‘Economy Entering Period Of Transition’: Bernanke
The Fed chairman shook up the markets today. “Although the anticipated slowdown in growth is underway, financial markets shouldn’t question the inflation-fighting credentials of the Federal Reserve Bank, Chairman Ben Bernanke said Monday. ‘There is a strong consensus’ among FOMC members to keep inflation low, Bernanke told an international banking forum here.”
“Recent core inflation readings ‘have been higher in recent months’ and ‘has reached a level that, if sustained, would be at or above the upper end of the range that many economists, including myself, would consider consistent with price stability and the promotion of maximum long-run growth,’ Bernanke said.”
“These core readings ‘are unwelcome developments,’ he said. ‘Therefore, the FOMC will be vigilant to ensure that the recent pattern of elevated monthly core inflation readings is not sustained,’ Bernanke said.”
From the Feds website. “‘It is reasonably clear that the U.S. economy is entering a period of transition. As had been expected, recent readings..indicate that the housing market is cooling, partly in response to increases in mortgage rates.”
“Overall, housing activity has softened relative to the high levels of last summer, and the rate of house-price appreciation appears to have lessened.’”
“‘In addition, the Committee must continue to resist any tendency for increases in energy and commodity prices to become permanently embedded in core inflation. The best way to prevent increases in energy and commodity prices from leading to persistently higher rates of inflation is by anchoring the public’s long-term inflation expectations.’”
And Danielle DiMartino is watching Fed data too. “Households’ fanciful notions of their financial health could soon awake to the reality of the longest Federal Reserve rate-hiking campaign in more than 25 years. A report due out soon, though, could finally call into question the strength of what has up to this point been the economy’s bulletproof vest.”
“The Federal Reserve releases its flow-of-funds data for the first quarter on Thursday. While it will surely reveal that household net worth has reached an all-time high, it will also write a few other records into the history books.”
“We know from reports on house price gains that after peaking in the last year’s second quarter, gains fell to their slowest pace in two years in the first quarter. And mortgage activity is sitting at a four-year low. At the same time, the so-called lag effects of the Fed’s tightening campaign have begun to visibly take hold of U.S. households.”
“The collision of these two factors, a slamming door on cashing out home equity and rising interest rates, will be most evident in one little line item of the Fed’s report. Some of us will be gleaning the other news in the flow of funds data, that households’ debt-to-asset ratios hit a new record; in other words, that debts grew at a faster rate than assets, as they have for years.”
“I checked in with the Northern Trust Co.’s Paul Kasriel. He is the first person to point out the most revealing of line items in the release; ‘Net Financial Investment.’ The best way to view the line item is as the surplus or deficit households are running. The figure has traditionally been positive. These days, which started in 1999, when net financial investment turned negative, households rely on the rest of the world financing their expenditures.”
“This is nothing new, you might be thinking. Think of the game of musical chairs. Now turn the music off. ‘House prices are no longer rising as rapidly so the home-ATM machine can no longer be tapped,’ Kasriel said. ‘And households are devoting a record and rising level of their incomes to servicing their debts.’”
“This means that the backstop households have relied on for the last four years is fast disappearing. It was ever-increasing rates of price appreciation that allowed households to continue cashing out their home equity.”
“Evidence of the strain was in Wal-Mart’s news that store sales were disappointing in May, sentiment that was echoed by auto dealerships. ‘We’re at a major turning point right now,’ Kasriel added.”
Raising rates by .25% is the right thing to do.
David
http://bubblemeter.blogspot.com
OT but is anyone getting this now?: All my friends and relatives who I tried to warn about housing are now chewing my ear off telling me how bad it is like they are telling me something i don’t know.
It is really amazing because I see now that people had some pretty strong “bad news” ear muffs on for the past few years.
Now they’re even more pissed off at me. Yep, this was all my fault!! I’ll be more careful next time.
They are at the Anger stage of Grief lol
When dealing with your FB friends and relations who refused to acknowledge the bubble, it is good to remember the immortal words of Jack Handy in DEEP THOUGHTS:
“It takes a big man to cry, but it takes a bigger man to laugh at that man.”
Not angry at me yet but I’m getting the “Are you free for breakfast / dinner?” kinda calls and the conversations sound like point by point replays of what I’ve warned about in the past.
I gotta find a polite way to say “What the !@###$ did you think I was telling you to sell for?”
When irresponsible Republicrat politicos run up insane budget deficits year after year, while the Fed cranks up the printing presses until the M3 (money) supply soars into the stratosphere, the net result is “cheap money.” However, it is increasingly being recognized as such by the bagholders (i.e. China and Japan) who will one day tire of accepting printing press dollars, backed by nothing, for their tangible goods and services.
I think there’s an outside chance that when the Fed gets together on June 29th to decide on the next interest-rate hike, Baranke will attempt to shed his “Helicopter Ben” moniker — and attempt to defend the dollar — by opting for a full 1/2 point (50 basis points) interest rate hike. If you think the FBs are suffering now, wait until interest rates start catching up with the REAL inflation rate (not the faked Fed “hedonic” CPI).
Nah! I think it will be 25 basis points this month and 25 more the next Fed meeting (July? August?). This stuff won’t be enough to break the back of precious metals. Try 7%. That will make gold bugs cower and go under a rock. Admittingly, I’m one of ‘em, yet I put only about 6% of my net worth in precious metals. I guess the time to start buying bonds is when you see two consecutive rate reductions. Buy lots of ‘em. Then a few months later buy more, but in a smaller increment. I’m not convinced that any hikes in interest this year is enough to counteract the 5 years of printing presses. I’ll continue to buy a few bullion coins at a time every 2 months or so.
With the rampant inflation (housing, gas, oil, CPI, etc) I vote for a 50 basis point increase.
Kind of OT.
But I thought you guys might enjoy reviewing a history of prices of stuff in Morris County New Jersey. Someone or organization gathered data from the classified section of the local county newspaper from 1906-2006. The categories include many things, like household items, clothing, food, real estate for sale, and rental real estate, among other things.
In this data you can see how prices shifted in these categories through the 20’s and 30’s. Housing costs went down, to buy, and rent. And the cost of goods also went down, according to my interprestation of the data. Check out the website for yourself.
See: http://www.gti.net/mocolib1/prices/
I would enjoy getting feedback from any of you that review the data and to know what you find in it.
You can find my email at my blog:
Los Angeles Friends In Deed
This is an inflection point….from here there is no where but down for the economy and housing.
Debt based systems will alway run out of steam. Whether it is one person or 300 million. It isn’t rocket science. What I wonder is, will the media connect the dots about how we got here?
The media won’t “say” how we got here. Too many folks way high up in the pecking order will be in worse shape than jail time if they were to spell it out. They just better pray to someone that the idiots in America don’t connect the dots. What is going to make it difficult is that they are a cornered, wounded animal, with no real way to predict their actions.
200K drop in price.
For those of you who don’t know where RHE is located it is on mountain you see on left side of plane as you fly into LAX from east.
24 Buckskin, Rolling Hills Estates, 90274 California
$1,799,500*
Status: ACT Orig Price: $1,995,000
That is a 10% drop in price. I know 200K is a lot, but I am seeing that all the time here in SD on a smaller level. 800K prices being lowered to 720K. I am not even going to flinch until I see 15% to 20% declines in asking prices. Hope to see that soon.
‘Home value appreciation fell for the third straight quarter in the three-month period ending March, Freddie Mac, the congressionally chartered housing agency, reported Monday. The national conventional mortgage home price index slowed to an annualized rate of 8.7% in the first quarter of 2006, down from the previous quarter’s revised rate of 12.9%, Freddie Mac said.’
‘Home prices are starting to feel the effects of the upward trend in mortgage rates,’ Freddie Mac chief economist Frank Nothaft said a press release.’
You could here BB’s voice trembling slightly, as if he was a little nervous. He is stuck between a rock and a hard place, if he raises rates, the fall in housing will definitely accelerate. BB knows this, but yet he wants to remain hawkish on inflation.
I would hate to have his job; the stress must be unimaginable.
This is why “buy low, sell high” is so easy to say and so hard to do, isn’t it? When they’re better to buy, you don’t want em and when they’re better for sale, you can’t bear to lose em.
Me, I’m just a bear. LOL
Housing bubble +
Rising interest rates +
Inflation +
Massive deficits +
Weak dollar +
= One hell of a mess
Don’t forget sky-high energy costs! (Although I guess that’s captured in the Inflation numbers… unless it gets taken out! :-))
Weak dollar, you betcha–> $1.2887 right now to buy one EURO in US Dollars:
http://www.bloomberg.com/markets/currencies/eurafr_currencies.html
Bernanke denied the existance of the housing bubble so he shouldn’t use a slowing housing market as an excuse to not be vigilant on fighting inflation now. The housing market will tank eventually regardless of the feds rate decisons.
Some people like to pull off a band-aid in one quick and painful movement; others like to slowly peel it away pulling hair after painful hair until it is finally off. Either way the housing boom has been the band-aid for our economy for the last 5 years and removing it is going to hurt.
Bernanke denied the existance of the housing bubble - so did Alan G and EVERYONE else - except the bloggers.
Agree that this can not be the excuse! Especially since the GOVT’s #’s never showed any housing inflation - since they use the rental amounts (even though 70% of population owns a home and housing costs make up 40% of GDP)!!!!
Hopefully this mess will encourage them to come up with a different way of calculating the rate of inflation. IMO if you included the cost of owning a home, and recalculated everytime a refinance occured it would be easy to see that inflation has gone through the roof the past five years.
People have been robbing their home equity to fuel economic growth.
For what?
So the rich can get richer?
Comment by Waiting in SD
2006-06-05 13:09:31
So the rich can get richer?
________________________________________________
And what is amazing about that truth, (yes the wealthy have gotten ALOT wealthier and the poor ALOT poorer in the last 6 years) you will be accused of “class warfare” when it is those making the accusation or engaged in it.
“are engaged in it”, rather.
____’EM. It’s always been about class warfare. They don’t call them “sheeples” for nothin!
I am not so sure Bernanke denied it, he just did not come out and say “quick everyone sell your home before the housing market collapses”.
Because he knows if everyones sells now…it will cause a faster decline!
How could BB encourage the general public to sell thier real estate? If he did so, I am sure he would be questioned on his logic. As the Fed Reserve chairman he is responsible for the general issues of economy. And if people sold their problem, it means the seller would merely be handing over the problem , over priced real estate, to someone else.
I can see how on an unofficial basis he might encourage certain friends or family members that it might have been a good time to sell no later than the summer of last year.
Although, I wonder if he could even do that, without violating some kind of conflict of interest, like insider trading.
I’m not picking on anyone in particular, but it really *isn’t* appropriate to use house prices to calculate inflation. To calculate inflation, you see what is happening to the prices of goods and services that people buy. For housing, which lasts a very long time and is eventually resold (it is not like a candy bar or a car) what the owner-occupier is doing is purchasing shelter (from himself). For someone who rents, they purchase shelter from their landlord. We observe how much a renter paid a landlord, but we don’t observe how much an owner-occupier pays himself. So we use housing rental prices for calculating inflation.
It is not appropriate to use an asset price to calculate inflation, whether that asset is a stock or a house. An asset is just a way to store your wealth (like cash, CDs, foreign stocks, etc.). Inflation measures the prices of goods and services (services like owner-occupiers renting from themselves).
I’ve got an issue with the Fed focusing on “core” inflation rather than the price level of all goods and services, but it isn’t wrong for the Fed to not include mortgages when calculating inflation.
I suppose I’d have to agree with that. I certainly don’t value my house based on recent (insane) comps and I guess the Fed shouldn’t either.
But yeah, the whole “core” inflation thing is just wrong when they are stipping out “volatile” food and fuel that have only been rising for 2 years now.
Maybe it should not be included in inflation, but it should definetly be accounted for.
Or put another way, you don’t “consume” a dwelling by buying it. You “consume” a dwelling by occupying it for a period of time. Which is what paying rent entitles you to do.
wait a minute. isn’t interest cost a service charge in a way?
I’m sure the guy who was renting for say $800 per month and now has a house payment of $3,000 would disagree with the “non-inflation”. This is like the Gov’t using the core rate - which is the CAVEMAN rate - naked, living in a cave and hungry!
Yeah, but the point is he chose to pay the $3K to own. He is paying $2200/month for the luxury of owning. He doesn’t need to.
Crap, can’t believe I’m arguing for govt statistics here!
“Bernanke denied the existance of the housing bubble - so did Alan G and EVERYONE else - except the bloggers.”
If housing isn’t a bubble, then he should have no problem raising rates because there is nothing to burst. Maybe that is why he said it, if indeed he did.
“Bernanke denied the existance of the housing bubble - so did Alan G and EVERYONE else - except the bloggers. ”
And except John Talbott, the fellow who wrote a housing bubble book in 2003, and a new one just this year. I was in Barnes & Noble a few days ago, looking for the book. In the real estate section, there was exactly one book (his) that said “Sell”. There was at least 99 other titles that said, essentially, “Buy!”
I think the sheeple are going to have their choice on this one. They can except the fact that their biggest asset (for the most part) is going to go down in value, and wonder how much. Or they can simply ignore the news and the foresale signs in their neighborhood until they too have to sell.
Ouch… Great analogy!
> Some people like to pull off a band-aid in one quick and painful movement; others like to slowly peel it away pulling hair after painful hair until it is finally off. Either way the housing boom has been the band-aid for our economy for the last 5 years and removing it is going to hurt.
Very nice picture!
To Ben Bernanke: He has no responsibility for the housing market, he must look after the banking system.
Great analogy - That’s why I put 25% on no increase, 25% on a .5% increase, and 50% on a .25% increase.
I take my Band-Aids off at a painful, yet comfortable, pace.
“You could here BB’s voice trembling slightly, as if he was a little nervous.”
I noticed that too.
He just got a postcard from Greenspan in Jamaica:
“Hey Ben. Guess you’ve figured it out by now. Sorry, but you’re screwed. Thanks for taking one for the team, and by team, I mean me. (You) wish you were here! -Love, Al”
he’s probably scared his kneecap will be taken off with the words he said today.
We have to put more weight on the words he uttered today relative to past announcements, as he was recently given a lesson by a hot lady (http://www.strangepolitics.com/images/content/102932.jpg) on the need to communicate clearly.
It wouldn’t be nearly as bad if home prices in some way factored into inflation–rates would have moved up starting 2-3 years ago, and we wouldn’t be in near the predicament we are in today.
Now, since home prices are sticky in the downward direction, rents will be forced upwards, driving inflation higher, which will drive interest rates higher yet, putting more pressure downward on home prices.
I would not want to be a speculator in housing today.
So what you’re saying is that home prices are sticky which will cause them to not be sticky?
If anything rent is much “stickier” than home prices. It is far easier to add a roommate and/or leave when you rent. Renters aren’t particularly interested in what your mortgage payment is and won’t pay it unless general wages support it. They don’t.
Rents may go down, and they may even drop the Fed funds rate. But it doesn’t matter. This was only started by the fed point-shaving. Mortgage rates have continued to be low despite, what is it, 20 quarter-point Fed raises? And even if the world decide to keep funding our crazy mortgages the fever is gone. The speculators are bailing and demand has hit a brick wall. Yes it will take awhile to play out, but the script is already in.
The “stickiness” of home prices means that downward pressure on home prices will increase, not be constant downward pressure. Reversion to the mean is a powerful force.
You said above: “It is far easier to add a roommate and/or leave when you rent.” Yes, true, and if rents go up, it is very easy to add a roommate to alleviate higher rents.
What I mean by “sticky” is that those people who can still make their payments would rather not sell their home than to sell at a loss–this is true for both investment properties and primary residences. Historically, while home prices DO go down, they are stickier on the way down than on the way up because of this emotional attachment to their “equity”. People don’t like to sell stocks for a loss and will hold on irrationally, this is also the case for real estate.
And I agree, rents are linked to wages, but in many, many markets, rents have been largely flat for a number of years while wages have increased. This was mainly because people could rent their money for less than their apartment/house. There is room for upward movement in rents even at today’s wages.
Today, interest rates, prices, wages, and rents are all out of whack. Prices need to come down, and rents generally need to come up. There will be increasing pressure on prices to come down as interest rates rise to counter inflation (because a lot of homes have owners with mortgages tied to short term rates, not long term rates). I say rents need to come up, because with the current costs of raw materials, etc. it is generally not all that economical to build new rental units. Supply will be constrained until rents come up or construction costs come down.
I think there could be a short term lag in this rental inflationary effect as the speculative houses and condos become rentals. But, in my opinion, the trend is clear–people who can’t hold onto their homes will be stung, selling at prices that the market will bear, those who can hold on will fight to keep the prices (and rents) high. This will drag up rental rates as more and more people choose to rent part of a relatively fixed rental supply (relatively fixed since it doesn’t make a lot of economic sense to build more rental stock).
This will contribute to inflation, pushing up interest rates, and forcing a few more people out of their homes, while others will continue to hold on.
All this means is that the “stickiness” of home prices will keep prices falling slower than if there were no emotional attachment, which will push rents higher faster than if there were no “stickiness” in home prices (which in turn will push interest rates higher, and will increase downward pressure on home prices).
Have to admit that at today’s rents, it is impossible to build new rental housing that will flow cash positive.
Sorry, when the 15% of dwellings that are currently empty because they are; flips, second/vacation homes get dumped on the market/rented you will see both rents and prices fall.
Have to agree - At least in San Diego, with its glut of investment properties, we will see falling rents as people unwilling to sell for a less will take whatever rent they can get. Better to get something rather than nothing, and if they set the rent to high, nothing is what they will get.
Dead Man Raising Rates
I am sure that some will welcome this with howls of protest, but the one wild card in all of this that might deploy a few air bags during this crash would be some short term tax cuts. I think everyone else is right, BB is stuck and the rates are going to continue to go up. You just KNOW the pigs in government are going to try not to give up anything. If we are going to take it in the shorts (the US public) they should to. Cut taxes now in some small hope that you can keep some life in the economy as it tries to digest this heavy meal of lard soaked credit we have been shoveling in our faces.
BB said “The best way to prevent increases in energy and commodity prices from leading to persistently higher rates of inflation is by anchoring the public’s long-term inflation expectations.’”
Here’s a crazy idea, but maybe protecting the value of the dollar would be a better way? Maybe if the federal budget wasn’t red ink as far as the eye can see the dollar wouldn’t be so weak against the Euro and Yen? I’m sure BB knows that the huge fiscal deficit and the resulting fall of the dollar is the cause of a large part of commodity price inflation. Why is he afraid to speak the truth to his Republican Masters?
Why is he afraid to speak the truth to his Republican Masters?
Oh Jeez not this again.
Why? It’s not because of who his ‘masters’ are, but who he is. The FED is the one stronghold of market-force absence. While free-market capitalists rail on central planning failures, they happily accept the FED setting the price of money in secret. How accurate is their pricing? Witness the secondary market bid the dollar down to its ultimate essential fiat-money value… paper useful for burning.
No, the “Republican masters” crap.
I feel the same way about the Federal Reserve Bank as I do Republicans, Democrats, and the people that must blame one party or the other for the stupid things the entire government is guilty of.
I was totally 100% with him until that sentence… and look, there are no further useful HOUSING BUBBLE posts after it. We’ve even got a “Gore invented the internet.”
Shoot, I oughta make a drinking game.
“Gore invented the internet”. its the republican who said that.
That whooshing sound is you missing the entire point.
I don’t really see this as a Republican or Democrat issue. What is really scarry is the lack of any sense of responsibility on the part of the people running up these debts, public or private.
Both parties are hooked on spending, just for differnt things. But what if one of the parties adopted a position of fiscal responsibility, high interest rates, paying down debt, slashing entitlements (don’t kid yourselves, you can’t possiblly deal with the spending without goring a lot of sacred cows.), and keeping a tight reign on new spending.
Does anyone think they would get elected?
No, because no corporation would fund their campaign.
If there was a major mess, maybe. Take San Diego - city bordering on bankruptcy, mayor steps down after pension scandal. The interim mayor elected (Sanders) had that sort of hard-line approach - I’m going to get ourselves solvent again by making hard cuts where needed.
For this to work at the Federal or State level, I think we’d need much more fiscal corruption to come to light and some scary, near-financial insolvency issue. Of course, if that happens at the Federal level we may have bigger things to worry about than who to vote for!
Great post Scott! I also wonder what our actual budget numbers would be WITHOUT the pork. D’ya ever wonder how much of the budget our generation’s Congressmen have added thru their stroking the locals, and what that has added to our grandkids backs?
One small edit: I see this as a Republican *AND* a Democrat issue.
Sadly, both parties have been having an orgy of debt.
That is an unfair statement. Recall that the last Democratic resisted its spending urges and balanced the Federal budget. How easily people forget history!!
“Recall that the last Democratic resisted its spending urges and balanced the Federal budget.”
This must have been right after Al Gore invented the Internet
Comment by SidneyPrice
2006-06-05 13:06:16
That is an unfair statement. Recall that the last Democratic resisted its spending urges and balanced the Federal budget. How easily people forget history!!
____________________________________________________
But isn’t it strange how the haters, radicals and loonies on the right will deny it?
sfv… come on, now. You’re joking, right? Puh-leeze… say you’ve got your sassy tongue in your kiss-blowing cheeks.
For what it’s worth I, for one, am an independent, and wholeheartedly agree with Roastbeef in that this issue affects all parties - including Dems and Repubs. Actually, I most closely align myself with the “Natural Law” party but they never have any candidates - haha. My point above was crediting the Democratic party with balancing the Federal budget during a period of record revenues due to the .Com bubble is not unlike crediting Al Gore as being the inventor of the Internet.
Ah… I get it. Proportional cynicism. Well done, Smithers!!
There is no avoiding the fact that Republicans have been in control for 5+ years and these have been years of massive financial recklessness.
The truth is out: Republicans are not more fiscally responsible.
How much is Iraq costing us? Are we safer?
I think both Dems and Repubs are crooks.
Some history of the federal deficits http://www.ravenna.com/~forbes/images/deficit.jpg
A picture is worth a thousand words.
Hi Lingus
Hi LapDog. lmao
Pant, pant, pant. When are you coming back to DE.
Soon sweetie. But don’t get your panties in a bunch, it will take me a couple days.
Don’t forget your knee pads.
Only if I can borrow yours sweetie.
http://www.omrlp.com/
A troubled party for troubled times…The Monster Raving Looney Party. Don’t waste your vote — vote Looney!
Yeah, and they get retirement pay we could only dream about!
Agreed…this country is run by a corporate “ruling elite”. The two major parties are just variations of the same theme. Even our presidential candidates are selected for us from an ever smaller pool of “acceptable candidates”. He who picks the candidates…wins. Who are we gonna get to pick from in 2008…Hillary?/Jeb?/Laura?. Anyone who thinks we live in a democracy should get DNA-tested for being descended from Big Bird (ostrich).
Comment by MjrMjr
2006-06-05 12:24:23
Why is he afraid to speak the truth to his Republican Masters?
__________________________________________________________
Good question. But you have to remember this….. the criminals in charge in the past 5 years are 100% beholden to corporate criminals and anything is game so long as “tax cuts” continue…… and shamefully, the 50k/yr wage slave runs off at the mouth with stupidity like, “why should corporations and the rich pay more taxes than the rest of us?” at his own economic peril.
c’mon, they are not criminals. laws doesn’t apply to them. no law is being broken.
Lingus,
You appear to be blind in the left eye. Yes, the Republicans (Republicrats, more accurately) suck. The RNC has been hijacked by the neo-cons and is totally beholding to the “moneyed interests” that Thomas Jefferson warned of. But how can any thinking person claim the Democrats are the better alternative? They are the party of parasites and corruption. The productive classes, meanwhile — those who work for what they get and play by the rules — are being squeezed tighter and tighter.
You appear to have at least some capacity for independent and original thought, so how can you still defend a party as vile as the Democrats?
If you don’t believe that Democrats are just as corrupt as Republican, then why are they pushing so hard for amnesty for illegal immigrants? Especially since this helps business primarily while crushing the lower classes (traditional democrat base) by undercutting low-skilled jobs.
Yeah, wouldn’t pro-amnesty an anti-Unions position?
Sam,
You made some valid points. However, you will never find a reply by me anywhere on this blog where I defend or subscribe to the alternate party’s shenanigans. Besides, they haven’t been in power in 6 years now? My point is always, and always has been that the current group of criminals occupying DC have reached such astounding levels of corruption to make the alternate seem like church boys. Further, the right wing corruption is far more insidious and heinous. How? Their economics are undoubtedly founded on extremely shaking concepts. You cannot find a mainstream economist willing to put their career on the line to validate supply side. Whats worse is these corrupticans have somehow achieved Nirvana; those who pay the highest price for the voodoo economics are the ones who have the least, yet they embrace it themselves, at their own peril.
Well Democrat LBJ’s “War on Poverty” is now tabbed at 1.5 Trillion dollars. That is a Democrat entitlement program that destroyed many families it intended to help and also robbed U.S. Taxpayers. Imagine how more competitive and strong America would be over the last 40 years if LBJ told individuals to be responsible for their own thoughts and actions.
Wow…. You’re really out there in the twilight zone Billy. The raping, robbing and pillaging of the 40 hour per week folks to facilitate corporate welfare via “tax cuts” and you’re hung on LBJ? Are you sure you’re not one of those desperate desert seperatists of McVeigh vintage?
Offtopic, but it seems we have a few Republicans here, can I ask you guys a question?
What is it about you and gays? No ammo for the elections?
They’re hoping outrage over homosexual unions will obscure their attempt to amnesty millions of illegals, and admit 100,000,000 more legally.
I doubt it will work.
RIght on. If social conservatives (I consider myself one) are stupid enough to scamper after this red herring thrown out by the clueless sell-outs to TRUE conservatism, Bush & Co., instead of focusing on the REAL problems facing the country, they deserve nothing but contempt.
sammy. thank you for that. just today at lunch i stated that “there have to be intelligent conservatives out there that can see this as the red herring it is.” you give me hope.
They (the Reps) can’t help it…. it’s genetic.
Nice!
Not a Republican but let me explain how this works.
Pick an issue important to people, any issue. In this case gay marriage. Now, we can frighten people by pointing at the other side:
“The heathens are coming after you!”
Throw in a few pictures of men in speedos kissing in the middle of a public street in San Francisco and you got yourself some votes.
Now, on the other side:
“The zealots are coming after you!”
Throw in a few pictures of people waving “God Hates Fags” posters and there’s some more votes.
The obvious solution is to simply create some sort of civil union that confers the same rights as marriage without all the hoohaa. What the hell does the govt have to do with who I can marry in the first place? Just give me some decent legal rights, and I’ll take care of the ceremony and honeymoon in Barbados.
It is a non-issue. Easily solved. And such a solution will never be considered by either side because TO DO SO WOULD REMOVE THEIR ABILITY TO INSTILL FEAR AND CONTROL YOU.
The sad thing is that a civil union would be extremely useful for people not interested in marriage. Many elements would help spell out and resolve situations that are currently quite painful.
Republicans what to control your morality and claim you know best how to spend your money. Democrats want to control your pocketbook and claim you know best how to control your morality. I think they both have it wrong and lately I see no difference in the parties. It amazes me that so many people on this blog see through the lies told by NAR but half of you think Bill Clinton didn’t lie to you and the other half think GW Bush doesn’t. Go back to talking about realestate SHEEPLE.
I’ll take Clinton lying about a hummer over Dubya lying about a war any day.
The “big nothing” issues (Gays, Abortion, etc.) are always wheeled out at election time as an emotional smokescreen which are proven time and time again…to be 100% effective.
These old chestnuts keep any candidate from having to address any issue of importance (economy, energy, unending war, etc.) while fueling peoples passions. The media jumps in to fan the flames and everyone votes for the candidate who expels the most hot air defending this country against … fill in blank.
Why mess with the formula if it works every time?
“Pay no attention to that man behind the curtain”…..
Comment by SeattleMoose
2006-06-05 22:07:04
The “big nothing” issues (Gays, Abortion, etc.) are always wheeled out at election time as an emotional smokescreen which are proven time and time again…to be 100% effective.
These old chestnuts keep any candidate from having to address any issue of importance (economy, energy, unending war, etc.) while fueling peoples passions. The media jumps in to fan the flames and everyone votes for the candidate who expels the most hot air defending this country against … fill in blank.
Why mess with the formula if it works every time?
“Pay no attention to that man behind the curtain”…..
______________________________________________________
Very well said. You will never get the criminals currently in power to speak THE TRUTH on economic and energy issues for one reason only; They have set the stage for profiteering by big money at the expense of the masses. If they open their mouth and TELL THE TRUTH on either of these issue, mass rioting and revolution will ensue. Therefore, they must continue to LIE to put enough time between them and when the truth finally gets told.
It seems that we have very many like minded individuals on this blog. Some lean left and some lean right (like myself), but we all seem to be pretty much disgusted with the both sides of the political fence. Can we not form our own party? Ben for President!!! Or at least do what we can to let Americans know that there are alternatives to Dems and Repubs?
During the last presidential election, NPR (All Things Considered) did a series focusing on the other people (besides Kerry and Dubya) running for president and I found it to be incredibly enlightening. These other less popular/less known political parties have good ideas, but lack the funding of big money interests. And as we all know, it’s the contributions that win elections. These parties don’t have money for the advertising and smear campaigns that the big two do. Basically they have no way to get their messages out and inform people about their platform. There must be something that can be done to help their cause. There must be some way to let the sheeple know that there are alternatives out there if both the Democrats and Republicans make your skin crawl.
And back to NPR, since that’s where I learned of the other candidates. They should do more to educate the public about these alternative parties and stop spending so much time focusing on Democrat vs. Republican. If I want to hear about the platforms, latest smear campaigns, and poll results of the Dems and Repubs, I can turn on “Nightly News w/insert your major network nightly news anchor here”. “Public Radio” should be about bringing the sheeple information about the candidates/parties that don’t have the big budgets to get the word out about their platforms. They should get the lion’s share of public radio reporting and not just a ten minute blurb at the end of the broadcast.
I wonder if the market will start to price in a .50 point hike at the next fed meeting. It looks like BB is setting us up for it. I think the minutes of the last meeting actually showed they discussed the option. If that happens, all hell will break loose. I’m selling all of my stocks, except Garmin (GRMN). ; ) hehe…
I sold my stuff three weeks ago. It is going to crash. I do not trust this market. Hand writtings are already on the wall.
Me too ! I’m sitting in 75% cash. Have been since a few days after May 10th. The stock market has been ignoring the housing bubble and inflation forever. Massive denial. And now they are just beginning to come to their senses. It will be a long way down before this situation plays itself out.
Please explain. If inflation is a problem, don’t you want a company with assets that will presumably inflate as well as with product that also will inflate. I’m probably missing a hugh economic principle. People who buy overpriced homes if they can make a 30yr fixed payment and can hold for 10yrs especially if inflation starts running at 5%. I know there is a key point I am not getting. Does it depend on how long you hold the asset. I understand that if we get financial armagedon things could be different.
Fed increasing interest rates -> A tightened dollar = deflation = dump your stocks now while they are high on excess liquidity.
When the FED stopped publishing M3, I removed all my stop loss sell limits and pushed the sell button. My allocation now? 40% gold bullion, 50% short T bills, and 10% put options on SP.
Do you think Liareah is pissed as hell right now? I can’t remember the source, but didn’t he say somewhere recently that he thought the Fed was done because they had to protect housing and (something else)?
Just goes to show he’s delusional. The fed is concerned with fighting inflation. The government is concerned with housing affordability. Keeping housing prices elevated runs counter to both goals.
This is the fundamental problem with democracy. People vote their perceived interests. In a society that’s been getting along with debt for so long, it’s going to take deflation for people to get scared of debt — personal or otherwise. I think it’s just a matter of time before we’re experiencing a major economic meltdown.
“I think it’s just a matter of time before we’re experiencing a major economic meltdown. ”
May be then overindulge people and overindulge governments (fed and state) would learn some fiscal discipline.
For sure during this so called conservative administration and conservative congress; fed. gov. have been behaving recklessly and thoughtlessly in regard to money.
Incredible, as if everybody is ‘high’ on spending and do not feel anything anymore.
Ya now-a-days you vote for a Republican because you are a fiscal conservative and you get run-away spending. So you have to vote a liberal Democrat in to get spending under control???
Both parties have failed American people (I have no lost love for liberals). Far more failure from the party who has betrayed its own principles (in this case principle of fiscal conservatism).
Ronald Regan from his grave is looking at this republican government and is crying his heart out now. Let’s be objective here not subjective.
Do people really take out HELOC’s to go shopping at Wal*Mart? If this is the case, I’d some people are in really rough financial shape. Heh, Wal*Mart plasma flat panel for a $950k McMansion.
Yes, they do. A friend of mine here in Houston just bought 2 flat screens and new furniture for their new rented house. They can not even pay the bills as it is. They owe money to everyone, but yet the furniture place sold them new furniture on credit.
At least they rent.
They lost their house 3 years ago, and they still have problems paying the bills. hmmm, I think buying so much crap might have something to do with this.
Wow, some people will never learn from their past mistakes.
Here is an idea…Someone walk over to the printing press and gently push the red switch with the 0, until the 1 pops up. The sound of the machine should stop…Then take out the red marker, pull out the budget and start putting lines thru everything that smells like pork.
But I want a bridge, even though I admit I don’t need it. And I want a McMansion, even though I don’t need it.
Who will be my enabler? Countrywide, Ameriquest, ECC? You are my saviours!
Or maybe, in reality, my executioners.
With a negative savings rate, no equity to tap in the housing and no manufacturing jobs - (IMHO) we are going to join the other third world countries with Hyperinflation think Zimbabwe. Raise the rates, show ‘em your serious, ‘cuz you screwed everybody with less than $2,000,000 in liquid assets.
Ah, the dumb herd rises to the bait once again. Inflation is not the likely catastrophe, but deflation. When next to no one thinks deflation is a problem, I suggest it most probably is. Few saw it coming in 1720, 1837, and 1929 though the size and exponential increase in debt/money was obvious.
The seeds of the necessary coming reversion (some say collapse) of dollar denominated prices for financialized assets — stocks, bonds, ETFs, mutual funds, real estate, base metal commodities, etc., which have been caused by non-self-liquidating easy-money-debt — are beginning to sprout.
Prepare for hard times, folks… Because of the size and global nature of the debt bubble — and the straw-man dollar being the planet’s reserve currency — there’s going to be hell to pay at this mess unravels. My suspicion: this correction will be deeper and longer than any in the past few hundred years.
Dollars were backed by gold up until recently. Now that they are not backed by anything, inflation and even hyper-inflation are also distinct possibilities (along with deflation) based on no more and no less than a beauracrat’s keystrokes.
The Fed could buy every MBS security in existence at face value… and then some. After all they have a device called an “electronic printing press”. They won’t do it if they don’t feel they must, be you better believe that option exists somewhere.
And print away is something they won’t hesitate to do. The only real bagholders will be the world population who are stuck with a bunch of worthless paper currency. But the idea of the Fed cutting the money supply is absolutely foolish. Heck, why then get rid of M3 reporting? No, there’s only one path ahead for all CBs and it’s firehose printing of worthless paper currency.
Bernnke just gave a speech on being vigilant with inflation. That runs counter to printing money. He isn’t going to do that. They learned the lesson last time they did that. He’ll take the economy down before he prints money.
You’re absolutely right. A government beauracrat would NEVER say one thing and do the exact opposite.
I’m betting on deflation, too. Dollars are perceived to have value, so they do. A yellow metal called gold is perceived to have value so it does. Both are intrinsically of little value, except for jewelry in the case for gold (but platinum is the new fashion).
Hyper-inflation leads to revolution. Deflation leads to socialism. Bernanke will choose survival and socialism, just like FDR et al. did in the 30’s.
Three words: Foreign Currency Cash
A few more words: Inflation = debt forgiveness. Inflation benefits the the borrower (= sheeple) and hurts those with wealth and power, doing the lending, and raking in the interest profits caused by this bubble. Who controls the fed… borrowers or lenders? So turning the crank on the money wheel is not a forgone conclusion here. Far from it, I believe.
I share your deflation view….
When is the last time a politican won an election promising spending cuts and higher taxes?
THAT is why we have huge deficits. Blame politicians all you want, but voters are responsible for electing them and then re-electing them.
Right on. We can’t trust people with their own money so let’s have them vote on how to use someone else’s!
Why is it people who have no faith in the free market have so much faith in the vote market?
Bah, I’ve got no faith in either.
because we cannot vote out free market, but we can vote out politicians.
What the hell, we’ve moved down the main page.
I fully support anti-trust regulation. Outside of those rare exceptions, I can change companies anytime I like.
I can only vote for a new President once every four years, not to mention if I don’t like the Democratic or Republican branch of the American political junta I don’t have much of a choice, do I?
It’s like a local deli that every four years holds a survey and allows you to choose either pretzels or chips which then they serve exclusively for the next four years. Except the pretzels and chips have guns and will shoot you if you don’t buy them.
unfortunately, 4 years is one of the price you have to pay to get stability and be able to do something else for yourself instead of, say, running a recall drive all the time. just imagine if we can kick out our president every 3 months.
“free market” heh? lmao. Jose, smoke some more.
Call me a cynic, but I think it makes people feel morally superior when they vote [in majority, of course] to take money away from others to spend on causes they “feel” for.
Case in point: “War on Poverty” I mean, why doesn’t people spend their own money? Because it hurts less to take it from others, “legally” of course.
People rant on and on about religious zealots who want to ban abortion.
Then you ask them if welfare should be legislated and 95% will immediately respond “Absolutely, it’s the moral thing to do.” or “It’s just basic humanity.”
Gah!
You don’t get it both ways. I really don’t care which side you pick (ok to legislate morals or not), but please, at least be consistent.
nope. it’s not about moral thing to do to basic humanity. those are just the words they use. its more like, less muggers on the streets, of people in the parking lot asking for some change, erc.
attempting to turn off the bold
Ben, could we have the preview/edit screen back?
TOL took a beating today!
Taking BOLD off
Lets try this Did it work?
It’s the roaring 20’s again. Get your flapper clothes on, girls. Seriously though, you have inflation and deflation ahead of us, the worst of both worlds. Inflation in the price of energy and food (yes, food, wait and see). I don’t know how far BB will push rates, but somewhere short of 20% you will crush the housing, bond and stock markets. The elimination of that wealth is definitely deflationary. Pick your poison. I’ll be at Gatsby’s; he throws marvelous parties.
Crud. My rudimetary HTML fails me .
a little test comment.
there
end
last try last try 2
If someone will send me an email about stuck bold or itallics, I can fix it very quickly.
I had the same problem a few weeks ago.
Jeremy Seigel also has an interesting take on this:
http://finance.yahoo.com/columnist/article/futureinvest/4954
in which he admits that “There is now overwhelming evidence that housing has turned down.” He also thinks that commodities are in a bubble, and that bubble must also pop in order for the Fed to stop raising rates.
Personally, I don’t agree that most commodities are in a bubble, especially with the news of the world lately….
I agree. The “rise” in commodoties are really only rises against fiat currencies. At some point I think the industrial commodities will take a beating as the world economy breaks down, but the precious metals should then skyrocket because it will more than obvious that the central bankers of the world have royally screwed the holders of their paper currencies. There is only one way out for all the central banks: print money like it’s the Weimar Republik all over again.
I read Siegel’s article. Similar one was posted on Yahoo finance by him a couple of weeks ago. We are 5 years into a commodities bull. The shortest commodities bull we had was 15 years and Mr. Siegel is pronouncing commodities dead! LOL.
“The best way to prevent increases in energy and commodity prices from leading to persistently higher rates of inflation is by anchoring the public’s long-term inflation expectations.’”
Can someone explain how an inflation expectation can be anchored?
Here’s a try:
I think he’s saying that the Fed is willing to raise interest rates to whatever level is necessary to curtail inflation. If market participants believe this, they won’t be as apt to raise prices, push for higher wages, etc. That is, market participants’ inflationary expectations will be “anchored” to current expectations and won’t give way to higher expectations.
Note, the current dilemma could have been avoided if Greenspan had incrementally raised rates as the bubble began to appear. Instead he lowered rates to facilitate Bush’s war in Iraq. It was purely a political decision that “postponed” the economic pain of the conflict and allowed the Bush administration to shift the cost of the war onto future generations.
Note, the current dilemma could have been avoided if Greenspan had incrementally raised rates as the bubble began to appear. Instead he lowered rates to facilitate Bush’s war in Iraq. It was purely a political decision that “postponed” the economic pain of the conflict and allowed the Bush administration to shift the cost of the war onto future generations.
I sold my home 10 months ago anticipating what I believe will be “Economic Armageddon” in the United States.
And the $3 trillion dollars that evaporated on Greenspan’s watch was in fact stolen from the American people while the Fed chief concealed the crime behind the smokescreen of low-interest rates. In the final analysis, Greenspan will be seen as a greater traitor than Bush.
Greenspan did all of this to help out the US consumer. Everyone knows we need to save more and the rest of the world needs to spend more. After you go through a Depression you learn how to save. Any questions?
http://tinyurl.com/h83rn
David Berson, chief economist for mortgage-investment giant Fannie Mae, is troubled that foreclosure activity is rising during a period of economic growth.
“Normally this is a situation in which housing problems tend to go down, not up,” Berson said. “If it continues, it could be a sign that borrowers are in financial distress.”
Gee, ya think??
Speaking of “borrowers in financial distress,” I had a client last week break down in full quivering-lip, spasmodic-breath tears last week because she needed a special accommodation to help her meet the increased monthly payment of her ARM (up $900/month). This client is also the type of person who vehemently argued, just twelve months ago, that renters needed to accept the rising cost of housing and if they didn’t like it, could move out. It was the renter’s fault for not being a shrewd investor. You know, everyone wants to play crapitalist until a bad roll of the dice…