January 28, 2014

Bits Bucket for January 28, 2014

Post off-topic ideas, links, and Craigslist finds here.

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Comment by Whac-A-Bubble™
2014-01-28 01:30:34

Has the turmoil finally ended?

Comment by Whac-A-Bubble™
2014-01-28 01:32:14

Turkey turmoil prompts central bank meeting
By Virginia Harrison @vharrisoncnn
January 27, 2014: 10:16 AM ET
The sell-off in emerging market currencies including Turkey’s lira have deepened in recent days.

Turkey’s central bank will hold an emergency meeting Tuesday in an effort to halt the lira’s steep decline as the sell-off sweeping emerging markets deepens.

The news helped the currency find firmer footing against the U.S. dollar Monday, but not enough to fully claw back recent losses.

Over the past month the Turkish lira has sunk to record lows against the dollar, and weakened sharply against the euro.

Stocks in the country have also been battered as a wide-ranging probe into public sector corruption continues to spook investors.

Comment by Whac-A-Bubble™
2014-01-28 01:33:15

Emerging markets rattled as anxiety rises
By Charles Riley @CRrileyCNN January 27, 2014: 5:58 AM ET
India’s rupee has weakened in recent days amid concerns about emerging market economies.

Equity markets around the world were battered Monday amid growing volatility in emerging markets.

Asian markets closed sharply lower, with benchmark indices in Tokyo, Hong Kong and Mumbai shedding more than 2% as investors looked to move out of riskier assets. South Korea’s KOSPI Index was off by 1.6%. European markets were also slow out of the gate, with broad declines across the continent.

In currency markets, the yen gained ground against the dollar as investors parked their money in traditional safe havens. Emerging market currencies extended losses, building on a trend from last week that hit the Argentinian peso, Turkey’s lira and India’s rupee especially hard.

Emerging markets have been hammered in recent days due to the possibility that the Federal Reserve, Bank of England and Bank of Japan will pull back on propping up their own economies. Signs of weakness in China’s huge manufacturing sector and a looming default in the shadow banking system have only added to worries.

“The fear is that the Fed, Bank of England, and even the Band of Japan will become less dovish more quickly than had been thought even a few weeks ago,” said Steven Englander, head of foreign exchange strategy at CitiFX.

Comment by Whac-A-Bubble™
2014-01-28 01:34:20

GLOBAL MARKETS-Asian shares pressured by emerging markets turmoil
By Hideyuki Sano
TOKYO Mon Jan 27, 2014 6:42pm EST

Jan 28 (Reuters) - Asian shares were pinned near five-month lows on Tuesday as turmoil in emerging markets and concerns about an economic slowdown in China took their toll.

Disappointing guidance from Apple Inc also looks set to hit regional technology stocks.

The world’s most valuable technology firm missed Wall Street’s target for iPhone sales over the crucial holiday shopping season and offering a weaker-than-expected forecast for this quarter, sending its shares down more than 8 percent after the bell.

Japanese shares look set to extend losses further from a 2 1/2-month low hit on Monday.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2 percent to a five-month low, extending a 3.8 percent loss in the past three days.

Expectations that the U.S. Federal Reserve will scale back its bond buying further have put pressure on risk assets, especially emerging markets dependent on external financing as the Fed kicks off its two-day policy meeting later in the day.

Tighter credit conditions in China as Beijing seeks to curb growth in high-risk lending has added to the gloom, with investors worried that the world’s second-largest economy could slow further.

The Turkish lira, which has been leading the rout in emerging currencies amid a corruption scandal that has rocked Prime Minister Tayyip Erdogan’s government, rebounded from a record low after the central bank called an emergency meeting on Tuesday.

Turkey’s central bank is expected to raise rates to defend the sagging lira after its decision not to do so last week had send the lira in a freefall. Its policy statement is due at 2200 GMT.

“The market is expecting a rate hike of one percent or more and possible capital controls. Whether their steps can calm markets is one big area of focus,” said Masafumi Yamamoto, chief strategist at Praevidentia Strategy.

Comment by Whac-A-Bubble™
2014-01-28 01:36:14

Asian shares pinned at five-month lows, with all eyes on Turkey
Focus today will be on emergency central bank meeting in Turkey, epicentre of latest turmoil
Tue, Jan 28, 2014, 07:43
First published: Tue, Jan 28, 2014, 07:43

The lira, which has been battered by the corruption scandal that rocked Prime Minister Tayyip Erdogan’s government, has rebounded from a record low after the central bank called an emergency meeting today. The central bank is expected to raise rates to defend the sagging lira. Photograph: Kerem Uzel/Bloomberg

Asian shares were pinned near five-month lows overnight, as concerns that slower growth in China and reduced US monetary stimulus could hurt some emerging economies dependent on exports and foreign capital. Investors are now focusing on whether the central bank of Turkey, one of the epicentres of the latest rout in emerging markets, could salvage the lira at an emergency policy meeting later in the day, after India surprised markets by raising rates.

European shares are seen steady to slightly higher with German DAX seen rising 0.1 per cent and French shares seen gaining as much as 0.3 per cent.

“I do not necessarily think the world economy will be severely damaged by the latest troubles in emerging economies, but markets are getting nervous,” said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank. MSCI’s broadest index of Asia-Pacific shares outside Japan briefly dipped to a five-month low, extending a 3.8 per cent loss in the past three days before recouping the losses to trade almost flat. Japan’s Nikkei average rose 0.2 per cent though it briefly fell to a 2 1/2-month low.

Investors drew some comfort from the news that a Chinese trust firm had reached an agreement to resolve a troubled high-yield investment product, just days away from what could have been a precedent-setting default in China’s shadow banking system. While the agreement alleviated fears that an immediate default could spark a run on similar products, concerns over the rapid expansion of China’s shadow banking sector, a key source of financing for local corporations, could fester.

“The deal to avert default is a source of relief for many, but it’s a clear warning on the scale of the risks that still remain with other trust products due to mature this year,” said Jackson Wong, Tanrich Securities’ vice-president for equity sales in Hong Kong. A contraction of demand in China, the world’s second largest economy, has repercussions for many emerging economies that have boomed on exports to China, including countries as far as Brazil and Argentina.

Comment by Whac-A-Bubble™
2014-01-28 01:38:34

Thailand’s woes symptomatic of a deeper regional malaise
Date January 28, 2014
William Pesek

Rather than add my voice to the chorus pointing out how much damage ongoing protests are doing to Thailand’s economy, I’m tempted to skip ahead and write its obituary. Cause of death: suicide.

What else is there to say about the semi-permanent state of emergency and political gridlock in Bangkok? Sooner or later, foreign companies are going to start voting with their feet, as Kyoichi Tanada, president of Toyota’s Thai unit, warned this week. Tourists fearing cancelled flights and the odd bomb explosion are going to stop filling the beaches. Neighbouring countries are going to look for other solutions to their logistical and infrastructure needs.

In their give-no-quarter battle for supremacy, Thai politicians aren’t just making Democrats and Republicans in Washington seem reasonable: they are also destroying the country’s potential.

But the region may have an even bigger problem. From Thailand to Indonesia to Malaysia - even as far as India - Asian nations are displaying a worrying set of shared vulnerabilities.

Across the region, debt-fuelled growth is wrecking household balance sheets. Large subsidies are draining government coffers. Asset bubbles in real estate and equities continue to swell. Current-account worries are eating away at currencies. The gap between rich and poor is widening. And once-frothy markets are dangerously exposed to Federal Reserve tapering and rising political risks.

This combination could be pushing the region towards another crash. This would probably be more of a mini-crisis than a 1997-like meltdown. But governments have no one but themselves to blame. They’ve failed to use the recent growth to strengthen financial systems, wean their populations off unsustainable handouts, improve infrastructure, or create safety nets to catch those bound to suffer most from slowing growth.

Thailand is merely a microcosm of what ails the region. Take Prime Minister Yingluck Shinawatra’s disastrous rice-subsidy scheme that has blown a $4 billion hole in the nation’s fiscal position. Instead of enriching rural areas, it has distorted commodity markets and caused a build-up of more than a year’s worth of rice for the rats to eat. Meanwhile, a $61 billion infrastructure plan to increase Thailand’s attractiveness as a business hub remains on hold, as do water projects.

More than street protests, government incompetence and neglect are to blame. The same holds true in countries that look far more stable on the surface. In Indonesia, President Susilo Bambang Yudhoyono has been missing in action for much of his second term. Rather than fix the country’s current-account problem, Yudhoyono has enabled a level of creeping economic nationalism that is turning off foreign investors.

Comment by Whac-A-Bubble™
2014-01-28 01:40:55

Bad apples emerge as free money heads home
Date January 28, 2014 - 12:08PM
Vesna Poljak

With the supply of easy money being dried by the US Fed’s stimulus tapering, the bad apples among emerging markets are being shown up.

Emerging markets experts disagree that the rout playing out in some economies right now points to a repeat of the 1997 crisis but they do concede that frontier economies face a difficult few months ahead.

Central banks in Argentina and Turkey have intervened in foreign exchange markets to try and stem the slide of the peso and the lira, just as political unrest causes investors to lose faith in Ukraine and South Africa where yields are rising.

HSBC’s Hong Kong-based co-head of Asian economic research Fred Neumann expects the sell-off to be more discriminating as the “bad apples” with large current account deficits and unstable political rule distinguish themselves from economies in better shape. “Emerging markets investors tell to sell everything at the first sign of bad news and then they search for the rubble and buy back in where things aren’t as bad as they thought,” he said. “One thing that might happen over the next few months is we’ll get more differentiation between emerging markets because the sell-off has been quite broad.”

He said the rout can be traced back to the US Federal Reserve’s decision to unwind ultra-stimulatory policy settings as of this month and heightened China fears on the back of subdued growth forecasts, weak manufacturing output and a Chinese trust product which averted default but stoked fears around the integrity of the banking system.

“There’s still concerns of tapering and Chinese financial health and there’s no magic bullet that can fix anything… we’re looking probably at a fairly challenging environment for emerging markets investors over the next few months,” said Mr Neumann.

IMF warning

Only last week the International Monetary Fund warned that emerging markets were vulnerable to capital outflows and urged developed nations not to tighten policy too quickly for fear of further flights of capital.

TD Securities Singapore-based head of Asia-Pacific research Annette Beacher said there was no avoiding the fact that emerging markets would come under pressure this year with the Fed’s unwinding of quantitative easing locked in. “When we were all putting together our 2014 outlook, everyone baked US tapering into our base case,” she said. “But unfortunately the sector that was always going to underperform was going to be the emerging markets because they’ve benefited from trillions and trillions of more-or-less free money looking for a home.”

While it un-surprising to her how the beginning of 2014 has panned out, Ms Beacher expressed frustration that fragile markets had seized upon every economic reading coming out of China with a singularly bearish view. “Obviously China is now on everyone’s radar screen. I cover China at a very, very high level and unfortunately the problem with China is everyone takes every data point as being significant.”

For example, she doesn’t think the latest China purchasing managers index reading was especially predictive and took the view that if China were to allow a specific credit product or provider to come under stress that showed the People’s Bank of China was becoming intolerant of suspect activity. “At some stage the market will be a little bit more selective around which markets they punish,” she said.

Comment by Mr. Banker
2014-01-28 06:21:15

“But unfortunately the sector that was always going to underperform was going to be the emerging markets because they’ve benifited from trillions and trillions or more-or-less free money looking for a home.”

“The lack of money is the root of all evil.” - Rev Ike

What free money giveth tight money will taketh away.

Comment by oxide
2014-01-28 08:54:05

Not if you lock in a fixed interest rate.

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Comment by Whac-A-Bubble™
2014-01-28 09:50:58

That’s what long-term Treasury bond owners thought before rates went up last year.

By the way, did you know that the prices of houses and Treasurys have very similar interest rate responses?

Comment by cactus
2014-01-28 10:21:35


Fixed long term interest rates screwed bankers back in the day ( 1980’s). “Liars Poker” is a fun book to read about how most Bankers had no clue and easily got ripped off by Wall Street as interest rates rose but fixed mortgages stayed fixed at low interest rates.

Comment by Rental Watch
2014-01-28 10:45:35

“By the way, did you know that the prices of houses and Treasurys have very similar interest rate responses?”

You keep saying this, but have you actually looked at the hard data?

I have not looked at the data scientifically, but even you need to admit that the housing market continued to collapse in 2008-2009, even as the Fed dropped rates to close to zero. Likewise, the bubble continued to rage in 2005-2007, even as interest rates rose.

With the value of treasuries, the reaction to different interest rates is a mathematical certainty. With housing, there is a correlation, but interest rates (and changes in interest rates) are NOT deterministic of home prices.

As I noted, there is a corollary with commercial properties (the link between interest rates and values). Going back a long time, a recent study noted there only being a correlation between the 10-year treasury rate and commercial property cap rates of about 0.6.

The correlation between interest rates and the value of a treasury is 1.

Comment by oxide
2014-01-28 11:20:37

I was referring to the individual level. I obtained a mortgage with loose money. If Mr. Banker tightens the money, he can’t take MY loose money away. He can only tighten on new mortgages.

Or are you referring to interest rate rates rising and house prices dropping and the general tight money taking away my equity, or some such long chain of events?

Comment by Rental Watch
2014-01-28 14:50:43

Oxide, the best I can tell, Whac prescribes to the theory of household budget constraints. In other words, that households are spending all they can on housing (based on median prices to median income ratios, etc.), and that any move up in interest rates necessarily limits what that household can pay in a mortgage, and thus home prices must correspondingly fall.

The problem I have with this is mainly:

When you look at the additional number of single-family homes that are sold in a market, it represents only a small percentage of the total number of renters in a market. What matters is not the median home price relative to the median income. What matters is what the rental pool looks like (what does the income of the top 10% of renters look like? What is their desire with respect to buying?).

Comment by Whac-A-Bubble™
2014-01-28 20:55:57

“You keep saying this, but have you actually looked at the hard data?”

Let me refine my statement:

The prices of houses and Treasurys have very similar interest rate responses, though Treasurys adjust to fundamentals much more quickly due to a much more liquid market than housing.

There — fixed it for you.

And no, I have no data to back this up, but anyone with a decent background in applied economics will recognize the veracity of my point on a moment’s reflection.

Comment by Whac-A-Bubble™
2014-01-28 20:58:01

“The correlation between interest rates and the value of a treasury is 1.”

Let’s agree to say 99% to be on the conservative side.

Comment by Whac-A-Bubble™
2014-01-28 20:59:15

“…he can’t take MY loose money away. He can only tighten on new mortgages.”

There is the error of your logic, as he certainly can take your loose money equity away.

Comment by Whac-A-Bubble™
2014-01-28 21:02:02

P.S. So long as you are unconcerned about networth implications of purchasing a home whose value is deflating, you should have nothing to worry about.

Comment by Whac-A-Bubble™
2014-01-28 21:09:18

“In other words, that households are spending all they can on housing (based on median prices to median income ratios, etc.), and that any move up in interest rates necessarily limits what that household can pay in a mortgage, and thus home prices must correspondingly fall.”

That’s a much stronger and probabilistically certain statement about future home price declines than I have ever made here.

To set the record straight, I believe real estate prices can stay on a permanently high plateau forever, provided the Fed remains committed to interventions to support housing prices, and provided such interventions are never overwhelmed at some future point by fundamental forces that bring home prices back in line with incomes and rents.

Comment by Whac-A-Bubble™
2014-01-28 01:42:37

Markets Live: Gloomy mood prevails
Date January 28, 2014 - 4:29PM
Patrick Commins, Jens Meyer

The recovery in the wake of strong business conditions numbers was fleeting and the ASX200 finished down 1.3 per cent, after emerging markets jitters blew an early hole in investor confidence.

Comment by Whac-A-Bubble™
2014-01-28 01:44:41

Russia, EU set to clash on causes of Ukraine turmoil
Published 27 January 2014
EU-Russia summit, Russia, Ukraine, Vladimir Putin

EU leaders will tell Vladimir Putin when they meet for a summit in Brussels tomorrow (28 January) that the present Ukrainian crisis was prompted by Russian pressure on Kyiv. The Russian president is expected to counter by saying that the EU made the first move by offering Ukraine a free trade agreement and for meddling in its internal affairs.

Despite declarations that the upcoming EU-Russia summit is “not about Ukraine”, the dramatic situation in the country is expected to be at the centre of the two-hour meeting.

An EU diplomat told reporters that the Russian pressure on Ukraine, which led to the decision by President Viktor Yanukovich to put off the signature of the Association Agreement (AA) with the EU and to the subsequent protests, had prompted the political turmoil in Ukraine.

This statement augurs that the summit could degenerate into a blame game in which Putin could in return accuse the EU of trying to impose association on Ukraine and a so-called ‘Deep and Comprehensive Free Trade Agreement’, for which Russia says Ukraine is not ready. Russian officials say that the DCFTA would impact negatively on Russian trade relations with Ukraine and that Brussels should have consulted Moscow first.

Comment by Whac-A-Bubble™
2014-01-28 01:46:26

Political Turmoil In Ukraine Spreads Outside Capital Kiev
by January 27, 2014 5:00 AM
4 min 47 sec

The protests began last fall in the capital when the country’s president refused to sign a trade deal with the European Union because of pressure from Russia. Demonstrations are now occurring in cities normally supportive to the governing party.


It’s MORNING EDITION, from NPR News. I’m Steve Inskeep.


And I’m Renee Montagne.

The political turmoil in Ukraine is spreading. Protests that began last fall when the country’s president refused to sign a trade deal with the European Union - under pressure from its neighbor Russia - have now moved out of the capital.

More disturbing for President Viktor Yanukovych, demonstrations are now occurring in cities normally supportive of his governing party. And they’re all calling on Yanukovych to step down.

NPR’s Corey Flintoff is on the line with us now from the capital, Kiev. Good morning.

COREY FLINTOFF, BYLINE: Good morning, Renee.

MONTAGNE: Let’s start with how significant these reports of protests in other cities are. Sounds bad for the president.

FLINTOFF: Well, this could be very significant, Renee. Yanukovych’s Party of Regions pretty much has dominated the industrial regions in the eastern and southern parts of this country. And up until now, there’s been very little anti-government protest.

Now we’re hearing that thousands of people have turned out in some big cities in the east and the south. They’ve tried to seize or block access to some of these regional government buildings, and they’ve clashed with police. We’re hearing that there have been dozens of arrests.

Comment by polly
2014-01-28 10:11:00

Hey, Bear.

Do you know if any of the Soviet nukes went to the Ukraine after the USSR split? I seem to recall that a number of their missile sites were located in the Ukraine…

Comment by Whac-A-Bubble™
2014-01-28 21:10:57

Don’t know…haven’t followed that conversation since I took a college course on international arms agreements three decades back which laid to rest my fears of nuclear aggression by superpowers.

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Comment by Whac-A-Bubble™
2014-01-28 01:47:31

Egyptian turmoil hits BG Group hard
NEARLY £6billion was wiped off the value of BG Group after it said turmoil in Egypt and price falls in the US would hit its output and profits this year.
By: Peter Cunliffe
Published: Tue, January 28, 2014

Chief executive Finlayson was disappointed Chief executive Finlayson was disappointed [PH]

Shares in the FTSE 100 energy company plunged 14 per cent, down 173p to 1082p.

The group has been affected by the continuing political turbulence in Egypt, which accounts for nearly a fifth of its total production.

Normally half the output from its rigs off the Egyptian coast goes to the domestic market and half for export as Liquefied Natural Gas.

Overall, output has fallen in Egypt but during winter the Cairo government has diverted more supplies to the local market, reducing the amount available for export. As a result, BG has issued “force majeure” notices to its LNG customers to prevent legal action over events beyond its control.

Comment by Whac-A-Bubble™
2014-01-28 01:50:45

Methinks the minister doth protest too much.

‘Argentina turmoil won’t affect Spain’s recovery’
A currency exchange board in Buenos Aires: fears of turmoil in emerging economies were sparked after Argentina’s peso slumped by 14 percent in two days recently. Photo: Leo La Valle/AFP
Published: 27 Jan 2014 16:41 GMT+01:00
Updated: 27 Jan 2014 16:41 GMT+01:00

The eurozone’s recovery will not be affected by contagion from growing fears over emerging economies, Eurogroup chief Jeroen Dijsselbloem said on Monday, comments that were echoed by Spain’s Economy Minister Luis de Guindos.

The worries over markets such as Argentina and Turkey come as the euro is overcoming the worst of its debt crisis.

“I think they’re quite different, separate issues,” Dijsselbloem told reporters ahead of a meeting in Brussels of finance ministers from the 18 countries that use the euro.

“I don’t think that there will be any contagion coming from those kind of risks in emerging economies back to the eurozone, no,” the Dutch finance minister added.

Spanish Economy Minister Luis de Guindos also played down fears of a knock-on effect on the eurozone, saying Argentina was unique.

“The case of Argentina is singular. The exposure of Spanish companies is much lower, Argentina is a special case,” he told reporters in Brussels.

Fears of turmoil in emerging economies were sparked last week after Argentina’s peso slumped by 14 percent in two days.

Turkey’s central bank announced it would hold an extraordinary meeting on Tuesday as the lira slides further against the euro and the dollar.

The ruble has also fallen heavily.

Asian stocks sank on Monday following sharp falls in Europe and the worst losses on Wall Street in seven months on Friday.

Comment by Whac-A-Bubble™
2014-01-28 01:52:27

Investors Cry Over Argentina as Contagion Fears Resurface
By Matt Egan
Published January 24, 2014
Argentina bank

Emerging markets have descended into chaos in recent days as investors worry about the fallout of Fed tapering and grapple with ineffective governments.

Nowhere are those concerns more clear than in Argentina, which in recent days has become the epicenter of emerging-market turmoil as its currency has plummeted 20% this month alone.

The trouble in Argentina and other emerging markets appears to be having a spillover effect on developed markets like the U.S., where the Dow Industrials are on track for their worst week in eight months.

“Companies and investors that deal in emerging markets also deal in developed markets’ stocks. When crazy stuff happens, correlations approach unity. We forget this over and over again, and at our own peril,” Michael Block, chief strategist at Rhino Trading Partners, wrote in a note to clients on Friday.

It’s not just Argentina that is causing investor angst. Emerging-market fears were sparked earlier this week by alarming manufacturing numbers out of China. At the same time, Venezuela remains in free fall, the Turkish lira has tumbled to a record low and the currencies of Russia and South Africa are sitting at levels unseen since the financial crisis.

“The volatility injected into the system has undermined confidence in emerging markets,” said Block.

Comment by Whac-A-Bubble™
2014-01-28 01:54:30

Rand hits five-year low amid emerging market turmoil
Jan 27, 2014 - 18 hours ago in Business

South Africa’s rand hit a fresh five year low on Monday as the currency came under sustained pressure amid a worldwide flight from emerging markets.

The rand weakened to 11.25 against the dollar in morning trading, before regaining some ground against the greenback.

The South African unit, often seen as a bellwether for emerging market currencies, has been under pressure since the US Federal Reserve announced that it would trim back stimulus spending.

The rand has now fallen by 25 percent against the dollar since last May,” said Shilan Shah of Capital Economics.

While South Africa has been buffeted by the same wind that has hit other emerging markets, domestic mining strikes and the country’s fiscal problems have also made themselves felt.

South Africa has been dubbed one of the “Fragile Five” emerging economies which are struggling under a large current account deficit.

“There is clearly a danger that the rand falls much further over the coming months,” said Shah.

The precipitous fall of the currency possess another headache for the South African Reserve Bank, which meets later this week.

The bank, already facing unemployment running at 25 percent and weak growth, it will have to weigh whether the weak rand poses an additional risk for inflation.

Comment by Prime_Is_Contained
2014-01-28 09:35:50

“The rand has now fallen by 25 percent against the dollar since last May,” said Shilan Shah of Capital Economics.

Interesting; we talked about the change in the Treasuries market immediately (thanks, PB!), but it didn’t occur to me at the time that that change would have such a large impact in emerging markets so quickly.

Comment by In Colorado
2014-01-28 10:38:32

South Africa has been dubbed one of the “Fragile Five” emerging economies which are struggling under a large current account deficit.

Since are all “emerging economies” are dependent on us snapping up their exports, they’re all “fragile”

Comment by Whac-A-Bubble™
2014-01-28 01:56:41

Oops…wrong crisis. My hand slipped!

TURMOIL IN RUSSIA: IN MOSCOW; Ruble’s Crash Sets Off Boom in Survival Strategies

Published: August 30, 1998

By Monday this week, the owner of Shury-Mury, a popular downtown Moscow restaurant that offers a country atmosphere and Russian cuisine, had made his decision: his prices would have to go up.

By the time he changed the menus yesterday, the cost of his baked sturgeon and blinis filled with red caviar had shot up by 30 percent.

”Already for a week, we had been working at a loss,” said Vadim Nikitin, 29, who in these times of trouble, has taken to watching two hours of television news every night, anxiously scanning the airwaves for information that will help him figure out which way his country is going, and what its currency is worth.

Two weeks ago, before the de facto devaluation of the ruble and the subsequent reshuffling of the Russian Government, one dollar equaled 6.2 rubles. Today, it is worth pretty much what anybody says — from 10 rubles at some currency exchange booths, to 20 rubles on an incipient black market, to 11, the rate set after Friday after brief trading on an electronic inter-bank exchange.

Comment by Blue Skye
2014-01-28 07:45:14

35 rubles to the dollar now.

Comment by Whac-A-Bubble™
2014-01-28 07:56:51

Whoa! Just how many emerging market economies are devaluing their currencies at the moment?

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Comment by Blue Skye
2014-01-28 08:14:16

Closer to home, the Canadian dollar is looking rather anemic.

Comment by Professor Bear
2014-01-28 08:21:43

“…the Canadian dollar is looking rather anemic.”

What does that portend for the all-cash Canadian buyer slice of U.S. residential real estate investment?

Comment by Blue Skye
2014-01-28 09:23:59

All other things being equal, owning property in the US might be a good play against their own currency.

Comment by In Colorado
2014-01-28 10:36:51

Whoa! Just how many emerging market economies are devaluing their currencies at the moment?

Suddenly those hot overseas investments aren’t looking so hot.

Comment by Whac-A-Bubble™
2014-01-28 21:13:02

“Suddenly those hot overseas investments aren’t looking so hot.”

Suddenly those overseas investments are looking much more affordable than U.S. housing.

Comment by Whac-A-Bubble™
2014-01-28 01:58:32

Is Russian ruble ready to hit the bottom?

Already next year, the Central Bank of Russia let the ruble float freely and focus on containing inflation. How will the floating exchange rate affect the Russians? Will the Russian ruble go up or down?

The Russian ruble has been losing value rapidly. In general, the situation with the national currency of the Russian Federation is alarming. The fact that the Central Bank is prepared to let the ruble float freely and focus exclusively on containing inflation raises many questions too. Can one trust the ruble, or would it be more profitable for the Russians to convert their savings into dollars due to instability? Experts explain that it all depends on the capacity and quality of the savings.

“If we talk about interest rates on deposits on the market, then, in fact, their level, in general, takes into account the processes and changes in exchange rates that exist. If a person, for example, wants to open a ruble deposit, he or she would get, say, eight percent. Accordingly, a dollar deposit it in this bank would give eight percent, minus insurance against devaluation of the ruble at a rate of six percent, that is, roughly speaking, he will receive two percent,” chief strategist of BCS financial Group Maxim Shein told Pravda.Ru. “That is, in this sense, when viewed from the perspective of the savings to be deposited, in principle, there is not a big difference, especially for short periods of time.”

Comment by Whac-A-Bubble™
2014-01-28 02:01:11

Russian economy chief cheers ruble’s historic slide
From the Newspaper
Published 2014-01-28 07:38:54

MOSCOW: Russia’s economy minister on Monday called the ruble’s rapid slide to historic lows a boon for exporters which should help industry and promote stalling growth.

The ruble began trending lower in late December and has lost more than two per cent of its value against both the dollar and euro in the last three trading sessions alone.

The euro shot up by about 1pc to 47.63 rubles in afternoon trading on the Moscow Exchange — substantially stronger than the 42.25 ruble record it had set in the worst months of Russia’s 2008-2009 financial crisis.

The dollar was up 0.9pc to 34.79 rubles. The level was also its highest against the Russian currency since the end of 2008.

Moscow’s VTB Capital investment house summed up the trading floor sentiment by calling the ruble’s performance “one of capitulation”.

But Economy Minister Alexei Ulyukayev sounded an upbeat note about the decline that is likely only to spur ruble selling.

“I am not a proponent of stimulating the economy through an artificial weakening of the ruble,” Ulyukayev told Moscow’s Prime business news agency.

“But since what we have now is not an artificial but a natural weakening … then why not enjoy its positive effects?” he asked.

“This will help improve the competitiveness of a range of industries,” the economy minister stressed.

Russia’s industrial production was flat last year amid falling investment and reduced demand — both domestic and foreign — for such factory staples as steel.

And economic growth of about 1.4pc delivered a shock to the Russian government which had initially projected 2013 expansion to come in at 5pc and then accelerate in following years.

Comment by Whac-A-Bubble™
2014-01-28 02:02:16

‘Mise-Ruble?’ Russia’s currency hits 5-year low
Published time: January 27, 2014 14:44
Edited time: January 27, 2014 18:20
RIA Novosti / Ramil Sitdikov

The ruble has taken a spectacular dive in 2014, so far this year losing about 10 percent. However, the Central Bank and government think the volatility isn’t a concern, adding that the currency is poised to fall further.

On Monday the euro reached a historical high of 47.64, with the dollar close to 35, according to the data from the Central Bank of Russia (CBR).

High volatility has sent the ruble against the euro-dollar basket to lows that were last seen in February 2009.

Comment by Blackhawk
2014-01-28 06:57:30


Thanks for posting. These articles paint a grim picture of what’s happening around the world.

Are there any good places to escape to?


Comment by Housing Analyst
2014-01-28 07:23:39

Yes. Right here. Do not hold any debt and have cash. Trust me when I tell you, you’re going to need it.

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Comment by real journalists
2014-01-28 06:47:58

Turkey? Thailand? Argentina? Seriously?

What does that have anything to do with buying my dream home in Highlands Ranch?

Comment by oxide
2014-01-28 07:36:00

It’s a roundabout way of saying that dollars are becoming more valuable which means deflation which means that house prices “are gonna” fall — eventually. But if inflation of a currency results in rising interest rates, then wouldn’t deflation of a currency would allow interest rates to stay low? Which mean house prices are NOT gonna fall?

But what the hell do I know. I was recently informed that since I, and I guess most of HBB, aren’t economists, we have no right to mull over or interpret economics news for ourselves. Which raises the question of why the good Prof even goes through the effort to cut and paste economics news — without comment or stellar economic insight — for us to…. not mull over or interpret.

Comment by real journalists
2014-01-28 07:42:12

Where the beautiful people live:


I’ll be putting in an offer next Monday morning.

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Comment by MiddleCoaster
2014-01-28 09:24:08

All that land around them, and no one has a yard. Or any separation from the neighbors.

Comment by real journalists
2014-01-28 09:31:51

‘all that land around them’

that’s because in addition to buying my estate in highlands ranch, i am going to buy onwentsia, and then i’m going to move it to highlands ranch, and no, you will never get into onwentsia.

Comment by Housing Analyst
2014-01-28 09:32:59

Would you comment on some of the architectural and structural features?


Comment by In Colorado
2014-01-28 10:34:56

All that land around them, and no one has a yard. Or any separation from the neighbors.

I’ve spoken to people about that (Broomfield is the same). The standard answer is that they don’t want a big yard, because it’s a chore to maintain.

Comment by whirlyite
Comment by Whac-A-Bubble™
2014-01-28 07:48:09

“But if inflation of a currency results in rising interest rates, then wouldn’t deflation of a currency would allow interest rates to stay low? Which mean house prices are NOT gonna fall?”

I realize most models economists use implicitly assume the underlying processes are 100% reversible, but I thought hard (aka “real”) scientists knew better than to assume that. Twenty years of low interest rates in Japan accompanied by deflation and falling home prices (roughly 1990-2010) puts the lie to this logic.

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Comment by Whac-A-Bubble™
2014-01-28 07:55:35

P.S. Check out the definition of “pushing on a string” to better understand the situation the Fed is in, exacerbated by a steadily ballooning $4 trillion balance sheet.

The Federal Reserve’s balance sheet will hit a mind-boggling $4 trillion any day now
By Matt Phillips @MatthewPhillips December 13, 2013
Fed watchers were all wet back in September. Who will get the call right this time? AP Photo/J. Scott Applewhite

The Federal Reserve’s balance sheet is on its way to becoming one of the biggest numbers in economics.
Sure it’s not Japan’s ¥1 quadrillion government debt. Or the US economy’s $16 trillion-plus economy. (Or come to think of it, the US’s $16 trillion-plus debt.)
But still, the amount of financial assets the US central bank is holding in the wake of quantitative easing and other stimulus measures of the past five years is a very big number: Unless something truly bizarre happens, it will hit $4 trillion very soon. In fact, it’s basically already there. A weekly update yesterday afternoon put its size at $3.994 trillion.
What does this mean?

In short: A $4 trillion Fed balance sheet is basically just another way of acknowledging the fact that, since the financial crisis hit, the US central bank has been trying every trick in the central banking playbook to try to help the US economy.

Where does the Fed get the money to pay for those bonds?

The hard truth is that the Fed actually just creates it out of thin air. When it buys a bond from a bank, it just electronically credits the bank’s account at the Fed with the reserves.
How can that be?

It’s just the way it is.
How can I go on?

You’ll find a way.
But if the Fed keeps creating money out of thin air, won’t we soon have a kind of situation where money has no value at all and people will be running around shirtless in the streets demanding blood?

Well that’s what some people say. They’re called monetarists. And they’ve been warning that the Fed’s bond-buying programs would lead to a really scary inflationary spiral any second.
Has it happened?

No. Inflation is well below the Fed’s long-run target of 2%.

Why hasn’t the US turned into Weimar Germany?

There are a bunch of reasons. But the main thing to keep in mind is that the reserves that the Fed uses to pay for the bonds it buys from banks aren’t really money. They’re pretty close to money. But they don’t become money until they move out of the Federal Reserve system and into the real economy.
How do they move out?

Reserves become money once banks lend them to consumers and business owners in the real economy. But since the financial crisis hit, banks have been pretty conservative lenders. (It makes sense: Not only did the entire system nearly collapse because of reckless lending a few years ago, the economy was also terrible.)
So if banks aren’t lending reserves, did the Fed’s bond buying program do any good?

Yes, the Fed was able to do some good things. For example, it pushed mortgage rates down to record lows, which helped make it easier for people to refinance. But the programs weren’t a panacea for the economy as a whole.
Ok, fine. But now the Fed owns a ton of bonds. And I just read that the bond market had a bad year. If bond prices fall sharply won’t the Fed be exposed to losses?

That’s a very complicated question. And if the Fed were a regular bank—which has to take losses or gains on its portfolio investments depending on what the market does—you’d be right. But it’s not a regular bank. Under the accounting rules the Fed follows, the central bank doesn’t have to take a loss on bonds it owns if the market falls sharply. Now if the Fed had to sell its large stockpile of securities at a loss it would have to recognize those losses. But it doesn’t have to. And increasingly, it looks like it never will.
So a $4 trillion balance sheet isn’t a problem?

There is one problem: The Federal Reserve is a creature of the US Congress. And as the balance sheet gets bigger and bigger, it’s been an easy area for opponents of the Fed to spotlight. After all, if what the Fed was doing was so effective, why does it have this ridiculously large balance sheet? In theory, a Congress worked up about the size of the Fed’s balance sheet could take steps to take away some of the Fed’s independence through legislative action. (That’s every Fed chairman’s worst nightmare.) So if there is a problem with a large balance sheet, it’s more political than financial.

Comment by Whac-A-Bubble™
2014-01-28 08:02:04

“So if there is a problem with a large balance sheet, it’s more political than financial.”

Speaking of untested theories…

Comment by oxide
2014-01-28 08:31:42

Thank you for your insight, Prof. Yes, we scientists are fully aware of hysteresis, which is the concept behind house prices being “sticky on the way down.” But hysteresis is only thermodynamic. I also had to look at kinetics.

In making my decision to buy, the textbook economic principle that high interest rates “were gonna” drop houses prices wasn’t enough for me. Interest rates would have rise high enough, house prices would have to respond quickly enough, and rents would have to stagnate for long enough, all of this within an acceptable commute (national averages are useless), to make waiting and renting worthwhile. By my calculation, the probability of all of that happening was small. In fact I saw it going the other way.

And this was before I knew about the grey swan of private equity cash propping up prices as much, or more than, QE.

Comment by Housing Analyst
2014-01-28 09:51:19

Prices will return to the long term trend irrespective of interest rates. That process has already started.

Comment by Professor Bear
2014-01-28 09:52:33


That’s what economists tend to ignore, which I find odd, as many of them are failed physicists who entered an easier field. (Wait…it’s starting to make sense now.)

Comment by cactus
2014-01-28 10:47:11

Reserves become money once banks lend them to consumers and business owners in the real economy. But since the financial crisis hit, banks have been pretty conservative lenders.”

This isn’t new money for Banks to loan out. Free FED money is replacing ~14T in loses in RE banks were facing. That’s why there is no new inflation. Its just keeping old inflation around mostly the tremendous run up in home prices from collapsing.

Robert Prechter tells Peter Schiff this in a you tube interview I saw many years ago. Sounded good to me.

Comment by Whac-A-Bubble™
2014-01-28 08:00:57

“…we have no right to mull over or interpret economics news for ourselves.”

You have every right to mull over and interpret economics news for yourself however you please. However, I advise you don’t ignore the data when you theorize. For instance, I suggest you meditate on the recent example of Japan as you try to grasp the dynamics of deflation, interest rates and asset prices.

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Comment by Housing Analyst
2014-01-28 08:24:15

Repeat: I suggest you meditate on the recent example of Japan as you try to grasp the dynamics of deflation, interest rates and asset prices.

Do this before you make another regretful decision.

Comment by HBB_Rocks
2014-01-28 08:56:14

I suggest you meditate on the recent example of Japan as you try to grasp the dynamics of deflation, interest rates and asset prices.
Yeah look at Japan for all that, but be sure not to look at Japan and their housing prices 3X of ours and their 35 year mortgages. It might send mixed messages.

Comment by Housing Analyst
2014-01-28 09:04:40

How about you and your friend look at reproduction costs?

Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 19:57:44

There is no need to look at Japan. Just look at the United States. What happened during the Great Depression and Great Recession? Both were caused by unregulated borrowing that got of control. The Great Recession is being dragged out over a loooong time, so as to avert the short, sharp shock of mass starvation.

I don’t think it’s done yet.

I think QE took us to the max, and now we are going to drift downward, before coasting for a while. No, we did not have a sustainable, huge run-up in stock and house prices during the protracted depression of the current era. That was air. We are headed back down to the pre-echo phase, and we will stay there until the economy actually catches up with the prices of things, or the other way around.

Comment by Whac-A-Bubble™
2014-01-28 21:19:23

“That was air.”

There’s plenty more air where that came from.

Comment by Prime_Is_Contained
2014-01-28 09:40:37

I was recently informed that since I, and I guess most of HBB, aren’t economists, we have no right to mull over or interpret economics news for ourselves.

LOL… I think the HBB’s record is pretty good—far better than most “professional” economists at predicting the downturn!

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Comment by Whac-A-Bubble™
2014-01-28 21:20:23

Spot on. Look no further than the economists who sit on the FOMC for the evidence.

Comment by Whac-A-Bubble™
2014-01-28 21:21:38

For the record, I have been a regular here since 2005. By 2007, I was frankly shocked by the degree of pessimism expressed in the armchair empiricist forecasts posted here.

Then came Fall 2008 and the reality proved far worse.

Comment by rms
2014-01-28 23:02:54

“Then came Fall 2008 and the reality proved far worse.”

+1 Skoolz didn’t mention “real capitalism?” :)

Comment by cactus
2014-01-28 10:36:36

But if inflation of a currency results in rising interest rates, then wouldn’t deflation of a currency would allow interest rates to stay low? Which mean house prices are NOT gonna fall?’

Deflation of a currency is what? it’s losing value so interest rates have to go up to defend it.

you got some words backwards but I would agree if a currency is going up ( inflating ) because of supply demand you wouldn’t have to offer high interest rates, interest rates could go down and mortgage rates could go down as they follow treasuries or LIBOR.

I’m not an economist either but I think US bonds should rally here ?

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Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 19:59:31

Deflation is when the money is worth more, meaning you can buy more stuff with it.

Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 19:35:20

Oxide is starting to sound like a global-warming denier. “It’s not fair for scientists to suggest that I learn the basics of science. I should be allowed to give my subjective opinion about scientific matters with no fundamental understanding of the thing to begin with, and no one should question the practice.”

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Comment by Whac-A-Bubble™
2014-01-28 21:25:05

“I should be allowed to give my subjective opinion about scientific matters with no fundamental understanding of the thing to begin with, and no one should question the practice.”

One of my first economics professors two decades ago shared his annoyance with me regarding people who never took a college economics course believing they knew as much about the subject as professionally trained, degreed economists.

As I mentioned recently, I cannot imagine pretending to know as much about chemistry as a chemist, about physics as a physicist, or about genetics as a geneticist, but I know plenty of natural scientists who proudly display their ignorance of economics in public.

Comment by Whac-A-Bubble™
2014-01-28 07:43:54

It has much to do with your prospective opportunity to buy. The emerging market crisis has triggered a flight-to-quality into U.S. debt, including long-term Treasury bonds and mortgage backed securities. Thanks to the emerging markets crisis, the Fed taper’s effect on long-term interest rates will likely be smaller than expected, keeping mortgages more affordable than they would have been without a crisis to repatriate a flood of dollars into the U.S. debt market.

Comment by real journalists
2014-01-28 08:16:14

Correction: opportunity to buy = opportunity to borrow.

Which as a renter sitting on a ever-increasing pile of cash, I have no plan to do so.

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Comment by Whac-A-Bubble™
2014-01-28 08:22:49

Fair enuf.

Comment by Whac-A-Bubble™
2014-01-28 02:03:40

Bitcoin entrepreneur’s arrest highlights digital currency’s underworld link
January 27, 2014, 3:58 PM

Bitcoin just can’t seem to shake its association with the underworld.

The arrest announced Monday of Charlie Shrem, a New York-based bitcoin entrepreneur for alleged links to illegal drugs exchange Silk Road, brought bitcoin squarely back into association with activities — drug purchases, money-laundering — that its more mainstream advocates have sought to downplay.

The cryptocurrency has emerged as a darling of venture capitalists, championed by both young entrepreneurs and Internet legends like Marc Andreeson, who are eager to establish the digital currency as the next frontier for financial payments. But law enforcement has shown it’s ready to act if –in officials’ words — bitcoin is used for very “old-fashioned” crimes.

“Truly innovative business models don’t need to resort to old-fashioned law-breaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act,” said U.S. attorney Preet Bharara in a statement.

Comment by Overtaxed
2014-01-28 05:13:21

Bitcoin may be involved in about .000001% of the global drug trade financing. The other 100% is conducted in US Dollars. We obviously should go after those printing those dollars, they are being used for illegal activities! Shoot, you can use a dollar not only to buy drugs, but also to use them. A dollar is drug paraphernalia!

The stupidity of the drug war truly knows no bounds. Silk road is just, of course, the latest victim. God forbid people buy drugs without government intervention.

Comment by real journalists
2014-01-28 06:51:12

“The stupidity of the drug war truly knows no bounds”

NPR reported today that Florida will have a medical marijuana ballot initiative this November, the first state in the South to do so.

Comment by oxide
2014-01-28 07:41:11

Pot in Florida? Hot damn! Time to buy stock in Old Country Buffet. (or maybe sell it? Buffets are all-you-can-eat for one price.)

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Comment by Suite Joey Blue Eyes
2014-01-28 07:44:53

It won’t pass. FL makes it easy to get on the ballot, though. So we’ll at least see what the %s are.

FL is the oldest state in the US and still has big swaths of social conservatives. Since FL has so many people on Medicare (read: cheap/free drugs on Medicare Part D) they actually have less need for med marijuana than you’d think.

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Comment by Suite Joey Blue Eyes
2014-01-28 06:49:43

BitCoin is nothing like the US dollar and banks in terms of money laundering.

The reason the gov’t and banks are against bitcoin is captain obvious. If bitcoins are widely adopted, commercial banking is done.

Comment by Suite Joey Blue Eyes
2014-01-28 06:51:04

The US dollar and big banks are far more involved in drug purchases, money laundering, etc.

The reason the media and the banks/lobbyists are against bitcoin is that bitcoin has almost no transaction costs and if it is every widely adopted, commercial banking is done.

Comment by oxide
2014-01-28 08:52:31

How can bitcoin be widely adopted if there are billions of unbanked — indeed, unelectrified — who will be unable to use it? Wouldn’t printing out a bitcoin nullify its purpose? Will the unbanked resort to barter?

Bitcoins do have transaction or at least maintenance costs, but they are hidden as dollars. If dollars are done away with, how will those expenses be paid? In bitcoins from customers. Isn’t that a transaction cost?

Why would commercial banking be “done?” When the time came, any banking computer could simply sell all its dollars for whatever they are worth in bitcoin and continue on with no change except to slash through a “B” instead of an “S.”

I think the banks fear the cost of the transition, and the anonyminity.

Comment by Suite Joey Blue Eyes
2014-01-28 10:39:26

What are you talking about? One of the big selling points for Bitcoin is that there are nearly 6 billion unbanked people in the world. Banking infrastructure and processing isn’t cheap and the poor pay a higher % of their earnings in transfer charges and storage fees. Bitcoin only requires a computer of some sort and an internet connection.

The idea behind adoption of bitcoin is that people in these areas would _rather_ receive their money in bitcoin than in their local currency. We take for granted a stable US dollar (even that has declining purchase power over time). But 95%+ of currencies in the world are SPS. Bitcoin is simply better. And it’s more secure than a credit card, debit card, or carrying cash.

We have the technology to make this happen. But it would crush banks. Which is why they will resist. Hell, banks resist using the kind of card technology (used in Europe and North Africa) that would’ve prevented the Target and Neimann breaches. Indeed, that chip + PIN technology is the kind of 2-level authentication that bitcoin is about.

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Comment by cactus
2014-01-28 10:52:50

Bitcoin is simply better. ”

Gold works too

Comment by Suite Joey Blue Eyes
2014-01-28 13:14:45

Goal isn’t as good as bitcoin for many reasons, the least of which is that you have to physically store it or pay someone to do so, it isn’t as divisible (look up how divisible a bitcoin is, bitcoins are divisible to 8 decimal places), it can be hoarded by hostile governments, it’s not as safe to carry on your person, and it could be subject to impurities (by scammers, for instance).

Bitcoin isn’t actually that complicated and it offers a lot of protections that debit/credit cards don’t offered. As long as you’re not committing crimes or dealing with scammers (the same as if you were handling real dollars) it’s not risky.

Comment by Whac-A-Bubble™
2014-01-28 21:27:58

The unbanked don’t need to rely on barter, provided they have dollars or bitcoin available.

Comment by Housing Analyst
2014-01-28 03:40:19

realtors are untrustworthy and corrupt

Comment by Bill, just south of Irvine
2014-01-28 04:06:51

The stock decline this week is a perfect excuse to realize gains on any assets you try timing. Staffing company stocks are crumbling and I am bailing with what gains I made the last 2 years. Before I lose more gains!

Comment by azdude02
2014-01-28 06:34:55

ring the register dude while you still have some equity left.

Comment by Bill, just South of Irvine, CA
2014-01-28 07:56:26

$22,000 and change. Over half that realized gain. Maybe 3/4. That will pay my rent for awhile.

Comment by Whac-A-Bubble™
2014-01-28 08:06:02

Noice, especially when you imagine how you could have wasted the money that funded that investment to make a down payment on an overpriced debt shack. Instead it sounds like you pocketed a year or so in rent!

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Comment by Bill, just South of Irvine, CA
2014-01-28 08:16:40

Yes, precious time! $39,000 or $40,000 of sales of that stock since late December, so well over a year and a half. Lots of things can happen - new opportunities at a higher salary. And I can break my lease (here goes - with only one month break lease penalty!

Tell that to Amy the Hoaxster and other trolls

Comment by Bill, just South of Irvine, CA
2014-01-28 08:10:19

Be fearful when others are greedy. Be greedy when others are fearful.

Now I have less fear, more cash!

380 shares bought at $6 per share, sold at somewhere over $30
365 shares bought at $16 per share sold at somewhere over $30

It’s $30 on paper until you sell it at $30. It’s sold at $30! And half the $22,500 goes into electronic T-bills!


Comment by Whac-A-Bubble™
2014-01-28 08:07:04

I pulled my stock funds a couple of months back. Didn’t mention it here because I didn’t want to spark a panic or anything…

Comment by Bill, just South of Irvine, CA
2014-01-28 08:13:30

You did good.

I was sparked by a couple of “pro” traders on market watch on my stock. In december one bailed out at $31. I sold 500 shares at $34 a week later. Then yesterday another bailed out below $30. The stock is up more than 2% today and the automatic 365 shares sale kicked in. Opening was over $30. 25 minutes later I sold the next 380 shares.

And in my old employer’s 401k I moved $50,000 out to an old man’s mutual fund - 30 month securities yielding about 2%.

Comment by Prime_Is_Contained
2014-01-28 09:51:08

Nice timing, PB.

How about mentioning when you go back in this time around? :-)

Comment by Whac-A-Bubble™
2014-01-28 21:28:58

Trickling in over the next five years (DCA, baby!)…

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Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 20:10:23

I tried to short the stock market while you were pulling your stocks out. I’m so bummed I don’t have the right moves like the Thrive Eighty-Five.

But that’s OK, ’cause I will get my 53% drop and then I will be happy again.

Comment by jose canusi
2014-01-28 06:31:06

Anyone catch the 60 Minutes interview with Jay Leno? Very revealing. Once again, he’s going out on top. I predict Fallon will tank, big time. And I agree Fox should grab Leno, if they can, and get into the late night thing.


Comment by jose canusi
2014-01-28 06:48:50

“Once again, he’s going out on top.”

I meant to say: Once again, he’s being FORCED OUT on top.

Comment by jose canusi
2014-01-28 07:33:01

On account of he’s not relevant anymore because of Twitter and Facebook, lol. But Jimmy Fallon and Justin Timberlake in Gumby outfits dancing around and butting heads, now THAT’s supposed to be funny. And relevant.

Meh. SNL has descended pretty much to the level of fart and titty jokes and I recall that Tina Fey had to nod and wink each time she made a joke so the audience would understand it was supposed to be funny. Sigh. When society dumbs down, one of the first things to go out the window is humor.

Comment by oxide
2014-01-28 07:53:10

If social media — Twitter especially — can crowdsource humor, then almost all comedians are irrelevant, not just Leno. I say “almost” because of Steven Wright. He invented Twitter humor long before Twitter.

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Comment by jose canusi
2014-01-28 08:03:38

I hear ya. Leno is #1, despite Twitter and FB, that should tell people something. But not the jerkoffs at NBC. I’ve dealt with guys like that in my career. I once had business dealings on a local level with a real POS who went on to national success in Tee-Vee land. He’s dead now, got a little too enthusiastic about exercise. But I recall when he tried to pull the rug out from under me, not realizing I had already gotten my check. Thank god for a good accounting department.

Comment by sleepless_near_seattle
2014-01-28 17:39:20

Leno is #1, despite Twitter and FB

I’d say “in addition to” not in spite of. Leno is so mainstream comedy as to be unwatchable, IMO. But for the older set.

Letterman and Conan (at least the old Conan) are more my speed, which doubles as the reason Leno was chosen over both of them. The mainstream can appreciate his forced humor.

Although, these days they’re all too late for me. :-)

Comment by jose canusi
2014-01-28 19:23:13

“Letterman and Conan (at least the old Conan) are more my speed”

Way too whiny and needly for my tastes, the both of them.

Never found Leno anywhere near unwatchable, although I don’t make a point to stay up to see him, like my dad did Carson. Always enjoyed the Jaywalking segments, the Headlines and Ross the Intern. I thought Iron Jay was hilarious.

Comment by jose canusi
2014-01-28 06:39:17

Hey, Absolute Beginner, your Daft Punk guys made a jolly good showing at the Grammys.

I’ll see your Daft Punk and raise you one Take That:


Dunno how I missed these lads, I heard the song at the end of X-Men First Class and had to find out who was doing it. Led me down quite the rabbit hole. Interesting group, morphs from 90s boy band into quite the sophisticates.

Comment by AbsoluteBeginner
2014-01-28 11:32:57

Long drive into work the other day. One of the Grammy winners from that album is from around here. And what do I get out of it? Nothing. No equity increase, nothing. Might as well been a rap album about hos and mo’ money.

Comment by jose canusi
2014-01-28 13:36:37

Well, see, that’s what you get for not being hip to Take That.

Have to laugh, though. This “boy band” business is hilarious. Like it’s a special kind of genre.

What were the Beatles? Boy Band
Rolling Stones? Boy Band
Dave Clark Five? Boy Band
The Who? Boy Band.
Def Leppard? Boy Band
Van Halen? Boy Band

and on, and on, ad nauseum

Comment by AbsoluteBeginner
2014-01-28 13:54:45

When I think boy band, I think of that ‘I Dream of Jeannie’ episode where Jeannie goes around to random venues and snags busboys,etc. to create a band. I think that was a Phil Spector-esque type allegory.

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Comment by HBB_Rocks
2014-01-28 15:01:45

‘boy band’ is a special genre and typically implies they didn’t generally write or mostly even perform their own music, and were formed at the behest of a svengali.

So the Sex Pistols and Monkees qualify (maybe the Beach Boys), but the Beatles, Van Halen, and the rest don’t.

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Comment by jose canusi
2014-01-28 16:36:29

Take That is a special case, then. I guess you could say they are a hybrid, because they were formed at the behest of a Svengali, but performed both covers and their own music (mostly written by the heavily Paul McCartney-influenced Gary Barlow). I think all of them do play instruments, often in their own performances. Other times, they are backed up by others.

Comment by Suite Joey Blue Eyes
2014-01-28 06:44:48

Funny article on Business Insider.

This is a graphic showing the Google auto-complete for the question “Why is [state] so ______”.


Auto-complete suggestions are ordered by the most common searches. It gives a good idea what people think about each state.

For example, “Why is Nebraska so” is auto-filled by “boring”.

For Colorado, the auto-fill is “fit”.

For Massachusetts, the auto-fill is “smart”.

For Georgia, the top selection is “backwards”, but “cheap” and “racist” are right below.

Etc, etc. I found the chart pretty humorous.

Comment by Housing Analyst
2014-01-28 06:58:36

Hello Liberace.

Comment by real journalists
2014-01-28 07:08:19

Q: Why is Colorado so fit?

A: Papa John’s Cheese Sticks™

Comment by Housing Analyst
2014-01-28 07:10:34

Got Cheetos?

Comment by jose canusi
2014-01-28 07:20:18

I’m from the south, so I’ll have me some pork rinds.

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Comment by Suite Joey Blue Eyes
2014-01-28 07:33:00

“I’m from the south, so I’ll have me some pork rinds.”

Not surprisingly, “fat” comes up on the list for essentially every southern state if you type it in.

“Poor” is the number 1 search term for southern states, though. Alabama’s top response is “good”, but it’s clearly a reference to their football team. (If you type in “Why is Alabama so”, poor is #2 and racist, fat, stupid, and backwards make the list of suggested searches.)

Comment by jose canusi
2014-01-28 08:08:59

Well, I dunno. HL Mencken was pretty vicious about the South in his day. But looking at the decline of northern cities, especially those with a former manufacturing base, the picture rivals or exceeds anything you can say about “the South”. And there are parts of Maine where the backwoods folks make Deliverance look like a Hamptons garden party.

Comment by jose canusi
2014-01-28 08:20:21

However, I did read something once about how colder weather keeps people slimmer. Something about a plastic surgeon who noticed a couple of young girls eating popsicles and how their cheeks sort of shrunk. Appears the cold shrinks fat cells or some such thing.

Comment by MightyMike
2014-01-28 10:39:25

I saw this the other day.

Shivering can help burn fat: scientists

January 26, 2014
Sarah Knapton

It may be the world’s easiest weight-loss plan, involving no exercise or dieting.

Scientists claim you can shiver yourself slim - simply by turning the heating down.

Mild cold increases body energy.
Most European houses are heated in winter but researchers at Maastricht University Medical Centre in The Netherlands advise lowering the temperature to between 15C and 17C for a few hours a day.

Experts say because we spend so much time indoors, in overheated homes and offices, our bodies do not naturally burn calories to keep warm.

It is a trend that has crept up on us over the past century as we have become more adept at controlling the temperature in our surroundings. But temperatures closer to what it is like outside might be more beneficial to health.

Simply being colder raises the metabolic rate - the speed at which calories are burnt - by 30 per cent, and shivering can burn around 400 calories an hour as it increases the metabolic rate fivefold.

Researchers say although shivering can feel uncomfortable, lowering the temperature so you feel chilly might be an easy option for people who struggle to keep up diets.

”Regular exposure to mild cold may provide a healthy and sustainable alternative strategy for increasing energy expenditure,” said lead author Wouter van Marken Lichtenbelt. ”Thermal comfort in the built environment may increase our susceptibility to obesity and related disorders.

”Mild cold exposure increases body energy expenditure without shivering and without compromising our precious comfort. More frequent cold exposure alone will not save the world, but it is a serious factor to consider in creating a sustainable environment together with a healthy lifestyle.”

The Dutch team found that people who spent six hours at 15C for a period of 10 days had increased levels of calorie-burning brown fat.

Telegraph, London


Comment by In Colorado
2014-01-28 10:04:40

Q: Why is Colorado so fit?

A: Papa John’s Cheese Sticks™

Correct … they are so gross no one here will eat them ;-)

Comment by MiddleCoaster
2014-01-28 13:54:32

Illinois: Corrupt!

In addition to our stellar politicians, the property taxes and the weather could spur us onward to find somewhere else to live after we both retire. I’m thinking maybe Colorado, or Oregon.

Comment by tom cruz bustamante
2014-01-28 16:34:17

Why do you want to ruin one more state? Just stay there and fix the mess you help created. Leave us gentle folks alone.

Comment by oxide
2014-01-28 07:03:06

Yesterday, Prof Bear wanted to know which graphs I saw in a Bernanke white paper that supported my decision to sell. Mainly, I was looking at the graph of rents (page 9). As house prices were diving in 2008-2011, rent prices leveled off, but they barely decreased at all. If prices are falling, then wouldn’t rents need to decrease too to prevent renters from buying? But rents didn’t follow house prices. In fact, vacancy rates for rentals went DOWN — I guess as subprimers were evicted. Keep in mind, this is a national trend where millions of jobs were being lost, including mine in the Midwest. But in the DC area, where am I now, rents bucked the trend in the graph. Jobs were generally retained, people were flocking to DC, and rents had no reason to go down at all (according to the rental agent).

So even if house prices fall again, I don’t think rents will fall this time either. I did a quick calculation and found that renting even a one-bed apartment would eclipse my PITI in 10-13 years. Knowing that, it’s easy to see that one type of Oil City plan — that is, to rent for 20 years and save enough buy an Oil City house outright later on — was actually not possible. I would save less and less each year and never accumulate enough.

While it’s very easy to say “oh just chase cheaper rents,” it’s not so easy to do. In order to keep rent low enough to buy outright, I would have to move every 18 months, and move to a place farther from work, lower quality, or less safe. And I would have to do that for decades. While all of you like to call me a debt slave (I’m not, I’m solvent, I can always sell), is it more preferable to be a stable buyer or slowly decend into a slum?

Bernanke white paper: http://www.federalreserve.gov/publications/other-reports/files/housing-white-paper-20120104.pdf

Comment by real journalists
2014-01-28 07:09:50

“I can always sell”

Sure you can :)

Comment by Blue Skye
2014-01-28 08:05:01

“I can always sell”

Millions of others have said this and now cannot sell. A house is not a liquid investment. With what you do to math and economics, your house will always look like the right choice to you no matter what happens. Besides, selling for you would be like ripping your own heart out!

I do think that you have hit on something, that people flocked to DC as the credit expansion gained momentum. I am not an extrapolate to infinity guy, I think there will be a reversal. The government is way beyond too expensive.

Comment by Professor Bear
2014-01-28 08:20:40

For the record, I’m not one of the posters who constantly needles you over your purchase decision. We would probably have bought the dip over the past several years if it had made sense at the time for our household. I have a number of colleagues at work (with smaller or no families) who got in to places very close to work at attractive prices.

“So even if house prices fall again, I don’t think rents will fall this time either.”

I wouldn’t project the future off a period of extreme financial market turmoil offset by even more extreme financial engineering to mitigate its effects. Many of us who post here believe that in the long run, market forces trump top-down financial engineering measures designed to manipulate the behaviors of market participants into making decisions which are good for Wall Street banks but bad for Main Street.

Rents and home prices are fundamentally connected through the substitution effect: Other things equal, if homes are ‘too expensive’, more households will rent; if rents are ‘too high’, more households will buy. The foreclosure crisis coupled with banks dragging their feet on getting foreclosure homes back on the market and a temporary collapse of the home building industry resulted in a transition period when demand for rentals was relatively high while supply of homes for rent or for sale was low. Factors discussed repeatedly at length on the HBB suggest this situation is temporary, and a reversion to market forces will result in less expensive prices in both the rental and owner occupied housing markets over the next several decades.

Comment by Housing Analyst
2014-01-28 08:55:52

Better yet, pick up a construction contract and it will explain substitution effect in great detail.

Comment by Blue Skye
2014-01-28 09:27:12

In other words, if you land a gig in a boom town, rent.

Comment by Housing Analyst
2014-01-28 11:05:15

Especially with this going on;

Arlington VA Housing Prices Fall 15%; Inventory Balloons 28%


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Comment by apathy
2014-01-28 13:04:37

Oxide, you made me curious about rent increases over time so I looked up a couple of my old places in Arlington.

1 BR Apt in Colonial Village in 2006 $1200, now $1600-1700. My neighbor had the 2 BR unit rented at 1600, now they are $2200-$2300. Looking at 25-38% increases.

The Meridian at Pentagon City, I paid $1900/month in 2011. Now it is $2300-$2520 for the same unit, the Iverson 1BR with den. What a bargain. That’s a frisky rent increase of 21-32%.

Comment by Housing Analyst
2014-01-28 13:12:27

They’re certainly far less costly than paying $5,500/month for a rapidly depreciating house at a grossly inflated price from which you’ll never recover.

Comment by apathy
2014-01-28 14:01:59


That 1BR that rents for 1600-1700, sells for $297-298k. 4.25% interest, 0 down, 30 year, payment is around $1400/month.

Still not my cup of tea, since I might out grow all 580 square feet over 30 years.

Comment by oxide
2014-01-28 14:48:29

Pay no attention to HA. We can’t figure him out.

Yes, one of my old one-bed went from ~$785 - $1200 in the 7 years. I left just before the pop. After that they renovated and sold the place. The same unit is now $1430. But those are the advertised prices. Now, instead of giving a month of free rent the first year, they just advertise low rent and hit the renter with sticker shock at the first renewal. At my last rental, the first renewal was a 20% hike after one year.

Comment by Housing Analyst
2014-01-28 15:15:21

Yes $5500 a month.

Thats the cost to go from your 1bedroom to a SFR in Arlington county.

Remember…. you’re operating on DebtDonkeyism so that’s going to be the standard.

Comment by Blue Skye
2014-01-28 16:09:13

“my old one-bed went from ~$785 - $1200 in the 7 years…”

What a coincidence, federal government spending went up by 75% in the same period!

Comment by oxide
2014-01-28 18:02:47

federal government spending went up by 75%

Yes, I remember watching the news of people standing on the highway staring at the smoke coming from the Pentagon.

Comment by Blue Skye
2014-01-28 18:19:50

Oxy, do you think that is the reason our FedGov spending about doubled, because of a murder? Is that the general consensus down there?

Comment by jose canusi
2014-01-28 07:13:56

Erik Prince, formerly of Blackwater,”makes the surprising claim that “there’s very little advantage to being an American citizen anymore. They tax you anywhere in the world you are, they regulate you, and they certainly don’t help you, at all.”

He’s right, of course, but I still don’t like him. I guess China gave him a gig.


Comment by Suite Joey Blue Eyes
2014-01-28 07:42:22

I’ve heard a bunch of interviews with this guy and he never ceases to disgust me. He acts like he’s a bootstrapping, hardworking guy, but in reality he’s just another contractor out to get paid by the government. This is what most of our military budget is these days, so it’s not just him, by a long shot. Remember, 5 million people have security clearances. That’s not hyperbole, that’s pretty close to the actual number. And far more classified info is gathered these days, probably 100x what was collected pre-9/11.

This system wouldn’t be able to operate without private, for-profit contractors. They charge high prices then turn around and use a lot of that money for lawyers and lobbyists. They agitate against hiring more federal employees or having a fully-staffed, fully-trained regular army/navy/air force. They like this because it means more profits for them. And they convince that public that their efforts are for our safety. They have incentives (rational) to get paid as much as possible and hey, since they’re not *technically* gov’t employees, that get to pretend they are bootstrappers and people like 2ban, slithers, and northTeasterner support them.

Comment by jose canusi
2014-01-28 07:46:42

Forgot to mention, I enjoyed your analysis of “Mitt” yesterday. It was very well thought out and raised some interesting points.

Comment by Suite Joey Blue Eyes
2014-01-28 08:04:25

You should watch the actual documentary. The access they had was great and it is very unbiased. There is no narration, it’s all just live shots of behind the scenes things and you see a lot of his family. You also see the GOP operatives assigned to him try to get him to be something he’s not (which sometimes worked).

The Wikileaks documentary is very good also. I learned so much more about how far various governments have gone to try to stop scandals from being exposed. It also shows the footage that Manning leaked and makes you question why so many steps were taken to cover that up. Makes you question how much of the U.S. military really is about killing brown people (and it seems to have been that way for 4 decades now).

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Comment by Ben Jones
2014-01-28 08:44:04

‘You also see the GOP operatives assigned to him try to get him to be something he’s not’

Which was a real alternative to Obama.

Very interesting this rehabilitation of good old Mitt Romney. After all, he likes wars, amnesty, government health care, gun restrictions, NSA spying. He’s basically Obama-lite. That’s the real purpose of establishment manipulation of the media prior to elections. Make us think we’re choosing between two different candidates when all we’re really asked to do is rubber stamp an establishment tool.

Comment by tom cruz bustamante
2014-01-28 08:51:24

Many a people DIDN’T vote for Romney because he was so conservative. LOL…

Comment by jose canusi
2014-01-28 10:16:21

“Very interesting this rehabilitation of good old Mitt Romney”

He’s beyond rehabilitation. The interesting part, to me, is how his consultants took him to the cleaners. Couldn’t happen to a nicer guy. I’m sure he thinks he’s doing the Lord’s work.

I just thought the analysis was interesting. I still wouldn’t vote for the guy.

Interesting, though, is his father’s story and what he did at HUD.

Comment by Suite Joey Blue Eyes
2014-01-28 10:43:26

Ben, the things the GOP operatives wanted him to be were a warmonger, a birther, and a Benghazi-thumper.

Watch the documentary. They wanted him to appeal to the Hannity crowd. He fell for it when Obama baited him into his statements about Benghazi in the 2nd debate.

The GOP operatives had a seething hatred for Ron Paul. And remember, the GOP primary’s alternatives to Mitt were… Rick Santorum, Herman Cain, Newt Gingrich, and Michelle Bachman. LOL, just LOL.

The primary voters are a huge obstacle. And Paul got delegates but then the GOP party systematically stole them from him. The process is broken.

Comment by Suite Joey Blue Eyes
2014-01-28 11:00:28

There’s a really good quote by David Frum (conservative writer) about what the Tea Party wanted as far as the economy and what Mitt wasn’t willing to give them:

“This isn’t conservatism: It’s a going-out-of-business sale for the Baby Boom generation. The economic motive is growing ever more naked, and has nothing to do with any principle that could be articulated by Goldwater or Reagan, or indeed with any principle at all. The political imperative is to preserve the economic cloak of unreality that the Boomers have wrapped themselves in.”

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Comment by Ben Jones
2014-01-28 11:04:18

“David Frum (conservative writer)”

“David “Axis of Evil” Frum first gained notoriety as one of George W. Bush’s more polemical speechwriters. During the run-up to the Iraq war, he was all over the media, agitating for the invasion and viciously denouncing anyone who questioned the wisdom of such a course. In an infamous article for National Review, entitled “Unpatriotic Conservatives,” he attacked those conservatives and libertarians who counseled caution, smearing Robert Novak, Pat Buchanan, Llewellyn Rockwell, Samuel Francis, Thomas Fleming, Scott McConnell, Joe Sobran, Charley Reese, Jude Wanniski, Eric Margolis, Taki Theodoracopulos, and myself as, variously, “defeatist,” “conspiracy theorists,” and “anti-Semitic.” Here is Frum, in March of 2003:

“They have made common cause with the left-wing and Islamist antiwar movements in this country and in Europe. They deny and excuse terror. They espouse a potentially self-fulfilling defeatism. They publicize wild conspiracy theories. And some of them explicitly yearn for the victory of their nation’s enemies.”

Frum went on for at least three thousand words, attacking his enemies as traitors and terrorist-sympathizers. It was all lies, of course, and I answered them here. Yet now we see Frum has reinvented himself as a “moderate” Republican, and has carved out a new career for himself as the kind of conservative who gets invited on NPR and CNN to snark at his former comrades. In a recent interview with Politico, he was asked: “What do you know now that you wish someone had told you 10 years ago?” His answer:

“That the Iraq War would be a disaster. Come to think of it, they did tell me.”

Comment by Suite Joey Blue Eyes
2014-01-28 11:39:32

OK, leaving Frum out of it, let’s still call out the truth that old people (largely GOP voters) are the actual problem with the federal budget. They’re the reason for the debt. And they block meaningful reform and investments in the future producers who will have to turn this around.
“There is a young America and there is an old America, and they don’t form a community of interest. One takes from the other. The federal government spends $480 billion on Medicare and $68 billion on education. Prescription drugs: $62 billion. Head Start: $8 billion. Across the board, the money flows not to helping the young grow up, but helping the old die comfortably. According to a 2009 Brookings Institution study, “The United States spends 2.4 times as much on the elderly as on children, measured on a per capita basis, with the ratio rising to 7 to 1 if looking just at the federal budget.”

Comment by tom cruz bustamante
2014-01-28 11:45:37

The political imperative is to preserve the economic cloak of unreality that the Boomers have wrapped themselves in.”

And we wonder why Romney lost…..

Comment by rosie from the north
2014-01-28 11:59:01

All your great conservative thinkers are foreigners. Rupert Murdoch, Australian. David Frum, Canadian.

Comment by tom cruz bustamante
2014-01-28 12:19:02

I wouldn’t call them tHinkers, more like tinkers.

I actually prefer the mexican illegals to these types of immigrants.

Comment by Ben Jones
2014-01-28 12:51:37

‘let’s still call out the truth that old people (largely GOP voters) are the actual problem’

I think I see what’s going on here. It looks to me like you tell yourself this so you don’t feel guilty for backing the people that you do. Meanwhile, as the red-blue bickering continues, the real PTB are robbing us blind.

Comment by tom cruz bustamante
2014-01-28 13:05:26

I think I see what’s going on here. It looks to me like you tell yourself this so you don’t feel guilty for backing the people that you do.

I have always felt that about Joey’s posts. He’s a wolf in sheep’s clothing. MASSIVE FRAUD!

Comment by Housing Analyst
2014-01-28 13:10:27

the real PTB are robbing us blind.

That might be a really good blog topic header, especially a discussion of the different means, methods and conduits used to siphon off every last dime. Once the dimes are gone, the process of donkeying begins, nobody excluded. Once the herd is developed, they’re worked until they’re financially dead, down or crippled.

Frankly, 99% of the public and readers here are blind to the many ways they achieve this.

Comment by Suite Joey Blue Eyes
2014-01-28 13:32:05

Who do I back?

I’ve said many times I think Gary J was the best guy in the 2012 race and that I think the GOP dumped on Ron Paul who was their only real candidate who has anything of value to say to young people about freedom, limited government, and intellectual honesty.

The Mitt documentary was interesting because you could see the disconnect between what he really wanted to say and represent and the concessions he made to get the nomination and then raise funds from his base. So yeah that makes him spineless. He knew the game he was playing, having been cost the ‘08 nomination because an inferior candidate (McC) ran the board in the South by using the Mormon issue, calling in favors from politicians, and tacking right on social issues. Sadly, I think all politicians are this spineless. Still interesting to see behind the scenes though.

Comment by bobo4u
2014-01-28 14:02:27

Want to Reduce Income/Wealth Inequality? Abolish the Engine of Inequality, the Federal Reserve
Posted on January 28, 2014 by Charles Hugh Smith

“The Federal Reserve is the primary obstacle to reducing income/wealth inequality. Those who support the Fed are supporting a neofeudal arrangement that widens the income/wealth gap by its very existence.”


Comment by MightyMike
2014-01-28 15:58:47

He knew the game he was playing, having been cost the ‘08 nomination because an inferior candidate (McC) ran the board in the South by using the Mormon issue, calling in favors from politicians, and tacking right on social issues.

I don’t remember McCain bringing up Mormonism in 2008, unless it was done in some sneaky Lee Atwater/Karl Rove way that didn’t get much attention. Commentators in the MSM often say that the Republicans respect experience or seniority. So they chose McCain in 2008 because he came in second in 2000 and Romney in 2012 because be he was second in 2008. This should put Santorum in the top tier if he runs in 2016.

I also don’t see why you think McCain was inferior to Romney. Would there have been any significant difference between a Romney administration and McCain administration? It sounds like that movie really convinced you that Mitt is personally a good family man and a nice guy. That sort of thing is not relevant to what sort of a president he would be. Or maybe you prefer him to McCain because he’s an HYP guy.

Comment by Blue Skye
2014-01-28 16:23:23

“The United States spends 2.4 times as much on the elderly as on children…”

It is a marvel that any of the children survive, with the government not spending enough on them.

As for me, I spent 30 odd years working long hours to raise up some children. That doesn’t enter into the government spending statistics. If the government doesn’t do it, you think it isn’t being done! Head start, hell my kids had their headstart before they left my house. Every day.

Comment by MightyMike
2014-01-28 17:16:27

The Occupy people would say that the 1% have been profiting at the expense of 99% for the past 40 years. This phenomenon is sometimes described as the decline of the American middle class.

Clearly if the 99% could all work together they should be able to implement changes that would help to reverse that decline. So it’s in the interest of the PTB to prevent them uniting and convince people not to think about the 99% vs. the 1% but rather black against white, red state against blue state or old people vs. young.

I didn’t read the article, but your excerpt makes it seem pretty lame. Everyone interested in politics should know that education is mostly handled at the state and local level. So if this issue of spending on seniors versus spending on kids is even worthy of discussion, it should be remembered that the states probably spend a lot more on kids than they do on retired people.

Comment by phony scandals
2014-01-28 17:23:33

“Meanwhile, as the red-blue bickering continues, the real PTB are robbing us blind.”

That’s the game plan and it’s working to perfection.

Comment by Ben Jones
2014-01-28 17:26:19

From the “Empires Always Go Bankrupt” department:

These Rumors of a Nine-Carrier Navy? Over the Long Term, They Could Be Off by Nine


“But the underlying budgetary trends threatening the flattop fleet are unlikely to change any time soon. And that calls for creative thinking, according to Capt. Henry Hendrix, an historian and strategist, wrote in a 2013 study for the Center for a New American Security think tank. “If it is true that when money gets tight, people get smarter, then the United States needs some very smart people right now.”

So here’s the thing; if you can eventually figure out that you don’t really need 10 aircraft carriers, wouldn’t it be smarter to phase them out before you can’t afford them anymore?

Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 20:25:48

Maybe there’s no advantage if you already got filthy rich BECAUSE of the US system, but to everyone else, there’s an advantage.

Comment by real journalists
2014-01-28 07:23:30

And now for some real journalism

“Another insane cold wave — not the infamous “polar vortex” but its evil twin — is bringing sub-zero and single-digit temperatures to much of the nation. And global warming may be even more extreme, and potentially more catastrophic, than climate scientists had feared.

This is, of course, no contradiction. The rallying cry of the denialists — “It’s really cold outside, so global warming must be a crock!” — can be taken seriously only by those with a toddler’s limited conception of time and space. They forget that it’s winter, and apparently they don’t quite grasp that even when it’s cold in one part of the world, it can be hot in another.”


Comment by jose canusi
2014-01-28 07:35:32

This guy snorted his shorts so hard they’re wrapped around his cortex.

Comment by real journalists
2014-01-28 07:54:33

From the article:

“On the global scale, 2013 was “merely” the fourth-warmest or seventh-warmest on record, depending on whether you believe the National Oceanic and Atmospheric Administration or NASA.

Nine of the 10 warmest years on record have occurred since 2002. Deniers who claim there has been a 15-year “pause” in global warming are cherry-picking the data to fit a precooked conclusion: As a baseline they choose 1998, a year in which global temperatures took a huge, anamolous, one-time leap. If you treat 1998 as the statistical outlier that it obviously is, you see a steady and unbroken rise.”

Comment by Blue Skye
2014-01-28 08:11:20

“whether you believe…”

If you don’t believe, you are a toddler brain.

Somehow, a religion that promises we will all roast in hell isn’t that attractive.

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Comment by jose canusi
2014-01-28 08:16:30

“If you don’t believe, you are a toddler brain.”

I’m surprised he didn’t say “poopy pants”.

Comment by real journalists
2014-01-28 08:22:39

Real journalists will construct the narrative, not you. Throw in some choice quotes from some “real scientists” and voila, now you’ve got some real journalism.

And besides, everyone reading this blog today will likely be dead within a hundred years, so it’s not like any of this really matters.

Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 16:23:49

It isn’t a matter of whether or not you feel attracted. It is a matter of fact.

Comment by Blue Skye
2014-01-28 17:04:18

Please do share what establishes something as a fact in your mind! This particular one is sliding into the dustbin, but nevertheless…

Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 20:42:49

1) The scientific method. It relies on mutually observable measurements and critical peer review. The goal is to disprove a hypothesis, since nothing can be proven. There is always a negative and positive control. Statistics are calculated using correct math. When practiced, it eliminates bias. Don’t be fooled by pseudoscientists who don’t follow the scientific method. Learn the method, and you will easily be able to pinpoint these sheisters.

2) It is only sliding into the dustbin in proportion to the dollars being spent to convince you that global warming is your friend, and caused by sunspots.

Comment by Whac-A-Bubble™
2014-01-28 21:35:02

‘Please do share what establishes something as a fact in your mind!

It relies on mutually observable measurements and critical peer review.”

Heard a great talk the other night by this guy. He said Francis Bacon was one of the first scientists to espouse the ‘publish to cherish’ principle.

Comment by Blue Skye
2014-01-28 22:19:47

“and critical peer review…”

That’s the interesting part, which is generally dismissed.

Comment by "Uncle Fed, why won't you love ME?"
2014-01-29 19:38:47


You are not a scientific peer, since you have no basic scientific education.

Comment by AbsoluteBeginner
2014-01-28 11:05:42

I am wondering why anyone really cares if there is global warming. I’d think it would be an economic boom somehow. You can sell more widgets and crap to people who are reptilian bent anyway. Cold weather makes people stay inside an not spend as much. They have to stay near a heat source. Yeah, show me some really hot weather and rounds of global warming for everyone at my AppleBees table.

In truth, wouldn’t people just want to admit there are too many people in their way and global warming will clean house of the undesirables and leave behind the enlightened?

Comment by real journalists
2014-01-28 07:33:57

More real journalism from the Washington Post

“Stop paying so much attention to Fox News, urges Frank Rich in a long essay about Fox News. A writer-at-large at New York magazine, Rich argues that Fox News’s audience is old and getting even older really fast …

“With a median viewer age now at 68 according to Nielsen data through mid-January, Fox is in essence a retirement community,” Rich concludes.

Comment by jose canusi
2014-01-28 07:37:08

Lol, I’m sure those old farts are what’s keeping Glee on the air.

Comment by real journalists
2014-01-28 07:38:27

More Hope and Change from the Washington Post

“Pew Research just released some new polling that confirms the GOP is seen as far more uncompromising and ideologically extreme than the Democratic Party, while Dems hold a big edge on which party is concerned with the needs of ordinary people”

To quote this blog’s owner: “Romney, BAH!”

See also the long piece “Planet Hillary” in last Sunday’s New York Times Magazine.

Permanent Democrat Supermajority

Comment by Suite Joey Blue Eyes
2014-01-28 08:21:04

I think MSNBC sucks too, but the fact is, they beat FNC comfortable in the valuable demographics. MSNBC has significantly more voters in the 25-54 age range than Fox News. When people talk about how much higher FNC’s ratings are, they are talking about the total number of TV views. Now, how many 30 yr olds do you who rush home from work to see Hannity? How many are tuning in to O’Reilly? The Neilson ratings also exclude online page views, downloads, and ipad/tablet views. Lastly, they exclude partial views–young people channel surf. They watch Maddow for like 5 min to get the rundown and then flip to ESPN or whatever. They’re not hanging on every word to give them significance and convince them that the 1950s are still alive the way that Bill O’Reilly’s viewers want.

Comment by MightyMike
2014-01-28 11:00:21

If these 30 year-olds only watch MSNBC in five-minute increments, I would think that it would be rather difficult for MSNBC to make money by selling access to their eyeballs to advertisers. A lot of retired Fox News viewers probably wake up in the morning, turn on the Fox and then leave it on all day. They might not have a lot of money to spend, but they will be exposed to lots of advertising.

I guess we need to see the numbers on which network is more profitable, not just which one has the higher ratings - if we care, that is.

Comment by Hi-Z
2014-01-28 15:12:04

Just wishful thinking, Mr Rich

From TVBytheNumbers website:

FOX News Channel (FNC) will end 2013 as the most-watched cable news channel among both total viewers and Adults 24-54 for the twelfth consecutive year. In total viewers, FNC beat CNN and MSNBC combined in both Total Day and in primetime while surpassing all other cable news networks in adults 25-54. Additionally, during each hour, FNC beat CNN and MSNBC combined in total viewers. Among basic cable networks, FNC ranked fourth in Total Day, while its chief rivals CNN and MSNBC ranked 28th and 30th, respectively. In Prime Time, FNC was sixth among all cable networks, while CNN was 31st and MSNBC was 29th.

Comment by Suite Joey Blue Eyes
2014-01-28 07:36:05

For those of you with children, this article is pretty interesting about being a young person in our current economy.

“Young People in the Recession”


Predictably, the comments section devolves into “Tea Party bootstrapping fantasy vs. the Millennial meta-victimization complex”. But the actual article is good, IMO.

Comment by real journalists
2014-01-28 08:35:48

a related nugget, i have read in a few places recently that among american women under age 40 today, 1 in 5 is unlikely to ever have children, and that number is increasing. wonder what the stats on that would be if broken out by educational attainment.

Comment by In Colorado
2014-01-28 09:51:34

I think we are about to see this pattern (no kids) extend to the lucky duckies too, though I do expect that the long term trend will be that the majority of births will be to low income, single women.

Comment by Suite Joey Blue Eyes
2014-01-28 10:46:16

Births are + correlated with “strong religious views” and low educational attainment. There will be more Mormons, more duck dynasty fans, more People of Walmart, and so forth.

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Comment by real journalists
2014-01-28 11:46:09


as summarized in the opening scene of the film ‘idiocracy’

Comment by AbsoluteBeginner
2014-01-28 13:17:42

What is wrong with having kids?

Comment by MiddleCoaster
2014-01-28 13:59:11

Mormons are generally well educated, are they not?

Comment by In Colorado
2014-01-28 15:02:25

Mormons are generally well educated, are they not?

Some are. They don’t all go to college.

Comment by In Colorado
2014-01-28 15:03:56

What is wrong with having kids?

Nothing really. It’s just that certain demographics are less likely to have them. See the opening of the movie Idiocracy

Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 16:19:39

The Y Generation already figured out that they are better off if they don’t get married because that qualifies them for more welfare. They have no hope of earning a living wage, so there is no fantasy about “waiting”. Just hop on the welfare rolls as soon as you can, and then get married after the kids are old enough to go to school and mom can get a job.

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Comment by Common Sense
2014-01-28 07:45:04

What are your guys’ thoughts on King O’s new min wage proposal for fed workers?

Comment by oxide
2014-01-28 09:16:05

Technically, fed contract workers. not federal employees. I don’t think there are any actual fed employees who make that little.

Comment by Whac-A-Bubble™
2014-01-28 21:36:02

Soon to be guaranteed a minimum wage, I hear?

Comment by rms
2014-01-28 09:22:28

Recently I’ve had the opportunity to work with several low wage people, and they really truly are incapable of organizing an outcome into small measurable tasks. Some of these workers have used basic office software for years, but haven’t learned anything beyond simple rote tasks, i.e., no keyword ideas for self help searches, basically no cognitive development. Little wonder that these peeps have such a difficult time finding employment let alone tacking in a new direction. Forget easy conversations too; I mean we’re talking low information citizen. I can definitely understand why some firms have to setup shop in certain areas despite higher costs.

Comment by MightyMike
2014-01-28 11:04:40

I don’t think that an inability to use Google indicates a lack of “cognitive development”. That’s absurd.

Comment by rms
2014-01-28 13:55:42

I don’t think that an inability to use Google indicates a lack of “cognitive development”. That’s absurd.

It’s the lack of “keyword” development. In digital photo editing terms like crop, flip, watermark, etc., should mean something. Working with line segments terms like midpoint, endpoint, etc., should mean something. Word processing involves margins, paper size, line spacing, bullets, etc.; geez-bus…how do people use software for years and never learn anything? Basically these peeps don’t even know how to ask for help, so forget about those remote technical support centers.

Maybe I’m using “cognitive development” out of context?

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Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 16:12:46

Just be glad there are lower-grade individuals to take those jobs. Otherwise, it would be you.

Comment by In Colorado
2014-01-28 11:34:35

they really truly are incapable of organizing an outcome into small measurable tasks

FWIW, half the population has below average intelligence. In decades past they could get a job in a factory where all they had to do was perform rote tasks.

New factories require problem solving skills that are beyond these folks’ abilities. Gone are the days when Fred and Barney could earn a living wage with a high school diploma.

The real question is: what are we going to do with these people?

Comment by rms
2014-01-28 13:56:54

“The real question is: what are we going to do with these people?”

+1 Indeed.

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Comment by Pete
2014-01-28 14:03:53

“The real question is: what are we going to do with these people?”

And they’ll likely be living longer too.

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Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 16:16:19

“What are we going to do with these people?”

They currently hold jobs that they can’t actually do. I have never worked at a company where I wasn’t frustrated at the inabilities of certain people. I guess after a while, you just learn to factor that into the equation. For instance, if an ideal team of workers could have done something in a week, then you should expect it to take two weeks with babysitting. The person with a higher capacity has to learn to keep track of everything up- and down-stream of themselves, and occasionally go around asking everyone if they need help to move things forward.

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Comment by In Colorado
2014-01-28 19:39:13

In my experience, those people get laid off.

Comment by reedalberger
2014-01-28 23:34:02

“The real question is: what are we going to do with these people?”

Import more uneducated mexicans to scoop any jobs “these people” may have taken.

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Comment by real journalists
2014-01-28 08:10:30

Class warfare from Bloomberg dot com

“The epicenter of the income inequality debate has shifted 2,600 miles west, from Wall Street to Market Street.

(Those occupiers need to occupy a shower and get a job!)

Concern about the growing gap between the wealthiest and poorest Americans is erupting across San Francisco, where an influx of newly minted dot-com millionaires is boosting rents and property prices, putting affordable housing that much further out of reach. Rage over inequality has spilled into the streets, where demonstrators have blocked buses transporting Google employees, breaking the window in one in Oakland.”


Comment by real journalists
2014-01-28 08:46:50

related article

wall street journal - san francisco leaders rush to ease housing pinch

‘by some measures, san francisco is the worst u.s. city to be a middle-class home buyer. just 14 percent of homes in the metro area are attainable to those making the area median income, the lowest percentage in the nation’


Comment by real journalists
2014-01-28 09:29:09

hope and change linked from the drudge report

‘with lethal-injection drugs in short supply and new questions looming about their effectiveness, lawmakers in some death penalty states are considering bringing back relics of a more gruesome past: firing squads, electrocutions and gas chambers.’

the article notes that 8 states currently have the electric chair option, alabama, arkansas, florida, kentucky, oklahoma, south carolina, tennessee, and virginia.


Comment by Temeculan
2014-01-28 10:38:40

Introduce a solar or wind powered “E-chair”(hipness factor) in California and you could get it passed for approval pronto!

Comment by AbsoluteBeginner
Comment by In Colorado
2014-01-28 09:47:32

Good question. From what I have heard locally, the ski resorts are busy. I’ve also heard the same about Disney: more expensive than ever, yet it’s packed to the gills.

Comment by azdude02
2014-01-28 13:27:20

havent been there in 20 yrs at least. as long as people keep paying why not keep raising the prices?

I expect some bankruptcies out of ski resorts near donner summit this year.

Comment by tresho
2014-01-28 14:30:03

more expensive than ever, yet it’s packed to the gills.
There are many businesses like that. Their continued existence & prosperity matter little in the larger scheme of things.

Comment by real journalists
2014-01-28 10:00:28

the non-’big name’ ski areas know there are limits to what they can charge. my 4 days at loveland this year cost $129. arapahoe basin dropped the price for 4 days from $158 last season to $129 this year.

aspen and vail can charge $115 for single day lift tickets and somehow enough people keep buying them. the most i’ve ever paid was $90 to ski crested butte.

Comment by AbsoluteBeginner
2014-01-28 10:04:45

I predict major shutdowns of AppleBees and Atlanta ski resorts.

Comment by Suite Joey Blue Eyes
2014-01-28 11:37:57

Ever use Liftopia? I’ve heard good things about it but have never used it.

Comment by real journalists
2014-01-28 12:58:07

I’ve never found any deals worth buying on there, and the few that might be are all mid-week.

The weekend traffic on I-70 is so bad that it’s not worth going during peak season. But Loveland and A-Basin have late seasons so I will save my remaining days there for April and May.

Meanwhile, can take the alpine/touring (backcountry) skis and ski thousands of acres of public land that does not involve driving on I-70. Here’s one route where I went to “earn the turns” last year:


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Comment by In Colorado
2014-01-28 14:56:35

The weekend traffic on I-70 is so bad that it’s not worth going during peak season.

It seems like its always bad, no matter what time of year. Now that the road work near Idaho Springs is coming to a close, it might get better.

Comment by rms
2014-01-28 19:21:01

My boss skis in Canada, but not this year; no snow.

Comment by In Colorado
2014-01-28 11:54:56

I suspect that Aspen and Vail cater more to the out of town crowd while Loveland and A Basin cater more to locals.

Comment by Dodge Ram Van Man
2014-01-28 09:36:22

The only reason to buy a house is to stick your wife and kids into it. I have a 24′ shuttle bus, have no hangers on and am enjoying life. If i don’t like my neighbors, I MOVE!!

Comment by chilidoggg
2014-01-28 13:10:52


Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 16:07:49

Why don’t you just rent a house?

Comment by Prime_Is_Contained
2014-01-28 10:22:31

During the early stages of stimulus, we talked a lot here about how the potential inflation wasn’t occurring here, because we were exporting it via hot money to emerging markets, and the Fed-produced inflation was occurring there instead.

So, my question for the peanut gallery: what will be the result of the reversal of currency flows caused by the reduction in stimulus (tapering) in emerging markets? Inflation? Deflation? Other?

Clearly we’re already seeing their currencies being devalued… That would typically be associated with high inflation, at least for goods that are imported.

But if they suffered inflation on the front-side, wouldn’t it make sense to expect the opposite when the currency flows reverse?

Comment by Housing Analyst
2014-01-28 10:23:18

You don’t understand inflation.

Comment by Prime_Is_Contained
2014-01-28 10:34:12

Clearly we’re already seeing their currencies being devalued… That would typically be associated with high inflation, at least for goods that are imported.

To clarify: I meant high inflation THERE, in those emerging countries—as their devaluing currencies are unable to buy as much of any goods that are imported into their countries from the rest of the world.

Comment by Blue Skye
2014-01-28 11:43:43

Cascading defaults.

Comment by cactus
2014-01-28 11:50:09

So, my question for the peanut gallery: what will be the result of the reversal of currency flows caused by the reduction in stimulus (tapering) in emerging markets? Inflation? Deflation? Other?’

First lower interest rates in the US then when the hot money folks find they can’t make any quick money Another Bubble somewhere

Comment by Housing Analyst
2014-01-28 12:21:13

Again….. Go back to incomes as it is the basis for everything. What magnitude deflation? When did it occur? What reaction did prices exhibit.

After studying and spending time with the concepts and your conclusion is inflation, you missed it entirely.

Comment by Patrick
2014-01-28 17:50:55

Their currencies are being devalued; they increase their interest rates; their currency stabilizes; domestic inflation occurs because debt volume doesn’t change quickly and often is more than 100% of a person’s annual pay (rates go up and you are forced to pay).

Higher interest lowers corporate profits who in turn raise their prices. Municipal governments suffer higher rates - raise taxes.

But, University endowments get better interest and make a bunch more money. So they can lower university fees. NAAAAAAAAAAW, will never happen.

I can hear the cries of “uncle” now from the Fed.

I don’t think they have even heard the train barrelling down on them yet.

Comment by Prime_Is_Contained
2014-01-28 10:31:56

Good news: those dollars that I’ve been holding (since the “cash is king” discussions here back in 2006) is _finally_ gaining in value—at least relative to all of the emerging market currencies that are crashing!

Comment by In Colorado
2014-01-28 10:45:15

As much as we suck, they suck even more. Without growing exports their economies crumble.

Comment by Blue Skye
2014-01-28 10:47:18

More good news, the price of coffee is going down. The big containers are back too! A 3 lb can is all the way up to 42.5 oz.! The last cans I bought were only 32.6.

Still waiting for a half gallon of orange juice to equal 64 oz.

Comment by Rental Watch
2014-01-28 10:37:22


New Case Shiller Data.

Remember, this data lags; it is the average of trailing 3 months.

When things start to go down, it will take a little while for it to show in this data (just like when things started to go up, it took a little while for it to show up here).

Comment by Housing Analyst
2014-01-28 10:51:07

And it excludes foreclosures, short sales and defaults.

Comment by Prime_Is_Contained
2014-01-28 11:05:29

When things start to go down, it will take a little while for it to show in this data

I think it _DID_ just show up in this data:

“For the month of November, the two Composites declined 0.1%. ”

That’s a change! It will take a long time before it shows up in the YOY data, but the monthly composites do now show decline for Nov (which is really Sept/Oct/Nov combined).

Comment by Rental Watch
2014-01-28 15:13:42

Yes. It is a change…a -1% annual rate of decline after massive increases. Just like it was wrong to get too excited about prices going up in 2010, I’m not too excited about this one move down (in the winter, on the heels of the government shutdown).

It took several positive months for the world to believe prices were going up. If prices go down month-on-month for 2-3 months, then I think we can have an earnest discussion about whether there is a shift in the overall market.

Comment by Housing Analyst
2014-01-28 11:01:29

Alexandria, VA Housing Prices Sink 13% Year Over Year


Falling housing prices is not a surprise considering new housing can be built for 40% less than current asking prices.

Comment by Blue Skye
2014-01-28 11:41:36

Construction costs will go down by 40% as well. Materials doubled in the mania. Another falling metric aimed at a falling base.

Comment by Housing Analyst
2014-01-28 12:30:59

Thats already happening…… Falling material prices.

Comment by azdude02
2014-01-28 13:23:46

prices arent falling at lowes. a piece of 4×8 x1/2″ thick sheetrock is 9.45 here. it was 7.50 not long ago.

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Comment by Housing Analyst
2014-01-28 13:30:14


Comment by rms
2014-01-28 13:38:49

“Materials doubled in the mania. Another falling metric aimed at a falling base.”

I recall Diogenes discussing this while his employer was busy expanding its Florida warehouse space.

Comment by Neuromance
2014-01-28 13:21:03

More good news: a strong improvement in the rental market as rents rise. Next up: improvements in gas and food prices. The housing market continues to improve as prices are up solidly YOY.

Facetious? Sort of. I’m making the point that each market has two sides - a buy side and a sell side. The Fed and government have ignored the buy side in their continuous efforts to use taxpayer (and printed money which the taxpayer will eventually pay for one way or another) to bolster house prices. Eventually, this will come back to bite politicians.

TransUnion Finds Renters Becoming Less Risky as Rental Prices Rise
Yahoo Finance
January 27 2014

“The rental market continues to be strong as demand for rental units remains high while consumer credit risk slowly improves,” said Michael Doherty, senior vice president of TransUnion’s rental screening solutions group. “The combination of improving rental risk scores and continued demand for rental properties is particularly good news for property managers.”


Comment by Neuromance
2014-01-28 14:30:07

“Eventually, this will come back to bite politicians.”

From The Economist:

“Polling by Ipsos MORI shows that a majority of people now regard rising house prices as a bad thing. Bank of England officials hint that the failure to build enough houses presents a structural risk to the British economy. Falling home-ownership is beginning to affect some target voters: 874,000 couples with children now rent privately, up from just 274,000 in the late 1990s.

Yet the 1947 planning regime has lasted this long for a reason. The gains from lowering the cost of land and building more are broadly spread, whereas opposition is locally focused. And a majority of Britons are still home-owners—especially elderly voters in marginal suburban seats.


And while the FIRE sector might be delighted at the thought of saddling these people with as much debt as possible, forcing them to be house poor for the next few decades while holding the foreclosure Sword of Damocles over their heads while they dutifully tithe a significant chunk of their income to Wall Street, I don’t think that’s what these people are hoping for. Either for themselves or their children.

Comment by Neuromance
2014-01-28 13:30:45

Baby versus the bathwater.

I am hearing more… anti-business, anti-achievement rhetoric. I think that’s a mistake. The ire should be directed at the regulatory-captured politicians who make the laws. The system is broken because politicians have allowed the system to become corrupted.

We elect these leaders. We share some of the blame because we keep falling for their “goose in every pot, buick in every driveway, and it won’t cost anyone anything” pillow talk. But still - they are leaders and their first priority should be to the country. But because the system has become corrupted, we get people who are most adept at winning in a corrupt system. We get what SecDef Bob Gates described:

“I saw most of Congress as uncivil, incompetent at fulfilling their basic constitutional responsibilities (such as timely appropriations), micromanagerial, parochial, hypocritical, egotistical, thin-skinned and prone to put self (and re-election) before country.”

They’re the bathwater. The baby is the encouragement and support of business, and respect and admiration of achievement, and desire for it.

What needs to be thrown out are bad or non-existent regulation which allows a few people to reap more and more of the gains of a more educated populace and better technology. They do so because they pay the politicians so much, like Sheldon Adelson giving Romney millions of dollars (Forbes). A system which rewards a few people for field stripping companies instead of maximizing employment.

Comment by tresho
2014-01-28 14:37:08

I am hearing more… anti-business, anti-achievement rhetoric.
Part of a cunning plan to distract the victims of the biggest theft in world history.

Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 14:41:23

“Respect for achievement” has been replaced with “favors for the wealthy”. Two completely different things.

Comment by Neuromance
2014-01-28 14:50:50

One other concern is the movement away from advocating personal responsibility. If society is to be free, the individual must be held accountable for his actions and decisions. Not his neighbors.

We talk about people being saddled with debt but the reality is that some people are debt junkies. They don’t care about it. They prefer the McMansion and the Hummer, and consider any saved money to be a waste. That’s a valid personal choice. I consider it ill-advised, but it’s not my place to decide - as long as the side effects are not impacting me.

However, the penalties for bad behavior are being socialized. “Privatize profits, socialize losses.” Wall Street can execute vast control frauds and still be bailed out at public expense, making vast profits. Deadbeat losses are socialized, paid off by the government and central bank taking on the bad debt. Which is all ultimately paid for by taxpayers.

The system should not be socializing penalties. This is incompatible with a free society. Just because my neighbor robs a bank shouldn’t mean that I have to serve a brief sentence along with the rest of the neighborhood.

A society which hopes to be free must have a strong emphasis on personal responsibility.

Comment by MightyMike
2014-01-28 17:29:42

Where are you hearing this? And what’s an example of “anti-achievement” rhetoric? For example, a lot of contributors to this blog complain about corporations have enhanced their bottom lines by moving manufacturing jobs to thrid world countries like China. Is that a form of anti-chievement rhetoric?

Comment by Neuromance
2014-01-28 18:54:15

No, no - I’m not defending any of the following:

• Getting rich through field stripping corporations and offshoring jobs.
• Getting rich through swindling pension funds.
• Getting rich through massive financial fraud then calling in political favors to bail you out.

However, many of these wealth-destroying actors conflate themselves with wealth-generating businesses and achievers. A mafia is a business. And then those attacking the mafia business might also been seen as attacking legitimate business.

I’m just trying to separate the two. Making sure the anti-wealth-destructive-business rhetoric doesn’t smear the wealth-producing businesses and those achievers who benefit society.

Obviously the wealth-destructive mafia-esque businesses try to equate themselves to wealth-generative businesses. Brilliant “financial engineers” who swindled millions try to equate themselves to brilliant scientists who advance actual technology that helps society.

I just want to make sure that we throw out bathwater, but keep baby.

Comment by Blue Skye
2014-01-28 13:34:15

Census reports new home sales in 2013 of 417,000. Dead flat at 2009 levels for five years.

Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 13:46:46

I don’t know what to think about the unemployment rate. On the one hand, it’s true that the decline in unemployment has coincided with an incline in disability claims, and probably welfare claims. On the other hand, I just got a cold call from a recruiter, and it’s not from some Indian weirdo who just wants to enter my information in their database.

However (on the third hand), I am contracting now. Maybe there is an increased demand for contractors, but not full-time emploees. I dunno.

Comment by Northeastener
2014-01-28 15:18:13

The U3 headline unemployment number is completely misleading as it doesn’t include marginally attached workers. U6 is closer to the truth, but it’s the combination of U6 and Labor Participation Rate that gives you the real picture. Lastly, median income provide the final “nail-in-the-coffin” insight.

Labor participation is cratering. Median income in falling unless you’re in the top 10% of wage earners. U6 is still 13%. Bottom line, if you’re not in STEM, you’re sucking wind.

Comment by Blue Skye
2014-01-28 16:36:56

If you are in debt up to your eyeballs you are probably sucking wind.

Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 20:54:07

Science jobs are offshored to countries with no protections for people and their environment. That’s the main reason why I don’t do actual science any more. I’m already on my second “niche” in a scientific industry. Gotta keep those paychecks going up, doncha know?

Comment by cactus
2014-01-28 14:48:05

A snakebite victim who was treated at a North Carolina hospital came away with more than just fang marks when he received an $89,227 bill for an 18-hour stay.

Eric Ferguson, 54, from Mooresville, N.C., was taking out the trash at his home last August when he was bitten on the foot by a snake. He drove himself to Lake Norman Regional Medical Center, where he was treated with anti-venom medicine.

According to his bill, the hospital charged $81,000 for a four-vial dose of the medication.

Shocked at the price tag, Ferguson told the Charlotte Observer he and his wife found the same vials online for retail prices as low as $750.

Ferguson, who is insured, said his care was “beyond phenomenal.”

“It was just the sticker shock,” he said.

View galleryMD005166
A Southern Copperhead snake. (Photo by Joe McDonald/Corbis)
Because the hospital has a contract with Ferguson’s insurer, Blue Cross and Blue Shield, it reduced the total bill to $20,227. According to the Observer, the couple paid $5,400 out of pocket to cover their deductible and co-pay.

The hospital defended its prices, saying it has to charge prices higher than retail because of the various discounts it is required to give insurers.

“We are required to give Medicare one level of discount from list price, Medicaid another, and private insurers negotiate for still others,” officials told the newspaper. “If we did not start with the list prices we have, we would not end up with enough revenue to remain in operation.”

The hospital added: “Our costs for providing uncompensated care are partially covered by higher bills for other patients.”

The Fergusons’ case is, of course, not unique. A 2013 cover story by Steven Brill in Time magazine (”Why Medical Bills Are Killing Us”) detailed the “outrageous pricing and egregious profits” destroying the U.S. health care system, noting that Americans were expected to spend an estimated $2.8 trillion on health care last year.

Comment by In Colorado
2014-01-28 14:53:40

The system is beyond broken.

Comment by tom cruz bustamante
2014-01-28 16:37:03

Doctors, nurses and Hospital administrators are laughing all the way to the bank.

Comment by In Colorado
2014-01-28 19:41:06

I know, I have a friend whose wife is a neo natal ICU nurse. She makes 150K with some overtime.

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Comment by rms
2014-01-28 21:02:33

I have friends in the medical world, and they have done very well. They’ve enjoyed steady annual wage increases that were always ahead of the CPI. My Civil Engineering income has lagged the CPI since I’ve held the position. No surprise really since the country’s infrastructure has been ignored in favor of the middle-east crusades.

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Comment by Neuromance
2014-01-28 15:00:40

This is part of the “War on Consumer Surplus” which will eventually cause some changes in society. Consumer surplus is the difference between what you pay for something, and what you’d be willing to pay.

“How much is your life worth?”
“Everything I got.”
“Then that’s how much it’ll cost.”

This can be traced back to a deeply flawed pricing system which is traceable back to political intervention.

Comment by Muggy
2014-01-28 17:39:11

This is horrible reporting. What kind of snake?

The answer makes a big difference. If you take one on the toe from an Eastern Coral, you’re in a totally different world.

Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 21:02:24


But the price of antiserum isn’t $20k. Not even close. Not even after you add the actual cost (not price) of people who didn’t pay their bill. And it MOST certainly isn’t $80k. Hospitals used to charge far less money for their services, and they didn’t go under. They made fine money.

It’s like I’m selling spaghetti for $8/plate, and then I raise my prices until it’s $80/plate, and then I claim “I have to charge that much because nobody will pay for the spaghetti at those prices. I have to make up for it on the people who will (which is nobody).”

Comment by "Uncle Fed, why won't you love ME?"
2014-01-28 20:57:42

Every business has a certain number of thefts, nonpays, late pays, and short pays. The hospital business simply has more because they are charging people too much to begin with. So the people get the care, but don’t pay the STUPID bill that follows.

Comment by Dodge Ram Van Man
2014-01-28 15:57:04

For you fans of Duck Dynasty, I was duck hunting in west Tennessee last weekend and heard this story in the duck blind. For the record, duck blinds are great places to hear such stories.

There is no bathroom in a duck blind. Pouring off used coffee is a fairly simple task but ridding yourself of last night’s all-you-can-eat fried catfish buffet is a bit more involved. One of the guys hunting with us recalled a day when his buddy had to dump in the blind, so they sent him around back where the boat was tied up. He hung his arse off the side of the boat and took care of business.

It had been quite cold the night before so the lake was frozen in the morning and they had to break ice with the boat on their way to the blind. Our protagonist unknowingly (or perhaps not), crapped on a piece of ice, thus leaving his steaming pile above water. Sometime later the wind carried the turd-berg from behind the blind to the front of the blind and left it floating in front of another hunter with a weak stomach. This resulted in dry heaving, complaining, and threats of bodily harm. The turd-berg remained stubbornly in place in front of his seat, wafting it’s powerful aroma directly up into his face.

After some time, he’d had enough, leveled his shotgun at the turd and pulled the trigger. This resulted in the turd blowing up and back into his face, hair, and across everyone else sitting in the blind. Realizing what had happened, the dry heaves turned into full on vomiting, adding insult to injury.

Never, ever, shoot a floating turd.

Comment by real journalists
2014-01-28 17:09:34

This is the most beautiful post on HBB all day today.

Comment by Rental Watch
2014-01-28 17:39:29


Comment by Bill, just south of Irvine
2014-01-28 17:09:57


Comment by real journalists
2014-01-28 19:24:39

“if you work hard and take responsibility, you can get ahead in America” - President Obama, January 28, 2014

Um, no, you can’t.

Sorry, but it doesn’t work that way anymore…

Comment by real journalists
2014-01-28 19:28:32

“How the son of a single mom can be President of the greatest country on Earth”

Stop playing the victim card, already.

Comment by real journalists
2014-01-28 19:41:45

More Shamnesty pimping on the air, maybe time to go throw up in my mouth a lil bit and turn off the TeeVee and watch more Dexter episodes on DVD.

Comment by Housing Analyst
2014-01-28 20:42:08

“if you work hard and take responsibility, you can get ahead in America” - President Obama, January 28, 2014


Comment by real journalists
2014-01-28 19:31:59

+1 for the energy independence part of the speech

Comment by real journalists
2014-01-28 19:35:34

and for those of you that don’t understand the permanent democrat supermajority, “Climate change is a fact.”

Comment by phony scandals
2014-01-28 19:58:49

State of the Onion

Comment by Muggy
2014-01-28 19:56:05

Getting gas safely = I’m gonna frack this mother

Comment by AbsoluteBeginner
2014-01-28 19:38:58

‘Sorry, but it doesn’t work that way anymore…’

It does, though. Most are not working hard enough. Sacrifice and nose to grindstone. I see it with some of my co-workers. Luck and social contacts may help them too, but that is their innate advantage they want to succeed. It teaches me about what people want out of life. I also see how wanting some things so much is not worth the trouble too.

Comment by Whac-A-Bubble™
2014-01-28 20:34:24

The Dow was up today and Obama gave an update State of the Onion Address.

In short, happy daze are here again!

Comment by Whac-A-Bubble™
2014-01-28 20:35:24

Meant to say “upbeat” but perhaps “update” captures it better.

Comment by Whac-A-Bubble™
2014-01-28 21:38:55

Does the stock market bubble have the FOMC in a state of borderline panic?

Comment by Whac-A-Bubble™
2014-01-28 21:40:34

Jan. 27, 2014, 8:51 a.m. EST
Nothing will deter Fed from tapering this week
Market volatility will not persuade them to slow down reduction in asset purchases
By Greg Robb, MarketWatch
Getty Images
Federal Reserve Board Chairman Ben Bernanke speaks during a news conference in December.

WASHINGTON (MarketWatch) — Neither snow, freezing temperatures, market volatility nor a lousy jobs report will stay the Federal Reserve from taking another small step towards the exit this week.

Federal Reserve officials will likely agree on another $10 billion taper to its bond-purchase program after a two-day meeting that ends Wednesday. That’s the same pace as the first reduction announced in December and it will bring the monthly purchases down to $65 billion per month, consisting of $35 billion of Treasurys and $30 billion or mortgage backed securities.

Next cut in Fed bond buys looms

The Federal Reserve is on track to trim its bond-buying program for the second time in six weeks, according to interviews with officials and their public comments.

I think the Fed is desperate to extract itself from quantitative easing, and it will continue to scale back the program and end it this year,” said Bernard Baumohl, chief global economist of the Economic Outlook Group, in an interview.

Fed chairman Ben Bernanke indicated the Fed wanted to taper at a similar pace to the December move and “now they’ll start off on that road,” agreed Nigel Gault, co-chief economist at The Parthenon Group in Boston.

The tumble in the stock market over the past two days will not deter the Fed from tapering again, analysts said.

I am not sure what happened over the past two days is yet sufficient to slow them down,” said Dan Greenhaus, chief global strategist at brokerage firm BTIG.

It is the 11th largest two-day decline in the last two years, it is not a forceful argument to pause,” he added.

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