Bits Bucket for March 18, 2013
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.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
June 2025 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Bloomberg News
Euro, Stocks Drops; Gold, Treasuries Rally on Cyprus
By Jason Clenfield and Adam Haigh on March 18, 2013
The euro weakened to its lowest level this year, while stocks and commodities fell, as an unprecedented levy on Cyprus’s bank savings threatened to throw Europe back into crisis. German two-year note yields dropped below zero as Spanish and Italian yields surged.
The euro fell 1.3 percent to $1.2901 and the yen gained 0.9 percent to 94.45 per dollar as of 7:01 a.m. in London. Euro Stoxx 50 Index futures dropped 2.6 percent, while those on Standard & Poor’s 500 Index slid 1.4 percent. The MSCI Asia Pacific Index of shares lost 1.8 percent. Oil declined 1.2 percent and copper lost 2 percent. U.S. Treasury 10-year yields headed for the biggest drop in three weeks. Gold advanced as much as 1.1 percent.
Euro finance ministers reached an agreement on March 16 forcing depositors in Cypriot banks to share in the cost of the latest euro-zone bailout. Moody’s Investors Service said today the levy is negative for bank depositors across Europe, while Bill Gross at Pacific Investment Management Co. said it moves “risk-on” trades to the back seat.
“More contagion fears will spread through investors and it will encourage depositors in the European periphery to move their funds to a safer place, either under the pillow or to Germany,” said Mark Bayley, a Sydney-based credit strategist with advisory company Aquasia Ltd. “This is essentially a bail-in of depositors and sets a dangerous precedent.”
…
Moral of the story: You can only screw savers for so long.
Wow. I guess cabana boy was right. You can spend other peoples’ money for only so long until you eventually run out.
Oh wait, I don’t think he meant the Bankstas.
Platinum, gold, and silver: movable, hidable assets (as long as they are not in bankster’s safe deposit boxes).
PPT to investors: We’re gonna pump you up!
Why do U.S. stock traders care one iota about “taking deposits”?
March 18, 2013, 1:36 p.m. EDT
U.S. stocks trim Cyprus-related losses
Bucking the down trend, J.C. Penney shares rally
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks on Monday trimmed what had been steep opening losses that came with a euro-zone proposal to tax Cypriot bank deposits in order to cut the cost of a rescue.
“Cyprus is just a tiny speck of country relative to all the goings on in Europe, but it is really opening the door to taxing deposits that has everybody concerned,” Paul Nolte, managing director at Dearborn Partners in Chicago, said of worries the levy could be used in larger European economies, such as Spain and Italy.
“Cyprus is really the only focus today, but because the market is ADD [Attention Deficit Discorder], that will be different tomorrow,” he added.
…
Don’t worry…be happy…
Why Wall Street shouldn’t worry about Cyprus crisis
Trading Deck: The European bailout of the Cypriot government is the latest in a long line of threats to the now four-year-old bull market. And as with all the rest, this one will shake, but not spark a bear run.
BwhaHahahahaHAHAHAHAHAHAHAHAHAAHAHAAAAAAAAA!!!!!!!!!!!!!
Don’t look now, but there are bubbles everywhere you look.
Technology
Waiting for the Accelerator Bubble to Pop
Posted by: Patrick Clark on March 14, 2013
Since Paul Graham launched Y Combinator in 2005, the field of startup incubators and accelerators has exploded in the U.S. and overseas, with new entries emerging in all manner of oddball shapes and sizes, from a 80,000-square-foot space in San Jose, Calif., dedicated to tech companies hoping to do business in China, to a program that offers entrepreneurs cash to develop their business in Chile.
There are accelerators for green tech, health tech, ed tech, the cloud, and every other tech flavor du jour, and accelerators everywhere from Baton Rouge to Durham, N.H., as cities across the country lay claim to the title of the Silicon Valley of [insert industry here].
There’s Unreasonable at Sea, a 100-day program on an ocean liner, which encourages entrepreneurs to “combat the greatest challenges of our time” while sailing among ports in 13 countries. There’s Brad Feld, TechStars co-founder and Foundry Group managing director, who bought a three-bedroom house in Kansas City and is using it to launch a co-working space that sounds a little bit like MTV’s The Real World meets Google Fiber.
There’s even a startup incubator housed in California’s San Quentin State Prison, though to be fair, the program’s founder, venture capitalist Chris Redlitz, told Reuters that the jailhouse incubator isn’t a play to develop investment ideas as much as a means to teach entrepreneurial skills.
…
Is there any city with a population of 100,000 or more that doesn’t have an “incubator” these days? What is rare are incubators that can point to bona fide success stories.
As long as the government hasn’t put any money into them, it isn’t a big problem. Unfortunately, a lot of them do get serious bucks, at least in the form of tax breaks.
This falls under my “government probably shouldn’t be doing it if a politician is drooling to get to do the ribbon cutting ceremony on it” rule. Boring infrastructure stuff (fixing bridges, sewage treatment plants, etc.) is good, but is much less appealing for speeches and glad handing by pols.
Unfortunately, a lot of them do get serious bucks, at least in the form of tax breaks.
And government grants, though I think many smaller towns are wising up to the fact that these “incubators” are mostly just a jobs program for the people who work for them.
But smaller cities are becoming desperate about creating non menial jobs. Here in Loveland the city is working with a developer to remodel the old HP campus to use as an “incubator”. There was a lot of fanfare when this was kicked off a couple of years ago. Then the original developer bailed out (after the city paid $5M to Agilent for the campus). They scrambled and and found another developer who actually took the property off of the city’s hands (in exchange for a juicy tax break). Two years later and pretty much nothing has happened.
FWIW, the $5 million bought almost 1 million square feet of space. That’s right … it was about $6 a square foot. I’m guessing that it will become a warehouse when the dust finally settles.
And government grants, though I think many smaller towns are wising up to the fact that these “incubators” are mostly just a jobs program for the people who work for them.
That’s exactly what they are here in Tucson. And those of us who are really doing business (or trying to in this crummy economy) aren’t too happy about that.
Our local “incubator” office was supposed to be courting a Utah based nanotech start up to relocate to our little burg. A lot of fuss was made in the newspaper about that, then it fell silent. Someone must have offered the start up a bigger bribe than we were offering.
I personally know of a company that the City of Fort Collins bribed about 400K to relocate from Laramie. This was for 80 jobs, 60 of them low paying. The sad thing was that the company would have moved anyway.
Anyway, I think that this is all that “incubators” do. They broker corporate welfare.
Agreed, Colorado. Which is why they are a terrible deal overall. Governing is necesary, but it should be boring. When people try to do something really cool, something has gone wrong. That isn’t to say that I don’t believe in a certain amount of government funded research. I do. But the research is what is cool. Administering the grants and/or supervising the labs should be very, very boring
Incubators…you got one, we got one, everybody’s got one. The promoters have no problem ginning up periodic stories in the local rag about how some new thing is showing promise, and could create Jobs blah blah blah.
Meanwhile there are local companies actually operating and hiring, but avoiding publicity because they don’t want people coming around looking for handouts.
So the media have no idea who is really out there operating and who is just blowing smoke.
Yeah, a luxury ocean liners are just the place to experience “challenge”
“Real World Start-up” Dude, that is SO last century.
And all of it, ALL OF IT, is based on who you know.
What a load of pretentiousness crap.
Here in Tucson, some startup-istas are forming something called the Pirate Mansion. They’ll be living together — and starting businesses.
I’m hoping that they attract serious business people, lest this turn into yet another University of Arizona area party house.
Too late. It’s baked into the very concept.
Are they going to have a Pirate Store?
what is the impact of the FED holding all the mbs and treasuries they have bought till maturity?
It’s akin to holding housing inventory off the market: Decreases the supply, increases the prices.
Double, double toil and trouble;
Fire burn, and caldron bubble.
Why does Wall Street give a rat’s arse about what happens on Cyprus?
New York Markets Open in: 2:59:57
Pre-Market Indications | Analyst Ratings
Futures: S&P 500 -0.9% DOW -0.6% NASDAQ -1.0%
Stock futures lose ground on Cyprus deposit levy
Cyprus’s unprecedented bank-deposit levy sends Asia and Europe stock markets and euro tumbling.
does the retail investor dare to short this manipulated stock market at the sign of an exit strategy?
I say no. They can make you wrong a million times before you’ll finally be right. And by that time you’ll have no money. Now if you have actual insider knowledge of the exit strategy…
The smart money doesn’t play blind.
now that does make some sense. it seems the people with insider knowledge have been riding the market up too.
I sold almost everything last week. I don’t have the guts to short, but I’m not staying in either. I was living in bonds for awhile, but, finally, that bubble seems to be rolling over, which means, if stocks go down and interest rates start to rise, everything is going to fall at once.
Sold AAPL for a gain this morning. It was a very modest gain after my brokerage fees. My other short term gains from sales the last two weeks on three stocks amounted to $1800.
I am fearful, as I see small investors being greedy and insiders being fearful. Good to take money off the table. Probably a $1,000 gain after capital gain taxes. Good toward getting my Colt SP6920 in a few weeks.
Stick with the LE.
MP-B M4 is going for $1250 at my Phoenix dealer. Is LE better?
Oh, I just saw a link showing they are identical, save for the markings.
“…if stocks go down and interest rates start to rise, everything is going to fall at once.”
1) Interest rates have already risen.
2) Treasury prices move in lockstep inverse motion with interest rates.
3) If stocks fall, bonds are likely to rally and interest rates likely to drop on safe-haven demand.
Bloomberg News
Treasury Yields Slide Most in Three Weeks Amid Concern on Europe
By Cordell Eddings and Susanne Walker on March 18, 2013
Treasuries rose, pushing 10-year note yields down the most in three weeks, as an unprecedented proposed levy on bank deposits in Cyprus threatened to reignite the euro region’s debt crisis, boosting demand for a refuge.
The 10-year yields traded below 2 percent for a second day before the Federal Reserve begins a meeting tomorrow amid speculation policy makers will decide to keep buying bonds to spur economic growth. Euro-area finance ministers sought to tax bank deposits in Cyprus to finance part of a 10 billion-euro ($13 billion) bailout for the nation.
“The Cyprus news was the biggest and most negative news we’ve had in some time,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, which oversees $12 billion in fixed income assets. “Still, the market is waiting for more news out of Europe, now that we know the risks, to drive us one way or the other.”
…
‘ In addition to the comparatively minuscule size of the Cyprus economy - about 0.2 percent of total euro zone gross domestic product - investors likely held to their beliefs that global central banks would continue to rush to plug any liquidity gaps.’
‘The U.S. Federal Reserve has expanded its balance sheet past $3 trillion to backstop the financial system, while European Central Bank President Mario Draghi has pledged repeatedly to step in where necessary.’
“The Fed is really engaged. The Fed cannot afford to see asset prices go down, and the economy is healing,” Mohamed El-Erian, co-CEO at bond fund manager Pimco, told CNBC. “But there will come a time when we have to make that transition from assisted growth to genuine growth and there’s a big question as to when and how we’re going to do that.”
http://finance.yahoo.com/news/tiny-cyprus-could-still-big-180528064.html
“But there will come a time when we have to make that transition from assisted growth to genuine growth and there’s a big question as to when and how we’re going to do that.”
If commentators keep saying this often enough, perhaps it will come true?
Will this transition happen in our lifetimes? By gawd, the Fed has been pumping for so long it seems like an eternity.
Cyprus’s unprecedented bank-deposit levy sends Asia and Europe stock markets and euro tumbling.
———————————————
Hitler ain’t too happy either:
http://www.youtube.com/watch?v=K5R2JyU_MKg&feature=player_embedded
That must be the most frequently parodied film clip in history! Thanks for starting off my day with a chuckle…
“Don’t cry. We can still eat horse meat.”
Ha!
“We have to keep paying for their EU fantasy”
Never thought Hitler could be so right!
Maybe cyprus is the knot on the EU balloon, and it looks like it’s coming untied.
The fact that a non-unified Cyprus is even in the EU at all is a joke.
AmazingRuss, you’re making me think of a balloon spiraling all over the place, making a continuous farting sound as it looses air.
How perspicacious of you! That was the exact image I had.
Why does wall street care? Probably because this in an indication that Germany is starting to really play hardball when it comes to bailing out marginal members of the EU. If they do it to Cyprus this month, why not [fill in the blank] next month?
Perhaps there were special factors in play with Cyprus?
Financial Times
March 14, 2013 4:58 pm
Cyprus fights doubts over Russian money
By Kerin Hope in Nicosia
In the seven years since she arrived in Cyprus as a penniless, unskilled immigrant from the former Soviet Union, Galia has carved out a lucrative niche in the island’s sprawling financial services sector.
Galia, who does not want her full name to be used, is the director of a Russian-owned company and, with the help of a local bank official, she helps a Russian government official bank money in Cyprus. The transfers arrive at irregular intervals, each amounting to about $1m, says the 35- year-old Nicosia resident, now a Cypriot citizen.
Yet Galia, and thousands of others employed in the sometimes dirty business of transferring money from Russia to the Mediterrean island with a low corporate tax rate and lax financial regulation, could soon find herself out of business.
Cyprus faces intensifying pressure to tighten regulation of its financial services sector as a condition for a bailout worth up to €17bn being negotiated with the EU and International Monetary Fund.
…
With experience like that and her connections, she should move to Manhattan.
Probably because this in an indication that Germany is starting to really play hardball when it comes to bailing out marginal members of the EU.
In my opinion this isn’t hardball, but rather evil, corrupt stealing from savers. Hardball is making the bondholders take it on the chin.
Almost no bond holders in Cyprus banks. Accounts are mostly owned by currupt Russians laundering the money they stole from other Russians. Joe 6 pack from Cyprus should have been exempt, but putting the costs on the people who caused the problem (dumping overwhelming amounts of money in banks that had no useful thing to do with it because they thought that the Cyprus banks wouldn’t turn over their account info to Russian authorities) is not an unreasonable solution.
but putting the costs on the people who caused the problem (dumping overwhelming amounts of money in banks that had no useful thing to do with it because they thought that the Cyprus banks wouldn’t turn over their account info to Russian authorities) is not an unreasonable solution.
It is when Joe6pack (JoeOuzo?) is included in the haircuts. Take that away and you may be able to make a case. (Except that the whole thing is still disastrous for the euro- unless that’s Germany’s real goal.)
‘Why does wall street care?’ Oh please. The EU is a multinational bankers racket. Perhaps you don’t remember that ex-Goldman Sachs executives were put in charge of Greece and Italy recently. Not elected, but forced onto the people.
It’s interesting how the unthinkable is so suddenly embraced when it comes out these days. Let’s see, we’ll steal billions from everybody with a bank account, give it to the bankers, and pretend we’re serving some kind of justice in the bargain! Yeah, that’s it. This is really just taking back from these Russians. Never mind that it isn’t going back to the Russian people, it’s going to Goldman Sachs.
So are corrupt people fair game, anywhere? As I posted earlier, HSBC got caught laundering money for drug dealers. Can we take a little slice from everybody with an account at HSBC? Why not, it’s DRUGS people; cocaine, heroine, think of the children!
While we’re at it, let’s really get the bad dudes. How about those Kennedy’s? They were smugglers! Let’s take all their money, the bastards. And their houses and cars too. And that rich guy down the street; I heard he cheated lots of people to get where he is. I want his money too, dammit!
I don’t care one bit about these Russians. But I do care about the rule of law. Here’s one thing not even being discussed today; the EU is toast. Every penny spent on this farce is a penny wasted. IMO the people in Europe should throw these globalist banker scum into prison and if these Russians are crooks, give them a cell on the same block.
Today is looking like a good day for owners of gold or dollars.
March 18, 2013, 4:20 a.m. EDT
Gold prices above $1,600 on Cyprus bailout fears
By Barbara Kollmeyer
MADRID (MarketWatch) — Gold prices pushed to levels not seen in more than two weeks on Monday as investors sought out perceived safer alternatives to stocks, after the weekend decision by the euro zone to force Cyprus to tax bank deposits as part of a bailout deal. The Cyprus news has sparked fears of renewed turmoil in the eurozone. Gold for April delivery (GCJ3 +0.57%) rose $10.80, or 0.7%, to $1,603 an ounce. Silver for May delivery (SIK3 -0.44%) rose 3 cents to $28.80 an ounce. European stocks opened with losses on Monday, following a drop for Asia stocks, and oil prices also tumbled as investors sought out the perceived safety of the U.S. dollar. But the stronger dollar kept gold gains in check.
And so life continues in the global “disaster economy”
Pb and Bill in LA…..
what about certified gold coins? Instead of raw coins act like you are a coin collector….
http://www.pcgs.com/
I own some PCGS MS65 Saint-Gaudens coins. Good to own and hold. PCGS coins are a great way to diversify within your gold holdings. I prefer mostly modern bullion, but will be buying more PCGS coins this year.
Cyprus rescue breaks all the rules
http://www.bbc.co.uk/news/business-21827922
Reform of how to mend broken banks, which has been negotiated globally and in Europe since the Crash of 2007-8, has been based on two central principles.
First, that the savings of ordinary people should be protected, up to a high threshold - or 100,000 euros in the European Union for example.
And that financial institutions which lend to banks by buying their bonds should incur losses when banks are bailed out: bondholders should, to use the jargon, be bailed in, as part of resolution plans.
So what is seen by many as profoundly shocking about the terms of the rescue of Cyprus by the rest of the eurozone and the International Monetary Fund is that both of these principles have been broken.
Retail savers are being punished, by a levy of 6.75% on savings up to 100,000 euros.
And bondholders aren’t being touched.
How did this happen? Well as I mentioned on Saturday the German government was determined that the Cypriot rescue should not be seen by German taxpayers as in effect rescuing Russian money launderers with deposits in Cyprus.
But a deal that might just be approved by the German parliament has resulted in serious collateral damage to the credibility of policymakers in the eurozone and the IMF.
The Cypriot deal sets back the cause of the new global rules for bringing order to banking systems when crisis hits. Apart from anything else, in other eurozone countries where banks are weak, it licenses runs on those banks, as and when a bailout looms.
but it’s for the greater good.
Throughout most of recorded history , when banks folded in panics , folks lost all their money , not just 10% of it.
Also , the Idea of a Negative return on your savings is a strange one for us in the USA, but with all the fees tacked on , we already have that , unless you have a big pile of it.
i am beginning to think that buying a house with a large down payment might not be that bad.
if you can’t beat ‘em…join em’.
lose serveral thousand dollars on a house…or let them just come take several thousand dollars from you at gun point?
i am beginning to think that buying a house with a large down payment might not be that bad.
Which is exactly what they want you to think. In order to keep their friends “solvent”. Probably some risk in that strategy that they’re not telling you about…
Carl, I don’t get your post. ISTM that pulling money from the banking system is NOT what they want you to do.
Any cash that is spent toward owning something outright, like a paid-off car, a paid-off trailer, a big chunk of a house, or even a paid-off economy-size bottle of Tide,* is money that they can’t use. They want you to keep the money in the bank so that they can take 10%. Or, they want you to use the banking system for a mortgage so you have to pay interest every dang month.
—————-
*as opposed to buying one “pod” packet of laundry detergent every week.
“ISTM that pulling money from the banking system is NOT what they want you to do.”
Overpaying for a house with an artificially inflated price is giving money to the banking system, not pulling it out.
buying a house period is giving money to the banking system.
$ 725,000 30 year mortgage at 3.5%
$ 300,000 30 year mortgage at 7.6%
either way the bank still gets theirs.
My point is just that they want you to think that a house is the safest place to put your money, whether it’s overpriced or not. Which will then keep the price of houses high, which will then keep their friends solvent. That means they want other places you could put your money to look really dangerous.
My point is just that they want you to think that a house is the safest place to put your money, whether it’s overpriced or not. Which will then keep the price of houses high, which will then keep their friends solvent. That means they want other places you could put your money to look really dangerous.
Clear as a bell to me, Carl. Thanks for the clarification.
Do you think that the US is about to go to Germany to bail out our banking system so we can remain part of the European Union? You do realize that this is the reason for the “tax”?
of course i realize that. our central bank will continue to do it in a much more subtle fashion…iflation.
i think we no longer have a two party system…we have just one…the “debtor” party. until a “saver” party emerges…i feel the dollar is doomed.
i would much rather have a lower valued asset that a pile of useless paper.
Seems like the even the nanny staters Polly and Alpha are starting to squirm about the 10% confiscation happening in Cyprus.
In Soviet Socialist Europe, bank robs YOU!
I’m going to go on the record here and say it’s about time we do the same in the Caymans, the Bahamas, and other algorithmically-proven off-shore tax havens. Keep in mind that the 10% confiscation rate applies only to accounts that exceed the approximate equivalent of what the FDIC insures here in the US.
Private “banks” that only accept million dollar+ deposits of foreign currencies, that refuse to cooperate with rules of internationally-accepted banking reciprocity, that exist only as post office addresses, etc., operate within the safety of a legal banking system to subvert international law and lawful taxation. (Btw, the US has already instituted far-more onerous confiscations in Switzerland and Luxembourg — with plenty of advance warning, of course….)
I see no philosophical inconsistency in confiscating money that’s been extralegally obtained, transferred or hidden. Screw the oligarchs — after all, they’ve amassed it by screwing the taxpayers of their respective countries.
+1
Keep in mind that the 10% confiscation rate applies only to accounts that exceed the approximate equivalent of what the FDIC insures here in the US.
??? This is a distortion!
Bill, why would that be any different than being pissed off about the Wall St. bailout?
Oh wait, because on serves most people and the other just the 1%.
Thresho-
IIRC FDIC insures accounts up to $250,000 here in the US. The 10% confiscation is of accounts over 100,000 EU. Same concept, and given the average wage/standard of living in Cypress, a relatively proportionate amount.
What I have read is that a percentage of ALL depositor’s money is being confiscated.
The novelty of Saturday’s deal is that, for the first time in the euro crisis, depositors will contribute to the cost of recapitalizing banks. As we went to press, the plan was for Nicosia to extract €5.8 billion via a one-off 9.9% “stability levy” on deposits larger than €100,000 and a 6.75% levy on deposits smaller than that. The International Monetary Fund will pitch in €1 billion, and the European Stability Mechanism lends the rest, for a total of €10 billion.
From the WSJ
‘Fiona Mullen, an economist living on the island, told BBC News the plans were unexpected. “We knew there was a possibility they would take the deposits above the insured threshold - so above 100,000 euros - but nobody thought they would take it down to someone with five euros in the bank.”
http://www.bbc.co.uk/news/uk-21820237
Seems like the even the nanny staters Polly and Alpha are starting to squirm about the 10% confiscation happening in Cyprus.
Except that it isn’t the “nanny state” who’s doing the confiscating.
I see no philosophical inconsistency in confiscating money that’s been extralegally obtained, transferred or hidden.
Gotta hang a few innocent to get all the guilty, too, right?
The percentage is lower for small accounts, but it isn’t zero. That was a mistake. They needed to provide some real safe haven for the equivalent of Cyprus Joe 6-pack. The Russian mobsters caused the problem in the first place. They seemed to think that because Cyprus banks are largely funded through accounts (not bonds) that Cyprus banks would be safer than other ways to store the excess wealth. They should be wrong.
By the way, taxing outsiders is very popular among taxing officials. There are a lot of states that don’t have a sales tax (largely falls on residents) but pretty much every one has a hotel tax (largely falls on non-residents).
The percentage is lower for small accounts, but it isn’t zero
6.75% is smaller, but if it was my money, I’d be pissed.
6.75% is smaller, but if it was my money, I’d be pissed.
Which is why you’re going to see those small savers taking it to the streets in a major way. Cue up the social unrest. Again.
It is not the same concept. 6.75% is/was scheduled to be confiscated from the smaller account balances, no matter how small. Taking that much of a small depositor’s net worth is HUGE.
There is no j in Greek. The closest we have is tz.
I would translate j6p into greek as giorgos6pack or maybe zaharias 6 pack. Both very popular names.
well, yeah, and wouldn’t they immediately go try to withdraw what’s left in their accounts?
Also , the Idea of a Negative return on your savings is a strange one for us in the USA, but with all the fees tacked on , we already have that , unless you have a big pile of it.
It hasn’t quite come to that, but it could.
I don’t pay a cent for my checking, savings, or money market accounts, and my credit card gets me about $300 per year cash back.
But it’s a little bit like being committed to NOT ever getting parking tickets: takes some vigilance.
There are plenty of people out there that pay to bank, pay to have a credit card, and get parking tickets all the time.
Against inflation, it IS a negative return.
Has been for decades.
“Cyprus rescue breaks all the rules”
How many bailouts since Fall 2008 didn’t break any rules?
It’s particularly hard to defend account holders of all sizes receiving haircuts, while the bond holders are paid in full.
Cyprus banks are almost entirely funded by deposits, not bonds. They are very different than most first world banking systems.
Have they no bond holders at all? I’m sure they do have some.
Why should those bond holders be bailed out, while even the smallest account holder is ‘bailed in’?
‘The move — a first in the three-year-old European financial crisis — raised questions about whether bank runs could be set off elsewhere in the euro zone. Jeroen Dijsselbloem, the president of the group of euro area ministers, declined early Saturday to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered.’
http://www.cnbc.com/id/100560290
Maybe their bond holders are mostly local? The overwhelming majority of the deposits are owned by foreigners (Russians) who dumped their money in Cyprus banks because (presumably) they had a reputation of not caring very much if the money was stolen and/or part of illegal enterprises. This was an attempt by Germany to prove to its own citizens that they were not paying for the economic wreckage caused by Russian criminals. They should have structured the tax to be only on foreign depositors and only on amounts over $10K euros. That would protect mom & pop who actually live in Cyprus and people from elsewhere who keep a bank account in Cyprus to have a euro denominated account for vacations or whatever.
I have all sorts of sympathy for the Germans who are sick of bailing out foreign banking systems.
Youtube Parody: Hitler learns his savings have been tapped to bail out Cyprus. http://youtu.be/K5R2JyU_MKg
I have all sorts of sympathy for the Germans who are sick of bailing out foreign banking systems.
I’d have a lot more if the bondholders shared in the haircut (wouldn’t surprise me if a lot of them were German), and accounts up to say $100k euros, not just 10,000, were spared the haircut.
Sparing the bondholders completely, while including the smallest account holders in the haircut, is indefensible.
‘The move — a first in the three-year-old European financial crisis — raised questions about whether bank runs could be set off elsewhere in the euro zone.’
They could easily test this by announcing that deposit taxes are under consideration for other Eurozone banks requiring future bailouts.
They could easily test this by announcing that deposit taxes are under consideration for other Eurozone banks requiring future bailouts.
There is no need to announce this. Any European bank depositor who has been following the news this past weekend should already be quite aware of this possibility.
I suppose a more useful announcement to facilitate this experiment would be for central banks to commit to not cooking up an ad hoc liquidity injection to paper over the bailout shortfall.
“But a deal that might just be approved by the German parliament has resulted in serious collateral damage to the credibility of policymakers in the eurozone and the IMF.”
___________________________/
There’s no policymaker in the Western world who has any credibility at all when it comes to economic matters. I thought that was obvious.
It’s just a matter of time before someone is shot. I don’t advocate that outcome, for the record, but these decisions are going to result in violent political consequences.
“…serious collateral damage to the credibility of policymakers…”
Barn door left open
All of the horses have fled
Hurry, shut the door
love it Stucco…..
March 15, 2013, 10:01 a.m. EDT
Looking for canaries in the correction coal mine
By Tom Lloyd Sr.
Are overvalued stocks like Amazon, Netflix, LinkedIn and Facebook the canaries in the coal mine ahead of a major market pullback?
Apple has shown what can happen when the market turns on an individual stock. When a market begins its pullback, investors pull out of high-beta, overvalued, high-flying stocks. This is the proverbial “risk off” move as investors try to move out of high-beta and into low-beta stocks to avoid going down as much as the market.
At the first hint of a pullback, investors will bail out of these types of stocks thus making them the canaries in the coal mine. When they turn down it will warn investors that the long-overdue pullback from the historical new highs in the market is finally at hand.
…
goog looks like a bubble to me.
One word for Google
Tizen
The GOOG IPO looked like a bubble to me. I use it every day, but still can’t figure out how they support their share price. (One possibility: Spying for dollars.)
I use it every day, but still can’t figure out how they support their share price
———————-
This is a joke, right? You realize that searches from the actual GOOG homepage are a small and ever-lessening source of their revenue, no? And that GOOG is a serious competitor in consumer electronics and other areas now…
GOOG glasses are going to be awesome and the profit margin should be staggering.
I always assumed everyone could see how/why Google is such a dominant company, but if you can’t, perhaps read their annual report?
Their main source of income is sticking ads on other people’s web pages.
overpriced momentum stock. will get crushed like aapl when the big money bails.
Their main source of income is sticking ads on other people’s web pages.
Agreed. And, if you’re in a business like mine, having those AdSense ads on your site is considered to be very unprofessional.
Their main source of income is sticking ads on other people’s web pages.
—————
Yes, they serve more online ads than anyone else and their margins are much higher. They can target your ads based on previous searches, the contents of your Gmail inbox, your location (for mobile ads with GPS turned on, i.e. almost all apple or samsung users), and demographic factors. They also have a commanding market share on blogs, where the audience tends to be very targeted (blogger is still very popular as a platform despite competition from tumblr).
Their main source of income is sticking ads on other people’s web pages.
Advertising is the main source of income for newspapers, magazines, radio and tv, too.
BTW, what happened to Facebook’s ads, anyway? I haven’t seen any in months. How do they make any money? Spying, again?
“Their main source of income is sticking ads on other people’s web pages.”
If not consensual, this sounds illegal.
Are overvalued stocks like Amazon, Netflix, LinkedIn and Facebook the canaries in the coal mine ahead of a major market pullback?
Answer: Yes.
Amazon - awesome, bright future
Netflix - awesome, bright future*
LinkedIn - garbage
FB - garbage
*the best show on “TV” right now is actually only available on Netflix, which is streamed to people’s TV’s by XBox, PS3, desktop, etc.
Unpossible.
The economy doesn’t need to create tangible stuff.
We can all just tweet our way to Recovery®
Fed Chair Ben Bernanke and TreasSec Tim Geithner flew to Canada on a hunting trip.
They chartered a small plane to take them into the Rockies for a week of hunting moose.
They managed to bag 6. When they met at the plane to return, the pilot said he could take only 4 moose.
The two officials objected strongly. “Last year we shot six. The pilot let us take them all and he had the same plane as yours.”
Reluctantly, the pilot gave in and all six were loaded. The plane took off. However, while attempting to cross the mountains, the little plane couldn’t handle the load and went down.
Somehow, surrounded by the moose bodies, only Ben and Tim survived the crash.
After climbing out of the wreckage, Ben asked Tim, “Any idea where we are?”
Tim replied, “I think we’re pretty close to where we crashed last year.”
I love stories with happy ending; make them both dead.
No, they have moose to live on until the PTB come to rescue them. If they run out of moose they can eat the pilot. Isn’t that effectively what they’ve been doing?
You had me laughing at Ben and Tim went hunting. I had a hard time reading the rest.
Where’s Dick Cheney when you need him?
Bumper sticker sighting:
“I’d rather go hunting with Dick Cheney than driving with Ted Kennedy”
New Homebuilder Index to come out this morning…I’m guessing the number will be way up in the Western Region.
And we’re going to keep supplying excess inventory until resale prices are driven in the ground.
And we’re going to keep supplying excess inventory until resale prices are driven in the ground.
I didn’t realize what heroes you homebuilders are. Are the realtors not part of your team? The Dynamic Duo?
Homebuilders? lmao
Anywhere you hang your hat.
The Dynamic Duo?
Crapshack Man!
Crapshack Man and Robbin’ — the Boy Realtor!
Holy vinyl-siding, Crapshack Man! We’ve got vinyl crapshacks to build in the middle of nowhere to destroy the prices of well-built houses in town!
To the Monster Builder’s Pickup! (that cost as much as a small home)
And I was wrong…down slightly.
Here’s an article about the Shiller P/E ratio …
http://finance.yahoo.com/news/shiller-p-e-ratio-says-100039462.html
And here’s what the chart looks like …
http://www.multpl.com/shiller-pe/
Currently very close to the 1966 level which presaged a 16-year drop to the 1982 nadir…
Apples and oranges. When did people putting their money into 401(k) accounts start taking off? When did people start widely using credit cards instead of layaway? To me both of those events are around 1980. I’m sure by 1982 credit and 401(k)s were starting to gain traction.
In 2008 we have the Fed starting to paper over everything in site and people are still contributing to their retirement accounts.
The conditions in 1966 were completely different from the conditions now.
In the 60s we didn’t have a few tens of millions of extra houses, and we are still building. Housing demand is at a multigenerational low.
Washington Post - Food stamps put Rhode Island town on monthly boom-and-bust cycle:
“The economy of Woonsocket was about to stir to life. Delivery trucks were moving down river roads, and stores were extending their hours. The bus company was warning riders to anticipate “heavy traffic.” A community bank, soon to experience a surge in deposits, was rolling a message across its electronic marquee on the night of Feb. 28: “Happy shopping! Enjoy the 1st.”
In the heart of downtown, Miguel Pichardo, 53, watched three trucks jockey for position at the loading dock of his family-run International Meat Market. For most of the month, his business operated as a humble milk-and-eggs corner store, but now 3,000 pounds of product were scheduled for delivery in the next few hours. He wiped the front counter and smoothed the edges of a sign posted near his register. “Yes! We take Food Stamps, SNAP, EBT!”
“Today, we fill the store up with everything,” he said. “Tomorrow, we sell it all.”
At precisely one second after midnight, on March 1, Woonsocket would experience its monthly financial windfall — nearly $2 million from the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps. Federal money would be electronically transferred to the broke residents of a nearly bankrupt town, where it would flow first into grocery stores and then on to food companies, employees and banks, beginning the monthly cycle that has helped Woonsocket survive.
http://www.washingtonpost.com/national/food-stamps-put-rhode-island-town-on-monthly-boom-and-bust-cycle/2013/03/16/08ace07c-8ce1-11e2-b63f-f53fb9f2fcb4_story.html
Small former industrial cities are not doing well in the U.S.A. Particularly if young people moved away and left the retired — and their burdens — behind.
Can you imagine the gridlock, long lines and bordering on riot conditions every month if that happened in NYC or any big city? So in NYC the date you are approved is the date the card gets refilled each month.
But then again:
Rebecka, 21,
Late on Feb. 28, Rebecka came home to their two-bedroom apartment to make a snack for her daughters, ages 1 and 3. The kitchen was the biggest room in their apartment, with a stove that doubled as a heater
Was it better to pay down the $600 they owed the landlord, or the $110 they owed for their cellphones, or the $75 they owed the tattoo parlor, or the $840 they owed the electric company?
Wonder if there is cheap real estate in Woonsocket.
The Oil city plan… buy a house with cash and live well ok….. plus The largest Woonsocket racial/ethinic groups are White (71.3%) followed by Hispanic (14.2%) and Asian (5.4%).
Crime about average:
http://www.city-data.com/crime/crime-Woonsocket-Rhode-Island.html
Let them eat SNAP!
(somehow, that just doesn’t have quite the… “weight” it should)
Did you know that for-profit, private-sector, government contractors account for seventy percent of the Pentagon’s costs for delivering services?
Is THAT why contractor employees outnumber regular federal employees and have for the last 10 years?
Damn those overpaid gubmint workers!
The Feds in our shop are getting furloughed for 22 days from mid-April to the end of September, which is a 20% pay cut for that time period.
The contractors are getting furloughed for ZERO DAYS.
Contractors rule, Feds drool!
Those poor folks sure eat a lot of meat.
Greg Humphrey, president of the Tuolumne County Association of Realtors, said the trend we’re seeing is part of a predictable pattern of the housing market. When a market becomes overbuilt, demand falls and so do the prices. New construction stagnates and foreclosures increase sharply, creating a buyer’s market. That market switches into a second stage, where the supply is bought up and prices slowly begin to rise.
Humphrey said the cycle will eventually switch the market to one that favors sellers as the existing homes are bought and demand drives increases in construction. The question is just how long.
“It always flows the same way, always,” he said on Friday.
“It’s hard to predict” how long it will take, he later said. “It’s not going to be this year.”
http://www.uniondemocrat.com/News/Local-News/Real-estate-prices-climb
Summit County Ohio sheriff months behind on filing foreclosed property deeds
Summit County is running months behind transferring property deeds after foreclosure auctions, creating a major problem for willing homebuyers who are walking away from deals and for real estate agents who are losing sales.
“It’s crazy,” said real estate agent Barb Sabo of Kremer Realty in Munroe Falls. “You should have your deed in like 10 days to two weeks and they are running two to three months behind.”
The backlog means hundreds of properties are sitting vacant when they should be occupied. And some buyers are deciding to look outside the county because they don’t want to deal with the deed hassle, agents say.
The sheriff’s office is responsible for transferring the deed to a new owner after an auction. Until the property is transferred, homebuyers can’t close on financing with their mortgage lenders or take ownership of the property.
In cases where banks or investors buy foreclosed properties, they can’t sell them until the deed is transferred into their names.
Sheriff Steve Barry blamed the problem on layoffs in recent years and the swell in the number of auctioned properties. There used to be five or six workers handling deeds, but now there are only three.
On top of that, some employees have transferred out of that division and there is a steep learning curve for the deed process, which is complicated and time-consuming, he said.
“You cannot make mistakes on this type of stuff,” the sheriff said.
He had heard some complaints about the delays, but said he was unaware of the extent of the problem until questioned this week by the Beacon Journal. Barry was elected last year and has been in office only two months.
I don’t know who Katy Perry is, but she made me laugh anyway.
Katy Perry — I Can’t Unload This Damn House!
13 March, 2013
The housing market may be bouncing back for a lot of people, but not Katy Perry, because we’ve learned she’s about to list her Hollywood Hills house for WAY less than the purchase price.
Katy bought the house with Russell Brand when they were married. She has full title and has been quietly trying to sell it for a long time, but she’s not getting anywhere near the $8 million she wants.
Katy wanted to avoid putting the house in the multiple listing service — which is the Paul Revere of the real estate world. She wanted to sell the house on the down-low, but it’s just not happening.
We’ve learned she’s agreed to put the house in the MLS in 2 weeks, and she’ll reduce the asking price to the mid 7s — as in millions. But here’s the deal … Our real estate sources say she’ll definitely sell it if someone offers in the high 6s.
The real estate market … hot again for most — cold for Katy.
http://www.foxbangor.com/tmz/katy-perry-i-cant-unload-this-damn-house.html - 53k -
Katie Perry is a pop singer. From the one snippet I saw, she appears to be mostly hair and makeup.
The author had me at “the Paul Revere of the real estate world.”
I think she has pretty good instincts for entertainment and a mildly interesting back story. But she’s not a particularly good singer. She’s got a bit of a strange look if you look closely at her eyes…I think that if they ever remake Fatal Attraction I think she’d be perfect in the Glenn Close role.
hair and makeup?
look lower, oxide, and I think you’ll see why she’s popular with the boyz
I think oxide just outed himself if all he noticed was her make up… LOL
oxide has no Y chromosome, but I’m still surprised she didn’t notice those…
While oxide’s gender (female) is calculable, the losses on her suburban Maryland used house will be incalculable.
Very good article on how rentals and home prices affect each other. Lots of data for you numbers folks:
House Price Gains Signal U.S. Rental Bonanza Ending
(bloomibergi) By John Gittelsohn & Prashant Gopal - Mar 18, 2013 7:35 AM ET
Rents for single-family homes are rising slower than property prices as firms such as Blackstone Group LP (BX) flood the market with homes for lease, posing risks to investors betting billions on the burgeoning market.
…“Investors are buying homes, in part, to rent them out, and that has added a lot of rental supply, and that’s preventing rents from rising,” Jed Kolko, San Francisco-based Trulia’s chief economist, said in a telephone interview. “It means some investors will start to think about selling those single-family rentals.”
…Investors flocked to Phoenix after home prices plunged 56 percent from their June 2006 peak to a September 2011 low…
…Blackstone, based in New York and the world’s largest private-equity firm, has spent more than $3.5 billion to buy 20,000 single-family rentals, while Tom Barrack’s Santa Monica, California-based Colony Capital LLC has raised $2.2 billion .
[in Vegas].. “What we’re seeing is a game of musical chairs,” Wilcox said. “People lose homes to foreclosure and then rent a single- family home from an investor while another investor buys the foreclosure they just left.”
Colony doubled the size of its portfolio during the quarter ended Dec. 31, to 5,405 homes, and has since increased the number to 7,000…
Added supply would be good for Phoenix, said Lawrence Yun, chief economist at the National Association of Realtors. “It would be a welcome thing because, in Phoenix, they just don’t have inventory,” Yun said in a telephone interview.
“The first step is to focus on stabilization,” Gutshall, whose company manages about 1,000 homes in California, Nevada and Illinois, said in a telephone interview. “The next phase is to focus on growing rents.”
————-
Well here is one area that will not see rental rates dropping:
“Nearly 132,000 new residents showed up in the Dallas-Fort Worth-Arlington metro area between July 2011 and July 2012″
http://frontburner.dmagazine.com/2013/03/14/dfw-had-the-largest-population-increase-in-the-country-last-year-says-the-census-bureau/
According to research at the University of Texas San Antonio, the population of Texas jumped by 4.2 million between 2000 and 2010. That’s a 20.6 percent increase.
During that time, Texas’ net migration was 1.7 million. Net migration is calculated by the number of people moving to the state subtracted by the number of people who moved away.
That 1.7 million made an impact on the state’s population, but it was overshadowed by natural population growth.
A high birth rate with a low death rate made up for 54 percent of Texas’ population growth from 2000 to 2010.
http://www.kxan.com/dpp/news/texas/researcher-tx-population-could-pass-ca
And where is the wage inflation to support those higher rents in right-to-work (for less money), race-to-the-bottom, job creator Texas?
132,000 new residents……divided by 10 per apartment…….
The rental vacancy rate may not be as high as you think.
Three families to a house in South Dallas.
For your perusal:
http://blog.chron.com/primeproperty/2013/03/homes-selling-in-a-flash/
“The next phase is to focus on growing rents.”
Watch the market become flooded with rentals and then focus on growing rents?
Lol.
It’s time to once again trot out my REIT chart:
http:/www.vectorgrader.com/indicators/reit-dividend-yield
The price you pay determines your rate of return. If you want a hefty return from a REIT then you need to buy it at a low price.
Also, if you want a hefty return from the rental income generated by a REIT then you need to make sure the REIT will be able to get it. If the REIT doesn’t get the income then you don’t get the income.
Ooops. Make that:
http://www.vectorgrader.com/indicators/reit-dividend-yield
Does one really expect rental rates to rise to meet grossly inflated asking prices of resale housing?
In the same way, does one expect wages to triple to meet grossly inflated asking prices of resale housing? Of course not. Grossly inflated asking prices are falling to meet wages.
Good morning pimp! No, I don’t expect wages to triple to meet the price of housing. But I do expect the wages PER UNIT to increase due to shacking up, enough to pay rent. And then they can raise the rent accordingly. Keep the people barely able to pay the rent, while never being able to save up enough for a down payment. THAT is the goal of these hedgies.
Remember, J6P owning something outright is their worst nightmare. A paid-off house is 20 years of lost rental income stream. And more importantly, it’s a 20-year rental bond that can’t be packaged or sol on the secondary market for instant fees (hat tip to Polly for pointing that out).
” But I do expect the wages PER UNIT to increase due to shacking up”
And this unprecedented event you came up with yourself. It’s not founded in reality but it’s the basis of your incessant blather.
Creating a precedent all on your own. In the same way you magically turn your stunning losses into gains.
Thank you for the +1, sweetie.
Pimp and Ho, a love story made in HBB.
She’s always running.
Does one really expect rental rates to rise to meet grossly inflated asking prices of resale housing? “
In Texas, yes.
You really should spend some time there.
But that’s the point of the article, combo. The investors had been snapping up cheap properties. The delta between rent and PITI was big, woo hoo. But now that house prices are increasing again, the delta is decreasing to where it’s no longer worth their while to buy and rent out. And the rising prices puts more people above water which means fewer tenants.
This article focuses on Phoenix and Vegas because that is where the craaaater was. But I think that those funds are a little too pleased with themselves chasing the cheapest prices and biggest deltas. They missed just WHY those houses were so cheap: JOBS, you hello. Without the jobs to support the housing, the funds won’t get a good delta no matter how cheap their PITI. They also need to be careful about “growing rents” if incomes don’t grow. Renters will just shack up 2-3 per unit, leaving fewer tenants to fill the rest of the inventory.
The funds were spoiled by high returns on Wall Street. They are idiots if they think they can get the same ROI from real people who have to labor for their money as they got from Fed-fueled digits on a computer.
“But that’s point of the article, combo. The investors have been snapping up cheap properties.”
And they are using Other People’s Money (OPM) to do it with.
The REIT promters/managers collect fees from the piles of OPM and the owners of the OPM get what’s left.
This is a great business model for the promoters in that there are so many piles of OPM searching for a return that they only need to focus their attention on getting hold of some of it. Once they get hold of it and start extracting their fees then most ot their concerns are behind them.
No so for the owners of the OPM; Their concerns lie ahead.
“And they are using Other People’s Money (OPM) to do it with.
The REIT promters/managers collect fees from the piles of OPM and the owners of the OPM get what’s left.”
I know of one guy who is using his own money to a large extent, and I believe that Wayne Hughes started American Homes 4 Rent with his own money before he brought in investors.
Just because funds are involved, doesn’t mean it’s not a reasonable investment.
“They missed just WHY those houses were so cheap: JOBS, you hello”
Oxide, I find it very strange the way you go on about jobbed and non-jobbed areas. Since houses are cheap here we must have no jobs - according to your logic.
Here’s what some of my renters do for a living:
Auto mechanic
Internet security
Professor
Lawyer
Catering
Specialty woodworking
Waitress
Architect
Bill collector
Accupuncture
Home security
Parking valet for hospital
Student
EMT/ambulance driver.
OK I’ll admit the students and professor maybe shouldn’t count because of the student loan bubble. And I realize some here will find fault with the occupations of the attorney and accupuncturist. But Oxide, I fail to understand why you consistenly belittle the occupations and efforts of people who happen to live in flyover country.
Unless I assume it is part of your rationalization for living in DC.
“Watch the market become flooded with rentals and then focus on growing rents?”
That was my thought exactly: In what parallel universe does a supply glut lead to higher prices?
I’m still waiting for that answer from our new precendence-setter.
Which question was it you wanted me to answer? Do I think that house prices will stop falling? Yes. In jobbed areas, prices seem to have stabilized because people have jobs. In non-jobbed areas, prices have stabilized because hedgies bought up at the low end ( Phoenix craaaatered 56%), intending to rent out. Will there be wiggle? Will we see a craaaater to 1989 prices in San Francisco like Charles Hugh Smith predicted? No — at at least not soon enough twiddle my thumbs renting and waiting for said craaaater. I’d be surprised if we fell to 2000 prices.
Supply glut leading to high prices? I never said that this would happen. I said that they wouldn’t be able to grow rents because there aren’t enough jobbed folks to fill all the units, especially if incomes have to shack up. And if these companies hold the inventory off that market, then it is no longer supply.
Precedent for shacking up? I lived in rental housing for almost two decades. I saw it at all stages: students two to a room, the adjoining apartment in my high rise, the multigenerational family + grandma SS + uncle SSDI in the townhouse behind me, the three military allowanced young men in the townhouse in the same row, the Latin house on my current block, many more Latino houses where they had a sheet on the refrigerator where you signed up for your time in the kitchen, the three recent college grads in the other house on my block. Those are the ones I knew about.
And if that’s not precedent enough for you, crack open ANY American history textbook and look for the picture the rooms in the tenement house, you know, the one with the 61-year-old withering in the corner chair and the 8-year-old kids hanging out of the fire escape. There’s your precedent.
Put down the kool-aid, your incalculable losses are making you hallucinate. New York Times, Feb. 4, 2012:
“More people live alone now than at any other time in history. In prosperous American cities — Atlanta, Denver, Seattle, San Francisco and Minneapolis — 40 percent or more of all households contain a single occupant. In Manhattan and in Washington, nearly one in two households are occupied by a single person.”
Just 1 of the “About 157,000,000″ google search results for “more americans living alone”.
And the description you gave of your neighborhood makes it sound like a real sh*thole. If I was renting there, I would move.
Hallucinating Oxides of Housing Pimpage
Excellent article in the NYT, thank you goon.
Now I can’t seem to figure out how all these single people are affording to live alone.
“In jobbed areas, prices seem to have stabilized because people have jobs.”
It’s not a very logical explanation for a mania, but there you go.
Yup. Doesn’t make any sense.
Just like building very few new homes when in a low vacancy/growing population and economy environment won’t lead to home prices collapsing.
In what parallel universe does a supply glut lead to higher prices?
Housing. Isn’t that what we are seeing now?
It’s taken a helluva lot of manipulation (shadow inventory kept off the market, low interest rates, Fed buying mortgage backed securities, etc.) but the banksters pulled it off.
It’s good that you realize that manipulation is behind the housing price increases.
Have you considered that manipulation might not last forever?
Have you considered that manipulation might not last forever?
Of course. But I won’t be alive forever, either.
But while waiting for the bubble to burst I got older and spent over 250K on rent, and had to rent out a spare room to a roommate to afford the rent.
I waited until renting and PITI were equal, and until buying was no more than 3X our annual salary.
Is it a risk? Sure. But not buying would have been based on guessing the future, too, and also risking that I was going to retire as a renter, something that I just don’t want.
We bought because the math worked out and because we didn’t want to put our lives on hold another 3-10 years, waiting for this thing to unwind.
What is interesting to me is that at the run up to 2008 the traditional criteria according to HBB for deciding to buy was based on making sure that the numbers worked (3X yearly income, PITI equal or less than rent) but now nobody really knows what the criteria is or will be.
Using the NY Times rent or buy calculator, and plugging in 0% home appreciation and 0% rent increases, we would still be better off owning after 6 years.
The fact that we’ve lived here 20+ years and plan to live in the house we bought for another 20+ years (bought a small house so we don’t have to downsize when the kids move out) was a big factor.
Buying as an investment and buying because you need a place to live and plan to stay put are really 2 different things.
W
I waited until renting and PITI were equal
No you didn’t and you know you didn’t so why lie about it?
Anyone on on this blog can rent the same square footage for half the cost on your street. You got impatient and now you’re paying the ultimate price for it.
That NYT rent/own calculator. If you put a little house price depreciation in the model, it will freak you out (unless you are a renter).
“That was my thought exactly: In what parallel universe does a supply glut lead to higher prices?”
How many time do I have to explain this?
Our economy is now based on voodoo, er, supply side economics.
In supply side economics, you raise prices in good times due to scarcity. In bad times you raise prices to compensate for lost sales/profits.
The sad part is that it actually works, but only for the big players. But since they control everything, not so good for us.
‘How many time do I have to explain this?’
I don’t know. But the ‘war on ebonics’ guy is still working on the answer.
A few observations:
1. The articles generally single out markets where there are higher vacancy rates…this is an indicator that the homes that were empty are finally now hitting the market to be occupied;
2. The article doesn’t talk about (but should) the fact that there may be weakening rental demand for homes BECAUSE a renter of a home is more likely to want to buy a home than, say, a renter of a studio apartment.
3. It is interesting to see that Colony has slowed down their acquisitions of homes pretty quickly in response to the opportunity becoming less attractive…this is completely different than the “investors” during the bubble who were buying more and more as home prices started to rise faster and faster.
Cash flow investors will buy less as prices rise too high…a “value investor” equivalent. Flippers will continue to buy as long as they think they can sell for a higher price…a “momentum investor” equivalent. The evidence seems to point to Colony being a “value investor”.
Posted: 7:49 a.m. Monday, March 18, 2013
Cyprus bailout deposit tax rattles markets
By PAN PYLAS
The Associated Press
LONDON —
Stocks around the world and the euro fell sharply Monday as investors fretted over a plan to tax depositors in Cypriot banks as a way to partly fund a bailout of the Mediterranean island nation.
———————————————————————————-
Is your retirement account safe from our government?
By Phil Kerpen
Published February 11, 2013
Is the same federal government that has Social Security headed for bankruptcy looking to mess with your 401(k) or IRA? Yes, according to a recent interview with Richard Cordray, the director of the so-called Consumer Financial Protection Bureau (CFPB). Cordray recently said: “That’s one of the things we’ve been exploring.”
Retirement accounts are already regulated by the Securities and Exchange Commission and, notwithstanding the roller coaster of the financial crisis and subsequent recovery, most Americans are much happier with their privately owned and privately managed accounts than they are with their government-promised retirement benefits. Yet the CFPB may step in with new regulations despite the fact that nothing in the thousands of pages of the Dodd-Frank Act that created the CFPB mentions retirement accounts.
That’s what’s so frightening – and unconstitutional – about the CFPB. It has boundless authority to interfere in nearly any consumer financial transaction and product anywhere in the economy, and to do so without any accountability to the American people. Its director cannot be removed even by the president absent a dereliction of duty. Its budget comes not from Congress through the annual appropriations process, but directly from the Federal Reserve, where it is formally housed. But the Federal Reserve itself is prohibited from exercising any oversight over the CFPB.
http://www.foxnews.com/opinion/2013/02/11/is-your-retirement-account-safe-from-our-government/ - 52k -
“all your retirement are belong to us”
+1
But precious metals in your possession are movable and hidable.
9000?!
FOX NEWS is LYING OUTRIGHT. They think we’re stupid to click on the articles. They want us to swallow this whole and then email our buddies to also swallow this whole. But I clicked, and I found:
1. The Fox news article references an earlier news story that “congress had mounted a direct attack” on 401K. But the news story only said that gee, there’s a lot of money in 401K, and that “everything was on the table” in the fiscal cliff negotiations. But there is no direct attack, no bill in committee, no text from any person in congress, not even a report of a rumor from the negotiations. No, the Fox guy just read some speculation of what Congress “could” do (which by the way, Congress can’t do), and spread it as fact.
2. As for the interview with Cordray, Fox news refers to an article with bloomibergi. Here is the relevant text:
“That’s one of the things we’ve been exploring and are interested in in terms of whether and what authority we have,” bureau director Richard Cordray said in an interview. He didn’t provide additional details.
The bureau’s core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams.
In other words, the CFPB is looking at whether they have to authority to protect or inform seniors against scams where the retirement companies steal 401K money. It’s not the government doing it, it’s the scammers.
This is outright yellow journalism.
By the way, if anyone wants to find some real facts about Congress taking away retirement, there is plenty of well-documented text, including TV interviews, from 2003-2005, when Bush and his advisors and the R’s in Congress tried to to “carve out” parts of Social Security for their buddies on Wall Street.
For a more recent example, go read Paul Ryan’s budget, where Medicare is voucherized and given to the private insurance companies.
FOX NEWS is LYING
That’s unpossible. Besides, there were stories in the Washington Times, on Breitbart, and even international coverage in the UK Daily Mail that confirm all of the above is true. Will go check Drudge and post a link…
Fox news is yellow journalism but it’s right.
The Government, local governments, political parties (D and R), central bank, banks, wall street, corporations, unions, churches, “climate change” groupies and realtors — THEY ARE ALL AFTER YOUR RETIREMENT MONEY & SAVINGS.
“The Government, local governments, political parties (D and R), central bank, banks, wall street, corporations, unions, churches, “climate change” groupies and realtors — THEY ARE ALL AFTER YOUR RETIREMENT MONEY & SAVINGS.”
At least one of you understands the truth.
“climate change” groupies
Wildfire season starting early this year, thanks to climate change induced drought. And all the carbon credits and Toyota Prius in the world can’t reverse it.
Climate change is real, it is caused by humans, and it is irreversible.
It’s gonna get worse, and then it’s gonna get more worse. You’ll see
http://www.foxnews.com/us/2013/03/15/northern-colorado-wildfire-threatens-numerous-homes-about-50-people-leave-area/
Elle and (whatever other names you go buy), we all know that corporations want our retirement; let’s focus on government for the moment. Could you provide a link to actual words or text from an elected or appointed official, or some other evidence stronger than someone else’s rumor mongering, that government is going to take or tax 401K money? If you do, you’ll be doing better than Fox news.
Just remove your blinders, you will see clearly.
401k money is already taxed when you receive it in retirement. IRA money too. It is taxed later (and for a lot of people, at lower marginal rates) than it would be if you didn’t put it in the 401k.
And there is nothing special about retirement accounts when it comes to reducing SS benefits. They treat any account under your SS number in the same way if they chose to do it for retirement accounts.
Oops, sorry Polly, I think they’re talking about taxing Roth IRA or Roth 401K distributions. Or they could start taxing regular 401K gains each year.
Or they could start taxing regular 401K gains each year.
Or they could simply TAKE IT. Don’t misunderestimate what any government would do in an emergency.
Or the gov could nationalize the corporations that issued the stock. All your Coca-Cola shares are belong to us…
You’re not supposed to read and think, you’re supposed to panic an look for somebody to blame.
Kudos, oxide.
April 20, 2012, 4:28 p.m. ET
Congress Eyes 401(k)s Again
By KELLY GREENE
Some of the most popular retirement-savings tools are coming under the congressional microscope.
As policy makers gear up for the tax-reform effort expected after the presidential election, they are asking: Can 401(k) plans, individual retirement accounts, and other tax-deferred vehicles be streamlined while getting more traction among people with lower incomes?
On Tuesday, the House Ways and Means Committee heard from several experts on the subject.
At the very least, the increasing focus on retirement savings is a reminder that tax treatment of the accounts, once considered permanent, is anything but. Here’s what you need to know about lawmakers’ eyeing your nest egg.
Q: Why are retirement accounts being scrutinized now?
A: Congress is looking for ways to raise revenue. This discussion comes on the heels of the Senate Finance Committee’s proposal earlier this year to take away a big tax advantage for inherited IRAs: Making heirs empty them out, and pay any income tax due, within five years of the death.
The measure, estimated to raise $4.6 billion in revenue over 10 years, was abandoned, though Sen. Max Baucus (D., Mont.) suggested it might be taken up as part of tax reform.
Q: It’s tough to get people to save. Why would Congress tinker with the retirement plans they already have set up?
A: “The proliferation of tax-favored retirement accounts has occurred as specific needs have led Congress to create new types of plans with different rules,” said Rep. Dave Camp (R., Mich.), chairman of the House Ways and Means Committee, at the Tuesday hearing.
Mr. Camp acknowledged that 66% of full-time workers participate in workplace retirement plans, with almost three-quarters of them making less than $100,000 a year. But the large number of plans with different rules and eligibility criteria has led some policy makers to question whether the plans have left workers confused—and less likely to use them.
Q: What proposals to increase tax revenue, or boost retirement savings, are on the table?
A: There are several.
• IRAs that would automatically enroll workers with no access to a workplace retirement plan, creating a means to save through regular payroll deposits.
• Capping retirement-plan contributions at $20,000 a year or 20% of compensation, whichever is less—including employer contributions. Currently, the limits are 100% of compensation or $50,000 a year.
• Replacing exclusions and deductions for retirement savings with an 18% tax credit, deposited directly into an individual’s retirement savings account.
• Accelerating “automatic enrollment” of workers in retirement-savings plans, along with their default savings rate, and automatically increasing workers’ savings rates each year.
• Simplifying the paperwork involved for small employers’ adopting existing types of plans, with the goal of increasing access for more workers.
Q: If Congress alters tax deferrals, will people still put money away?
Not at the rate they do now, says Jack VanDerhei, research director at the Employee Benefit Research Institute. In the group’s 2011 Retirement Confidence Survey, one in four full-time workers saving for retirement said they would reduce, or totally eliminate, their retirement-savings plan contributions if they could no longer deduct them.
Doing away with tax-deferrals for workers could lead some employers to drop their plans as well. A study done for the Principal Financial Group last year found that if workers’ ability to deduct any amount of their 401(k) contributions from taxable income were eliminated, 65% of the plan sponsors surveyed would have less desire to continue offering their 401(k).
Q: How much do these plans cost the government in lost revenue?
A. It depends on which time period you consider. The government has estimated that it will lose $136 billion this year in revenue to tax-deferred retirement plans. But “every dollar that is excluded from income this year will be included in income in a future year,” says Judy Miller, retirement-policy director at the American Society of Pension Professionals and Actuaries.
That future tax revenue doesn’t show up in the typical five- to 10-year budget windows used by federal number-crunchers, said James Klein, the American Benefits Council’s president, in a post-hearing interview.
http://online.wsj.com/article/SB10001424052702304331204577354024207255032.html - 180k
Congress doesn’t run the country. Obama rules by fiat.
Thanks for the misinformation link, jethro. We can always count on you.
Some politics today. Here’s the laundry list of how the Republicans want to regain in their elections:
GOP report calls for sweeping reforms to compete in 2016
http://firstread.nbcnews.com/_news/2013/03/18/17351259-gop-report-calls-for-sweeping-reforms-to-compete-in-2016?lite
——————
The Republican National Committee released an audacious set of recommendations on Monday aimed at revitalizing the party…The RNC’s 100-page report, the “Growth and Opportunity Project,” is the election autopsy ordered by Chairman Reince Priebus last fall.
[excerpts from the rest of the article]
•.. increased outreach to women, young voters and minorities — especially Hispanics. … but [the report's] top recurring theme arguably involves building a robust Republican data infrastructure…prompted by the Obama campaign’s far more sophisticated operation in 2012.
•”third-party groups that promote purity are hurting our electoral prospects,”
•Super PACs are a “wild card” that threaten to weaken an eventual nominee due to the onslaught of negative advertising during primaries…
•limiting the total number of debates to 10 or 12…[Translation: fewer debates = fewer gaffes]
•….recommends that Republicans ditch caucuses and conventions — venues in which conservative activists traditionally dominate [Translation: they don't want pesky Ron/Rand Paul supporters to gum up the works again]
•Commit an initial $10 million to improving outreach to minority communities
•”RNC Celebrity Task Force of personalities in the entertainment industry” to attract young voters, and encourage Republican leaders to “participate in and actively prepare for interviews” on the Daily Show, the Colbert Report and other media aimed toward younger Americans; [Maybe Jane Fonda is available? Jon Stewart will eat these folks for lunch. And I'm sure that Colbert would be delighted to speak at another Correspondant's Dinner.]
•[Plus a laundry list on early voting, datamining and tracking voters, consistent polling including cell phones, and varous ways to raise more money.]
———————-
To be honest, I think the R’s missed the mark. This is all about money and messaging, not the message. The fact remains that the R’s are stuck dealing with their split between social purity and electability, freeing up the Dems to make headway on the jobs front. Even if R’s become socially libertarian, it’s still very clear that they are the party of unfettered capitalism from Wall Street, Jack Welch’s outsourcing, banks, polluting the environment to cut costs, and profiting off the old and sick (SS, Medicare). Not to mention eviscerating the middle class and then blaming the middle class as lazy victims. And the young know it.
As I said last week, until the R’s produce actual career jobs, and an environment where hard work and education produce actual results for the majority (like it used to) instead of for a lucky few anecdotes, they are not likely to gain or keep any traction no matter how sophisticated their databases.
until the R’s produce actual career jobs
You’re two weeks early for April Fools’ Day.
Like they are going to start with Detroit and demand its children be fluent in English to graduate….ok
freeing up the Dems to make headway on the jobs front
The Republican National Committee released an audacious set of recommendations on Monday aimed at revitalizing the party
To summarize them: Shut up the Tea Party and bring in the Hispanic voters before the entire ship sinks. Oh, and more computers and those smart phone thingies.
I think the current version of the Republican Party is unlikely to woo Hispanics in significant numbers. After doing everything they can to turn them off, it will be very difficult to convince Hispanics that the Republican Party is now sincere about wanting them.
Which reminds me of a story from my younger years. I was renting a room from a woman who had come from Italy when she was barely out of her teens. She married a U.S. Army doctor whom she met while she was a WWII translator in a village near Naples.
To say that she spoke-a de English with an accent was an understatement. Understanding what she was-a saying was quite the challenge.
She was interested in Republican Party politics to the point where she started running for office. The WASP Republican power structure of early 1980s Pittsburgh gave her a very frosty reception. Very frosty.
At one point, she said to me that “They don’t like me because I’m-a ethnic.” It was hard to argue with her on that point.
Since 2banana has the day off today, we’ll fill in with the standard response to “republicans are racists” by noting that Senator Byrd (D-WV) was a member of the Klan.
Is the same misogynist, racist, plantation owning, divine right to be rich at the expense of others, GOP, or a different one?
Because this one doesn’t stand a chance of ever changing.
Those are all just Democrat party talking points.
You should read more Breitbart articles and get the Truth.
I don’t keep up. What the F is “social purity”?
Housing’s Dead Cat Bounce
Now that it’s self-evident that housing is in dead cat bounce mode, you can now observe the losses of those who were foolish enough to believe the tripe and paid a grossly inflated price for what is always a depreciating asset.
Remember that cats have nine lives the same way that baseball games have nine innings. So I guess, instead of asking which inning the housing bubble is in, we should ask which of the nine dead cat bounces we’re on.
Remember…. Housing prices are still at the grossly inflated levels of 2004… and falling. And with million of excess empty houses and demand at 17 year lows, do you really think prices will magically stop falling and begin rising?
Thank you for the compliment, honeypot.
Don’t run. Answer the question.
“honeypot”
You keep using that word. I don’t think it means what you think it means.
Oh, I bet she knows what it means.
“And with million of excess empty houses and demand at 17 year lows, do you really think prices will magically stop falling and begin rising?”
Isn’t this where the QE3 MBS purchase program comes to the rescue?
The demand for replacement housing is at 60 year lows.
“…demand for…”
Why does that matter with the Fed playing the role of housing-fluffer-in-chief?
The dead cat bounce will only become evident from the lens of history’s rear-view mirror, as the dust is settling on the death throws of the housing bubble’s final collapse.
The Masters of the Universe, doing “God’s Work”
“U.S. regulators are investigating whether high-frequency traders are routinely distorting stock and futures markets (they are) by illegally acting as buyer and seller in the same transactions, according to people familiar with the probes.
Such transactions, known as wash trades, are banned by U.S. law because they can feed false information into the market and be used to manipulate prices. Intentionally taking both sides of a trade can minimize financial risk for the trading firm while potentially creating a false impression of higher volume in the market.
The Commodity Futures Trading Commission is focused on suspected wash trades by high-speed firms in futures contracts tied to the value of crude oil, precious metals, agricultural commodities and the Standard & Poor’s 500-stock index, among other underlying instruments, the people said.”
http://online.wsj.com/article/SB10001424127887323639604578366491497070204.html
Simple fix
.01 cent per share tax on all trades. This type of trading produces nothing of value in fact it destroys value because people decide not to invest.
This was one of the “demands” of Occupy Wall Street.
Until the media smear campaign and President Obama’s Department of Homeland Security crackdown destroyed the movement.
+1.
also to make all bids and asked good for 1 second…1 lousy freakin second would dry up all the nanosecond trading…
“…by illegally acting as buyer and seller in the same transactions…”
Treasury & GSEs = sellers
Fed = buyer
All of the above = subsidiaries of Uncle Sam, Amalgamated
Hmmmmmmmm…
I guess the rules the gubmint follows are different?
P.S. Other than the fact the the gubmint has near-monopoly interests in the military and money printing businesses, what is the difference between the gubmint and any other too-big-to-fail monopolist?
Is it that the gubmint looks out for the Peoples’ interests while monopolists don’t? Tell me another whopper…
I’m shocked, shocked, that Wall Street is making profit by manipulating practices on Wall Street (your bonus, sir).
[actually what's shocking is that this was reported in the WSJ, of all places]
btw, for those of you who think that a Dem Administration is no different from an R Administration, it’s awfully coincidental that the SEC, CFTC, and other regulators didn’t wake up and start investigating until 2009 or so. And yes, it takes years for an investigation to advance to a stage where news of it can be leaked.
Note that the investigation is going after some bit players.
The Boyz are untouchable. All your base are belong to the Boyz.
Note that the investigation is going after some bit players.
Where do I note this? The firms aren’t named in the article, nor is it implied that they are bit players.
Besides, who’s heard of any of the HFT firms? They don’t run ads about themselves.
KEYRAAAAAAAAAAAAAAAAAAAASH!!!
That’s the sound of falling housing prices blowing a hole through the floor in your neighborhood.
Dude, know your sound. That’s the sound of 10% haircut of your life savings in Cypriot banks.
But the mental imagery is mint.
http://farm1.staticflickr.com/31/45883637_4bf23fbe53_z.jpg
For the time being, prices are rising in my nabe. I doubt it will last, but they are rising. I will keep a close eye out this summer.
This one sold for $61,000 more than it did in 1998 (I actually know the people who sold it, they divorced).
http://www.zillow.com/homedetails/3901-Crestone-Dr-Loveland-CO-80537/13887838_zpid/
14 years of interest payments? They must have earned a fortune!
“If you buy a house today you’re going to lose alot of money. ALOT of money. Rent now as rental rates are half the monthly cost of buying at current inflated asking prices of resale housing. Buy later for 65% less.”
The losses in suburban Maryland and in San Francisco will be incalculable.
How is home builder confidence shaping up as we enter the red hot spring sequestration sales season?
Builder confidence ain’t all that.
March 18, 2013, 10:00 a.m. EDT
Homebuilder confidence declines in March: NAHB
By Ruth Mantell
WASHINGTON (MarketWatch) - A gauge of confidence among homebuilders declined in March to the lowest level since October, hurt by weaker views on current sales of single-family homes, according to the National Association of Home Builders/Wells Fargo housing-market index released Monday. The overall builder-confidence index decreased to 44 in March from 46 in February for a second month of declines. “In addition to tight credit and below-price appraisals, home building is beginning to suffer growth pains as the infrastructure that supports it tries to re-establish itself,” said David Crowe, NAHB’s chief economist. While views on present sales declined, a barometer of homebuilders’ sales expectations rose in March, as did a gauge of prospective-buyer traffic. Analysts polled by MarketWatch had expected the overall builder-sentiment index to tick higher to 47 in March, supported by rising home prices and growing employment. The last time the index reached above a key reading of 50 was in 2006. Readings over 50 indicate that more builders see sales conditions as good than poor. Despite March’s decline, the sentiment level among homebuilders is up 57% from a year earlier.
Quite high. Profits are there at levels under resale housing asking prices.
Quite high
Another great prediction.
Poor alpo slop. Couldn’t build himself a doghouse with plans and 6 months to do it.
Gordon G. Chang, Contributor
I write primarily on China, Asia, and nuclear proliferation.
Op/Ed
3/03/2013 @ 4:31PM
China’s Property Sector, Just Before The Crash
On Friday, China’s State Council released a statement calling for higher down payments for second homes in cities and demanding both the collection of taxes on secondary sales and the enforcement of existing property curbs. The document, capping Premier Wen Jiabao’s three-year campaign to cool the housing sector, comes at a time when both Beijing’s National Bureau of Statistics and private surveys show an acceleration of residential prices across China.
Prices in China’s 100 largest cities rose 2.5% in February year-on-year, according to a private survey conducted by China Real Estate System, a consultancy. That was up from January’s 1.2% pace. February was the third-straight month of year-on-year increases and the ninth-straight month of month-on-month price growth. Home inflation in February was especially pronounced in the top 10 cities, where prices jumped 4.3% from the previous February.
The National Bureau of Statistics reports that residential prices rose 6.8% in 2011 and 7.7% in 2012.
Home prices have been increasing since the beginning of last decade and especially since 2009, when Premier Wen pumped too much stimulus into the economy. Housing prices, not surprisingly, soared about 20% that year as money, which could not be used productively, was diverted for speculative purposes. There was a sharp correction in late 2011, but the People’s Bank of China, the central bank, started another bull run in the middle of last year when it added even more liquidity to the economy.
As a result, homes are now beyond the reach of all but the wealthy. And economists think the problem will get worse. A Reuters poll shows that economists think prices will rise 7% this year.
…
What is either surprising or so upsetting about a “screw the savers” bailout? Isn’t this what banking is all about: Screw somebody else in order to increase profits to the 0.01%?
the 0.01%
Thirty years of trickle-down has been very good for the 1%, the 0.1%, and the 0.01%. If the trend in this chart continues we’ll be in a New Gilded Age soon.
http://en.wikipedia.org/wiki/File:Share_top_1_percent.jpg
They gotta get their 8-10% ROI, no matter what. It’s their birthright.
To make sure they get what’s theirs, the rest of us are just going to have to suck it up.
It’s their birthright
That’s class warfare commie talk.
They are the Producers, the Job Creators, the Makers not Takers, the rugged individualists, Galt Gulch, born in a log cabin, Horatio Alger, et cetera…
born in a log cabin
They have log cabins in the Hamptons?
I’ll bet they have some toe-tappin’ log cabin Republicans.
‘Very real danger’ that the eurozone crisis about to flare up again
John Shmuel | 13/03/18 | Last Updated: 13/03/18 10:20 AM ET
Protestors are seen outside Cyprus’ parliament in Nicosia, the capital. Analysts say a potential bailout for the country sets a dangerous precedent.
The flight from risk is in full swing this morning after Cyprus and its lenders agreed to a bank levy on the country’s borrowers in exchange for a bailout over the weekend. Economists are now fretting that the deal could have a nasty fallout effect that could ignite Europe’s sovereign debt crisis once again.
IHS has a note out this morning that warns the deal looks set to open up a “nasty can of worms.” The biggest concern is that savers in other struggling eurozone countries could start to fear they’re next, triggering a run on banks.
“[The risk is] depositors will feel increasingly uncomfortable about leaving their money in banks in these countries,” IHS economists wrote. “This could then lead to a destabilizing withdrawal of credit from banks that exacerbates the problems and further escalates the problem.”
That means the sovereign debt crisis, which has practically vanished from investor minds since last September, could return to be the main market driver over the next few months.
“A mass of withdrawals from eurozone periphery banks could heat up the debt crisis once again after the international financial community had decided that lending to countries such as Spain and Italy would not require the extremely high risk premia it had earlier demanded,” IHS economists wrote.
Cyprus shocked markets over the weekend when it announced it would tax the country’s bank deposits to secure a 10-billion euro bailout package. Under the terms proposed, Cypriot depositors with funds under 100,000 euros would be on the hook for a 6.7% tax, while those over 100,000 euros would pay a 9.9% tax.
This is the first time that a bailout package in the eurozone has directly involved taxing bank deposits.
Analysts are now worried that any future bailouts involving other struggling periphery countries could also involve bank taxes.
“The problem is [the Cyprus bailout] might have just set a precedent for the larger crisis-economies such as Spain and Italy,” said Mark Chandler, head of fixed income and currency at RBC Capital Markets.
…
I didn’t know this nugget from Cyprus that banks are actually closed. They just extended it through Thursday.
The eurozone powers-that-be (mainly Germany) gave Cyprus a bailout and insisted that the depositors in Cyprus’s banks pay part of the tab — a startling condition that has never before been imposed on any major banking system since the start of the global financial crisis in 2008.
The deal did not touch the bondholders. Why the depositors? These are folks who had their money in the banks for safe-keeping.
This says everything about how much power the elite have. The stock and bond holders at the bank should have been wiped out, then and only then should the account holders take a hit. Nope destroying the stock and bonds would destroy other European banks and harm the rich.
Years ago, we discussed how the housing/debt bubble and its aftermath was a “Bagholder Identification Process.”
Instead of the government doing all it could to limit losses to predatory lenders and irresponsible borrowers, instead, it sought to do its best to socialize the losses of the lenders and subsidize the borrowers. Why? Because it was in the politicians’ interests. They are funded by Wall Street and obtain tax revenue based on house prices.
The attack on depositors in Cyprus is more of the same. Additionally there’s a Russian angle: “We can’t use German taxpayers’ money to guarantee deposits of illegal Russian money in Cypriot banks,” SPD lawmaker Carsten Schneider told SPIEGEL.” - http://www.spiegel.de/international/europe/german-spy-agency-says-cyprus-bailout-would-help-russian-oligarchs-a-865291.html
It’s not clear this was a well-thought-out move. One net result is that people will want to move at least some money out of banks. IF this was not a well-thought-out move, that leads to one line of conjecture.
Or, if this was a well thought out move, with a full analysis and understanding of the ramifications, that leads to another line of equally interesting conjecture.
Unintended consequences however - and the black swan - are common in history. Is this Princips aiming at the Archduke? Or another step in a carefully orchestrated ballet?
If someone is trying to destroy the currency union, or force exits of various nations, inciting withdrawals from banks in the at-risk nations would be one use tack. Perhaps Germany sees it chance to assert itself, shed the peripheral nations from the common currency, and in fact strengthen the Euro with like economically like-minded countries. What does that do for France I wonder.
Or perhaps this is in fact the best deal for Cyprus, which suddenly found itself in a weak position and was pounced upon. No bailout and depositors lose more perhaps.
Fascinating, and educational, stuff.
Maybe it is a well thought out move.
ZIRP is an attempt to get people to move money out of MM and safe investments. Assuming these people go out and buy assets or stocks it might help the economy. Smirk.
Of course they could just plow the cash into a literal hole in the ground. If I was in a wealthy neighbor hood I’d buy a pair of binocculars and scout out who was digging holes in my neighborhood.
I read this in an ABC news story about Cyprus, and no matter how many times I reread it, it still makes no sense:
Cyprus’ banking sector is about eight times the size of the economy and has been accused of being a hub for money-laundering, particularly from Russia. That’s why many European officials wanted to have the banks’ depositors involved in the cost of the bailout.
How is robbing all depositors going to fix this? What am I missing?
‘has been accused of being a hub for money-laundering, particularly from Russia’
Oh well, they’ve been accused. That’s good enough in today’s world. Only the Russians do such a thing.
‘Argentina’s government said it filed charges against the local subsidiary of U.K. bank HSBC Holdings PLC for allegedly helping businesses evade taxes and launder money. Ricardo Echegaray, director of federal tax agency Afip, said a six-month investigation uncovered evidence of tax evasion and money laundering amounting to 616 million pesos ($121 million).’
‘Mr. Echegaray said at a news conference that “there was decisive participation” of HSBC executives in hiding financial information, including the use of phantom bank accounts, from the authorities.’
‘In December, U.S. authorities announced a $1.9 billion fine against HSBC Holdings for failed antimoney-laundering controls they said allowed drug proceeds and transactions from sanctioned nations enter the U.S. financial system.’
‘In that settlement, HSBC said it accepted responsibility for its actions. Neither HSBC nor any of its executives were charged with criminal conduct in the U.S. case.’
http://online.wsj.com/article/SB10001424127887323415304578368244050745684.html
Oh well, they’ve been accused. That’s good enough in today’s world.
What he said.
I didn`t see this but if I knew the president had a part I may have watched.
Why does the devil in ‘The Bible’ look exactly like President Obama?
By James Nye
PUBLISHED: 02:08 EST, 18 March 2013
Sunday evening’s episode of the History Channel’s hit series ‘The Bible’ threw up an awkward coincidence when viewers noticed that Satan bore a remarkable resemblance to President Obama.
Twitter exploded into life during the airing of the latest edition of the Mark Burnett-produced series with most noting the striking similarities between the 44th President and the devil played by actor Mehdi Ouzaani.
The show has been a surprise hit in the ratings, with the religious mini-series attracting 13.1 million viewers on Wednesday - topping television leviathan American Idol’s 12.8 million viewers on Wednesday.
http://www.dailymail.co.uk/news/article-2295082/Why-does-devil-The-Bible-look-exactly-like-President-Obama.html?ito=feeds-newsxml - -
I didn’t see enough of it to see the actor playing Satan, but I did notice that Jesus was pretty much the palest dude around. Not actually blond, but with light brown hair and very pale skin rather than the darker hair and/or complexion of most of the rest.
an awkward coincidence
Did you know that President Obama’s middle name is Hussein? The same as the last name of the Iraqi dictator who flew the planes into World Trade Center on 9/11 when they attacked us because they hate our freedoms?
“My daddy served in the army
Where he lost his right eye
But he flew a flag out in our yard
Until the day that he died
He wanted my mother, my brother, my sister and me
To grow up and live happy
In the land of the free.
Now this nation that I love
Has fallen under attack
A mighty sucker punch came flyin’ in
From somewhere in
Iraqthe back”– Toby Keith, “Courtesy of the Red, White and Blue”
When I heard that song, I realized what must have been the original lyric. Stirring song, certainly, don’t want to take anything away from it, but it goes to show some of the disinformation that’s been disseminated.
I’m partial to the “Team America” song myself…..
“Wal Mart! …..(chorus)……
Starbucks!..(chorus)…….
Books!…….(silence)………”
“Promise me you will never die”
“You know I can’t promise that”
“If you did that, I promise I’d make love to you right now…..”
“I promise, I’ll never dies….”
“But I thought you weren’t gay……”
“This isn’t about sex, Gary…..it’s about trust.”
some of the disinformation
Clint Black - Iraq and I Roll:
http://www.youtube.com/watch?v=41gGLmKSm-E
http://www.sing365.com/music/lyric.nsf/Iraq-And-Roll-lyrics-Clint-Black/83868839E481461848256CF4000A1A00
NJ police & DYFS invade home over Facebook photos
Jack-booted thugs in full tactical gear, spurred on by Division of Youth and Family Services, invaded the home of a law-abiding suburban family over a picture posted on Facebook of their son holding his .22 rifle.
The Police had no warrant. They demanded access to the firearms safe in the house in order to ensure all firearms were registered. When the father told them to leave because they had no warrant, he was told he was being unreasonable and acting suspicious. To push the matter, DYFS threatened to take away their child.
It’s all good, the government and the Moonbats just want to help us… by taking away our 2nd Amendment rights and if we resist, our 4th Amendment rights.
Remember, it’s “for the children”.
And Waco was “for the children” too. Except those children got gassed and burned alive
Yeah, “For the Children” in this case means some gun-grabber communist moonbat NARCed the family out because of they were offended by the picture. As far as the cops and family services go, their entire method of operation is based on fear, intimidation, and ignorance of legal rights. They were on a hunt to find a criminal violation, even though there was no probably cause and no warrant.
Remember, it’s “for the children”.
————————————–
No, its to fight the racists; they’re everywhere!
http://www.youtube.com/watch?feature=player_embedded&v=9v3erlEFzd8
SPLC Letter to Holder and Napolitano: Patriot “Hate” Groups Pose Domestic Terror Threat
Kurt Nimmo
Infowars.com
March 8, 2013
The letter sent by the president and CEO of the SPLC, J. Richard Cohen, begins by reminding Holder and Napolitano that the organization “wrote Attorney General Janet Reno about the growing threat of domestic terrorism” prior to the Oklahoma City bombing in October, 1994.
“Today, we write to express similar concerns. In the last four years, we have seen a tremendous increase in the number of conspiracy-minded, antigovernment groups as well as in the number of domestic terrorist plots.” Today’s “ominous threats,” Cohen warns, come from citizens concerned about federal government attacks on the Second Amendment. “Because of the looming dangers, we urge you to establish an interagency task force to assess the adequacy of the resources devoted to responding to the growing threat of non-Islamic domestic terrorism.”
Utilizing the standard SPLC modus operandi and fear tactics, Cohen conflates a small number of racist white supremacist groups with the larger and more diverse patriot community. He also characterizes growing concern on the part of millions of Americans in response to egregious violations of the Constituion as dangerous and deems the federal government response to this “domestic terror” threat as entirely insufficient. “In light of these questions and the disturbing trends we have described in this letter, we believe it is time to take a fresh look at the issue,” he concludes.
Finally, the SPLC’s theatrical use of the Oklahoma City bombing is interesting considering the organization’s connection with that terrorist event. In 2004, a declassified FBI memo obtained by an Oklahoma newspaper revealed the existence of a Southern Poverty Law Center informant connected to the Elohim City operation. “References to an informant working for the SPLC at Elohim City on the eve of the Oklahoma City bombing raises serious questions as to what the SPLC might know about McVeigh’s activities during the final hours before the fuse was lit in Oklahoma City – but which the SPLC has failed to disclose publicly,” the newspaper reported.
Asked about his organization’s role in the terror attack, Morris Dees, co-founder and chief trial counsel for the SPLC, told the media: “If I told you what we were doing there, I would have to kill you.”
http://www.infowars.com/splc-letter-to-holder-and-napolitano-patriot-hate-groups-pose-domestic-terror-threat/ - 86k -
SPLC Letter to DOJ & DHS | Southern Poverty Law Center
http://www.splcenter.org/home/splc-letter-to-DOJ-DHS - 39k - Cached - Similar pages
Mar 5, 2013 … Attorney General Eric Holder Secretary Janet Napolitano … the country has seen an increase in right-wing domestic terrorism as the number of …
We posted this unsigned editorial from the Los Angeles times (that was carried locally in the Boulder Daily Camera) recently.
The SPLC probably wrote it. They excel at pimping the fear:
http://touch.latimes.com/#story/la-ed-patriot-groups-splc-report-20130308/
Yeah…..his “.22 rifle” that looks like an AR-15. Nice that the “story” leaves that little detail distorted.
As usual, there has got to be more to this story than is being reported.
Like, maybe, this guy is one of the NRA’s “cold dead fingers guys” and has told all the neighbors that in no uncertain terms?
Posting a Facebook photo of your kid holding an AR-15/AR 15 lookalike is the height of stupidity.
If he’s like most of the NRA guys that I know, his “my guns are holy artifacts, and eff everbody else” worldview kinda pisses off/scares the neighbors.
Eff his neighbors and the cops who tried to violate his rights. As far as the kid holding a .22 that looked like an AR-15, what has that got to do with anything? I have pics and video of my 9 yo daughter shooting my AR-15 and my Ruger 10/22 in a Troy chassis that looks just like an AR-15. Both rifles are MA AWB compliant, legally owned and look “very scary”.
What a rifle looks like has nothing to do with it’s effectiveness or lethality unless you’re a moonbat who thinks the ‘94 Assault Weapons Ban, which focused on cosmetic features of semi-automatic weapons like “Flash Suppressors” and “Adjustable Stocks” did anything to stop gun crime. The epitome of moonbat “Scary Black Rifles are evil” propaganda. Let me paint my daughter’s 10/22 pink, and I’m sure the moonbats will love it…
It’s like thinking because your M1 Garand has a wood stock and no pistol grip, it’s less killy than that evil black AR-15. I guess no one told the moonbats how 7.62mm is more lethal than 5.56mm…
“Like, maybe, this guy is one of the NRA’s “cold dead fingers guys” and has told all the neighbors that in no uncertain terms?”
That`s right!
Or maybe he was one of those Pop Tart right wing non-Islamic domestic terrorists.
School suspends 7-year-old Josh Welch for biting Pop Tart pastry into ’shape of gun’
Boy says shape was intended to be a mountain
Posted: 03/05/2013
Last Updated: 13 days ago
BALTIMORE - A 7-year-old Maryland boy has been suspended from school after biting his breakfast pastry into a shape that his teacher thought looked like a gun.
Josh Welch, a second-grader at Park Elementary School in Baltimore, said he was trying to nibble his strawberry Pop Tart into a mountain.
“It was already a rectangle and I just kept on biting it and biting it and tore off the top and it kinda looked like a gun but it wasn’t,” Josh said. “All I was trying to do was turn it into a mountain but it didn’t look like a mountain really and it turned out to be a gun kinda.”
But when his teacher saw what he had done, the boy says she got “pretty mad” and he knew he was “in big trouble.”
Josh’s dad was called by the school and informed that his son had been suspended for two days.
“I asked if was any one was hurt, they said ‘No’,” B.J. Welch said. “I would almost call it insanity. I mean with all the potential issues that could be dealt with at school — real threats, bullies, whatever the issue is. It’s a pastry.”
The school sent home a letter with every student informing parents that: “A student used food to make an inappropriate gesture.”
http://www.10news.com/news/watercooler/school-suspends-7-year-old-josh-welch-for-biting-pop-tart-pastry-into-shape-of-gun03052013 - 132k -
That kid is probably a Racist® too. He should have his allowance money confiscated until he turns 18 and given over to Jesse Jackson so he can get more Social Justice™ by getting his kidz another Anheuser-Busch distributorship.
Nobody move! I got a doughnut and I’m not afraid to use it.
why aren’t they doing this to black people? We all are supposed to believe in equal justice under law.
An interesting article on the link between ZIRP and asset inflation. It’s as we suspected…
Bizarre New York Times Article on Lousy Finances of the Young Gives Undue Prominence to Housing as an Investment
Key point: A young person is going to have trouble amassing any kind of nest egg because the financial returns aren’t going to be there unless they are a very skillful or lucky investor. The most important principle of investing is “buy cheap” and that is perilously difficult to do right now.
“That would have undermined the promise that Greece’s debt writedown last year was a one-off, but the unprecedented move to hit depositors adds a radical new dimension to the crisis across the euro zone.”
cyprus = lehman brothers
White House ‘closely monitoring’ Cyprus bailout effort
By Justin Sink - 03/18/13 01:46 PM ET
The Obama administration is closely watching Cyprus’s effort to tax bank deposits in the island nation in exchange for a $13 billion bailout, the White House said Monday.
The banking system in Cyprus is reportedly on the verge of collapse, delayed a vote on the highly controversial bailout amid widespread protests.
“We are monitoring this closely, as you would imagine, but that our overall approach has been to support a strong, stable Europe, because it’s in the interests not just of Europe, but in the United States,” Carney said Monday.
Carney sidestepped questions about the effects the tumult in Cyprus might have on international markets.
“I’m not going to comment on markets,” Carney said. “You might see if Treasury officials will comment on them. I would simply say that we have long said that a strong stable Europe is in the interests of the United States.”
European stock markets and the euro fell sharply Monday on news of the bailout, with the European currency falling to a three-month low against the dollar.
The White House spokesman also declined to answer when asked generally if the White House had a general reaction to the Cyprus plan, under which the government would take 9.9 percent from all deposits in the nation’s banks. The unorthodox move would have implications far beyond the Cyproit shores; some experts estimate up to a third of deposits in the nation’s banks are from Russian citizens.
“I can’t. I think that it is the wise course to defer to the Treasury Department,” Carney said.
Read more: http://thehill.com/blogs/on-the-money/banking-financial-institutions/288769-white-house-closely-monitoring-cyprus-bailout-effort#ixzz2Nusz50×8
Follow us: @thehill on Twitter | TheHill on Facebook
I was thinking more like Thailand — tiny country whose 1997 currency crisis ignited a major international financial conflagration.
Lehman Brothers was seriously interconnected. When it blew up, the effect was like the sudden unanticipated strike of an F-5 tornado on Wall Street. I can’t imagine Cyprus having a similar level of interconnectedness in the global financial system, but then perhaps I underestimate the gravity of the situation.
DR Horton has been running an ad on DC news radio. Basically, one of the two characters in the ad show hesitation over buying a house, and the other character says, “YOLO!” and they do it. Then a character exhibits hesitation over purchasing some option for the house, and the other character says, “YOLO!” and they do it.
So what exactly does YOLO mean?
Urban Dictionary has a crowd-sourced definition: http://www.urbandictionary.com/define.php?term=yolo
The highest rated response is the following:
1. Yolo : 8693 up votes, 2969 down votes:
“Abbreviation for: you only live once
The dumbass’s excuse for something stupid that they did
Also one of the most annoying abbreviations ever….
Guy 1: “Hey i heard u got that girl pregnant”
Dumbass 1: ” Ya man but hey YOLO”
Guy 1: “Hey i heard that you broke ur leg falling off the balcony at that party”
Dumbass 1: “Ya but hey YOLO”
Posted yesterday
CRAMENTO, Calif. (AP) — An undercover video that showed California cows struggling to stand as they were prodded to slaughter by forklifts led to the largest meat recall in U.S. history. In Vermont, a video of veal calves skinned alive and tossed like sacks of potatoes ended with the plant’s closure and criminal convictions.
Now in a pushback led by the meat and poultry industries, state legislators across the country are introducing laws making it harder for animal welfare advocates to investigate cruelty and food safety cases.
Next up no filming government officials, CEO’s, or anyone in power.
We have a corporate media already so this will just get rid of anyone who questions power or shows it’s abuses.
I’m a meat eater and I have to say I don’t want downer cow steaks.
Frankly I can’t see how these laws are constitutional
I was just thinking this might be a first step prior to Solyent Green. No reporters to view where our food comes from.
The food industry can effectively self-regulate.
The invisible hand of the free market is the most efficient way to produce safe, healthy, and affordable food to put on America’s families.
Freedum!
What non-sense. Where did you this from PETA? Yep. Let’s see which is easier hence more cheap and profitable? Skinning livestock while it’s alive or after it’s dead? Hmmm? Hmmm? Hmmm?
Isn’t the town’s name CRATERAMENTO?
I’ve mentioned this before, but my mom is from Cyprus (country whose citizens just got shafted as part of its “bail out” package from the EU). She’s a UK citizen and never had money in a Cypriot Bank (Cyprus used to be a UK territory). Anyway, Cyprus is really a sad situation and a great example of how the EU papered over some very real problems in the last 2 decades. Greek Cypriots had the northern half of the island basically stolen from them by Turks and the international community basically didn’t do anything. No one is willing to invest in anything in Cyprus because of the uncertainties. All the young people leave if they have 2 brain cells to rub together. And very few people send money back, much less invest in the upkeep of their former properties once they leave. It’s a really sad statement about what happens when a country is perceived to be incapable of guaranteeing its citizens’ human rights, private contracts, personal safety, and tangible property. Modern economies don’t function amidst chaos.
Another issue is that the Turks who now have the northern part of the island are quite the fertile population bomb. This, combined with them not having any sentimental value attached to the land and historical sites, means that they’re basically overrunning vast sections of the island and screwing it up for perpetuity.
It’s a really sad statement about what happens when a country is perceived to be incapable of guaranteeing its citizens’ human rights, private contracts, personal safety, and tangible property. Modern economies don’t function amidst chaos.
You’re making Cyprus sound like it is not a country nor a modern economy, more like a no man’s land, where anything goes.
You’re making Cyprus sound like it is not a country nor a modern economy, more like a no man’s land, where anything goes.
———
Basically yes, you can’t have a western style democracy or modern economy under those conditions. I’m surprised it took this long for the S to HTF.
I found the following in a comment on the Daily Telegraph website:
fertile population bomb
So you’re Racist® against Turks? OK, we get it.
Speaking of fertile populations, this piece diacusses the Sons of Aztlan taking over USA from an aging, dying, non-fertile whitey. Some nuggets from the article:
“More than 45 percent of students in kindergarten through 12th grade are minorities”
“By 2039, racial and ethnic minorities will make up a majority of the U.S. working-age population”
“The white population, now at 197.8 million, is projected to peak at 200 million in 2024, before entering a steady decline in absolute numbers”
As you have posted before, the most prolific white breeders are the tea people and fundamentalists. The imminent Idiocracy of USA combined with global climate change means the future = there is no future. Consider that before breeding…
http://www.nydailynews.com/news/national/fast-growth-latino-population-blurs-traditional-u-s-racial-lines-article-1.1291138
Racist, you say? Hey, someone had to take over for Dio/nicki/AQDan.
But in all seriousness, it’s not racist to point out that Turks invaded a sovereign nation. It’s quite a bit different than what’s happening hear, but perhaps a window into the future.
I saw the Dio flame-out. What happened to the other two?
People who throw out the word “racist” as an accusation of racial bias live in the whitest, most un-diverse neighborhoods in USA. The most racist people I’ve ever met are all white, limosine liberals.
Harpsichordists are the first to throw around the word racist.
Wait. What? I thought government just getting out of everybody’s way was the perfect capitalist utopia.
You mean anarchy is the reality? Socialeest commie talk!
Yes, I know. I keep harping on the student housing bubble. But I’m not the only one. Link:
Will the Student Loan Bubble and the Housing Bubble Merge Into One Huge Super Bubble?
Oops. Forgot to do the HTML thing. Here’s the link, in all its glory:
http://observer.com/2013/02/will-the-student-loan-bubble-and-the-housing-bubble-merge-into-one-huge-super-bubble/
Do any HBB posters recall the gold price in 2001? I’m thinking it was on the $300-$400 range, but my recollection is murky.
Financial Times
Markets Insight
March 18, 2013 12:22 pm
Rising dollar marks big investment shift
By George Magnus
Industrial commodities and EM currencies will be under pressure
Investors have come to regard a weak US dollar as an essential part of the low real rate, high capital flow backdrop for about a decade, but things are starting to change.
The US dollar has had a spring in its step this year, with the dollar index, a weighted composite of the dollar’s strength versus its trading partners, rising almost 4 per cent. This is likely to be the “amuse-bouche” of a more substantial meal of appreciation that could go on until 2015, marking a big shift in the investment environment.
A change in US dollar direction would be important partly because it has form. Since the collapse in 1971 of the Bretton Woods Agreement, a system of fixed exchange rates, the US dollar has been through three downwaves (1968-78, 1985-92, and 2001-11) and two upwaves (1978-85 and 1992-2001), with an average duration of a little over seven years.
…
“Let housing prices crater, then buy later for 65% less.”
Cratering is so yesteryear.
Also tomorrow, once the all-cash Chinese and Canadian investors are out of the game. Similar thing happened on the national U.S. scale back when the California investors left the building, leaving homeowners from Bend, Oregon to Boise, Idaho to Bentonville, Arkansas sitting high, dry and naked as a jay bird. On an international level, the exit of the Canucks and Chinese all-cash investors will result in a cratering of demand in markets where these greatest fools fueled today’s housing market dead cat bounce.
Given the entrenched, institutionalized treachery, fraud and systemic theft which is endemic to the current state of the international banking system, why is anyone sufficiently foolish to trust it?
Banksters will steal. And what theft targets could be more tempting than the savers who are dumb enough to entrust the banksters with their money?
EUROPE NEWS
Updated March 18, 2013, 6:16 a.m. ET
Cyprus Rescue Risks Backlash
Unprecedented Move to Levy Fee on Island’s Bank Accounts Stokes Worry in Euro Zone; Asian Markets Open Lower
By GABRIELE STEINHAUSER in Brussels, MATINA STEVIS in Nicosia, Cyprus, and MARCUS WALKER in Berlin
The Cypriot government is negotiating with international lenders over its €10 billion bailout package which is conditional on the imposition of a one-off bank deposit levy. Matina Stevis reports on the Cypriot government’s efforts to strike a deal which protects smaller depositors. Photo: Associated Press
The euro zone took the unprecedented step of taking a bite out of depositors’ bank accounts to help pay for its bailout of Cyprus, a high-risk decision that could erode savers’ confidence across the currency bloc and add to popular anger over its handling of the financial crisis.
The decision to raise €5.8 billion ($7.6 billion) from taxes on depositors—including individuals with small amounts in their accounts—risks a political backlash for the newly elected center-right government on the Mediterranean island and a wider political fallout for the euro-zone leaders who are guiding the bloc’s crisis strategy.
Asian shares and the euro fell sharply in early trading Monday as markets reacted to the bailout. Japan shares dropped 2.1%, Hong Kong fell 2.0% and Australia fell 1.4%. “The feeling is that the euro crisis could be back and that you could see full-on contagion,” said Shane Oliver, head of investment strategy and chief economist at Amp Capital in Sydney. “But I suspect that we are going to hear reassurances from other countries.”
A tax on depositors—6.75% on deposits up to €100,000, and 9.9% above that level—was the only way out for the bloc’s finance ministers after Germany, the euro zone’s biggest economy, and the International Monetary Fund insisted that financial aid to Cyprus should be limited to €10 billion.
With the money due to have been withdrawn electronically from bank accounts over the weekend, politicians in Nicosia were discussing how they might adjust the levy to make it appear fairer. Monday is a public holiday on the island, when banks are closed, but European officials said contingency plans were being put in place to calm any turmoil in the country’s financial system when the banks eventually reopened.
Since the global financial crisis began in 2008, few European bank depositors have taken losses. Denmark forced some large depositors to do so in 2011, when two midsize lenders collapsed. Iceland also decided not to repay foreign depositors when it suffered a bank crisis in 2008—although the British and Dutch governments stepped in to make sure savers didn’t incur losses. In 1992, Italy imposed a small tax on its depositors.
As the currency union’s finance ministers, the IMF and the European Central Bank worked to contain the cost of the bailout, officials early Saturday morning crossed a red line they had avoided during the five-year financial crisis: making depositors pay for saving their banks.
To get there, the ECB threatened to send Cyprus’s two biggest banks into liquidation, a move that would have sunk the island’s financial system and, its president warned, could have led to its euro-zone exit.
European officials on Sunday emphasized that the levy was a one-time tax for Cyprus—based on the huge size of its banking system compared to the relatively puny size of the country’s economy—and wouldn’t be replicated elsewhere in the currency union. But the deal sends a signal to the rest of the euro zone that the bloc’s richer nations are increasingly reluctant to transfer the costs of insolvent banks and governments onto the shoulders of their own taxpayers.
Over 10 hours of tense negotiations, euro-zone finance ministers hammered out the rescue for Cyprus, a nation of 800,000 people, an economy of less than €18 billion, and an opaque banking system with some €70 billion in deposits, many of them held by Russians and other foreigners.
But the final deal has triggered protests and cash withdrawals in Cyprus, where it imposes losses not only on rich Russians who took advantage of the island’s lax bank rules, but also on ordinary Cypriot savers and companies.
“It was the worst time in my life. It reminds me of the invasion of the Turks in 1974,” said a Cypriot official involved in the negotiations.
…
Why?
Here’s a fundamental that was discussed here briefly but only scratched the surface.
The Banking Crime Syndicate proxies are embedded throughout society. Who are they? Take a look at “Angies List” for instance. The BCS is so arrogant that they allow their media proxies to use their real names in their ad. The next time you see an Angies List commerical, go ahead and select a name and google it. Who are they? MBA pimps. Go over to the liars on marketwatch and google a few names of the housing pimps over there and then come back here and tell us what you find. I already know. I encourage you to seek. These creeps are marketed as harmless hokey dopes.
And I often wonder why the ambulance chasers spend so much time here on this blog.
There is a HCS representative hiding behind a bush near you!
It’s different in Cyprus.
March 18, 2013, 10:58 p.m. EDT · CORRECTED
Asian shares fall amid Cyprus bailout concern
By Daniel Inman
A previous version of this report wrongly attributed the quote about Japan’s economic exposure to the euro and dollar. The report has been corrected.
HONG KONG (MarketWatch) — Asian markets and the euro fell sharply Monday, with Japanese stocks plunging the most in 10 months, as a controversial bank bailout in Cyprus brought concerns about Europe’s debt crisis back to the fore.
Cyprus proposed a tax on the country’s bank depositors to decrease the costs of the bailout. If passed by parliament, the move would mark the first time that such a strategy has been implemented during the five-year euro zone crisis. The move may erode savers’ confidence across the currency bloc and add to popular anger over the handling of the crisis.
“The feeling is that the euro crisis could be back and that you could see full-on contagion. That is why you’re seeing the market reaction today,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital in Sydney.
“But I suspect that we are going to hear reassurances from other countries that Cyprus is different and that this plan won’t be put in place elsewhere.”
…
Try not to catch yourself a falling apple.
Nobody wants to buy Steve Wozniak’s old house
The former house of Apple co-founder Steve Wozniak is on the market yet again after another price cut.
by Josh Lowensohn
March 18, 2013 3:43 PM PDT
After a several months-long lull, Apple co-founder Steve Wozniak’s old house is back on the market.
The six bedroom, seven bathroom, Los Gatos, Calif., home, which Wozniak built in 1986 though sold off years ago, is back on sale for slightly lower $4.395 million. It’s even having an open house this weekend, notes the house’s real estate agent over at the San Francisco Chronicle, which spotted the listing on real estate site Redfin.
This is the latest sale attempt of the house, which last changed hands in 2009. Records show that the house originally sold back in October 2004 for $4.75 million, again in March 2006 for $6.9 million, and then once more in February 2009 for $3.1 million. Its current owners (who do not include Wozniak, and who got the lowest price on the house yet) last year tried to sell it for $5 million before dropping it down to $4.5 million.
As you’d expect, the house is pretty snazzy. It has a pool with a waterfall, an indoor play area for kids, and even a Koi pond. A slideshow shows other additions, like an office filled with various bits of odd geometry, and a firehouse-style pole for quickly descending between two floors.
…
‘Tis a mere flesh wound.
Cyprus parliament ready to veto deposit tax
Politicians let savers down in Cyprus
Mon, Mar 18 2013
Cypriots furious over proposed bank deposit tax
Euro zone shivers as Cyprus panics
Protesters raise their open palms showing the word ”No” during an anti-bailout rally outside the parliament in Nicosia March 18, 2013. REUTERS/Yorgos Karahalis
By Michele Kambas and Karolina Tagaris
NICOSIA | Tue Mar 19, 2013 3:35am EDT
(Reuters) - Cyprus’s parliament was set to reject a divisive tax on bank deposits in a vote scheduled for Tuesday, pushing the island closer to a debt default and banking collapse.
A weekend announcement that Cyprus would break with previous practice and impose a levy on bank accounts as part of a 10 billion euro ($13 billion) EU bailout prompted turmoil on European financial markets on Monday.
Cypriot and euro zone officials have sought to soften the initially proposed levy of 6.75 percent on depositors of up to 100,000 euros and 9.9 percent above 100,000 to ease the burden on small savers.
But passage of the bill in the 56-member chamber, where no party has a majority, was unlikely and it was not clear if the vote would even go ahead later on Tuesday if leaders were sure it would be rejected.
“It looks like it won’t pass,” Cypriot government spokesman Christos Stylianides told state radio.
The House of Representatives was expected to meet at 1600 GMT(12:00 EST). Rejection of the measure would effectively block a bailout that Cyprus needs to keep its banks afloat and government paying wages and welfare.
Tuesday’s vote, originally planned for Sunday, has been postponed twice already. Three parties have said outright they will not support the tax, while a fourth, in the co-governing coalition, said it cannot support it as it stands either.
Cypriot President Nicos Anastasiades asked the EU for more aid during a telephone conversation with German Chancellor Angela Merkel on Monday, with a second call likely on Tuesday. Stylianides said Anastasiades may also speak to Vladimir Putin, the Russian president.
The tax will batter not only Cypriots, but thousands of Europeans and Russians with business interests on the island. Putin on Monday described it as “unfair, unprofessional and dangerous.”
Cypriot finance minister Michael Sarris was due to hold meetings in Moscow on Wednesday.
Stunned islanders emptied cash machines over the weekend and banks are to remain shut on Tuesday and Wednesday to avoid a bank run. Hundreds of protesters rallied outside parliament on Monday, honking horns and holding banners saying “We are not your guinea pigs!”
“If they vote for this tax they will face the fury of the people,” said Markos Economou, a 47-year-old physics teacher and father of two. “The banks and the politicians should pay for this mess, not the people.”
The island’s stock exchange also suspended trading for another two days.
…
Bankraub auf Zypriotisch:
Cyprus deposit tax stirs Twitter reactions
March 18, 2013, 1:49 PM
Cypriot banks may be closed until Thursday, but the Twitter-verse has been aflame with tweets since Saturday’s bailout plan was announced. “Cyprus” remains a trending keyword on the social network as the small Mediterranean country awaits a vote on the bailout and its controversial plan to tax bank deposits. The levy has led many to fear a bank run in the small island nation and across the euro zone. A look at some of the response from across Twitter:
E.U. Bailout Tax Sparks Bank Run In Cyprus
Renee Montagne and Jim Zarroli
March 18, 2013 4:00 AM
Listen to the Story
Morning Edition
4 min 53 sec
Citizens of Cyprus did not react well to the news that their government wants to allow the E.U. to take nearly 10 percent of their savings deposits in exchange for a $13 billion bailout. Banks are closed through Tuesday after worries over bank runs. Depositors stood in long lines to withdraw money over the weekend.
Richard (RJ) Eskow
Writer; host, ‘The Breakdown’; Senior Fellow, Campaign for America’s Future
Cyprus Bank Panic: It Can’t Happen Here — Can It?
Posted: 03/18/2013 4:05 pm
There was panic in Cyprus today as ordinary citizens learned that the government was about to take nearly seven percent (6.75 percent) of the money in their bank accounts as part of a package to bail out reckless banks.
The outrage was justified, predictable, and immediate. Then, in a move reminiscent of the Great Depression, banks were closed in a government-mandated ‘holiday’ while lawmakers and financial authorities scrambled and tried to figure out what to do next.
Putin’s mad. Observers like Paul Krugman are predicting bank runs in other troubled European countries. There’s only one saving grace for American observers:
It Can’t Happen Here
… Or can it?
…
March 17, 2013, 1:49 pm
The Cypriot Haircut
OK, I didn’t see that one coming. With all the problems in Greece, Italy, Spain, and Portugal I wasn’t watching Cyprus. But that’s where the big euro news is this weekend; in return for a bailout, Cyprus is supposed to impose a large haircut — that is, loss — on all depositors in its banks.
You can sort of see why they’re doing this: Cyprus is a money haven, especially for the assets of Russian beeznessmen; this means that it has a hugely oversized banking sector (think Iceland) and that a haircut-free bailout would be seen as a bailout, not just of Cyprus, but of Russians of, let’s say, uncertain probity and moral character. (I think it’s interesting that Mohamed El-Erian manages to write about this thing, fairly reasonably, without so much as mentioning the Russian thing.)
The big problem, however, is that it’s not just large foreign deposits that are taking a haircut; the haircut on small domestic deposits is a bit smaller, but still substantial. It’s as if the Europeans are holding up a neon sign, written in Greek and Italian, saying “time to stage a run on your banks!”
Tomorrow and the days immediately following should be very interesting.
…
AGENDA
Updated March 18, 2013, 8:14 a.m. ET
Euro Zone Moving Into Twilight Zone
By SIMON NIXON
The Cypriot government has little option but to raise money through a bank deposit levy, but it may also be a good thing, argues Heard on the Street’s Simon Nixon. He says taxing the current generation rather than future ones might allow Cyprus to move on more quickly. Photo: AP
No doubt about it, the euro zone has crossed a Rubicon. The decision to make a €10 billion ($13.08 billion) bailout of Cyprus conditional on a one-off tax on bank deposits takes the currency bloc into uncharted territory. Under the threat of national bankruptcy, the new Cypriot government has committed to introduce a 10% levy on all deposits above €100,000 held in Cypriot banks and a levy of 6% on all deposits of under €100,000 before the banks open on Tuesday morning. In so doing, the euro zone is breaking the financial system’s final great taboo.
In the early stages of the crisis, the euro zone’s preferred solution to tackling the continent’s debt problems was to lend governments the money to bail out holders of financial assets such as bondholders and bank shareholders, thereby passing the burden to future generations of taxpayers. But over time, as the burden of debt has ballooned and doubts over the sustainability of government finances have hardened, that approach has been partly abandoned.
In Greece, part of the burden was shifted onto holders of Greek government bonds. In Spain, Ireland and the Netherlands, losses were inflicted on junior bondholders. On each of these occasions, the financial sector loudly warned that imposing any losses on investors would trigger contagion and risk a euro collapse. Yet each time the euro survived. Now that the euro zone has gone one step further by imposing losses on depositors, there have been familiar warnings of impending doom.
This need not be the case. The decision to impose losses on depositors may have come as a shock to many both inside and outside Cyprus, but it didn’t come out of a clear blue sky: the possibility has been widely discussed in the domestic and international financial press. And even as the new government publicly dismissed depositor haircuts as a “stupid idea,” it was learning that its bargaining power was virtually nonexistent. Nicosia appears to have been taken entirely by surprise when presented with an ultimatum at Friday’s Eurogroup meeting in Brussels. Yet with two of the country’s major banks reliant on emergency liquidity support from the European Central Bank, the euro zone always had the option to pull the plug on Cyprus at any time.
…
Cyprus is Coming for Your Savings
By Scheherazade Rehman
March 18, 2013 RSS Feed Print
Scheherazade S. Rehman is a professor of international finance/business and international affairs at The George Washington University. You can visit her homepage here and follow her on Twitter @Prof_Rehman.
There seem to be times when commonsense eludes us even after years of experience. While we know this to be true in our personal lives, it is surprising when it is done at a national level, let alone a supranational level. What I’m referring to are the financial crisis management and bank bailouts happening in Europe. In particular, the eurozone which has muddled through for three long years trying to rescue itself.
It seemed that the Europeans finally got their act together last November when new European Central Bank Governor (ECB) Mario Draghi took the helm and began real crisis management. The world began to exhale finally as the Europeans began to look like they were getting their financial house under control and a real handle on their economic crisis.
But here we go again. Cyprus has asked for a bailout. This by itself is not a big event. Nor is it surprising and it should have been a non-event with only €10 billion (approx. US$13 billion) at stake. Remember the U.S. American Insurance Group (AIG) was bailed out with $175 billion, Spanish bailout $100 billion plus, Greek bailout $200 billion plus, and so on and so on.
The Cyprus bailout, however, has a condition attached to it that would irk any average citizen no matter where they reside. All bank customers in Cyprus (which essentially means everyone) are being asked to pay a one-off levy (tax) in return for the €10 billion country (bank) bailout. To date, the details are that all bank customers in Cyprus will pay a one-time tax of 6.75 percent or 9.9 percent on their bank deposits. Anyone with less than €100,000 euros would have to pay the lesser off the two tax rates while those who have more money would pay the higher tax. In an attempt to ease the sting of this tax, the depositors will receive the equivalent amount in shares in their banks. This is not much solace to many savers and is, in fact, a gross “moral hazard.”
[See a collection of political cartoons on the European debt crisis.]
So basically, if you don’t pay that bank tax to save your bank, your savings may be lost. No one likes to have his or her hard earned savings be held hostage, especially by their own bank. All this was announced over the weekend and ATM machines were emptied out over the weekend. Today, luckily for the government, happens to be a public holiday in Cyprus and the government has mandated that all banks will be closed until Thursday to prevent a full blown bank run.
…
Just buy yourself an overpriced house and stop worrying about having enough money to retire on. Real estate always goes up, ya know!
U.S. NEWS
March 19, 2013
Workers Saving Too Little to Retire
By KELLY GREENE and VIPAL MONGA
Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement.
New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last.
Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49% reported having so little money saved in 2008.
The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study’s 23-year history.
The same forces are weighing on corporate balance sheets. Based on another recent report, the Society of Actuaries said that rising life expectancies could add as much as $97 billion to corporate pension liabilities in coming years, an increase of up to 5%.
While Americans are living longer, the extended life spans will make it tougher for workers trying to stretch retirement savings and put additional strains on pension plans.
Scott Ghelfi, 49 years old, a small-business owner in Falmouth, Mass., and his wife own two candy stores and a children’s clothing shop. He said they didn’t make their normal $24,000 contribution to their retirement plan two years ago because they couldn’t afford to take the money out of the businesses.
The total amount in the couple’s retirement accounts is less than $200,000, which he considers inadequate.
“Sales are fine, but we’re not growing rapidly like we were several years back, and everything is more expensive,” Mr. Ghelfi said.
He isn’t alone. The percentage of workers who have saved for retirement plunged to 66% from 75% in 2009, according to the Employee Benefit Research Institute survey.
Only about half of the 1,003 workers and 251 retirees surveyed said they were sure they could come up with $2,000 if an unexpected need were to arise in the next month.
“Workers are recognizing there is a crisis,” said Alicia Munnell, director of the Boston College Center for Retirement Research. She noted that companies continue to do away with traditional pensions.
The survey of workers and retirees was conducted in January, even as the U.S. stock market was heading toward new highs.
…
The Great Divide
March 18, 2013, 11:09 am
Singapore’s Lessons for an Unequal America
By JOSEPH E. STIGLITZ
The Great Divide
The Great Divide is a series about inequality.
SINGAPORE
Inequality has been rising in most countries around the world, but it has played out in different ways across countries and regions. The United States, it is increasingly recognized, has the sad distinction of being the most unequal advanced country, though the income gap has also widened to a lesser extent, in Britain, Japan, Canada and Germany. Of course, the situation is even worse in Russia, and some developing countries in Latin America and Africa. But this is a club of which we should not be proud to be a member.
Some big countries — Brazil, Indonesia and Argentina — have become more equal in recent years, and other countries, like Spain, were on that trajectory until the economic crisis of 2007-8.
Singapore has had the distinction of having prioritized social and economic equity while achieving very high rates of growth over the past 30 years — an example par excellence that inequality is not just a matter of social justice but of economic performance. Societies with fewer economic disparities perform better — not just for those at the bottom or the middle, but over all.
It’s hard to believe how far this city-state has come in the half-century since it attained independence from Britain, in 1963. (A short-lived merger with Malaysia ended in 1965.) Around the time of independence, a quarter of Singapore’s work force was unemployed or underemployed. Its per-capita income (adjusted for inflation) was less than a tenth of what it is today.
There were many things that Singapore did to become one of Asia’s economic “tigers,” and curbing inequalities was one of them. The government made sure that wages at the bottom were not beaten down to the exploitative levels they could have been.
…
This time is different. Or so the experts told me.
Economy is beating expectations despite sequester
Paul Davidson, USA TODAY
9:53p.m. EDT March 18, 2013
The economy likely will dip this spring as it has the past couple of years this time because of Washington deficit-cutting. But the housing rebound and less-debt-laden consumers should ease the pain.
(Photo: Justin Sullivan, Getty Images)
Story Highlights
The Fed is expected to keep easy money flowing
Payroll tax has yet to show big impact
Business confidence is growing
After sputtering for several years, the U.S. economic engine finally seems poised to fire on all cylinders.
If only the federal government can patch up that unsightly pothole it created about a mile up the road.
For the third consecutive year, solid first-quarter job growth and budding hopes for a stronger recovery are tempered by the specter of a midyear swoon. In the past, Europe’s financial crisis, Japan’s earthquake and the debt-ceiling showdown in Congress have slowed early-year economic surges.
This year, private-sector momentum is threatened by January’s payroll tax increase and across-the-board federal spending cuts that will likely affect the economy in a couple of months unless the White House and Congress reach a deal to delay most of them.
Yet this time is different, experts say, because the underpinnings of the economy are sturdier.
…
where is everyone this tuesday morning?
Comment by joe smith
2013-03-18 15:50:18
“There is no j in Greek. The closest we have is tz.
I would translate j6p into greek as giorgos6pack or maybe zaharias 6 pack. Both very popular names.”
*******
Learn something everyday on the HBB…