October 12, 2014

Bits Bucket for October 12, 2014

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




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140 Comments »

Comment by Jingle Male
2014-10-12 03:53:01

Market report from the Sacramento foothills:

Sellers are getting “stucco” again. They are becoming accidental landlords. Some high end flippers are taking their homes off the market and looking for renters. One flipper bought a bank owned house for $635,000 in May ($30,000 over asking). He mopped the floors and replaced the sod and put it back up for sale at $859,000. Lowered it to $799,000. Still no sale.

Listed it for rent 45 days ago for $3,995. No takers. Just lowered the asking rent to $3,500. I wonder if it will lease at that price. It is 4,840 SF, so the asking rent is $.72/SF. It is a two story house.

Here is the curious part: One story homes are selling quickly. A 3,000 SF single story home two blocks away sold in less than 2 weeks for $775,000 ($258/SF)

Comment by Whac-A-Bubble™
2014-10-12 05:39:05

Doesn’t seem that curious if not all the dancers immediately notice the very moment when the music stops.

 
Comment by Housing Analyst
2014-10-12 06:18:52

Let’s examine your “selling quickly” claim shall we J._Fraud?

Housing Demand Plummets YoY In 24 Of 26 Cities In Sacramento County

http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv

So you see… Your vested claim falls flat much like your $90,000 water meters and your general contractor experience.

Comment by Shillow
2014-10-12 06:45:40

Objective facts v. Objective fraud.

 
 
Comment by Shillow
2014-10-12 06:23:20

Thanks for the early reports of fraud.

Are your debts keeping you up at night?

 
Comment by Ben Jones
2014-10-12 07:59:37

‘bought a bank owned house for $635,000 in May…put it back up for sale at $859,000′

Sounds like a mania to me. What other environment would exhibit such behavior? Ask yourself, under what conditions would a reasonable person expect to put $200k in his pocket for buying and selling any item in such a short period of time?

All this stuff about, “Oh, there aren’t subprime loans… This is based on fundamentals” has missed the point all along. You know what caught my eye back in 2011 or so? Writing letters to sellers. I saw it in a California article, and couldn’t believe it. So I started looking, once again, for signs of manic behavior. It wasn’t long until I found a report from Vancouver, Canada about a Chinese guy who read about a pre-construction condo sale in the morning and bought one a few hours later. I thought to myself, the bubble is still on.

I can understand people thinking a mass delusion, once commonly identified, must have ceased to be. But nowhere more than on this very blog have we seen the power of greed in convincing once skeptical individuals that trees grow to the sky.

Comment by Housing Analyst
2014-10-12 08:04:57

Which brings up a very fundamental point; $635k for a used(depreciated and depreciating) item that costs $200k(material, labor, lot and profit) is something that gets taken as typical. I can assure everyone, it’s not normal. You don’t want to be on the short side of this one, ever.

Comment by Whac-A-Bubble™
2014-10-12 08:18:37

Why are you so skeptical that the PTB won’t continue the charade of propping up California home prices to levels far above what household incomes can fundamentally support? It’s worked out great thus far; why can’t it continue indefinitely?

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Comment by Blue Skye
2014-10-12 09:03:11

Simply because it’s a mania. Manias consume, taking more and more over time from a deteriorating frame. The final outcome of a mania is certain; exhaustion and collapse. Policy can exaggerate the divergence, but they cannot make the universe infinitely elastic.

When this snaps back, it’s going to leave a mark.

 
Comment by Whac-A-Bubble™
2014-10-12 10:18:49

So are you saying that trees really don’t grow to the sky? I don’t know about that…have you ever visited California’s Sequoia National Park?

 
Comment by Blue Skye
2014-10-12 11:22:25

I’ve been to Muir Woods. The really big ones are hollow, aren’t they?

 
 
 
Comment by scdave
2014-10-12 08:09:31

have we seen the power of greed in convincing once skeptical individuals that trees grow to the sky ??

That really sums it up right there Ben….

Comment by Ben Jones
2014-10-12 09:26:46

I want to be very clear about something Dave. Because one could easily say, “weren’t you involved in buying houses around the same time Ben? Aren’t you motivated by greed?”

I think our language fails us a bit here. We use one word to describe multiple things. I have said in the past that there is good greed and bad greed. But even that is semantics. If a person asks for a raise, is that greed? Is this person due for a raise, or does he have his boss over a barrel of circumstance? In either case, is it good or bad to ask?

To want, expect or demand money, that is the question. I guess it is human nature. We all have our ethical limits, or lack of them. For me, the limit was one morning in Tucson. A UHS told me about a foreclosure, saying it was going to hit the market that day and would sell in hours. He was right. I meet him and three other potential buyers showed up at the same time. It needed a ton of work and didn’t pencil out as a rental in any way. I looked around at the people making offers on the car hoods and said to myself, I’m outta here.

That was just my choice. I’m sure the buyer that morning was later in a position to make some bucks. I decided it wasn’t going to be me. It’s difficult to explain. Why wouldn’t I join in? Having spent years telling others about the destructive nature of financial manias, I do have to look at myself in the mirror. I’m sure there are those who consider such vanities a weakness. Is vane the right word? This demonstrates how vague the definitions are here. And if the lines are fuzzy, stepping in and around them is even more unclear. When am I merely following the herd. Are my actions going to lead to negative consequences down the road (for me or someone else) and should I care? I guess I do care. Having seen so much pain in Texas all those years ago. The question of bubbles and greed and paths to chose is seared into my thought process. If you aren’t adding value. If you haven’t done something to earn money, it’s more like gambling. I don’t have a problem with gambling. But when it moves into the lives of regular people, most of whom aren’t gambling, we have a problem. I don’t want to contribute to that problem.

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Comment by scdave
2014-10-12 09:43:52

Nice summation Ben….

If you aren’t adding value. If you haven’t done something to earn money, it’s more like gambling ??

Yep….

when it moves into the lives of regular people, most of whom aren’t gambling, we have a problem ??

Yep again….

 
Comment by Michael Viking
2014-10-12 10:16:02

I’m sure the buyer that morning was later in a position to make some bucks. I decided it wasn’t going to be me. It’s difficult to explain. Why wouldn’t I join in? Having spent years telling others about the destructive nature of financial manias, I do have to look at myself in the mirror. I’m sure there are those who consider such vanities a weakness. Is vane the right word?

I consider myself to mostly be in the same situation. It never once entered my mind that it was vanity, if I’m understanding you correctly. For me it’s been ethics and morals. It’s wrong to take advantage of people in this manner - as well as risky, since who knows when the music stops.

Maybe I’m not understanding what you’re saying?

 
Comment by Whac-A-Bubble™
2014-10-12 10:33:01

“If you haven’t done something to earn money, it’s more like gambling.”

I feel similarly with respect to stock market investing. It would be nice to have a national currency that simply served as a store of value, but our central bank openly acknowledges that they deliberately create inflation as part of their policy, and the have recently used quantitative easing to suppress returns on savings.

So U.S. households face the choice of seeing their savings systematically eroded in ’safe’ investments whose returns don’t cover inflation, or gambling with the high rollers in the risky asset classes, such as stocks. Pick your poison.

 
Comment by (Still) Waiting For the Fall
2014-10-12 12:17:38

The Guy in the Glass

by Dale Wimbrow, (c) 1934

When you get what you want in your struggle for pelf,
And the world makes you King for a day,
Then go to the mirror and look at yourself,
And see what that guy has to say.
For it isn’t your Father, or Mother, or Wife,
Who judgement upon you must pass.
The feller whose verdict counts most in your life
Is the guy staring back from the glass.
He’s the feller to please, never mind all the rest,
For he’s with you clear up to the end,
And you’ve passed your most dangerous, difficult test
If the guy in the glass is your friend.
You may be like Jack Horner and “chisel” a plum,
And think you’re a wonderful guy,
But the man in the glass says you’re only a bum
If you can’t look him straight in the eye.
You can fool the whole world down the pathway of years,
And get pats on the back as you pass,
But your final reward will be heartaches and tears
If you’ve cheated the guy in the glass.

For me, I want to be able to look God straight in the eye…
Thanks, Ben

 
Comment by Ella58
2014-10-12 12:55:28

“there is good greed and bad greed”

Schiller had an interesting take on greed in the documentary “The Flaw.” He thought there was a fundamental shift in the way individual Americans approached capitalism during the Reagan years, based entirely on the FEAR of being left behind.

Greed can only take people so far - it distorts perception of risk. But fear - that everyone else has some unfair advantage, that if you don’t get with the program you will slide down the socioeconomic scale - can obliterate that sense of risk entirely. This fear snowballed into a general culture of “everyone else thinks greed is good, so I guess I should too.”

Fast-forward 25 years and the old capitalist idea of a win-win transaction has become not only outdated but impossible, because the gamblers (win-lose transactions) push out productive business (win-win).

I think Schiller may be right that it comes down to perception, which is self-perpetuating. We see it all the time on this blog, with quotes like “everyone’s doing it,” “buy now or be priced out forever,” “get while the getting’s good.” None of those quotes reflect the thought process of win-win capitalism. These quotes reflect actors in a win-lose economic environment, one of their own making.

 
 
 
Comment by rms
2014-10-12 10:32:35

“What other environment would exhibit such behavior?”

From $635,000 to $859,000? Wouldn’t the lender’s appraiser such catch this nonsense? Who would guarantee such fraud?

Comment by Shillow
2014-10-12 12:47:32

Who would guarantee such fraud?

Think about trusting a close to a million dollar transaction to an appraiser. Nothing against appraisers, but the quality varies tremendously I imagine.

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Comment by Housing Analyst
2014-10-12 13:27:24

Think about it this way. How qualified is an “appraiser” when they concur on such outlandish prices for a house? Clearly they know little or nothing about input costs. Really they’re nothing more than a glorified realtor.

 
 
 
 
Comment by scdave
2014-10-12 08:07:47

Thanks for the facts on the ground JM…Just ignore some of the idiot responses…..

Here is the curious part: One story homes are selling quickly ??

Older people do not want two story and older people usually are the ones with the money…

Comment by Housing Analyst
2014-10-12 08:11:06

Stick with the data Dave. No matter how much it gets in the way of your wallet.

 
Comment by Blue Skye
2014-10-12 09:14:59

Based on earlier discussions it is clear that JM’s investments turn to donkey pooh when valuations start to decline even a little.

Comment by scdave
2014-10-12 09:25:46

JM’s investments turn to donkey pooh when valuations start to decline even a little ??

Would you say the same thing to someone who bought stock two weeks ago ??

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Comment by Shillow
2014-10-12 09:32:10

All the shills came out to play,
hoping fraud prices were here to stay.

So deep in denial, sell now and get what you can. Don’t leverage your future to a pipe dream mania.

 
Comment by Whac-A-Bubble™
2014-10-12 10:34:51

“Would you say the same thing to someone who bought stock two weeks ago ??”

Does your scenario assume they used massive leverage in order to make the purchase?

 
Comment by Housing Analyst
2014-10-12 16:24:44

Well Dave? Are you going to hide from Wac-A-Bubble too?

 
 
 
 
Comment by dwkunkel
2014-10-12 10:08:32

Here’s another example of an upside down flipper in my area:
1846 LOS PADRES Blvd Santa Clara, CA 95050

Oct 7, 2014 Price Changed $749,000
Sep 10, 2014 Listed (Active) $849,000
Jun 16, 2014 Sold $745,500
Feb 27, 2014 Listed (Active) $794,900
Sep 13, 2013 Sold (Foreclosed) $695,000
May 25, 2006 Sold $755,000

He paid $745,500 for a foreclosure that was built in 1952 and needed a lot of work. I would estimate that he spent at least $50K remodelling it, listed it for $849K after 3 months work, and then dropped his price by $100K after just one month on the market.

Comment by Housing Analyst
2014-10-12 10:25:09

That’s what you get for paying $750k for a house worth $40k.

 
Comment by rms
2014-10-12 10:39:49

“…listed it for $849K…”

Nearly $1 million to live on a busy street with double yellow lines?

 
 
 
Comment by Hard Rain
2014-10-12 04:39:02

Craziness, a furniture website and a sales software company. A select few become fabulously wealthy and the sheep get left holding the bag. Gonna party like it’s 1999..

http://betaboston.com/news/2014/10/11/two-ipos-444-million-raised-historic-week-for-wayfair-hubspot-greater-boston-tech-scene/

HubSpot (NYSE:HUBS) provides cloud-based marketing and sales software enabling business to improve their inbound marketing operations online. The company witnessed a successful public debut in what has been a very difficult and volatile week in which the company has chosen to make its public debut.

Investors still like the offering, sending shares higher on top of the already strong preliminary pricing. Yet while growth is attractive, the losses and lack of key differentiating factors is not attractive in my opinion, warranting my cautiousness.

“Nothing against Wayfair, Garver said, but he estimates a closer to fair valuation would be between $17.25 and $21.25. Garver set out his reasoning in an opinion piece that ran on Yahoo Finance late last month.

So why the higher valuation? Garver said it “may be a function of the valuation that institutional investors paid (in financing rounds for Wayfair) prior to the IPO, and pressure from those institutional investors to at least break even and not lose money on their investment.”

 
Comment by Whac-A-Bubble™
2014-10-12 05:40:58

Is anybody who posts and reads here brave enough to buy stocks the rest of this month?

Comment by Whac-A-Bubble™
2014-10-12 05:45:44

Looking for more reasons to worry? A stronger dollar may hammer US corporate earnings, leaving less cash lying around to fund future share buybacks.

 
Comment by Whac-A-Bubble™
2014-10-12 05:50:31

Are Ebola fears leading you to sell your stocks? I can’t claim to understand that mentality, but then I’m not much of a herd animal.

Comment by Whac-A-Bubble™
2014-10-12 07:39:45

World stock markets slide as bad news mounts up
Fears of a global economic slowdown, tensions in the Middle East and the spread of the Ebola virus weighed on world shares
Nick Fletcher
The Guardian, Friday 10 October 2014 12.49 EDT
US aircraft refuels after airstrikes on Islamic State jihadists in Syria. Tensions in the Middle East have added to market gloom. Photograph: STAFF SGT. CIARA WYMBS/AFP/Getty Images

Global stock markets came under renewed pressure on Friday in a widespread sell-off prompted by fears of a global economic slowdown, tensions in the Middle East and the spread of the Ebola virus.

After another volatile week, the FTSE 100 slumped to its worst level since 9 October last year, falling 91.88 points or 1.4% to 6,339.97. The index fell for the third week in succession for the first time since March.

Since its recent peak of 6,878 in September, the FTSE has dropped about 8%, close to the 10% level which stock market analysts label as a correction.

Meanwhile Germany’s Dax dropped 2.4% on Friday to 8,788 and France’s Cac closed 1.6% lower at 4,073. After European markets had closed, Finland was stripped of its top-notch triple A rating and France warned it faced the risk of further downgrade to its AA rating. S&P was the first of the major ratings agencies to cut Finland’s prized rating because of its fear the country could suffer “protracted stagnation” and its exposure to Russia and the eurozone. Only Germany and Luxembourg remain triple A rating in the eurozone.

On Wall Street the Dow Jones industrial average, which lost 334 points or nearly 2% on Thursday, made an uncertain start and closed down 0.69% on the previous day.

Emphasising the uncertainty facing US investors, the Vix volatility index jumped 8% to its highest level since December 2012.

Jasper Lawler, a market analyst at CMC Markets UK, said European markets had been hit by US investors liquidating their holdings. He said: “This week has seen the biggest weekly US outflow from European stocks in two months and total European assets held by US funds have dropped to $40bn (£25bn) down from nearly $50bn in June, according to Lipper data.

This week’s market declines followed news that the International Monetary Fund had cut its global growth forecasts for 2014 to 3.3% from the 3.7% it was predicting in April. While it expects a pickup to 3.8% in 2015, it warned its predictions could still be too optimistic.

Construction figures on Friday emphasised the fragile state of the UK economy, with a sharp fall in new housebuilding in August sending output down 3.9% compared with July, the first fall for 18 months.

Comment by palmetto
2014-10-12 07:54:45

I dunno about ebola fears causing a stock market meltdown, but it may cause some health care workers to re-think their career choices.

http://www.foxnews.com/health/2014/10/12/health-care-worker-at-dallas-hospital-tests-positive-for-ebola/

Here we go!

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Comment by goon squad
2014-10-12 08:10:43

Is this the “fundamental transformation” that we were promised?

 
Comment by Shillow
2014-10-12 09:34:37

Someone who knows the guy has Ebola and knows enough to take precautions still gets it? Hmmm, maybe it is easier to get than we have been led to believe.

 
Comment by Blue Skye
2014-10-12 09:37:12

“…a “breach of protocol” caused a health care worker at a Dallas hospital to preliminarily test positive for Ebola.”

Or…you have no clue and your protocol isn’t effective.

 
Comment by Housing Analyst
2014-10-12 09:39:14

^
Ironically the blog owner spoke directly to definition of words today. It’s a fundamental transformation for certain. Just not our definition.

 
Comment by oxide
2014-10-12 14:10:23

I agree, Shillow. “Bodily fluids” says to me saliva and sweat, which are really easy to pass on, not to mention the ugly stomach-flu symptoms. What if that patient from Africa had “shown symptoms” in a shopping mall?

 
Comment by Housing Analyst
2014-10-12 14:56:43

Hey Donk

 
Comment by Neuromance
2014-10-12 17:05:50

If it’s transmitted partially like a cold - meaning someone can touch a “hot” surface and can then get ebola if they touch a mucus membrane, then this is a troubling development.

 
 
 
Comment by Whac-A-Bubble™
2014-10-12 07:42:12

Pakistan Observer
Sunday, October 12, 2014

European stock markets fall to one-year low

Sunday, October 12, 2014 - London—Heightened anxiety that the euro zone could slump into another recession sent European equities reeling to levels unseen for a year. London’s benchmark FTSE 100 index dropped 1.43 percent to 6,339.97 points and Frankfurt’s DAX index tumbled 2.4 percent to 8,788.81 points to close at year lows. Meanwhile in Paris the CAC 40 shed 1.64 percent to 4,073.71 points, its lowest level in 2014. Madrid lost 1.20 percent and Milan fell 0.94 percent. The euro dropped to $1.2630 from $1.2691 late on Thursday in New York.

“It now looks as though investors are nervous about a confluence of factors ranging from worries of a global economic slowdown, an economic crisis with German economic data especially poor, deflation, an unwillingness on the part of German policymakers to adopt fiscal reflation, the impact of Ebola and lurking geopolitical risks,” said Neil MacKinnon, economist at VTB Capital financial group. The slump in Europe on Friday followed a similar one in Asia and a broad two percent sell-off on Wall Street on Thursday as the weak economic data from Germany heightened concerns about poor overseas growth.

 
Comment by Whac-A-Bubble™
2014-10-12 07:44:54

Markos Kaminis, Wall Street Greek
Long/short equity, special situations, growth at reasonable price, deep value

Ebola Threatens Global Stock Market
Oct. 9, 2014 6:08 AM ET
Summary
* Ebola is not apparent in the valuations of financial securities as yet, but the latest chart may reflect the beginnings of the incorporation of relative risk.
* The disease threatens global commerce and local economies, and is uniquely capable of seizing up global financial markets.
* It is of the utmost importance that the governments of the world and the U.S. government stop Ebola, for it threatens humanity in more ways than are obvious.

Ebola is worthy of Wall Street worry, because if the situation worsens and the disease spreads to Europe and/or the United States it poses a serious threat to the global economy. The disease is so lethal and terrifying that it could seriously impair commerce. Should it do so, it would force layoffs and drive global recession. As a result, and even preceding such a dire scenario, stocks would collapse globally. Is the CDC correct in its reassurance that Ebola is not of concern to us then?

Comment by Blue Skye
2014-10-12 09:40:30

If your financial market seizes up, you might have Ebola. Or you might have Nomoola.

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Comment by goon squad
2014-10-12 07:51:31

Fox News - Health care worker at Dallas hospital tests positive for Ebola:

“A health care worker at a Dallas hospital tested positive for Ebola in a preliminary test, the Texas Department of State Health Services said in a statement early Sunday.

The health care worker at Texas Health Presbyterian Hospital, who has not been identified, provided care for Thomas Eric Duncan, the first person diagnosed with Ebola in the United States, who died last week.

If the preliminary diagnosis is confirmed, it would be the first known case of the disease being contracted or transmitted in the U.S.”

Comment by Whac-A-Bubble™
2014-10-12 07:55:14

Ouch! Any chance normal air travel from Ebola-stricken countries to the US might be limited at some point in the foreseeable future?

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Comment by Shillow
2014-10-12 12:50:29

Countries like Texas?

 
 
 
 
Comment by Shillow
2014-10-12 06:25:21

Buy the dip.

Don’t fight the fed.

Prices are dropping.

Donkeys seeing red.

— Craytor

 
Comment by Combotechie
2014-10-12 06:33:33

Buy ACHN.

Comment by SUGuy
2014-10-12 07:38:23

Why?

Comment by Combotechie
2014-10-12 08:07:58

Because (IMHO) the risk/reward ratio is extremely favorable.

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Comment by Whac-A-Bubble™
2014-10-12 07:48:17

Is a sloth of hungry bears menacing your inner Goldilocks?

Comment by Whac-A-Bubble™
2014-10-12 07:52:07

Sunday Journal
Bears Stalk the ‘Goldilocks’ Stock Market
As Five-Year Rally Falters, the Dow Loses All Its 2014 Gains
By Tom Lauricella
Oct. 11, 2014 8:07 p.m. ET

Investors were taken on another white-knuckle ride last week, as stocks posted wide back-to-back gains and losses.

Unexpectedly weak economic news out of Germany helped pull the Dow Jones Industrial Average down 1.6% on Tuesday, its sharpest one-day decline since July. Then on Wednesday the Dow rocketed back 1.6%—its biggest gain of the year—on news suggesting that worries about Europe and a stronger dollar could lead the Federal Reserve to raise rates slower than some had expected. Just when the coast seemed clear, the Dow tumbled 2% on Thursday, before falling another 0.69% on Friday.

When the dust had settled, the Dow had lost all of its gains for 2014.

For several years, it’s been a Goldilocks stock market. Now, some investors wonder if an economic slowdown overseas and the Federal Reserve will spoil the fairy tale. Most think the bull market will endure, but investors should expect a bumpy ride.

Concerns are building that a renewed weakening of economies in Europe, at a time when Japan remains in the doldrums and China’s massive economy is slowing, could spill over to the U.S. economy.

At the same time, the Fed is signaling that it expects next year to begin raising short-term interest rates, which have been locked near zero since the financial crisis. Though most investors expect the Fed to move slowly and carefully, many also think uncertainty about its timing will make stocks more prone to sharp swings.
Enlarge Image

Liz Ann Sonders, chief investment strategist at Charles Schwab, (SCHW -3.32%) had been a steady bull on stocks, but in recent months she’s become more cautious. The long-term bull market “is not over,” she says. But selloffs like the current one, which have brought the S&P 500 down 5.2% from its most recent high, “are going to be a bit more par for the course,” she says. “It’s very normal at this stage…to get multiple pullbacks.”

That would be a change for investors. For five and half years stocks have been in a bull market, and in the past two years declines have been shallow and short-lived. It’s been two years since the last “correction”—a 10% decline or more—in the S&P 500. The biggest decline this year was a three-week selloff totaling 5.8% that began in mid-January.

 
Comment by Whac-A-Bubble™
2014-10-12 07:59:22


The market has gone up for five years now and has gotten quite high, but I’m not selling yet.

Watch out below in case Professor Shiller ever tells the MSM he is selling.

6:02 am ET Oct 10, 2014
Markets
Robert Shiller on What to Watch in This Wild Market
By Jason Zweig
CONNECT

You would have to be crazy to think the stock market isn’t crazy.

In three tumultuous days this week, the Dow Jones Industrial Average dived 273 points, then jumped up 275 points, then dropped 335 points.

But you might be even crazier if you think you know exactly when to get out of the market.

Few people understand that better than Robert Shiller, the Yale University finance professor who shared the Nobel Prize in economics last year for his research documenting that stock prices fluctuate far more than logic can justify—and who is renowned for telling people when to get out of the market.

Prof. Shiller predicted the collapse of both the technology-stock bubble in 2000 and the real-estate boom in the late 2000s. And he developed a measure of long-term stock valuation that many professional investors rely on.

Yet the central message that emerges from three conversations with Prof. Shiller over the past few weeks isn’t a cocksure forecast; it is a deep humility in the face of irreducible uncertainty.

Many analysts have warned lately that Prof. Shiller’s long-term stock-pricing indicator is dangerously high by historical standards.

Known as the “cyclically adjusted price/earnings ratio,” or CAPE, Prof. Shiller’s measure is based on the current market price of the S&P 500-stock index, divided by its average earnings over the past 10 years, both adjusted for inflation. It stands at nearly 26, well above the long-term average of about 16.

If only things were that simple, Prof. Shiller says.

“The market is supposed to estimate the value of earnings,” he explains, “but the value of the earnings depends on people’s perception of what they can sell it again for” to other investors. So the long-term average is “highly psychological,” he says. “You can’t derive what it should be.”

Even though the CAPE measure looks back to 1871, using data that predates the S&P 500, it is unstable. Over the 30 years ending in 1910, CAPE averaged 17; over the next three decades, 12.7; over the 30 years after that, 15.7. For the past three decades it has averaged 23.4.

Today’s level “might be high relative to history,” Prof. Shiller says, “but how do we know that history hasn’t changed?”

So, he says, CAPE “has more probability of predicting actual declines or dramatic increases” when the measure is at an “extreme high or extreme low.” For instance, CAPE exceeded 32 in September 1929, right before the Great Crash, and 44 in December 1999, just before the technology bubble burst. And it sank below 7 in the summer of 1982, on the eve of a 17-year bull market.

Today’s level, Prof. Shiller argues, isn’t extreme enough to justify a strong conclusion. So, he says, he and his wife still have about 50% of their portfolio in stocks.

On Thursday, as the Dow fell more than 300 points, Prof. Shiller told me, “The market has gone up for five years now and has gotten quite high, but I’m not selling yet.” He advises investors to monitor not just the level of the market, but the “stories that people tell” about the market. If a sudden consensus about economic stagnation forms, that could be a dangerous “turning point,” he says.

 
Comment by Whac-A-Bubble™
2014-10-12 08:11:38

Bear markets are a learning experience. Really.
John Waggoner, USA TODAY 8:15 a.m. EDT October 10, 2014
(Photo: Grizzly Creek Films, AP)

Unless you were doing something unusually specific, like teaching a monkey to yodel, you probably don’t remember what happened Oct. 9, 2007. But it was a very big day for most investors, and it would be a good thing to talk about the lessons we’ve learned from it.

What was the big deal about that day seven years ago? It was the starting date of the worst bear market since the Great Depression. The Standard and Poor’s 500-stock index fell 57% during the next 17 months before hitting bottom on March 9, 2009.

What can we learn from this?

 
Comment by Whac-A-Bubble™
2014-10-12 08:14:00

Why is it the bears always get blamed for stock market selloffs? Don’t bulls have to decide to sell their shares at a lower price than for what they bought in order for a selloff to proceed?

Comment by Whac-A-Bubble™
2014-10-12 08:15:45

Stock Market Today
Bears Regain Control As Stocks Suffer Sharp Losses
By KEN SHREVE, INVESTOR’S BUSINESS DAILY
Posted 10/09/2014 04:16 PM ET

Sellers were in the stock market Thursday as concerns resurfaced about the health of the global economy. The VIX, a volatility gauge, shot up to an eight-month high.

At the close, the Nasdaq, S&P 500 and Dow Jones industrial average all lost about 2%. Preliminary data showed NYSE and Nasdaq volume coming in slightly lower than Wednesday’s levels.

At the New York Mercantile Exchange, November crude oil lost $1.54 to $85.77 a barrel, the lowest close since December 2012. Gold, meanwhile, jumped $19.30 to $1,225.30 an ounce. Both commodities reflected fears about the world economy.

Oil and gas producers, drillers and field services firms were among the worst performing industry groups, falling more than 4% each.

In economic news, weekly jobless claims fell 1,000 to 287,000 — the fourth straight week below 300,000. The four-week moving average of claims is now at 287,750, the lowest since February 2006.

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Comment by scdave
2014-10-12 08:13:30

Don’t own any stocks…Never have but, if I were to buy any I would buy something like Caterpillar….

Comment by Housing Analyst
2014-10-12 09:41:07

Why? All the 30 year plan projects are near the end and at project closeout.

 
 
Comment by Whac-A-Bubble™
2014-10-12 08:23:57

The Wall Street Journal
Fed rate hike won’t damage global economy: Fischer
Published: Oct 12, 2014 9:53 a.m. ET
Plays down euro’s weakness
By Greg Robb
Senior economics reporter
Bloomberg
Fed Vice Chairman Stanley Fischer

WASHINGTON (MarketWatch)— The Federal Reserve’s eventual rate increase, the first since 2006, will not damage the global economy, Federal Reserve Vice Chairman Stanley Fischer said on Saturday.

While there could be “trigger further bouts of volatility” in international markets when the Fed first hikes, “the normalization of our policy should prove manageable for the emerging market economies,” Fischer said in a speech at the International Monetary Fund’s annual meeting.

Fischer also played down concern about the recent fall of the euro, which has fallen more than 8% against the dollar since the beginning of the year.

“We were all surprised for how long the euro stayed as high as it did, so to turn around and say that terrible things are likely to happen — I think, what is happening now is reflective of the underlying strengths of the economy,” Fischer said.

 
Comment by aNYCdj
2014-10-12 10:48:17

well if we are bears wouldn’t this go up up up….

Direxion Daily Small Cap Bear 3X ETF (TZA)

http://finance.yahoo.com/echarts?s=TZA+Interactive#symbol=TZA;range=my

Comment by Whac-A-Bubble™
2014-10-12 11:12:16

After three straight years of QE3-fueled stock market gains, with no indication that QE-to-infinity-and-beyond won’t be invoked the moment the market starts to falter, bears are pretty much an endangered species.

 
 
Comment by Whac-A-Bubble™
2014-10-12 12:16:54

I’m counting on the Fed to keep dollar appreciation in check, as always.

Economic Preview
Global funk is latest threat to U.S. economy
Published: Oct 12, 2014 12:02 p.m. ET
By Jeffry Bartash
Reporter

WASHINGTON (MarketWatch) — The economy has been jolted by a number of speed bumps since the U.S. exited recession five years ago, and now another hurdle is looming.

Even as U.S. growth accelerates, the rest of the world is slowing down. Continental Europe and Japan might be on the verge of another recession and China’s economy has clicked down to a lower gear.

What happens around the world is no small matter to American consumers and businesses since trade represents a greater share of the economy than ever before. That’s why worries about the global outlook spooked U.S. stock markets last week.

The shift in economic fortunes has already triggered a sharp uptick in the value of the U.S. dollar (DXY, +0.31%) and made American goods more expensive on global markets. Slower growth abroad could dampen U.S. exports, cause businesses to put off new investment or even hire fewer people.

“Europe seems to be back on the ropes,” said Gustavo Reis, an economist at Bank of America/Merrill Lynch. And “global growth seems stuck in a rut.”

The news is not all bad, though. Slower global growth, combined with soaring U.S. oil production, has knocked the price of crude oil down to its lowest level in two years. And prices are expected to go even lower.

The result: Americans will pay less to fill up at the gas station, giving them more money to save or spend on other things.

“The drop in gasoline prices arguably boosts growth as much as the strengthening dollar weakens it,” said Neil Dutta, head of economics at Renaissance Macro Research.

 
 
 
Comment by Housing Analyst
2014-10-12 06:45:09

Downtown Miami, FL Sale Prices Crater 15% YoY As Defaulted Inventory Floods Area

http://www.zillow.com/downtown-miami-fl/home-values/

Comment by Housing Analyst
2014-10-12 07:35:54

^
Take note of this one. The reversal was rapid as is the decline velocity.

Comment by watching
2014-10-12 14:46:21

Crap that’s awesome. Thank you.

Comment by Housing Analyst
2014-10-12 15:07:04

No “nuance” there. ;)

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Comment by watching
2014-10-12 17:48:11

Ha, not so much! Best thing in the world for me to get ‘doubting Thomas’ rubbed in my face, really (you understand though how after the last seven years we could be bracing for too good to be true) … Anyway please keep posting, these data points and your earlier suggestion about the zillow data are very valuable. Thanks.

 
 
 
 
 
Comment by Ben Jones
2014-10-12 06:51:23

Here’s a strange title:

‘World economies warn of global risks, call for bold action’

How do “economies” call for something? Turns out it’s the same old whining for free money.

‘The International Monetary Fund’s member countries on Saturday said bold action was needed to bolster the global economic recovery and they urged governments not to squelch growth by tightening budgets too drastically, although Germany poured cold water on the idea of a new global “crisis.”

‘With Japan’s economy floundering, the euro zone at risk of recession and even China’s expansion slowing, the IMF’s steering committee said focusing on growth was the priority.’

“A number of countries face the prospect of low or slowing growth, with unemployment remaining unacceptably high,” the International Monetary and Financial Committee said on behalf of the Fund’s 188 member countries.’

Focusing on growth was the priority. Priority over what other alternatives? What does growth even mean anymore: record stock prices, record house prices?

Comment by Housing Analyst
2014-10-12 06:54:49

The outfall is going to be tremendous when the rug gets pulled out from under this thing.

 
 
Comment by Housing Analyst
2014-10-12 07:13:33

“If you have to borrow for 15 or 30 years, it’s not ‘affordable’ nor can you ‘afford’ it.”

Keep this in mind when the ‘affordability index’ propaganda is published.

Comment by Mr. Banker
2014-10-12 07:19:17

Hush! You’ll ruin a good thing I have going on!

 
 
Comment by phony scandals
2014-10-12 08:01:47

Everyone must sign in with Controller upon arrival.”

Comment by goon squad
2014-10-12 08:12:27

Still Ebola free here in Region VIII.

Comment by phony scandals
2014-10-12 08:33:05

By James F. Tracy
October 8, 2014

The plan, created on October 8, 2012, explicitly references a scenario where the “Mass Death of Children at a School By Firearms” is followed by a “Suicide or Apprehension of [an] Unknown Shooter.”

The 20-page document further instructs the “Use of Media” to be employed for “For Evaluation” and “for Information Distribution.”

Download drill-site-activation-call-down-exercise-plan (PDF)

While the date for the drill is marked “December 14, 2012″ on the document’s cover page, on page 12 under Chapter 2: Exercise Logistics, the event is scheduled one day earlier. “The Preparation for Mass Casualty Drill will be conducted on 12/13/12 beginning at 8:00AM. Exercise play is scheduled until the exercise director/Controller determines that the exercise determines that the exercise objectives have been met. Everyone must sign in with Controller upon arrival.”

memoryholeblog.com/…/ - 139k -

Comment by goon squad
2014-10-12 09:16:24
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Comment by phony scandals
2014-10-12 08:21:13

Hammond Police Dept Break Through Vehicle Window and Taze …
http://www.youtube.com/watch?v=XsW-QCxXkQA - 654k - Cached - Similar pages
6 days ago … Hammond Police Dept Break Through Vehicle Window and Taze …. The police broke the car window and tasered the passenger - with KIDS IN …

Comment by Ben Jones
2014-10-12 08:39:05

‘Police agencies have used hundreds of millions of dollars taken from Americans under federal civil forfeiture law in recent years to buy guns, armored cars and electronic surveillance gear. They have also spent money on luxury vehicles, travel and a clown named Sparkles.’

‘The details are contained in thousands of annual reports submitted by local and state agencies to the Justice Department’s Equitable Sharing Program, an initiative that allows local and state police to keep up to 80 percent of the assets they seize.’

‘Brad Cates, a former director of asset forfeiture programs at the Justice Department, said the spending identified by The Post suggests police are using Equitable Sharing as “a free floating slush fund.” Cates, who oversaw the program while at Justice from 1985 to 1989, said it has enabled police to sidestep the traditional budget process, in which elected leaders create law enforcement spending priorities.’

“All of this is fundamentally at odds with the U.S. Constitution,” said Cates, who recently co-wrote an article calling for the program’s abolition on The Post’s editorial page. “All of this is at odds with the rights that Americans have.”

‘The spending also included a $5 million helicopter for Los Angeles police; a mobile command bus worth more than $1 million in Prince George’s County; an armored personnel carrier costing $227,000 in Douglasville, Ga., population 32,000; $5,300 worth of “challenge coin” medallions in Brunswick County, N.C.; $4,600 for a Sheriff’s Award Banquet by the Doña Ana County (N.M.) Sheriff’s Department; and a $637 coffee maker for the Randall County Sheriff’s Department in Amarillo, Tex.’

‘Sparkles the Clown was hired with asset forfeiture proceeds by police in the Village of Reminderville, Ohio, where she painted children’s faces at a community relations event.’

‘Sparkles the Clown was hired for $225 by Chief Jeff Buck in Reminderville, Ohio, to improve community relations. But Buck said the seizure money has been crucial to sustaining long-term investigations that have put thousands of drug traffickers in prison.’

“The money I spent on Sparkles the Clown is a very, very minute portion of the forfeited money that I spend in fighting the war on drugs,” he told The Post.’

 
Comment by 2banana
2014-10-12 08:52:15

Chris Rock - How not to get your ass kicked by the police

http://www.youtube.com/watch?v=uj0mtxXEGE8

 
Comment by Whac-A-Bubble™
2014-10-12 16:56:07

ft dot com
October 12, 2014 4:54 pm
The riddle of black America’s rising woes under Obama
By Edward Luce
Those who have fared worst under this president are the ones who love him the most

Paradox haunts America’s first black president. African-American wealth has fallen further under Barack Obama than under any president since the Depression. Yet they are the only group that still gives him high ratings. So meagre is Mr Obama’s national approval rating that embattled Democrats have made him unwelcome in states that twice swept him to power. Those who have fared worst under Mr Obama are the ones who love him the most. You would be hard-pressed to find a better example of perception-driven politics. As the Reverend Kevin Johnson asked in 2013: “Why are we so loyal to a president who isn’t loyal to us?”

The problem has taken on new salience with the resignation of Eric Holder. America’s first black attorney-general has tried to correct the gulag-sized disparities in prison sentencing between blacks and whites. His exit leaves just two African-Americans in Mr Obama’s cabinet. Given the mood among Republicans, it is hard to imagine the US Senate confirming a successor to Mr Holder who shares his priorities.

Mr Obama shot to prominence in 2004 when he said there was no black or white America, just the United States of America. Yet as the continuing backlash to the police shooting of an unarmed young black man in Ferguson has reminded us, Mr Obama will leave the US at least as segregated as he found it. How could that be? The fair answer is that he is not to blame. The poor suffered the brunt of the Great Recession and blacks are far likelier to be poor. By any yardstick – the share of those with subprime mortgages, for example, or those working in casualised jobs – African-Americans were more directly in the line of fire.

Without Mr Obama’s efforts, African-American suffering would have been even greater. He has fought Congress to preserve food stamps and long-term unemployment insurance – both of which help blacks disproportionately. The number of Americans without health insurance has fallen by 8m since the Affordable Care Act came into effect. Likewise, no president has done as much as Mr Obama – to depressingly little effect – to try to correct the racial bias in US federal sentencing. Bill Clinton was once termed “America’s first black president”. But it was under Mr Clinton that incarceration rates rose to their towering levels.

By no honest reckoning can Mr Obama be blamed for the decline in black America’s fortunes. Yet the facts are deeply unflattering. Since 2009, median non-white household income has dropped by almost a 10th to $33,000 a year, according to the US Federal Reserve’s survey of consumer finances. As a whole, median incomes fell by 5 per cent. But by the more telling measure of net wealth – assets minus liabilities – the numbers offer a more troubling story.

The median non-white family today has a net worth of just $18,100 – almost a fifth lower than it was when Mr Obama took office. White median wealth, on the other hand, has inched up by 1 per cent to $142,000. In 2009, white households were seven times richer than their black counterparts. That gap is now eightfold. Both in relative and absolute terms, blacks are doing worse under Mr Obama.

 
 
Comment by Whac-A-Bubble™
2014-10-12 08:30:33

Never buy a property with an HOA, EVER!

Comment by Whac-A-Bubble™
2014-10-12 08:32:45

Local Topics
Government & Politics
Battle over artificial turf heats up in HOAs
San Diego lawmaker to consider bill protecting HOA residents in 2015
By Chris Nichols
6 a.m. Oct. 11, 2014
Carlsbad resident Rocky Wilson on his artificial front lawn in front of his home. — Charlie Neuman

SACRAMENTO — Artificial turf has gained grudging acceptance on front lawns from Sacramento to San Diego, driven by years of drought and residents’ shrinking patience for water-guzzling natural grass.

But inside the world of California’s private homeowner associations, the battle over whether synthetic turf should be allowed is still very much alive —- and heating up, month-by-parched month.

Only a small fraction of the state’s thousands of HOAs permit artificial turf on front lawns, saying its out-of-place look is a threat to property values.

This restriction, combined with California’s increased calls for water conservation, has led some HOA residents and state lawmakers to push back against the rules and seek permanent change.

Change could come as early as next year.

Assemblywoman Lorena Gonzalez, D-San Diego, said Friday she is considering a bill to protect HOA residents who add synthetic turf, though she’s still weighing several factors.

“We’re looking at it for next year,” Gonzalez said. “We need to have conversations with the governor’s office.”

Three years ago, Gov. Jerry Brown vetoed a bill that would have allowed HOA residents to install artificial turf without the fear of fines.

The governor’s spokesman said Brown would consider any bill that lands on his desk, but said he was not aware of any change in the governor’s position on the topic.

Today’s artificial turf, supporters say, is not the tacky green carpet of the past. It looks much more like natural grass and is getting more environmentally-friendly.

That’s led many to wonder whether the HOA restrictions are necessary.

“Why aren’t HOAs leading the charge to encourage artificial turf?” said Rocky Wilson, who installed synthetic grass in the front yard of his home, at the La Costa Greens Community Association in Carlsbad, before the HOA had any guidelines on the topic. “I think people should have the right to do what they want with their own property.”

 
Comment by phony scandals
2014-10-12 08:46:04

“Never buy a property with an HOA, EVER!”

Assuming we don’t have to list a high crime neighborhood or a single family home this tops my list in Region IV

1- No HOA
2- City Water
3- CBS construction
4- Hip Roof

If I were looking to buy today I would have to figure out where to put Ebola free.

 
 
Comment by Whac-A-Bubble™
2014-10-12 08:54:07

Real Estate
Like Ben Bernanke, even financially secure retirees sometimes can’t get loans
By Kenneth R. Harney
October 10, 2014

Ed Fine’s recent rejection for a refinancing of his home loan wasn’t exactly like former Federal Reserve Chairman Ben Bernanke’s. But there are enough similarities to raise questions about current tight mortgage market standards and how lenders scrutinize applicants’ incomes.

At the very least, there are lessons for anybody who can’t document months of steady, predictable income, whether from salary, regular drawdowns of retirement funds or other sources.

Bernanke’s refi blow-up was widely publicized last week. He didn’t specify why he was turned down or by whom, but mortgage industry experts say most likely it was because he experienced a disruption in his regular employment income stream. He retired from the Fed at the end of January. Though reportedly he has since made $250,000 for a single speech, has a book contract and is now a resident fellow at the Brookings Institution, his income pattern may not have fit the standard mold in an era of computer-driven underwriting.

Fine, 72, isn’t coy about why he got turned down by two major lenders — it was an irregular income pattern — and he’s steamed about it. The retired defense contractor lives with his wife in a house they own in Shalimar, Fla. The Fines also own a rental house in Northern Virginia and a rental condo in Shalimar. The couple’s regular monthly income of around $3,500 consists of rent and Social Security and pension fund payments. They supplement that when needed by making withdrawals from their IRA, which currently exceeds $250,000. With high FICO credit scores and no delinquencies “ever,” Fine says, “we are not hurting financially.”

But, like Bernanke, the Fines couldn’t get through the refi hoops, even though their lender, Quicken Loans, solicited them to apply. Ditto for a term extension on their home equity credit line from Bank of America, which also solicited their application.

Comment by scdave
2014-10-12 09:31:12

This is spot on….

 
Comment by Shillow
2014-10-12 09:47:08

This guy who is 72 who has a combined income of $40 K a year, including from rents (that can easily go poof), is exactly like Bernanke.

They are both liars.

 
Comment by Mr. Banker
2014-10-12 09:50:56

Pay attention to this, proles:

“Ed Fine’s recent rejection for a refinancing of his home loan wasn’t exactly like former Federal Reserve Chairman Ben Bernanke’s. But there are enough similarities to raise questions about current tight mortgage market standards and how lenders scrutinize applicants’ incomes.”

This Ed Fine puke wasn’t looking for a new loan, he was looking to refinance a loan he already had. Now, just why would a lender be interested in having a puke like Ed Fine refinance a loan? Why would a lender not want to keep Ed Fine trapped in the same loan he signed up for?

Comment by Whac-A-Bubble™
2014-10-12 10:45:56

Wouldn’t the lender do better by keeping Ed Fine in the loan he agreed to repay, rather than offering him sweet terms on a lower rate loan for which Ed probably doesn’t even qualify?

 
 
 
Comment by Mr. Banker
2014-10-12 11:14:29

Bahahahahaha … people are smart:

“Dear Liz: My husband returned a car to the dealer when he lost his job. Now the company says he owes it more than $7,000 (the difference between what he owed to the dealer and the price for which the car was sold). He refuses to pay any amount, but recently he received a letter from a law office demanding payment or they will take him to court. Is he obliged to pay this money? What options does he have to get rid of this debt?.”

“Answer: A debt doesn’t disappear simply because someone decides not to pay it.

“Your husband signed loan paperwork to buy the car, and this paperwork obligated him to repay a certain amount. Voluntarily surrendering the car didn’t change his obligation. Also, the surrender probably is being reported to the credit bureaus as a repossession, which is a big negative mark on his credit reports. Some people mistakenly believe that a voluntary surrender avoids credit damage. Typically, it does not.”

Comment by Housing Analyst
2014-10-12 11:38:06

That’s what you get for financing it. This is a perfect example of having eyes larger than your wallet.

Why not pay cash for a more affordable car?

 
Comment by aNYCdj
2014-10-12 14:40:34

This is what i am finding all over the place people have no idea what Google search is….not a clue even kids today dont know.

People get a threatening foreclosure letter from the bank and move out.

It amazes me sometimes even here in NYC the landlord sends a nasty letter saying you violated your $500 rent controlled apt lease, by sending the rent check from another state….even though you are staying with your kids on vacation, and they move out a lousy stamp and they throw it all away.

 
Comment by Puggs
2014-10-13 13:55:19

Moron. You forgot to buy the car with OPM.

 
 
Comment by Whac-A-Bubble™
2014-10-12 12:10:49

Do you plan to work until you drop?

Comment by Whac-A-Bubble™
2014-10-12 12:13:23

Buttonwood
Work until you drop
Ageing societies create many employment challenges
Oct 11th 2014 | From the print edition

THE developed world is heading into what Shakespeare described as “second childishness and mere oblivion, sans eyes, sans teeth, sans taste, sans everything”. The share of the population aged over 65 in rich countries will rise from 15% in 2010 to 27% by 2050, while those aged over 80 will increase from 4% to 9%. While this trend is well known, countries are only just starting to grapple with the implications. The issue was the subject of a conference held at the London School of Economics last month.

There are two main ageing-related problems. The first is how to achieve economic growth (and afford social benefits) in the face of a shrinking workforce. The second issue, given that shrinking workforce, is how to look after the very elderly, many of whom will need round-the-clock nursing.

In terms of growth, one obvious answer is to get people to work longer. Since 1970, the life expectancy of the average 65-year-old in the OECD, a club mostly of rich countries, has risen by four or five years, virtually all of which has been spent in retirement. The age at which governments start paying pensions is at last starting to edge higher, from 65 to 67 or 68.

However, it may well be that changes in private-sector pensions are more important in determining how long the elderly work. Generous final-salary pensions are dying out; they have been replaced with defined-contribution schemes, whereby the employee accumulates a pot to see him through his dotage. These pots may be too small to generate a decent income, as many people are discovering; they will need to keep working, whatever the official retirement age may be.

In Britain the proportion of men aged over 65 in employment has risen from less than 8% at the turn of the century to more than 13% today (for women, the increase has been from just over 3% to more than 7%). In addition, fewer people are taking early retirement, whether voluntary or involuntary. At the turn of the century, 54% of British women aged 50-64 were in work; now it is nearly 66% (for men, the rise has been from 72% to 78% over the same period). Since the recession, the biggest single gain in employment has been among women aged 60-64.

Similar trends have been seen in America. Since 2000, employment of those aged 65 and over has risen by 51%, while that of those aged 25-64 has fallen 3.5%.

Comment by 2banana
2014-10-12 13:02:35

65 is the new 45…

 
Comment by rms
2014-10-12 13:40:55

“The second issue, given that shrinking workforce, is how to look after the very elderly, many of whom will need round-the-clock nursing.”

What did they do 100-yrs ago?

Comment by Whac-A-Bubble™
2014-10-12 14:27:13

Under half the population survived past 65.

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Comment by Tarara Boomdea
2014-10-12 19:42:19

Ran across this article subtitled “My Alzheimer’s Nightmare and Why it Will Soon Be Yours”: Jackie’s Goodbye

I assume insurance for long term care is already out of reach for someone at my age and income. Having seen these places, I think I’ll pass, and just pass. Hmmm, where do I want to be left on the side of the mountain? Aren’t they already doing that in Japan, only in a forest (at the foot of Mt. Fuji)?

Thanks to whoever posted the link to the NYT article on suicide the other day; the comments were heartbreaking and compelling.

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Comment by Blue Skye
2014-10-12 15:36:25

The only people who need this “growth” are the parasites.

 
 
 
Comment by goon squad
2014-10-12 13:22:34

Broncos 31 Jets 17

Comment by phony scandals
2014-10-12 17:18:50

Cowboys 30 Seagirls 23

Comment by Housing Analyst
2014-10-12 17:20:59

Coming up…. NYG >Philly

 
 
 
Comment by Selfish Hoarder
2014-10-12 14:00:30

Took a long walk, maybe 5 miles through my southeast nabe. And one part I rarely go on is a HOA-owned path. Prices around there are still bubble prices, albeit much lower than 2008. It is very affordable by the standards of my Orange County nabe. Just as clean, and less traffic. Emotionally I want to end up at north Scottsdale. But the area in my nabe has everything I want nearby. When is the 25% RE price drop going to happen?

Comment by Whac-A-Bubble™
2014-10-12 14:28:30

“When is the 25% RE price drop going to happen?”

The fear currently gripping the stock market is a promising sign that it may not take forever…

 
Comment by Blue Skye
2014-10-12 15:33:37

“When is the 25% RE price drop going to happen?”

Looks like it could be every seven years or so, unless things speed up a tad.

 
Comment by Jingle Male
2014-10-13 03:00:40

“When is the 25% RE price drop going to happen?

It already did in 2009.

Comment by Housing Analyst
2014-10-13 04:12:51

And you took the bait and lost J._Fraud.

 
 
 
Comment by Whac-A-Bubble™
2014-10-12 16:12:15

Rolling global stock market crash continues (yawn…).

Comment by Whac-A-Bubble™
2014-10-12 16:13:15

Markets More: Dubai Stock Market
Dubai Stocks Crash
Myles Udland
Oct. 12, 2014, 11:06 AM

Stocks in Dubai crashed 6.5% on Sunday.

This was the biggest drop in four months and brings the Dubai Financial Market General Index to its lowest level since July 20, according to Bloomberg.

Dubai, which like many Middle East exchanges is open from Sunday to Thursday, led a broad sell-off in Middle East stocks, as markets in Israel, Qatar, and Saudi Arabia also sold off on Sunday.

Hisham Khairy, the Dubai-based head of institutional trade at Mena Corp. Financial Services, told Bloomberg that, “Global markets are all selling off and it’s that weakness we’re tracking. There’s still more blood to come.”

Last week, US stocks fell more than 2.5% across the board, with the S&P 500 falling 3.1% and the Nasdaq losing more than 4%.

And so after last week’s ugly action, markets around the world still look unsettled; US futures trading opens at 6 p.m. ET.

Here’s the one-day chart of Sunday’s trading in Dubai.

 
Comment by Whac-A-Bubble™
2014-10-12 16:14:27

Stockswatch
Stock market has best day of 2014
By Matt Egan
5 October 8, 2014: 5:02 PM ET

NEW YORK (CNNMoney)
Wall Street’s nightmares about the Federal Reserve just got a lot less scary. In fact, it looked downright dreamy in the stock market Wednesday.

The Dow surged 275 points — its best performance of the entire year — after a new report suggested the Fed isn’t ready to lift interest rates off the floor just yet.

 
Comment by Whac-A-Bubble™
2014-10-12 16:26:10

The Stock Market Just Had Its Worst Day of 2014
Trader Sean Spain works on the floor of the New York Stock Exchange, Monday, June 24, 2013.
Image: Richard Drew/Associated Press
By The Associated Press
3 days ago

NEW YORK — The stock market had its worst day of the year Thursday, just 24 hours after recording its best.

The Dow Jones industrial average plunged 334 points as falling energy stocks and worries about the global economy sent investors fleeing out of the market. The blue-chip index rose 275 points the day before.

For three years, U.S. investors have enjoyed a stock market that has, for the most part, quietly and steadily moved higher. The pleasure cruise appears to be over.

Market volatility is back and in a big way, market observers say. The stock market hasn’t seen day-to-day movements like this since August 2011, when Standard & Poor’s downgraded the United States’ credit rating. The S&P downgrade subsequently pushed the U.S. stock market into its last “correction,” a technical term for when stocks fall 10% or more from a recent peak.

 
Comment by Whac-A-Bubble™
2014-10-12 16:30:10

What’s behind the stock market’s sudden turmoil?
October 11, 2014 at 5:52 PM EDT
After a long climb, the stock market suffered its biggest losses this past week in two and a half years. To help us understand the forces behind the sudden drop, Roben Farzad joins Hari Sreenivasan via Skype from Richmond, Virginia.

HARI SREENIVASAN: After a long climb the stock market suffered its biggest losses this past week in 2 and a half years. The DOW dropped 2.7 percent, the SNP fell 3.1 percent and the NASDAQ was down 4.5 percent. To help us understand the forces behind the sudden drop, we are now joined via Skype from Richmond, Virginia, by Roben Farzad. He’s the host of the radio program ‘Full Disclosure.’ Let’s talk first about what happened in Europe this week. What happened, and why does it matter to the U.S. stock market?

ROBEN FARZAD: A couple of things, the big pillars in Europe, mainly Germany and France. We got some worrying news. One in the case of France, you have their credit outlook downgraded by Standard & Poor’s, the big credit rating company here in the United States. They’re worried about sluggish growth and they’re worried about lackluster pace of reforms. This is a country that has significant structural problems with labor and wages, and has a significant debt overhang. It’s hugely indebted and is trying to come out of the hangover of the great European economic crisis of 2009 and 2010. And similarly that’s connected to Germany. Germany is the giant player of the continent today. It has a hugely export-driven economy and you’ve got some weak numbers out of Germany. So, their new concern is that the entire continent and sub-continent of Western Europe can come unhinged at a time when we need all the growth globally that we can get.

HARI SREENIVASAN: And this is happening at a time when the U.S. dollar is getting stronger. So, how does that work?

ROBEN FARZAD: Right. It’s actually very few people, you know men on the streets – that a weak currency is actually in the interest of your exporters. They can sell their wares? For a more compelling price. For example, if you’re getting more bang for your Euro than the Dollar, the more European countries and consumers are going to be amenable to buying American exports. It’s the same with Japan and its Yen, the same thing with China and its Yuan. The United States is now looking comparatively more hale and healthy than some of these struggling economies in Europe. And that’s a currency that’s uniting more than a dozen economies. It’s really important for these guys to be able to hold their own against the Dollar, but not become so strong they crowd out their own exporters.

HARI SREENIVASAN: And finally, oil prices going lower is usually good news for consumers here, but there’s also this concern about what China does in terms of buying or not buying much oil.

ROBEN FARZAD: That’s right. China is a fifteen-ton elephant in the room. Ten, twelve years ago people would worry what oil would break $20 or $30 a barrel. Then China suddenly sends and buys this stuff voraciously. Now we’re talking about worries about triple digit oil. When you get weakness out of China, the big emerging players like Brazil, suddenly its economy is lackluster. People are worried about Russia. People are worried about the kind of secondary emerging economies. And obviously Europe, which drinks a ton of oil. Suddenly the price is going to fall. And we have new things in play here in the United States. North Dakota is suddenly producing more than the smallest member of OPEC, which is Ecuador. Production is coming up at a time when prices are falling and that stands to reason that prices could fall even more.

 
Comment by Whac-A-Bubble™
2014-10-12 16:33:15

3:02 pm ET
Oct 12, 2014
Markets
Despite Declines, Stocks Are Still Expensive

By E.S. Browning
CONNECT

Even after last week’s market turmoil, stocks aren’t cheap.

That is why many money managers believe that, sooner or later, stocks could fall more than they have so far.

Past experience suggests big stocks, represented by the Dow Jones Industrial Average and the S&P 500, are overdue for a pullback of 10% to 15%. But in the days since the 2008 financial crisis, past experience has been a poor guide to market behavior. One of the big questions in the market today is whether stocks indeed will fall 10% or more in the near future or continue to dodge that widely expected fate.

The Dow industrials are down 4.3% from their record hit in September. The S&P 500 is 5.2% off its record, which also dates from September. The more-volatile Russell 2000 small-stock index, by contrast, is 13% below its record, which dates from March.

Even with these declines, stocks remain expensive. The S&P 500 trades at 18.6 times its companies’ net profits for the past 12 months, according to Birinyi Associates. That is down from more than 19 at the peak in September, but still well above the long-term average of 15.5.

With interest rates and inflation exceptionally low, many investors believe it is appropriate for stocks to be more expensive than average. But today’s price/earnings ratio represents a markup of 20% above the historical average, which is a lot.

Doug Ramsey, chief investment officer at Leuthold Group, which oversees $1.7 billion in Minneapolis, has been trimming his stockholdings since August and said the declines aren’t enough to lure him back yet.

“This is not yet a sizable move,” he said, adding that he wouldn’t be surprised to see the market fall 10% to 15% before the declines are over.

Few people expect a drop of 20%, which would meet the common definition of a bear market. Even most pessimists, such as Mr. Ramsey, expect more-modest declines because recession doesn’t appear to be on the horizon in the U.S.

 
Comment by Whac-A-Bubble™
2014-10-12 16:36:05

U.S. Futures Slip After Three-Week Stock Market Decline
By Joseph Ciolli
Oct 12, 2014 3:43 PM PT

U.S. index futures fell following a three-week selloff that last week sent stocks to the lowest level since May.

December contracts on the Standard & Poor’s 500 Index dropped 0.5 percent to 1,884 at 7:40 a.m. Tokyo time, slipping beneath their lowest level in August. Futures on the Dow Jones Industrial Average declined 0.4 percent.

Federal Reserve officials said this weekend that interest-rate increases might be delayed should slowdowns in other countries threaten the expansion of America’s economy. The International Monetary Fund last week reduced its forecasts for global economic expansion in 2015, predicting it will be 3.8 percent, compared with a July prediction of 4 percent.

“If foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise,” Vice Chairman Stanley Fischer said Oct. 11 in a speech at the IMF’s annual meetings in Washington.

The comments came three days after minutes of the Fed’s September policy meeting showed authorities highlighting worries over the risks posed to their economy by deteriorating expansions abroad and a stronger dollar, which could hurt exports and damp inflation.

U.S. gross domestic product grew 4.6 percent between March and June, the most since 2011, and will expand 3 percent this quarter and the next, according to the median estimate of 89 economists in a Bloomberg survey. The unemployment rate dropped to a six-year low of 5.9 percent in September as employers added 248,000 to payrolls.

 
Comment by Whac-A-Bubble™
2014-10-12 16:37:36

Whatever you do, don’t exit stocks at this point. The selloff has only just begun!

Comment by Whac-A-Bubble™
2014-10-12 16:39:02

Stockswatch
Is it time to exit stocks?
By Heather Long
@byHeatherLong
October 11, 2014: 8:42 AM ET
The market suffers from whiplash

NEW YORK (CNNMoney)
Buy low, sell high — that’s a well-known stock market mantra.

It’s great advice, except for one problem: it’s incredibly hard to tell the peak or the nadir.

Billionaire Carl Icahn has made a lot of money off his investments. Even he says, “No one is smart enough to know when to buy at the bottom.”

After the worst stock market drop of the year, plenty of people wonder if it’s time to sell. The argument goes something like this: The S&P 500 is up nearly 200% since it bottomed out in early 2009. There hasn’t been a correction since 2011, let alone a true “bear market” where things really drop. Surely it’s time to exit…

 
 
Comment by Whac-A-Bubble™
2014-10-12 16:42:51

El-Erian Says Fed Comments Show Unease About World Slowdown Risk
By Vince Golle Oct 12, 2014 9:07 AM PT
Photographer: Pete Marovich/Bloomberg
Mohamed A. El-Erian writes a column for Bloomberg View and is chief economic adviser at Allianz SE.

Federal Reserve policy makers’ recent comments about the threat to the U.S. expansion from a global slowdown that’s rattled financial markets underscore growing concern among central bankers, according to economist Mohamed A. El-Erian.

Fed Vice Chairman Stanley Fischer indicated yesterday at the International Monetary Fund’s annual meetings in Washington that slower-than-anticipated overseas growth could prompt the U.S. central bank to put off an interest-rate increase.

Fed Governor Daniel Tarullo also said he was troubled by the weaker state of the world economy, while European Central Bank President Mario Draghi spoke of continued bias toward easier monetary policy.

“What that is is the nervousness among central bankers, that if asset prices come down, then that is going to affect the real economy,” El-Erian, who writes a column for Bloomberg View and is chief economic adviser at Allianz SE, said on the Fox News program, “Sunday Morning Futures With Maria Bartiromo.” “What we’ve seen this weekend in Washington, D.C. is the number of central bankers, they said, ‘Don’t worry, we will be more patient.’ But the real question is, is that enough?”

Investors are having their doubts. The Standard & Poor’s 500 Index posted its biggest weekly drop in two years and the Dow Jones Industrial Average erased gains for the year.

“What the market is starting realize is that central banks only build bridges, they can’t guarantee destinations,” El-Erian said. “We need the other policy makers to step up and unfortunately they are not. Central bankers alone can’t do all the heavy lifting.”

 
Comment by Whac-A-Bubble™
2014-10-12 17:06:32

Market Pulse
Australia stocks fall ahead of China data

Published: Oct 12, 2014 7:47 p.m. ET
By Michael Kitchen
Asia editor

LOS ANGELES (MarketWatch) — Australian stocks moved decisively to the downside early Monday, with gains for some major miners unable to offset losses from financials and energy names. The S&P/ASX 200 (XJO, -0.89%) sat 1% lower at 5,136.90, extending a more-than-2% plunge on Friday, though the market held the potential to move signficantly on Chinese trade data due out later in the day. Given a Friday pullback for U.S. shares that followed the rout in Sydney, Australian financials started the week with a deficit, as Macquarie Group Ltd. (MQG,-1.36% MCQEF, -4.22%) lost 1.6%, Commonwealth Bank of Australia (CBA, -0.79% CBAUF, -1.52%) and Westpac Banking Corp. (WBC, -0.96% WEBNF, -2.14%) gave up 1% each, and Suncorp Group Ltd. (SUN, -0.97% SNMCY, -1.07%) retreated by 1.2%. Meanwhile, with both Nymex and Brent crude-oil futures off by more than 1% in electronic action, energy stocks saw a broad decline, with Oil Search Ltd. (OSH, -1.02% OISHF, -0.86%) down 1.8%, Caltex Australia Ltd. (CTX, -1.33% CTXAF, -3.99%) down 1.7%, and Woodside Petroleum Ltd. (WPL, -0.92% WOPEF, -2.43%) down 1.1%, although Karoon Gas Australia Ltd. (KAR, -0.15% KRNGF, -5.71%) managed to hold at the flatline after updating shareholders on its latest buyback in a stock-repurchase program. Despite the easing oil price, shares of Qantas Airways Ltd. (QAN, -2.07% QUBSF, -3.36%) lost 2.1%, with the move coinciding with news that foreign ownership of the airline had risen to almost 48% as of mid-September, up from just below 45% in late August. Qantas, Australia’s flag carrier, is forbidden by law to sell more than 49% of its stock to foreign interests.

 
Comment by Whac-A-Bubble™
2014-10-12 19:18:26

Market Pulse
Taiwan stocks down sharply, as techs drop
Published: Oct 12, 2014 9:46 p.m. ET
By Michael Kitchen
Asia editor

LOS ANGELES (MarketWatch) — Taiwan stocks were leading losses in Asia Monday morning, with the Taiex (Y9999, -2.01%) down 2.1% in early trades. The retreat in the tech-heavy Taiwan market followed sharp losses for U.S. tech shares on Friday, when the Nasdaq dropped 2.3%. Among the leading decliners, Taiwan Semiconductor Manufacturing Co. (2330, -2.80% TSM, -5.03%) lost 3.6%, Advanced Semiconductor Engineering Inc. (2311, -3.75% ASX, -4.03%) gave up 4.7%, Wintek Corp. (2384, -6.42%) plunged 5.4%, and Asustek Computer Inc. (2357, -2.63% ASUUY, +2.89%) was weaker by 3.1%. Still, Dow Jones Newswires quoted an unnamed local trader as saying government-backed funds were “buying actively” to support the market.

 
 
Comment by phony scandals
2014-10-12 17:26:53

Ebola panic is getting pretty racist

By Arielle Duhaime-Ross
on October 8, 2014 10:49 am

And now that Ebola has “reached” the US, American privilege — white privilege, especially — is floating to the surface, in even less subtle ways.

Now, an ugly new hashtag has emerged: #Obola, a coinage that was popularized thanks to a tweet by conservative writer Dinesh D’Souza, and a Michael Savage radio segment. If you don’t get the reference, I don’t blame you. The President’s name doesn’t exactly resemble “Ebola.” But D’Souza, a known “birther,” has somehow managed to liken a name like Obama with a disease that’s raging in Africa — not in the US. Predictably, this has given racist xenophobic Americans a banner to rally around.

http://www.theverge.com/2014/10/8/6941749/ebola-panic-is-getting-pretty-racist - 233k -

 
Comment by phony scandals
2014-10-12 17:34:49

Race to stop Ebola: Obama briefed; Nurse’s home on lock-down

by Daily Mail | October 12, 2014

The Dallas home of the female nurse who has tested positive for Ebola has been sealed off with a police guard outside.

The nurse, who works at Texas Health Presbyterian Hospital, was part of a team caring for Ebola patient Thomas Eric Duncan who died from the virus last week.

Her identity has not been released – Dr. Daniel Varga, of the Texas Health Resources, said during a news conference Sunday the worker and her family have ‘requested total privacy.’

Varga said a ‘close contact’ of the nurse has been ‘proactively’ placed in isolation.

A dog was reportedly inside the patient’s apartment on Marquita Avenue, which Rawlings assured is showing no symptoms of Ebola and will be taken care of.

Dallas Mayor Mike Rawling said the hazardous materials unit of the Dallas Fire Department has cleaned up and decontaminated the shared areas of her apartment complex.

 
Comment by AbsoluteBeginner
Comment by Housing Analyst
2014-10-12 19:00:03

Thats California for you. Fraud in all 4 directions.

 
Comment by Whac-A-Bubble™
2014-10-12 19:04:54

Caccavo recalled how, starting around 2006, a family of three people began to help her out with shopping and rides to the doctor. The neighbor said he doubted their motivations — they were unrelated to Cheiker, though they claimed to have known her deceased mother — and warned her to be careful.

And then, “all of a sudden, Sarah disappeared,” Caccavo told The Associated Press by telephone Sunday. That was the fall of 2008.

The following year, a living trust in Cheiker’s name sold the house for $712,000, according to property records.

According to authorities, Cheiker was taken from Los Angeles by 41-year-old twins and their 21-year-old godson — the same people Caccavo said had befriended her.

Look for variations on this sort of scam to happen again and again in the coming decades as senility increasingly afflicts the Baby Boomers.

 
 
Comment by Selfish Hoarder
2014-10-12 19:15:34

U.S. stock futures down 0.3% while gold price is up 0.8% at this hour.

I have seen two or three instances of this when stocks take mini corrections. And recall that while in the Fall of 2008 both stocks and metals tumbled, metals recovered much faster than stocks.

Comment by Whac-A-Bubble™
2014-10-12 19:20:40

Gold is not the only thing going up in response to crumbling Bull Street confidence.

Comment by Whac-A-Bubble™
2014-10-12 19:22:34

Treasury Futures Gain With Aussie Bonds on Global-Growth Concern
By Kristine Aquino Oct 12, 2014 5:32 PM PT

Treasury 10-year futures rose to the highest in almost 11 months, while Australian bonds gained, as concern global growth is slowing boosted demand for safer assets.

Futures contracts advanced for a sixth day after benchmark U.S. government securities rallied for a fourth straight week. Federal Reserve policy makers may slow interest-rate increases if world growth disappoints, Vice Chairman Stanley Fischer said two days ago. People’s Bank of China Governor Zhou Xiaochuan reiterated the need for “prudent” monetary policy. Australian 10-year yields dropped to the lowest level since June 2013 before a Chinese report that economists say will show imports declined in September.

We saw some commentary out of China that suggested they’re not prepared to provide any stimulus at this stage,” said Adam Donaldson, head of debt research at Sydney-based Commonwealth Bank of Australia. “Officials are also signaling that perhaps Fed hikes are a little further off and that global-growth concerns might be enough to push out their timing, and all of that is of course very supportive for the bond market.”

Comment by Selfish Hoarder
2014-10-12 20:16:58

Looks like it’s still prudent to do snails pace (on a cold day) moves from T-bills into 2 year notes. Thinking my proportion is 14 to 1 of T-bills to 2 year notes. Probably keep that way another year. Still hoping to get mostly into 3 year notes!

(Comments wont nest below this level)
Comment by Selfish Hoarder
2014-10-12 20:21:48

Arizona municipal bonds are hot when the Dow and S&P 500 plummet.

A 3 month plot of AAZAX vs S&P 500 and Dow shows why.

 
 
 
 
 
Comment by Whac-A-Bubble™
2014-10-12 22:12:04

Why Has Bitcoin Plunged By 50% in 2014?
By Motley Fool, October 12, 2014, 05:15:02 PM EDT

Since the beginning of the year, the price of a single bitcoin has fallen by more than half, from about $750 to the current price of around $360. In fact, in the past two months alone, the price of a bitcoin has plunged by more than $200.

Why has this happened? If anything, it would seem like the opposite path would be more likely. After all, more retailers than ever are accepting bitcoins, major players in the venture capital industry are throwing money into bitcoin-based businesses, and more of the public is becoming aware of the digital currency.

So, why has bitcoin plunged? And should people who own bitcoins be worried?

 
Comment by Whac-A-Bubble™
2014-10-12 22:15:21

Bitcoin’s shoeshine boy moment: FOMC members expressed mild curiosity upon hearing about it, then moved on. This wouldn’t have happened if it were a serious contender to the almighty dollar (aka Federal Reserve Notes).

Comment by Whac-A-Bubble™
2014-10-12 22:19:04

Everyday Money Bitcoin
Why Bitcoin Fans Don’t Believe in Bad News
Jacob Davidson
Oct. 9, 2014
People attend a Bitcoin conference on at the Javits Center April 7, 2014 in New York City. Andrew Burton—Getty Images
Bitcoin might be doing poorly, but for the currency’s online proponents, it’s always time to buy. Here’s the reason behind their optimism.
Updated—Friday, October 10

Last weekend, Bitcoin crashed. The dollar value of a single Bitcoin began to decline on electronic markets starting on Friday and by Sunday afternoon had fallen 14%, to $290.

It recovered a bit in the days that followed, but the slide appears to part of a broader trend: At the Thursday price of about $350, the digital currency has lost almost 70% of its value since its all-time high of $1,147 in December 2013. At the New York Times, Paul Krugman used the roller coaster weekend as an occasion to once again call Bitcoin a long con.

But among the Bitcoin faithful, the sun never stopped shining. On Reddit’s Bitcoin discussion board, for example, home to almost 140,000 enthusiasts of the electronic currency, the price drop was framed as good news. “The good old days are back! Massive walls, manipulation and a true financial wild west – I love it” chirped one of Monday’s most popular posts.

 
Comment by Whac-A-Bubble™
2014-10-12 22:22:54

As the Fed’s secrets are revealed, will the world turn to Bitcoin?
by Joel Dietz @ 2014-09-28 05:59 PM
This article is a guest post by the member of our expert community, Joel Dietz.

On Friday secret tapes of correspondence from Goldman Sachs and the Federal Reserve were released. The truth is not pretty and it may be even more shocking than you think

Observers of the Fed have long known that the Reserve is extremely secretive. What they haven’t known is what it is secretive about. Much of their work is guesswork. Now we finally know what is actually going inside the Fed.

For those who don’t know, the Federal Reserve was set up as a private entity in the early part of the 20th century, a sort of superbank to regulate America’s money supply. It is supposed to oversee the big banks, including those that were “too big to fail,” but these disclosures displayed that it’s been doing just the opposite.

Something like a Randian soap opera, the Federal Reserve apparently operates on a consensus model where anyone who disagrees with what currently is going on, is pushed aside. If you agree, you may get promoted and go off to work for a better salary in a big bank. If you ever disagree or suggest that the Federal Reserve should perform its job, you are likely to be unceremoniously fired.

In one curious case, some upstart who thought that Goldman Sachs should be held accountable for its many conflicts of interest was one of those who “didn’t fit in,” and was summarily dismissed. The difference was that she disappeared with many privately taken recordings of what really happens inside the Fed. Which is, apparently, a whole lot of nothing at great cost to the American taxpayer.

 
 
Comment by Whac-A-Bubble™
2014-10-12 22:26:51

Is China pulling through its non-slowdown?

Comment by Whac-A-Bubble™
2014-10-12 22:28:17

Kenneth Rogoff: China’s inscrutable contraction
The idea that controlled tightening is easier in a more centrally planned economy, where policy makers must rely on far noisier market signals, is highly questionable
Kenneth Rogoff
October 10, 2014 Last Updated at 21:49 IST

While virtually every country in the world is trying to boost growth, China’s government is trying to slow it down to a sustainable level. As China shifts to a more domestic-demand driven, services-oriented economy, a transition to slower trend growth is both inevitable and desirable. But the challenges are immense, and no one should take a soft landing for granted.

As China’s economy grows relative to the economies of its trading partners, the efficacy of its export-led growth model must inevitably fade. As a corollary, the returns on massive infrastructure investment, much of which is directed toward supporting export growth, must also fade.

Consumption and quality of life need to rise, even as China’s air pollution and water shortages become more acute in many areas. But in an economy where debt has exploded to more than 200 per cent of gross domestic product (GDP), it is not easy to rein in growth gradually without triggering widespread failure of ambitious investment projects. Even in China, where the government has deep pockets to cushion the fall, one Lehman Brothers-size bankruptcy could lead to a major panic.

 
Comment by Whac-A-Bubble™
2014-10-12 22:32:32

China housing bubble ‘will burst’
Daniel Mercer
The West Australian
October 10, 2014, 2:35 am

WA’s top Treasury official says China’s housing market is a bubble waiting to burst and this could cut demand for iron ore and further hit the State’s Budget.

Acting Under-Treasurer Michael Barnes said yesterday a building frenzy in China during its boom had created an oversupply of about 50 million apartments.

After visiting several Chinese cities, including Hohhot, the capital of Inner Mongolia, Mr Barnes said he was convinced the sector was due for a severe correction.

In a sobering reminder to the State Government, he said this would have “implications” for steel production in China and in turn iron ore exports from WA.

Mr Barnes said the remarks were his own views and did not reflect the Government’s position.

As far as the eye can see there are rows and rows and rows - not just in this city (Hohhot) but every city I went to - of 20, 30-storey empty apartment buildings,” Mr Barnes said.

It’s extraordinary. The official estimate in China is there are 50 million surplus apartments, yet they’re still building them.

So I came away from that thinking this bubble has got to burst at some stage.

 
 
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