March 19, 2013

Bits Bucket for March 19, 2013

Post off-topic ideas, links, and Craigslist finds here.

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Comment by azdude
2013-03-19 06:18:42

I’m thinking about buying more FB shares today.

Comment by joe smith
2013-03-19 06:19:57

my sarcasm detector is pinging.

Comment by Arizona Slim
2013-03-19 12:07:20

And my sarcasm alarm is warbling.

Comment by AmazingRuss
2013-03-19 16:55:23

Ah, the sounds of spring.

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Comment by Housing Analyst
2013-03-19 06:19:51

“Get what you can get for your house today because it’s going to be much less tomorrow for many years to come.”

Comment by joe smith
2013-03-19 06:51:15

What about this house?

Thanks to SuperPACs, it costs alot [sic] to live here.

Comment by elle ven deep fried twinkies
2013-03-19 07:10:01


But somehow you come out richer after leaving that house. Ask anyone and his children who ever lived there?

Comment by joe smith
2013-03-19 07:19:07

You know what’s another good place to get rich?

It’s this place, which is right across from Treasury and W.H.:

The Big Boyz contractors take more money out of this place in 1 year than all the food stamps in the US combined from now until 2028*

*this year was a guess, probably a bit hyperbolic, but you get my point

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Comment by elle ven deep fried twinkies
2013-03-19 07:28:45

I believe it. One thing I have always wondered is why the Treasury building is so close to the WH?

Comment by joe smith
2013-03-19 08:22:39

Puppet strings get tougher to work the further you are away.

(This is true for both blue & red puppets.)

Comment by azdude
Comment by snowgirl
2013-03-19 07:42:17

billions and billions and billions and…..

OMG, if I was a British banker I’d be hiring my security service right after viewing this. When I saw Cyprus, I was nervous thinking all we needed now was a real spark for the Ponzi to combust but maybe what will come first is crowd combustion.

This guy’s gonna blow an artery before he throws his first pitchfork.

Comment by azdude
2013-03-19 07:47:42

I liked the part where he was talking about tiny tim.

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Comment by Michael Viking
2013-03-19 07:49:34
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Comment by alpha-sloth
2013-03-19 08:00:23

That was an impressive rant, Sam Kinison territory. He looks like Joe Strummer’s angrier brother. Is he in a cab?

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Comment by Resistor
Comment by alpha-sloth
2013-03-19 17:14:39

By profession, McGowan is a London taxi driver and occasional university speaker and arts tutor.

Aha! I thought that looked like an awfully roomy car for London.

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Comment by AbsoluteBeginner
2013-03-19 06:22:15

Beware the stockmarket.

Comment by palmetto
2013-03-19 06:33:08

This Cyprus situation is unbelievable. And there’s that LeGarde creep with her smug little smile, all tickety-boo and we’ll get through this. No wonder so many Europeans have nothing but contempt for the livin’ large Eurocrats in Brussels.

Comment by AbsoluteBeginner
2013-03-19 06:45:47

‘And there’s that LeGarde creep with her smug little smile’

Comment by joe smith
2013-03-19 06:49:44

Cool story, bro.

You think we’re that different than Europe?

Here, meet your Masters - - - >

Comment by joe smith
2013-03-19 06:52:31

Just in case you don’t recognize the building from a distance:

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Comment by In Colorado
2013-03-19 07:02:59

And there’s that LeGarde creep

A right wing politician (OK, by Euro standards she’s right wing) and a Bankster! What’s not to love?

Comment by elle ven deep fried twinkies
2013-03-19 07:08:15

She fits right in with other european right wingers like Dimon, Blankenstein, Soros, Corzine……..

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Comment by In Colorado
2013-03-19 07:10:27

Moral of the story …never trust a bankster … never.

Comment by michael
2013-03-19 07:09:32

…as long as she can be considered “right wing” somewhere…that’s what matters.

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Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 20:30:55

“What’s not to love?”

She’s also a lawyer and a politician.

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Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 08:16:09

Markets fragile as investors await Cyprus vote
March 19, 2013
By PAN PYLAS, Associated Press

LONDON (AP) — Financial markets were tense Tuesday as investors awaited a vote in Cyprus on a contentious plan to raid bank deposits to help fund the country’s bailout.

On Monday, trading was extremely choppy, particularly in Europe, as investors fretted over an agreement between cash-strapped Cyprus and international lenders to seize a percentage of deposits in the country’s banks.

A vote on the seizures has been scheduled for later Tuesday, although it could be delayed again if the government does not secure the necessary support.

If the bill isn’t passed, Cyprus faces bankruptcy and a potential exit from the euro. That’s a clear concern for markets — as is the expected turmoil the country will face when banks reopen Thursday. Depositors around Europe are watching developments closely now that the taboo of raiding deposits has been violated.

“The underlying tone of the market is set to stay jittery with investors unnerved about the potential loss of trust between banks and small depositors,” said Jane Foley, an analyst at Rabobank International.

Comment by Jess from upstate SC
2013-03-19 06:59:30

Incandescent Light Bulbs are a winner this winter . These are the regular ones like Edison invented generations ago ,most of them are outlawed by now. In the heating season every bulb is a little heater ,producing both heat and light,what could be greener then that ?. In summer that is not needed ,the heat that is.
The odd thing is that all those expensive fancy smancy spaghetti bulbs that cost so much, hardly ever outlast a simple older type bulb.In spite of what the package says , and the new fangled ones are all made in China…Quality be gone.
We still have a good stash of the older ones for winter use ,like a 50 year supply…….

Comment by AbsoluteBeginner
2013-03-19 07:04:23

I’ve already had to replace a few of those curly fries fluorescent bulbs since the apt. people installed a fixture for them last year. Not impressed with the technology so far.

Comment by In Colorado
2013-03-19 07:09:17

most of them are outlawed by now

Say what? I was in Lowe’s last weekend, they had mountains of them.

The odd thing is that all those expensive fancy smancy spaghetti bulbs that cost so much, hardly ever outlast a simple older type bulb.

That has most definitely NOT been my experience. I have many that have been in heavy use for years, in places where incandescent bulbs only lasted a few months. Though I agree that the Chinese ones are inferior, but they still outlast the incandescent bulbs.

Comment by joe smith
2013-03-19 07:16:12

I use the CFLs in the few places I don’t have LEDs or halogens.

CFLs are heavily subsidized here by our utility. A pack of 4 CFLs is like $1.49, $1.99, etc. at stores that participate in the subsidy (for example Lowes, Home Depot)

The only incandescents I have in my house are the little candelabra lights in the chandelier for my wife’s closet. They do make LEDs that would fit but they are really expensive and she’s only in that room to dress for work.

Comment by oxide
2013-03-19 07:38:25

LED and CFL bulbs are fine for lighting, but they look awful in chandeliers and other decorative fixtures where the bulb is exposed.

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Comment by alpha-sloth
2013-03-19 08:04:38

where the bulb is exposed

Exactly. I use CFLs (mailed free to me by my utility) everywhere except my chandelier. I haven’t found a non-incandescent bulb that looks right there.

Comment by inchbyinch
2013-03-19 08:18:06

We just had Ca Title 24 CFL plug in’s installed for can lighting in the kitchen. The plug in CFLs are long curly blubs (opposite the horizonal ones). We bought shower can lighting cover/trim kits to hide the fugly, and they look normal now, actually nice.
They are finally making some CFLs look like incandescents. I use them in our lamps, but will change them out to LEDs as the price comes down.

Ca Title 24 has some insane requirements. You have to have motion sensors on certain fixture lighting, etc…

Someone in the BIA (Building Industry Assoc.) told me the cost to special interest groups on these kind of bills, and it was 100’s of $M’s.

I am green oriented anyway, and don’t much appreciate the totalitarian angle. Our electric bill w/ a pool was $70 last mo.

Comment by Pimp Watch
2013-03-19 08:19:36

Tears of debt-ridden misery.

Comment by inchbyinch
2013-03-19 08:44:14

We have no debt. Didn’t you take your meds this morning?
(Love your gusto. Cyber hug.)

Comment by Pimp Watch
2013-03-19 09:20:12

But you’ve got losses….. big losses.

Did you take your sodium pentathol this morning?

Comment by inchbyinch
2013-03-19 09:44:43

No drugs needed in our home. For the rest of our lives, we have no house pymt or rent. We’re ahead of the game. Think long term my friend.

Comment by In Colorado
2013-03-19 10:06:16

Exactly, there is no loss until you sell, and if it’s a toe tag house, then the “losses” will be your heirs’ problem.

Comment by joe smith
2013-03-19 10:14:58

@colorado - I don’t even think they *have* heirs.

Comment by Pimp Watch
2013-03-19 10:44:05

No drugs needed in our home. For the rest of our lives, we have no house pymt or rent. We’re ahead of the game. Think long term my friend.

Paying a massively inflated price for a depreciating asset from which you’ll never recover is called Behind the 8 Ball my friend.


Comment by polly
2013-03-19 13:05:22

And when you can find an empty lot to build on in their neighborhood (no more than 4 or 5 streets in any direction) for $2000, you can build a house on it and undercut the price they paid and gloat. Until then, leave the nice lady and her husband (who, in case you are still missing it, is going blind and wanted to be in a toetag house so he could get completely comfortable with the layout and surroundings before he finished losing his sight), alone.

Comment by Pimp Watch
2013-03-19 13:56:57

Ruses, charades and housing misrepresentations are acceptable to you. Carry on sister.

Comment by Neuromance
2013-03-19 17:02:19

CFLs are heavily subsidized here by our utility.

I’d be curious about the money trail here. The utility is a well capitalized profit making enterprise. So they’re probably getting some incentive ($$) from the government. So it may well be you who is subsidizing the utility for those bulbs. Be an interesting exercise to calculate how much a taxpayer is actually spending on a bulb.

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Comment by ann gogh
2013-03-19 08:32:00

You can get 60 watts but you’ll never see a 75 or a 3 way bulb!

Comment by inchbyinch
2013-03-19 08:41:22

Purchased the higher watt blubs and stashed them for future use. I wasn’t the only one doing it.
You brought up a good point.

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Comment by Blue Skye
2013-03-19 09:05:55

Just illegal to make them in the US, not illegal to sell them, I’m thinking. Lowes sells them.

Free trade!

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Comment by ahansen
2013-03-19 11:43:03

I literally cannot see or concentrate in rooms where those dreadful things are used. They create a flicker effect that cancels out neural impulses and cloud my vision– a total distraction from everything but that terrible light. Worse, they physically enrage me. And those garish blue spectrum LED’s are positively dystopian. When I travel I always carry a 150 watt incandescent with me to read/work by.

Surely I’m not the only person who can’t spend more than twenty minutes in a grocery store or office that uses fluorescents? A public nuisance, the accursed things suffocate me.

Comment by Arizona Slim
2013-03-19 12:09:14

My CFLs work just fine. But for two fixtures, they’re what’s lighting the Arizona Slim Ranch.

Comment by joe smith
2013-03-19 07:13:19

for one thing, using electricity for heat is a lot less cost effective than natural gas, esp with natural gas prices where they are now.

do they even make incandescent bulbs for recess or accent lighting? most people these days don’t use lamps as a primary light source, except maybe in the bedroom (where the lights are usually off during the times you need the extra tiny bit of heat)

Comment by rms
2013-03-19 07:28:59

“for one thing, using electricity for heat is a lot less cost effective than natural gas, esp with natural gas prices where they are now.”

Natural gas heating usually has a loss associated with the flue pipe. FWIW, our electricity is low cost at $0.04-kWh where I’m at near the Columbia river hydroelectric complex, so all new construction is all-electric. Older homes frequently use heating oil.

Comment by azdude
2013-03-19 07:35:13

4 cents a kwh is cheap. we pay 13 cents and if we go over what they say were suppose to use it can go to 29 cents with pg&E. Bunch of crooks.

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Comment by joe smith
2013-03-19 07:38:41

Is .04/kWh the total cost including delivery fees, etc? That seems incredible. My dad considered a contractor job in Columbia River Valley about 10 years ago. Everything was much less expensive than the coasts. They still didn’t want to do it because it was so far from family.

My electricity is .086/kWh but there’s another .03/kWh for all the other fees.

Natural gas here is .53/therm. I just signed a new 1 yr agreement for .55/therm.

So at least for the east coast, using electric for heat seems like a bad deal.

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Comment by Pimp Watch
2013-03-19 07:47:12

4 cents/kW is incredulous.

And incandescents are great heaters.

Comment by rms
2013-03-19 07:55:14

s .04/kWh the total cost including delivery fees, etc?


That seems incredible.


They still didn’t want to do it because it was so far from family.

+1 A bitter pill we swallowed 15-yrs ago.

Comment by azdude
2013-03-19 08:02:48

they say I’m allowed to run my air conditioner for roughly 3 hours and If i run more I pay more to stay cool.

Comment by inchbyinch
2013-03-19 08:33:29

We had the Electrician installed 6 remote operated, dual directional ceiling fans in the 4 bdrms, LR and FR. So far we are pleased w/ how quick the central heat turns itself off. Summer should be cool enough for minimal AC use. If anyone complains, I’ll throw them in the cold pool. lol

(Heating the 18,800 gal pool is out. I wish solar was cost effective, but wish in one hand…)

We had solar roof fans installed when we put on the new roof and love them. The house is so much cooler on hot days. The price was competitive w/ standard ones.

Comment by Blue Skye
2013-03-19 10:05:20

$0.05 here. Village Electric.

Comment by scdave
2013-03-19 07:34:44

using electricity for heat is a lot less cost effective than natural gas ?

It depends….If you have a large place and only want to heat a small protion of it, electric heat is cost efficient vs. firing-up the F/A heater…

Comment by Pimp Watch
2013-03-19 08:02:43

Electric is 100% efficient.
Gas is 90% at best unless you’re burning it in a condensing boiler.
Oil 85% on a perfect day right after it’s been tuned. With every cycle, it loses efficiency ever so slightly.

Anyways…. cost effectiveness is a function of what you’re paying /k_Btu’s, adjusted for efficiency.

Dave is correct as spot heating with any fuel is far more efficient than firing central heat.

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Comment by joe smith
2013-03-19 13:41:53

I know electricity is more efficient - it’s the same for automobiles, cooking ranges, or anything else. The question is one of expense.

If electricity cost 4 or 5 cents per kWh, it would be a close call but with electricity at 12 cents/kWh (8 cents for commodity charge, 4 cents in fees & taxes) it’s not even close. I suspect this is the same for much of the east coast (maybe all).

It would also be different if we get global warming, at least until the bay rises and we’re all literally underwater (as opposed to the mortgage underwater situation).

Comment by Pimp Watch
2013-03-19 14:07:32

No $hit Sherlock. You’re not going to get to a final cost until you adjust for efficiency.

And motive force powered by electric is more efficient than fossil fueled methods? How do you know this? Explain.

Comment by Sean
2013-03-19 07:25:12

Speaking of light bulbs, I saw a documentary a few years ago called “The Light Bulb Conspiracy” which was about companies designing their products to fail. I believe the industry term is called Planned Obsoletion. Very interesting movie.

Comment by snowgirl
2013-03-19 08:08:41

Planned obsolescence….marketing 101. At least that was true in 1979.

From wikipedia…”Origins of planned obsolescence go back at least as far as 1932 with Bernard London’s pamphlet Ending the Depression Through Planned Obsolescence.[2] The essence of London’s plan would have the government impose a legal obsolescence on consumer articles in order to stimulate and perpetuate consumption.”

Comment by AmazingRuss
2013-03-19 07:33:20

Incandescents are great for heating your attic.

Comment by Bluestar
2013-03-19 07:41:11

“50 year supply”
You are screwed when they switch to the grid to D.C. someday.
Did you know that almost every thing in your house would cost less to manufacture if we had a DC grid? Billions of transformers and power supplies would be obsolete. Except for those 3% efficient light blubs almost every thing in you home could run on DC at lower cost and longer life span.

Comment by measton
2013-03-19 08:21:50

I thought the problem was transmission loss with DC. Although I believe superconductors may change this equation.

Comment by Bluestar
2013-03-19 09:02:46

I noticed the really big transmission lines are now switching to DC so maybe at higher voltages it’s more efficient. Funny thing, if you go to the Texas Oklahoma border where their electrical grid connects to ours it’s done at the DC level so they don’t have to worry about the AC sine wave sync.

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Comment by Hi-Z
2013-03-19 09:09:41

Transformers don’t work on DC so changing voltage levels is a huge problem.

Comment by Prime_Is_Contained
2013-03-20 00:37:42

Huh? Last time I checked, DC transformers worked just fine…

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Comment by aNYCdj
2013-03-19 08:07:46

Anyone get eye strain from the florescent bulbs? My eyes seem to be a lot happier when i use regular bulbs

Comment by inchbyinch
2013-03-19 08:37:48

Thanks for bring that point up. Absolutely hard on the eyes for reading. We don’t have CFLs in our two home offices. My eyes are growing older without addition strain.

Comment by measton
2013-03-19 08:20:05

The odd thing is that all those expensive fancy smancy spaghetti bulbs hardly ever outlast a simple older type bulb.

This simply is not true. I’ve been in my current house for 2 years and have replaced one bulb, and I transplanted a bunch of bulbs from my prior house.

You also neglect the fact that the price of these things has cratered. I saw them at the hardware store for a buck each. CREE is coming out w a 10 dollar LED,.

Comment by Bluestar
2013-03-19 09:29:26

Hey measton, The CREE LED lasts 25,000 hours or 25 times longer than typical incandescent light bulbs. Rated at 40w output for about 6w. I’m buying 4-6 as soon as they hit the shelves at Home Depot.

Comment by Blue Skye
2013-03-19 10:58:38

So they say. My place is all LED going on two years and I have had a couple of failures already.

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Comment by oxide
2013-03-19 12:46:25

The light bulbs are textbook example of the “bathtub curve” for engineering failure.

Failure rate is high at the beginning stages because some of the bulbs have initial “birth defects.” They are removed from the pool of bulbs.
Failure rate goes down to 0 during design life, because all the defective bulbs have already failed. The rest of the bulbs are fine.
Failure rate goes way back up at the end. This is because ALL the bulbs are aging and nearing the end of their design life.

Comment by WT Economist
2013-03-19 11:24:54

We averaged 7.1 kwh per day last year. Plus 737 therms of natural gas for the year. And I’m not going to whine about my real American right to show my affluecne by using more.


The best part about CFLs and LEDs is that you don’t have to change the light bulbs very often at all. Time is also scarce in your one and only life. Which is why I don’t have a lawn either.

Comment by Bluestar
2013-03-19 07:16:57

So 200,000 underwater mortgages just moved from -B grade debt up to A-. Does that mean the amount owed is less than the value of the equity + appraised value of the property? At least it will give some people a chance to cash out. Will they rent or re-enter the market at some different price point?

“A 5 percent gain in prices would return another 1.8 million homes, or 3.7 percent of all residential properties with a mortgage, to positive equity, CoreLogic said.”

Comment by rms
2013-03-19 07:34:46

“Underwater Homeowners Regain Equity as Prices Rise”

Exactly what the patient wants to hear and read.

Comment by azdude
2013-03-19 07:36:17

we are on the verge a historic run in stock prices, get in why you can.

Comment by Carl Morris
2013-03-19 08:15:06

It’s gonna be a run alright…

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Comment by scdave
2013-03-19 07:39:24

Interesting…Nice post…

So was that part of the plan….Allow suspension of mark-to-market, sit on the inventory until we can inflate our way to solvency on these bad debts…

Comment by Bluestar
2013-03-19 07:52:22

If any one should be surprised by this it would be the doomers that just can’t get a grip on how powerful the FED (and FASB) really are. I myself thought high energy & commodity prices would overcome QE but it hasn’t yet because they exclude it from inflation numbers.

Comment by Carl Morris
2013-03-19 08:17:54

If any one should be surprised by this it would be the doomers that just can’t get a grip on how powerful the FED (and FASB) really are.

I think you’re right, but at the same time I think that leads to the non-doomers concluding that they are omnipotent, which I think is also incorrect. The only question is how long it takes until we find out that they are not…

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Comment by Bluestar
2013-03-19 09:14:04

Blasphemous talk. Are we not a nation of LAWS!? We have laws for and against every imaginable thing, even which God is on our money (note Allah is not a valid American god). So as long as we follow the laws they make then society remains intact and anarchy is suppressed.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 07:39:39

What are the chances of “ensuring financial stability” through putting arcane academic theory to work in the real world while pursuing a rock-bottom rate policy?

Updated March 18, 2013, 12:03 p.m. ET

Inside a Warier Fed, Watch the New Guy


Wall Street is watching Jeremy Stein.

Still not a year into his tenure on the Federal Reserve’s board of governors, the 52-year-old has grabbed the attention of investors, traders and his own Fed colleagues by publicly airing concerns about overheating in some sectors of the credit markets.

Fed Chairman Ben Bernanke and Vice Chairwoman Janet Yellen have referred to Mr. Stein in recent speeches, acknowledging his concerns but playing down the immediate risks.

Jeremy Stein has aired concerns about overheating in credit markets.

Still, the notice senior Fed officials are giving to a junior governor on leave from his job as an economics professor at Harvard University shows how much he is helping shape internal debate at the Fed.

“Pay attention to the new guy,” Vincent Reinhart, a Morgan Stanley economist and former head of the Fed’s powerful monetary affairs department, said in a written commentary.

Fed officials gather Tuesday and Wednesday for a policy meeting where they will discuss how long to continue their low interest-rate policies. In the past, Fed officials saw inflation as the main danger of such policies.

Now, a bigger worry for many Fed officials is that low rates could cause markets to overshoot and create a new mess. Mr. Stein publicly elevated that risk in a February speech.

Fed policy makers are likely to decide this week to keep the low-rate policies in place, while remaining on high alert for trouble.

Mr. Stein is a brainy, former college gymnast who spent most of his career as an academic. In Washington, he is trying to put arcane academic theory to work in the real world.

In an interview, Mr. Stein said his goal is to make a mark at the Fed as it reorients its mission to include ensuring financial stability, one of Mr. Bernanke’s top priorities. The interview took place before the Fed’s traditional blackout period, which starts a week before Fed officials gather for a policy meeting.

Fed officials were humbled by the central bank’s failure to foresee or prevent the financial crisis. The Dodd-Frank financial-overhaul law gave the Fed more responsibility.

Mr. Bernanke has reorganized the central bank to pay more attention to dangers lurking in the financial system. His moves include a new Office of Financial Stability Policy and Research to look out for risks and come up with strategies for preventing another crisis.

Low interest rates are starting to cause investors and lenders to “reach for yield,” or take on new risks in search of higher returns, Mr. Stein said in a February speech. Too much risk-taking could lead to trouble for certain firms, he added, especially if they borrow heavily to fund their holdings.

Comment by azdude
2013-03-19 07:52:00

funny how investors get excited about the prospects of printing more money for the stock market.

Wouldn’t a healthy and trustworthy stock market rely on profits from companies? Aren’t you are suppose to be investing in a business that makes money selling products or services correct?

Comment by measton
2013-03-19 08:25:51

This is called positioning yourself for BB job when he get’s the boot.

Comment by rms
2013-03-19 07:49:49

Here’s what $525,000 buys in Los Osos, CA, 20-min to Cal Poly, SLO:

Featuring no sewers, no sidewalks, an unincorporated county area.

Comment by azdude
2013-03-19 08:00:34

lmao that thing is so dated, tear everything out to the gypsum board and start over. maybe worth 150k on a good day.

Comment by joe smith
2013-03-19 08:04:10

Stainless steel GE stove & microwave are the only things that would be left standing.

But look at the “street view” and you’ll see it’s not worth rehabbing that POS house.

Also, the garage was “converted to living space” - - imagine living in a neighborhood where that was a routine practice. Klassy.

Comment by rms
2013-03-19 14:14:18

“…imagine living in a neighborhood where that was a routine practice…”

That’s what happens when income and house prices disconnect.

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Comment by rms
2013-03-19 14:19:00

“lmao that thing is so dated, tear everything out to the gypsum board and start over. maybe worth 150k on a good day.”

This is near the foggy coast too, so most of the gypsum board has mold covered over with latex paint. Our closets didn’t breathe well, so most of our nice “infrequent” clothing absorbed mold spores; in the trash!

Comment by joe smith
2013-03-19 08:01:05

That is the kind of house I’d wish my worst enemy to live in. Absolutely awful, it looks like a modified dumpster. I clicked on the “street view” function and, wow, it’s like WT heaven. Above ground power lines, dirt road, overgrown vegetation, boats parked in the middle of the road (with cones around it?!?!), fencing in the front yards, the houses look like trailers, etc.

I assume it’s 500k because it’s walking distance to the bay? Madness.

Comment by scdave
2013-03-19 08:32:26

That is the kind of house I’d wish my worst enemy to live in ??

I want to be your enemy…. :)

Comment by joe smith
2013-03-19 08:44:01
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Comment by rms
2013-03-19 14:35:50

“…I want to be your enemy…”

+1 Me too. :)

We really miss the SLO area, but I just wasn’t willing to belly-up to the closing table. The captivity of debt is something I just can’t live with especially as I move closer to my sixties.

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Comment by ahansen
2013-03-19 15:33:03

What do any of these pretty pictures have to do with that gawdawful teardown shack?

Paying a half-million dollars for what amounts to a crowded lot in a trailer park neighborhood makes about as much sense as buying a house in Watts because it’s “20 minutes” from downtown Los Angeles. If there had been any sort of view or any sort of neighborhood amenities they would have showcased them instead of that gag-inducing truck-stop bathroom.

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Comment by oxide
2013-03-19 08:28:13

Garage converted to living space… with the garage door still there. The driveway is dirt.

Tax assessment: $217K
Last sold: 9/11/2012 $431K
“Priced to move” 3/11/13: $525K

They didn’t even paint it before trying to flip it. :roll:

Comment by Montana
2013-03-19 14:26:32

Wow, had some family friends retire to Los Osos from socal over 30 years ago. It got to be the thing, to get away from all that crap down in LA. Looks like it paid off for them or their heirs.

Comment by rms
2013-03-19 14:38:43

“Wow, had some family friends retire to Los Osos from socal over 30 years ago. It got to be the thing, to get away from all that crap down in LA. Looks like it paid off for them or their heirs.”

+1 The early nineties were the last best time to buy there, IMHO.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 08:02:56

March 19, 2013, 9:56 a.m. EDT
Stocks rise after positive housing report
Stories You Might Like
Fed to signal it will keep punch bowl full
10 signs your stocks are about to tumble
Apple, Google lead techs higher, but ARM, EA fall

By Kate Gibson, MarketWatch

NEW YORK (MarketWatch) — U.S. stocks started modestly higher on Tuesday after data illustrated that the recovery in the U.S. housing market continues and as Wall Street brushed aside concern about Cyprus.

Ahead of the open, the Commerce Department reported housing starts climbed 0.8% in February, slightly better than expected. Meanwhile, a vote on a euro-zone proposal to tax bank deposits in Cyrus to help fund a rescue of the island nation did not appear imminent.Read more about home construction data

“The housing market recovery continues,” said Gus Faucher, senior economist at PNC Financial Group.

“There’s a little concern, but the general consensus is Cyprus is not going to be a major factor for the U.S. economy going forward,” he added.

The Dow Jones Industrial Average (DJIA +0.16%) rose 54.06 points, or 0.4%, to 14,506.12, with Bank of America Corp. (BAC +2.11%) leading gains among all but one of the index’s 30 components.

The S&P 500 index (SPX -.00%) gained 4.79 points, or 0.3%, to 1,556.89, with consumer stapes faring best and energy the worst-performing of its 10 major sectors.

The Nasdaq Composite (COMP -0.07%) added 11.66 points, or 0.4%, to 3,249.25.

Comment by Craterous Maximus
2013-03-19 08:05:24

Let housing prices CRATERRRRRRRRRRRRRR!!!!!!!!

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 08:05:43

March 18, 2013, 2:20 p.m. EDT
Fed to signal it will keep punch bowl full
No hint of tapering or ending QE3 likely next week
By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — The Federal Reserve will use its policy meeting next week to try to convince investors that it has no intention of slowing down or ending its ultra-loose monetary policy anytime soon.

Although the economy has looked unexpectedly robust so far this year, “talk of tapering in the near term is nuts,” said Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors.

Fed Chairman Ben Bernanke and his majority on the Fed are concerned that markets may start to price in some tapering, and higher rates could harm the recovery.

“Market participants always come to expect more tightening sooner than is appropriate for sustained expansion,” said Vince Reinhart, Morgan Stanley’s chief U.S. economist.

The Fed doesn’t want to feed these expectations, analysts said.

“My judgment on where they are now is they do not want to change the broad signals they have sent about policy,” agreed Lewis Alexander, chief economist at Nomura Securities.

Since December, the Fed has been buying $85 billion per month of Treasurys and mortgage-backed securities in an open-ended program that it said would continue until there was a substantial improvement in the labor market. It has held its short-term interest-rate target close to zero since December 2008.

Comment by Carl Morris
2013-03-19 08:23:34

How many times can you spike the punchbowl until it’s just pure ethanol?

Comment by PeakHubris
2013-03-19 21:49:08

At a certain point, after so many hair of the dog treatments, the patient just up and dies.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 08:08:31

March 18, 2013, 8:03 a.m. EDT
10 signs your stocks are about to tumble
Commentary: Winter’s rally is over and bears are hungry
By Jeff Reeves

Editor’s note: This column is the first in a two-part series. Part two will publish Tuesday and detail the market’s bullish signs.

ROCKVILLE, Md. (MarketWatch) — As U.S. stocks hover at record highs, many investors rightly wonder if the rally will last.

Unfortunately, it may not.

Don’t take my word for it. Check out these 10 negative headlines and economic data points that could trigger a 5% to 10% downturn over the next several months.

Feel free to share your own observations below. And for balance, check back Tuesday for 10 reasons the market could move even higher.

Comment by oxide
2013-03-19 09:42:33

Yeesh, Bomby, that is like SOOO Monday. Today, Reeves put out “10 reasons to run with the bulls.”

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 08:12:38

Investment Banking | DealBook Column March 18, 2013, 8:49 pm
A Bank Levy in Cyprus, and Why Not to Worry

A rally against the deposit tax in front of Cyprus’s Parliament on Monday drew about 800 participants.

Never mind.

The last 72 hours have been filled with breathless proclamations of impending disaster after the European Union and International Monetary Fund indicated that they planned to take money directly from depositors with bank accounts in Cyprus as part of a bailout of that country.

Analysts and politicians compared the bailout plan, the first to include a levy on deposits that were considered to be insured, to government-sponsored larceny, and said it would cause a run on banks across Europe, if not a full-fledged global crisis.

The very nature of banking has been shaken to its roots with this decision, for banking depends upon trust,” Dennis Gartman, the investor, wrote in a note to his clients. “Trust that has now been shattered; torn asunder, broken … destroyed.”

Jim O’Neill, chairman of Goldman Sachs Asset Management, called the decision an “astonishing move” with “little thought of contagion to the rest of the euro zone, and indeed perhaps the world.”

Mark J. Grant, a market commentator who has been predicting an economic apocalypse in Europe for years, went so far as to compare the terms of the bailout with “rape.” He said: “Pay attention please. The European Union and the European Central Bank and the I.M.F. have just advocated the confiscation of private property for their own indulgence.”

Even President Vladimir Putin of Russia got into the debate, given that much of the deposits in Cypriot banks are Russian. “Mr. Putin said that such a decision, if adopted, would be unfair, unprofessional and dangerous,” a spokesman said.

And yet here we are. And, well, nothing bad has happened.

There have been no re-enactments of “It’s a Wonderful Life,” with people lined up around banks in Italy or Spain — considered the next dominoes, if you believe the doomsayers. The stock markets in Europe dropped less than 1 percent. In the United States, investors shrugged their shoulders, too.


Comment by alpha-sloth
2013-03-19 09:40:22


Because it hasn’t happened yet?

Comment by oxide
2013-03-19 13:11:28

That doesn’t explain why the average Cypriot hasn’t gone to extract his cash before taking a 6.5% hit. I know I would have. Does Cyprus operate with an underground cash system, do they have payday loan places, maybe their lucky duckies are paid in “pods” of Tide laundry detergent?

Comment by alpha-sloth
2013-03-19 13:27:47

Their banks are closed until everything gets settled. People were lined up at ATMs, but they quickly ran out of cash, and apparently aren’t being replenished.

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Comment by Prime_Is_Contained
2013-03-20 00:49:34

People were lined up at ATMs, but they quickly ran out of cash, and apparently aren’t being replenished.

People were also told that taking their money out of the ATM would not reduce their “contribution”—e.g. it would be calculated based on their last-Saturday’s balance.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 08:21:33

The real reason for the extreme mortification over the Cyprus situation: Once the central banker cartel replaces a rule of law in the banking system with ad hoc improvisation, there is no guarantee your savings to be safe, unless you convert them to gold and hide them well.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 08:22:47

In 1941, The Federal Reserve Wrote A Letter Explaining Why The Cyprus Bailout Was Such A Terrible Idea
Rob Wile | Mar. 18, 2013, 9:51 AM

The main reason why people are going crazy this morning over the “Troika’s” (EU, IMF, ECB) bailout of Cyprus is the one-off 9.9 percent tax all Cypriots with over 100,000 euros will be charged, and 6.5 percent if you have less.

It seems shocking, but the concept isn’t that novel.

As Sky News’ economics editor Ed Conway points out this morning, in 1941, the Federal Reserve responded to an inquiry on why American deposits weren’t taxed, since it would be so easy to administer and would produce so much revenue.

Perhaps, the Fed said, it could be done.

But such a tax would also violate “one of the fundamental principles of taxation in a democracy.”

That is, some rich guy may actually have a relatively small amount in his deposit account that consists only of his salary and dividends, while a local businessman may have his entire payroll locked up in his branch’s vault.

That kind of indiscriminate punishment is exactly what the Troika has executed today, Conway writes:

…one’s sympathy has to be with the country’s savers. Consider it: overnight a widow’s life savings, carefully saved up over decades, have been gouged, simply because EU bureaucrats decided to protect hedge funds and the German surplus, and to teach Russians a lesson.

Here’s the full reproduction of the Fed’s 1941 response. Big thanks to Ed Conway for passing it along.

Comment by elle ven deep fried twinkies
2013-03-19 08:36:15

After giving a little thought, I have concluded that this is a warning shot to Russians to buy depreciating western real estate properties instead of keeping it all cash. IMF, EU and the Fed never had any issues with laundered money going to buy houses. There you go.

Comment by Carl Morris
2013-03-19 08:42:46

Makes sense. If they won’t take their haircut the old fashioned way then we’ll just hold them down and do it Romney-style.

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Comment by elle ven deep fried twinkies
2013-03-19 08:55:12


There was a video in youtube with that name during election. Funny stuff.

Comment by Carl Morris
2013-03-19 09:05:58

I bet it didn’t include his method for giving haircuts.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 09:15:18

“IMF, EU and the Fed never had any issues with laundered money going to buy houses.”

In fact, the Fed is doing all it can to pump up the value of U.S. real estate and encourage foreign investors to snap it up.

All-cash Canadian and Chinese investors in U.S. residential = smart.

Russian money launderers parking money in Cyprus banks = dumb.

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Comment by ecofeco
2013-03-19 13:20:00

You have problem with Corporate Communist Capitalism©®™?

Comment by ahansen
2013-03-19 15:40:27

“…unless you convert them to gold and hide them well.”

Perhaps there’s an ulterior motive here? Russia is the world’s top gold buyer; maybe this is a clever ploy to run up the price?

Comment by Bill in Los Angeles
2013-03-19 19:12:45

there is no guarantee your savings to be safe, unless you convert them to gold and hide them well.

+1 and bingo.

I like to advise people this: Using your own good judgement and world view, assign a probability that your 401k, IRA, even your non tax deferred brokerage accounts and or savings will be confiscated to some degree. Based on the percent chance the figure is the percentage of assets that you should have in precious metals.

Comment by Bill in Los Angeles
2013-03-19 19:14:30

It was a felony to own gold after Communist Roosevelt’s decree. If communist Obama does the same thing, I will be a felon. Any LE or agent coming to my door asking if I have gold, well it would be too late, for I would have sold it already.

Comment by Pimp Watch
2013-03-19 19:47:20

Even though I know it’s established history, the mental image of tens(hundreds?) of thousands of people turning over their gold for some fixed price because the great Oz says to is stunning to me.

Comment by Bill in Los Angeles
2013-03-19 20:30:32

Which is why you won’t see it happen, or at least see much compliance among people with caucasian skin color. The black people who comply based on that he’s the first black President, thus their deity, will end up as the victims.

Obozo is not Oz. FDR perhaps was Oz. To the “subjects” of FDR’s defense, they were fooled once. Well we know the history. FDR was a thief.

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Comment by tresho
2013-03-20 03:59:40

Well we know the history. FDR was a thief.
Nah, he wasn’t a thief. His actions were ‘ratified’ by the US Supreme Court, and therefore ‘legal’. Or you could call it, “stealing - fair & square.” Native Americans are very familiar with that.

Comment by Cantankerous Intellectual Bomb Thrower™
Comment by measton
2013-03-19 08:35:52

The power of gerrymandering

The 2010 elections, in which Republicans won the House majority and gained more than 700 state legislative seats across the nation, gave the party the upper-hand in the process of redistricting, the once-a-decade redrawing of congressional seats. The advantage helped them design safer partisan districts and maintain their House majority in 2012 — even as they lost the presidential race by about 5 million votes. Also nationwide, Democratic House candidates combined to win about 1.4 million more votes than Republicans, according to data compiled by Bloomberg News.

Comment by elle ven deep fried twinkies
2013-03-19 09:41:27

Is it really gerrymandering? Democrats have more safer congressional seats and they won those by higher margins. Republicans won more of the the closely contested seats.

Comment by joe smith
2013-03-19 10:38:34

It is gerrymandering, the seats are drawn to pack Democrats into relatively few districts and spread out Republican voters as much as possible.

GOP controls more state legislatures. To maximize the number of Congressional seats they’ll win, they put Democrats into very “blue” districts and try to spread Republican voters out so they will only win 50-55% in any one district but thus end up winning more districts.

Setting aside college towns (tend to be Democratic) Republicans have a relatively small edge in non-urban areas, whereas Democrats run up large majorities in cities and the immediate/inner suburbs.

Comment by elle ven deep fried twinkies
2013-03-19 11:08:22

GOP controlling more legislatures is relatively recent phenomenon. Gerrymandering for the benefits of republican party exists and it does for democrats as well. I just don’t think gerrymandering alone explains the republican win in house of rep. Mathematically it’s possible to win more seats by winning more of the competitive seats and still losing the popular votes.

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Comment by measton
2013-03-19 13:13:58

You obviously don’t understand what gerrymandering is.

You can see that this is powerfull by the fact that many of these same states now want to proportion their presidential vote based on congressional districts. ie not a winner take all scheme. These states are purple but controlled by GOP. Pure red still want winner take all.

Not saying it doesn’t happen the other way but GOP is more successfull at it.

Comment by joe smith
2013-03-19 13:50:19

To be fair, it’s also easier for the GOP to do it - groups that lean blue also tend to live in very populated areas. It’s not like they have to go too far out of their way to cut it just right.

Also to be fair, look at a state like Maryland. There are some ridiculous looking districts which serve to make MD even more “blue” than it would be. Look at the 2 district that run through Baltimore Cityb as well. One of them (Elijah Cummings) runs through primarily black areas, guaranteeing it a black representative. The other one runs through a lot of wealthy and extremely white areas. That’s John Sarbanes’ seat (his dad was Senator Paul Sarbanes of Sarbanes-Oxley infamy), which is a traditional “power seat” in Maryland politics. Most of our recent Senators have come through that seat (both of the current ones), plus Nancy Pelosi’s dad had that seat for a while (prior to becoming Mayor of Baltimore).

So gerrymandering can even be used to divide regions so that you guarantee one minority rep and one elitist white rep. Technically they’re in the same party, but their constituents might as well be different species. If we drove around Baltimore we wouldn’t need a map to figure out which blocks are in Sarbanes’ territory and which are in Cummings’.

Comment by Arizona Slim
2013-03-19 14:55:04

Also to be fair, look at a state like Maryland. There are some ridiculous looking districts which serve to make MD even more “blue” than it would be. Look at the 2 district that run through Baltimore Cityb as well. One of them (Elijah Cummings) runs through primarily black areas, guaranteeing it a black representative.

I live in a U.S. Congressional District that’s pretty much guaranteed to elect a Hispanic. Hence, U.S. Rep. Raul Grijalva.

He’s not my first choice of Hispanic legislators. I much prefer Linda Lopez in the AZ Senate. Or Carmen Cajero Bedford, also of the AZ Senate.

Comment by oxide
2013-03-19 13:28:55

Given the demographic trends, the R’s need to be very careful about how close they want to cut their districts.

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Comment by WT Economist
2013-03-19 11:28:07

That’s how the Democrats kept control of the house from 1980 until 1994 despite Republican ascendency.

So much for the House being the part of the federal government that reflects the will of the people. It has been the reverse for most of the past 35 years.

Comment by Rental Watch
2013-03-19 13:55:32

From the whole article:

“Democrats aren’t immune from engaging in the political bloodsport of redistricting. With control of the process in Illinois, Democratic lawmakers from Obama’s home state approved a map on Memorial Day weekend in 2011 that led to the defeat of five Republicans in the 2012 elections.”

CA now has the district redrawing overseen by a panel of judges. The result of which was at least once, two Democratic incumbents needed to fight it out, as they both ended up in the same district.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 08:36:26

March 19, 2013

Workers Saving Too Little to Retire

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. Kelly Greene reports. Photo: AP.

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.

Comment by azdude
2013-03-19 08:53:38

A lot of the retired people I see sit around and watch tv all day.

Comment by joe smith
2013-03-19 09:06:07

Seems like many retirees are on such a tight budget that they can’t afford to do much other than shuffle between their couch and some routine errands, seeking deals on food and other necessities. Maybe an ocassional meal out at a very basic restaurant.

Comment by (Now that I'm "diversified") Jetfixr
2013-03-19 12:04:51

Or trip to the penny slots at the local Indian casino.

Or as my brother refers to them: “Native American Reinbursement Tours”

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Comment by ecofeco
2013-03-19 12:40:52

That’s about it joe. Contrary to popular belief, most retirees did not make out like bandits while robbing the younger generations.

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Comment by oxide
2013-03-19 09:57:22

And the current retirees are still of the generation when people paid off their houses. What will happen in 10 years when people retire with a mortgage?

Comment by joe smith
2013-03-19 10:31:52

In the future, we old people won’t need to do work. Old people in 2065 will be able to watch Netflix all day and use robots to run errands, load the dishwasher, vac the floors, mow the lawn, etc.

I, for one, plan to have several robots so I can send them out to do other people’s yard and house work and bring some money home to me.

During all of this, I’ll be sitting poolside or working on my tennis/squash game.

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Comment by alpha-sloth
2013-03-19 11:30:08

I, for one, plan to have several robots so I can send them out to do other people’s yard and house work and bring some money home to me.

I’ll send my robots to work on Wall Street, skimming money on HFT or something, and bring home some real bucks.

Comment by ecofeco
2013-03-19 12:39:05

I’ll send my robots to beat up your robots and rob them.

Comment by alpha-sloth
2013-03-19 12:45:53

My robots will be bulletproof.

Comment by Carl Morris
2013-03-19 14:45:28

BulletPROOF? Or just bullet resistant?

Comment by alpha-sloth
2013-03-19 17:28:43

PROOF or resistant?

It won’t matter, we’ll have outlawed guns by then, and my bots will take over with a 2×4 with a nail through it.

You will hear my name and tremble, and you will know my bots by the trail of bodies.

And capital gains will be taxed as income, after deducting inflation.

And we’ll have single-payer health care coverage.

Comment by goon squad
2013-03-19 11:07:21

The USA is in an endless, stagflationary depression.

Welcome to the recoveryless recovery.

The future belongs to Lucky Ducky.

Comment by ecofeco
2013-03-19 12:35:29

For J6P, it has been for the last 35 years.

Comment by goon squad
2013-03-19 17:05:19

Haven’t been alive that long, but from what we read, we agree.

It’s gonna get worse, and then it’s gonna get more worse :)

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Comment by Arizona Slim
2013-03-19 12:15:28

Why, those naughty workers! In these days of flat real wages and salaries for decades, how DARE they not save for retirement! It’s as if they’re expecting PENSIONS or something.

Comment by ecofeco
2013-03-19 12:37:54

After all, they could have easily predicted the future!

Comment by oxide
2013-03-19 13:33:46

Slim, about half the comment section reflect your sentiment, sans sarcasm. Americans simply aren’t “choosing” to save anymore, buying new cars every three years* and going on expensive vacations, you see. Well, that’s the WSJ for ya.

[the other half of the comments is full on generational warfare.]

*Of course, if we were really buying new cars every three years, then why is there such a dearth of 3-4 year old used cars…

Comment by ecofeco
2013-03-19 13:09:22

I like the way the whole foundation of this article is that pensions are a liability.

Uh, no. It’s payment for deferred wages.

Comment by Weed Wacker
2013-03-19 14:41:55

If you bother to save the govt will just take it away from you anyway. And if you don’t save govt will take money away from “rich” people that saved and give it to you anyway. Plus your savings are just destroyed by inflation anyway. So why save?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 09:04:29

March 18, 2013, 8:34 pm
Former Calpers Chief Indicted Over Fraud

Federico R. Buenrostro was the top official at the California Public Employees’ Retirement System, or Calpers, from 2002 to 2008Linda Spillers for The New York TimesFederico R. Buenrostro was the top official at Calpers from 2002 to 2008.

As head of the country’s largest pension fund, Federico R. Buenrostro wielded vast influence in the money management world.

From 2002 to 2008, Mr. Buenrostro served as chief executive of the California Public Employees’ Retirement System, or Calpers, which allocates more than $200 billion to investment firms across the globe.

Federal prosecutors say that Mr. Buenrostro abused that position. In an indictment filed in Federal District Court in San Francisco on Monday, the United States attorney charged Mr. Buenrostro and his friend, Alfred J. Villalobos, with defrauding the private equity firm Apollo Global Management.

The corruption charges against Mr. Buenrostro and Mr. Villalobos are connected to a nationwide pay-to-play scandal that erupted several years ago. Regulators from numerous states, including California and New Mexico, have cracked down on widespread influence peddling in how their state pension funds were invested.

The scandals focused on the role of middlemen, or placement agents, who charged lucrative fees to help money managers win business from state pension funds. In some cases, placement agents proved to be unlicensed fixers who received illegal kickbacks from pension officials. A number of pension officials and middlemen have served prison time, including Alan G. Hevesi, the former head of New York’s state pension fund.

The government claims that Mr. Buenrostro and Mr. Villalobos invented a crude scheme that tricked Apollo, one of the world’s largest private equity firms, into paying Mr. Villalobos at least $14 million in fees for his help in securing an investment from Calpers.

“We are extremely pleased that law enforcement authorities are moving to hold individuals accountable for activities which violate the public trust,” Rob Feckner, the board president of Calpers, said in a statement.

Comment by In Colorado
2013-03-19 10:00:20

“Buenrostro” = “Good face”

Comment by ecofeco
2013-03-19 12:34:19

As I’ve said, there was so much fraud going on, it will take years to catch up to everyone, so every one just be patient.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 09:08:16

Can the price history be right?

10227 Winecreek Ct, San Diego, CA 92127

Bedrooms :5 beds
Bathrooms: 5 baths
Single Family: 4,854 sq ft
Lot: Contact for details
Year Built:2006
Last Sold: Oct 2010 for $1,270,000

Value Range 30-day change $/sqft Last updated
Zestimate What’s this? $1,331,911 $546K – $1.96M +$18,298 $274 03/17/2013
Rent Zestimate What’s this? $6,158/mo $4.5K – $9.4K/mo +$347 $1.27 03/18/2013

Price History
Date Description Price Change $/sqft Source
10/29/2010 Sold $1,270,000 -2.2% $261 Public Record
09/25/2010 Listed for sale $1,299,000 – $267 Shay & Associates
09/02/2010 Listing removed $1,299,000 – $267 Re/Max Ranch & Beach
08/21/2010 Listed for sale $1,299,000 -16.2% $267 Re/Max Ranch & Beach
07/31/2006 Sold $1,550,000 -86.7% $319 Public Record
03/30/2005 Sold $11,683,296 – $2,406 Public Record

Comment by joe smith
2013-03-19 09:34:18

I like this one a lot. How much could someone rent that for, in your opinion?

Comment by Cantankerous Intellectual Bomb Thrower©
2013-03-19 13:56:39

“Rent Zestimate What’s this? $6,158/mo $4.5K – $9.4K/mo +$347 $1.27 03/18/2013″

If you are seriously interested, I can ask around, as we know folks who rent there…

Comment by Weed Wacker
2013-03-19 14:45:02

Looks like an extry 1 was accidentally inserted on that first sale price. Has to be a typo.

Comment by cactus
2013-03-19 09:12:35

Rep. Betsy Ritter, a Waterford Democrat, not only has sponsored a “combined reporting” bill, but she has also proposed a hoarder’s tax. This would place a levy on liquid assets — companies with a lot of money in the bank — and dedicate the proceeds to job creation programs.

and we elect these idiots

Comment by In Colorado
2013-03-19 10:02:24

I’m not a fan of Corporate America, but this is a really bad idea.

Comment by oxide
2013-03-19 11:08:31

They should look at how companies get all that cash to begin with. Job outsourcing, offshore tax havens, merger to the point of monopoly, accounting tricks, microsecond trades, interest rate manipulation, tax breaks. Little of this has to do with providing a good or service.

Comment by Arizona Slim
2013-03-19 12:20:09


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Comment by measton
2013-03-19 13:09:14

This is in the US not cypris right?

Next stop taxing American Savers.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 09:12:48

Who would buy with a $6000 monthly, and why?

P.S. Note the Dutch auction price action since this home was recently listed, and the bizarre price spike in the Zestimate™ graph. Try not to catch yourself a falling knife.

16266 Winecreek Rd, San Diego, CA 92127
For Sale: $1,699,888
Price Increase (Mar 11): $888
Zestimate®: $1,402,676
Est. Mortgage:

Bedrooms:4 beds
Bathrooms:5 baths
Single Family:4,205 sq ft
Lot:21,861 sq ft
Year Built:2006
Last Sold:May 2006 for $1,235,000
Heating Type:Forced air

Price History
Date Description Price Change $/sqft Source
03/11/2013 Price change $1,699,888 -5.6% $404 Realty Experts
02/04/2013 Price change $1,799,888 -0.0% $428 Realty Experts
12/29/2012 Listed for sale $1,800,000 45.7% $428 Realty Experts
05/24/2006 Sold $1,235,000 – $293 Public Record

Comment by Rental Watch
2013-03-19 09:25:35

Because they want to live in the house and can afford the cost.

Same as someone who chooses to buy a cheaper house.

Comment by Cantankerous Intellectual Bomb Thrower©
2013-03-19 13:48:35

You missed my point, which is why would someone who can afford to buy a $1-$2 million home bother with a mortgage?

Comment by joe smith
2013-03-19 14:02:21


Use a mortgage until it doesn’t make sense for tax reasons. Then pay off in cash.

This is my plan but then again my mortgage was only 140ish :-( . If I had a 1.5MM mortgage, I think the MID might make sense for a loooong time.

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Comment by HBB_Rocks
2013-03-19 14:32:02

Also because the mortgage rate is about 4%. You can get better returns over 30 years than that.

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Comment by Cantankerous Intellectual Bomb Thrower©
2013-03-19 17:56:25

Especially because the 4% is tax deductible, thanks to the friendly folks in Flyover Country who are happy to help Californians buy $1m+ homes.

Comment by Rental Watch
2013-03-20 08:57:20

You can borrow to invest, and have it tax deductible as well. But you can’t borrow at a fixed rate for 30 years.

Comment by Rental Watch
2013-03-19 14:35:33


1. 3.75%-4% (or whatever the loan’s interest rate may be) may be the cheapest money they will ever get;
2. They believe that there will be an inflationary consequence to the Fed’s QE; and
3. They think that the combination of #1 and #2 will allow them to borrow the money essentially for free (in real terms), and will pay back the debt with much cheaper dollars in the future.

When I purchased, rather than liquidate shares of REIT stocks to have a lower mortgage amount, I kept them, since I thought they still had a way to run in terms of value (and my basis was quite low, so to get $1 to go toward the home purchase, I would need to sell $1.20 worth of stock–or thereabouts).

Since then, in about 2 years, one has gone up 20% in value, and distributed cash of another 5% in dividends. Excluding the fact that I would have paid tax to sell, and excluding appreciation, my net cost of borrowing rather than liquidating the stock and using the proceeds was approximately 1% per year. The current dividend rate on the price I would have gotten if I sold then is approximately 3.9% annually…my cost of borrowing is 3.75%.

So, by NOT selling that one particular security, the dividend from that security is paying for that portion of the cost of the mortgage. And every year that goes by with inflation (and they raise their dividend…as has been the custom), that security can pay more and more of the cost of the mortgage.

And I understand fully the concept of picking up nickels in front of steamrollers. I get it.

I’m not relying on these dividends to pay the mortgage. We got our loan approved on my wife’s income alone, and have fully liquid securities sufficient to sell and repay the whole mortgage.

Additionally, I’m not interested in borrowing any more $, even if it’s cheap–there is a limit to my madness. That said, I would much prefer to repay the loans I do have in future dollars than liquidate, pay tax, and go mortgage free.

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Comment by Pimp Watch
2013-03-19 15:04:38

You’re FOS because;

There is no inflation.

Comment by Rental Watch
2013-03-19 16:05:18

“They believe that there will be an inflationary consequence”

Future tense. Go back to 4th grade.

Comment by Pimp Watch
2013-03-19 16:11:05

“There is no inflation.”

Now get over it.

Comment by Rental Watch
2013-03-19 17:07:00

I’m curious…what is the cost of building a house compared to, say, a year ago?

And be honest about it…everyone I speak to (including a high-up REIT exec) says that construction costs are up…

Comment by Pimp Watch
2013-03-19 17:22:38

You ask a question like that and you’re telling me to be honest?

Your raft of BS day after day here and you’re telling me to be honest?

Get a grip.

Comment by Rental Watch
2013-03-19 17:54:19

Saying there is no inflation is incredibly naive. And yes, increased costs have hit the construction industry.

And food, and gas, and other things people need, like medical care, and education are also up in price.

It’s just that the government plays with the numbers so it doesn’t look so bad.

Filet mignon goes up in price? Let’s just change the basket of goods to reflect that people will buy more ground beef.

Do you honestly think that the PTB don’t understand the solution to the US debt/deficit mess? Monetize the debt through inflation–even better if you do it without people knowing…to quote Chuck Schwab, “the Fed is trying like hell to create inflation…eventually they’ll be successful.”

Deny it all you want…right now, people with lots of resources are positioning their assets to protect against (and to benefit from) the possibility of more significant inflation.

Comment by Pimp Watch
2013-03-19 18:06:41

That’s not inflation my lying friend.

Comment by Ben Jones
2013-03-19 18:07:20

‘the Fed is trying like hell to create inflation…eventually they’ll be successful’

I’ve heard this for decades now. Sure, they want inflation, but competing against Chinese/Indian/Mexico wages, US workers aren’t earning more. They are just poorer if food, etc, goes up. And they have less to pay for houses, BTW. Globalism ruined the central banks ability to create inflation. After 3 trillion in balance sheet additions, this should be obvious to even Charles Schwab.

Comment by Rental Watch
2013-03-19 22:53:13

Inflation is not high today, but it is not zero. Over the past three decades (during which we have been fighting against globalism, and cheap labor elsewhere), the price of goods in dollar terms have risen by 133% ($100 in 1983 is $233 now)…if you believe the official numbers.

I met an Indian guy who was investing the equivalent of first deeds in India at more than 20%. He noted that you can get 7% interest in the bank in India. They are running with inflation at about 7% per year.

Chinese inflation is much tamer at about 3%, down from 6% in 2011, but back on the upswing.

Inflation is alive and well there…we’ll see if it stays alive after China’s property bubble collapses.

In the meantime, I heard another economist recently note that if you measure labor cost/productivity across different countries, the cost of US labor per unit of productivity has been flat…India and China are way up. While he wasn’t predicting a big boost in US manufacturing, he did point to this fact as a reason why the hemorrhaging of US manufacturing jobs has slowed considerably.

There are many out there that don’t believe inflation is dead in the US…only sleeping. They may be wrong…perhaps we are in for a low inflation environment for a long-time to come. Then again, the Fed is undertaking one of the largest liquidity experiments in history, and thinks they can control inflation if their Trillions start moving around the economy at a much faster pace. I hope they aren’t as incorrect about this as they were about the housing bubble in 2005-2007 (subprime is contained, prices are based on strong fundamentals, etc.).

Back to borrowing at 3.5-4% fixed for 30 years: If there is low inflation (say, 2%…about 30% lower than the last 30 years), your real cost of borrowing is 1.5-2% per year…cheap. If there is higher inflation, the real cost of borrowing is even less.

Comment by joe smith
2013-03-19 09:36:24

way overpriced & some of the upgrades seem “over the top”.

Comment by inchbyinch
2013-03-19 09:58:57

That house is beautiful ,but after living in 4,000 sq ft, I’ve grown fond of a modest home.
I am so not into tropical anymore. We are going w/ brick and a more traditional pool yard, when we fix the pooldeck issues .

Our former neighborhood was in a backyard competition. What people paid (refi’d for) was insanity. We went cash and did a nice yard, just not a resort.

Comment by joe smith
2013-03-19 10:23:08

It’s only on .5 acres and I hate what they did to their yard, it looks super try-too-hard and tacky. I think the same thing about some of their tile work and master BR. IMO, if you’re going to go crazy on the reno like that, you better plan for it to be a toe tag house. A lot of the choices they made are not everyone’s cup of tea. But look how fast they sold (or are trying to sell). Seems nuts to me.

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Comment by Cantankerous Intellectual Bomb Thrower©
2013-03-19 17:52:55

There will be more toe tag houses available for resale over the next two decades around San Diego than you can shake a stick at.

Comment by Cantankerous Intellectual Bomb Thrower©
2013-03-19 17:54:16

How do used home sellers get the dead body smell out of toe tag houses before pawning them off on some unsuspecting chump?

Comment by oxide
2013-03-19 13:38:48

Both of those houses on that street are just too darn stony and BROWN for my taste. Not that I want HGTV Purple on the walls, but surely the decor doesn’t have to look like a cave.

Comment by Cantankerous Intellectual Bomb Thrower©
2013-03-19 13:50:44

We know lots of folks who live in that ‘hood. The homes are cut out of the same drab brown stucco fiber as the other homes in 4S Ranch, but they are twice as large and behind a gate.

And they have cougars (not the aging human female variety, either).

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Comment by Cantankerous Intellectual Bomb Thrower©
2013-03-19 13:53:43

Apparently some reporters are too dumb and lazy to know the difference between a cougar and a bobcat.

Mountain Lion Spotted Near Oak Valley Middle School; Has Not Been Located By Sheriff’s Dept.

Authorities said an agency will be brought in to determine if the bobcat is a threat.

By Melissa Phy
March 12, 2013

A resident reported a mountain lion sighting arond 9:28 a.m. this morning off a hiking trail near Winecreek Road, the San Diego County Sheriff’s Department said.

Authorities told Patch that there has been only one report of the puma.

“It was sighted just west of Oak Valley Middle School,” the department said, noting no schools were on lockdown.

The Sheriff’s Department said ASTREA was searching from the air and ground units were also looking for the mountain lion, but they were unable to locate it.

“If we felt it was a threat… it’s possible it would be dispatched,” the department said.

Comment by ann gogh
2013-03-19 10:25:30

I see myself living in that home when it sells for 650k

Comment by joe smith
2013-03-19 10:41:08

If the price of that thing gets to 650k, it means the S has HTF. Which means that there will be a ton of volatility and thus it’s unlikely you’ll want to buy anything. Also, by the time it gets to 650k, that size of a house probably won’t appeal to you any more unless you can afford hired help to care for the house.

Comment by Pimp Watch
2013-03-19 10:47:22

It does? Why would the SHTF when housing is price according to construction costs +profit?

The reality is the M&L+P isn’t any more than 300k for that shanty.

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Comment by joe smith
2013-03-19 11:35:21

I mean the insanity of the global markets will be laid bare and there will be real impacts on all areas of the economy if housing prices drop by 70%. People will just walk away from their houses, bonds will fail, then pension funds, 401k’s, IRAs, etc. Similar to 2008 but much larger in scale (remember, it didn’t take huge price drops to bring about the 2008 issues).

A simpler way to say it: No bank would be solvent. I’m not disagreeing with your estimate to build the house, nor that the current prices are way too high. I’m saying that the stupid housing bubble will mean that credit collapses and cash is king. And if you have cash at that point, why the h*** would you sink it into a house (unless you have billions or are retarded)?

Comment by Pimp Watch
2013-03-19 13:59:11

Housing prices falling to pre-bubble levels is the end of the world? Really?


I love my harpsichordist!

Comment by joe smith
2013-03-19 15:11:28

It has nothing to do with housing prices being “good” or “bad”, stupid. If bond markets fail and all the banks are insolvent, it’s a different world. Lots of old peoples pensions wiped out. Insurance companies unable to pay on claims.

Only an m.f.’ing moron would want to put cash into a house under that scenario. People would need to have few obligations and be ready to move for jobs.

Comment by Pimp Watch
2013-03-19 15:44:04

Again…. housing prices falling to pre-bubble affordable levels is the end of the world.

We understand you.

Comment by tresho
2013-03-20 04:03:53

Must be nice to live in a reality where neither inflation nor deflation is a possibility. I envy you.

Comment by Pimp Watch
2013-03-20 05:39:22

We’re in a deflationary environment and have been for 30 years.

Comment by ann gogh
2013-03-19 11:07:29

When you live in california you are brainwashed to want the Italian lifestyle. That home would work for me!

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Comment by Cantankerous Intellectual Bomb Thrower©
2013-03-19 13:55:21

The Fed is not planning to let the price drop to $650K nominal. Perhaps it will in inflation-adjusted terms, but that means you need to get on the inflated dollar gravy train one way or the other in order to have a shot at buying.

Comment by ecofeco
2013-03-19 12:29:33

Ugly AND bad acoustics.

Comment by alpha-sloth
2013-03-19 12:55:57

Place seems like a mausoleum. Certainly not cozy. I liked the pool, though, even though it was a bit over the top.

Comment by rms
2013-03-20 00:18:09

Look at that walk-in closet will ‘ya? Wow!

Comment by cactus
2013-03-19 09:51:52

I will agree with Housing pimp owning a house is a pain in the butt

I now have a very slow water leak dripping from somwhere “up” and showing up at the inlet openning for the furnace down at ground level. I think its a drip and is running down a copper pipe but because there is insulation in the wall it diffuses.

So I call the warrenty and they send out a plummer who decides its from poor caulking around the shower.

60 bucks service charge for really lame advice. I tried to explain how wrong he was over the phone but between the phone having this annoying echo and his Tradesman’s studity I agree to caulk the tub with silicon epoxy. He did not do this. He says he checked the water meter and it was not running so not leak and he said wall was dry ( BS I got home and it was still dripping from inside wall )

Its like a HMO plummer I have to use versus a PPO plummer because its an insurance calim.

Short story Plumber will be back out tomorrow ( after 24 hours cure on the caulking what BS ) and I will be there to explain yes you will have to cut holes in drywall to find leak and I would start behind vanity which happens to be directly above pipe ( I measured with tape measure what a novel idea) which seems to be dripping and if we pull the vanity away from wall and cut drywall a rough repair won’t look so bad and yes its hard work mr plumber so sorry.

If it was a rental and I just went to work not worring about it God knows the plumber would probably start cutting holes all over the place starting up from leak at ground level , up the wall then in ceiling, who knows ?? He might do this anyway I’m sure he doesn’t want to move the vanity ( built in ) which has 2 sinks and is directly above the leak so would be the obvious place to start.

Comment by Pimp Watch
2013-03-19 10:49:55

You don’t own a house. It owns you. And at current massively inflated asking prices of resale housing, it owns you in ways you’ll regret forever.

Comment by alpha-sloth
2013-03-19 13:08:47

yes you will have to cut holes in drywall to find leak and I would start behind vanity

Cut a small square out of the wall, frame it, and cover it with a square piece of wood, painted your wall color, that you can remove easily next time there’s a problem. They used to do this on almost all sinks.

Comment by ecofeco
2013-03-19 13:42:37

Most home “warranties” are worthless.

Comment by joe smith
2013-03-19 13:52:08

Correct. They make you pay for their representative to come out and “inspect”, then they find a loophole to deny you.

Comment by Arizona Slim
2013-03-19 14:59:00

And so are those home warranty policies. I had American Home Shield until I figured out that I was shelling out money for nothing.

Comment by CharlieTango
2013-03-20 15:22:24

Try a flir camera, you can probably view and photograph the wet area with infrared.

Comment by Neuromance
2013-03-19 10:36:01

“Financial Pollution” - public costs imposed by financial products.

Financial pollution is anything where financial activities impose public costs, like effluvia from a tannery dumps pollution into a river. The tannery gets to keep the profits, and the public suffers the costs. Sounds familiar.

Probably the simplest way to limit financial pollution is to prevent government backing of private debt. And to prevent Wall Street from linking consumer deposits to their gambling activities. “Ring fencing” consumer deposits, like Iceland did. And the US used to do, before Glass Steagall was gutted, then eliminated.

Limiting public costs from financial activities should be a focus of the society. Just like limiting public costs from any other economic activity. Like pollution.

Government should have a department, perhaps in the CFPB, that deals with financial pollution.

Comment by (Now that I'm "diversified") Jetfixr
2013-03-19 11:49:05

I thought we already had a name for this…..”Privatizing the profits, Socializing the losses”.

Comment by Neuromance
2013-03-19 15:48:04

Yep, that’s an accurate description of it. If it’s presented as a more concise noun, perhaps more people will understand its pervasiveness and it’s destructive impact on their lives, and support policies to stop it.

Comment by Pimp Watch
2013-03-19 16:07:10

I like it. “Resale housing at current inflated asking prices=Financial Pollution. Beware.

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Comment by goon squad
2013-03-19 11:13:52

Chart from Pat Buchanan’s magazine describing conservative media:

Note that Breitbart is labeled “Hysterics as investigative journalism”

Comment by joe smith
2013-03-19 13:54:59

This is hilarious. What’s that graphic supposed to be, the closer to the middle the close they are to going down the drain completely?

(I like some of the sources towards the edge.)

Comment by Arizona Slim
2013-03-19 12:35:05

If you liked the residential SFR bubble of the last decade, well, you will just absolutely love the latest bubble. Yup, it’s buying to rent on a massive scale.

Key point from the above linked story: Suddenly, the market for single-family rental homes—unlike apartments, which cater to different people—has turned into an elbow-to-elbow affair. The pressure on rents is huge. Year-over-year, rents edged up only 0.5% in Atlanta and dropped 1.7% in Las Vegas. For Phoenix, Bloomberg cited Fletcher Wilcox, a real estate analyst at Grand Canyon Title Agency: median rent per square foot rose 3% year-over-year in February 2011, and 1.5% in February 2012. But in February 2013, it fell 3%.

This tendency was confirmed by others. On the west side of Phoenix, where investors have concentrated their purchases of single-family homes, rents dropped by $100 a month last year—a stunning 10%!—according to James Breitenstein, CEO of Landsmith which has dumped most of its Phoenix properties. He is seeing similar pressures in Las Vegas and Atlanta. “There’s a whole bunch of rental supply that’s coming on that used to be sitting empty in bank portfolios,” he said.

Timing couldn’t be worse. Occupancy rates of single-family rental homes are already low— 53% for Colony Capital. But investors are buying ever more properties and flood the rental market with them. Just when the stream of people who’ve gotten kicked out of their foreclosed homes is tapering off. With rising costs and declining revenues, the rental part of the business model collapses.

Comment by measton
2013-03-19 13:07:58

BERLIN (Reuters) - The European Central Bank said on Tuesday after Cypriot lawmakers overwhelmingly rejected a key element of a proposed bailout that it was in contact with its IMF and EU partners and remained committed to providing liquidity within certain limits.

“The ECB takes note of the decision of the Cypriot parliament and is in contact with its troika partners,” the bank said in a statement. “The ECB reaffirms its commitment to provide liquidity as needed within the existing rules.

Cyprus unlike other EU partners has realized that the EU can’t let these banks and bonds fail as it will lead to failure of other banks at the heart of the EU. Thus why should conservative investors have to pay.

Comment by Cantankerous Intellectual Bomb Thrower©
2013-03-19 13:47:13

‘Tis a mere flesh wound.

March 19, 2013, 2:58 p.m. EDT
Cyprus parliament rejects bank deposit levy
Fate of sovereign bailout for Cyprus unclear after parliament vote
By Polya Lesova, MarketWatch

NEW YORK (MarketWatch) — The parliament in Cyprus rejected on Tuesday a proposed tax on bank deposits, throwing the nation’s bailout into uncertainty since the levy was required by international lenders.

CNBC reported that 36 parliament members voted against the controversial tax, while 19 parliament members abstained.

President Nicos Anastasiades had earlier told a Swedish media outlet that the bill will be rejected, because it’s seen as unjust, according to reports.

It’s unclear what happens next in Cyprus, but the nation’s sovereign bailout is now in serious doubt. If Cyprus is pushed to the brink of default, the situation could deteriorate quickly — in a worst-case scenario leading to the nation’s exit from the 17-nation euro zone and threatening the future of the currency bloc.

Comment by Arizona Slim
2013-03-19 15:01:10

It’s unclear what happens next in Cyprus, but the nation’s sovereign bailout is now in serious doubt. If Cyprus is pushed to the brink of default, the situation could deteriorate quickly — in a worst-case scenario leading to the nation’s exit from the 17-nation euro zone and threatening the future of the currency bloc.

Interesting use of the word “bloc.” That word got a lot of use during the Cold War.

Comment by Neuromance
2013-03-19 20:11:14

Two possibilities are:

1) The Euro really is a house of cards and having a tiny country like Cyprus leave or default will really wipe out the Euro.


2) The big players that stand to lose some money are playing the part of Chicken Little, and screaming, “The sky is falling!” in order to avoid losing any money.

The sums we’re talking about here are pretty trivial:

“Overall, Cyprus needs about $20 billion — an amount equal to its annual economic output and a sum that, if all borrowed, would throw the country’s finances onto unsustainable footing. The IMF’s internal rules do not allow the fund to make loans to the country under those circumstances. Euro-zone countries are hesitant to lend the full amount, as well.

As a consequence, the fund, the euro zone and the European Central Bank want to cap the amount of international loans to Cyprus at about $12.5 billion and leave the country to come up with the rest. The deposit tax was one alternative for raising the money. It had the advantage of grabbing $2.2 billion to $3 billion from foreigners, many of them Russian, who own more than one-third of the money on deposit in Cypriot banks.”

20 billion? The annual economic output? The Bernank is spending 85 billion a month, at least 45 billion of which is unsterilized purchases of Treasury debt, and possibly more in the 40 billion a month purchases of the mortgage-backed securities.

The Europeans (Northern core in particular) aren’t quite as fond of the printing press as The Bernank. But it seems hard to believe they can’t scrape a few billion out of the sofa cushions

Another possibility is that this could be a scare tactic to get foreign money out of Cyprus too. But it seems like quite a blunt instrument way to go about it. It could be a test bed to see how an exit or default works.

Interesting stuff.

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Comment by Anngogh
2013-03-19 17:44:42

Gas went down to 3.99 a gallon for regular in Oceanside. When I thanked to guy at the gas station, he said he pays the tanker thirty-five thousand!

Comment by Anngogh
2013-03-19 17:59:13

Read more:

California’s top-end taxpayers — already steamed over a recent hike in the nation’s highest state income tax — are now fuming over a new $120 million retroactive tax grab on small business owners.
In December, the state’s tax authority determined that a tax break claimed over the past few years by 2,500 entrepreneurs and stockholders of California-based small businesses is no longer valid and sent out notices of payment.
“How would you feel if you made a decision, which was made four years ago, (and) you absolutely knew was legally correct and four years later a governing body came in and said, ‘no, it’s not correct, now you owe us a bunch more money. And we’re going to charge you interest on money you didn’t even know you owed’,” Brian Overstreet told Fox News from his office north of San Francisco.
Last year, Overstreet and his fellow investors sold Sagient Research Systems and immediately reported the sale to the California Franchise Tax Board, the state’s version of the IRS. “It was good for the shareholders, it was good for the employees and good for those of us who founded it,” Overstreet said about the sale of the data mining company. “We paid the tax based on the law at the time.”
But the FTB changed its interpretation of the law after a state appeals court ruled unconstitutional a qualifying provision of the break requiring companies to maintain 80 percent of their workforce in California. Instead of asking the legislature for guidance on what to do, the FTB suspended the break in its entirety and ordered anyone who’s claimed it in the last five years to pay up.
“What that translates into is tens of thousands, if not literally hundreds of thousands, of potential jobs,” Overstreet contends.
Overstreet said he’s learned more about the workings of state government in the last two months than he ever knew before and he’s become the point person for others like him who were surprised by the FTB’s decision. “It’s going to cause not only significant financial hardship but real personal stress on a lot of people who shouldn’t be worried about this,” he said. “They did what is right. They paid their taxes. They should be off working away at their next business — instead they’re having to spend their time fighting this stuff.”
Overstreet wouldn’t disclose the exact amount the FTB says he owes but said it was “well into the six figures,” and calls it a sucker punch from the state.
The taxpayers fighting the FTB won an early victory in their fight when the tax board announced a temporary delay in issuing actual bills, technically called Notices of Proposed Assessments. It’s believed the additional time is to allow the state’s political leaders time to figure out a solution.
“Once the revenue is identified, those folks up in Sacramento will figure out how to spend it already,” warns former state Sen. George Runner. “And that’s what makes this so difficult. Even though it has this great bipartisan support as being wrong.”
Earlier this month, lawmakers from both parties introduced legislation that would force the FTB to scrap the retroactive tax bills. “Californians planned and based their actions on the language of the law as it existed,” Democratic Sen. Ted Lieu said in a statement. “Going backward in time and changing the rules innocent taxpayers relied upon violates the very essence of the rule of law.”
Republican Assemblyman Jeff Gorell’s companion bill would prohibit the state from charging interest and penalties in similar situations in the future.
“We want to unwind this poor decision and bring relief to small business owners throughout the state, while also setting prohibitions against this kind of surprise tax increase again for the future.”
What’s not as clear is what Gov. Jerry Brown thinks of the issue. “Quite frankly, we haven’t heard from the governor on this and the governor could solve this,” Runner, a Republican, said. “Ultimately, the legislature can try to fix it, but ultimately the bill still has to end up on the governor’s desk.”
Brook Taylor, a spokesman with the governor’s business development office, told Fox News in an email that the tax credit “provided a real boost to entrepreneurs” and that the court’s ruling was unfortunate. Taylor added that, “we are reviewing the situation to determine how best to help these business owners given the court’s decision.”
California’s high tax rates, strong environmental regulations and a Democratic lock on many public offices have led some to conclude the state is anti-business. Texas Gov. Rick Perry, among other state executives, has made repeated overtures to the state’s business leaders to relocate. Those criticisms have been regularly rebuffed by Brown and his staff.
During a recent dust-up over a radio ad promoting Texas, Brown reportedly said, “you go where the gold is” and that Perry is “not going to Lubbock, or whatever those places are that make up that state.”
What’s not addressed by the pending legislation is what to do about the future of the tax credit. It’s been around for 20 years to promote job-growth and investment — especially in the computer technology and bio-research industries. “California has always prided itself in the ability to be that incubator for high-tech, for entrepreneurial investment,” Runner said. “And this just goes to the core of that. Undermines our credibility, if you will, on that particular issue.”
Overstreet’s main focus has been on retroactive part of the FTB’s action but he also said if lawmakers allow for the tax break to go away entirely it will have consequences for the state. “As a going-forward problem if entrepreneurs are no longer allowed this kind of incentive, there’s no longer any reason for us to intentionally grow our companies here in California. We are going to take our business to where it is the cheapest and most effective place to hire people.”

Read more:

Comment by Cantankerous Intellectual Bomb Thrower©
2013-03-19 18:02:38

Financial Times
Global Market Overview
Last updated: March 19, 2013 8:08 pm
Stocks fall as Cyprus uncertainty mounts
By Dave Shellock

Tuesday 20:00 GMT. Uncertainty over the situation in Cyprus made for another nervous session in the markets, as the country’s parliament overwhelmingly rejected a tax on bank deposits, throwing into question plans for an international bailout.

“This is a major concern,” said Kathleen Brooks at “Cyprus needs to get its hands on cash urgently, its cash reserves are running dry and it can’t afford to fund its troubled banking sector as its banks’ collateral is too low quality to even meet the basic standards required to access cheap, unlimited funds at the European Central Bank.”

The ECB responded to the Cypriot vote by reaffirming its commitment to provide liquidity, within existing rules. That helped the euro pare an earlier fall that had seen it touch a four-month low against the dollar.

Global equities also rallied off their lows, with the FTSE All-World index trading 0.3 per cent lower and the S&P 500 ending down 0.2 per cent. In Europe, where stock markets had already closed by the time the news of the vote emerged, the FTSE Eurofirst 300 finished with a loss of 0.4 per cent.

Spanish and Italian stocks came under greater pressure amid fresh concerns about the potential for contagion from Cyprus. The Ibex 35 index in Madrid fell 2.2 per cent and the FTSE MIB in Milan shed 1.6 per cent.

Steve Barrow, strategist at Standard Bank, argued that Cyprus did not represent a systemic risk to the eurozone. “If policy makers had thought it was a systemic threat they would have presumably stumped up the money; after all, when you’ve already bailed out Greece alone to the tune of well over €200bn, what’s €6bn if your credibility could be at stake?” he said.

“But it is clearly a mark of the concern among larger eurozone countries, especially Germany, that these bailouts are turning into black holes and politicians sense that electorates want every last cent costed out.”

The extent of the nervousness among investors was evident from a “flight to safety”, notably in highly-rated government bond markets such as the US and Germany.

The yield on German two-year government bonds turned negative for the first time since early January, while that on the 10-year Bund dipped 6 basis points to 1.35 per cent, a low for the year The 10-year US Treasury yield was down 6 basis points at 1.90 per cent.

Other assets regarded as “havens” also moved higher. Gold was up 0.4 per cent to $1,612 an ounce, even as the dollar gained 0.4 per cent against a basket of currencies. The Japanese yen also benefited from the jittery mood in the markets.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 19:13:10

Did the Plunge Protection Team step in to buffer the U.S. stock markets against Cypriot panic?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 19:15:55

Monday, 18 March 2013 10:02
Panic Grips Europe as Cyprus, EU, and IMF Confiscate Savings
Written by Alex Newman

Panic-stricken bank depositors in Cyprus emptied ATM machines across the nation after the surprise announcement Saturday that, as part of an extremely controversial European Union and International Monetary Fund bailout deal, authorities would seize up to 15 percent of all savings deposited in Cypriot banks. Markets across Europe plunged as fears of contagion or even a large-scale bank run in the region plagued investors, with the single euro currency falling to multi-month lows and gold rising back above $1,600 following news of the $13 billion scheme.

Critics ranging from banks and market analysts to politicians and even establishment media outlets lambasted the EU and IMF plan, saying it creates uncertainty and amounts to brazen wealth confiscation. Citizens and foreigners with money deposited in Cyprus, meanwhile, expressed outrage over the controversial scheme as well, demanding that it be halted immediately. Aside from Cypriots, Russians and Britons are expected to be among the hardest hit.

Despite imposing a $500 limit on withdrawals and a ban on online transfers, most ATM machines in Cyprus were completely drained of funds over the weekend as nervous depositors lined up to save what they could before the confiscation begins. March 18 is a national holiday, meaning financial institutions are closed. However, banks in Cyprus may also face an extended so-called “banking holiday” as national politicians iron out the details of the supposed one-time “stability” tax with EU and IMF policymakers.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 19:18:39

It’s not theft if a bankster does it.

Economists warn Cyprus will face a recession ‘for decades’
By Agence France-Presse
Monday, March 18, 2013 12:39 EDT
Previous Cyprus president Demetris Christofias welcomes Russia’s Dmitry Medvedev to Nicosia in 2010. (AFP)
Cyprus ♦ Cyprus banks

Russians are preparing to withdraw billions of euros from Cyprus and the island will plunge into a recession lasting for decades due to the onerous terms of a EU bailout, economists warned on Monday.

“The Russians are already indicating they want to withdraw their money. Why should they stay? They will go somewhere where they can be protected; we can’t protect them,” economist Simeon Matsi told AFP.

“We have indications that billions (of euros) will be withdrawn, we already know of about three billion that is ready to move. They are already asking lawyers to draw up documents to withdraw money.”

As a condition for a desperately-needed 10-billion-euro ($13 billion) bailout for Cyprus, fellow eurozone countries and international creditors Saturday imposed a levy on all deposits in the island’s banks.

Deposits of more than 100,000 euros will be hit with a 9.9 percent charge, while under that threshold the levy drops to 6.75 percent.

The controversial tax is seen hitting Russian pockets hard, with experts estimating that Russian deposits in Cypriot banks amount to at least 15.4 billion euros ($20 billion) of the estimated 67 billion euros of deposits held by Cyprus banks.

Russian President Vladimir Putin on Monday criticised the proposed tax, describing it, according to a Kremlin spokesman, as “unfair, unprofessional and dangerous”.

Russian Prime Minister Dmitry Medvedev was equally forthright.

We should say this directly: this simply looks like the confiscation of other people’s money,” Russian news agencies quoted him as saying. “I do not know who the author of this idea is, but this is what it looks like.”

Comment by Anngogh
2013-03-19 18:46:39


Among the 50 states, California in the West and Rhode Island in the East tied in January for the highest jobless rate in the nation, 9.8%, while North Dakota was the lowest at 3.3%, according to the Bureau of Labor Statistics.

And unsurprisingly, Texas led the nation in payroll job growth, just as it did in January of last year.

As BLS documented, California’s employment was poor despite the fact that most Western states grew in job growth over the last 12 months.

The Northeast, more closely linked with the European economy, fared much worse. Its job growth was 1.1%. The Midwest’s results fell between the West and the Northeast’s.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 19:11:22

Despite its 10% unemployment rate, California real estate is always going up again. Go figure!

Comment by Pimp Watch
2013-03-19 20:00:03

California looks to be in a free fall according to this map.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 20:43:30

Pretty much the entire West Coast is underwater, at least according to that map, with price declines in most locales on the range from 30% to 50%+!

(Comments wont nest below this level)
Comment by hazard
2013-03-19 18:49:15

Even though I think it is probably higher, is 4 out of 10 borrowers being underwater really something to brag about?

Only two in five Palm Beach County borrowers underwater, CoreLogic says

by Jeff Ostrowski

Research firm CoreLogic reports a rapid decline in the share of Palm Beach County homeowners who owe more than their homes are worth.

In the fourth quarter of 2012, 40 percent of Palm Beach County homeowners were underwater, CoreLogic says. Normally, that would be a disastrous number, but it’s falling fast, thanks to rising home values.

The share of Palm Beach County homeowners with negative equity topped at 47 percent in late 2009 and early 2010. Homeowners who are upside down in a loan can’t sell easily and don’t have the same incentive to make their monthly payments as owners who have a cash cushion.

This entry was posted on Tuesday, March 19th, 2013 at 4:49 pm and is filed under Foreclosures, Real estate bust. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Comment by Pimp Watch
2013-03-19 19:39:14

If it’s CoreLogic, divide their optimism in two and you’ll come close to reality.

Comment by Pete
2013-03-19 18:56:36

Thought y’all would get a kick out of this….
Headline: “Why higher mortgage rates will help the housing market”

Key snippets:

If anything, slightly higher rates could reflect that slightly more risky borrowers are being offered credit following years of tighter lending standards. And this could be a good thing, says Barney Hartman-Glaser, real estate finance professor at Duke University.

“Although important, rising interest rates alone are not enough to slow down the housing recovery,” says Hartman-Glaser, adding that “my sense is that underwriting standards are getting easier to satisfy, and so we would expect rates to rise as slightly more risky borrowers are brought into the fold.”

Comment by Resistor
2013-03-19 19:17:15

My screenplay is on the ground in L.A.
Wish me luck.

Time marches on.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 21:58:45

Total good luck! Glad to here America still has enterprising individuals like yourself who are trying to make a difference…

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 19:23:54

Suddenly, Things Are Going “Terribly Wrong” for the Big Banks
By Aaron Task | Daily Ticker – Mon, Mar 18, 2013 12:59 PM EDT

Monday’s stock selloff is largely being attributed to the drama in Cyprus, which is potentially a big deal and certainly weighed on global markets overnight. But U.S. proxies weren’t down nearly as much as international bourses – or as initially indicated.

Related: Why Cyprus Is a Bigger Deal Than You Think

In fact, U.S. stocks might be solidly in the green now if it weren’t for another development that bears watching: Weakness in financials.

Monday’s slide is also being attributed to Cyprus, which has revived fears of “contagion” emanating from Europe and the related counterparty risk faced by banks. But bank stocks were under pressure before the Cyprus “bail in” hit the headlines.

Starting late Thursday, the financials had a really bad weekend when a Senate report found JPMorgan had misled regulators (and investors) in its disclosures surrounding the now infamous London Whale trade.

Related: ‘London Whale’ Isn’t Dead Yet: JPMorgan Is Out of Control, Rosner Says

The bank’s disclosures “were incomplete, contained numerous inaccuracies, and misinformed investors, regulators and the public” said Senator Carl Levin (D-MI), chairman of the Senate’s Permanent Subcommittee on Investigations.

The 300-page report was just an appetizer for Friday’s hearing, when JPMorgan executives were grilled under oath and former CFO Douglas Braunstein essentially admitted the bank kept regulators in the dark about its mounting losses.

“Things went terribly wrong,” testified Ina Drew, who ran the firm’s Chief Investment Office before stepping down under pressure after the London Whale losses first surfaced last spring. The Senate report and subsequent testimony could expose JPMorgan to additional litigation risk, which is a problem for a number of big banks these days.

Related: Size Counts: Small Banks Are King, The Big Guys Still Have Lots of Problems, Says Whalen

Indeed, things kept going terribly wrong for JPMorgan on Friday when the Federal Reserve gave only conditional approval to its capital plans. But that wasn’t just a JPMorgan story as the Fed said the same of Goldman Sachs.

Both firms had “weaknesses in its capital plan or capital planning process that were significant enough to require immediate attention, even though those weaknesses do not undermine the quantitative results of the stress tests,” the Fed declared.

In addition, all the big banks were in the crosshairs Saturday when Dallas Fed President Richard Fisher laid out his plans to break up the “too big to fail” banks at the annual Conservative Political Action Committee (CPAC) conference.

As discussed here last week with Josh Rosner of Graham Fisher (no relation) and co-author of Reckless Endangerment, the fact a speech about breaking up the big banks was delivered at CPAC is an eye-opening development.

Growing conservative support to get tough on big banks “is a sea change and under-appreciated,” Rosner says.

Related: ‘Too Big to Fail’: Conservatives and Liberals See Eye to Eye

Anti-bank sentiment represents an opportunity for rare bipartisan agreement in Washington. Think about it, there probably aren’t that many things that Rand Paul (R-KY) and Bernie Sanders (I-VT) agree on but they do find common ground here.

Sen. Paul doesn’t support breaking up or heavily taxing the big banks, as Sen. Sanders has advocated. But the rising star of conservative politics has expressed support for “something like Glass-Steagall” as well as a limit to FDIC insurance on individual accounts which Rand believes “helps limits the size of banks.”

So while breaking up the ‘too big to fail’ banks is highly unlikely anytime soon, it’s now plausible we could see more serious consideration to a combination of the following:

* Reinstatement of Glass-Steagall, which separated commercial and investment banking and/or full adaptation of the so-called Volcker Rule, which bans banks from trading their own accounts, i.e. “prop trading.”

* Requirements to list derivative transactions on an exchange, if not actually regulate the trading thereof.

* Higher reserve requirements and/or lower maximum leverage ratios.

Many, including my colleague Henry Blodget, remain skeptical that politicians will ever approve regulations with any teeth and bank stocks had been on a tear prior to this recent selling squall. But the reality is the recommendations above make both good policy and good politics. You don’t have to be a political genius to see there’s no love lost on Main Street for the “fat cats” on Wall Street. Indeed, some Republicans might now see that running a former private equity executive as their standard-bearer didn’t help their cause in November. (To be fair, Republicans may have the reputation as the “party of big business” but going back at least to the Clinton years, Democrats have spent as much time in bed with Wall Street as the GOP.)

More than five years after the financial crisis began in earnest, we may finally have arrived at a moment where there’s bipartisan support to “get tough” on the big banks.

Better late than never.

Comment by Ben Jones
2013-03-19 19:39:50

‘The non-oil domestic exports of Singapore declined by 30.6 percent year on year in February, the trade promotion agency International Enterprise Singapore said on Monday. International Enterprise Singapore said the decline in February was due to a contraction in both electronic and non-electronic exports. The contraction in non-electronic NODX was led by structures of ships and boats, which went down 99.4 percent, as well as the pharmaceuticals and electrical machinery, which fell by 56.5 percent and 54.5 percent, respectively.’

‘Exports to nine of the top 10 markets decreased in February. The top three contributors to the export contraction were the European Union, the United States and China’s Hong Kong.’

‘Australian Treasurer Wayne Swan on Sunday warned of a “dramatic” hit to the government’s bottom line due to commodity price falls, steeling voters for an austere budget in an election year. Swan said government revenues had taken a “massive hit” from a plunge in its terms of trade—the value of exports measured against imports—with prices for its key mining products down but the Australian dollar remaining high.’

“This has contributed to subdued prices pressures and weaker profitability across the economy, which means that nominal GDP—the value of the goods and services we produce—has grown more slowly than real GDP for three straight quarters,” said Swan in his weekly economic note. “This run is unprecedented since records began.”

Comment by Pimp Watch
2013-03-19 19:56:34

The contraction in non-electronic NODX was led by structures of ships and boats, which went down 99.4 percent

jiminy cripps…. how can that be?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 20:27:32

It’s boom time, folks. How will the porcine beauticians spin this one? I predict they will rely on denial and ignorance.

Singapore News
S’pore’s NODX down 30.6% on-year in February
By Wong Siew Ying | Posted: 18 March 2013 0900 hrs
File photo: Singapore’s skyline.

SINGAPORE: Singapore’s non-oil domestic exports (NODX) declined by 30.6 per cent on-year in February, compared to a 0.4 per cent increase the previous month.

Trade agency International Enterprise Singapore attributed the sharp drop to weak electronics shipment, oil rigs and pharmaceutical exports.

Economists said the fall exceeded market estimates of a 16 to 24 percent decline, and was the sharpest drop since the 35 per cent contraction in January 2009 after the fall of investment bank Lehman Brothers.

Exports to all of the top 10 markets, except Taiwan, decreased in February.

The top three contributors to the export contraction were the European Union, the US and Hong Kong.

On a month-on-month basis, exports decreased by 2.4 per cent in February, following the previous month’s 1.8 per cent decline.

On a year-on-year basis, total trade contracted by 17.3 per cent in February 2013, compared to the 1.4 per cent rise the previous month.

Exports of ships and boats were down 99.4 per cent on-year in February.

Song Seng Wun, CIMB’s regional economist, said: “The lumpy items which were the key contributors to the sharp jump in NODX in February last year, when one and a half billion dollars worth of lumpy items — these are special purpose items which are jack-up rigs, oil rigs — that was about 9 per cent of NODX in February.

“This year, this February, we only recorded S$8 million worth (of lumpy items from oil rigs sector, which barely registered in terms of NODX.). That factor alone almost accounted for the bulk of the decline.”

Meanwhile, the pharmaceutical sector saw shipments drop by 56.5 per cent on-year in February.

The electronics sector, having contracted for seven straight months, continued to be affected by weak demand. Electronics exports decreased by 27.4 per cent on-year last month.

Some economists said the Lunar New Year holidays might also have distorted export numbers as some factories were closed.

Francis Tan, an economist at United Overseas Bank, said: “If you net out the Chinese New Year effect, which we looked at January and February together, the decline during these two months this year was a 16 per cent decline.

“That shows that other than Chinese New Year, there seems to be some weakness across the board in our NODX, particularly coming from our volatile pharmaceutical exports and the lumpy structures of boats and ships.

Comment by Ben Jones
2013-03-19 20:33:11

‘German shipping company Hapag-Lloyd posted higher losses for 2012 due to unexpectedly low cargo volumes as a result of the global downturn and high energy costs, prompting it to defer the delivery of new ships. The company, which is currently in talks to merge with rival Hamburg Sued, reported a net loss of 128 million euros ($166 million) for 2012, compared with a loss of 29 million for the previous year.’

‘The company said it had postponed the delivery of three new ships it had ordered from the second half of 2013 to March and April 2014 due to low forecast transport volumes.’

‘Israeli container shipping line, ZIM, said Tuesday that it has reached an agreement with Samsung Heavy Industries of South Korea to cancel five newbuildings with options to cancel even more. In a statement, ZIM said the agreement relieves the company from obligations amounting to $1.4 billion and that ZIM will be refunded for advance payments $30 million.’

‘In addition to the five cancelled orders, ZIM says the deal with Samsung also includes the postponement of delivery of other vessels to 2016, and an option to cancel an additional 4 orders, pending shipyards approval. The company is expected to state a loss of $133 million in Q4 2012 as a result of the cancellations, ZIM added.’

‘Frontline 2012 Ltd., the shipping company led by billionaire John Fredriksen, almost doubled the number of vessels it’s building at a time when the maritime industry is contending with record low earnings and a glut. While the market is “massively oversupplied” in some cases, Frontline 2012 placed orders for fuel-efficient carriers after construction prices slumped, it said.’

‘The ClarkSea shipping index, a measure of vessel earnings across the industry, averaged $8,284 a day in February, its lowest on record, according to Clarkson Plc (CKN), the world’s largest shipbroker.’

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 23:54:26

China Shipping Development Profit Plunges 93% on Slumping Rates
By Jasmine Wang - Mar 19, 2013 4:06 AM PT

China Shipping Development Co. (1138), the commodities-carrying unit of the nation’s No. 2 shipping company, said annual profit plunged 93 percent in 2012 on slumping freight rates.

Net income tumbled to 73.7 million yuan ($11.9 million) from with a profit of 1.06 billion yuan a year earlier, the company said in a filing to the Shanghai stock exchange today. The Shanghai-based company was projected to post a net loss of 244 million yuan based on the average of 10 analysts’ estimates complied by Bloomberg. Sales fell 9.2 percent.

China Shipping Development sought to delay receiving new ships in August after slumping rates caused a net loss of 495 million yuan in the first half. Sluggish demand and excess capacity in international and domestic markets resulted in a downturn in freight rates, China Shipping said in a statement in January when it warned of a “considerable decline” in annual profit.

The Baltic Dry Index, the benchmark rate index for hauling commodities, averaged 920 last year, the lowest since 1986, according to figures from the Baltic Exchange, the London-based publisher of freight rates. The index gained 0.8 percent to 899 points in London yesterday.

China Shipping fell 0.7 percent to HK$4.16 at the close in Hong Kong trading, before the earnings were released. Its Shanghai shares also dropped 1.1 percent to 4.39 yuan today.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 23:30:16

Cyprus could trigger bank runs and eventual eurozone break-up
by Scott Livermore
19 March 2013

The EU and IMF could have avoided calling on depositors by using the oil and gas reserves in Cyprus as collateral for part of the bail-out instead

The proposed bail-out package for Cyprus could prompt a credit crunch, cutting eurozone gross domestic product by around 3 per cent. This would be equivalent to almost €300bn, to raise under €6bn from depositors. And it could trigger a eurozone break-up, lopping as much as 10 per cent off the single currency bloc’s GDP.

The European Union and International Monetary Fund reached a deal with the government of Cyprus over the weekend deal to restructure the island’s banking sector. It includes the now familiar package of an EU/IMF loan – in this case worth €10bn – with conditions attached. In relation to other bail-out packages, this one is small but the details are highly contentious.

In particular, €5.8bn of the total €17bn package is to be funded by a levy on deposits with banks in Cyprus. The details are still to be agreed between the EU and Cyprus but the initial proposal was to impose a ‘tax’ of 6.75 per cent for deposits up to €100,000 and 9.9 per cent for larger deposits. Forcing depositors to contribute in this way effectively reneges on the supposed state guarantee for deposits of €100,000 or less, and creates a potentially dangerous precedent.

There is a significant risk that depositors in other countries panic and withdraw money from local banks, fearing a similar fate. A massive credit crunch is the most immediate risk if depositors withdraw their savings from banks in peripheral eurozone countries such as Spain and Italy, fearing that their deposits are no longer guaranteed.

If deposit withdrawals force banks to tighten credit conditions as much as they did after the collapse of Lehman Brothers, funding costs would rise and eurozone GDP would shrink by around 3 per cent below the central forecast. This is equivalent to wiping almost €300 billion off output for the sake of raising under €6bn from depositors in Cypriot banks and highlights the disproportionate risks that leaders are taking.

And the consequences may not end there. Rising unemployment and increased social unrest could yet trigger a eurozone break-up. This would be far more costly, lopping as much as 10 per cent off GDP. This latest move by single currency governments contains several hidden messages. Given the small size of Cyprus – its economy accounts for only 0.2 per cent of eurozone GDP – the other member states could easily have funded a larger share of the deal.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 23:32:30

March 20, 2013, 1:54 a.m. EDT
Cyprus vote raises more doubt over euro membership

By Sarah Turner, MarketWatch

Lawmakers raise their arms to vote against a controversial bill to tax deposits in Nicosia March 19, 2013. Cyprus’s parliament overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout on Tuesday, throwing euro zone efforts to rescue the latest casualty of the currency area’s debt crisis into disarray.

SYDNEY (MarketWatch) — The Cypriot parliament’s rejection of a bailout proposal has left plans to shore up the country’s banking sector in disarray and opened the door a bit wider to the possibility of its exit from the currency bloc, say analysts.

Still, markets appear to be taking the rejection of the 10 billion euro ($13 billion) bailout plan — which had at its center a controversial deposit tax — in their stride at present. U.S. stocks had mostly ended mildly lower on Tuesday, and Asian stocks were split between gains and losses Wednesday.

One reason for the recent relatively sanguine market reaction, analysts say, is that there is still time for lawmakers to present a more palatable agreement to the Cypriot parliament, before bank branches reopen on Thursday after an extended holiday.

No bank tax in Cyprus

The latest on the financial situation in Cyprus.

“We do not believe that the move by the Cypriot parliament should be seen as the ultimate ‘no’ vote to the bailout; banks in Cyprus are closed until Thursday and we expect a new deal to emerge over the next 24 hours,” said Vassili Serebriakov, currency strategist at BNP Paribas.

Details of a new proposal “remain highly uncertain at this point, although it appears that bank deposits under €100,000 (i.e. those covered by deposit insurance) will likely not be part of the contribution to the bailout,” said Serebriakov.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 23:49:52

March 19, 2013, 12:12 p.m. EDT
Cyprus: Has the next global crisis arrived?
Commentary: Traders caught off-sides into quarter-end
By Todd Harrison

A closed branch of Bank of Cyprus in Nicosia on March 19.

NEW YORK (MarketWatch) — Cyprus — officially the Republic of Cyprus — is an island country in the eastern Mediterranean Sea, east of Greece, south of Turkey, west of Syria, Lebanon, northwest of Israel and north of Egypt. I had to search Wikipedia for that information as I, like most of you, wasn’t quite sure exactly where this Aegean island was.

This euro-zone country, with population just north of one million, three-quarters of whom are Greek and most of the others Turkish, has dominated recent financial news. In a stunning shift from previous aid packages, EU finance ministers — the folks up north, primarily German — asked Cypriots savers to forfeit a portion of their deposits in return for a $13 billion bailout.

While that may not sound like a big deal, remember that few foresaw how meaningful the Microstrategy Inc. news was in March 2000, when Securities and Exchange Commission accusations of accounting irregularities pricked the sentiment surrounding the technology bubble.

Ditto American Home Mortgage in August 2007, when the lender opened 80% lower and triggered what would eventually morph into the sub-prime lending crisis.

One could intelligently argue that both of those situations were symptoms rather than the cause of those respective crises, and the same can be said of Cyprus, which is seemingly a guinea pig for a new approach from those pulling the policy strings.

Cue the unintended consequences (the potential for bank runs across Europe) and moral hazard (word on the street is that wealthy Russian oligarchs have size holdings in the heretofore stealth sunny island); in an interwoven finance-based global economy, credit of a different breed — that of credibility, as posited in 2007 — is the issue at hand for markets at large.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 23:50:59

Can a country with a population of one-third that of San Diego County possibly spark a global financial crisis?

Comment by tresho
2013-03-20 04:15:22

The Euros remember how the failure of the Credit-Anstalt bank in Austria in May 1931, not that big a bank, not that important a country, led to a spreading financial disaster. By March 1933 all US banks were closed. J. Bradford DeLong, an economist at the University of California at Berkeley, said: “Because we remember the Credit-Anstalt, we will not make that mistake. We will make different ones.”

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-19 23:57:06

Why would the Fed ever allow this?

March 20, 2013, 12:02 a.m. EDT
Bond crash dead ahead: tick, tick … boom!
Commentary: ‘Investors have no idea what’s about to happen’
By Paul B. Farrell, MarketWatch

SAN LUIS OBISPO, Calif. (MarketWatch) – InvestmentNews latest cover is so powerful you can actually hear sirens atop a flashing neon billboard, megawarning in huge bold type: “Tick, Tick … Boom!”

A warning: InvestmentNews wants to make damn sure its readers, the 90,000 professional financial advisers who rely on timeliness and accuracy of every INews forecast: “What will your clients’ portfolios look like when the bond bomb goes off?” Get it? Not if but when it happens.

Yes, they do expect the bond bomb to explode and are publishing “a special report on the impending crisis in the bond market.”

Yes, you heard them. “Tick, Tick … Boom!” Wake up, it’s an “impending crisis,” dead ahead. And to punctuate their message, InvestmentNews added an alarming photo of an alarm clock with huge bells, wired to rolled up bonds looking like a stack of dynamite sticks. “Tick, Tick … Boom!”

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