‘Barely Scratching The Surface’ For The ‘Vital Public Trust’
Some housing bubble news from Washington. “Worried about the potential for inflation to get worse, Federal Reserve policy-makers at their May meeting considered raising a key interest rate by half a percentage point before opting for a quarter-point increase.”
“(Economist) Douglas Porter said there were no major surprises in the notes given recent signs of economic strength and high oil prices. However, ‘the overall impression the minutes leave is that there’s a bit more concern about inflation that in previous minutes,’ Porter said. ‘I think it comes across loud and clear that these concerns are starting to weigh heavily on the Fed’s members.’”
And on Fannie Mae. “Fannie Mae and Freddie Mac should retain records to allow regulators an on-demand look at the books of the two big mortgage companies, a federal agency said Wednesday. Rep. Richard Baker said he hopes that the Ofheo report will spur legislation tightening rules on the companies, which buy mortgages and free up lending capital at banks.”
“‘OFHEO’s examination of Fannie Mae revealed breaches of propriety and judgment so deplorable in nature and pervasive in reach that it’s almost as if we were barely scratching the surface,’ Baker commented Wednesday.”
From the USA Today. “In early 2004, Fannie Mae’s then-CEO Franklin Raines came to USA TODAY to talk to editors and reporters. He was furious over an editorial that had run a few days earlier criticizing his company for, among other things, its ‘questionable accounting practices.’”
“With barely a ‘good morning,’ Raines launched into a criticism of the editorial and a defense of his company.”
“Last week, government officials said the company engaged in ‘extensive financial fraud’ by doctoring earnings so Raines and other executives could earn ‘unjustified levels of compensation.’”
“These are extraordinarily damning assertions. They show a company whose top executives were contemptuous of criticism and imbued with a sense of entitlement to enrich. According to the report, Raines pulled in more than $90 million in his six years as CEO, $52 million of which was performance pay triggered by bogus accounting.”
“Fannie Mae is no average company. It has a standing letter of credit from the U.S. Treasury. It is exempt from many of the reporting requirements of other public corporations. It can borrow money at lower interest rates than other companies can.”
“It also creates special risks. The company, which pours money into the housing market by buying millions of mortgages from banks, is crucial to the functioning of the economy. For that reason, taxpayers would almost certainly be called on to bail it out if it ever got into serious financial trouble. That makes an honest accounting of its profits, assets and liabilities a vital public trust.”
“That is not what the public got under Raines and his associates. The company overstated its earnings by $10.6 billion over six years. When people questioned the company’s extraordinarily complex accounting, they were treated to angry rejoinders reminiscent of those delivered by Enron executives at their arrogant heights. When lawmakers or government officials argued that the company needed tighter oversight or fewer privileges, they were outgunned by Fannie’s lobbying machine.”
“The battle against corporate fraud did not end with the Enron verdicts last week. Federal agencies are still evaluating whether to bring civil or criminal charges against individuals. These are not pleasant things to contemplate. But they are the facts.”
‘For that reason, taxpayers would almost certainly be called on to bail it out if it ever got into serious financial trouble. That makes an honest accounting of its profits, assets and liabilities a vital public trust’
I would add that the public also has a stake in FOMC actions, including keeping rates so low for so long that housing turned into a crap shoot and the savings rate went negative.
“keeping rates so low for so long”
You know Ben, while it was occuring we couldn’t get anybody to see the logic of that. Listening to us now probably won’t do much good. This is one part of the HB where saying “I told ya so” isn’t going to make me feel any better.
Being right doesn’t make me feel any better.
Making money for being right does.
I learned awhile ago now to shutup and put my money where my mouth is. I don’t need to prove anything to anyone. Fear of losing my money keeps me humble and positive results keep me validated.
Yeah it is going to be a hollow victory though for us housing bears if this thing drags us into a recession like I think it will.
here here!
Also, kudos to the USA Today for spelling it out, although it is disappointing to see them talk about a bailout.
The government doesn’t have any money for a bailout.
Here, we’ll bail you out Fannie, just as soon as we can borrow a few hundred million more from the chinese.
America is now in a very sorry state. The National Debt has almost doubled under Bush. The public has a net negative savings rate. Promised but unfunded Pension obligations total over half a million dollars per family. Real Estate is primed for a decade long bust.
Can you say “Second Great Depression”?
Don’t forget the govt still has a printing press and lots of helicopters…
Yes, but cronies on both sides will be given helicopter flight paths and exact drop coordinates.
They’ll be heading home with full trash bags right around the time the general public gets a report the helicopters are taking off.
Next thing you know, Wall Street traders will form a cargo cult…
“The National Debt has almost doubled under Bush. ”
More then doubled, Bush doubled it in his first term, he created more debt then all the other presidents combined.
And unbelievably, there is a minority of blind who will $hit all over themselves defending his failed policies all in support of a warped economic dream called “trickle down” economics.
Suzanne researched that.
Actually, I have never believed that el Presidente’s economic policies have failed. The rich have gotten richer, the poor, poorer. Sure, there were a few sacrificial lambs a long the way (sorry, Kenny Boy, guess all those campaign contributions weren’t such a good investment after all), but that was the plan all along. When people say his policies “failed” they’re just assuming that his policies were intended to promote a healthy economy that benefited everyone. Ha hah hahhha ha.
Mooph - ain’t that the truth…
Tickle down was coined during the Reagan administration, and if I remember correctly, it was based on tax cuts and spending cuts (Reagan tried to cut spending but did not have much cooperation from Congress) along with a FED that took on the inflation beast that was rearing its ugly head after the Vietnam war. It pushed us into a needed recession which coined the phrase “Stay the course”.
To associate Bush with “Trickle Down” is not fair to Reagan. Bush is no Reagan conservative.
Remember, the FED may never use the phrase “Trickle Down” but the FED is exactly where it all trickles from.
Lingus never lets knowing what he is talking about get in the way of saying something. His posts are modern day versions of Mein Kampf.
i would vote democrat however those gun robbing pinko fags will have to remove my 30.06 from my dead cold hands.when they support the constitution and endorse gun rights they will get my vote.
Don’t fret. Your guns will be taken from you….. and there is nothing you can do about it.
try it bitch
Don’t be so angry. Besides, it won’t be me taking your little peashooters away…. but I’ll be standing there laughing at you when it happens.
Don’t despair—suicide remains a popular option for gun owners. Something for the rest of us to look forward to.
Comment by Moopheus
2006-05-31 16:39:19
Don’t despair—suicide remains a popular option for gun owners. Something for the rest of us to look forward to.
________________________________________________
Amen…. one less gun freak, the better.
Amen? That indicates the conclusion of a prayer. To what God do you pray that someone would take their own life?
Gee wiz. You’re right. I asked for forgiveness. I’m now forgiven. Thank you for pointing that out.
Only if you mean it.
And telling people how to pray….Typical right wing looney…
Where ya been Lingus? Work release? Nazi Punk…..
And another coward slithers out from a rock….. huh feep…;)
“To what God do you pray that someone would take their own life?”
“SAVE THE PLANET—KILL YOURSELF
Lets hope they accept gun nuts for membership.
Yeah but I just saved a bunch of money by switching to Geico.
The Mess that Greenspan Made had a funny fake document from John Snow.
It was from last fall it suggested borrowing a couple of hundred billion and then going BK before the BK laws changed last October.
It was pretty funny, if it weren’t true.
Can you say “Second Great Depression”?
I agree. I’ve been thinking maybe we should come up with the name for the next depression. How did they name the “Great Depression?” Were there others preceeding it that weren’t so great?
How about “The Pretty Good Depression”
> How did they name the “Great Depression?”
Before WWI, busts were called a Panic - to avoid that word, the downturn was called just a “depression”. The Great came afterwards.
Worried about the potential for inflation to get worse, Federal Reserve policy-makers at their May meeting considered raising a key interest rate by half a percentage point before opting for a quarter-point increase.”
They mulled, the pontificated, they chewed a collective cud, and in the end they did exactly what everyone expected. This is not leadership, and anyone who expects the Fed to get us out of this predicatment should reCONSIDER their stance.
A bunch of clowns at the round table. Greenspam is responsible for all the mess we have now.
if they raised .50 basis pts this mess would have been over a year ago, perhaps bernake has some huevos.
More, Ben -nysar press release is out - dated May 25 but not released till this week-
http://www.nysar.com/releases/april06stats.html
From the USA Today. “In early 2004, Fannie Mae’s then-CEO Franklin Raines came to USA TODAY to talk to editors and reporters. He was furious over an editorial that had run a few days earlier criticizing his company for, among other things, its ‘questionable accounting practices.’”
Did the editorial explain how the questionable accounting helped Raines pocket an extra $52m in pay? I hope he follows his soulmates Lay and Skilling into the slammer.
He makes Lay and Skilling look like amateurs. This is a big deal.
100% in agreement with that statement eom.
We should definitely let this guy enjoy all his bonuses in jail. He can buy a pack of cigarettes for one million.
For six months I have been saying this type if behavior is disgusting. Why is this guy not being investigated? He is out enjoying fancy DC clubs on our money.
Something about a pot and a kettle?
Shame on you Mr. Raines, you are slime.
This is kind of off topic but my friend, who bought at the peak says she doesn’t need to worry about interest rates, even though she has an ARM, because she has a cap so it will only go up a little. Is this true for alot of ARM holders?
no - tell her to read the whole contract
no - tell her to read the whole contract
Not worry? No way. She has to worry.
The max cap is per year.
Usually 2%. So for example if it went from say 3% to 5% in 2006. It can go from 5% to 7% in 2007. 7% to 9% in 2008 etc, etc…
It just prolongs the obvious pain if rates go up over many years… Sounds like reason to worry if things ever got back to the rate levels in the early 1980s.
there’s an annual cap of 2% (most), and I believe there’s also a lifetime cap.
Most of the ARMs I’ve seen have an annual cap of 2% per year, with a lifetime cap of around 10%.
A lot of the ARM’s have a yearly payment cap but with most of them you are still being charged the adjusted interest rate based on a index plus a margin .
Ok, thanks. It’s so frustrating because when she bought the house in Dec. 2004- LA- I had been trying to warn her of what I thought was happening in the housing market because I care about her as a friend. Now I feel like my nose is constantly being rubbed in her 200k appreciation. Oh well, I’m sticking to my guns.
200k appreciation may become 100k or 50k. Home equity can go down.
Until the house is actually sold, and the money is in the bank, she can run around claiming to be a multi-millionaire due to the “appreciation”. Tell her to sell the house, and show you the money. Until then, don’t let it get to you at all. It’s nothing but toilet-paper money, worth nothing more than wiping your ass with at this point.
$200k since 2004 is fantasy money. She may have 200, 100, 0, -100. We’ll see when she sells.
As devil’s advocate, some do have actual long-term caps. I’ll still take my 5 5/8 fixed though.
Right, but that cap is usually in the 5% range and usually doesn’t take a into account any initial “teazer” rate. Thus, say, a 4.5% ARM could typically have a lifetime cap of 9.5% or a little more. In other words, it could go up enough to cause a stretched borrower a lot of pain.
I blogged this at my foreclosure site:
‘But aren’t people making a lot more money today than they were back in 1989? ‘
‘Well, yes. In 1989, the median income in Texas was $34,700. In 2005, it was $54,000. That’s a 55 percent rise in median income over 16 years, which equates to a 3.4 percent increase every year. But that’s only half the equation. In 1989, the average value of a home in Texas was $86,100. Today, that number is $183,000. That works out to 112 percent, or 7 percent a year.’
‘What that means is the cost of the home has increased at double what incomes have’
I don’t think those income numbers are inflation adjusted, either. Looks like real wages have been falling for over 15 years in Texas.
Hate to see what that analysis would look like for California…oh wait, I know, there’s this guy in San Diego…Toscano or something. Yeah, he has information
But low wages are “good for the economy”. At least that’s what the wacky group of warped ones who worship at the altar of “supply side” economics embrace.
Low wages are better than no wages. Just ask any of the millions coming to this country to work their behinds off doing jobs that Americans refuse to do.
You can blame government, apporpriately, for making things worse with financial mismanagement, and blame Americans for demanding their entitlements, but the real problem is billions of starving Asians willing to work for a fraction of what Americans will, thereby sucking our jobs overseas. Instead of facing the problem head on, we are borrowing temporarily to finance our lifestyle.
Yes….. you should work for less…
…”jobs that Americans refuse to do.”
That is not true. Americans are perfectly willing to do the jobs as long as they are PAID a responsible wage to do so.
Comment by weinerdog43
2006-06-01 09:51:45
…”jobs that Americans refuse to do.”
That is not true. Americans are perfectly willing to do the jobs as long as they are PAID a responsible wage to do so.
________________________________________________
The problem with that is that it flies in the face of the failed trickle down (trickle on) economics so stupidly embraced by the blind. Their entire premise is to get everyone slaving away for $5/hr.
“Fannie Mae is no average company. It has a standing letter of credit from the U.S. Treasury.”
That is what makes Fannie such a perfect place for a scam-artist-CEO to work. At the end of the day when the house of cards tumbles down, the taxpayers will have the pleasure of paying for the damage.
——————————————————————————-
Finance & Economics
Fannie Mae
A ton of bricks
May 25th 2006 | NEW YORK
From The Economist print edition
Regulators take an American mortgage giant to task
ON MAY 24th, after three years’ work, American regulators published a blistering, 340-page report on Fannie Mae, a giant, government-sponsored mortgage company. Fannie Mae, which had repeatedly overstated its profits, has been fined $400m and has agreed to a list of restrictions and reforms.
The Office of Federal Housing Enterprise Oversight (OFHEO), Fannie Mae’s main regulator, found that the company had bloated its profits between 1998 and 2004 so that its bosses qualified for bigger bonuses. Of the $90m paid to Franklin Raines, the then chief executive, $52m was linked to profit targets. OFHEO also says that Fannie Mae used its huge political influence to thwart efforts to regulate it more tightly and that its internal controls and accounting systems were shoddy. The company’s board and managers, says OFHEO, created an “arrogant and unethical corporate culture” in which “the ends justified the means”. Fannie Mae’s reputation as a well run, low-risk company was a “façade”.
Fannie Mae has agreed to improve its internal controls, accounting and risk management. Until it does—which could take years, says James Lockhart, the acting director of OFHEO—Fannie Mae must limit its mortgage portfolio to $727 billion, its size at the end of 2005.
The company may have further difficulties to face. OFHEO’s report adds fuel to efforts in Congress to contain Fannie Mae and Freddie Mac, its twin mortgage giant. Lawmakers and others fear the pair could pose a risk to the stability of America’s financial system, because of the sheer size of their balance sheets and the market’s belief that they, in effect, enjoy a federal-government guarantee. The Department of Justice, too, is investigating Fannie Mae’s accounts. And the $400m settlement covers only the company, not its former executives, who are not yet out of the woods.
Eileen Fahey of Fitch Ratings, a credit-rating agency, points to a few crumbs of better news. Fannie Mae has already done some of the things that its regulators wish. With the mortgage market slowing and borrowers moving out of the fixed-rate mortgages that are Fannie Mae’s bread and butter to adjustable-rate or other loans, Fannie Mae will be less affected by the cap on its mortgage assets than it could have been.
The cap could benefit Freddie Mac, the smaller of the two. Freddie Mac was also found to have misreported its earnings, but because its scandal came to light earlier, it has done more cleaning up. It also understated its profits, rather than overstating them. Last year Fannie Mae sold a lot of mortgage assets to meet its new regulatory capital requirements. Now the balance sheets of the siblings are almost the same size.
HOV after the bell! Looking forward to their SPIN!
I really get frustrated when they say that the GSEs are critical to the functioning of the economy. It’s not like banks couldn’t make loans without them. All the GSEs have really done is fuel house price inflation and collect more interest than ever from the public and transfer it to institutions and foreign central banks.
I’d say it’s more accurate that the GSEs have become a critical drag on the economy by vacuuming money from the productive economy into the financial services industry. The GSEs have transfered the average new buyer from one with a nice home and a modest mortgage to a one with a modest home and a huge mortgage. That’s not progress, and it’s not necessary.
Amen to that! We need to hear more folks shouting it from the rooftops. I just may get my wish.
Good point, Climber. People forget that for decades the average middle-class worker could save a little, make a down payment and then, without too much stress, make monthly mortgage payments at a fixed rate.
It’s only relatively recently that buying a house would stretch most buyers to the very limits of their finances. This comes from the dark side of capitalism in the information age.
Businesses are very sophisticated at manipulating the market so as to extract maximum income from consumers. They have a lot of political power and a lot of propaganda power thru advertising.
The average joe just goes with the flow. And recently the flow has led him into buying a huge house that he can’t afford.
Most people’s biggest exspense is taxes. Social security used to be less than 1%. Now it’s around 15%. Figure in local, state, and federal taxes, it’s a wonder anyone gets by.
Excellent point Climber
exactly. What did people do before Uncle Sucker got into the mortgage business?
And then to have the agency looted by the CEO? The guy’s a thief (no different than someone who robs a gas station) and should do hard time for his crimes.
What is GSE? and what they do?
Government Sponsered Entity. Quasi private government entity.
Government Sponsored Enterprise
(or was it Government Sanctioned Embezzlement?)
Funny.
From Wikipedia
http://tinyurl.com/puafu
thanks,
Don’t forget the role of GSEs in overallocating investment into the housing sector. The excess supply of built housing and reconfiguration of our productive economy to align with fundamental demand will take years to work out.
Yes! this is exactly what I’ve been thinking. All this organization has done is to help drive up the price of homes. Who needs it?
It’s just one more link in the chain of lending that results in high home prices. The more of those links we can cut out , the better.
I know this isn’t gonna happen, but can you imagine how cheap homes would be if we had to pay cash for them?
For those who don’t know it yet, China’s got new rules on lending for RE: 30% downpayment and 5 years to hold or you get taxed at a higher level. Goal is to cut the speculation in the market before it infects the whole country.
I’m thinking they learned their lesson the easy way, by observing our mess.
Thanks for the FNM news Ben and others. This is one to watch!
One of our Seattle specuvestors (seattlerei.blogspot.com) is having a hard time getting loans right now. I wonder if the lending industry is in the beginning stages of caring who they lend money to?
Was talking to an elderly neighbor today and out of the blue he says “the 30’s are coming back”. I said, “what makes you think that?” He said “debt and bad credit”.
Think I’ll have him and his wife for dinner one night next week. Interesting that just about the only people out there who are seeing this for what it is are 85 years old and have seen it all before and know it can happen and why. They’re ready.
Who kept their mouth shut? Who helped Raines? Are they still at Fannie Mae?
WTF do people in government and gse organizations that fail miserably get to keep their jobs?
WTF do people in government and gse organizations that fail miserably get to keep their jobs?
Or their 90M in bonuses, or their freedom?…These people need to
be on a chain gang!
Raines: Dyed in the wool Clinton Democrat.
I say this not to defend Republicans. I say this to point out BOTH sides are corrupt.
Yes, and I’d like to know why the GOP doesn’t have a raging hard-on for his downfall.
Comment by Comrade_Chairman_Greenspan
2006-05-31 13:44:21
Yes, and I’d like to know why the GOP doesn’t have a raging hard-on for his downfall.
__________________________________________________
That’s easy. The GOP is rife with corruption and thievery. It took them 70 years to gain 3 branches and only 7 to lose it for embracing a failed economic policy and corruption.
Say what you like about “failed” supply-side economics, but the fact remains that nobody, yet nobody is proposing going back to the Keynesianism and “industrial policy” of the 1970s. Virtually the entire world (with the possible exception of certain poor doomed dumb Latin American banana republics) recognizes that government can’t press too heavy a hand on the economy without squashing it. That recognition is the essence of supply side theory. Even the Scandinavians have downsized their command-and-control systems.
It certainly seems to be the case that for at least the last 30 or 40 years, there’s been almost no real correlation between tax rate changes and growth.
You can twist, duck and weave all you want but it will never change the fact that supply side economics have proven to be an utter failure in established economies that have implimented said policy. And you’re inference that those countries that don’t embrace those failed economic policies doomed and dumb is sheer malarky.
You might want to go to work for the FED. They’re the perfect example of repeating lies in a failed attempt to get the public to embrace said lies.
failure compared to what? communism?
Bait and switch doesn’t work for you desperate economic liars anymore…..
Try again.
garcap asked a fair question.
Just can’t come up with an honest answer huh?
Kind of like asking which candidate is best suited for office? You amateurs need to try a little harder.
The Chinese seem to have figured out how to make communism profitable.
Good point! Those pinkos are in the process of whoopin our supply side A@#!
We already have communism. Its called trickle down. We subsidize business, fire the referees and then wonder why all the financeers have resorted to pump and dump strategeis on steroids and criminal conduct. Capitalism is for the working class in this country-we get our asterisks kicked. But the corporate class is our mentor and we will rush with them to the bottom if given the chance. Bring back the ethics and the referees.! Terms like communist and pinko and all that BS are so 19th century. Get over it! Marxism IS a form of CAPITALISM!!
Raines is no longer at FNM. But he is enjoying his 90mil. Yours and my money.
Well for the sake of argument, for 30 odd years they worked pretty well at increasing liquidity in the mortgage market without causing huge (real) appreciation in house prices. What got them into trouble IMHO was the huge interest rate swings from the late 70s on. These have simply been bad times for issuers of extreemly long term debt.
Well Armando Falcon spoke up and look what happend to him. He issued a report on the GSE’s and systemic risk and was out the door before you could say boo.
OT… More job cuts for California…
—————————————————————————-
Sun Micro to shed up to 5,000 jobs in company restructuring
By Rex Crum
Last Update: 4:42 PM ET May 31, 2006
SAN FRANCISCO (MarketWatch) — Sun Microsystems Inc.
said Wednesday it will cut between 4,000 and 5,000 jobs over the next six months as part of a company restructuring plan. The computer server and software developer also said it would sell its campus in Newark, Calif., and its leased facilities in Sunnyvale, Calif. The company said the moves would result in savings of between $480 million and $500 million annually.
Damn I was going to buy their stock on this rumor (buy the rumor, sell the news.) Too late now!
This will not bode well for the silicon valley and SF area in terms of housing.
Depends upon who you ask. I really feel for that 5k who are about to get the hose, but a 30-50% crash in Bay Area real estate would make a lot of people happy. Too many poor stiffs have been priced out or paying inflated home prices because of a few Megabubble IT DINKs for too long. If a bunch of BA tech folks take it in the shorts, that phony tech bubble -> house bubble money boil will be lanced for good. Folks will have to go back to earning their fortunes.
and now a return to the 70’s inflation! This downturn of the cycle is going to hurt.
http://www.canada.com/vancouversun/news/business/story.html?id=716e1bb6-b276-441a-bcbc-a62f75e2170b&k=1535
So much for driving up to Canada to buy stuff cheap. Looks like you guys will be coming down here to do your shoppping for a while. 10 years? 20?30? maybe for ever more.
Seems like only yesterday it was 60 cents=1 Canadian dollar. 91 cents is hard to believe.
Here we go again.
Only 5K in cuts? Well, Jonathan Schwarz was always an idiot in my book. They need to shed a lot more than 5K. Good luck Sun, hope you make it.
Larrry Kudlow just said the Fed is more hawkish than people assumed, given they thought about a 0.5% rate hike. Seems to me, if they had done it, maybe I could agree with Larry. These 0.25 hikes seem so tiny.
yeah but there have been a lot of them….
Lying Larry is a republiKKKan apologist. Don’t expect any truth to come from his mouth.
And yet if we call Democrats Commies, they all go “Waah” and cry McCarthyism. You’re starting to bore.
Shucking, jiving, ducking and weaving merely makes you look like an apologist. Try again.
I hope that the financial mess this country is headed for makes everybody so f’in mad that both parties are booted from office. If somebody, anybody in either party gave a damn about this country instead of looking at government as some sort of chess match, they would have my vote. Unless people start working together on real solutions instead of name calling we are doomed.
Kudlow is a Wall Street shill who appears to have been enrolled in the Fed’s program of trying to prop up stocks but hammer commodities by “talking tough” on inflation. This is pointless because they’re both fueled by the same thing - grossly excessive liquidity.
If you read the minutes, the Fed also considered NOT hiking rates at all. Previously, this would have been seized on for another silly “one and done” rally.
Anyway, all they can do is inflate, and that’s exactly what they’re doing, despite the yammering. The Fed did another $1.2B heroin injection coupon pass today. The depression that will result from this historic credit spree is no longer acceptable to the American mind. It’ll happen anyway, but not voluntarily.
Comment by Comrade_Chairman_Greenspan
2006-05-31 13:54:03
Anyway, all they can do is inflate, and that’s exactly what they’re doing, despite the yammering. The Fed did another $1.2B heroin injection coupon pass today. The depression that will result from this historic credit spree is no longer acceptable to the American mind. It’ll happen anyway, but not voluntarily.
________________________________________________________
How long will it take for one of the warped supply side economic nutjobs to suggest that “we need more tax cuts to stimulate the economy”. [rolling eyes]
About 15 minutes from now.
We need more tax hikes to stimulate the economy.
We need an economy to stimulate.
Lame sarcasm does nothing the economic failures you desperately hang on to.
You keep telling me I’m hanging onto something. That was a funny, plain and simple.
And please, don’t mention my economic failures. They have been very difficult for me. I totally sold my last car for way less than I should have.
Desperation is a character flaw you really need to let go of.
I know, it’s really hard for me. The other day I split two 7s against a 9. Talk about a failed economic policy.
Seriously, do you even look at what I post? Do you see where I talk about cronies with garbage bags full of cash? Does that sound like apologies for the administration to you? I’m really curious about this here.
No… Your posts reveal you’re a typical tax whiner who is now embarrassed to stand by you man and his failed policies.
Lingus, I would vote for Bush for a third time. We’re at war and you don’t think there’s going to be deficit spending? Since 9/11 not one domestic terrorist attack. Bush tried to cut spending - social security and all the other giveaways. But no dice. You would think all the rich doing gooders - Ted Kennedy, Jay Rockerfeller, John Kerry, George Soros, etc.. would just start a charity and provide free health care and everything else they’re promoting. But you know those hypocrites. They want to do charity but with other people’s money.
Comment by Anon in DC
2006-05-31 18:55:32
Lingus, I would vote for Bush for a third time.
_________________________________________________
At your own economic peril. This is sad.
Lingus, you better believe I whine about taxes.
I don’t look to Bush for help on that and never voted for him.
I think you are actually a kkkonservative trying to make the other side look bad.
It is stimulating the economy…the Chinese economy
LMAO, Maybe communism will still win. When did it become a good idea to export all our industry to a communist country.
I am from Detroit talk about a housing collapse, almost all the property in a city that had a population at 2.5 million at its max went to zero or near zero value.
Lets do it for the whole country.
You know you’re right Will. All those beautiful mansions and brownstones in Upstate NY. Whole cities of properties being auctioned off for a pittance- back taxes.
Those places were once the homes of the wealthy and powerful. They had a LOT of value at one time. Now they can barely GIVE them away.
It could hapen anywhere.
Will, they’e not communists anymore, they’re old-school, robber-baron, damn-the-environment capitalists. And they’ll eat our lunch.
On CNBC (I know…) recently, someone mentioned the M2 growth was only 4%, completely ignoring the M3 (maybe Jimmy Hoffa knows where it is). THANK you for mentioning the ongoing creation of liquidity. It is often ignored by the talking heads. I wish Barron’s would at least show what M3 is up to…
Check russwinter blog for a very believable description of Kudlow modus operandi. He calls him an apparatchiks of the FEDs. Eventually, BB will need to act more and talk less.
5:14pm 05/31/06 Hovnanian sees Q3 EPS $1.40-$1.50 - MarketWatch.com
5:15pm 05/31/06 Hovnanian First Call Q3 EPS est $1.75 - MarketWatch.com
5:14pm 05/31/06 Hovnanian sees FY EPS $7.20-$7.40 - MarketWatch.com
5:14pm 05/31/06 Hovnanian First Call FY EPS est $7 - MarketWatch.com
5:12pm 05/31/06 Hovnanian Q2 rev $1.57B vs $1.21B - MarketWatch.com
on arms,they have annual,and lifetime caps,a world arm thaken out in 04 would have a lifetime cap of 10%,in 2-06 the lifetime cap went to 12%.almost all arms (90% plus)turn over in five years,either refinanced or home sold…so the risk horizon is at 5 years…so if you bought in 04(why an arm,for god’s sake!)expect to be in the home 15 years or more,are comfortable paying 10%,and don’t care about value changes,hey you are fine…rates were very low in 04…why the f get an arm?
Life time cap of 10%? As in 10% more payment? That doesn’t make much sense. You’d have to pay far above market rates to get a cap like that.
Interest rate ie: if your rate is 5% now it can not adjust above 10% for the life of the loan
no brian,the highest the interest rate,not the payment,can go is up to 10%,and went to 12% in 2-06.which means the lender is comfortable with a 2% per annum INTEREST RATE increase(if rates go up) and a lifetime 12% INTEREST RATE cap,the lender knows that historically,all these loans will be paid off in 5 years,refied or home sold.so the period of time the bank considers in evaluating a risk premium is 5 years…a 5 year risk horizon.no matter what your original index and margin are,you will not pay more than the lifetime cap…..until you get that lovely 1099 from the irs after the foreclosure…..but really that’s just a new kind of refi…isn’t it ?start at a 1% i/o teaser rate,just pay interest,and watch your payment increase tenfold in 2-3 years.uuurrrrkk!
Not sure if you understand how ARM loan programs work. Usually they are fixed for a certain period, and then the adjustments are capped afterward, with a lifetime cap ranging anywhere from 5%to 7%. I do agree with you though on the “why the f get an arm” it only makes sense unless you are not planning on keeping the home for a period longer than the fixed period of the loan.
I bought with a 5/1 ARM in March 06. The reason is I expect to be on the way out of the house in 5 years.
Exactly my point, if you sell the house within the next five years you should be fine. Where did you buy?
Does not matter. If you want to be out of the house, you must be able to find a buyer. Would the buyer be able to get a loan for the price you want for the house, at the prevailing interest rate five years from now? If interest is 8% in 2011, that limits the amount the buyer of your house can borrow in 2011.
Do you think that you can find a buyer who is willing to swallow a higher payment and keep the price at 2006 levels? Or do you think the price of the house in 2011 has to come down so that the payment at 8% match the buyers income?
That is a VERY common strategy.
Who are you going to sell to and for what price and can you make up the delta with real cash?
I expect not to have an accident on the way home.
I still have insurance.
Definitely OT, but any thoughts on Henry Paulson? Seems that he’s on-board with the G7 and the Bush administration and everybody else in the frickin’ world who wants to deflate the dollar. It’s spooking me to think that massive inflation really is the get out of jail free card for both the deficit-ridden U.S. gov’t and for the financially overextended U.S. public.
How inflation would help with U.S. deficit and public debt? How does it work? What is the mechanics of it?
The debt is denominated in nominal dollars. Inflation amounts to getting more nominal dollars the easy way (printing relatively more money than the collective value of US goods, services, and accumulated wealth they represent) than the hard way (increase productivity = the value of US output per worker, raise taxes, or cut spending). Inflation is a stealth tax which transfers wealth from those who have money in the bank (creditors, like Asians who bought lots of US Treasury bonds and MBS) to those who owe money (debtors, like most US homeowners and Uncle Sam). If all goes smoothly, then inflation will eat away the real value of scheduled future debt repayments without triggering a disruption in the currency markets.
Ok, I see the logic. However, would not inflation stagnate the economy and consequency less taxes would be collected!
seems to be rather delicate and risky and desperate move.
Its amazing how few people understand this concept. I’ve been saying for years that we’re headed towards inflation, simply because inflation SOLVES the government’s problems.
Inflation favors the debtor. Deflation hurts the debtor.
This game has to end sooner or later, and the sooner-the-better so far as I am concerned. Just as an individual cannot spend at profligate levels forever and stay financially afloat, neither can the US economy at all levels (household, civic — at least in SD, state — at least in CA, and national).
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