t show up sooner than 12 hours before the sale really began.
I don’t have a problem with this. Weather around here has been excellent for camping. Best Buy even put up Porta-Potties in the parking lot the last few days.
Drove past Best Buy at 11pm last night on the way home from Skyfall. The parking lot appeared to be crowded with idiots keeping an all-nite vigil for Black Friday shopping opportunities.
ouch!
Alas Florida…
Black Friday Arrest Caught On Camera: Samantha Chavez Arrested At Florida Walmart (VIDEO)
Posted: 11/23/2012 12:26 pm EST
Black Friday Arrest On Camera
The arrest of a Black Friday shopper at a Florida Walmart was caught on camera and uploaded to YouTube by a fellow shopper on Friday.
Samantha Chavez, 28, is seen in the video being handcuffed by two police officers who were on top of her as she repeatedly screamed “please stop.”
According to police, Chavez was arrested around 10:30 p.m. on Thursday inside the Walmart in Altamonte Springs, Fla., WKMG Local 6 reports. Officers told the news station that Chavez attempted to bypass the long checkout lines.
Police say that after being told to get in line several times, Chavez refused and began screaming and throwing the merchandise she was carrying to the floor. When she tried to pull away from the officers they wrangled her to the floor and handcuffed her.
Chavez was charged with disorderly conduct and resisting an officer without violence. She was later released from the county jail on $550 bond.
Though police say she was trying to cut the lines, Chavez told Central Florida News 13 that she was just trying to find her sister-in-law in the crowded store.
“I came back and the lines kind of moved and I couldn’t find her. Her cellphone wasn’t working, the battery had died. This cop’s in front of me and he’s like ‘no you can’t go, you need to go the other way,’” Chavez told Central Florida News 13. “I’m like ‘I’m just looking for my sister’ and he’s like ‘no you have to go that way’ I’m like ‘but she’s here, I need to find her.’”
…
Black Fridays are like hurricanes, you don`t see the really hard hit places until 3 or 4 days after the storm passes.
Monday, November 19, 2012
Borrowers with modified mortgages re-default as homes re-enter shadow inventory
Note that once a mortgage is modified, the house is no longer counted as part of the so-called “shadow inventory”. Modifications certainly contributed to a significant recent reduction in shadow inventory (see discussion - “mods” in the pie-chart). And now some of these homes are moving into the “shadow” once again.
JPMorgan: - It appears that mod re-defaults drove the increase. The number of re-defaults jumped 24% from the previous month…. We have argued that the sharp decrease in shadow inventory over the past two years was to some extent the result of aggressive modification activity. We think we are now seeing a wave of re-defaults from the modifications over the last two years that failed. This wave should last through 2013, and a greater share of current-to-30 rolls will come from re-defaults going forward.
http://soberlook.com/2012/11/borrowers-with-modified-mortgages-re.html - 147k
The Boys Are Back In Town Lyrics
Thin Lizzy
Guess who just got back today?
Them wild eyed Beats that had been away
Haven’t changed, haven’t much to say
But man, I still think them Beats are Lazy
They were asking if you were around?
How you was, where you could be found?
Told them you were living upside down
Driving the HAMP people crazy
The Beats are back in town
(The Beats are back in town)
I said the Beats are back in town
(The Beats are back in town)
The Beats are back in town
(The Beats are back in town)
The Beats are back in town
(The Beats are back in)
(They never left)
Every business that I have ever bought something from spammed me between last evening and this morning.
I understand that email has virtually no cost but if things are so great, why are there so many discounts?
I’m not much of a shopping type. Nor is most of the HBB, I assume.
Anyone else see the same?
Seems to be true here too. However It’s less than the daily barrage of political emails of the last six months. One big difference it the size of the payload though, the xmas stuff is 5X larger than the election emails.
not much of a shopping type
We bought our Christmas gift for ourselves in October, a new alpine/touring ski setup, which was made much more affordable by getting clearance and coupon emails from two locally owned ski mountaineering stores.
We regularly get emails from REI, there are occasionally clearance and closeout items worth buying. Other than that we don’t get emails from retailers.
We used to find lots o’ ski stuff/clothes for ourselves and the kids at REI Outlet. Online. And some online place called Al’s Ski Barn.
Happy Days DINKy! Skin a peak for me.
Skin a peak for me
We would if there was snow. Going up to ~13,000′ near Leadville tomorrow and won’t even need snowshoes. Was going to ski Loveland or Arapahoe Basin this weekend but it’s not worth it with only 5 runs open.
We have been engaging in mountain biking. But the local resort opened yesterday, (Mt Bachelor, 6,000-9000 ft)so skiing/boarding is finally an option.
Always have the snow here but at the lower elevation and proximity to the Pacific we refer to the snow as “Cascade Concrete”
But I leave the skiing to my friends after I busted my ankle ten years ago. Glad to be able to bike and surf, though, I will be taking my son to the coast this weekend for some Oregon ice cream headaches.
I will be taking my son to the coast this weekend for some Oregon ice cream headaches ??
Thats a pretty long drive isn’t it Mike ?? Closest would be Florence right ??
“I’m not much of a shopping type.”
We intend to avoid the Black Friday shopping crowds like the plague. Who in their right mind would go elbow to elbow with the unwashed masses on opening day of holiday shopping?
elbow to elbow with the unwashed massed
That’s pretty disdainful of the 99% there, PB. Show some love.
Who in their right mind would go elbow to elbow with the unwashed masses on opening day of holiday shopping?
It’s gotta be the same folks who go to Times Square on New Year’s Eve.
To each his own.
I’d personally much rather be at Time Square on New Year’s Eve than at Walmart on Black Friday.
LOL….
Before I retired, my job was caring for the unwashed masses. I lost most of my sense of smell, thank heavens! As long as I don’t catch their cooties, I’ll be fine.
“… my job was caring for the unwashed masses.”
That’s what my dad did for a livelihood.
I felt no desire to follow his career path.
Who in their right mind would go elbow to elbow with the unwashed masses on opening day of holiday shopping?
I asked myself this very question as I stood in line at Kohl’s this morning before coming to work.
They had one first-generation Shark steamer mop left at half price, and I snagged it. My old one recently died a dramatic death in a puff of smoke and black water-spitting.
It’s a discount to a companies margin. They still turn a profit. I believe that the pricing structure for products is set up specifically for these types of sales. Out of the red and into the black.
Monday, November 19, 2012
Borrowers with modified mortgages re-default as homes re-enter shadow inventory
Note that once a mortgage is modified, the house is no longer counted as part of the so-called “shadow inventory”. Modifications certainly contributed to a significant recent reduction in shadow inventory (see discussion - “mods” in the pie-chart). And now some of these homes are moving into the “shadow” once again.
(Sung to the tune of “Back in the Saddle, again”)
Back to the Shadows again
Back where a bailout’s your friend
Where the veg’tables are green,
And you can pee in the stream
(and that’s important you know)
Yes, we’re back in the Shadows again
so-called “shadow inventory”
lol
WSJ - The Cost of Dropping Out:
“The rising cost of a college education is hitting one group especially hard: the millions of students who drop out without earning a degree.
But as more Americans than ever before attend college, more too are dropping before they ever don a cap and gown. That means millions of Americans are taking on the debt of college without getting the earnings boost that comes from a degree. Dropouts are more than four times as likely as graduates to default on their student loans.
According to a 2011 study by the Institute for Higher Education Policy, a Washington, DC based research firm, 58% of the 1.8 million borrowers whose student loans were began to be due in 2005 hadn’t received a degree. Some 59% of them were delinquent on their loans or had already defaulted, compared with 38% of college graduates. The problem has almost certainly worsened since, as the recession wiped out job opportunities for less educated workers.”
The debt lives on forever. Can’t discharge in bankruptcy.
They’ll even garnish SS wages for it.
Never mind that. The REIC propagandists will keep pushing their lie about “pent up demand”. Because what those dropout Lucky Duckies need is overpriced housing.
Lucky Duckies need is overpriced housing ??
I just saw a short sale house in Stockton California this morning…1360 square feet…I would say maybe 25 years old…Google Street shows it to be at least a clean neighborhood…
$63,000.
The REIC propagandists will keep pushing their lie about “pent up demand”
And these liars are everywhere in every media outlet, especially on the net. Even here on this blog.
“The debt lives on forever.”
You got that right!
I keep getting bills at my house for a woman who died there.
Guess what kinds of bills they are?
My understanding is that student loans are discharged upon death. Other debtors can make a claim upon one’s estate, of course.
Only the direct federal loans. Private loans are not.
But aren’t private, non federally insured loans dischargeable in BK?
they are medical bills.
It lives forever until it will be forgiven in the name of “fairness” or “helping people” or “doing the right thing” whatever the current Democrat talking points will be at the time.
Which brings me to Thanksgiving. Hope all enjoyed it. We had a nice dinner including our talk on the election and politics. Provided lively banter and discussion. Can some please explain the infatuation will Hillary Clinton????? Even last week or so NYT columnist Gail Collins had a piece about Hillary and 2016. Not sure what was worse - the column or the reader comments or the comments at dinner yesterday. Where some see a “leader” or “a wonderful role model for women” or a “life long public servant” I see….
A faux feminist who for years aided and abetted and covered up a serial sexual predator often using the nuts and sluts offensive on his victims. Why? Because if he had been booted from office the two of them would have to have earned an honest living rather than live off the taxpayer for decades. Still can’t believe the people of NY voted her for senate. When she ran she had been unemployed for nearly ten years, never held elective office, never lived in NY. But hey she was the boss’ wife (faux feminist.) To be fair lots or career sponges on the other side of the aisle, too.
P.S. She also like Obama wanted government run health but of course did even send her own daughter to public school. And if Hillary was not a diversity candidate and boss’ wife she never ever would have been thought of as a senate candidate after the health care debacle that cost the Democrats the House of Reps in the mid term elections during Bill’s first term. She would have been handed her head on platter and show the door. But among women “feminists” seem to be the biggest beneficiaries and users playing the women card for personal gain.
At least Hillary doesn’t eat dog meat like The One does!
“We had a nice dinner including our talk on the election and politics.”
We got into a little of that. I met a friend of my cousin’s, who said he would be willing to chip in higher taxes to help pay down the deficit. I asked him whether his willingness to do so would be affected by how the money was used: For instance, would he be happy to fund more unmanned drone strikes on brown people around the world?
The conversation on that topic ended rather abruptly at that point.
Which brings me to Thanksgiving. Hope all enjoyed it.”
yes I did although I was asked to work but did slip out at 3:30 Pm
we need a metal change which takes 30 days then test is back at it. lets see 30 days what’s in 30 days …
maybe I’ll be sick I can feel it comming on already
And for those who get Thanksgiving off remember it is an American holiday and when your company is bought by the Chinese or whoever do you think they will care ? Correct answer is no
As a matter of fact American companies don’t give a rats either see Walmart and other companies opening Thursday making thier workers work and not even paying them well.
The future looks bright for the middle class doesn’t it?
But college is a great place to avoid work.
I worked harder in college than in most of my jobs.
I worked harder in college than in most of my jobs.
Not for me. The hardest job I ever had was my first post-graduate year: 36 hour shifts from time to time, 95 degree weather outside and no A/C inside. The worst such shift I lost 10 lb. because I forgot to drink enough water, and my resting pulse rate went down to 27 beats/min. Cured that by drinking a gallon of lukewarm water (in increments) to rehydrate myself and also drank a pot of strong coffee to speed up my heart rate so I could sleep without being awakened by a slowly pounding heart. Had to set my alarm every 90 minutes to keep pushing the fluids. Have been troubled by kidney stones ever since. Won’t ever do that again, couldn’t survive it anyway.
“I worked harder in college than in most of my jobs.”
I am sure you did as I many do but I know of a few cases like these and I would have to think there are a lot more than a few. I can`t say for those in this article but the ones I know of have no major, no plan and no intention of ever paying these loans back.
Are College Kids Blowing Their Student-Loan Money on Clothes and Beer?
By Suzanna de Baca
Aug. 02, 2012
I conducted some informal research to determine how endemic the misuse of loans really is. I tapped my kids as well as other recent college graduates, friends and co-workers, and I was stunned at how pervasive this seems. When I asked my stepson, who graduated last winter, if he knew of kids using their student loans for non-school-related purchases, his response was, “Don’t even get me started.”
First, he told me about a family friend who, a few months ago when she was a junior in college, used her student-loan money to buy a used car. I almost flipped. Didn’t she realize this means she’ll be paying that car off — at an interest rate almost twice as high as a typical auto loan — long after it breaks down?
My colleague Meghan, also a recent grad, mentioned classmates who had purchased flat-screen TVs, sound systems and trendy decor for their dorm rooms. I heard from various people about kids using student loans to pay for expensive spring-break trips, clothes and, a common refrain, “partying.” These students will be paying high interest rates for purchases they probably won’t even remember in five years.
http://healthland.time.com/2012/08/02/are-college-kids-blowing-their-student-loan-money-on-clothes-and-beer/ - 56k
You work for the government don’t you?
You can do so to a point. But if you don’t jump through some basic hoops (attend classes, turn in assignments on time, study for and take exams, etc), you will get drummed out of the system w/o a degree and diminished job prospects.
So it’s not really the free lunch you suggest.
So it’s not really the free lunch you suggest.
I need access http://www.ocde.us/ACCESS/Pages/What-is-ACCESS.aspx
I wonder if my Chinese boss will be impressed by ACCESS graduates ?
Correct answer is no
Clear evidence of a failure of the US K-12 system.
What percentage of foreigners (legal student visas) you think are in that group?
(assuming they needed to borrow)
If a kid wants to learn in K-12, the resources are there.
The quote below pretty well captures the worst case.
I note the parallel between students graduating (or not) without the necessary credentials to earn enough to pay off their student loans, and homeowners whose mortgage balances exceed their ability to pay them off out of their permanent incomes. In both cases, government-sponsored lending programs have driven up the the price tag of a basic consumer want (education, housing) beyond many U.S. households’ ability to pay for it.
The Cost of Dropping Out
Millions Struggle With High College Debt and No Degree
By BEN CASSELMAN
The rising cost of a college education is hitting one group especially hard: the millions of students who drop out without earning a degree.
…
“Graduating with a lot of debt can be daunting,” says Lauren Asher, president of the Institute for College Access and Success, an advocacy organization promoting access to higher education. “Having a lot of debt and not graduating is even more daunting.”
…
Yes, the bailouts are coming.
Washington Post - Economists, Obama administration at odds over role of mortgage debt in recovery:
“Nearly 11 million Americans, or more than a fifth of homeowners, are buried in debt, owing more than their properties are worth after piling their life savings (WTF?) into their properties, a persistent and largely unaddressed problem that represents the missing link in what many economists consider the administration’s overall strong response to the recession.”
The article, of course, mentions nothing about cash-out refis or what the poor victims spent all that refi money on.
The Bailouts are coming, the Bailouts are coming!
http://www.youtube.com/watch?v=tpAOwJvTOio
Made possible by this:
http://obamaphone.net/
And don’t forget this golden oldie:
http://www.youtube.com/watch?v=P36×8rTb3jI
“…owing more than their properties are worth after piling their life savings (WTF?) into their properties, a persistent and largely unaddressed problem…”
Why is it the government’s concern if people choose to pour their life savings into owning a larger, fancier home than others choose to live in? Whatever happened to freedom of choice in America?
+1 Pbear…
Home Sweet Shipping Container: Detroit Housing Project
The first U.S. multi-family condo built of used shipping containers is slated to break ground in Detroit early next year. The units will come rigged with ductless heating and air systems, tankless water heaters and other energy-saving systems. “We’re putting money into these energy efficiencies so that the tenant has reduced energy costs,” says Leslie Horn, CEO of Three Squared, the project’s developer. “And we can build in less than half the time.”
But will those metal walls stop a .50 cal bullet? That’s important in Detroit.
Yeah…Try building that in California….
Already been done in California, “This 1,200 square-foot home was built with six used shipping containers in Felton, California. Designed by Modulus, the home was the subject of a 2012 Citation Award from the Santa Clara Valley chapter of the AIA. The architect camped on the site to study light and other characteristics, according to Dwell, and designed the layout to reduce construction grading. The containers were left exposed but painted, and the walls were covered with drywall for a clean interior look. Inside, an atrium was used for light and to radiate heat throughout the home.” Of course its price was most likely prohibitive!
Another has been built near Joshua Tree, of all places: This is the first permitted shipping container house in the Mojave Desert near Joshua Tree, California, according to a statement by the architect, Walter Scott Perry, principal of ecotechdesign. The home, also known as The Tim Palen Studio at Shadow Mountain, was built with re-purposed shipping containers and some impressive green elements such as a steel shade system, a living roof, and a 10,000 gallon water storage tank. Again, I hate to think of what was paid for this.
Yes tresho, I know a few have been done in rural area’s…I guess I should have better qualified my statement…
In looking at the link, I saw that it was high density four story assemblage of these containers…Not just a single unit, like in Felton or Joshua tree…What I should have said is try building that project in Silicon Valley…
And I’d hate to think how much energy the thing uses to modulate ambient air temp in the middle of the Mojave. Oven in the sun, icebox in the night. Period.
A steel “shade system”? AYFKM? A “living roof” might be useable in part of April and October? Maybe. And a 10K water tank is standard code for rural construction. Big Whoop.
There’s no way to “green” a shipping container unless you completely surround the exterior with hay bales. In which case, what’s the point?
Burial of a shipping container under several feet of earth could serve to modulate the air temp inside the container rather well. A 20′ by 8′ by 8′6″ container holds 10,000 gallons of water more or less, buy a 2nd one & use that for water storage.
I know living underground is not a popular idea.
I tried that, but they collapse from the weight of the earth when it rains. Reinforced with railroad ties, it still leaks at the seams, rusts, dents unevenly. Pretty decent wine cellar, but that’s about all. As for holding water, they don’t.
At $5 per bullet fired, I doubt the thugs of Detroit are shooting .50 cals… 9mm parabellum moe likely. Those containers should stop 9mm.
But they don’t.
HBB Quiz Question: Whose quote is this?
Eccles
“It is for the interests of the well to do – to protect them from the results of their own folly – that we should take from them a sufficient amount of their surplus to enable consumers to consume and business to operate at a profit. This is not “soaking the rich”; it is saving the rich.”
Was he some kind of communist, progressive, liberal or member of another group worthy of a pejorative label?
joesmith
Does your handle refer to Joseph Smith, LDS church founder?
Prof Bear — no, i just wanted an anon name to use on here. I was reading “Under the Banner of Heaven” at the time I first started posting here, though. Perhaps that’s why it popped into my head when picking a moniker.
Probably not Romney.
Different Mormon, different era.
HBB Quiz Question: Whose quote is this?”
Some non-rich guy who wants to be rich ?
Wrong.
Could the U.S. fiscal cliff talks similarly wind up with punting on any kind of resolution until after the holidays?
23 November 2012 Last updated at 10:57 ET
EU budget summit ends without deal
Breaking news
The Brussels summit on the EU budget has ended without agreement.
EU leaders are taking a short break before returning to draft a statement on when to meet and what to do next. News conferences are expected later on Friday, sources at the summit say.
…
It seems like most of the anticipated consequences of sequestration or other varieties of fiscal cliff-related austerity are dire. Less discussed are the costs of a failure to act currently (”punting”). Is there any downside to agreeing to continue disagreement on how to resolve the fiscal crisis and setting a date at some point in the future when an agreement will be reached?
Nov. 23, 2012, 6:00 a.m. EST
Why the fiscal cliff matters
Commentary: Businesses and individuals will be hurt by inaction
By Diana Furchtgott-Roth
WASHINGTON (MarketWatch) — Rex Nutting has some good news for Washington politicians about the fiscal cliff. “There’s no urgency to reach a deal quickly,” he wrote in these columns last week. Although tax and spending laws will change on Jan. 1, 2013, the effects of these changes will be spread out over a longer period, he writes.
…
Skilled workers needed to run high-tech CNC machines
Mike Hellman is one of the people looking for a skilled CNC machinist. He’s head of human resources for Display Pack, a company in Grand Rapids. Display Pack makes that impossible-to-open clear plastic packaging. The molds for the packaging are made on CNC machines.
Hellman’s been looking for a machinist for three months with no luck. Only a couple years ago, Display Pack had to lay off machinists… And the pay’s not too bad either. Trent could come out of this 18-week class [at Grand Rapids Community College] and get a job that pays $10-15 an hour. …. Right now, manufacturers are desperate for these workers.
A starting shift manager at McD’s makes about $14 an hour, and s/he didn’t have to pay a cent to be trained. Some important facts were not mentioned in this story.
Found a comment on a forum at practicalmachinist.com referring to a Fox news article of the same ilk:
Let me get this straight. American companies trashed an entire country full of
manufacturing industries, so they could squeeze an extra dime of ROI for their
shareholders, and bigger bonusses for the executive management.
They single-handedly wiped out an entire technical career path in the US, by
systematically outsourcing and firing any skilled workers who made any money.
They made a policy of moving manufacturing towards non-union regions where they
could hire the lowest paid workers, firing all the skilled workers in the old plants.
And now they have the temerity to squeal that they can’t find skilled workers?
I hope whoever prompted fox to put that article up there chokes on the unfilled
need for skilled, educated, hardworking american machinists.
And welders.
And fitters.
And assemblers.
And technicians.
And plumbers.
And so on.
Up to 80K. Entry level, you start at 15K. If you brown-nose it enough in
50 years you might get close to 80K. Maybe.
American companies did not trash the jobs. It was competition from lower cost labor elsewhere with help from the unions and tax and spend liberals but mostly lower cost labor. Markets are not static. I getting tired of repeating myself. The conditions that provided a nice comfortable middle class life style a la US 1950 / 60 for so many unskilled / semi skilled workers were a historical / economic anomaly. It could return again and might. Might not. Just watched last night “How Green Was My Valley” The 19th c Welsh coal miners earned good livings thought it would never end. Then came the increase production / competition. Wonderful movie (1939) even better book.
Yeah, the “market” is wonderful when business can sell out their current employees for those working in Communist/Socialist/Mercantilist states.
I guess that kind of “socialism” is okay.
Business would sell their mothers, if it made sense financially.
That’s the difference between our current management class, and the unwashed masses.
The airlines are currently attempting to limit/eliminate any “oversight” authority on work done outside the country on US registered airliners. Not having to comply with FAA regs saves a bunch of money.
Funny, they don’t mind letting the unwashed masses fly on airplanes inspected overseas, but 90% of business jets operators worldwide bring their aircraft to the US for major work inspections.
(My aircraft is currently getting a 6 year “C” check and mods. The shop is buried, can’t find full time help (but they won’t raise pay rates for the troops) lots of high priced contract help due to the workload. Aircraft from Switzerland (2-3), Norway, Brazil (2-3), Egypt, Mexico are in the same hangar with us.)
The wonderful in reference to the movie was the story of a lovely family and the movie is well made with good actors: Maureen O’Hara, Roddy McDowell and others, rather than the challenges they faced being wonderful. Directed by John Ford I think.
Of course employees never sell out employers by leaving for better opportunities. X-GSfixr you ought to start a business and provide jobs with good wages, job security, loyalty, etc.. while at the same time earning a competitive return on the capital. Then when is profitable you can give most of the profits away to the brain trusts in Washington, DC. After all you want to pay a “fair share.” Let us know how it works out.
Even with the economy as crappy as it is in most of the USA, some of these chickens are coming home to roost.
The S is really going to HTF if some miracle occurred, and the economy started growing at 4-5%.
people will not get off the couch for 10 bucks an hour in CA. they can collect all kinds of freebies and make more money playing x box all day.
When all you get paid is $10/hour, and it costs you $8/hour to get back and forth to work, sometimes you are money ahead sitting on the couch.
Really good article recently in NYTimes (20 Nov)
“Skills don’t pay the bills” Advancing manufacturing is really complicated. Aspiring workers often need to spend a considerable amount of time and money taking classes like those of Joseph Goldenberg at Queensborough Community College in NYC to even be considered. Every one of Goldenberg’s students, he says, will probably have a job for as long as he or she wants one… Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he would hire as many skilled workers as show up at his door. Last year, he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbister’s pickiness, he says, comes from an avoidance of workers with experience in a “union-type job.” Isbister, after all, doesn’t abide by strict work rules and $30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. Comment from further down the page: “Isbister is having problems finding workers because he is running a “business” that requires below market wages. The problem is his business model, not a lack of workers with sufficient education. He is trying to prop up an unsuccessful business by paying low wages and complaining because it isn’t working.” From what I understand, a new shift manager at a nearby McDonald’s can earn around $14 an hour. From a reader’s comment further down the page: “Mr. Isbi[s]ter’s potential employees could not possibly accept a job that pays the kind of wages he’s offering. These students are literally bankrupting themselves to get the advanced training they need to get a job that will pay them a LIVING wage. And $10 an hour won’t cut it, especially when it comes time to pay back Uncle Sam for the loan they took out to go back to school.”
The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. “It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.”
… The so-called skills gap is really a gap in education, and that affects all of us. Comment further down the page: The conclusion makes no sense. He writes that skilled workers won’t work for ten bucks an hour than concluded the education system is at fault?
Sorry, I messed up my italics tags. The NYTimes article is here.
“If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.”
The problem is that the big bosses have mandated that low wages are to be paid, the market be damned.
He writes that skilled workers won’t work for ten bucks an hour
Don’t tell that to CEOs that make 10 million a year.
“The problem is that the big bosses have mandated that low wages are to be paid, the market be damned.”
If that’s the case, and NOT hiring is impacting the ability for the company to complete orders, won’t someone, somewhere pay more, attract the workers, deliver the orders, and take market share?
Yeah, it’s a fault for teaching skilled workers math, instead of convincing them they should be happy making minimum wage.
I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs.”
really I wonder why ?
Comments on this story are very good. Two comments stood out:
————
TBaum:
If there truly is a shortage of skilled machinists, then Economics 101 states that wages for these skilled workers should be going up, since demand is greater than supply. If wages are NOT going up, then there is no true shortage, no matter how much screaming and whining you hear from employers trying to undercut the market.
Good point… if they advertised this job for three months without raising th wage, they probably don’t need the skilled worker all that badly.
Gladys:
Took a look at the Grand Rapids Community College website.
They charge $5,000 for a 4 month course.
That’s not that much money. Why not offer to pay the course tuition? They probably lost $5K of business in waiting three months anyway.
J. Kester:
One of the last projects we did was to help a CNC company re-locate to a new, larger facility. They had received a state grant to expand their facilities… The avg. 1999 CNC operator salary then was $70K/yr.. So they, took the grant, moved to the new facility, and expanded their (local) employment; (required by 36 month terms of the grant), and kept on growing their volume.
Directly following their 36th month, 300 container trucks showed up, unbolted the CNC (laser cutting) machines, and loaded them up (along with {5} of the best machinists), and shipped everything to Malaysia.
OOPS. And they wonder why people aren’t willing to do these jobs. Why bother if they’re just going to be outsourced?
Third World, here we come.
Reading this article, I am reminded of a few posters who smugly derided anyone who had not sufficiently prepared for power outages. There are some people who still do not have power since the hurricane.
How many days of no power are you ready for? 3? 7? A month?
A Failed Experiment
In upper-middle-class suburbs on the East Coast, the newest must-have isn’t a $7,500 Sub-Zero refrigerator. It’s a standby generator that automatically flips on backup power to an entire house when the electrical grid goes out.
In part, that’s a legacy of Hurricane Sandy. Such a system can cost well over $10,000, but many families are fed up with losing power again and again.
(A month ago, I would have written more snarkily about residential generators. But then we lost power for 12 days after Sandy — and that was our third extended power outage in four years. Now I’m feeling less snarky than jealous!)
More broadly, the lust for generators is a reflection of our antiquated electrical grid and failure to address climate change. The American Society of Civil Engineers gave our grid, prone to bottlenecks and blackouts, a grade of D+ in 2009.
I could barely stand to read Kristoff’s propaganda piece: It’s manifestly silly (and highly polluting) for every fine home to have a generator. It would make more sense to invest those resources in the electrical grid so that it wouldn’t fail in the first place.
So wrong-headed, I won’t do more than poke fun at it.
As far as I’m concerned “fine homes” are manifestly silly and highly polluting by their very existence, and serve as conspicuous consumption more than anything else. If the owners want their own power generation capability, built-in fire suppression facilities, the ability to purify their own sewage into drinking water, and to withstand a determined assault from a well-equipped modern military force, let them do it.
I consider the failure of maintenance of the US’s electric grid to originate in causes Kristoff isn’t remotely aware of.
By the way, a bare bones approach to generating power for one’s home for 1-2 weeks is much less than the price Kristoff quoted. Someone would have to be at home to turn it on, however.
Whole-house generators run on natural gas. They produce heat as a by-product. They can be relatively cheap or mighty expensive depending on the amount of energy capacity one needs or wants. Mr. Kristof obviously knows nada about them.
Even low-cost portable generators can be modified to run on triple fuels, kits cost about $300 for DIY’ers.
We had one of those whole-house generators installed after a 4 day power outage in 2007. It has saved our bacon (and frozen foods, and general household comfort) several times since then. Upgrading the power grid is a fine idea. Until the time that the PTB decide to do it and figure out how they/we are all going to pay for it, we will stick with our generator.
Sounds to me like another expensive toy to maintain and to brag to your friends about. Let’s not address the real problem (the country’s decaying infrastructure - electical grid, roadways, sewers, etc.), let’s just try to sell upscale generators to the haves, while the have-nots can learn to do without.
When I visit my friends back east and see all their consumerist lifestyles, it’s no wonder both need to hold full-time jobs.
Several years ago, a major storm caused prolonged power outages in the Seattle area. The air quality really suffered during the outage as people turned to fireplaces for heat and generators for electricity.
Our house has gas heat, but without electricity, the igniter will not light the burner and the fan will not blow air. Daytime highs were in the 40s and inside temp eventually settled at around 40 - uncomfortable, but not life threatening.
Our house has gas heat, but without electricity, the igniter will not light the burner and the fan will not blow air.
I have the same problem & my climate is much colder than yours. I can buy time by running the burners on my gas stove, but they don’t provide enough heat during severe cold spells.
My local electric code oddly mandates fixed wiring for my furnace. I may just install a plug/outlet in the line (violating the code) so that I can power the furnace using a small portable generator if necessary. The necessary generator costs less than 3 nights in a motel.
A transfer switch installation to meet code would cost 3 times the price of the generator.
Cyprus Is ‘Very Close’ to Bailout Agreement, President Says
By REUTERS
Published: November 22, 2012
NICOSIA — Cyprus is close to agreeing on a bailout package with international lenders, President Demetris Christofias said Thursday as officials from the lenders left the country after the latest round of talks.
The Mediterranean island nation sought financial aid, expected to top €10 billion or 60 percent of its gross domestic product, in June after its banking sector was battered by exposure to Greece.
“After tough negotiations,” Cyprus is “very close to signing a memorandum,” Mr. Christofias said in a statement from Brussels, where he is attending a two-day summit of European Union leaders.
“Very few issues remain and it’s possible that the gaps in these issues will be bridged very soon,” he added.
…
I need to replace the 1980-era asphalt shingles I had installed shortly after I bought my cheap house here in NE OH. The roof leaks when it rains too much. I first installed a new asphalt roof in 1958 on another house my dad built, under his supervision. I had planned to install these shingles in 1980, but was sidetracked when my brother broke his leg and mother came down with cancer, so I had to hire someone to install the material I bought. I’m not a professional but like to think I know a little bit about asphalt shingles. That job has worked out pretty well.
So I have been looking at materials. I can’t believe the abysmal quality of modern asphalt shingles. They are not remotely comparable to the shingles I used years ago, yet they are (supposedly) warrantied for 15+ years. Compared to what I have handled, I doubt very much they can last that long. Labor and disposal expenses for re-roofing have gone up drastically & will problem continue to do so.
I went to a seminar offered by a DIY metal roof manufacturer, who pointed out that the asphalt content of shingles has dropped from 75% to about 15% - the absolute minimum necessary to keep the shingles from disintegrating. The remainder of the material is fiberglass and limestone. The salesman pointed out that these shingles are prone to mold and algae growth since there is no longer enough asphalt to prevent that. Then I discovered their metal roofing materials alone would cost me about 125% more than having my entire roof redone with modern asphalt shingles (including a tearoff & rebuild from the paneling up).
Being retired, I don’t want to need any further roof replacements. However, I really doubt current asphalt shingles will last anywhere near as long as my last batch.
I hate to think of what shortcuts builders have been making, that I DON’T know about.
Consider light-weight composite tile instead although it will cost more…Although, I am not quite sure of its compatibility with the cold weather of the NE…It is used extensively out here in the west although comp-shingles are still the most popular because of the value factor…
You’re in snow country. Go with tin.
Slate.
For a while there has been some concern about the demise of the dollar as the world’s reserve currency. I think very misguided. After all what’s the alternative?
And as long as it remains that way we can continue to run deficits.
The comments section after this article was 90% negative. Most comments after housing pieces are quite negative.
“However, regardless of the state of the stocks, there remain plenty of skeptics on housing who are questioning just exactly how healthy it is. Barry Ritholtz, CEO of FusionIQ and founder of the blog The Big Picture, sees some of each side of the argument.
“Currently, housing is one of the few bright spots in the economy,” he says in the attached video. “The problem with housing continues to be it’s not an organic recovery, or stabilization, to use a better word. The [Federal Reserve has] driven rates down to inconceivable levels.”
Foreclosures, Ritholtz says, are now rising after banks had put many of them on hold to sort out the robo-signing debacle, and he’s “expecting that to continue to gather momentum.”
“I’m comfortable saying housing has stabilized, but I’m not buying the ‘we’re in a full-blown recovery’ meme,” he says.
By spring, we should know which side is right on housing — that is, whether a legitimate turn is upon the market or more weakness lies ahead, he says.”
“By spring, we should know which side is right on housing — that is, whether a legitimate turn is upon the market or more weakness lies ahead, he says.”
Here’s to looking forward to mocking the serial bottom callers’ latest failed bottom call YET AGAIN in 2013!
“Currently, housing is one of the few bright spots in the economy,”
Heavily-subsidized sectors have a way of shining more brightly than those which don’t qualify for subsidies.
Never a truer word has been spoken!