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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Who could have guessed that slapping on free* federal guarantees to every mortgage purchased by Fannie Mae or Freddie Mac would result in making these government sponsored enterprises “super profitable”?
* Taxpayer-funded
Other than Fannie Mae and Freddie Mac, what other too-big-to-fail U.S. monopolies are currently pretty much in the same sweet (federally-insured) situation they were in before the Fall 2008 financial collapse?
Do major banks coordinate their REO sales (or inventory withholding) activities to manipulate prices?
Foreclosures Jump as Banks Bet on Rising Home Prices
A realtor looks in the window of a foreclosed home she is set to show to a prospective buyer on April 11, 2013 in Miami, Florida. Photographer: Joe Raedle/Getty Images
By Dan Levy and Heather Perlberg
June 13, 2013
Home repossessions in the U.S. jumped 11 percent in May after declining for the previous five months as rising prices and limited inventory for sale across the country spurred banks to complete foreclosures.
Lenders took back 38,946 homes, up from 34,997 in April, according to Irvine, California-based data firm RealtyTrac, which tracks notices of default, auction and seizures. Thirty-three states had increases in the number of homes repossessed, RealtyTrac said in a report today.
Banks are more willing to move to the final stage of foreclosure because there is sufficient demand and prices are improving, said Eric Workman of Tinley Park, Illinois-based Mack Cos., which aggregates single-family rental homes and resells them to individuals and institutional investors. U.S. home prices advanced almost 11 percent in the year through March, the biggest 12-month gain since April 2006, according to the S&P/Case-Shiller index of values in 20 cities.
“For a very long period of time, the market in general and specifically banks were unsure of what these assets were valued at,” Workman, vice president of sales and marketing at Mack, said in a telephone interview. “With increasing stability of the economy and housing prices throughout the U.S., these banks and sellers are getting much more comfortable with the value of their properties.”
Blackstone Buying
Private-equity firms, hedge funds and individuals are all buying foreclosed or distressed homes to turn into rental properties as prices remain 28 percent below their 2006 peak. Companies including Blackstone Group LP (BX), which has invested more than $5 billion to buy almost 30,000 homes, and Colony American Homes Inc., which owns more than 12,000 properties, are helping to increase prices in areas hit hard by the real estate crash by draining the market of inventory as low borrowing costs and improving employment fuel demand from buyers.
The average rate for a 30-year fixed mortgage climbed to 3.98 percent from 3.91 percent last week, McLean, Virginia-based Freddie Mac said in a statement today. While that’s the highest in more than 14-months, it’s down from 6.8 percent almost seven years ago before the housing crash.
“There are plenty of companies out there that will buy assets throughout the range of condition because the demand for finished quality inventory is so high,” Workman said.
…
“For a very long period of time, the market in general and specifically banks were unsure of what these assets were valued at,”
Like someone posted the other day, these SOBs aren’t even pretending anymore.
Here is a theory: Megabank, Inc sees the rising interest rates as a sign this may be their last chance for a long time to sell foreclosures in bulk at top dollar to firms that can borrow at far lower rates than U.S. households can. Once rates go up another 100 bps, the chance will only be visible through the lens of the rear-view mirror.
There was a realtor on the radio the other day. His theory was that the increase in interest rates would actually stimulate buyers to pull the trigger. His reasoning was buyers had been warned about rising rates, but it hadn’t happened. “Pshaw,” said the buyer, “the media is crying wolf. Rates will be low for a long time. I still have time to decide.” Now that it’s really happening and rates are rising, buyers are panicking and trying to get in before the rates get too high.
They’re also assuming that the increase in rates will not depress prices. IMO, that’s still a wild card, when so many houses were cash buys.
The news this morning reported that inventory in DC is lower (relatively) than in other markets.
In my drives around town, “under contract” signs are showing up fairly quickly.
Hello Debt Donkey
HEE HAW!
His reasoning was buyers had been warned about rising rates, but it hadn’t happened. “Pshaw,” said the buyer, “the media is crying wolf. Rates will be low for a long time. I still have time to decide.” Now that it’s really happening and rates are rising, buyers are panicking and trying to get in before the rates get too high.
I think a lot of people believe the Fed may try to pull back but when the markets respond they’ll be so much pressure they’ll end up back on the QE plan which will not end until the final crack up.
A conspiracy is unnecessary. The banks are insolvent. The Fed has encouraged them to keep their bad loans on the books as good loans so that insolvency is not discovered. Banks cannot afford to process foreclosures any faster because it leads to discovery.
I am still getting arrears notices addressed to my former SIL from Surprise after six years. Six years without a payment and no foreclosure notice.
Welcome to the fake housing recovery.
+1 Blue Skye…I think you may have it right…
What Blue Skye said.
“Six years without a payment and no foreclosure notice.”
And here we sit paying through the nose to rent a crappy half duplex with no lawn, as our LL is broke.
Funny world we live in, no?
With the Fed talking about dialing back QE3 and investors interested to avoid catching themselves falling knives, who is buying long-term bonds these days?
What do y’all think about this logic:
“If you hold your bond to maturity, you’ll get its full face value, plus interest. Mutual funds, however, have to price their holdings every day. While a fund may well hold a bond to maturity, the fund’s share price will fall every day as interest rates rise.”
It makes it sound as though if you own a bunch of bonds individually, you can never go wrong, so long as you don’t sell them until maturity. But if you hold a share of the exact same bond portfolio through mutual fund shares, you could lose money every day if interest rates steadily rose between now and the bonds’ maturity dates.
This argument seems to violate some kind of no-arbitrage condition. (I realize bond funds routinely buy and sell their holdings, but don’t believe this gets to the crux of the comparison.)
Bond funds battered in rate rise
Jun. 12, 2013
The 10-year T-note yield hit 2.19% Tuesday — still low by historical standards, but a sharp recent rise nonetheless.
USA Today
by John Waggoner, USA TODAY
Stocks aren’t the only investments that have fallen because of rising interest rates: Your bond funds have gotten clobbered, too.
Interest rates have been rising since May 2, when the yield on the bellwether 10-year Treasury note hit 1.63%. The 10-year T-note yield hit 2.23% Wednesday - still low by historical standards, but a sharp rise nonetheless. And bond prices fall when interest rates rise.
…
Why do bonds fall in price when interest rates rise? A bond is a long-term, interest-paying IOU. It pays a fixed rate of income. When newly issued bonds arrive with higher interest rates, you can’t go back to the issuer and demand a higher rate.
Instead, you have to cut the price of the bond, which raises its yield - the interest payment divided by its price. The more rates rise, the steeper the discount traders will demand for your bond.
If you hold your bond to maturity, you’ll get its full face value, plus interest. Mutual funds, however, have to price their holdings every day. While a fund may well hold a bond to maturity, the fund’s share price will fall every day as interest rates rise.
…
Mutual funds, however, have to price their holdings every day.
Sounds like we might need a little more FASB 157 action to prevent the wrong people from losing money.
The big disadvantage of owning a bond fund versus bonds in a rising rate environment is duration not daily pricing. If you buy a five year bond it becomes a 3 year in 2 years. It rolls down the curve, eventually matures, and you get your money back. A bond fund will be managed to look like some index, say the Barclays Aggregate Bond Index, which doesn’t mature, new bonds are always being added to that index. Hence, the fund may never get back to the price you paid for it if rates continue to rise.
Your comment prompted me to look at the Vanguard Total Bond Market Index mutual fund. This fund is indexed to the Barclays US Agg Float Adj Index.
From the Vanguard website (values are for the benchmark index):
Fixed income characteristics as of 04/30/2013
Barclays US Agg Float Adj Index
Number of bonds 8286
Yield to maturity 1.7%
Average coupon 3.4%
Average maturity 7.2 years
Average duration 5.3 years
What struck me was the difference between the 1.7% yield to maturity and the average coupon of 3.4%.
The mutual funds are marked to market daily. Even though the coupon may be 3.4%, the principal has been marked down to market so the yield to maturity is 1.7%.
I checked the US Treasury website’s Daily Treasury Curve rates and it shows that for 6/14/2013, the rate for the 7 year point on the yield curve is 1.53%.
This is the price we are paying for the “stability” of a bond fund. You’re getting a 1.7% yield, which is about 1.5% higher than the short term rates. The index with its 5.3 year average duration is not going to be as volatile as a long term bond.
Someday, during Bernanke’s visits to Congress, I hope one bond investing Senator has a moment of clarity and realizes to himself, “Now I know why my ass hurts.”
If you are an individual and you hold a bond to maturity then you will eventually receive the full face value of the bond, as will a bond mutual fund.
If you are an individual doing this then you can choose to not buy another bond. But if you are a bond mutual fund then you do not have this choice.
A bond mutual fund must continue to buy bonds else it would not be a bond mutual fund. The money generated by maturing bonds must be rolled over into new bonds else the mutual fund would not longer be a bond fund but instead it would evolve into a cash fund - a fund that holds cash.
A chacteristic of a mutual fund - stock, bond or whatever - is Price equals Value.
The fundamentals that should determine its value is NOT what ends up determining its value: PRICE is what determines it value. And this price is determined by the actions of strangers (sometimes some very emotional actions of these strangers), strangers who do the buying and selling.
Ultra-low interest rates are making bonds unsafe
By Allan Sloan, senior editor-at-large June 7, 2013: 7:22 AM ET
Sooner or later, interest rates are going to rise sharply from current levels. And that’ll hurt.
FORTUNE — What do you call a supposedly safe investment in which a five-week hiccup can wipe out more than a year of income? Answer: a bond mutual fund.
Yes, that sounds extreme, if not demented. But it’s true—as I’ll show you in a bit, using numbers from the nation’s biggest mutual fund, Pimco Total Return, which is run by bond-dom’s most prominent investor, Bill Gross.
If you’re a typical investor—especially, if you’re a typical investor of my age (68)—you’ve heard for decades about bonds providing a safe haven. But as people like my Fortune colleague Shawn Tully and I have been warning you for quite awhile now, buying bonds at today’s ultra-low interest rates isn’t at all safe.
Look at the Pimco fund. From the start of May through Thursday’s market close, the net asset value of Pimco Total Return Class A (PTTAX, for those of you keeping score at home) dropped to $11.05 from $11.34. Reason: the relatively modest increases in interest rates since the end of April have decreased the value of the fund’s $290 billion or so worth of bonds. Gross has been a terrific money investor for decades, and I think very highly of him. But he—like all bond fund managers—is swimming against the tide these days.
The 29-cent price drop in Gross’ fund may not sound like all that much. However, it’s more than all the interest dividends that Pimco holders got for the 12 months ended May 31—although you won’t realize this unless you dig quite deeply into the fund’s numbers.
According to data that I got from Morningstar, investors got 28.082 cents of interest dividends for the year ended May 31: less than the aforementioned 29-cent decline.
This loss is masked by the fact that during the 12 months we’re discussing, PTTAX paid holders 26.9 cents of capital gains dividends, and a “special cash distribution,” required by obscure portions of the tax code, of 11.4 cents. Subtract these two items from the fund’s total 12-month distributions, and you’re down to 28 cents.
Why the price loss? Because, as they teach you in Bonds 101, when interest rates rise, the prices of existing bonds fall.
…
The interest rate sword of Damocles
By Brent Sheather
9:30 AM Wednesday Jun 12, 2013
If you believe the industry rhetoric, the Sword of Damocles hanging over investors is the threat of rising interest rates. Photo / Thinkstock
If we are to believe the rhetoric from much of the investment industry i.e. financial advisors, stockbrokers and fund managers, the Sword of Damocles hanging over investors at present is the threat of rising interest rates. In fact many advisors are so enamoured with this scenario that they view it as a certainty that will devastate bond portfolios.
Accordingly the more radical advisors are telling clients not to own any bonds at all. One or two have even gone into print to that effect.
That this position is ridiculous, not to mention reckless for just about anyone let alone a retired individual, is evident when we consider three facts, as opposed to biased opinions, predictions and stabs in the dark:
• For at least the last 30 years NZ pension funds have averaged a 40 per cent weighting in bonds and there is no indication that they are today switching to shares en masse.
• Overseas pension funds have increased their weightings to bonds in the last five years and the latest edition of Pension Fund Indicators sees this trend slowing but not reversing.
• Last, but certainly not least, no one knows the direction of interest rates and given that the US bond market is the most liquid financial market in the world it’s a big call to say that the collective view of the market, as expressed by the 10 year treasury yield, is wrong.
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What Goldman’s Bearish Call On Bonds Means For Your Portfolio
Jun 13 2013, 21:08
By Michael Vodicka
Bonds are supposed to be safe investments. But what most fixed-income investors don’t realize is that bonds have rarely been more risky. That’s because with interest rates near record lows, bond prices are vulnerable to huge losses if interest rates rise.
And that’s exactly what they’ve been doing.
May was the fourth-worst month in 20 years for the bond market. Fund-flow data showed aggressive selling in a broad spectrum of fixed-income markets, with the iShares Barclays 20+ Year Treasury Bond (TLT) falling 5.2%, its biggest drop since the financial crisis.
…
From Morningstar:
“IShares 20+ Year Treasury Bond tracks a collection of Treasury Bonds with an average duration around 17 years. The bonds are backed by the United States government, which means that the risk of default is near zero. Despite the absence of credit risk, this fund is still exposed to interest-rate and inflation risk. That is, if inflation or the real rate of return demanded by the market rise, the price of this fund will drop accordingly.”
If you must invest in bonds in this market, then my money is on the shorter durations.
Rising interest rates will greatly erode the capital appreciation component of bond with long durations to extent that that you may incur capital losses.
If old man inflation blows in for a visit, then you’re really hosed as a long term bond investor.
May 30, 2013, 9:24 A.M. ET
Mortgage Bonds Slump As Mortgage REITs Dump Them
By Michael Aneiro
Mortgage bonds are limping toward month-end after a sharp sell-off in May amid broadly rising rates. Al Yoon reports in today’s Wall Street Journal that prices of some mortgage bonds backed by loans guaranteed by government-controlled companies Fannie Mae (FNMA) and Freddie Mac (FMCC) traded at an average 100.97 cents on the dollar Wednesday, down from nearly 105 cents at the start of May. This market has been propped up by the Federal Reserve’s bond-buying program, and increased speculation that this program is nearing an end has undercut mortgage-bond prices this month.
…
traded at an average 100.97 cents on the dollar Wednesday, down from nearly 105 cents at the start of May.
Is this still the paper from houses bought at 2006 prices? These bonds will never be paid back at par. The Fed is going to loose money. ALOT of money
wsj dot com
June 14, 2013
Refinancings Plunge as Bond Yields Rise
A spike in mortgage rates threatens to halt a boom in refinancing that has delivered strong profits for banks over the past two years.
Refis generate all sorts of fees. That’s probably where a lot of the bank profits are coming from.
Treasuries Fall on Speculation of Mortgage-Related Hedge Sales
Susanne Walker and Anchalee Worrachate, ©2013 Bloomberg News
Published 6:17 am, Tuesday, June 11, 2013
June 11 (Bloomberg) — Treasuries tumbled on concern the biggest monthly surge in yields since December will prompt investors to sell government debt as a hedge against losses on mortgage bonds as borrowing costs climb to a 14-month high.
Yields on the 10-year note, which serves as a benchmark for mortgage and corporate loans, rose for a third day on the risk the increase will lead to an even bigger surge as investors place bearish bets to protect against housing-debt losses triggered by rising rates, a practice known as convexity hedging. San Francisco Fed President John Williams said last week a “modest adjustment downward” in the buying is possible as “early as this summer.” The U.S. plans to sell $32 billion of three-year debt today, part of $66 billion of notes and bonds this week.
It’s the “liquidation of mortgage paper, which needs to be hedged because of convexity fears,” said Thomas di Galoma, senior vice president of fixed-income rates trading at ED&F Man Capital Markets in New York. “People need to hedge out risk. That’s where the selling pressure is coming from.”
…
Are we witnessing a race to the exits out of long-term debt instruments, or does this merely appear to be the case?
wsj dot com
June 14, 2013
Foreigners Sell Record Amount of Treasurys
Foreign investors sold $30.8 billion of long-term U.S. Treasurys in April, a record amount amid signs that the American economy would continue to recover and as Federal Reserve officials talked about tapering its bond-buying operations.
ASIA MARKETS
Updated June 14, 2013, 5:04 a.m. ET
Weak China Bond Uptake Adds to Funding Concerns
By SHEN HONG
In a rare failure, China was unable to sell all of a government bond to banks Friday, heightening concerns about a severe funding squeeze in the money market that has sent interbank borrowing costs soaring.
Banks have been short of cash since the end of last month, as they kept more funds to meet regulatory requirements. But the liquidity crunch worsened recently as customers yanked out deposits ahead of a three-day holiday earlier in the week, pushing a seven-day benchmark for interbank funding costs up to 6.87% Friday from 6.39% Thursday and 4.8% two weeks ago.
The lackluster demand for the debt sold by the Ministry of Finance deals a fresh blow to China’s already-beleaguered financial markets, which have been hit by the slowing economy. Stocks slumped to their lowest in six months this week, and the currency weakened from a record as global investors pulled money out.
The Ministry of Finance last failed to sell an entire bond almost two years ago, and this time sold just 9.53 billion yuan ($1.55 billion) of 273-day government bonds, well below the originally planned size of 15 billion yuan, traders participating in the auction told The Wall Street Journal Friday. The government also had to pay more to borrow, with the yield at 3.76%–far higher than the 3.14% on similar bonds currently being traded.
“Tight liquidity is the main cause for the ministry’s failure to complete the bond sale today. The high funding cost in the interbank market has made such investments even less popular,” said Yan Yan, senior trader at China Guangfa Bank.
…
wsj dot com
June 14, 2013
Euro-Zone Risks Return to Fore
The turbulence rattling global bond markets is unmasking an unpleasant notion in Europe: The euro zone’s problems aren’t solved.
Yawn…
Global stock markets shed trillions in value since May
Andrew Burton/Getty Images
A trader works on the floor of the New York Stock Exchange during morning trading on June 11, 2013 in New York City.
Interview by David Brancaccio
Marketplace Morning Report for Friday, June 14, 2013
Markets, thy name is volatility. Financial markets have been on a bumpy ride recently. The VIX, a widely-used measure of market volatility, has rocketed up nearly 30 percent in a month. Part of what’s moving traders is uncertainty about the Fed’s next moves. But a number of key factors around the world have investors bracing for more sharp peaks and deep valleys.
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Income inequality in the U.S. more closely matches that in Uganda than in the United Kingdom. And it’s getting worse.
Here’s a sample of what it shows:
Income inequality is increasing in 14 advanced economies including the U.S., but the U.S. is by far the worst. Its bar on the graph literally wouldn’t fit on the same chart as other developed nations, so it wasn’t drawn to scale.
The American middle class continues to shrink, falling from 61 percent of the population in 1970 to 51 percent in 2010; median income declined 5 percent over that period, adjusted for inflation.
From 2007 to 2011, average U.S. CEO pay among the largest firms grew by 10 percent. In 2011, it was 508 times larger than the compensation of the average employee, far higher than in any other country examined. The next closest was the U.K., where it was 228 times the average.
http://finance.yahoo.com/news/u-income-inequality-gotten-even-225745761.html;_ylt=A2KJ2UYjKbpRqDkAwXTQtDMD
The middle class in the US has borrowed itself into oblivion. When the debt donkey wagon breaks down, it’s contributes to income inequality. It was one 4ell of a party though.
Boston parking spaces sold for $560,000
It’s exclusive Back Bay real estate. Two tandem parking spaces behind a building on Commonwealth Avenue, all asphalt with an alley view.
And they sold Thursday on auction for $560,000.
Too many cars and too few parking spaces make it so valuable.
It’s like a diamond that comes to auction that you’ve never seen before.
They are two spaces in one, and Betsy James was a loser in a bidding war that started at $42,000.
“I came in with a strategy to jump out of the box right away and start bidding. I was totally outbid,” James said.
She said she was willing to pay $130,000 for two spaces, which may still seem like a lot of money.
On the street, $560,000 would go a long way.
Think of what it costs to park a car in the area: $1.25 an hour. At that price you could park for 448,000 hours or 18,666 days.
Do these parking spaces have a view? Maybe a view of the ocean? If so, then maybe they are worth every cent.
Maybe everybody wants to park there.
(sarc)
Here’s one of the reasons for parking problems in the Back Bay:
Back Bay’s Tower of Wealth
Originally published in The Boston Globe
September 29, 2008
David Filipov (Reporter, The Boston Globe)
When the Mandarin Oriental, Boston, a $300 million luxury hotel and residential complex, opens next week, the city will see an overt expression of wealth like it’s never seen before - and something that seems immune to the financial crisis bedeviling most Americans. It’s not only an entirely new level of opulence in luxury housing, but also a manifestation of a profound change in the way this city expresses its wealth.
The least expensive of Mandarin Oriental’s 49 condominiums runs $2 million; the priciest is $14 million. All sold when they were but a glint in the developers’ eyes, to buyers who saw nothing more than floor plans. The residences are like 49 urban versions of Weston mansions that somehow fit into two 14-story towers that rise above the hotel and a retail arcade. The developers, Robin A. Brown and Stephen R. Weiner, believe that the arrival of Mandarin Oriental - a fixture in such cities as New York, Geneva, London, and Tokyo - is a sign that Boston has hit the big time.
“We’re right in with the major cities of the world,” Brown said during an exclusive tour of the 490-foot-long complex before he hands over the keys to the new owners.
What does it say that so many super-rich people want to live under one roof, in a complex with hotel service, and located above Gucci, Italian fine linens purveyor Frette, and restaurant extraordinaire L’Espalier?
Over the last two decades, the booming technology and (until recently) financial industries have put large amounts of wealth into the hands of entrepreneurs, who tore down the old houses in the rich suburbs and built newer, bigger ones. Developers began building luxury condominium complexes, like the Ritz-Carlton and Atelier 505, around Boston.
You don’t expect the uberrich to be leaving behind the rare parking spaces for the proles do you?
Also, this article was written in 2008. Can anyone report how these places have fared since?
On the street, $560,000 would go a long way.
Think of what it costs to park a car in the area: $1.25 an hour. At that price you could park for 448,000 hours or 18,666 days.
It’s the car version of rent vs. buy! But math is not the reporter’s strong point. The $560K is for TWO spaces. If parking for “a” car is $1.25 per hour, then parking for two cars is $2.50 per hour. That’s only 9,333 days (25 years).
And that’s if you bought cash. Now, if you financed that purchase with 20% down and a 30-year fixed-rate 3.7% loan, you would pay $751,496 for those spaces. That would pay on-street for parking for two cars for 12,525 days (34 years).
Assuming the “rent” for cars didn’t go up.
They’re not making any more parking spaces, so she’s being smart… They will be worth $2M in 5 years when the Chinese start buying in Boston and they need spaces to park their Maseratis
I don’t think they care what it will be worth in the future…They want it…They can afford it..They buy it…Thats what wealthy people do…The fricken money comes in faster than they can spend it…
As an aside, I have concluded that is exactly what is happening here in our valley and driving prices…
For heaven’s sake. It isn’t about the equivalent cost of paying $1.25 and hour for street parking. It is about not having to go looking for street parking. And not having to deal with parking when all on street parking is forbidden (street cleaning hours, snow emergencies, etc.). And not having to be always doing whatever it is that is required for the street parking (old version - feeding quarters in the meter every two hours, modern version - having to do something with your cell phone that pays for the parking but probably not being allowed to simply remain in the space indefinitely).
Is it an absurd amount of money? Of course. But having off street reserved parking isn’t the equivalent of street parking.
Tin Foil hat time.
Is the government’s reaction to Snowden because he’s giving up “secrets” to the terrorists/enemy?
Or is it because the NSA has swept up enough data to put about 85% of the business/financial/government leadership in jail?
Note that our politicians for the most part don’t seem to be too upset about all of their electronic communications being stored somewhere, ready for someone to use/misuse. Kinda makes you wonder if they don’t believe they have anything to worry about, as long as they keep their toes in line.
they don’t believe they have anything to worry about, as long as they keep their toes in line ??
Or it may be; Go ahead…Cut my budget and see what happens…
Just one of the scenarios that could happen…….
Notice also how they have co-opted the congressional oversight panels. No Congressman wants to admit he doesn’t know (or worse, doesn’t care) what’s going on. So he pretends that he knows what’s going on, and the intelligence agencies pretend that he does.
Why is the US supporting religious terrorists fighting against the democratically-elected secularist government of Syria?
Why do Americans, with the greatest technological research machine ever known to mankind at our disposal, allow a dinosaur like Big Oil to dictate our foreign policy and trash our economy with their endless wars of acquisition?
‘Why is the US supporting religious terrorists fighting against the democratically-elected secularist government of Syria?’
Sticking to the plan:
‘A Clean Break: A New Strategy for Securing the Realm (commonly known as the “Clean Break” report) is a policy document that was prepared in 1996 by a study group led by Richard Perle for Benjamin Netanyahu, the then Prime Minister of Israel.[1] The report explained a new approach to solving Israel’s security problems in the Middle East with an emphasis on “Western values”. It has since been criticized for advocating an aggressive new policy including the removal of Saddam Hussein from power in Iraq, and the containment of Syria by engaging in proxy warfare and highlighting their possession of “weapons of mass destruction”.
‘Israel can shape its strategic environment, in cooperation with Turkey and Jordan, by weakening, containing, and even rolling back Syria. This effort can focus on removing Saddam Hussein from power in Iraq — an important Israeli strategic objective in its own right — as a means of foiling Syria’s regional ambitions.’
‘In 2006 Sidney Blumenthal noted the paper’s relevance to potential Israeli bombing of Syria and Iran, writing that “In order to try to understand the neoconservative road map, senior national security professionals have begun circulating among themselves” the Clean Break “neocon manifesto.”[9] Soon after “Taki” of The American Conservative wrote that “recently, Netanyahu suggested that President Bush had assured him Iran will be prevented from going nuclear. I take him at his word. Netanyahu seems to be the main mover in America’s official adoption of the 1996 white paper A Clean Break, authored by him and American fellow neocons, which aimed to aggressively remake the strategic environments of Iraq, Palestine, Lebanon, Syria, and Iran. As they say in boxing circles, three down, two to go.”
http://en.wikipedia.org/wiki/A_Clean_Break:_A_New_Strategy_for_Securing_the_Realm
Ya think?
Thanks for having the gonads to publicly state the unpleasant obvious. Also blatant is the media’s shameless flogging of this who-gives-a-**** non-story every night for the last eighteen months. John McCain and other reliable tools of the military industrial complex to the contrary, there is no compelling case for this intervention other than the political concerns of the conservative faction of the State of Israel.
We tried this once before with Saddam Hussein, and the resulting fiasco bankrupted our country. Where can we possibly go from here? …..
Oh. Never mind….
Dear stock market: Hurry up and crash already
or
The signs of a dead-cat bounce
or
Rebubble Trouble
Scroll up…
Global stock markets shed trillions in value since May
Andrew Burton/Getty Images
Should I buy a house, stop paying the mortgage, pay the taxes and… wait?
How is the municipal debt doing these days? Not a peep in the MSM.
Other than Stockton and San Bernadino I have not heard of any other city going bk.
How many U.S. cities are set to or already in the process of stiffing creditors?
Fixing Detroit is simple as pie:
1) Wipe out the creditors.
2) Ruthlessly expunge criminal enterprise.
3) Get federal monies to fund shovel-ready projects to clean up toxic industrial waste sites.
4) Sell off all unclaimed property at no-reserve auction to the highest bidder.
The city could be back on its feet in under a decade from now.
Detroit’s Creditors Are Asked to Accept Pennies on the Dollar
By STEVEN YACCINO
Published: June 14, 2013
DETROIT — The emergency manager who was sent to reverse the fortunes of this financially troubled city asked some of its creditors on Friday to accept pennies on the dollar as he laid out his plan for tackling Detroit’s staggering debt, kick-starting negotiations that could determine whether the city is headed to bankruptcy court.
Presenting a grim take on the city’s fiscal standing in a closed-door meeting, the emergency manager, Kevyn Orr, a bankruptcy lawyer from Washington who was appointed in March, made a case to dozens of bondholders and union leaders that deep cuts alone cannot save Detroit. He said that painful sacrifices must be shared.
“This is not meant to be a hostile act,” Mr. Orr said at a news conference in which he discussed the session. “It isn’t meant to be combative. It is meant to be an acknowledgment and recognition of the realities that we can no longer deal with.”
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Is the global housing bubble still inflating at this point?
House price falls worsen in Greece and Spain
A world league table of property markets has shown values are falling fastest in southern Europe, as a recovery gathered pace in major markets across the globe.
Elounda Gulf Villas in Crete
The price of property in Greece tumbled by nearly 12pc in a year
By Andrew Oxlade
11:41AM BST 10 Jun 2013
Prices in Greece, where the economy has been crippled by the weight of government debt and by austerity measures, fell by 11.8pc in the year to the end of March, according to estate agency Knight Frank.
The rate of decline worsened from 9.8pc a year earlier.
Other countries in the so-called PIIGS countries - Spain (-7.9pc), Portugal (-6.9pc), Italy (-4.1pc) and Ireland (-3pc) - were also among the weakest markets (see the table below).
The fall in the value of Spanish propery was marginally worse than the year before when it was 7.3pc.
Ireland’s fall, however, was a vast improvment from a 16pc plunge the year before.
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Debt slaves, take heed:
UPDATE 2-IMF urges repeal of ‘ill-designed’ U.S. fiscal cuts
Fri Jun 14, 2013 10:34pm IST
By Anna Yukhananov
(Reuters) - The International Monetary Fund urged the United States on Friday to repeal sweeping government spending cuts and recommended that the Federal Reserve continue a bond-buying program through at least the end of the year.
In its annual check of the health of the U.S. economy, the IMF forecast economic growth would be a sluggish 1.9 percent this year. The IMF estimates growth would be as much as 1.75 percentage points higher if not for a rush to cut the government’s budget deficit.
The IMF cut its outlook for economic growth in 2014 to 2.7 percent, below its 3 percent forecast published in April. The Fund said in April it still assumed the deep government spending cuts would be repealed, but it had now dropped that assumption.
Washington slashed the federal budget in March, adding to the drag on the economy created by tax increases enacted in January.
The IMF said the United States should reverse the spending cuts and instead adopt a plan to slow the growth in spending on government-funded health care and pensions, known as “entitlements.” The Fund would also like the United States to collect more in taxes.
“The deficit reduction in 2013 has been excessively rapid and ill-designed,” the IMF said. “These cuts should be replaced with a back-loaded mix of entitlement savings and new revenues.”
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