Holiday Topic Suggestions
A Turkey Day report from Forbes. “According to the American Farm Bureau, the price of a Thanksgiving dinner for 10 is actually 44 cents less than last year. Affordable food prices represent good news for American consumers as we start the holiday season. Adding to the good news for home owners, housing prices are up about 6% across the country. Many Americans will feel a little bit wealthier this holiday season as their biggest asset has appreciated and costs – for Turkey at least – stay low.”
“Ironically, falling prices are exactly what central bankers around the world are trying to avoid. The immediate focus is on keeping rates low to stimulate the economy, increase growth and reduce unemployment.”
“Using prices for chicken as a stand-in for turkey, I compared prices for cities around the country. There is clearly a huge difference in the prices that families will pay for their Thanksgiving dinner across the country. These changes show differences in cost of living between cities. Many of the cities that have had high annual home price appreciation also had high prices for chicken. Prospective homebuyers in these areas may feel the opposite side of the wealth effect, as both housing and food are increasing rapidly at the same time.”
New York Magazine. “Your family’s conversation at Thanksgiving dinner will probably begin with fairly innocent topics, and move on to slightly more serious ones. But the overwhelming odds are that, sometime between the second helping of turkey and the pumpkin pie, someone at your Thanksgiving table will bring it up: the economy. Lucky for you, when your Uncle Chad (and it’s always Uncle Chad) starts talking about the stock market, the deficit, or Ben Bernanke’s money-printing machine, these handy talking points will help.”
“The subject: Quantitative easing (”QE”). The one-minute summary: Since the financial crisis, the Federal Reserve (the money-think place in Washington) has been boosting the economy by buying a lot of stuff from banks. That program is called quantitative easing. It’s been pushing stock markets to all-time highs, and it’s made a lot of people on Wall Street very rich. It’s probably going to end soon.”
“What Uncle Chad will say: ‘The markets are addicted to easy money, and Ben Bernanke just keeps printing, printing, printing. We’re going to get massive inflation and the dollar will become worthless. You’ll see, it’ll be the Weimar Republic all over again.’ Is he wrong? Yes. There has been no significant inflation since the end of the financial crisis, despite the dire warnings of Bernanke haters. And while QE hasn’t worked perfectly, it’s helped keep unemployment from rising to Depression-era levels.”
“Say this to end the argument: ‘You know, Uncle Chad, you’re right. The dollar is being totally debased by all this reckless money printing. Hey, how’s your gold fund doing these days?’”
“The subject: Wall Street greed. The one-minute summary: Wall Street banks break the law sometimes, and are generally greedy. What Uncle Chad will say: ‘If Eric Holder and his cronies actually did their job, all these crooks would be in jail.’”
“Is he wrong? Not totally. There was a lot of bad behavior on Wall Street this year. (As in every other year.) But this has been a historic year in terms of punishing Wall Street misdeeds. Eric Holder wrung a $13 billion settlement out of JPMorgan Chase for mortgage fraud – the largest corporate settlement in history. Hedge funds are pleading guilty to insider trading. And while it’s true that no major bank executives went to jail over the financial crisis, the new chair of the SEC, Mary Jo White, is taking a tougher approach to busting financial crimes than her predecessors.”
“Say this to end the argument: ‘Unfortunately for Eric Holder, it’s not against the law to be stupid.’”
The Housing Bubble Blog on November 26, 2008. From the comments, “Comment by 2banana 2008-11-26. ‘I am buying with three small kids (so flame away). However, it is either cash or credit card that will be paid in full when the January bill comes in. I can not understand people who go into debt for Christmas and take 5-6 months to pay it off (and I do know people like that).’
“Also - something we all do as a family is ‘buy’ gifts from the Samaritans Purse (like a well or medical supplies for a village). It is very interesting what the kids ‘buy’ with their own money. Sometimes it is very surprising (like they use all their money they saved for other things for this). Maybe that is the best present of all.”
“Comment by Olympiagal, 2008-11-26.
‘I can not understand people who go into debt for Christmas and take 5-6 months to pay it off (and I do know people like that).’”
“I know people like that, too. Crazy, innit? But HERE’S even a worser and crazier thing: a few years ago I worked with a girl who was getting a divorce after 3 years of marriage and, get this, part of the terms they were arguing over was who had to keep paying off the bills for their…wedding. Huh? Huh?
Wow.”
“Comment by Olympiagal, 2008-11-26. ‘Tell us about your newborn, Muggy. Is it cute? Are you training it to be a good future HBBer? Can it say ‘Mama, dadda, loan-to-value ratio’, and stuff like that?’”
“Comment by Olympiagal, 2008-11-26. ‘I come from a giant clan of exuberant Christmas-lovers. And I do mean ‘giant’; I’m from Mormon Land, also known as Utarr, and they take that advice from Sweet Baby Jeebus to ‘multiply and replenish the earth’ seriously. Lessee, I’ve got 67 cousins on my dad’s side. I forget how many on my mom’s side. I don’t pay attention to that side anyhow, as them’s boring. They all still have all their fingers, no scars, and few jail-house and/or homemade tattoos, for instance. And, for some reason, most of them have grown up to be dentists. Odd. I think that’s odd. Don’t you guys think that’s odd?’”
“‘I mean, that’s a lot of dentists. I bothered to show up to one of their reunions and everyone was peering inside each other’s heads.
Outta there!”
“My point is: we love Christmas! Christmas! Christmas! *sits up straight and emits a mighty whoop from the festive Olylungs*”
“And yes, that would be first cousins. And ’bout near every single one of us has got mighty lungs, a translucent hide, a fondness for misbehaving and for trees, and a desire to see what happens if you poke something, anything, who cares what it is, with a stick. These would appear to be what Mendel termed ‘dominant traits’.”
“Hahahaha! That seems funny to me, for some reason.”
“Ahhhh, family… I can’t wait to see them all. And to argue with them all. Maybe I’ll argue alphabetically this year. I suspicion I missed a few arguments last year, in the hurly-burly.”
God bless Oly.
“God bless Oly.”
Ditto. You don’t fully appreciate what you have until it’s gone.
“Ahhhh, family… I can’t wait to see them all. And to argue with them all. Maybe I’ll argue alphabetically this year. I suspicion I missed a few arguments last year, in the hurly-burly.”
I sure wish my wife’s Utarr relatives enjoyed arguing like that. They are altogether too civil in one another’s company, which gets very boring in a hurry.
Particularly nice to read all those quotes as I sit here at a resort in Utarr waiting to drive down the mountain to the family festivities in a few hours…
Enjoy! Sounds like great times.
Is it something like an episode of Sister Wives?
In this case, none of us are “from” Utah…there’s is one sibling that happens to live here right now and it makes a nice meeting place. But even though everyone that will be there today is LDS, we don’t really fit in with Utah culture very well. No dentists in the family and no green jello. No sister wives that I’m aware of either.
I see.
Dentists and green jello must be an LDS thing no?
Both are Utah cliches. Oly alluded to the dentist thing in one of her quotes.
Jello and ice cream are very popular foods in Utarr, as are ‘funeral potatoes.’
As for sister wives, I believe it is the rare, though existent, exception.
+1 combo…
Thanks Ben.
Olygal…We miss you.
When ever I was feeling magenta, Olygal
would make me smile. Kindness, wit, creativity, humor,that was Olygal.
is this the year people finally realize they will never get out of the hole they have dug and file for bankruptcy?
The sooner all of these folks get their bankruptcies over and done with, the sooner Fannie/Freddie/Some other gov’t agency can get them into a new zero-down home loan.
It’s funny because it’s true…
“It’s funny because it’s true …”
Also enormously profitable for the same reason.
Dodd-Frank was a predictable failure, as too-big-to-fail firms are even too-bigger-to-fail than before. The next time the zero-down, no-doc subprime lending machine gets rolling again, you can bet your bottom Bitcoin it will be the first step towards another round of bailouts.
Soggy turkey ain’t no fun
But if you’re underwater
It’s all that can be done
There’s always chicken. It’s what’s for dinner in California.
A time to give thanks for wealth distribution:
http://www.whitehouse.gov/share/When-You-Sit-Down-To-Thanksgiving
Thanks to the Bush tax cuts for the super rich that never went away, America has the most unequal wealth distribution of all the western country economies.
November 18, 2013
American Inequality in Six Charts
Posted by John Cassidy
Last Friday, the Center for American Progress, the center-left think tank founded by Bill Clinton’s former chief of staff John Podesta, held a conference to launch its new Washington Center for Equitable Growth. The new center, which is being funded by the Sandler Foundation, will finance academic research into the causes and effects of inequality, broadly conceived, and function as a hub for policy makers, journalists, and others involved in the subject.
It was an interesting morning, featuring some of the top researchers in the field, and I moderated one of the panel sessions. In some brief opening remarks, I noted that Washington has long had a number of centers promoting inequitable growth, so it only seems fair to have one supporting equitable growth. And having learned a good deal from the panelists, I thought it might be worthwhile to share some of the charts they brought with them. Taken together, the pictures convey a good deal of what we know about inequality. They also raise important questions about the channels through which it impacts economic growth and human development.
I’ll start with an updated chart from Emmanuel Saez, of Berkeley, which shows the share of pre-tax income enjoyed by the top one per cent of earners over the period from 1913 to 2012. The data, which comes from the Internal Revenue Service, is for market income: it includes realized capital gains but excludes government transfers.
The U shape of the chart should by now be familiar. After rising in the Roaring Twenties, the income share of the one per cent fell sharply in the postwar period. Since the late nineteen-seventies, it has been climbing again, albeit in a somewhat zig-zag fashion. The top earners’ share of overall pre-tax income peaked at about twenty-four per cent in 2007, fell back during the Great Recession, and then recovered strongly. In 2012, it was about twenty-three per cent.
How have the folks outside the one per cent been faring? A second chart from Saez tells us the answer. Going back a century, the light line shows the path of inflation-adjusted pre-tax incomes for families in the bottom ninety-nine per cent. The dark line shows how families in the top one per cent have been doing.
Once again, the long-term trends are clear. Between the start of the Second World War and the first oil-price shock of 1973, families in the bottom ninety-nine per cent saw their incomes rise sharply. With the exception of the late nineteen-nineties, the past forty years have been marked by slow growth. For those at the top of the income distribution, recent history has been very different. After growing modestly in the postwar decades, the incomes of families in the top one per cent took off in the late nineteen-seventies, and have been zig-zagging upward since then.
The United States is a very unequal country. But how much does it differ from other industrialized countries? And what difference do taxes and government transfers make? (If the tax and benefits system is ameliorating inequality that the market generates, it might change the way we think about the issue.) Presenting data from the invaluable Luxembourg Income Study, of which she is a director, Janet Gornick, a political scientist at the CUNY Graduate Center, provided answers to both of these questions.
The third chart shows a measure of pre-tax inequality and inequality after taxes and transfers for twenty-two advanced countries. The measure used is a Gini coefficient, which captures inequality on a scale of zero to one, where zero is perfect equality (everybody receives the same income) and one is perfect inequality (the richest person gets all the income). The light lines on the bar chart show pre-tax inequality. The dark lines show inequality after taxes and transfers.
One striking thing about this chart is that the U.S. figure for pre-tax inequality (0.57) doesn’t really stand out. In fact, according to this metric, the United States has pretty much the same level of pre-tax inequality as Sweden and Denmark, two countries that are usually thought of as highly egalitarian. The United Kingdom, Ireland, and several other countries have pre-tax levels of inequality that are considerably higher than the level seen in the United States.
Where the United States does stand out is in the level of inequality after taxes and transfers. Judged by this metric, the United States is the most unequal of all the twenty-two countries. As Gornick said at the conference, what this means is that, contrary to popular perception, our system of taxes and transfers does less to ameliorate inequality than the systems other countries have. Take Ireland, for example, where government interventions reduce the level of inequality from 0.63 to 0.35, a reduction of 0.28. In the United States, the comparable figures are 0.57 and 0.42, a reduction of just 0.15.
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I’m thinking it would be a much different story had it not been for the Bush-Bernanke-Obama bailouts of the 0.1% on their Fall 2008 gambling losses.
America once had a strong and vibrant middle class. The “unequal wealth distribution” that you are observing is the result of the ongoing destruction of that demographic.
It has been occurring for over thirty years so I believe that blaming just one Presidents action (like “tax cuts for the super rich”) for the problem is being more than a little obtuse.
I’m thinking it would be a much different story had it not been for the Bush-Bernanke-Obama bailouts of the 0.1% on their Fall 2008 gambling losses.
I blame Bernanke almost exclusively. Were it not for the extreme measures taken the Federal Reserve, this episode would have had much more of a leveling effect, similar to previous debt-bubble bursts.
Thats because not a dime of those trillions, has gotten to me to spend….
Multiply that by 100 million households and what inflation?
…… There has been no significant inflation since the end of the financial crisis,
Say this to end the argument: ‘You know, Uncle Chad, you’re right. The dollar is being totally debased by all this reckless money printing. Hey, how’s your gold fund doing these days?’”
This is exactly why the government is manipulating gold so it can say this. However, the price of gasoline is still around double what is was when Obama took office and food is still much higher. QE has caused inflation but it is being somewhat offset by a still very weak economy.
http://www.consumerreports.org/cro/news/2009/01/average-gas-prices-january-19-2009/index.htm
And this is well after the Fed began to dump money into the economy. We have a situation where commodity prices are well above January 2009 prices but unemployment is not significantly lower. They want you to concentrate on recent small decreases and not the impact over five years or more of easy money.
“However, the price of gasoline is still around double what is was when Obama took office and food is still much higher. QE has caused inflation but it is being somewhat offset by a still very weak economy.”
You see inflation, while I see a systematic writedown of the dollar. It happened with respect to gold, housing, and gasoline prices. Even good ole ‘Two-buck Chuck’ now sells for $2.50 at Trader Joe’s.
Though the end result is the same, the dynamic is different, as the stagflationary period of the 1970s was at least accompanied by wage gains.
“However, the price of gasoline is still around double what is was when Obama took office and food is still much higher. QE has caused inflation but it is being somewhat offset by a still very weak economy.”
Doesn’t the price of things doubling make our GDP look like it is not sinking like a rock?
There has been no significant inflation since the end of the financial crisis ??
And, as Gary Shilling suggested, the latest GDP numbers reflect building inventories…Maybe in anticipation of holiday sales ?? or maybe because of the lack of them ?? Well shall see…
Want a job in the mortgage banking industry? Move to Kansas.
Kansas gains mortgage jobs while country as a whole loses
By Jerry Siebenmark
The Wichita Eagle
Published Tuesday, Nov. 19, 2013, at 9:35 a.m.
Mortgage Daily’s Third Quarter 2013 Mortgage Employment Index said the period was the worst for mortgage employment in the U.S. since before the financial crisis, but Kansas bucked the trend, posting job gains.
The index said there were 17,683 layoffs in the mortgage industry in the quarter ended Sept. 30, and 2,401 hirings.
“The industry was hit with a double whammy during the period,” Mortgage Daily publisher Sam Garcia said in a news release Tuesday. “Improving loan performance reduced demand for servicing employees, while rising rates dragged down refinance activity and eliminated the need for production employees.”
But Kansas added a net of 216 jobs in the mortgage industry in the third quarter, according to the index, ranking it third highest in industry job gains behind Arizona (350) and Missouri (250), the index said.
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How much more money will Wall Street’s Megabank, Inc have to shell out before their legal exposure to the subprime mortgage debacle is finally laid to rest?
Big Banks May Pay $105 Billion More Over Sketchy Mortgages: S&P
Reuters | Posted: 11/26/2013 11:30 pm EST
Nov 26 (Reuters) - The largest U.S. banks may need to pay out up to an additional $105 billion to settle legacy mortgage-related issues, but have a capital cushion that would help them absorb these losses, according to a report by ratings agency Standard & Poor’s.
Eight of the top U.S. banks, including JPMorgan Chase & CO and Bank of America Corp, may have an additional exposure of between $56.5 billion and $104 billion in potential mortgage-related payouts, the S&P report said.
Banks have faced a new wave of lawsuits as the government investigates their role in the packaging and sale of mortgage-backed securities comprising of bad loans in the run up to the financial crisis.
“Notably, mortgage-related litigation has recently gotten a second wind and has expanded beyond investor claims,” S&P credit analysts led by Stuart Plesser wrote in the report.
The government has been seeking to hold firms liable under the Financial Institutions, Reform, Recovery and Enforcement Act of 1989 (FIRREA), which it uses to recover civil penalties for losses to federally insured financial institutions.
The largest banks, combined, could have a $155 billion buffer to absorb the losses and the banks’ buildup in capital would help them withstand potential legal costs, S&P said.
The increase in litigation reserves significantly weighed on third-quarter profit for U.S. banks, the federal banking regulator said on Tuesday.
…
So its lend the banks money at zero interest loan it out a 18% make 50 billion then pay it back in fines to stay out of jail…..cool how do i get this deal.
May, they may have to pay this? Yeah right, and monkeys may fly out of my …
“Using prices for chicken as a stand-in for turkey, I compared prices for cities around the country. There is clearly a huge difference in the prices that families will pay for their Thanksgiving dinner across the country. These changes show differences in cost of living between cities. Many of the cities that have had high annual home price appreciation also had high prices for chicken. Prospective homebuyers in these areas may feel the opposite side of the wealth effect, as both housing and food are increasing rapidly at the same time.”
So much for the sham home equity wealth effect. Enjoy your chicken today, California — it’s what’s for dinner.
Bitcoin always goes up.
How much longer from now will gold become completely worthless, as Bitcoin assumes its role the benchmark safe-haven currency?
‘You know, Uncle Chad, you’re right. The dollar is being totally debased by all this reckless money printing. Hey, how’s your gold fund doing these days?’
Quite the conversation stopper for gold bugs!
Bitcoin prices seem completely irrational.
Suppose you “knew” that by this time next year, Bitcoin prices will be 2500%+ higher than they are now. Wouldn’t it be perfectly rational to buy some? Especially if you “knew” that you will be able to sell before the onset of ultimate Ponzi collapse?
In such case I would be a clairvoyant, and would just as soon prefer to pick the winning lottery numbers in order to secure my future of complete financial domination.
Go ahead and say it: I’m uncharitable.
Bitcoin hits record $1,242 as it nears value of ounce of gold
November 29, 2013, 11:40 AM
First it was gold that was poised to rise infinitely as the world’s major central banks and politicians debased the dollar and other major currencies, setting the stage for hyperinflation in their misguided attempts to reflate a global economy laid low by the burst housing bubble.
That hasn’t really worked out. But gold bugs and others seeking an alternative to those rotten fiat currencies certainly have a new passion in bitcoin and the other alternative currencies that are “mined” by cracking algorithms. Bitcoin, of course, is the star. And Friday it hit a new all-time high of $1,242. That’s not far off the price of the yellow metal. Gold futures jumped $16.20 an ounce on Friday in a round of apparent short covering, taking the most-active February contract to $1,254 an ounce (though gold is still on track for its biggest monthly drop since a June bloodbath).
As the chart above shows, that’s a pretty intense rise for bitcoin from a close of $140.30 on Oct. 1. An uncharitable soul might point out that this is what a bubble looks like.
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There’s always a fly in the ointment.
ft dot com
November 28, 2013 8:45 am
Bitcoin needs to learn from past e-currency failures
By Stephen Foley
A pile of Bitcoin slugs sit in a box ready to be minted by Software engineer Mike Caldwell in his shop in Sandy, Utah on April 26 2013©Getty
Before Bitcoin, there was e-gold. In 1999, the Financial Times called it “the only electronic currency that has achieved critical mass on the web”.
As it kept growing through the next decade, users ultimately opened more than 4m accounts, with more than $60m in deposits, backed by almost 4m metric tonnes of precious metal, and millions of dollars of transactions on a typical day.
And then it all stopped.
The founder of e-gold, an oncologist and economic history buff in Florida called Douglas Jackson, had hoped his gold-backed electronic currency would become a new base money to rival flawed fiat currencies.
Instead, it became a tool for hackers and drug dealers. The FBI and Secret Service raided his offices in December 2005, and he wound up spending three years on probation, including six months under house arrest, after pleading guilty to running an unlicensed money transmitter business and aiding money laundering.
Mr Jackson has spent months tracking down former e-gold customers in order to return cash from their accounts, even calling up parish priests to chase down relatives of deceased customers. Under the eye of a court-appointed administrator, users are often getting back far more than they put in, since the gold price has soared over the past decade.
And as he has wound down e-gold and consulted for a 2.0 version, he has watched with some irritation as a new generation of entrepreneurs evangelised Bitcoin, Ripple, Litecoin and other innovations.
Despite being one of the pioneers of alternative currencies, Mr Jackson has rarely spoken publicly since his conviction and never before on Bitcoin. In an email interview with the Financial Times he had a blunt answer to whether he thought any of the virtual currencies since e-gold hold particular promise: “No.”
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Those who buy Bitcoin at the top are going to lose their shirts, and there will be no central banking bailout authority around to make them whole.
Don’t miss the relevance of the passage below to central banking operations. More from ft dot com:
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Bitcoin, whose price topped $1,000 for the first time this week, differs from e-gold in that it does not rely on a single company to manage the system. Transactions are recorded instead on a peer-to-peer network of computers.
Mr Jackson believes that currencies and payments systems with central management authorities are more likely to succeed, since regulators and customers demand protections against hacking, fraud and errors.
And this, he argues, is the biggest lesson from e-gold: the superior value of an asset-backed currency. His company has begun paying out what will be more than $20m of claims, after liquidating vaults full of gold that backed the currency, something that will not be happening for users of today’s virtual currencies, should anything go wrong.
“Suppose that someone has 1 Bitcoin in their wallet, which they regard as having the equivalent value of $500 or $900 or, give it another day or two, $20,000, and then suppose that some circumstance emerged that effectively prevented it from ever circulating again,” Mr Jackson says.
“Who, after six years of non-circulation, would pay that $500 or $20,000 or even so much as a nickel?”
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I asked someone to explain bitcoin to me once. After a couple minutes I got bored and walked off.
This is all I need to know about bitcoin
http://images.wikia.com/onlyonetv/images/c/c2/Buttcoins.gif
I find it quite incredible the masses have fallen for the tortured tale of cyber bots silently mining the virtual currency at a predetermined rate.
The ephemeral bits that define it have no fundamental value and pay no dividends. The capital gains driving its returns will continue wracking up as new buyers come in to share in the Ponzi gains, right up until the point of collapse.
In short, Bitcoin is another bubble. Get ready to enjoy mocking those who bought at the top.
I didn’t realize twerking could be so profitable! Imagine firing out $1000 coins at that rate…
Got cash?
I didn’t realize twerking could be so profitable! Imagine firing out $1000 coins at that rate…
Many women have been told for years that they are sitting on a gold mine so this is really not new.
ft dot com
November 28, 2013 2:44 pm
E-gold founder backs new Bitcoin rival
By Stephen Foley in New York
The founder of one of the earliest virtual currencies has re-emerged with a rival to Bitcoin, more than five years after his first venture, e-gold, was shut down by the US Department of Justice.
Douglas Jackson is consulting for a membership organisation called Coeptis that hopes to launch a new version of his gold-backed currency, which attracted millions of users at its height.
The aim is to lure many of the people who have been attracted to Bitcoin and other virtual currencies this year, including businesses that are looking for a cheap way to process payments outside the traditional banking system.
Coeptis’s “global standard currency” would be fully backed by reserves of gold, held in a trust, in effect turning the precious metal into a medium of exchange.
…
This bubble’s gonna blow up any day now. Got popcorn?
Bitcoin
Bitcoin under pressure
Virtual currency: It is mathematically elegant, increasingly popular and highly controversial. Bitcoin’s success is putting it under growing strain
Nov 30th 2013 | From the print edition
ALL currencies involve some measure of consensual hallucination, but Bitcoin, a virtual monetary system, involves more than most. It is a peer-to-peer currency with no central bank, based on digital tokens with no intrinsic value. Rather than relying on confidence in a central authority, it depends instead on a distributed system of trust, based on a transaction ledger which is cryptographically verified and jointly maintained by the currency’s users.
Transactions can occur directly between the system’s participants at almost zero cost, without the need for a trusted third party or any other intermediary, and are irreversible once committed to a permanent and fully public record. Bitcoin’s mathematically elegant design ensures that the money supply can increase only at a fixed rate that slows over time and then stops altogether. Anonymity, while not assured, is possible with the right precautions and tools. No wonder Bitcoin is so appealing to geeks, libertarians, drug dealers, speculators and gold bugs.
Bitcoin began in 2008, at the height of the financial crisis, with a paper published under the pseudonym Satoshi Nakamoto. The technical design outlined in the paper was implemented in open-source software the following year. It came to widespread prominence in 2012 and has been in the headlines ever since.
Investors are backing Bitcoin-related startups, the German finance ministry has recognised it as a “unit of account” and senior officials told an American Senate committee on November 18th that virtual currencies had legitimate uses. But there have also been many cases of Bitcoin theft. Exchanges that convert Bitcoin to other currencies have collapsed or closed. Silk Road, an online forum where illicit goods and services are traded for Bitcoin, was shut down by America’s Federal Bureau of Investigation in October but has since reopened. The Bitcoin price has fluctuated wildly, hitting $230 in April 2013, falling below $70 in July, and then exceeding $600 in November, prompting talk of a bubble.
The system is now straining at the seams. Its computational underpinnings have collectively reached 100 times the performance of the world’s top 500 supercomputers combined: more than 50,000 petaflops. Bitcoin’s success has revealed three weaknesses in particular. It is not as secure and anonymous as it seems; the “mining” system that both increases the Bitcoin supply and ensures the integrity of the currency has led to an unsustainable computational arms-race; and the distributed-ledger system is becoming unwieldy. Will Bitcoin’s self-correcting mechanisms, and the enlightened self-interest of its users, be able to address these weaknesses and keep Bitcoin on the rails?
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Did you manage to capture a piece of the 24.2% overnight improvement in the Bitcoin price for yourself?
Even the Fed agrees that Bitcoin is real, folks. Why not get in on the action and follow the path to overnight riches?
Nov. 29, 2013, 7:22 a.m. EST
Bitcoin keeps surging, taps new record atop $1,200
By Barbara Kollmeyer
MADRID (MarketWatch) — Bitcoin continued to push higher Friday, touching a new record of $1,242 before pulling back to around $1,183. The virtual currency took out Wednesday’s $1,000 high on Thanksgiving Day. The run-up for bitcoin got new life after a congressional hearing earlier this month that effectively gave the currency an official blessing. The currency also elbowed into the holiday shopping season with its own Bitcoin Black Friday promotion involving hundreds of merchants.
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Bitcoin $5,000!
Nov. 29, 2013, 9:27 a.m. EST
Black Friday discounts for paying in bitcoin
Black Friday deals aim to boost use of the virtual currency
By Quentin Fottrell
The country-less virtual currency bitcoin has soared in value in recent weeks. But lost in all the talk of a bitcoin bubble is whether the digital denomination is useful for more than just a novelty investment. What can you actually use it for? To prove the new currency has practical value a group of online retailers and bitcoin are offering Black Friday deals.
The group created an online deal site, BitcoinBlackFriday, to help consumers spend their bitcoin. The site first went live last year with just 74 merchants, but this year the site already has over 200 participating retailers, and is targeting a total 500 this year. “Most merchants sign up the day before Black Friday and on Black Friday itself,” says John Holmquist, founder of Bitcoin Black Friday. The site will offer discounts on everything from dating site OkCupid and CheapAir.com to handmade American rugs and Christmas trees. One retailer – the family-run Bees Brothers – is luring customers with a 20% discount on honey.
Bitcoin is a peer-to-peer currency that doesn’t require a bank or Treasury Department. Its value has risen to around $808 from below $50 in March and $10.50 two years ago. MtGox.com (short for Magic the Gathering Online Exchange), the main exchange for users swapping Bitcoins, handles around 80% of all Bitcoin trade and charges 0.25% to 0.60% for its brokerage services, depending on the size of the trade. There are around 12 million Bitcoins in circulation, according to BitcoinCharts.com.
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realtors are liars
Are you planning to spend more or less on holiday items this year than the recent past?
Maggie McGrath, Forbes Staff
I cover market news and personal finance for millennials.
Investing
11/26/2013 @ 9:00AM
How Little Can Cash-Strapped Millennials Get Away With Spending This Holiday Season?
“That” family. Every block has one. You know the type: It’s the family that gives the king-sized candy bars at Halloween when everyone else is sticking to fun-sized. The one whose seasonal decorations look professionally installed, while yours are more akin to Charlie Brown’s Christmas tree. The family, in short, who does not spare a cent on any holiday.
For blogger Kali Hawlk, “that” family happened to be her future in-laws. And the first time she participated in their annual holiday gift exchange, Hawlk was out of her financial league.
“They have a slightly bigger family, and they would go all out at Christmas. Hundreds of dollars for each person. When I started dating my husband, I was in college [and] I didn’t have that kind of money,” Hawlk says.
It’s a dilemma that just about every young adult has faced at one time or another: you’re not technically a “kid” but far from a financially-established adult – so how can you afford to buy presents for everyone in your life at the holidays? If the average American will spend $1,014 on holiday gifts but you don’t even have $1,000 in a savings account, is it okay to hit up your parents (or older siblings) for some extra cash? What are holiday expectations and etiquette rules for those still getting on their financial feet?
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First world problems, a “blogger” worrying how to deal with her husband’s rich family.
Here’s what her blog says: “I’ve learned how to make the most out of a small yearly income – I have no student loan debt nor credit card debit, I am a homeowner, I contribute to retirement accounts for the future and I save 30% of my income – and I want to help other people like me do the same.”
Will 2014 finally mark the end of the Eurozone debt crisis?
Oh bugger…
First Published: Wed, Nov 27 2013. 10 38 PM IST
Greece to stay in recession in 2014, may need rescue: OECD
OECD says the Greek economy would contract by 0.4% and the country will likely need additional aid
Athens: Greece will remain mired in recession in 2014 for a seventh straight year, and is likely to need more financial assistance, the Organisation for Economic Cooperation and Development (OECD) said on Wednesday, in contrast to forecasts by Athens.
OECD said the Greek economy would contract by 0.4%, and said Greece was likely to need additional aid. “The need for further assistance to achieve fiscal sustainability cannot be excluded,” the OECD said. “If negative macroeconomic risks materialize…serious consideration should be given to further assistance to achieve debt sustainability,” it said.
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Ohbewannas job plan:
Hundreds of coal plants that have been closed or slated for early retirement due to Environmental Protection Agency regulations, according to coal industry estimates.
“Already, EPA regulations have contributed to the closure of more than 300 coal units in 33 states,” said Laura Sheehan, spokeswoman for the American Coalition for Clean Coal Electricity.
http://dailycaller.com/2013/11/27/epa-preparing-to-unleash-a-deluge-of-new-regulations/#ixzz2lsMfk6kx
Gas and oil companies love it when their dollars spent on lobbying result in the decommissioning of coal fired generation facilities.
You can tie that story in with the story of prices of electricity hitting a new high. Obama is determined to take away the advantage that our industries have with the cheap natural gas being produced by fracking.
Obama is going to start eating your children, too. You better go into hiding.
This is all I need to know about bitcoin
Yes, it is money out the kazoo a 1999 Internet bubble ad.
Actually that is whazoo and the ad first occurred during the 2000 superbowl:
http://www.bing.com/search?q=money+out+the+kazoo+and+ad&form=MSNH14&x=0&y=0
“The subject: Wall Street greed. The one-minute summary: Wall Street banks break the law sometimes, and are generally greedy. What Uncle Chad will say: ‘If Eric Holder and his cronies actually did their job, all these crooks would be in jail.’”
“Is he wrong? Not totally. There was a lot of bad behavior on Wall Street this year. (As in every other year.) But this has been a historic year in terms of punishing Wall Street misdeeds. Eric Holder wrung a $13 billion settlement out of JPMorgan Chase for mortgage fraud – the largest corporate settlement in history. Hedge funds are pleading guilty to insider trading. And while it’s true that no major bank executives went to jail over the financial crisis, the new chair of the SEC, Mary Jo White, is taking a tougher approach to busting financial crimes than her predecessors.”
“Say this to end the argument: ‘Unfortunately for Eric Holder, it’s not against the law to be stupid.’”
That’s precious. Suggesting Wall Street is merely greedy and stupid - the CEO’s especially! - but not criminal.
Not so fast there, Sparky *tousel hair*:
1) Control Fraud: “How to Prosecute the Elite Bank CEO that Led the Frauds that Drove the Crisis” by Bill Black: http://neweconomicperspectives.org/2013/11/prosecute-elite-bank-ceo-led-frauds-drove-crisis.html
2) Political complicity: The Lanny Breuer Frontline Interview - here’s a segment, helpfully dubbed to elucidate Mr. Breuer’s message: http://www.youtube.com/watch?v=FHWTsDPaCXk
3) Watch “The Inside Job”, which won the Oscar in 2011 for Best Documentary: http://www.imdb.com/title/tt1645089/awards?ref_=tt_awd
The summary: There was massive control fraud. The highers up were in on it. Politicians enabled it. Trying to spin it as naive wide-eyed innocent executive teams making mistakes is the meme both politicians and Wall Street and their MSM lackeys have been pushing.
Finally, an exchange from The Inside Job:
“IJ: Why do you think there isn’t a more systematic investigation
being undertaken?
Roubini: Because then you will find the culprits.”
Happy Thanksgiving
Since when are criminals not stupid?
Has anyone else noticed the bubble in “No Bubble Here” stories in the MSM financial press ever since Yellen’s confirmation hearing?
No Bubble Here: The NYC Penthouse Worth $60M
Nov. 27 (Bloomberg) –- The creator of the W Hotel franchise is at it again. Barry Sternlicht of Starwood Capital gives Bloomberg’s Betty Liu an inside look at the ultra luxurious future Baccarat hotel and residence in Midtown Manhattan. (Source: Bloomberg)
How the media blows bubbles
Morgan Housel, The Motley Fool
4:52 p.m. EST November 22, 2013
The first real newspapers appeared around the 1600s in Holland, Yale economist and recent Nobel Prize winner Robert Shiller mentioned at a conference in Orlando last week. That was also around the time the Dutch tulip bubble formed. “I can’t find much evidence of financial bubbles before then,” Shiller said.
We’ve been having them consistently ever since.
Those two factors — newspapers, then bubbles — aren’t coincidental, Shiller asserted. “The big fluctuations of bubbles are primarily social-psychological changes,” he said. You need a well-armed media to drive that change. “You can’t have a bubble with word of mouth.”
Think about the last three bubbles.
Radio went mainstream in the 1920s. For the first time ever, Americans were connected to each other live across the country, listening to new ideas they had never been exposed to. “It connected you to the world,” Shiller said. Radio not only made people optimistic about the future, but it spread new ideas — like the power of investing in stocks, spawned in 1924 by Edgar Lawrence Smith’s book Common Stocks As Long Term Investments. Soon came one of the biggest stock market bubbles in history.
The Internet did the same 70 years later. Virtually overnight, the entire world was connected for the first time, sharing ideas and being exposed to thoughts traditional media outlets had never covered. “It was hard for this not to make you optimistic,” Shiller said. In the mid-1990s, Wharton economist Jeremy Siegel wrote the book Stocks for the Long Run, echoing Smith’s message from the 1920s. A new mindset took hold. Stocks tripled in less than seven years. You know how the story ends.
Same for housing. From 1890 through roughly 1990, inflation-adjusted home prices nationwide were flat, if not declining. Searching through more than 100 years of newspaper archives, Shiller found almost no mention of home prices, except in construction trade journals. “It just wasn’t on people’s minds,” he told me a few years ago. “No one cared. One expected to buy a home as part of normal living and didn’t think to worry about what would happen to the price of homes.” That all changed in the early 2000s, with a burst of media coverage on rising home prices. “In June 2005, there was this media explosion on housing as an investment,” Shiller said. Newspapers, TV, and the Internet went nuts about how much money could be on homes. A TIME magazine cover that month read, “Home $weet Home.” Prices peaked soon after.
Bubbles are complicated. No one can point their finger at a single cause. But more than most economists, Shiller focuses on the psychological aspect of bubbles. And wherever you find big psychological shifts, you find the media. “The news media are fundamental propagators of speculative price movements through their efforts to make news interesting to their audience,” he said.
But is this cause and effect? Are stock and housing prices going up because the media is talking about them, or is the media talking about them because they’re going up?
It’s not hard to say it’s the former.
In his book Irrational Exuberance, Shiller writes that most modern bubbles are global. Stocks didn’t just rise in America in the 1990s, they surged all around the world. Same with real estate in the last decade. Home prices in Belgium, Spain, and the Netherlands surged more than American home prices last decade.
But most people don’t pay attention to foreign media. So how can the media explain why bubbles are global? Shiller has an idea:
Of course reporters of the news, especially the serious news, feel an obligation to read the news from other countries, so as not to miss an important piece of news. But, beyond this, reporters learn from experience that an excellent way to produce good copy is to piggyback on others’ successes. A sequence of stories in foreign news media is a sign of a successful story, and such a success can probably easily be replicated at home if the story is copied with only a few tweaks and adjustments for local tastes and associations.
As a financial writer, I can attest this is true.
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Bloomberg News
Former Fed Chief Greenspan Sees No Bubble in Dow 16,000
By Joshua Zumbrun November 28, 2013
Former Federal Reserve Chairman Alan Greenspan said the U.S. economy probably will grow more slowly next year than some forecasters predict and indicated that a record U.S. stock market isn’t in a bubble.
“This does not have the characteristics, as far as I’m concerned, of a stock market bubble,” Greenspan said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. “It could come out that way but I don’t see it at this stage.”
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I think it’s easy to not see a bubble in stocks because frankly stocks should have already reached this valuation or higher. But that would be based on real growth, having taken our medicine long ago. Since those things didn’t happen but should have, I think it’s easier to convince people that stocks should really be valued where they are. Since they have no understanding of what is the cart and what is the horse anyway…
This time is different.
Innovation Nation
No tech bubble here
By Julianne Pepitone @julpepitone November 27, 2013: 8:00 AM ET
Market analysts say this Nasdaq run-up is nothing like the tech bubble of 13 years ago.
NEW YORK (CNNMoney)
The tech-heavy Nasdaq index recently topped 4,000 … a level it hasn’t reached since the dot-com boom days of 2000. But this run-up is nothing like the tech bubble of 13 years ago.
It makes sense that benchmarks like the Nasdaq at 4,000 could reignite bubble fears. It comes after the recent string of successful initial public offerings from unprofitable companies like Twitter (TWTR), and reports of startup Snapchat turning down a $4 billion buyout — despite bringing in no revenue.
But analysts say the rush to call a tech bubble, while understandable, isn’t grounded in reality.
“Anytime you have a substantial run in an asset — especially one like the Nasdaq … you can’t help but ask the [bubble] questions,” said Drew Nordlicht, managing director at asset management firm HighTower Advisors. “But there are big divergences between now and the tech bubble of 2000.”
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Nope, ‘Still’ No Bubble Here…
Tyler Durden’s picture
Submitted by Tyler Durden on 11/25/2013 20:46
Even the most ardent of bulls would ‘admit’ that the period of the last 90s was a bubble in US equities. What started at the margin quickly morphed into a euphoric valuation for any and everything that could be pitched. Even The Fed’s Jim Bullard ‘knew’ there was a bubble back then… Today’s recovery of the NASDAQ to 4,000 - levels not seen since this period - is quickly dismissed by those that need things to go higher on the basis of earnings, multiples, or some such forward-looking hope-based methodology that reinforces their bias. However, Tobin’s Q - among the longest-lived and most well-respected of longer-term valuation methodologies has just reached levels only ever seen during the 1999/2000 bubble. BTFATH valuation?
Why do so many MSM-favored financial experts whistle so loudly as they stroll past the graveyard?
It’s not a graveyard, it’s just a park with a lot of stonework and grass that grows unexpectedly well.
The grass is regularly watered with gobzillions of QE3 liquidity.
Wall Street’s Best Minds | WEDNESDAY, NOVEMBER 27, 2013
Howard Marks: We’re Not at Bubble-Type Highs
By HOWARD MARKS | MORE ARTICLES BY AUTHOR
The influential chairman of Oaktree Capital makes the case for his “middling stance” on asset values.
I’ve written a lot of memos to clients over the last 24 years – well over a hundred. One I’m particularly proud of is The Race to the Bottom from February 2007. I think it provided a timely warning about the capital market behavior that ultimately led to the mortgage meltdown of 2007 and the crisis of 2008. I wasn’t aware and didn’t explicitly predict (in that memo or elsewhere) that the unwise lending practices that were exemplified in subprime mortgages would lead to a global financial crisis of multigenerational proportions. However, I did detect carelessness-induced behavior, and I considered it worrisome.
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Nice post Pbear…
Denial ain’t a river in Egypt.
Yellen Sees No Bubbles; Stockman Sees Them “Everywhere”
By Lauren Lyster | Daily Ticker – Fri, Nov 15, 2013 9:00 AM EST
There are no asset bubbles – not in equity markets, not in the housing market.
That’s according to Federal Reserve chair nominee Janet Yellen, who was asked about bubbles in her confirmation hearing before the Senate Banking Committee Thursday.
The Wall Street Journal reports that Yellen, citing valuations, told lawmakers, “Stock prices have risen pretty robustly…[but] you would not see stock prices in territory that suggest…bubble-like conditions.”
The S&P 500 (^GSPC) is up 25% this year, hasn’t had a pullback of 10% since fall 2011 and has hit a series of all-time-highs this year, including on Thursday. (This came after Yellen’s “dovish” remarks in the hearing indicating she supports the Fed’s easy money policies, as expected.)
Yellen also deconstructed the housing bubble argument saying, for example, that private investors are buying homes in some of the markets that were hardest hit, which is “logical” and something the Fed is watching.
Some disagree with Yellen’s view of market bubbles. In the accompanying video, former Reagan budget director and author of The Great Deformation David Stockman argues that “we have bubbles everywhere” — in junk bonds, stocks, and a housing market “riddled with speculators.”
He blames the Fed for “dripping monetary morphine into Wall Street” and creating these bubbles, and he calls for the Fed to stop its easy money policies immediately.
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Related: New Fed Chair Could Mean Interest Rates Near Zero Until 2017
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Related: Forget the Fed, Interest Rates Are Heading Lower, Shilling Says
Which incipient national housing bubble collapse is destined to wreak the most economic havoc on the home country and global economies?
Norway’s?
China’s?
Canada’s?
Other?
Nov. 28, 2013, 6:07 a.m. EST
Bank of England pulls back on support for home loans
By Jason Douglas and Geoffrey T. Smith
LONDON — The Bank of England said Thursday it plans to cut its support for mortgage lending in the U.K. and nudge banks towards lending more to small businesses.
The move is a response to mounting concern that a rapid pickup in housing market activity in Britain could ultimately turn sour, hurting banks and borrowers, as well as longstanding worries that small firms are being starved of credit, hindering economic recovery.
It is also an example of the increasing willingness of central banks across the globe to deploy tailored policies to steer their economies, rather than relying solely on official interest rates.
The BOE said in its twice-yearly financial stability report that although there is little evidence that quickening activity in Britain’s housing market poses an immediate threat to financial stability, “risks may grow if stronger activity is accompanied by further substantial and rapid increases in house prices and a further buildup in household indebtedness.”
The central bank said property has played “a central role” in many previous economic and financial crises. In the U.K., real estate accounts for 70% of non-financial assets.
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The comment about so many Mormon dentists makes sense to me. Mormonism was born with a strong streak of flimflam in it. Official church history emphasizes how persecuted they were in their pre-Utah days and how they were run out various places, all for their beliefs we are told. But it’s also true that counterfeiting activities and land sales swindles made them enemies and played a larger role in their being obliged to decamp from everywhere they settled before Deseret..
Mormons love being Dentists and Chiropractors because they get real doctors’ incomes and status without either having to endure the rigorous training of real doctors or the responsibilities and obligations of real doctors…
I think if it wasn’t so hard to get into medical school most of them would be doctors. It’s not because they’re not willing to do the work. I think most are just going for maximum bang for their effort and education buck.
My BIL, the AMA-certified doc, would beg to differ with you.
My observation is that Mormon guys tend to be overrepresented in high income occupations because they have lots of kids, they have to give 10% off the top to their church, and their wives are discouraged from working outside of the home. If they want to have enough to make ends meet, they’d darn well better become a doctor, attorney, highly-compensated STEM worker or business executive.
Dear all,
We, Brazilians, are living a ruge housing bubble.
A blog “www. estamosricos.com.br compares the prices in Brazil with the prices observed in USA’s and Europe’s house.
Comparing to us, you, americans, are in heaven.
Please, feel free to write in our blog: “www. bolhaimobiliaria.com”
You all can writh in English because most part of us will understand and, besides, there is google translate to help.
Who cares what prices are in the third world?
You think the housing collapse is going to be any less severe here?
You’re nuts.
We are talking about the 8th largest economy in the world. Of course it will impact the world’s economy.
I did not say that the housing collapse in the US would not be severe (more ou less than the Brazilian’s one).
My purpose was just to inform about the Brazilian housing bubble and give you the address of the main blog where it has been discussed since 2010.
Just that.
And it’s still a 3rd world country. Don’t feel bad though. We have states in the US that are much like third world countries…. namely California. It’s the poorest state in the union.
Welcome to the blog…Please come back…Just ignore the twerp who posted after your intro…Most people here are interested in providing and receiving data and diverse opinions….
Unfortunately, most of the posts are by the twerp.
“Comparing to us, you, americans, are in heaven.”
Isn’t Brazil in S. America? I wonder what you mean by “in heaven”. You can get a hearty conversation about the global housing bubble here. Post your perspective.
Thanks for the tribute to Olygal.
Will a U.S.-China showdown over Japanese air space end the symbiosis and tip over the global economic apple cart?
ft dot com
Last updated: November 28, 2013 8:03 pm
China sends fighter jets into disputed air space
By Simon Mundy in Seoul and Demetri Sevastopulo in Hong Kong
A Chinese produced J-10 fighter jet is displayed outside the offices of the Aviation Industry Corporation of China in Beijing on November 28 2013. The US on November 28 pressed its concerns over China’s newly declared air defense zone, a day after US B-52s flew over the disputed area in the East China Sea©AFP
China sent fighter jets into its new air defence zone on Thursday further escalating tensions in the East China Sea that have also drawn in the US.
Col Shen Jinke said several fighter jets and an early-warning aircraft had been deployed as part of a routine patrol. He described the mission as “a defensive measure and in line with international common practices”, according to a statement on the website of the Chinese defence ministry.
The move came as Japan and South Korea flew military aircraft into the same zone, in defiance of China’s demand on Saturday that it be informed of all flights through the area. The zone includes airspace over the contested Senkaku Islands. Earlier this week the US responded to China’s declaration of an “air defence identification zone” by sending B-52 bombers into the airspace as part of a pre-planned exercise.
Yoshihide Suga, Japan’s chief cabinet secretary, said on Thursday Japanese military aircraft were “carrying out surveillance activity as before in the East China Sea”.
“We are not going to change this out of consideration to China,” said Mr Suga, without saying how often Japanese military aircraft had entered the zone.
The South Korean defence ministry said on Thursday it had conducted a routine surveillance mission on Tuesday over a submerged rock where Seoul has a scientific research centre, but to which China also lays claim.
Tensions between Beijing and Tokyo have mounted over the past year as Chinese ships and aircraft try to weaken Japan’s control over the group of five uninhabited islands and three rocks that are known in China as the Diaoyu. Japan angered China last year by buying three of the islands from their private Japanese owner.
China has said the creation of the air zone – which overlaps with corresponding Japanese and South Korean zones – was a “legitimate action” and not targeted at any one country. But the move has sparked criticism across the region and drawn a sharp rebuke from the US.
At a meeting in Seoul on Thursday, Chinese military officials rejected calls from South Korea to reconsider the zone, according to Seoul’s defence ministry.
“Japan and the US should carefully reflect upon and immediately correct their mistakes,” a Chinese foreign ministry spokesman said on Thursday. “They should stop their irresponsible accusations against China and refrain from remarks and actions that harm regional stability.”
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Are banks loading up on so many risk assets that a next leg of the financial crisis is “in the bag”?
ft dot com
November 27, 2013 9:06 am
Return of bundled debt deals raises crisis re-run fears
By Tracy Alloway in New York
The Adams Express Building in lower Manhattan has a colourful history that includes a first world war explosion and the discovery of basement-dwelling goldfish.
Perhaps of greater relevance to its Wall Street neighbours, the loan used to build the near century-old skyscraper was also one of the first to be bundled and securitised into a commercial real estate bond.
Creating bonds backed by income generated from a variety of assets is a technique that has a long history. While securitisation has helped funnel private capital into everything from office buildings to home loans, it has also been criticised for the role it played in exacerbating the subprime boom that spurred the financial crisis of 2008.
Five years on, and bankers are beginning to experiment with new assets that can be bundled up and sold to investors as they rush to take advantage of resurgent demand for higher-yielding products. In recent weeks, the cash flows from US solar panel leases, single-family rental homes and “peer-to-peer” loans have all been sliced and diced into investable bonds.
The experimentation with new assets follows a broader recovery in many areas of traditional structured finance. Issuance of collateralised loan obligations (CLOs), which pool together leveraged loans made to companies, has reached the highest level since 2007. Sales of commercial mortgage-backed securities (CMBS) have multiplied from $4bn in 2008 to $86bn so far this year, according to Dealogic.
“It feels like 2013 has been the year in which many of the recovering products became mainstream again,” says Tom Cheung, co-head of structured credit for the Americas and Europe at Deutsche Bank, which built the rental bonds. “We have also seen a lot of innovation in several asset classes this year.”
This recovery, however, is prompting questions over whether history could be repeating itself.
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ft dot com
November 28, 2013 10:00 am
Yield-hungry US banks gorge on ‘sliced and diced’ securities
By Tracy Alloway in New York
US banks have increased holdings of “sliced and diced” securities to a record in the latest sign that financial institutions may be seeking to boost profits by investing in riskier, higher-yielding assets.
Growing portfolios of structured products have raised concerns that banks could be assuming more risk on their balance sheets to make up for low interest rates, a situation that would echo the pre-crisis environment in which banks created and purchased billions of dollars worth of securitised assets.
Banks’ holdings of structured products rose to almost $70bn in the three months to September, according to data released this week by the Federal Deposit Insurance Corporation.
That is a 45 per cent rise on the same period last year and the highest level since the FDIC began breaking out the individual figure in 2009.
The FDIC’s definition of the products covers a range of securitisations including collateralised loan obligations, commercial mortgage-backed securities and collateralised debt obligations.
Sales of the securities have this year surged to their highest levels since 2007, fuelled by interest from investors ranging from big pension funds to small banks and from companies seeking to refinance old loans and lock in lower rates.
Banks are also looking to offset the effect of low interest rates on their bread-and-butter lending business, analysts say.
According to the FDIC’s data, higher legal expenses at JPMorgan Chase and falling revenues from mortgage lending in the past quarter combined to create the first decline in collective net earnings for US banks in more than four years.
Banks have also been cutting back on their purchases of US Treasuries, trimming their holdings to $159bn compared with $196bn a year ago.
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Did you dump your bonds yet?
Taper Is Not Raising Interest Rates; Bill Gross Buys Shorter-Dated Bonds
By Min Zeng
CONNECT
The Federal Reserve has had a simple mantra for the past six months: Tapering is not tightening.
Perhaps it’s finally sinking in.
Traders and investors are warming to the idea that when the Fed dials back its bond buying in the coming months, it will tap other tools to keep its key policy-rate lower. The Fed has held the fed-funds target rate between zero and 0.25% since December 2008.
Yields of shorter-dated Treasury bonds, the most sensitive to changes in the Fed’s policy rate, have come down in recent weeks. Interest rate futures–both eurodollar futures and fed-funds futures– indicate that traders don’t anticipate the Fed raising interest rates for years.
Demand for shorter-dated U.S/ government debt sales this week has perked up.
Overall demand for a sale of $32 billion two-year notes on Monday was the strongest since April.
A sale of $35 billion five-year Treasury notes Tuesday afternoon was offered at a yield of 1.34%, slightly lower than the level before the sale. Lower yield signals demand is stronger than dealers had anticipated. One highlight is strong buying from foreign investors via the 50% indirect bid, the highest since July.
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Treasuries Fall on Speculation Jobs Data May Spur Fed Taper Vote
By Daniel Kruger - Nov 29, 2013 7:39 AM PT
Treasuries declined, extending their first monthly loss since August, on speculation a U.S. jobs report next week will be strong enough to lead the Federal Reserve to vote to trim bond purchases as soon as December.
U.S. debt fell before data forecast to show employers added 183,000 jobs this month and the unemployment rate dropped to 7.2 percent, the lowest since 2008, according to Bloomberg surveys of economists. Treasuries have lost 0.4 percent in November, and are down 2.3 percent in 2013, based on Bloomberg World Bond Indexes.
“Thoughts of possible tapering in December” have driven 10-year yields higher on the month, said Matthew Duch, a fund manager at Calvert Investments in Bethesda, Maryland, which oversees more than $12 billion in assets. “You’ve got to get strong, confirmable numbers to justify any action in December.”
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Are you headed over to Walmart today to go elbow-to-elbow with Joe SixPack over some special Black Friday deals?
Walmart’s Black Friday Going About As Badly As You’d Expect
Posted: 11/28/2013 10:12 pm EST | Updated: 11/29/2013 10:47 am EST
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I’d like the local authorities to start charging Walmart for the police calls so that citizens aren’t on the hook for this nonsense.
Don’t you think that there is some chance that crime in the rest of the city goes down by a corresponding amount?
Think of the savings!! If you can corral all of the crime into a small geographic area, the police can cover it that much more effectively.
ByCrimesider Staff CBS News November 29, 2013, 2: 03 PM
Thanksgiving Va. Walmart stabbing over parking spot
CLAYPOOL HILL, Va. – Two men were arrested Thanksgiving night at a southwest Virginia Walmart after one stabbed the other over a parking space.
Christopher Jackson, 35, and Ronnie Sharp, 61, allegedly got into a fight at around 6:30 p.m. Thursday after arriving at the store to shop, according to NBC affiliate WVVA.
The confrontation reportedly started out as a small verbal argument over a parking space but then turned physical when Sharp threatened Jackson with a rifle.
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Dith-spicable!
Black Friday fights happen at Walmart stores across country
Jen Steer, Northeast Ohio Media Group By Jen Steer, Northeast Ohio Media Group
on November 29, 2013 at 9:15 AM, updated November 29, 2013 at 10:19 AM
Violence erupted at several Walmart stores across the U.S. on Thanksgiving and Black Friday.
NBC affiliate WVVA in Virginia reported that one man was stabbed during a fight over a parking space at a Walmart store. Police said one man threatened the other with a gun before a knife was pulled. The 35-year-old victim’s arm was sliced to the bone.
Police said they seized a rifle at the scene. Both men were arrested.
At the Walmart in Rialto, California, at least three people were involved in a fight over cutting in line, the NBC station in Los Angeles said. Two were arrested and an officer suffered minor injuries while breaking up the brawl.
Police shot at a man believed to be involved in a shoplifting scheme at an Illinois Kohl’s. The Chicago Tribune said it happened Thursday night in Romeoville when two suspects pushed a shopping cart out of the store.
An officer approached the car and became involved in a struggle. Police said the officer was caught in the car’s door, but the driver did not stop. That’s when a second officer fired, striking the driver’s shoulder.
Video from inside a North Carolina Walmart shows a mob of people pushing each other over flat-screen TVs. A woman can be heard screaming “Oh my God” repeatedly during the scuffle.
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Holiday retail numbers will be down, not as many Deadbeats living rent free with the disposable income. Not to mention the Deadbeat LLs who have lost $1,700 a month in stocking stuffer money.
Now there are still more than a few Vampire Beats out there who were probably duking it out over those Black Friday Smart TVs at Wally World.
The Stealth Stimulus of Defaulters Living for Free
By Mark Whitehouse
Updated Nov. 1, 2010 12:01 a.m. ET
The mortgage-foreclosure mess could prove expensive for banks and investors. But in some states, it will also prolong an unintended economic stimulus: free housing for millions of defaulters.
Defaulters living in their homes are getting a subsidy worth about $2.6 billion a month, according to a Wall Street Journal analysis based on mortgage data from LPS Applied Analytics and rent data from the Commerce Department. That’s 0.25% of U.S. personal income, roughly equivalent to the benefit top earners receive from Bush-era tax breaks.
The longer defaulters stay in their homes, the longer the stimulus lasts. The average borrower whose home is in the foreclosure process hasn’t made a payment in nearly 16 months, according to LPS.
Some homeowners who have defaulted on their mortgage payments are cashing in by renting out their homes. Joe Mayol, a real-estate agent in Palmdale, Calif., estimates that in his area about two-thirds of houses with defaulted mortgages are occupied, and half of those by renters. “People are getting money out of these houses,” he said.
http://online.wsj.com/news/articles/SB10001424052702304879604575582681822993688 - 97k -