March 31, 2013

Bits Bucket for March 31, 2013

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

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Comment by goon squad
2013-03-31 02:15:05

Wall Street Journal - The Debt Bomb That Taxpayers Won’t See Coming:

“Earlier this month, the Securities and Exchange Commission charged Illinois officials with making misleading statements to bond investors about the state’s pension system. The agency detailed a long list of deceptive practices including failure to tell investors that the system was so underfunded that it risked bankruptcy.

Illinois taxpayers, as well as the holders of its debt, will ultimately bear the burden of the officials’ misdeeds. But there is nothing unique about the Prairie State. For years, elected officials in states and municipalities across the country have been imprudently piling up obligations that are imposing serious strains on budgets, prompting higher taxes and cutbacks in services.

According to studies by the Pew Center on the States, states and the biggest cities have made nearly three-quarters of a trillion dollars in promises to pay for retiree health-care insurance. Yet governments have set aside only about 5% of the money they’ll need to pay for these promises.

A December report by the States Project, a joint venture of Harvard’s Institute of Politics and the University of Pennsylvania’s Fels Institute of Government, estimated that state and local governments now owe in sum a staggering $7.3 trillion. Incredibly, the vast majority of this debt has never been approved by taxpayers, who are often unaware of the extent of their obligations.”

Comment by Skroodle
2013-03-31 09:47:18

They can just sell off some more tollways and parking meters.

Comment by palmetto
2013-03-31 11:20:41

In other Illinois news, a mob of “mischievous teens” had themselves a party in Chi-town yesterday. The comments are interesting, to say the least.

Sing along with ‘ole palmetto, now: “My kinda town, Chitcago is, my kinda town…”

More third world signs and wonders!

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 10:16:13

“…that state and local governments now owe in sum a staggering $7.3 trillion.”

Luckily by the time this debt comes due, the dollar will be worth a small fraction of its current value, making it far easier to repay than in current dollars.

Breaking Down Poway’s $1.2 Billion Debt: Graphic
Photo by Sam Hodgson

At a meeting of the Poway Unified School District, Superintendent John Collins addressed a packed room to explain why the district purchased controversial capital appreciation bonds.

Posted: Wednesday, September 26, 2012 4:46 pm | Updated: 4:51 pm, Thu Oct 25, 2012.
by Keegan Kyle

Our recent stories about the Poway Unified School District have contained a bunch of really, really big numbers. First, we explained how borrowing $105 million will cost taxpayers nearly $1 billion. Then we discovered the district had pushed the limits of state law to borrow more than we knew.

In our pages and beyond, all sorts of numbers are flying around about the district’s bond deals. I know they can be tricky to follow from story to story, so I’ve created a graphic illustrating the most important numbers.

There are two big things to look for:

1. Poway Unified has sold bonds twice since 2008. You can see how much cash the district borrowed through each bond in the left column of the graphic and how much debt taxpayers will owe in the right column. The third pair of circles shows combined totals.

2. Our latest story about the district explained how extra upfront cash boosted its debts. The dark red sections in the left column represent how much extra cash the district got. The light red sections in the right column represent how much getting that extra cash will ultimately cost taxpayers.

Comment by In Colorado
2013-03-31 14:25:00

Jeepers, our district is about half the size of Poway’s (in term of enrollment), but has 1/10 the debt.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 15:50:12

Our kids are getting a great education in the Poway District, and as renters, we needn’t worry about getting stuck holding the bag on outsized property tax payments to service this unsustainable debt load. In another six years, our youngest will be out of high school, and we can move on to a less encumbered municipality.

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Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 10:18:47

Is the Fed’s plan to carry out enough quantitative easing to shrink this debt down to a small fraction of its current value?

If that is not the plan, then what is it? A little more glasnost would go a long way.

Comment by alpha-sloth
2013-03-31 13:38:41

Why should the Fed care about Poway? Are they a big bank?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 15:55:58

My reference to the Poway debt was meant as a case in point of this passage from the WSJ article:

A December report by the States Project, a joint venture of Harvard’s Institute of Politics and the University of Pennsylvania’s Fels Institute of Government, estimated that state and local governments now owe in sum a staggering $7.3 trillion. Incredibly, the vast majority of this debt has never been approved by taxpayers, who are often unaware of the extent of their obligations.

My guess is that state and local governments are collectively TBTF, but then I can think of several examples (Vallejo, Stockton, San Bernardino) which suggest my guess is wrong. Perhaps a better model is that of predator-prey competition, where Megabank, Inc plays the role of the predator, and states or municipalities with the sickest economies are the prey.

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Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 16:04:22

For clarification, Megabank, Inc is my shorthand reference to the Fed plus its largest member banks, which include J.P.Morgan Chase & Co, Bank of America Corp, Shitigroup, Wells Fargo & Company, Goldman Sachs Group, Morgan Stanley, U.S. Bancorp, Bank of New York Mellon, HSBC North America Holdings, PNC Financial Services Group, and Capital One.

The above-listed eleven banks comprise well over 50% of the total U.S. banking industry by assets. Got illegal monopoly power in open violation of the Sherman Antitrust Act?

Comment by goon squad
2013-03-31 02:35:18

Washington Post - Beneath the surface, the Beltway crumbles:

“The Capital Beltway, a politically iconic and locally vital highway, is dying beneath your turning wheels.

Under the surface of all but some recently restored segments, fissures are spreading, cracks are widening and the once-solid road bed that carries about a quarter-million cars a day is turning to mush.

In a perfect world, it would be torn up — the asphalt and concrete, and the bed of crushed stone below — right down to the bare earth. From that fresh start a new and stable highway would grow. But this is the Beltway, and closing down whole sections of it would tie one of the most congested regions in the nation into a Gordian knot.

“With the older base layers under the asphalt, the surface is not able to absorb the pounding the way it used to,” said Doug Simmons, deputy highway administrator in Maryland, home to almost two-thirds of the 64-mile Beltway and to the more serious of the highway’s problems. “It is at that 50-year age point, which is too close to [the end of its life]. It’s a good example of the challenges we’re going to be facing not only in Maryland but other places in the country.”

Ultimately, the Beltway will not be allowed to die. It is too central to life in this region and to the national highway system. But it stands as a symbol, one roadway among the tens of thousands at the end of a long and fruitful life span into which 21st century America was born.”

Comment by Skroodle
2013-03-31 09:52:30

If Republicans are serious about reducing the size of the government, they would tear up the beltway and never replace it.

Comment by tresho
2013-03-31 09:58:26

Another way to reduce the size of government, at least in DC, would be to charge some nice stiff tolls on those oh-so-expensive pavements. $10 a mile for starters, to be raised every year until the vast amount of traffic starts to defray the national debt. Those who don’t like it can move away.

Comment by palmetto
2013-03-31 09:59:07


Comment by palmetto
2013-03-31 09:56:21

Ah, signs and wonders! The US has reached turd world sh*thole status, and darned fast, too! Airport signage falling on and crushing passengers, roads and bridges in disrepair and in danger of collapsing, major cities looking like bombed out shells of their former selves. Flash mobs, gangstas. And way, way, WAYYYYYYYYYYYY too many people, all beady eyed and resentful, looking to get a leg over.

Hey, but we can fight those wars, yes we can!

Except I think Kim Jong whatever is calling our bluff. Funny, I always thought it would be Pokeestan that would give us the gate, looks like there’s another contenduh.

Comment by palmetto
2013-03-31 10:17:07

Oh, and did I mention illiteracy? Everyday, functional illiteracy? I’m sorry, but some younger folks don’t have an effin’ prayer the way they’ve been indoctrinated, er, uh, I mean eddicated. I was going to do a bit of business with a fellow in his mid-30s, seemed like a nice enough guy at the start, until I got all this cockamamie paperwork not relevant to the state in which he was doing business, and only marginally relevant to the deal. Fellow just sent me a file written four years ago, he didn’t even bother to review. When I brought up my puzzlement over some of the clauses, starts blustering about “where does it say that? I think you’ve just changed your mind”. Then he actually bothers to LOOK at the file. Ooopsie! Even then he didn’t even know WTF.

Comment by polly
2013-03-31 10:38:30

Sending the wrong documents because he didn’t read them means he is lazy. Functionally illiterate means he couldn’t understand them if he did read them. Not the same thing at all.

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Comment by palmetto
2013-03-31 11:53:12

“Functionally illiterate means he couldn’t understand them if he did read them.”

Like I said: “Then he actually bothers to LOOK at the file. Ooopsie! Even then he didn’t even know WTF.”

Comment by polly
2013-03-31 14:30:48

Looking at something while on the phone with an irate customer (you were talking to him while on the phone, right?) isn’t the same as actually reading something. Give people 10 minutes before you declare them functionally illiterate.

Comment by ecofeco
2013-03-31 10:58:07

We have the government and society we deserve.

Comment by palmetto
2013-03-31 10:59:45

Maybe you deserve it, I don’t, and I’m quite sure of that.

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Comment by palmetto
2013-03-31 11:43:40

Wow, folks, check out the google news aggregator page this fine day. All sorts of turd world “ooopsies” right here in the good old US of A. Less see:

1) We got a Takesass DA and his wife been executed (an assistant prosecutor was assassinated two months ago)

2) We got an aksydent at a nuke plant in Arkansas.

3) Also in Arkansas, BP took another dump with one of their pipleines.

4) We got the corrupt ex-school superintendant and her cohorts indicted for cheating to get some of that No Child’s Behind Left goobermin cheese fo’ hesself.

And that’s jes what I knows about. The Chi-town youf flash mob isn’t showing jes yet.

Comment by SV guy
2013-03-31 18:17:54

“Maybe you deserve it, I don’t, and I’m quite sure of that.”


Comment by alpha-sloth
2013-03-31 13:44:02

one roadway among the tens of thousands at the end of a long and fruitful life span into which 21st century America was born.”

And when was this once-great infrastructure that our country runs on born?

During those ‘wasteful’ Keynesian days of yesteryear.

Comment by aNYCdj
2013-03-31 15:46:25

can’t the dumbo people in DC walk ? either that or stop the spending in Afghanistan

One day the beltway will collapse like the mianus bridge and all will be solved.

Comment by palmetto
2013-03-31 16:38:36

Hah! Wait’ll the Tappan Zee crumbles. According to a segment on 20/20 a couple of weeks ago (Highway Confidential) the Tappan Zee is in dire condition. That bridge gives me the screaming white knuckle willies.

Just as an aside, there was this story about the Mianus Bridge collapse, not sure if it’s sort of an urban legend, but supposedly some truck driver got the news over his CB radio and was pulled off to the side of the road. Tried to flag down some guy in a Beemer to warn him, guy gives him the finger, zips by and, well, look out belowww!

It’s just so, uh, Greenwich!

Comment by aNYCdj
2013-03-31 19:30:53

I think that’s a true story my brother told me that one…he had to drive in that mess for almost 2 years from Norwalk to port chester…using the side roads…he had a commercial license on the company van so no Merritt Pkwy. and they were enforcing the law.

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Comment by goon squad
2013-03-31 03:40:35

NAR commercial - Denver’s hot real estate market now seeing quick, 24-hour sales:

“Metro Denver’s housing market has roared back to life with an early spring rush characterized by multiple offers, low inventory and — in some cases — homes going under contract within 24 hours of being listed. “It’s a frenzy out there,” said Ty Dokken, the new board president of Denver-based Metro Brokers Inc.”It’s one of the hottest sellers’ markets I’ve seen in the last 10 years.”

A quick market makes for extremely motivated buyers, he said, adding that they have to say yes quickly or risk losing the deal.

After the housing bubble burst in 2007, the real estate market flat-lined for a period, then finally started picking up steam a year ago. But the sudden rush has nonetheless caught many buyers and sellers off-guard.

“Two years ago, buyers were dictating to sellers,” said Michelle Ackerman, Redfin’s managing broker for the Denver metro area. “Today, it’s the sellers who are dictating terms. We’re seeing multiple bid offerings all over the metro area.”

The most recent S&P/Case-Shiller home-prices index showed that prices in the Denver metro area rose 9.2 percent in January compared with January 2012. Nationally, the year-over-year gain was 8.1 percent — the largest increase since the summer of 2006.

Denver has now experienced 13 straight months of year-over-year gains, following 18 months of declines.

Housing inventory — or, more specifically, a lack of it — is the driving force behind the frenzied market.

Just 6,786 single-family homes and condos were listed for sale in February, down 32.7 percent from a year ago and the lowest since 1985, according to real-estate analyst Gary Bauer.

Demand has gone up as buyers feel more confident both in the housing market and in the overall economy. Mortgage rates, meanwhile, are holding near historic lows, giving buyers an extra jolt of motivation.”

Comment by Combotechie
2013-03-31 08:10:44

“Housing inventory - or, more specifically, a lack of it - is the driving force behind the frenzied market.

Lol. Love the NAR and save the banks.

The NAR folks get to fight with each over selling 32.7% fewer houses than were sold last year (which means they get to earn a lot less in commissions) and this scarcity of available houses for sale drives up the prices.

And what does this drive up in prices do to the inventory of all houses - all the houses, whether they are for sale or not? And just who is it that owns the mortgages that are backed by these houses, for sale or not?

Lol. The NAR folks works their asses off and the bankers go play golf.

Comment by Combotechie
2013-03-31 08:19:16

Plus … the banks get to enjoy the results of all the numerous RE ads that the NAR is paying for.

If you are a realtor just who is it that you work for?

1. Yourself.

2. The banks.

Love the NAR.

Comment by Combotechie
2013-03-31 08:29:11

Every percent increase in the price of houses results in hundreds of millions of dollars of increased value of underwater mortgages that are backed by these houses.

The rate of return of invested capital made by the lenders for RE advertising as reflected by the rising values of these mortgages must be tremendous ESPECIALLY SINCE they are not the ones who are footing the bill.

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Comment by Combotechie
2013-03-31 08:57:22

Question: If you were a banker and you wanted to release a few houses for sale, which ones would you release?

1. The ones that have their mortgages underwater, or

2. The ones where the price is higher than what is owed?

(Hint: In one case you have to eat a loss, in the other case you don’t.)

Comment by In Colorado
2013-03-31 08:29:25

I’m guessing that they are hoping that rising prices will get people off the fence and into buying a house. Of course, this assumes that there are eligible buyers sitting on the fence.

They could also be hoping that it will spur a “trade up” chain reaction, where the sale of a used “starter home” could cause a chain reaction of 5 or more trade ups.

The real trick will be to keep previously underwater sellers from flooding the market with the houses they want to unload. That could bring rising prices to a screeching halt.

Comment by scdave
2013-03-31 08:53:32

Of course, this assumes that there are eligible buyers sitting on the fence ??

Isn’t it apparent that is part of the plan…

Make more people eligible with Ultra low interest rates ??

Entice people with Ultra low interest rates ??

Help spike the market with Ultra low interest rates thereby helping the balance sheets of all holders of MBS’s circa 2004-2008 ??

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Comment by polly
2013-03-31 12:33:32

Hey, Colorado. Happy Easter.

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Comment by Pete
2013-03-31 18:10:22

“selling 32.7% fewer houses than were sold last year (which means they get to earn a lot less in commissions)”

Yes. A good realtor friend of mine told me that in 2009 and 2010, the worst time for “the market”, she was busier than she’d ever been. Selling two houses a week at 100K each is much better than selling one at 150K.

Comment by Pete
2013-03-31 18:11:23

Haha, by “good realtor friend”, I mean she’s a good friend. I wouldn’t imply on this forum that she’s a good realtor. :-)

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Comment by Rental Watch
2013-03-31 19:32:26

The non-current loan rate in CO is lower than AZ or CA…at 5.2%. One of the lowest in the country,mans very close to “normal”.

Any increase in inventory won’t be coming from a big wave of foreclosures.

Comment by Truth In Housing
2013-03-31 09:00:24

It’s one of the hottest sellers’ markets I’ve seen in the last 10 years.”

That’s odd. 10 year chart of sales(Zillow) in Denver shows the current sales rate has never been lower.

Why do you think NAR would lie about that?

Worse yet, there are 8,000+ excess REO’s in Denver alone.;-104.9842300415039&lvl=11&sty=r&srange=3&page=1&sort=featured,asc&tabs=PreForeclosure,Auction,LiveAuction,OnlineAuction,BankOwned,REO,GovernmentOwned

With that kind of excess inventory, sales at 10 year lows, the losses associated with buying a house in Denver at those massively inflated prices are huge.

Comment by Prime_Is_Contained
2013-03-31 10:43:27

“It’s one of the hottest sellers’ markets I’ve seen in the last 10 years.”

That’s odd. 10 year chart of sales(Zillow) in Denver shows the current sales rate has never been lower.

Those two statements aren’t at all contradictory.

“Hottest sellers’ market” just means that sellers have the upper hand and can dictate the terms.

With almost no inventory on the market, that is the case, even though the absolute number of purchases/closings is not all that high.

Why do those two seem in conflict to you? I suspect you are misreading one of the two statements.

Comment by Pimp Watch
2013-03-31 10:54:37

“Those two statements aren’t at all contradictory.”

Sales at 10 year lows is hot? You have a problem with understanding definitions.

“With almost no inventory on the market, that is the case,”

That’s not the case. There are 8,000 excess empty houses classified as REO in Denver alone.

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Comment by Combotechie
2013-03-31 11:40:57

“With almost no inventory on the market, that is the case, even though the absolute number of purchases/closings is not all that high.”

Isn’t this great! Think about it! A few closings at higher prices causes massive increases in equity, as measured collectively, for all the comps. The fewer the closings the greater is the multiplication factor.

Price equals value is a matter of perception among buyers and sellers of houses but price equal value becomes a reality when it comes to the values of the mortgages that are backed by these houses. If one wants to pump the value of the mortgages then all he has to do is pump the price of the houses that back these mortgages. But he doesn’t have to pump the price of ALL the houses, just a representative few; Pump the price of a few and the price of all the comps end up geting pumped as well.

The fewer houses that need the pump the cheaper it becomes to do the pumping. And it really becomes cheap if you can arrange it so “somebody else” does all the work and also pays the bill.

“Somebody else”, in this case, is the NAR.

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Comment by polly
2013-03-31 07:10:14

I was working on helping my lucky ducky friends with their taxes yesterday. In past years, a lot of their income has been from small businesses so their tax credits have largely gone to pay for the payroll taxes they didn’t pay during the year. They got some money back, but enough to fix the car and maybe cover a property tax payment, but not much else.

This year, all the income is from regular employee wages (4 different jobs between the two of them). They don’t get any paid leave at all and had the death of a parent this year. Plus she got laid off from the best job they had in 2012, though he started one a little better, but only towards the end of the year. Total comp for the year approximately $17,500. They are so scared of owing taxes, they put down 0 for their exemptions, so they had about $1000 of income taxes withheld. I think they are going to get over $8000 from the IRS. Maybe almost another $2000 for DC if I can get them to claim it.

No wonder tax returns have an actual influence on the revenue of places like Walmart.

Comment by WT Economist
2013-03-31 07:20:37

We have one million “self employed” people working in NYC, according to the BEA, or about one-quarter of the private sector workers. This is based on Schedule C, so we aren’t talking about people who are “off the books.”

Most are basically employees without benefits.

Meanwhile, those at the top on Wall Street used to be self-employed partners, taking risks and getting rewards. But these “risk takers” today employees with contracts, like extreme over-paid union workers, not self employed. They still get the rewards, but the shareholders and taxpayers bear the risk.

The real self employed “risk takers” who must make it on their own in the free market every day or suffer the consequences earn the minimum wage or less.

Comment by aNYCdj
2013-03-31 07:42:48

Bush really screwed this up, he should have wanted a renters society. So we would all be freelance, and there wouldn’t have been a housing bubble.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 10:20:43

Freelances tend to take cash remuneration, which is harder to tax than W-2 earnings.

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Comment by Bill in Los Angeles
2013-03-31 09:02:32

Since you are a Statist extroardinaire, I would expect you to be sure they paid more than they were due to pay to run your beloved big government.

Comment by tresho
2013-03-31 09:03:56

they paid more than they were due to pay
Probably, but it was largely their choice.

Comment by polly
2013-03-31 09:16:58

I have nothing to do with how they fill out the forms they need to fill out when they start a new job. They are adults and more than capable of deciding how they prefer to do that. They will get every cent of the income tax withheld back, and, as I mentioned, about $7000 on top of that. EIC and the child tax credits.

The choice to put down zero exemptions is unnecessary, but they don’t have great instincts about how the tax system interacts with their income and their situation means they have NO reasonable chance at predicting their income for the year. If they want to be absolutely guaranteed not to have a federal income tax bill to pay on April 15th, then the choice they make is reasonable if a little overly conservative. These are also the friends who don’t have a credit card because they don’t want to even have the temptation of going into debt. All in all, I respect their decisions greatly.

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Comment by Pimp Watch
2013-03-31 09:49:58

“Since you are a Statist extroardinaire, I would expect you to be sure they paid more than they were due to pay to run your beloved big government.”

Thanx for saying for me.

Comment by Bill in Los Angeles
2013-03-31 18:58:30

You are welcome. Will keep sayin’

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Comment by polly
2013-03-31 10:27:28

You need to have your glasses checked, Bill. I don’t think you read what I wrote.

I have friends. They had approximately $1000 withheld for income taxes this year from their various part time, part year jobs. I am helping them do their taxes which should get them every penny of that $1000 back and another $7000 besides in the form of refundable tax credits. And maybe another $2000 from the District of Columbia.

This is where all good psuedo-libertarian anarchists (who make all their money off the public’s dime) complain about their stolen money getting redistributed to people who aren’t pulling their own weight in society and are part of the evil 47% who vote themselves goodies out of your pockets.

You totally missed your cue. Try again.

Comment by Prime_Is_Contained
2013-03-31 10:51:09

I am helping them do their taxes which should get them every penny of that $1000 back

As a side note, in the face of ZIRP, this is perhaps the least costly time in history to have chosen to overpay your taxes—because they couldn’t have earned anything on that $1000 if they had received it sooner in their paychecks anyway. :-)

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Comment by ecofeco
2013-03-31 11:10:45

Bill, you lead such a sheltered, sheltered life and shows. Often.

I don’t know (or now care) if you have ever paid attention to what polly does, but finding and eliminating gov waste and fraud is part of her job.

Comment by tresho
2013-03-31 09:02:37

They are so scared of owing taxes, they put down 0 for their exemptions
Is it really that hard to predict one’s taxes for the current year? That was a lot of free money they let Uncle Sam use.

Comment by polly
2013-03-31 09:19:19

4 part time jobs, all held for less than the full year. Also, taking care of a dying Alzheimer’s patient at the very end of her life and dealing with an extremely ill and disabled father. Also two kids. When I asked her to give me a guess about their income a few weeks ago, she had no idea at all and that was after the year ended, not while it was actually happening.

Comment by tresho
2013-03-31 09:50:57

When I asked her to give me a guess about their income a few weeks ago, she had no idea at all
I guess if they don’t bother to keep track of their own income, any other method of budgeting / predicting / planning is not worth advising.

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Comment by Skroodle
2013-03-31 09:57:56

In case you haven’t worked a part-time job in the last decade, your hours can vary from 40 hours one week to 8 hours the next week.

Comment by tresho
2013-03-31 10:00:10

your hours can vary from 40 hours one week to 8 hours the next week.
Does that prevent you from adding up your income as it comes in? You can do that with pencil and paper.

Comment by snowgirl
2013-03-31 10:12:58

Also taking care of an end stage Alzheimer’s patient is exhausting and all encompassing. Your friend is probably lucky she knows her own name due to exhaustion never mind cumulative income from 4 different inconsistent sources. A friend of mine was his mother’s sole caretaker and it changed him greatly. The fact that he was “sole” caretaker when he had 2 other siblings probably has changed his family dynamics forever too.

Comment by polly
2013-03-31 10:20:13

There is no budgeting. No debt. They live with her father, but he refuses to pay any of the household expenses because he wants them to “prove” they can take care of the house or he won’t let them have it when he dies. They pay the bills out of whatever money there is and try to eat on what is left over. That is all there is to it. Not very complicated. When the money runs out, they can’t spend any more until the next check comes in. They can’t afford anything that other people plan and/or budget for.

This tax “refund” is going to be more money than they have had as a lump sum in years if not over a decade. Possibly ever. There might have been a little after her mother died, but I think it went to pay back other relatives who lent them some to pay the back property taxes on the house - her father hadn’t paid them in a few years and didn’t bother to tell them about it.

The fear is so dense you could cut it. They never come to me even though they have gotten money back every time I have helped them. She was crying when I told her what my calculations came up with.

Comment by Prime_Is_Contained
2013-03-31 11:03:54

Does that prevent you from adding up your income as it comes in? You can do that with pencil and paper.

You don’t even have to add it up as it comes in.

Just throw all of your pay-stubs in a shoebox, and then pull out the most recent one from each job when you need to total them up.

Comment by Prime_Is_Contained
2013-03-31 10:35:09

they had about $1000 of income taxes withheld. I think they are going to get over $8000 from the IRS. Maybe almost another $2000 for DC if I can get them to claim it.

So they will get $7K more back than they had withheld.

Welfare by any other name…

Personally, I think the tax collection system should be separate from the welfare distribution system; combining the two merely muddies the waters.

Comment by Skroodle
2013-03-31 10:48:43

I know right?

I mean sure the interest deduction on my mega-yacht and 7 vacations homes may seem to be welfare to the plebeians, but when you are rich, you deserve every tax credit and tax break you can pay a lobbyist to get written into the tax code.

Comment by Prime_Is_Contained
2013-03-31 11:08:13

Two wrongs don’t make either one right.

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Comment by ecofeco
2013-03-31 11:21:25

Guess you missed the part about having 4 jobs.

Comment by polly
2013-03-31 11:37:57

Closer to $9K, I think. Not sure what their “state” withholding was. Again, I have to convince them to file for the DC one. They haven’t the last few years even though I told them that DC has an EIC and without any payroll taxes to offset, they were sure to be getting money back. This year, I am going to try to convince them to use the free TurboTax option (for people with AGI under $31K).

The earned income tax credit was greatly expanded under Ronald Reagan. He thought it was a fantastic idea because it provided an incentive for poor people to work as an alternative to welfare. Or at least that is what he said. Maybe he just wanted it for a subsidy so that corporations wouldn’t have to pay people a wage that they could live on. The additional child tax credit (the regular child credit isn’t refundable) also requires the filer have earned income.

If you define welfare as money from the government that you get even if you don’t work, these two credits don’t begin to qualify.

Comment by Bill in Los Angeles
2013-03-31 16:16:04

A statist doing taxes is like a wolf volunteering to clean the hen house.

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Comment by Bigguy
2013-03-31 19:31:35

Same with a statist eliminating govt waste and fraud.

Comment by tresho
2013-03-31 08:04:41

Cleveland: Low-cost conversions make old houses marketable, avoiding demolition
Buying a house for $500 would be an indisputable bargain in most places, but not necessarily in Cleveland.

So when the owner of the vacant house in the St. Clair-Superior neighborhood made the offer to developer and landlord Charles Scaravelli, he paused.

A traditional rehab would cost at least $30,000, more than he could recoup by renting or selling the house.

That didn’t stop him. “Wow, it’s got a slate roof,” Scaravelli said. “I’ll buy it.”

Scaravelli converted the dwelling into a loft house, a rehab that cost only $10,000. He has had no problem renting the home on Schaefer Avenue for $500 a month. Now the Cuyahoga land bank and the St. Clair Superior nonprofit are engaged in a pilot project to see whether the loft home conversions can be a way of bringing vacant houses, often the wreckage of the foreclosure crisis, back online. Demolition is the typical solution, but if an affordable model can be found to create a viable market for these houses, bulldozing doesn’t have to be their only fate.

Demolishing a house costs between $7,500 and $10,000, depending on the structure. The land bank is making a two-year, low-interest loan to Scaravelli, based on what it would have cost to demolish four houses he is scheduled to convert to loft homes.

There are about 26,000 vacant residential structures in Cuyahoga County, according to the land bank. Roughly 625 are in the land bank’s current monthly inventory; some of those will be demolished and others rehabbed. Frangos said the land bank has programs to sell off the inventory, often with incentives, to responsible homeowners and rehabbers.

“Part of the challenge is that, yes, we find rehabbers, we find homeowners; but there are not enough homeowners and rehabbers to match with every home that is distressed in the city of Cleveland,” he said.

Less than a decade earlier, in the midst of a hot housing market, the home probably would have sold easily. The St. Clair Superior group probably would have considered it an ideal candidate for rehab, putting $30,000 to $50,000 into the property, because it could sell for up to twice that much.

“Right now in the neighborhood, you couldn’t make that argument,” said Michael Fleming, the nonprofit’s executive director. “If you put in $50,000, it would still be worth $40,000.”

Fleming was speaking of a traditional rehab, in which most of the walls and floors of a house would remain intact and the structure would receive a new heating system, kitchen, bathrooms and more. Scaravelli based his alternative on knowing that many houses built in the late 1880s and early 1900s used balloon framing. That means that the studs in the load-bearing walls run uninterrupted from the foundation to the eave line. These two-story-high posts made of old-growth forest wood made it easy to tear out floors and walls, without causing structural damage, to dramatically alter the nearly 125-year-old house for an updated look.

The model is so promising because it is so cost-efficient, said Terry Schwarz, director of Kent State University’s Cleveland Urban Design Collaborative.

“It is not a perfect housing unit, but it is just cool enough that I think it is really a promising idea.”

Loft homes “offer a very low-cost, high-impact design-on-a-dime strategy.”

“I’m wondering what other kinds of tricks you could pull off with $10,000,” Schwarz said.

She said a group of “creative young students” will look for options other than loft homes at the same price point.

The “design on a dime” strategy offers a new twist in the city’s battle to stem population loss. Most of these efforts have focused primarily on higher-end products often aimed at luring suburbanites. This includes downtown apartments and custom homes, like those in Hough or Mill Creek, a subdivision that bills itself as offering “urban living with suburban flair.”

“It is not pristine,” Schwarz said of the loft home. “It is not a perfect housing unit, but it is just cool enough that I think it is really a promising idea.”

Housing Court Judge Raymond Pianka agrees, especially when you consider the probable alternative — vacant lots, which he says can have “a blighting influence” on a neighborhood.

Comment by tresho
2013-03-31 09:00:55

vacant lots, which he says can have “a blighting influence” on a neighborhood.
Is he implying that vacant houses DON’T have a worse blighting influence? Choose wisely.

Comment by Truth In Housing
2013-03-31 09:27:34

This article honestly demonstrates the residual value of a 20 year old house.

Comment by tresho
2013-03-31 10:05:16

One of the bids I got last fall for putting new asphalt shingles and gutters on my house was more than the total cost of this Cleveland house including the re-hab. Said house is about 30 miles from me. Bid was ridiculously high.

Comment by In Colorado
2013-03-31 12:45:19

Really? I once had that done (just the roof, no gutters) for under $4k.

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Comment by aNYCdj
2013-03-31 08:16:41

More of those useless jobs gone:

About 153 toll takers, snow plow drivers, mechanics and other workers at the New York State Thruway Authority will be laid off Wednesday, according to union and authority officials.

Comment by tresho
2013-03-31 08:59:37

Yup, those snow plow drivers will be sorely missed for the next 5 months or so.

Comment by scdave
2013-03-31 09:14:44

If technology can take your job, It will…

Comment by Skroodle
2013-03-31 10:00:02

Robot snow plows?

Comment by scdave
2013-03-31 10:23:39

Robot snow plows ??

Why not….Googles has a driverless car….We fly droids by remote…

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Comment by scdave
2013-03-31 10:54:04

Droids = Drones

Comment by azdude
2013-03-31 09:55:36

will technology replace realtors?

Comment by palmetto
2013-03-31 10:02:40

Hah, in some cases it has, with online listings open to the public.

Comment by scdave
2013-03-31 10:04:11

will technology replace realtors ??

I think it already has and likely will continue….

Comment by Rental Watch
2013-03-31 19:46:35

Or at least change the comp structure…see Redfin.

Comment by Skroodle
2013-03-31 10:07:23

A Tale of Two Londons
Who really lives at One Hyde Park, called the world’s most expensive residential building? Its mostly absentee owners, hiding behind offshore corporations based in tax havens, provide a portrait of the new global super-wealthy.

From the Hyde Park side, One Hyde Park protrudes aggressively into the skyline like a visiting spaceship, a head above its red-brick and gray-stone Victorian surroundings. Inside, on the ground floor, a large, glassy lobby offers what you’d expect from any luxury intercontinental hotel: gleaming steel statues, thick gray carpets, gray marble, and extravagant chandeliers with radiant sprays of glass. Not that the building’s inhabitants need venture into any of these public spaces: they can drive their Maybachs into a glass-and-steel elevator that takes them down to the basement garage, from which they can zip up to their apartments.

The largest of the original 86 apartments (following some mergers, there are now around 80) are pierced by 213-foot-long mirrored corridors of glass, anodized aluminum, and padded silk. The living spaces feature dark European-oak floors, Wenge furniture, bronze and steel statues, ebony, and plenty more marble. For added privacy, slanted vertical slats on the windows prevent outsiders from peering into the apartments.

In fact, the emphasis everywhere is on secrecy and security, provided by advanced-technology panic rooms, bulletproof glass, and bowler-hatted guards trained by British Special Forces. Inhabitants’ mail is X-rayed before being delivered.

The secrecy extends to the media, many of whose members, including myself and the London Sunday Times’s and Vanity Fair’s A. A. Gill, have tried but failed to gain entry to the building. “The vibe is junior Arab dictator,” says Peter York, co-author of The Official Sloane Ranger Handbook, the riotous 1982 style guide documenting the shopping and mating rituals of a certain striving class of Brits, who claimed Knightsbridge’s high-end shopping area, which stretches from Harrods to Sloane Square, as their urban heartland.

Comment by palmetto
2013-03-31 10:38:19

Thanks for posting, I sort of skimmed it, will read in more detail later.

However, if anyone has any doubt about who is really in charge, read this. I’ve long contended that the US gets its marching orders from Britain, that Britain hides behind the big skirts of the US and this sort of confirms it for me. It’s how we were dragged into WW1 and 2, into the Middle East, Israel, Pakistan, etc. That’s not to say the US hasn’t engaged in a few adventures of its own, like Vietnam, but even then I wonder.

Anyway, eff Merrie Old England, glad to see it’s committing national suicide. But we don’t have to mimic it.

Comment by palmetto
2013-03-31 10:53:55


May I suggest high-end plastic surgery as a career for some of the more enterprising young folks who are literate and have half a brain? It will be needed to reconstruct the richie-riches and their progeny who get kidnapped for ransom. New fingers and ears will be in high demand, maybe noses. That sort of thing.

Comment by hazard
2013-03-31 10:56:27

America’s “going to crash big time,” says Paul Craig Roberts. Humanity hopes it’ll happen in time to matter. - 13k - Cached - Similar pages
Mar 13, 2013

Comment by hazard
2013-03-31 11:08:01

Crisis They Can’t Avoid-Paul Craig Roberts

18 March 2013

By Greg Hunter’s - 158k - Cached - Similar pages

Comment by CRATER!!!!
2013-03-31 14:01:47


What was that?!

You know that house you made the mistake of buying? Well the value of it just fell through the floor leaving a smoldering moon-crater.

Beware reading public. Beware.

Comment by Robin
2013-04-01 00:56:20

Bow down to my positive cash flow you negativist low-life envious slime!! - :)

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 15:16:20

True confession time:

How many of you are engaging in portfolio management strategies which you KNOW FOR SURE are doomed the moment the Fed stops spiking the quantitative easing punch bowl?

These include:

1. Reaching for yield where there are none to be reached without engaging in high-risk gambles;

2. Going into the poor house to send Junior to college, because you know he needs a degree from a good university to stand a chance in the future globalized economy;

3. Owning your employer’s stock, even though you realize that if the company collapses, you will lose your job and your retirement savings at the same time;

4. Taking Social Security too early, even though you realize it will cost you a fortune in foregone retirement income;

5. Buying long-term bonds, even though you realize that the minute the Fed firms up plans to take away the quantitative easing punch bowl, you stand to lose a fortune in negative capital gains.

6. Buying a house now in competition with an army of hedge funds and all-cash Canadian and Chinese investors, on the misguided assumption that “the bubble is over, and real estate will always go up again from now on.”

‘Fess up: How many of you are currently making some of these stoopid investing decisions out of ignorance or desperation?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 15:21:29

Is anyone besides me expecting a bell to ring at the moment it becomes prudent to buy Treasurys, thanks to so many greater fools buying stocks in order to avoid losing money in the widely-heralded bond bubble collapse?

March 31, 2013

Five Really Dumb Money Moves You’ve Got to Avoid

You know the smartest things to do with your money. But what are the worst moves? What should you avoid?

Weirdly enough, they are things that a surprising number of people are still doing—even though they probably know, in their heart of hearts, how foolish they really are.

Any list is going to be incomplete. But here are five to avoid.

1. Reaching for yield

What this country needs is a good 5% certificate of deposit. Instead the collapse in interest rates, and the Federal Reserve’s policy of keeping them down for as long as possible, is driving people crazy—especially people who need to generate income from their investments.

In these circumstances, people start to do really foolish things in the desperate hunt for higher interest rates. That includes taking on crazy amounts of risk, or investing in complex products they don’t understand, in the hope of higher yields. The Fed is producing a bull market in scams, Ponzi schemes and associated rackets.

2. Going into the poor house to send Junior to a country-club college

Over the past 40 years, the cost of tuition and fees at a private university has tripled—after accounting for inflation. The cost of a public university has quadrupled.

The cost of getting a bachelor’s degree has become a scandal in this country. Students spend $160,000 on a four-year degree and the results are too often questionable.

5. Buying long-term bonds

A surprising number of people still subscribe to the flawed and circular argument that bonds, including long-term government bonds, are “safe.” In reality, bonds—especially long-term government bonds—are the rare example of a bubble that has been explicitly declared.

The Fed is openly printing money and using it to buy up such bonds, driving up the price and driving down the interest rates, in order to help the economy. There is no dispute about this. It’s public policy.

A 30-year Treasury bond currently sports an interest rate of just 3.1%. That’s barely half a percentage point above long-term inflation forecasts. Based on history, the yield should be at least 4.5%, or two percentage points above inflation.

Thirty-year Treasury inflation-protected securities, known as TIPS, sport a “real” or inflation-adjusted yield of 0.6% a year. Again, it should be 2%.

The only reason to buy such bonds in any quantity is to gamble on a 1930s-style depression and world-wide deflation. Such bonds are a gamble, not a safe haven.

Comment by Pete
2013-03-31 18:29:43

“The only reason to buy such bonds in any quantity is to gamble on a 1930s-style depression and world-wide deflation.”

Isn’t that the popular prediction here?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 16:14:45

For clarification, I don’t really expect any honest answers to my query, which I merely posted for my self-entertainment.

Who knew that behavioral economics could be good for more laughs than a barrel full of monkeys?

Comment by Rental Watch
2013-03-31 19:50:20

We are engaging in #3, but since the company has almost no debt, is a market leader in their industry, and that holding represents <20% of our investments, I’m not overly concerned.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 15:23:45

Investing success in the present market amounts to anticipating what asset class will next bubble up with quantitatively eased printing press money and parking your money there.

Some obvious possibilities include:

1. Treasurys
2. Mortgage-backed securities
3. U.S. stocks
4. Real estate of all stripes
5. Gold
6. Anything tangible which you can sell later at a higher nominal price, due to Fed-engineered anti-deflationary inflation

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 15:25:38

I forgot to mention farmland, but perhaps it has already had it’s run, and is next up to crash…try not to catch yourself a falling knife!

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 15:45:48

As long as insanely overvalued agricultural commodity prices hold up, we needn’t worry about a farmland bubble. What is it that bovines don’t get about unsustainably overvalued commodities?

Flyover Country Congressmen arguing about whether or not there is a farmland bubble is a story WAY too rich to make it up:

Muhlbauer says farmland “bubble’ primed to burst

“When it crashes it will crash a couple thousand dollars an acre — right at once. I’m looking at it could happen in the next two years.” -Rep. Dan Muhlbauer

“In our area it’s been local purchases by very strong hands,” Kettering said. “There is in many cases no borrowing and in some cases very responsible borrowing.” -Sen. Steve Kettering

Staff Writer

Carroll County’s voice in the Iowa House of Representatives, cattleman and grain farmer Dan Muhlbauer, is sounding a warning about the dramatic jump in Iowa land values.

Beware the bubble, says Muhlbauer, a Manilla Democrat.

“When it crashes it will crash a couple thousand dollars an acre — right at once,” Muhlbauer said. “I’m looking at it could happen in the next two years.”

Carroll County farmland values hit an all-time high in 2011 of $7,921 per acre, a 33 percent increase over last year, according to Iowa State University Extension and Outreach’s Iowa Land Value Survey.

Following a statewide trend — a 32.5 percent increase over the same period — Carroll-area counties posted record land values for 2011 with Calhoun County and Sac County showing the most expensive ground in the region at $8,617 and $8,427 acre averages, respectively.

“I think this is a bubble that we’re looking at,” Muhlbauer said. “It can burst and fall back. I don’t think it will fall back like it did in the ’80s. But I can sure see it fall back to the $4,500 to $5,000 range — which is quite a reduction.”

The average acre dollar value for other counties in The Daily Times Herald coverage area are as follows for 2011: Crawford, $7,285; Shelby, $7,453; Audubon, $7,240; Guthrie, $6,616; and Greene, $7,531.

Muhlbauer has a lot of skin in the game personally with Muhlbauer Cattle — an 1,800-acre operation in the Manilla area. Most of the land is located in Crawford County where it is used for row crops. Muhlbauer also has land holdings in Shelby County (80 applies to land-price increases as it did in the housing sector five years ago.

I don’t see it as a bubble like we’ve had bubbles in the past,” Kettering said.

The dynamics today are far different than in the lead-up to the farm crisis of a generation ago, Kettering said.

“It was speculative fever in the ’70s and ’80s when everybody went out and leveraged everything they had to acquire more ground,” Kettering said. “That’s not the case. This time it’s driven by agriculture and the commodity prices.

Comment by loca poll participant
2013-03-31 17:07:43

I’ve started drinking sour cherry jusice as an arthritis cure and am beginning to think the sour cherry tree I planted may turn out to be a very good investment.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 21:30:02

I buy and drink sour cherry juice from Trader Joe’s, just because I like it, not to cure arthritis. Do you think your home grown will work better than Trader Joe’s sour cherry juice would as an arthritis cure?

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Comment by loca poll participant
2013-04-01 09:18:13

No, I’m sure it’s the same. It is a pricy beverage but if you count the time and electricity for canning maybe not such a good return. I guess a lot depends on whether one enjoys the labor involved.

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Comment by loca poll participant
2013-03-31 17:04:40

Funny, that was one of the questions the Rasmussen computer asked. Except substitute savings accounts for #6.

I’ve been buying plumbing supplies and other hardware at pennies on the dollar from estate sales. The biggest investment is the time it takes to sort it.

Of course there’s always the investment of maintenance on the houses to keep them from Craaaatering.

Comment by Rental Watch
2013-03-31 19:53:18

I’m having a hard time finding anything with those characteristics. I personally think that #4 will do just fine, but not because of ZIRP ongoing, but because lots of the REITs have fixed their interest rates for longer terms, and rents are likely to rise from recession levels as vacancies fall in certain markets.

If ZIRP comes off because there is stronger growth (lower unemployment), the REITs will get the benefit of higher rents, but the affect of higher rates will take some time to sink in.

Comment by Bill in Los Angeles
2013-03-31 16:14:33

Why am I not surprised?

Cyprus President’s Family Transferred Tens of Millions To London Days Before Deposit Haircuts

someone who sees this please repost tomorrow

Comment by Resistor
2013-03-31 18:42:20

“It’s a big f*cking club, and you ain’t in it!”

George Carlin

Comment by AbsoluteBeginner
2013-03-31 20:25:45

‘Cyprus President’s Family Transferred Tens of Millions …’

see you at the party, victor

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 21:24:29

How is it that the wealthy and best connected passengers always manage to get on board the life rafts, while the less fortunate end up going down with the Titanic or swimming in the icy seas without a life vest?

Comment by tresho
2013-04-01 13:57:04

while the less fortunate end up going down with the Titanic
The then-richest man in the world went down with the Titanic in 1912. He was “less fortunate” by definition, I guess.

Comment by AnnGogh
2013-03-31 20:42:00

Also not from drudge:

Thanks, World Reserve Currency, But No Thanks: Australia And China To Enable Direct Currency Convertibility
Submitted by Tyler Durden on 03/31/2013 12:46 -0400

Australia Australian Dollar Brazil China Hong Kong India Iran Japan Renminbi Reserve Currency Treasury Department Yuan

A month ago we pointed out that as a result of Australia’s unprecedented reliance on China as a target export market, accounting for nearly 30% of all Australian exports (with the flipside being just as true, as Australia now is the fifth-biggest source of Chinese imports), the two countries may as well be joined at the hip.

Over the weekend, Australia appears to have come to the same conclusion, with the Australian reporting that the land down under is set to say goodbye to the world’s “reserve currency” in its trade dealings with the world’s biggest marginal economic power, China, and will enable the direct convertibility of the Australian dollar into Chinese yuan, without US Dollar intermediation, in the process “slashing costs for thousands of business” and also confirming speculation that China is fully intent on, little by little, chipping away at the dollar’s reserve currency status until one day it no longer is.

That said, this latest development in global currency relations should come as no surprise to those who have followed our series on China’s slow but certain internationalization of its currency over the past two years. To wit: “World’s Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade”, “China, Russia Drop Dollar In Bilateral Trade”, “China And Iran To Bypass Dollar, Plan Oil Barter System”, “India and Japan sign new $15bn currency swap agreement”, “Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says”, “India Joins Asian Dollar Exclusion Zone, Will Transact With Iran In Rupees”, and “The USD Trap Is Closing: Dollar Exclusion Zone Crosses The Pacific As Brazil Signs China Currency Swap.”

And while previously the focus was on Chinese currency swap arrangements, the uniqueness of this weekend’s news is that it promotes outright convertibility of the Yuan: something China has long said would happen but many were skeptical it ever would. That is no longer the case, and with Australia setting the precedent, expect many more Asian countries (at first) to follow in Australia’s footsteps, because while the developed world is far more engaged in diluting its currency as a means to spur “growth”, Asian and developing world nations are still engage in real, actual trade, where China is rapidly and aggressively becoming the world’s hub.

More from The Australian:

Former ambassador to China Geoff Raby, now a Beijing-based business figure, told The Weekend Australian: “The value of such a deal would be substantial for exporters to China, especially those that import a lot from China like mining companies, as it would remove business constraints including exchange-rate risks and transaction costs.”

Businesses, like individuals when travelling, have to pay extra to convert currency since there are different rates for buying and selling.

So removing one step also cuts out the cost of paying for such a “spread”.

Australia has undertaken significant lobbying for the deal and the direct conversion of the yuan, also referred to as the renminbi (RMB), is identified as a priority in the government’s Asian century white paper.

“We have held preliminary discussions with the Chinese government to explore how soon direct convertibility can be practicably achieved,” the white paper says.

“We are continuing these discussions, and also exploring other opportunities to work with China to support the internationalisation of the RMB.”
Australia’s banks increasingly arrange trade finance through Hong Kong, which has developed a special role as China’s chief international finance centre.
Needless to say, China is eagerly looking forward to taking yet another bite out of the USD’s reserve status.

New President Xi Jinping, a former Communist Party secretary of Shanghai, is a champion of that city’s development as China’s finance hub, and it is believed that the Prime Minister may fly there to sign the currency conversion deal.

Ms Gillard is expected to go on from Shanghai to Beijing, where she will open the third Australia China Economic and Trade Forum organised primarily by the Australia China Business Council, which will be bringing about 100 people from Australia for the event. Participants are likely to include Andrew Harding, Rio Tinto’s new chief executive for iron ore; Warwick Smith, ANZ Bank’s chairman for NSW and the ACT; Australian Trade Minister Craig Emerson and Financial Services Minister Bill Shorten; Gao Hucheng, China’s Commerce Minister; and Gao Xiqing, the acting head of China Investment Corporation, the country’s vast sovereign wealth fund.

The ANZ Bank has been a strong advocate of direct convertibility between the dollar and the yuan. Gilles Plante, the bank’s chief executive in Asia, said in a recent report that in the last financial year, China accounted for 29 per cent of all exports and 18 per cent of imports, but the value of that trade denominated in yuan was less than 0.3 per cent.

He forecast that cross-border flows of funds would be liberalised “to support Shanghai’s plan to build itself as a global financial centre. At the time the whole world is digging out opportunities from the rise of the yuan, Australia should not lag behind.”

It was significant the liberalising governor of the People’s Bank, Zhou Xiaochuan, kept his job during the reshuffle of China’s leadership. He said last year at a conference: “The next movement related to the yuan is going to be reform of convertibility. We are moving in this direction; we need to go further, we will have some deregulation.”
Most importantly, to China, Australia will serve as the Guniea Pig - should this experiment in FX liberalization work out to China’s satisfaction, expect Beijing to engage many more trade partners in direct currency conversion.

Beijing appears to have chosen Canberra as its partner in this next movement for straightforward economic reasons, as Australia has become China’s fifth-biggest source of imports and thus, the appropriate partner for the march of its currency.

Ms Gillard and President Xi Jinping may also during the visit establish a “strategic partnership” between the countries. This will enable Australia to catch up in status with a large range of nations.
Why is this so very critical? For the simple reason that the free lunch the US has enjoyed ever since the advent of the US dollar as world reserve currency, may be coming to an end as other, more aggressive alternatives - both fiat, and hard-asset based - to the USD appear. And since there is no such thing as a free lunch, all the deferred pain the US Treasury Department has been able to offset thanks to its global currency monopoly status will come crashing down the second the world starts getting doubts about the true nature of just who the real reserve currency will be in the future.

Comment by AnnGogh
2013-03-31 21:18:24

Not from drudge:

Do not use Safety Deposit Boxes
Posted on March 31, 2013 by Sean Taeschner
Dinarvets – by Don Paul


According to in-house memos now circulating, the DHS has issued orders to banks across America which announce to them that “under the Patriot Act” the DHS has the absolute right to seize, without any warrant whatsoever, any and all customer bank accounts, to make “periodic and unannounced” visits to any bank to open and inspect the contents of “selected safe deposit boxes.”

Further, the DHS “shall, at the discretion of the agent supervising the search, remove, photograph or seize as evidence” any of the following items “bar gold, gold coins, firearms of any kind unless manufactured prior to 1878, documents such as passports or foreign bank account records, pornography or any material that, in the opinion of the agent, shall be deemed of to be of a contraband nature.”

DHS memos also state that banks are informed that any bank employee, on any level, that releases “improper” “classified DHS Security information” to any member of the public, to include the customers whose boxes have been clandestinely opened and inspected and “any other party, to include members of the media” and further “that the posting of any such information on the internet will be grounds for the immediate termination of the said employee or employees and their prosecution under the Patriot Act.” Safety deposit box holders and depositors are not given advanced notice when failed banks shut their doors.

If people have their emergency money in a safe deposit box or an account in a bank that closes, they will not be allowed into the bank to get it out. They can knock on the door and beg to get in but the sheriff’s department or whoever is handling the closure will simply say “no” because they are just following orders.

Deposit box and account holders are not warned of the hazards of banking when they sign up. It is not until they need to get their cash or valuables out in a hurry that they find themselves in trouble.

Rules governing access to safe deposit boxes and money held in accounts are written into the charter of each bank. The charter is the statement of policy under which the bank is allowed by the government to do business. These rules are subject to change at any time by faceless bureaucrats who are answerable to no one. They can be changed without notice, without the agreement of the people, and against their will. People can complain but no one will care because this is small potatoes compared to the complaints that will be voiced when the executive order that governs national emergencies is enforced.

That order allows the suspension of habeas corpus and all rights guaranteed under the Bill of Rights.

A look at the fine print of the contract signed when a safety deposit box is opened reveals that in essence the signer has given to the bank whatever property he has put into that deposit box. When times are good people will be allowed open access to their safe deposit box and the property that is in it. This also applies to their bank accounts.

But when times get really bad, many may find that the funds they have placed on deposit and the property they thought was secured in the safe deposit box now belong to the bank, not to them. Although this was probably not explained to them when they signed their signature card, this is what they were agreeing to.

During the Great Depression in the early 1930’s people thought that many banks were going to fail. They were afraid they would lose their money so they went in mass to take it out, in what is known as a run on the banks. The government closed the banks to protect them from angry depositors who wanted their money back. Throughout history, governments have acted to protect the interests of banks and the wealthy people who own them, not the interests of depositors or box holders.

In a time of emergency, people will have no recourse if access to their safe deposit box and bank accounts is denied. If they are keeping money in a bank that would be needed in an emergency or in a time when credit is no longer free flowing, they may not be able to get it out of the bank. The emergency may occur at night or on a weekend or holiday when the bank is closed.

The solution is to take emergency cash or valuables out of the safe deposit box or bank account and secure them somewhere else, like in a home safe. An even better idea may be to close the safe deposit box account completely, letting someone else entertain the illusion of safety.

Americans have learned a few things since the Great Depression. They now have the FDIC to liquidate any failed banks.

The FDIC promises to set up a series of dates and times when safe deposit box renters can access their boxes by appointment to remove their property and surrender their keys. The FDIC also promises to mail bank customers an announcement of the dates for such events and include a question and answer page that addresses safe deposit box access.

The people have the FDIC to give them back the money they had on deposit that they were unable to get out of any failed bank that carries FDIC insurance. Sheila Bair, head of the FDIC, promises that depositor`s money will be available in 24 hours or less. But people should remember that the FDIC is just another bureaucracy, and it`s probably best not to rely on a bureaucracy in an emergency.



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Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 22:44:53

How can some banks be too-big-to-fail, while others are supposedly too-big-to-rescue? Makes no sense to me whatsoever…

Cyprus money woes, Italian bank’s $4.1B loss bring new fears about Europe finances
Published March 31, 2013

FILE- In this Tuesday, March 26, 2013 file photo, employees of the Bank of Cyprus shout slogans as they holds banners reading in Greek “shame” during a protest at Cyprus central bank in Nicosia, Cyprus. The moment word broke that Cypriot lawmakers in Parliament had voted down a bailout deal that would have raided everyone’s savings to prop up a collapsing banking sector, a huge cheer rose up from hundreds of demonstrators gathered outside that echoed through the building’s corridors. Many relished it as a kind of David-against-Goliath moment a country of barely a million people standing up to the will of Europe’s behemoths who wanted it to swallow a very bitter pill to fix its broken-down economy. (AP Photo/Petros Karadjias, File) (A2013)

Customers of an Italian bank have seen deposits fall by “a few billion euros” after a scandal in February, the bank announced Saturday.

According to Reuters, Monte dei Paschi bank reported a yearly loss of 3.2 billion euros ($4.1 billion) – a higher-than-expected net loss for 2012 – after loss-making derivatives trades at the lender amounting to 730 million euros. Bad loans also contributed to the loss.

The bank’s chief financial officer said after the earnings were released on Thursday that it was “quick in recovering ground in March” on the lost deposits in February.

The figures highlight the scale of the problems at Italy’s third-biggest lender, which received a 4 billion euro ($5.1 billion) state bailout last month, according to Reuters.

The news of Monte dei Paschi comes as a deal to rescue Cyprus banks from financial collapse has renewed fears about Europe’s shaky financial system.

Many banks across Europe have been struggling for more than three years as losses on government bonds and bad loans piled up. Some governments, meanwhile, have taken on more debt trying to prop up their lenders to the point where they have needed bailing out themselves.

In Cyprus’s case, its banking sector became much bigger than the country’s government could afford to rescue — seven times the size of the country’s economy. When the banks were hit by large losses and Cyprus could not afford to bail it out on its own, the country turned to the other 16 European Union countries that use the euro.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 22:48:56

When in doubt about your economic future, why not gamble on it and hope for the best?

Cyprus bets on casinos to help boost economy after savings raid
President braves wrath of Orthodox church by including plan to lift ban on gambling among his initiatives to rescue economy
Juliette Garside
The Guardian, Sunday 31 March 2013 14.52 EDT

Cyprus is to lift a ban on casinos as part of measures to counter the economic shock of a much larger than expected 60% raid on the savings of the island’s most wealthy depositors.

President Nicos Anastasiades outlined a 12-point plan to rescue the troubled economy before travelling to Athens, where he was reported to be meeting the Greek prime minister to petition for €2bn in aid, despite Greece’s own economic collapse.

The Cypriot bailout is the first eurozone rescue package to punish savers by forcing them to hand over a slice of their savings in broken banks. The sums are far higher than original estimates that Bank of Cyprus depositors would take a 30% or 40% hit. The conditions were imposed when Cyprus was told to find €5.8bn as a condition of a €10bn loan from the International Monetary Fund.

Anastasiades has braved the wrath of the influential Orthodox church by declaring that he will allow casinos to operate in Cyprus. Gambling has until now been legal only on the northern, Turkish side of the island.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 22:52:57

Small businesses spell big problems for Italy and Spain
A man walks past a closed down business in Madrid March 27, 2013. REUTERS/Susana Vera
By Silvia Aloisi and Sarah White
MILAN/MADRID | Mon Apr 1, 2013 12:04am EDT

(Reuters) - Small companies struggling to repay loans in Italy and Spain signal bigger problems on the horizon for the euro zone after the dust has settled on Cyprus’s last-ditch bailout this week.

Defaults by small and medium-sized enterprises (SMEs), easily the biggest employers in Spain and Italy, are rising at a worrying clip, spelling trouble for the banks and two countries at the heart of Europe’s debt crisis.

“You can be sure that if these companies’ bad debts rise, you’re going to see more bad loans to families, and credit card bills that won’t be paid,” said Javier Santoma, finance professor at Spain’s IESE business school.

The ability of Italy and Spain, which account for 28 percent of the euro zone economy compared with Cyprus’s 0.2 percent, to pull themselves out of crisis and avoid full-blown bailouts depends on the health of their banks; weak banks conserve capital rather than lend to get the economy moving.

Profits at Spain’s top three lenders Santander (SAN.MC), BBVA (BBVA.MC) and Caixabank (CABK.MC) fell an average 60 percent in 2012 due to steep government-enforced provisions for property losses. Writedowns of nearly 24 billion euros at state-owned Bankia (BKIA.MC) led to a record 19.2 billion euro loss.

In Italy, the two biggest banks, Intesa Sanpaolo (ISP.MI) and UniCredit (CRDI.MI), set aside a combined 14 billion euros in 2012 to cover bad loans. Smaller lenders also had to increase provisions after the central bank conducted simultaneous audits of around 20 institutions.

Banco Popolare (BAPO.MI), Italy’s fourth biggest, issued a profit warning after the audit prompted 684 million euros of loan loss provisions in the fourth quarter, more than the total it set aside in the first nine months of the year.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 22:57:04

Just because mortgage debt nearly collapsed Wall Street and the entire global financial system in Fall 2008, doesn’t mean it will necessarily cause any problems north of the Canadian border.

Editorial: Deflate the bubble
Recent reports show Canadians have too much debt
Calgary Herald
March 19, 2013

What goes up, must come down. The more inflated the balloon, the easier it is to pop.

These common sense truths come to mind with Friday’s Statistics Canada report that showed Canadian household debt is at an all-time high. Coupled with average home prices in Calgary bobbing above pre-recession highs, it might be time for Calgarians and all Canadians to remember this simple fact of gravity — nothing stays up in the higher reaches of the atmosphere forever — and that includes the financial atmosphere. Eventually, some event or the cumulative effect of several events will cause a balloon to float back to Earth, or worse, it might pop in mid-air.

Let’s consider some facts. First, the good recent news from Statistics Canada’s report is that national net worth is up as a result of stocks, mutual funds and pension assets increasing.

Now, the bad news. Over the past year, on an annual basis, the level of debt increased by 5.5 per cent.

StatsCan calculates the average household owed a record $164.97 in market debt for every $100 of disposable, after-tax income earned in the fourth quarter of 2012. The previous high was $164.70 in the prior three months.

Meanwhile, another recent Statistics Canada report, on housing, shows that the new housing price index has zoomed ahead in Winnipeg, Calgary, Toronto and Oshawa — consumer demand driving higher new home prices in the latter two cities and labour costs driving higher new home prices in Calgary.

Other reviews of the nation’s housing market are giving off warning signals that Canada’s housing market is perhaps overvalued. Moody’s Investors Services is the most pessimistic, with a warning that home prices could fall as much as 44 per cent. Other predictions are much less dramatic. TD Economics predicts housing prices will rise only with inflation, so about two per cent a year, so flat in real terms.

Defenders of optimistic housing prices and from the “don’t worry” school on debt argue Canadian household debt levels are affordable because of a decent Canadian economy, and low interest rates. Also, mortgage debt is not as bad as other kinds of debt.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-03-31 23:10:26

Is David Stockman destined to go down in history as a latter-day financial markets Cassandra, whose prophetic vision of the end game of America’s ginormous debt bubble anticipated what the entire Federal Open Market Committee missed?

P.S. Don’t miss out on the chance to purchase his new book through the Amazon link posted below at a deflationary 40% off list price!

Stockman Warns of Crash Of Fed-Fueled Bubble Economy
By Richard Rubin - Mar 31, 2013 9:01 PM PT

The U.S. economy is in a bubble inflated by “phony money” from the Federal Reserve and will burst within a few years, warned David Stockman, who was budget director for President Ronald Reagan.

In an essay published yesterday in the New York Times (NYT), Stockman wrote that the Fed’s quantitative easing policies in the aftermath of the credit crisis have flooded stock markets with cash even while the “Main Street economy” remains weak. The combination, he wrote, is “unsustainable.”

When it bursts, there will be no new round of bailouts like the ones the banks got in 2008,” wrote Stockman, a former senior managing director at Blackstone Group LP (BX) and a former Republican congressman from Michigan. “Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.”

Stockman, 66, is the author of “The Great Deformation: The Corruption of Capitalism in America,” which will be published April 2.

The Fed, led by Ben S. Bernanke, is purchasing $85 billion in assets every month. The Fed is leaving its key interest rate near zero while it tries to reduce unemployment below 6.5 percent and hold inflation below 2.5 percent.

The Standard & Poor’s 500 Index (SPX) rose to an all-time high last week, closing at 1,569.19 on March 28. That surpassed the previous record of 1,565.15 set in October 2007. U.S. stock markets were closed March 29 for the Good Friday holiday.

Gold Standard

Among the other culprits Stockman blamed for what he termed a “state-wreck” are President Franklin Delano Roosevelt for weakening the gold standard in 1933, President Richard Nixon for removing the convertibility of dollars to gold and “lapsed hero” Alan Greenspan, the former Fed chairman, for keeping interest rates too low for too long.

Investors will sell, Stockman wrote, at any hint that the Fed is starting to remove assets from its balance sheet.

Notwithstanding Bernanke’s assurances about eventually, gradually making a smooth exit, the Fed is domiciled in a monetary prison of its own making,” he wrote, warning of unsustainable fiscal policies as well. “These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen.”

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