Asset Speculation And Impoverishment
A reader suggested a topic on policy and housing bubbles. “The Federal Reserve and the myth of the disinterested technocrat. Ain’t no such thing as a disinterested human being in economic affairs. Especially affairs which impact oneself, family and friends.”
“The policy of encouraging ever-increasing house prices is: 1) A generational wealth transfer, from young to old. 2) Also, it is a reverse Robin Hood wealth transfer from poorer to richer. 3) And it is a wealth transfer from outside the FIRE sector to within it.”
The Fiscal Times. “Just how big are the largest banks in the U.S.? Here’s a little perspective: In the past few months, JPMorgan Chase has agreed to pay, depending on how you do the math, somewhere between $22 billion and $25 billion in fines and penalties for various illegal activities, from hiding its suspicions about Ponzi schemer Bernie Madoff to misleading investors about the notorious London Whale.”
“Meanwhile, as of the third quarter of 2013, 99.1 percent of banks chartered in the U.S. had less than $20 billion in total assets on their books. Think about that for a moment. In the space of less than 90 days, JPMorgan Chase has agreed to fines greater than the total value of all the assets held by almost every bank in the country. And not only is it still in business, it’s generating revenues roughly equal to all those fines every quarter. And its stock price is soaring.”
“The point here is not to pick on JPMorgan alone. The very largest banks in the U.S. are posting almost uniformly spectacular financial results that have seemingly inured them to the regulatory and legal penalties they are made to pay.”
“A hearing held Wednesday by the Senate Committee on Banking, Housing and Urban Development addressed one of the reasons why the banks are doing so well even as they face continued legal actions: They enjoy a massive subsidy rooted in the market’s belief that, should they ever get in trouble, the government will bail them out. That enables those banks to borrow more cheaply than their smaller competitors and leads shareholders to believe that they are protected from downside risk should the bank get in trouble.”
“In the hearing Wednesday, Lawrance L. Evans, Jr., Director of Financial Markets and Community Investment for the Government Accountability Office, testified that during the financial crisis, the more than $1 trillion in support given to the financial markets by the federal government went largely to the biggest banks. Evans said that a follow-up report, due out sometime this year, will quantify the financial benefits that large banks receive as a result of the public’s expectation that the government will not allow them to fail.”
“Professor Cornelius Hurley, who directs the Boston University Center for Finance, Law & Policy, said that he expects public support for shrinking the biggest banks to coalesce ‘once the public realizes that bailouts are not just something that happened in 2008 but something that’s going on today.’”
The Asian Times. “Piracy is confiscation of wealth by brute force. Money counterfeiting confiscates wealth, and so does swindling. Bernie Madoff was sentenced to 10 years in jail, simply because swindling is a crime; his victims lost their wealth that they had entrusted to him. Yet, when outgoing Federal Reserve chairman Ben Bernanke prints every US$85 billion every month out of thin air, this act is considered a virtue - even though it is forced confiscation of wealth. It is called an economic ’stimulus’ in that, according to its proponents, it boosts the economy and moves it towards full employment.”
“He only encouraged intense asset speculation and brought about financial disorder, and impoverishment. He is not alone in this, for sure - many economic theories their proponents claimed to be exact, such as communism and Keynesianism, have failed miserably and caused disasters wherever applied. Now we can add or Bernanke-ism to that roll of dishonor.”
“Bernanke’s ‘money helicoptering’ is not manna from heaven. Although Bernanke possessed the power of confiscation, he had zero power to create wealth. Money creation out of ‘thin air’ is a pure redistribution of wealth. Bernanke injected close to $3.5 trillion; yet, he did not create even one gram of wheat or one pair of shoes.”
“Through mortgage buying, Bernanke became (the) biggest buyer of houses in the US, causing housing prices to escalate by 14% in 2013. For politicians, this is not inflation - even though such a rise would have been impossible without Bernanke’s near-zero interest rates. It is considered a ’strong’ housing recovery - yet a similar ’strong’ recovery in 2003-2008 led to millions of foreclosures. Bernanke’s housing recovery will intensify speculation, make housing unaffordable, and increase dramatically income from property taxes.”
“President Barack Obama may be appalled by the US income gap - yet, he is not concerned by Bernanke’s massive wealth transfer in favor of lucky beneficiaries at the expense of unfortunate losers. Bernanke carried out his money destruction with the full seal of the US Congress. US congressmen firmly believe in Bernanke’s absurdity that zero interest rates bring forth full-employment, even though years have gone by without this relation materializing concretely. Adhering firmly to Bernanke’s absurdities, President Obama nominated Janet Yellen, a staunch supporter of Bernanke and this week confirmed to succeed Bernanke, as the new Fed chairman to carry further Bernanke’s fallacies.”
‘bailouts are not just something that happened in 2008 but something that’s going on today…banks…enjoy a massive subsidy rooted in the market’s belief that, should they ever get in trouble, the government will bail them out. That enables those banks to borrow more cheaply than their smaller competitors’
It’s not just this; if I deposit one dollar at Wells Fargo, they can lend out $20, with the fees and interest that come with it. Nice work if you can get it.
Lol. And none of this money actually belongs to the bank.
Eons ago I took an Econ class taught by a banker. He frequently bitched about the fractional restrictions on his poor bank.
Then they use 5 of those dollars to buy up congress and keep the whole thing going.
It’s a self supporting feedback loop now. The will of the people is meaningless.
“The will of the people is meaningless…”
I don’t agree. These clowns are empowered by the crooks that we keep electing to Congress and the White House. We elect them because they are cute or something and we care nothing for their principles. We prefer lies to the truth, as the Bible says. Maybe unintended, but the ongoing situation is the direct result of the will of the people being put in place.
We elect them because they have the money to drive anybody not owned by the finance industry out of the race.
“We elect them because…”
Apparently 47% re-elect them to continue their free cheese.
We elect them because they enable us to get rich not by working, but by borrowing money.
Lotsa people bitch about the banks…lotsa people made lotsa money borrowing money from those banks.
Including “equity” locusts who sold their cheaply bought California/New York homes for big bucks.
I hope no one here who sold their homes for big cash gains have any bad words to say about bankers.
My guess is that there now is (and has been) plenty of HBB posters who raked in plenty of money by selling properties to unwitting dupes and “moving up” as a result.
It’s okay if Joe Blow down the block is YOUR dupe, but not okay if you are the dupe of the banks. Is that not right?
Not only can they lend at 20-1 leverage, but they pay near 0% on the money they borrow from you which they can lend long-term at 4% or more.
If banks weren’t so good at making bad investments and losing shareholders’ money, I’d probably even invest in them!
Technically I think “lend at 20-1″ is not really the limit.
Right. Probably a severe underestimate, especially in the derivatives era.
Bernanke bought $1 trillion in depreciating houses last year. Why? Because demand for housing is at 16 year lows.
And these houses were bought from whom?
Why, from the lenders, that’s who.
Lol.
“You can’t lose with the stuff I use.” - Rev Ike
A distinction without a difference. They losses are merely transferred from one sucker to another.
Bernanke bought $1 trillion in depreciating houses last year.
Technically, he bought only roughly half-a-trillion. Half of the monthly QE goes into Treasuries, not MBS.
So $40B/mo for 12mo is $480B, not $1T.
It’s still a travesty, but let’s get the details correct.
So they own $1 trillion in rapidly depreciating houses over the last 2 years.
Let’s get the facts correct.
So they own $1 trillion in rapidly depreciating houses over the last 2 years.
Thank you.
“… once the public realizes that bailouts are not something that just happened in 2008 but something that’s going on today.”
Well we bankers are just not going to allow this to happen, this public realizes thingy.
“Dumb ‘em down and keep ‘em dumbed down” should be our motto, right along with “send me your money”.
Since we bankers own the best media that money can buy it shouldn’t be too hard a sell to convince the already dumbed-down masses that if the economy is to be saved then the banks must be saved.
‘Bernanke injected close to $3.5 trillion; yet, he did not create even one gram of wheat or one pair of shoes’
‘President Barack Obama may be appalled by the US income gap - yet, he is not concerned by Bernanke’s massive wealth transfer in favor of lucky beneficiaries at the expense of unfortunate losers. Bernanke carried out his money destruction with the full seal of the US Congress…Adhering firmly to Bernanke’s absurdities, President Obama nominated Janet Yellen, a staunch supporter of Bernanke and this week confirmed to succeed Bernanke, as the new Fed chairman to carry further Bernanke’s fallacies’
I don’t agree with everything this writer says, but this point stands out. We sit here with high poverty, unemployment. Yet house prices are above or near record highs in some areas. Stock have soared.
‘Rana Foroohar interviews incoming Fed Chairwoman Janet Yellen. “On the housing market, which had a brief lull this fall: “I expect it to pick back up and I do expect a further recovery.”
See, this bubble isn’t enough. She wants even more!
‘Ms. Yellen defended the bond-buying program (QE), against criticism that it has primarily benefited the wealthy because of the boost it has given to prices of riskier assets, such as stocks.’
‘You know, a lot of people say this (asset buying) is just helping rich people. But it’s not true. Our policy is aimed at holding down long-term interest rates, which supports the recovery by encouraging spending,” she said in the interview, conducted on the day the Senate confirmed her nomination. “And part of the (economic stimulus) comes through higher house and stock prices, which causes people with homes and stocks to spend more, which causes jobs to be created throughout the economy and income to go up throughout the economy.’
‘a lot of people say this (asset buying) is just helping rich people. But it’s not true’
The proof is in the pudding Yellen.
Janet Yellin, one of my favorite employees.
Like I said, she’s going for more. Paid shill doing her billionaire master’s bidding, same as Hillary, Christie, and the rest.
Pull the government spending and propping up, bailing out and meddling out and what do you have?
The engagement party cake from that baker in New Zealand.
’she’s going for more’
But there’s just one little problem with this scheme:
‘It is considered a ’strong’ housing recovery - yet a similar ’strong’ recovery in 2003-2008 led to millions of foreclosures’
No one can see it coming, ask Alan Greenspan!
ask Alan Greenspan
That’s SIR Alan Greenspan to you!
“higher house and stock prices, which causes people…to spend more, which causes jobs to be created…”
The woman defies logic. Higher house prices taxes people, which causes them to spend less on things that create jobs. Giving new money to banks in exchange for crappy loans causes them to speculate in the necessities of life, which taxes the people, which does not create a single job.
It’s been said here before. If high house prices boosted the economy, nothing bad would have happened in 2007.
This also raises the question; has the economy been completely turned over to the central bank? Remember when congress used to at least try and do little things to improve the jobs market?
“…has the economy been completely turned over to the central bank?”
So far as I can tell, the Fed leadership regards themselves in charge of the movements of stars, planets and galaxies.
“If high house prices boosted the economy, nothing bad would have happened in 2007.”
Exactly. And yet, we have the most braindead media in the history of the world which doesn’t even ask the question. Absolutely dreadful state of affairs. Shameful that these corrupt pigs are in charge.
“higher house and stock prices, which causes people…to spend more, which causes jobs to be created…”
Sounds like a macroeconomic Ponzi scheme.
“We sit here with high poverty, unemployment. Yet house prices are above or near record highs in some areas.”
And somehow members of this marginally-employed populace are supposed to buy houses at near-record prices? I guess that’s where federally-subsidized and -guaranteed lending enters the picture.
Don’t forget the Messiah’s aim to affect your house value by integrating the cRAP, crack, and foul language Ebonics culture into your neighborhood.
http://www.usnews.com/news/articles/2013/08/09/hud-proposes-plan-to-racially-economically-integrate-neighborhoods
Maryland had a program like this called “Move To Opportunity”.
1) http://portal.hud.gov/hudportal/HUD?src=/programdescription/mto
2) http://www.nytimes.com/1995/03/28/us/housing-voucher-test-in-maryland-is-scuttled-by-a-political-firestorm.html?pagewanted=all&src=pm
My take is, it didn’t particularly help those whom it was supposed to help. And it inflicted harm on those whose neighborhoods were selected for the program. And of course, as is the case with most social policies, how does one measure the impact in a repeatable, scientific way?
“People are so spread out that we’ve had very few racial problems,” Ms. Irvine said.
Wasn’t there a study done years later that showed crime following the housing vouchers out into the burbs, quite predictably?
Societies that become increasingly unproductive have increased wealth disparity.
Expanding governments must lie with increasing velocity and voracity as expanding governments are increasingly unproductive.
Thus, as governments expand, so does wealth disparity. Big government loves this. It diminishes individual liberty and increases dependency - at gunpoint, no less.
‘Eugenio Alemán presented a U.S. and regional economic outlook Thursday at an event hosted by Wells Fargo for its clients at the University Club. The housing market has improved, with prices up about 10 to 15 percent nationwide. The Federal Reserve is “still concerned,” Alemán said, adding that it wants to bring down negative equity to allow people to refinance or sell their homes.’
‘Housing prices could be the biggest threat to the economy, he said. Mortgage lending isn’t growing and has been shrinking for several years. Two-thirds of all purchases in the housing market are mortgage-based; the remaining one-third are mostly investors and foreigners making cash purchases.’
“What is going to happen when these people are out? What happens to home prices when investors and foreigners are out of the picture? That is a big concern,” Alemán said.’
‘The Federal Reserve is “still concerned,” Alemán said, adding that it wants to bring down negative equity’
Here’s a thought; Yellen doesn’t know how high or low house prices should be. So all this manipulation could just be stampeding buyers into loans they can afford. Wait, didn’t we just see this movie?
“The housing market has improved, with prices up about 10 to 15 percent nationwide.”
There’s that word ‘improved’ again. Does it have a commonly-agreed definition in the economists’ lexicon?
I think so: “It has helped me, my family and/or friends.”
Seriously.
‘Stanley Fischer was officially nominated Friday as a Governor and Vice Chairman of the Federal Reserve, the job Janet Yellen is vacating as she becomes Chairwoman. While Yellen is incredibly qualified, it’s exciting to have Fischer beside her.’
‘here are a few of the reasons his nomination is great news. He’s credited with essentially saving the Israeli economy, the economy barely faltered during the global financial crisis.’
(There’s a huge housing bubble in Israel.)
“Fischer has been around the inner circle of international economic policymaking for three decades,” Morgan Stanley’s Vincent Reinhart wrote in a research note.
(Great, the inner circle.)
‘He is a brilliant academic economist, and one of the fathers of New Keynesian economics’
(If it failed before, start a New one.)
‘The rest of his résumé is equally stellar, he helped resolve the Asian financial crisis of the late ’90s at the IMF, and rose to a top job at Citigroup’
(A top job on Wall Street? Hurrah! Another revolving door money printer joins the cast of counterfeiters at the central bank! Thanks Obama!)
Google: “Shoring Up Israel’s Economy”
The United States has played a critical role, beyond the allocation of foreign aid, in reinvigorating the Israeli economy. Through the Joint Economic Development Group (JEDG), the two countries’ senior economic policymakers and private economists discuss trends in, and policy prescriptions for, Israel’s economy.
In 1984, then Secretary of State George Shultz suggested a joint American-Israeli group to work continuously on Israel’s economic challenges. Israeli Prime Minister Shimon Peres agreed. Since then, the JEDG, chaired by the Undersecretary of State for Economic Affairs and the Director-General of the Israeli Ministry of Finance, has met twice a year, in Washington and Jerusalem alternately.
The JEDG played a pivotal role in the formulation of Israel’s ambitious stabilization plan of 1984, a plan that was welcomed in Washington. At the time, Israel was in serious economic distress. Years of shouldering the enormous defense burden imposed by Arab hostility, and the accumulated result of dependence on imported raw materials and fuel for Israel’s industry — to say nothing of the continuing cost of absorbing waves of destitute immigrants and providing them with the full range of social services — had led to extensive borrowing and a huge foreign debt. Foreign reserves had plummeted, and inflation was raging at 450 percent per year and rising. The government was running a budget deficit equivalent to 17 percent of the gross national product.
Then something unusual happened. Within Israel, the many parties and different schools of thought pulled together, set aside their differences, and worked in a united fashion for national economic recovery.
In 1985, Israel implemented a stabilization program that included several major features: a large cut in subsidies on basic products and services like milk, eggs and transportation. This helped to cut the budget deficit from 17 percent to 8 percent of GNP; a large currency devaluation followed by a stable exchange rate against the dollar; wage and price controls and the cessation of direct indexing of wages and savings to inflation; and a monetary policy that would control the growth of credit, thus driving interest rates upward.
The New York Times later described the sacrifices of the Israeli people, and the message of the stabilization program, as “Everybody takes a step backward — together.”
One of Israel’s main concerns about the program was the possibility of massive unemployment. American economic aid encouraged the Israeli government to act decisively. U.S. aid provided a safety net of resources and reserves if things went wrong, strengthening public support for what all knew must be done.
As the Wall Street Journal described it, Israel’s stabilization program worked like “a mini-miracle.” Inflation fell sharply, and is now around 10 percent annually. The exchange rate of the shekel stabilized, foreign-currency reserves recovered, exports increased, and the budget deficit contracted.
I would like to hear from people if drought is a concern for them. I see migrations in the future arising from it. More than one scientist has suggested that when we finally see the effects we may have been in it for fifty years. (And salt intrusions into our fresh water aquifers will be the end of South Florida oceanfront condominiums.)
In 1980, more than forty years ago, a friend’s father complained to me that it was no longer raining over his ranch in Colombia. “It’s changed,” he observed.
Math was obviously not your major subject in school.
The NE US is flooding today. We can pipe some of this down to the poor people in Florida.
“Math was obviously not your major subject in school.”
Nor was physics.
Where did this notion come from that “we’re running out of water”?
“we’re running out of water”
That one is right up there with ‘climate change’ among the scariest political hobgoblins to menace the populace.
You’re in a decade where the perfect storm surrounding the issue of water is forming. The EPA wants to avoid at all costs any discussions dealing with the high correlations between global warming, drought, high salinity and toxic algal bloom outbreaks.
This is the century of potable water, not oil.
Read about H.L. Mencken’s comments to Alistair Cooke, about himself, at the end of his life.
Even when it’s cooling, it’s warming? We are letting the tap run so the pipes don’t freeze.
That’s what we have water treatment plants for.
Hey Whac and all
Have you read Thomas Sowell - “The Vision of the Anointed”?
Feedback?
“water treatment”
Also why desalinization technology is under development. Why rely on a drought-depleted Colorado River for water when there is an ocean of it just offshore? If someone figured out how to harness wave or other ocean-driven energy, they could potentially design these systems to be self-contained, that is independent of the fossil fuel driven energy grid.
Desalination comes of age with Poseidon Plant
By Deborah Sullivan Brennan
Noon March 31, 2013
As Poseidon Resources launches construction of the largest desalination plant in the Western Hemisphere, it’s relying on technology incubated in the San Diego area decades ago.
The nearly $1 billion project in Carlsbad will transform about 50 million gallons of seawater into drinking water each day, and promises to meet 7 to 10 percent of San Diego’s water needs.
Crews are now laying pipeline, doing demolition, and removing hazardous materials from the site in preparation for construction. Over the next three years workers will spend a million labor hours building the plant, along with a 10-mile pipeline connecting it to regional water lines.
Its construction also links the San Diego area to a worldwide network of plants taking water from sea to tap.
Poseidon’s reverse osmosis system will be assembled by Israeli engineers with the firm IDE, which has built 400 similar plants around the world over half a century. Its filters will likely come from manufacturers in Vista, Oceanside and Poway which currently supply desalination operations overseas, said Poseidon Senior Vice President Peter McLaggan, who is heading development of the Carlsbad plant.
McLaggan started his own career 35 years ago as an engineer with Fluid Systems, a San Diego company that manufactured desalination membranes for plants throughout Mexico, Israel and Saudi Arabia. That company was originally owned by San Diego-based General Atomics, which patented reverse osmosis technology in 1964.
photo Poseidon Senior Vice President Peter McLaggan, head of development of the Carlsbad plant. Photo courtesy of Poseidon.
At that time California was putting the final touches on the ambitious State Water Project, the vast waterworks that ships water from north to south. But in a parallel process, San Diego area companies were devising ways to draw water from west to east.
“In some aspects the U.S. and particularly the San Diego region were leaders in the field, because we produce the desalination membranes,” McLaggain said.
…
Haven’t read it but it looks entertaining. I’m closing in on p. 1000 of Les Miserables (500 pages or so of small print to go); maybe after I finish this epic?
Seven to ten percent? And the other ninety percent?
Whac
I was informed you can apply his (Sowell’s)theory in the book to everything the elite and our govt dictates for the masses, and when it doesn’t work, well we’re stupid and that’s why it failed. For instance a high carb, low fat diet. Look how well that advice has turned out. Or buying an overpriced sfh and borrowing against it.
It’s on my reading list for sure. A friend read it and it changed his view of the world’s “anointed”. Now he lol and doesn’t get high blood pressure.
“As Poseidon Resources launches construction of the largest desalination plant in the Western Hemisphere, it’s relying on technology incubated in the San Diego area decades ago.”
Building any of these plants- desal, biological, chem/phys, whatever is stunningly profitable. It’s my favorite end of the construction biz. No gingerbread, all heavy/highway classification, big geotech/foundation work, thousands of yards of concrete and big cha-ching.
“And the other ninety percent?”
My guess is that environmentalists are working day and night to prevent the establishment of a desalinization operation off San Diego that could supply 100% of the city’s drinking water needs. This is just a hunch, based on what I know of California environmentalists’ detrimental effect on economic production.
It’s about saving the plankton! Why does this story seem fishy to me? Were actual ocean scientists involved in the impact assessment, or was it environmental whackos with friends in political office pushing their extremist agenda?
Proposed desalination plant could harm ocean environment, report says
Seawater desalination plant in Huntington Beach could significantly harm coastal waters unless major changes are made, panel says.
November 10, 2013|By Bettina Boxall
The AES Huntington Beach Generating Station looms behind Magnolia Marsh. A proposed seawater desalination plant in the city could significantly harm parts of the Southern California ocean environment unless substantial changes are made in its design and operation, according to the staff of the state Coastal Commission. A commission vote on the project is expected this week.
A proposed seawater desalination plant in Huntington Beach could significantly harm parts of the Southern California ocean environment unless substantial changes are made in its design and operation, according to the staff of the state Coastal Commission.
A staff report prepared for this week’s commission vote on the project highlights the potential downside of large-scale efforts to turn the salty water of the Pacific Ocean into drinking supplies for coastal California.
“There are ways to do desal in a fairly environmentally benign way,” said Tom Luster, an environmental scientist with the commission. “This one will have some fairly significant adverse effects.”
Poseidon Resources, a small, privately held company based in Stamford, Conn., first proposed the Huntington Beach desalter, and a similar one now under construction in Carlsbad in San Diego County, in 1998. Both would be the largest seawater-to-drinking-water operations in the country, each producing enough purified water every year to supply roughly 100,000 households.
Poseidon intended to avoid the expense and environmental problems of building and operating ocean intake and discharge systems by locating its facilities next to power stations and tapping into the huge volumes of seawater used to cool the generating equipment.
But that strategy ran into hurdles in 2010 when the State Water Resources Control Board directed most coastal generating stations to phase out seawater cooling, which every year kills massive amounts of plankton at the bottom of the marine food web along with billions of fish eggs and larvae.
…
“That one is right up there with ‘climate change’ among the scariest political hobgoblins to menace the populace.”
In addition to that our orbit around the sun is decaying.
Have you read Thomas Sowell - “The Vision of the Anointed” ?
Just looked at the reviews…113 5-star & 17 4-star out of 149…pretty impressive…I will order it…Thanks for the recommendation…
scdave
You’re welcome. I watch Sowell’s interview on you tube on his opinion of the anointed and he evidently is awake about academia and the ptb. All sides are bought and sold. We’re doomed. But I like his thought process, so I’ll read it as well.
I don’t always agree with him (H1-B’s/L1-B’s are ok w/ him).
No you’re doomed. You paid a 250% premium for a depreciating house. That’s doom.
“I watch Sowell’s interview on you tube on his opinion of the anointed and he evidently is awake about academia and the ptb. All sides are bought and sold. We’re doomed. But I like his thought process, so I’ll read it as well.”
Man this Uncle Tom is [so] Oreo…’jus kidd’n.
I agree with his pessimistic appraisal, and in fact two of his clips are on my Youtube list this evening.
So our present weather isn’t part of global warming? And the arctic vortex didn’t arise from slowing oscillations in the jet stream. (Look at a global map displaying it.)
Since you are well-versed in mathematics and I’m not, you would understand that it’s displaying a rare “sin” wave pattern of “alternation.” Would you not?
Of course it’s rare until it occurs every year going forward for the next thirty years.
And your water comment is amazing. Do you know anything about growing crops? Do you understand why meat prices were already set to rise dramatically in the coming months BEFORE this severe cold enveloped us?
Yes I am a sometimes farmer and scientist. I’m laughing at the phrase “polar vortex”. We used to call this cold snap, which happens just about every year a “Canadian High” or later an “Arctic Blast”.
Please do explain why the price of meat is going up. Is a week of winter weather going to change last years crop harvest? We had above average rain around here last year and a great growing season, so we can keep the Mississippi pipeline going for another while I suspect, and also throw some grain to the steers.
“So our present weather isn’t part of global warming?”
As much as enviros would like to make this connection, or at least claim it, there really is no way to tell whether a short term period of extreme weather is due to global warming, climate change, or the environmental hobgoblin du juor, or simply a short term aberration from the weather pattern that has continued for millennia.
ummm…1980 was 34 years ago….but yes, drought is currently a big worry in California, until today was wearing shorts and a tshirt for the last month or two….we finally got a very small amount of rain today and it is already gone
In other news, a solution has been found for transporting tech employees around the Bay Area.
http://www.newstruth.co.uk/wp-content/uploads/2012/09/price-william-carried-by-slaves.jpg
“The policy of encouraging ever-increasing house prices is: 1) A generational wealth transfer, from young to old. 2) Also, it is a reverse Robin Hood wealth transfer from poorer to richer. 3) And it is a wealth transfer from outside the FIRE sector to within it.”
Are there any economic studies on the wealth transfer effects of Fed policy? So far as I am aware, the Fed maintains their policies have no redistributive effects, and mutually benefit all Americans. Count me as skeptical.
Why would you disbelieve the message of the stockholders of the Fed? They pull their pants on one leg at a time, just like you.
Not me. I throw my pants in the air, and backflip into them before they hit the ground.
Don’t forget the wealth transfer from the taxpayers to the voting blocs of welfare folks and defense workers. And of course politicians and bureaucraps. Also the endless war on drugs is a wealth transfer t cops, judges, prisons, correctional officers and the drug cartels.
This is all from the point of a gun every April.
This is what statism is all about.
It stands to reason that as they push the price of a very common, high demand asset higher and higher, those who already own the asset will be able to command a higher price for it, thanks to the intervention. And those who wish to purchase it will have to go deeper and deeper into debt to do so.
First time buyers (including the young and the poor) will have to promise more of their income to sellers and Wall Street than they have in the past. Hence the redistributive angle.
I don’t have specific citations yet.
“The point here is not to pick on JPMorgan alone. The very largest banks in the U.S. are posting almost uniformly spectacular financial results that have seemingly inured them to the regulatory and legal penalties they are made to pay.”
The ultimate tragedy of the 2008 U.S. financial crisis is that no meaningful reforms of the financial system were adopted. In fact, the system is now more systemically risky than ever, with the biggest privileges for the banks which qualify as too-big-to-fail.
“It’s very uneven,” Warren said. “There have been places where Bernanke has done a good job. Regulation has obviously not been a place where he has concentrated and done what the Fed needed to do to help bring under control the too-big-to-fail banks.
Warren said she isn’t sure Fischer is “going to work in the right direction,” without elaborating on her concerns. [ed. note: a former vice chairman of Citigroup making national economic policy? That can only end well.]
“We have to keep reminding people that, back in 2008, when the big crash came, that our leaders stood up and said, remember, they stood up and said, ‘We have got to bail these banks out because there’s too much concentration in the banking industry, they’re too big, we cannot let them fail.’” She said. “And where are we today? They are bigger than they were then.”
http://www.bloomberg.com/news/2014-01-10/warren-says-she-expects-yellen-will-boost-fed-s-bank-oversight.html
There have been places where Bernanke has done a good job. Regulation has obviously not been a place where he has concentrated
LOL That’s the problem with her and people like her. Can’t tell the difference between a forest and a tree.
“The point here is not to pick on JPMorgan alone.”
Good point. There are about four other U.S. banks which, together with JPMorgan, own almost everything in the country.
Is there any truth to the rumor that U.S. banks are out of danger while China’s banks are entering danger?
Companies
Does Wells Fargo’s Emergence As World’s Largest Bank By Market Capitalization Indicate A Shift In US-China Balance Of Power
By Sreeja VN
on July 24 2013 9:02 AM
An employee of Industrial and Commercial Bank of China (ICBC) walks past a logo at an ICBC branch in Beijing April 24, 2013. REUTERS/Kim Kyung-Hoon
U.S.-based Wells Fargo (NYSE:WFC) has replaced the Industrial & Commercial Bank of China (SHA: 601398), or ICBC, as the world’s largest bank by market capitalization, reflecting a possible shift in the global dominance game played out between two of the world’s largest economies.
San Francisco’s Wells Fargo & Co. was valued at $236.83 billion as of Wednesday on the New York Stock Exchange where it is listed. ICBC, which is listed on the Shanghai Composite Index, which lost its place at the top is now valued at 1.37 trillion yuan, or $223 billion.
ICBC has lost its position as the world’s leading bank six years after it overtook Citigroup (NYSE:C) following the financial crisis in the U.S., which left several of the country’s financial institutions struggling for survival.
ICBC was then valued at $374 billion in market capitalization and its emergence as the world’s largest bank was considered by many observers as the beginning of a shift in the world’s economic axis from the slowly-growing developed countries to the fast-growing emerging economies led by China.
Now, the latest shift at the top of the banking industry has come at a time when the U.S. economy is slowly crawling back from the brink while China, which had averaged double-digit economic growth over the past decade, is showing signs of a prolonged slowdown.
Analysts believe that Wells Fargo’s eclipsing of the Chinese banking giant could indicate a resurgence of U.S. financial institutions while underlining the challenges faced by the world’s second-largest economy in converting its recent breakneck growth into sustainable long-term progress.
“There’s been a complete 180-degree turn in perceived danger,” said Paul Schulte, chief executive of Schulte Research, according to the Wall Street Journal. “The U.S. banks are exiting danger and Chinese banks are entering danger.”
…
‘Taiwan’s high housing prices could finally give way this year, allowing more room for buyers of non-luxury homes to haggle, two real estate experts predicted Saturday. Hua Ching-chun, an associate professor of real estate management and investment at Takming University of Science and Technology, said that housing prices could drop by more than 10 percent this year and continue the downward trend for the next 3-5 years.’
‘The expected drop combined with already high prices countrywide mean that now is not a good time to buy homes, he advised.’
‘Shrinking transaction volume and high prices in Taipei have caused housing market speculation to shift toward central and southern Taiwan, he noted. As a result, those areas will feel downward pressure several months later than the greater Taipei region, he said.’
‘Chuang Meng-han, a professor of industrial economics at Tamkang University, said that the property market this year is already seeing dwindling transactions, fewer houses sold at their ballooned prices, more opportunities for buyers to haggle, and mounting downward pressure.’
http://focustaiwan.tw/news/aeco/201401110030.aspx
Bloomberg News
Krugman Urges Sweden to Drop Tightening Ambition in Bubble Fight
By Johan Carlstrom January 10, 2014
Sweden’s central bank should delay plans for interest rate increases to avoid aggravating a significant housing bubble, Nobel Laureate Paul Krugman said.
A low repo rate would limit risks of falling house prices and allow inflation to erode record household debt levels, he said today in Stockholm after speaking at a Skagen Funds conference.
“It’s possible, I would even say probable, that Sweden has a significant housing bubble and it does have a high level of household debt,” he said. “But given the borrowing has already happened and where you are right now the household debt issue is only made worse if you raise interest rates. It’s only made worse if you allow the economy to slide in deflation, so at this point what you want is an expansionary monetary policy to offset the risks of a housing decline or of a debt problem.”
…
Seems like that’s Krugman’s answer to everything - print more. Never mind the unintended consequences. Or even whether the intended ones actually exist.
“Bernanke’s ‘money helicoptering’ is not manna from heaven. Although Bernanke possessed the power of confiscation, he had zero power to create wealth. Money creation out of ‘thin air’ is a pure redistribution of wealth.
SOOOOOO true. And yet so few people have even stopped to consider where that “free money” from the Fed is really coming from.
Are there any academic studies on the redistributive effects of the Fed’s monetary policy (including QE)?
From the Asia Times article:
Gave any of you read Vultures’ Picnic?
*Have