April 30, 2016

The Benefit Of The Doubt Has Been Lost

A weekend topic on the Federal Reserve starting with this MarketWatch interview, “The Fed does what it wants and plays favorites. And as a result it’s lost the trust of the American people. That is the stark view the central bank’s actions in the wake of the financial crisis by Lawrence Jacobs, a public policy expert at the University of Minnesota. In a new book, ‘Fed Power, How Finance Wins,’ Jacobs, and his co-author Desmond King from Oxford University, lay out their case that the Fed managed to overstep the U.S. constitution by taking giving trillions of dollars in loans to financial market participants.”

“These actions should have been reserved for Congress and offended Main Street, he said. ‘Elites’ in Washington and New York went along with the central bank’s actions believing basically the ends justified the means, they argue. In an interview with MarketWatch, Jacobs said reform of the Fed’s 100-year old structure is now inevitable, whoever wins the White House. The following interview has been edited lightly for clarity.”

“MarketWatch: You argue the Fed has lost some of its legitimacy and credibility. That’s a big deal for the Fed. Can you explain what you mean?”

“Jacobs: Everything that I’ve read and studied and analyzed leads me to believe that there is tremendous public doubt and that it has lingered past the initial skepticism about what the Federal Reserve has done [in the crisis.] The issues about the Fed and its credibility are no longer just being questioned by libertarian [Rep.] Ron Paul in the House. It enjoys much wider scrutiny throughout Congress and, among the attentive public. The benefit of the doubt has been lost.”

“MarketWatch: And that’s because the people view the Fed as not accountable?”

“Jacobs: I think there are two sources of this decline in the credibility of the Fed. One is a sense that the Fed is unmoored from our system of democratic accountability. It does what it wants. And the second corrosive perception that is now widespread is that the Fed plays favorites. The facilities that it created were tremendous in their scope and they selectively provided benefits of credit during a credit freeze to a small number of banks and non-banks. Meanwhile, Main Street and millions of homeowners were faced with real duress or bankruptcy or foreclosure.”

“MarketWatch: Congress and the White House could have done things to help homeowners and they didn’t, so why is it the Fed’s job?”

“Jacobs: It is certainly the case that Congress fell down on the job. But partly it is because the Fed has stepped into what used to be the normal arena of fiscal policy. The Fed has kind of crowded out the constitutional authority and responsibilities of Congress. If the Fed wasn’t doing this, and it fell to Congress, Congress would absolutely step up, because it would have had no choice. But when the Fed steps in, it kind of gives an out to Congress to do its job. I think, in general, the movement of the Fed into fiscal policy is unsustainable. It far exceeds the Fed’s constitutional responsibility and it has brought upon itself this kind of erosion in trust and legitimacy.”

From CBS News. “When the Federal Reserve triumphantly raised interest rates in December for the first time since 2006, it did so over the objections of America’s trading partners — especially China. The Fed moved amid proclamations that it was focused on setting policy for the U.S. based on a tightening job market and stabilizing inflation. Fast-forward a few months, and the drums are hammering out a different beat. A rising concern for Fed officials is the health of the Chinese economy, which, despite a headline growth rate of 6.7 percent for the first quarter, remains vulnerable.”

“The Fed mentioned downside risks to China six times in its Jan. 26-27 policy meeting, after citing them three times at the March 15-16 meeting. And Fed Chair Janet Yellen singled out China and the country’s currency in her March 29 speech before the Economic Club of New York, which in retrospect was a big catalyst for the recent stock market upswing: ‘One concern pertains to the pace of global growth, which is importantly influenced by developments in China. There is a consensus that China’s economy will slow in the coming years as it transitions away from investment toward consumption and from exports toward domestic sources of growth. There is much uncertainty, however, about how smoothly this transition will proceed and about the policy framework in place to manage any financial disruptions that might accompany it. These uncertainties were heightened by market confusion earlier this year over China’s exchange rate policy.’”

“That’s a lot of focus on China for an official who’s supposed to be preoccupied, and setting policy, based on what’s happening in the U.S.”

From Yahoo Finance. “while you might think that the economy has pretty much recovered from the Great Recession of 2008, one prominent financier thinks the problems that caused that big meltdown have been papered over and will come back to hurt us again. And then there’s the little issue of China’s economy surpassing ours soon. John Thornton, the former president of Goldman Sachs (GS), who likes to take the long view, says he’s ‘feeling uneasy’ about the global economy right now and thinks we’re living on borrowed time.”

“‘After the events of 2008, really since then, the central banks either collectively or individually have tried to implement policies which would, in effect, buy time for individual governments to take the actions they should take to put their houses in order,’ Thornton says.”

“‘By and large, the governments have not done that. So I feel as though we’re sitting in 2016 with many of the same problems that we’ve had for the last eight or 10 years, they haven’t been addressed very forcefully, we’re living on borrowed time. And sooner or later, that ends in tears. I’m generally, sort of, uneasy with where things are. And I think by and large, if things don’t make common sense, sooner or later, they come home to roost,’ he says.”




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260 Comments »

Comment by Combotechie
2016-04-30 02:45:19

“I think there are two sources of this decline in the credibility of the Fed. One is a sense that the Fed is unmoored from our system of democratic accountability. It does what it wants.”

It does what it wants. Check.

“And the second corrosive perception that is now widespread is that the Fed plays favorites.”

It does what it wants, and one of these wants is to play favorites. And the Fed can do this because “the Fed is unmoored from our system of democratic accountability”.

So the Fed has been set up to be independent, which is another way of saying it can do what it wants, and what it wants to do is to play favorites.

And this finding becomes a shocker because …?

Comment by Combotechie
2016-04-30 04:08:07

The people who make up the ranks of the PTB are going to choose somebody who does what he/she wants if what he/she wants coincides with what the people who make up the ranks of the PTB want. Is this tough to understand?

Would people in power choose somebody to run things for them if they thought whomever they chose would run things differently than the way they want them to be run?

Comment by Ol'Bubba
2016-04-30 04:42:06

“The people who make up the ranks of the PTB are going to choose somebody who does what he/she wants if what he/she wants coincides with what the people who make up the ranks of the PTB want. Is this tough to understand?”

Case in point: look at the Commissioners of the major sports in America. They are chosen by the owners of the franchises (teams). For the most part, they have done a masterful job of extracting public funds for stadia and arenas for the benefit of the ownership of the franchises.

Comment by taxpayers
2016-04-30 09:14:36

Monorail
Simpson’s

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Comment by Rental Watch
2016-04-30 19:10:03

Mono = One
Rail = Rail

Class dismissed.

 
 
 
 
Comment by United States of Jerry Springer
2016-04-30 05:51:30

It does what it wants

I think that’s a big lie. The fed does what washington dc wants.

Comment by Raymond K Hessel
2016-04-30 07:47:40

I think that’s a big lie. The fed does what washington dc wants.

No, Sparky, the Fed does what its Oligopoly patrons order it to do to effect the transfer of wealth from the 99% to a corrupt and venal .1% in the financial sector. Read “The Creature from Jekyll Island” to see how the robber barons and their captured political elites covertly set up the Federal Reserve in 1913 to serve their interests, something it has done ever since to the detriment of everyone else.

Comment by United States of Jerry Springer
2016-04-30 08:28:26

Keep on believing the propaganda that Fed does what it wants. Of course the DC crowd would like you to believe this to deflect any criticism against them. Brilliant isn’t it?

Fed indeed does what DC wants it to do. The owners of the Fed have no problems following govt orders because they make all the money by doing so.

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Comment by Oddfellow
2016-04-30 08:36:58

Your posts read like you have a Russian accent. (It’s your irregular use of articles, specifically “the”.)

Do you?

 
Comment by United States of Jerry Springer
2016-04-30 09:17:07

Do you?

What do you have against “the”? Boris not like this. I destroy must you.

BTW, our women are hotter.

 
Comment by Oddfellow
2016-04-30 09:19:53

BTW, our women are hotter.

Yeah, but crazier too.

 
Comment by United States of Jerry Springer
2016-04-30 09:35:13

Boris like crazy women and more crazy politics.

 
Comment by Oddfellow
2016-04-30 09:45:17

The crazy ones will kill you.

They’re high on crazy.

 
Comment by palmetto
2016-04-30 12:06:17

Here’s some crazy that went on up in the unfriendly skies.

http://www.zerohedge.com/news/2016-04-30/dont-fly-near-our-borders-us-spy-plane-again-intercepted-russian-jet

“The US Air Force has two solutions: either not to fly near our borders or to turn the transponder on for identification.”

Be careful what you wish for, Pentagon. Don’t be poking that bear.

 
Comment by Oddfellow
2016-04-30 13:04:04

Don’t be poking that bear

Odd that a financial web site like ZH would spend so much time cheering Putin.

 
Comment by palmetto
 
 
 
 
Comment by rms
2016-04-30 06:28:36

“It does what it wants.”

Get shorty.

 
Comment by The Selfish Hoarder
2016-04-30 07:03:34

The end of the Fed cannot come quick enough.

https://mises.org/library/financing-empire

Comment by Raymond K Hessel
2016-04-30 07:50:29

The end of the Fed is nowhere in sight, even though its swindles against the 99% have become increasingly brazen and larcenous since 2008. However, 95% of the electorate continue to bend over for the Wall Street-Federal Reserve Looting Syndicate and its captured political elites election after election, meaning the Fed and its TBTF bankster accomplices literally have a license to steal.

Comment by The Selfish Hoarder
2016-04-30 09:25:44

Whether or not the end is in sight, the Fed will end.

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Comment by Professor Bear
2016-04-30 09:59:46

That reminds me, was the move to take Andrew Jackson off the face of the twenty dollar bill related to his role in shutting down the Second Bank of the Unites States?

 
Comment by Oddfellow
2016-04-30 10:13:10

But central bank booster Hamilton stays on the ten. And he wasn’t even a president.

Of course, central bank opponent Jefferson remains on the nickel and 2$ bill.

 
Comment by Raymond K Hessel
2016-04-30 11:04:06

“The bold effort the present (central) bank had made to control the government … are but premonitions of the fate that await the American people should they be deluded into a perpetuation of this institution or the establishment of another like it.” — Andrew Jackson

 
Comment by Raymond K Hessel
2016-04-30 11:06:18

“You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out.”

– Andrew Jackson to the banksters of his day who wanted to form a forerunner to the Federal Reserve

 
Comment by The Selfish Hoarder
2016-04-30 15:32:49

“You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out.”

Beautiful quote. Stealing it

 
Comment by Professor Bear
 
 
 
 
Comment by Raymond K Hessel
2016-04-30 08:01:12

The Federal Reserve is the oligarchy’s chief instrument of plunder against the 99%.

http://www.mybudget360.com/federal-reserve-primary-tool-of-new-financial-oligarchy-banking-balance-sheet/

 
Comment by Professor Bear
2016-04-30 11:33:56

Since we are at the dawn of the age of self-driving cars, how about developing automated central banker bots which follow an established rule for regulating inflation and unemployment, with no discretion to bail out oligarchs whose high-risk gambling activities would otherwise land them in the poor house? The moral hazard in the current system for serial bailouts of systemically risky institutions could be at least somewhat contained if the Fed’s unbridled discretion were eliminated through the substitution of banking drones for politically-motivated FOMC members. If Congress had to act in order to bail out too-big-to-fail institutions, at least the voters could throw them out at the next election.

Comment by Professor Bear
2016-04-30 11:58:57

Big Bank Moral Hazard: A Look at Paul Volcker’s Fed and June 30, 1982
By Pam Martens and Russ Martens: June 24, 2015
Paul Volcker (right) Hobnobbing at a Group of 30 Event

By any measure, the taxpayer bailouts and Federal Reserve loans of more than $13 trillion infused into the banking system during and after the 2008 financial collapse eclipse any other period in U.S. history. A growing body of research now suggests that these bailouts have set us up for ever greater episodes of moral hazard.

Kartik B. Athreya, writing for the Richmond Fed, has described moral hazard this way:

As for implicit guarantees as a source of systemic risk, the idea is this: Any belief among financial market participants especially creditors, that they will be made whole by the public in the event of the failure of the assets they finance (i.e., that they will be ‘bailed out’) will lead them, all else equal, to (i) take greater risks, even if that means becoming ever more opaque or interconnected, and (ii) grow too large.

Frequently cited as prior misguided adventures into moral hazard by the U.S. government is the bailout of Continental Illinois National Bank in 1984 and the Federal Reserve’s intervention in the Long-Term Capital Management crisis in 1998, where high-risk gambles in derivatives by an obscenely leveraged hedge fund blew up.

There is another stunning example of moral hazard that is rarely discussed today; perhaps because it occurred on the watch of former Fed Chairman Paul Volcker who was intimately involved in fashioning financial reform after the 2008 crisis.

At the June 30, 1982 meeting of the Federal Open Market Committee (FOMC) of the Federal Reserve, Chairman Volcker asked the Board to approve a $700 million loan to Mexico. As a bit of background, according to Fed data, in 1982 the largest U.S. banks held Latin American debt amounting to 176 percent of their capital. Regulators allowed this hubris to occur and now the Fed was preparing to bail them out of their jaded actions.

 
Comment by Neuromance
2016-04-30 16:25:57

Professor Bear: Since we are at the dawn of the age of self-driving cars, how about developing automated central banker bots which follow an established rule for regulating inflation and unemployment

Virtually no one gives up discretionary power.

Also, they don’t exactly know how the economy works.

 
 
Comment by Bluto
2016-04-30 15:16:26

I posted this excerpt before, but it is highly relevant to today’s topic…from “Oil!” a novel by Upton Sinclair from about 90 years ago, based on the southern Calif. oil boom and the Teapot Dome scandal. Anyway, looks like the credibility of the Fed has not changed much in nearly a century…

“Bunny had a talk with Mr. Irving, who told him that it was the Federal Reserve system at work; a device of the big Wall Street banks, a supposed-to-“be government board, but really just a committee of bankers, who had the power to create unlimited new paper money in times of crisis. This money was turned over to the big banks, and in turn loaned by them to the big industries whose securities they held and must protect. So, whenever a panic came, the big fellows were saved, while the little fellows went to the wall.
In this case it was the farmers who were being “deflated.” They were unorganized, and had no one to protect them; they had to dump their crops onto the market, and the prices were tumbling—literally millions of farmers would be bankrupt before this year was by. But the price of manufactured goods would not drop to the same extent, because the big trusts, having the Wall Street banks behind them, could hold onto their stocks. Bunny took this explanation to his father, who passed it on to Mr. Roscoe, who said it was exactly right, by Jees; he knew the bunch that had their fingers in the till of the Federal Reserve bank here on the coast, and they were buying up everything in sight, the blan“kety-blank-blanks, but they weren’t going to get the Roscoe-Ross properties.”

Comment by Professor Bear
2016-05-01 06:57:38

How interesting that the Fed has a history of using its printing press to enable the banking sector to foreclose on America in tough times, thereby consolidating wealth and power in the financial sector through the currency monopoly.

 
Comment by Professor Bear
2016-05-01 11:57:54

“…who had the power to create unlimited new paper money in times of crisis. This money was turned over to the big banks, and in turn loaned by them to the big industries whose securities they held and must protect.”

There is no way to overstate how much worse the situation is in the computer age of money creation using electronic balance sheets.

 
 
 
Comment by Combotechie
2016-04-30 03:01:06

“John Thornton, the former president of Goldman Sachs (GS), who likes to take the long view, says he’s ‘feeling uneasy’ about the global economy right now and thinks we’re living on borrowed time.”

Borrowed time as expressed by borrowed money.

Lots of borrowed time expressed by lots of borrowed money. Lots and lots and lots of borrowed money.

Time and money. Borrow money from the future and in a sense you are borrowing time from the future.

Borrowing money and then spending it is spending money that hasn’t been earned yet. How nifty of a situation is this? In such a situation a borrowed dollar added to an earned dollar will allow two dollars of spending to take place today instead of just one.

And if two dollars are borrowed and are added to the one dollar that is earned then three dollars of spending can be allowed to take place.

Same rule goes for borrowing, say, ten dollars and then adding it to the one dollar that is earned; In this case eleven dollars can be spent today even though only one dollar was earned.

Nifty.

Comment by Combotechie
2016-04-30 04:12:29

“‘After the events of 2008, really since then, the central banks either collectively or individually have tried to implement policies …”

Painful policies at that …

“… which would, in effect, buy time for individual governments to take the actions they should take to put their houses in order,’ Thornton says.”

“‘By and large, the governments have not done that.”

What a surprise.

“So I feel as though we’re sitting in 2016 with many of the same problems that we’ve had for the last eight or 10 years, they haven’t been addressed very forcefully, we’re living on borrowed time.”

Living on borrowed time and deferred pain.

Comment by Combotechie
2016-04-30 05:56:36

“Living on borrowed time and deferred pain” should probably be:

“Living on borrowed time and borrowed money and deferred pain, lots and lots of deferred pain.”

Comment by muhFeelins
2016-04-30 07:39:57

Papering it over worked long enough to get the next guy (or Hillary) in office. Papered over for 8 yrs. housing and stocks back close to peak.

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Comment by Neuromance
2016-04-30 16:28:34

Future’s infinite. Not like 100 years infinite, but 1/0 infinite. So there’s a lot to borrow from.

However, to keep the currency sound, one can’t become too unrestrained with the debt, even if the Fed is going to sequester and cancel it one day.

 
 
Comment by Senior Housing Analyst
2016-04-30 05:00:00

Mount Vernon, VA Housing Affordability Blooms As Prices Plummet 15% YoY

http://www.zillow.com/mount-vernon-va/home-values/

 
Comment by Ovwebanked
2016-04-30 05:29:10

Is this the “thing” we’ll later point to as evidence of the peak?

http://fortune.com/2016/04/29/berkshire-hathaway-annual-meeting-live-stream/

 
Comment by Professor Bear
2016-04-30 05:51:56

“The Fed does what it wants and plays favorites. And as a result it’s lost the trust of the American people.”

Yesterday one of our regulars naively asked how the Fed is political. Hopefully he will find today’s thread enlightening.

Comment by Oddfellow
2016-04-30 07:32:28

What does “political” mean?

Comment by United States of Jerry Springer
2016-04-30 07:43:24

of or relating to the ideas or strategies of a particular party or group in politics

Comment by Oddfellow
2016-04-30 07:46:40

Which party did the Fed favor?

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Comment by United States of Jerry Springer
2016-04-30 07:53:20

The party in charge.

No it’s not democrats/republicans.

 
Comment by Raymond K Hessel
2016-04-30 07:54:10

The captured Republicrat duopoly. The same bird of prey with two different wings.

 
Comment by Oddfellow
2016-04-30 08:08:37

So the Fed supports the economic status quo, irrespective of political affiliation.

Is that political?

 
Comment by United States of Jerry Springer
2016-04-30 08:30:54

Puny brains can only think in terms of red vs blue. Anything else is beyond their comprehension. Pathetic!

 
Comment by palmetto
2016-04-30 08:41:48

“The party in charge.”

Oh, boy. You just said a mouthful. That “party” is always there no matter whether the red team or blue team is nominally elected.

“To learn who rules over you, simply find out who you are not allowed to criticize.”.

 
Comment by Oddfellow
2016-04-30 08:56:17

Who are we not allowed to criticize?

 
Comment by Ben Jones
2016-04-30 09:00:15

Ask the guys at zero hedge.

 
Comment by Combotechie
2016-04-30 09:03:09

“Who are we not allowed to criticize?”

Promoters of Global Warming/Climate Change is one example.

 
Comment by Oddfellow
2016-04-30 09:08:05

Promoters of Global Warming/Climate Change is one example.

They are criticized here and elsewhere quite regularly. Big Oil has deep pockets and a lot of astroturf.

Ask the guys at zero hedge.

What would their answer be?

 
Comment by Combotechie
2016-04-30 09:17:51

There’s currently a move by some in Congress and elsewhere to use the RICO laws to prosecute global warming skeptics.

Go here:

http://www.weeklystandard.com/senator-use-rico-laws-to-prosecute-global-warming-skeptics/article/963007

 
Comment by Ben Jones
2016-04-30 09:29:23

“What would their answer be?”

Example

 
Comment by Oddfellow
2016-04-30 09:48:49

to use the RICO laws to prosecute global warming skeptics.

If there is a conspiracy to deceive for profit, that’s illegal.

 
Comment by Oddfellow
2016-04-30 09:52:17

The guys at Zero Hedge have made a fortune criticizing every element of our power structure. Is there a similar website in Russia or China?

Why not?

 
Comment by United States of Jerry Springer
2016-04-30 10:31:42

Why not?

Why should they? The writers at zerohedge are Americans and they are doing a good job of exposing criminality you support and vote for.

 
Comment by Happy Humphrey
2016-04-30 10:33:06

Lol@Anklepants

 
Comment by Oddfellow
2016-04-30 11:07:10

Why should they?

You don’t find anything notable about the absence of any web sites like ZH in those countries?

 
Comment by snake charmer
2016-04-30 20:24:17

“If there’s a conspiracy to deceive for profit, that’s illegal.” Well that’s a load off our minds! Maybe the DoJ can apply the rule of law to the financial services industry now.

You appear to have an interestingly restrictive conception of politics. Not very left at all, but that’s the modern Democratic Party, which getting back to the subject of today, has no beef at all with outsourcing economic policy to the Fed. And we’re about to have at least the fifth national election in the past quarter-century where the purported left-wing party fielded a Wall Street candidate.

 
Comment by Oddfellow
2016-04-30 21:09:35

an interestingly restrictive conception of politics.

In that I understand the Constitution and the Fed?

Should our interest rates be set by Congress?

 
Comment by Ben Jones
2016-05-01 06:42:33

‘Not very left at all, but that’s the modern Democratic Party, which getting back to the subject of today, has no beef at all with outsourcing economic policy to the Fed. And we’re about to have at least the fifth national election in the past quarter-century where the purported left-wing party fielded a Wall Street candidate’

That seems to be why we are here, there’s not much opposition to the central bank. Running a blog has given me the opportunity to read how people view themselves. If you asked most people to define the two parties, you’d probably get a predictable stereotype. What you just described scrambles that. Why was Eric Holder able to protect wall street? Why does Bernanke make huge amounts of money for talking to certain groups for a few minutes? No opposition to this state of affairs. A monolith.

Rush Limbaugh said something once. That the two parties are like a Harlem Globetrotters game. Lots of emotion, pretend contest. The same outcome. Or you could compare it to professional wrestling. Limbaugh won’t take it to the logical conclusion, interestingly, that we should just hang them all.

OK, we’ve been over that a million times. Here’s the beef; Meadowlark Lemon can’t run a global economy. And neither can Yellen or Greenspan or the suits on wall street. The fact is an economy can only function based on the input of millions of consumers voting with their pesos millions of times a day. What type of car turns into how much steel and what factory in which country, involving the labor itself. How intelligent or educated were the people who designed the air bag that could save my life? And on it goes, every product, house, jet-plane, who flies the plane. It’s too complex for central planning.

The initial interview is interesting because he explains how outmoded the Federal Reserve is. These regional banks are left over from the days when it was thought there might be a bank run in say, Kansas. And that it has turned into a power hoarding situation. We’ve got Monopoly board players in charge of the economy with no political oversight.

 
Comment by Ben Jones
2016-05-01 07:02:56

D Magazine, “Analyst Danielle DiMartino Booth is making national waves with her criticism of the Federal Reserve, which she says has addicted the U.S. to the ‘heroin’ of low interest rates. DiMartino Booth served from 2006 until this year as a key adviser to Federal Reserve Bank of Dallas president Richard Fisher, the widely respected inflation hawk who stepped down from his post in March.”

“She’d caught the Fed’s eye while writing a controversial daily business column for several years for The Dallas Morning News. There, DiMartino Booth was a lonely voice of reason about the easy-mortgage boom, which she argued was introducing ’systemic risk’ into the entire financial system. For her efforts, she was roundly criticized as an anti-business spoilsport and a ‘nattering nabob of negativism’ (including, full disclosure, by yours truly). As it turned out, of course, her critics were wrong and she was right.”

“These days DiMartino Booth is continuing to rail against the Fed’s cheap-money policy, as well as the institution itself. (It’s opaque and ‘bloated,’ she says, with ‘delusional’ leadership.) She contends, in a nutshell, that by ‘artificially’ keeping short-term interest rates at near zero since the 2007-2008 financial crisis, the Federal Reserve has ‘criminalized’ saving, ‘enabled and financed and underwritten’ the soaring and unsustainable national debt, worsened income inequality, and propped up short-term corporate profits at the expense of productive, long-term business investment.”

“At the same time, she argues, the Fed’s easy-money policy has allowed politicians in Washington to borrow and spend more, creating a ‘veneer of prosperity’ when, in fact, the ‘country as a whole is still weighed down by a tremendous amount of economic stagnation.’”

“As a result, DiMartino Booth says, the nation’s central bank has been ‘boxed in’ by its zero-interest policy—no matter how much it might want to let rates rise to their natural levels, say, to 3 or 4 percent. ‘They’ve been so low for so long—the heroin, if you will, the drug, of low-interest rates—it’s become really hard to take the patient off the drug,’ she says. ‘They’re trying to get out of a canyon this time.’”

“By raising rates to their ‘natural’ levels, I ask, playing the devil’s advocate, wouldn’t everyday people be hurt, because it would become more expensive to borrow money? ‘Well, there’s expensive, and then there’s normal,’ DiMartino Booth replies. ‘It’s a crime in this country to save money, to be conservative, to be in your retirement years and try to [increase] your portfolio, what little portfolio you have. Retirees don’t have the option of going down to Bank of America and putting their money in a five-year CD.’”

“Because the rates are so low? ‘Yes. The rates are so low that savers have been punished for years and years,’ she says. On the other hand, ‘I don’t know why anybody should have the right to have a 2.5 percent mortgage for 30 years. It actually puts borrowers in a bind, because they end up buying more than they can truly afford, because they’re basing it on a very false level of interest rates.’”

“By keeping rates near zero, though, hasn’t the government maneuvered somewhat adroitly past the Great Recession, with a relatively low unemployment rate, for example? As for unemployment, ‘You have 93 million Americans who are out of work who could be in the workforce,’ she says. ‘I would call that nearly a third of the population who could be working who are not working, out of the labor force entirely. Then there’s the third that is this growing population of people who are part-time—some of them involuntarily, some voluntarily. Then think of the final third as being true, full-time workers, highly productive. They have all the pricing power when it comes to wages, while the other two cohorts have none.’”

“But, the unemployment rate is still around 5 percent, I say. ‘Sure it is, because they don’t count these people,’ DiMartino Booth replies. ‘It’s very conveniently measured. Trust me; I’ve been hanging around economists for the last nine years. You can measure anything any way you want.’”

“‘So, there should be a timeline limit to how long policymakers can be ‘well-intentioned’ in their decision-making framework. [We needed to say], ‘Wait a minute, we’ve got a lot of silly investing going on, and there will be a price to pay.’ Whether the price is Congress abdicating all of its responsibility to policymakers … who provide the groundwork, via very low rates, to paint the veneer of prosperity, which works until it stops working. And then we go into another crisis, which is what we’ve been doing for cycle after cycle after cycle.’”

http://thehousingbubbleblog.com/?p=9323

 
Comment by Ben Jones
2016-05-01 07:04:23

Peak to Peak: Where In Today’s Boom/Bust Cycle Does the U.S. Find Itself? By Danielle DiMartino Booth. The bursting of the housing bubble, which to this day remains a thorn in the lumber industry’s side, and today’s commodities bubble, currently plaguing the global economy, are two bubbles bound by a troubling ‘flation’ paradox. The reaction to the PEAKing in home price inflation led to the PEAKing in commodities inflation. Meanwhile, boom/bust cycles, which stretch back in history as far as black tulip mania and characterize the current era of policymaking will inevitably usher in deflation scares that emanate from bursting bubbles.”

“The debt Band-Aids applied provide an easier path than the restructuring of economies that would make them more productive over the long haul. The absence of such structural reforms leaves countries reliant on re-igniting their sputtering export engines. The only catch is, not everyone can play the same game at once.”

“Where in today’s boom/bust cycle does the U.S. find itself? According to the latest WSJ headlines, ‘Worry Over Low Inflation Kept Fed at Bay.’ And yet, eight days earlier, another headline, this one from the Dallas Morning News angsted over, ‘Area Apartment Rents Rising at a Record Rate.’ Well, which is it? According to two of the brightest minds in investing, Van Hoisington and Jim Grant, the answer is BOTH.”

“At a recent conference, fixed income investing legend Van Hoisington explained why the Fed cannot technically ‘print’ money, at least when gauged by true M2, which is cash, checking and savings deposits and money market mutual funds. Recall that at its simplest, inflation is too much money chasing too few goods. Buying up all manner of debt with the hopes of inducing inflation only works if what the Fed spends circulates back into the economy in the form of M2 chasing goods. But that hasn’t happened. Rather, Fed purchases have been deposited right back at the Fed where they now sit fallow generating a pittance of income that sadly beats the negative rates they’d get otherwise.”

“When money growth stagnates, the economy won’t slip into gear, which is just what we’ve seen for over six years now. (True money printing involves depositing money directly into checking accounts and happens to be illegal for those of you wondering.)”

“Jim Grant of Interest Rate Observer fame concedes that while we have seen little in the way of inflation of goods in recent years, we remain real time witnesses to the effect of the extraordinary amount of credit chasing asset prices from stocks, bonds and commercial real estate to the mountain PEAKs and beyond. Rising asset prices have no place in traditional inflation metrics as they are viewed as misleading economic growth signals. Or, as Grant said ‘The distortion of prices puts us in a Hall of Mirrors.’ It is thus an illusion of prosperity via the prism of asset bubbles that deludes us into believing anything of economic value has been produced.”

“But back to those paradoxical inflation/deflation headlines. The two gentlemen above, along with some acknowledged defects within the Fed’s preferred inflation measure, help solve the riddle. The creation of debt in debt-laden economies accomplishes a whole lot of economic nothing, hence incomes grow at no faster pace than the rest of the economy. That’s what happens when debt levels cross a line in the sand of the whole of a given country’s economic output. (Look no further than Japan’s debt to GDP of 670 percent to understand why that country is flirting with recession yet again.)”

“At the same time, credit has been chasing high-end apartment construction and prices to what is hoped are PEAK levels. At a national level, apartment data miners find that rents are rising at something more along the lines of a five-plus percent pace. The core consumer price index (CPI), which excludes food and energy, meanwhile, reports a more subdued 3.6-percent pace in rental inflation.”

“But that still isn’t the number that poisons the ‘flation’ worry well. The Fed’s ‘preferred measure,’ the core personal consumption expenditures (PCE) gauge, most recently crawled in at a worryingly low 1.3-percent rate, a level sufficiently shy of the Fed’s formal 2 percent target. When numbers are this low, four-tenths of a percent is material. That’s exactly the size of the difference between core PCE and CPI, the latter of which last clocked in at 1.7 percent. The main difference between the two comes down to their shelter weightings.”

“Tellingly, the core PCE also came under scrutiny during the PEAK years of the housing boom because it failed then, as it fails today, to capture the immense drag housing puts on household budgets. Harvard’s Joint Center for Housing Studies most recent data find that almost half of all renters spend more than 30 percent of their income on rent; they call this cohort ‘burdened’ and I’d have to agree. More than a quarter of all renters are ‘severely cost burdened,’ and spend more than half their income, half, on rent. The Harvard data reveal that lower income individuals are even more disproportionately burdened, which distressingly stands to reason.”

“In a recent report titled, ‘The Burden of Shelter,’ Michelle Meyer, Bank of America economist and renowned housing expert, nodded to policymaker’s dilemma: ‘If renters have to allocate more of their disposable income on shelter, there is less money to spend elsewhere, contributing to the disinflationary pressure for consumer goods.’ And that’s just what we’ve seen.”

“As for the prospects for truly normalizing interest rates one day, demographic trends only promise to increase the ranks of severely cost burdened renters in the coming years. Harvard’s data project that due to the rise in minorities and elderly as Baby Boomers age, those who spend more than half on rent will increase by 11 percent over the next decade and that’s IF rental inflation slows to that of income growth.”

“Of course, the opposite scenario unfolding would be ideal – that income growth begins to outpace that of rent inflation. Such an economic miracle, though, will only be possible with a radical change of thinking among policymakers. Policymakers are either blind, or worse, willfully blind to the financial asset price inflation that flashes red today, just as it did during the dotcom and housing bubble eras. If that is the case, the bust to come will be followed by yet another boom in asset prices, one that will require firehoses to douse the flames of impending deflation.”

“At the core of policymakers’ Catch 22 is the fact that there is no easy way out. To borrow from Hoisington’s philosophy – developed countries such as the U.S. are simply too large to devalue their way out of debt by using a depreciating currency to reduce debt loads. That leaves belt tightening which generations of central bankers have been trying to avoid at all costs.”

“Can the same brands of debilitating debt loads that leveled the global economy during the Great Depression be sustained indefinitely? That’s surely the hope as the frequent application of additional debt-creation bandages over the open wounds of high debt levels seem to be the only solution politicians find palatable.”

“Perhaps the privileged skiers atop the world’s financial markets will be nimble enough to avoid sliding on the ice as one season of asset bubble glides into the next creating the illusion of a powdery permanent winter wonderland for a chosen few. Perhaps they can be magically transported from PEAK to PEAK with little in the way of collateral damage.”

“But what of the hard landing on the fully-thawed bare earth at the bottom of the mountain that must be endured by the millions of workers who cannot choose a more accommodating trail to escape their budgetary shackles? Will central bankers always be seemingly divinely endowed with soothing words to calm and assure the masses? After all, inflation in the wise words of central bankers, is only an illusion and does not exist. Except it does exist in a very real way for the masses far below the rarefied air of the lofty PEAKS.”

http://thehousingbubbleblog.com/?p=9299

 
Comment by Professor Bear
2016-05-01 07:09:34

“And that it has turned into a power hoarding situation. We’ve got Monopoly board players in charge of the economy with no political oversight.”

The country has expanded to the West, but wealth and power remain ensconced in the old power centers of the East. The Fed’s money monopoly and discretionary bailout policy provide a key mechanism for this to continue.

 
Comment by Professor Bear
2016-05-01 16:17:11

“Should our interest rates be set by Congress?”

Obviously not.

But what do you think of my FedBot idea? Wouldn’t that be a great way to get politics out of the rate setting process?

 
Comment by Oddfellow
2016-05-01 18:28:53

I like the FedBot. As long as it has a FailSafe;-)

 
 
 
 
 
Comment by Professor Bear
2016-04-30 06:03:38

“And then there’s the little issue of China’s economy surpassing ours soon.”

They already have far surpassed us.

The Financial Times of London
China Economic Slowdown
China’s debt reckoning cannot be deferred indefinitely
Credit build-up will end with serious consequences for the global economy, writes George Magnus
George Magnus
A worker walks past cranes operating on a construction site in Beijing, China, on Wednesday, March 2, 2016. Obscured by the focus on the accuracy of China’s growth figures is a tumble in estimates for the economy without adjusting for inflation — a slide that gives a clearer picture of why the country’s slowdown has stoked rising concern about its debt burden.
Photographer: Qilai Shen/Bloomberg
© Bloomberg
yesterday

On one of my first trips to China in the early 1990s, on the drive from Beijing airport, I remember gazing out at hundreds of workers labouring with little more than shovels on a new highway snaking its way through farmland towards the capital. By the time the Olympics came to the city in 2008, the road had been joined by a second expressway and China had grown into the world’s largest construction market. Last year, it completed the world’s second-highest building: the Shanghai Tower, 632m of luxury offices, designer shops and a high-end hotel.

But there is a bit of folklore about the topping out of skyscrapers: the builders’ ceremonial placing of the final beam often heralds the onset of grim economic news, coinciding with the end of a credit cycle that has funded a frenzy of lending for ever-bigger projects. And indeed, as the economy slows markedly, China is increasingly dependent on credit creation. The share of total credit in the economy is approaching 260 per cent and, on current trends, could surpass 300 per cent by 2020 — exceptional for a middle-income country with China’s income per head. The debt build-up must sooner or later end — and when it does it will have a significant impact on the global economy.

Comment by Ben Jones
2016-04-30 06:55:24

If China is doing well, how does that hurt this country? The economy isn’t a race.

‘That’s a lot of focus on China for an official who’s supposed to be preoccupied, and setting policy, based on what’s happening in the U.S.’

Isn’t globalism a gas? We get to contort our economy for over a decade and she’s worried about a bunch of Chicoms who are rolling in Yellen bucks. Meanwhile, we’re over here arguing about raising the minimum wage.

Ask the President. He thinks it’s all hunky-dory. Do you realize the next president will be the 5th in a row to be taking military action in Iraq. A country whose people never did one thing to us. These people in DC are delusional. They throw around money like nothing, their priorities are all screwed up and their actually polices don’t work! And when it becomes obvious they don’t work, they do more of it!

Comment by Professor Bear
2016-04-30 12:29:50

“If China is doing well, how does that hurt this country?”

Apparently one result of China’s construction boom was to drive a global bubble in commodities, which drove up costs in the U.S. and elsewhere.

Comment by Ben Jones
2016-04-30 12:33:27

I mean if China has a healthy economy, that should be beneficial to the US.

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Comment by Professor Bear
2016-04-30 12:56:09

Whatever could possibly be unhealthy about myriad entire built cities sitting largely empty?

 
Comment by Professor Bear
2016-04-30 14:51:56

China is the Country with Most Ghost Towns in the World
TravelWires (Press Release): April 21, 2016
Anda Robescu
Attractions, Destinations

In the recent years, China has risen with a stunning mobilization of constructors, architects and engineers, as smaller settlements were transformed into cities, to host rural inhabitants.

Many of these cities are still suspended, waiting for their inhabitants; others have remained frozen after social policies and urban strategies have not given the expected results. Kai Caemmerer, the famous photographer has documented these so-called “ghost towns” under the Unborn Cities series.

The photographer, who lives in Chicago, does not disclose the exact places where the project involving six of these cities and did not make any comment about the ideological machine that makes them soar into frantic pace. The images taken by Kai Caemmerer speak for themselves, telling the stories of these settlement hybrids, which he compares with some mausoleums dedicated to a paradoxical future.

For the Westerners, says Caemmerer, China’s approach regarding the housing problem and migration is counterintuitive: instead of developing cities around existing settlements, they build mammoth cities in areas where no one lives. Later, residents of rural areas are directed to the brand-new cities: some adapting, others leaving for foreign spaces, unable to get used to the rules and geography of these incredible buildings.

 
 
 
Comment by snake charmer
2016-04-30 20:33:08

Not only is money thrown around like nothing, but it’s our money, or borrowed money that the rest of us will be responsible for paying, or for the consequences of not paying. Washington truly has become an imperial capital, in some kind of denial phase. I’m not looking forward to the anger phase.

 
 
Comment by Dutch Spikes
2016-04-30 08:03:22

All together now: “We’re Number 2! We’re Number 2!”

 
 
Comment by Apartment 401
2016-04-30 06:54:34

Apartment 405 hung himself in the closet of his apartment last week.

Just found out about this yesterday.

Comment by Professor Bear
2016-04-30 08:21:26

That kind of occurrence nearby is upsetting, regardless of your relationship to the individual.

Comment by Apartment 401
2016-04-30 09:56:32

What’s even creepier is that my friend M lives in 407, her bedroom is right next to the closet where he died, and he was in there at least 48 hours before before being discovered.

Comment by Professor Bear
2016-04-30 10:05:16

My ex-girlfreind had a similar incident occur on the floor of her dorm while she was away at college (Chicago). It left a psychological scar on the student community.

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Comment by Oddfellow
2016-04-30 10:05:38

She should put some cedar chips in her closet.

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Comment by Tarara Boomdea
2016-04-30 11:24:41

People in my neighborhood in Manhattan used to check the local funeral parlor for leads re: newly available apartments. Bigger score if it was rent controlled or stabilized (old people).

Way back when, an elderly gentleman who was in the care of a friend of mine’s mother killed himself in an apartment in my building. She called me and I called another friend with the news and she had the apartment within hours. I didn’t want her to see where it had happened so I cleaned the blood up (eew) before she got there, never told her. Could have been a Seinfeld episode, except it was not really funny, but that’s the way things worked then and I’m sure it’s no different now.

 
 
 
 
Comment by United States of Jerry Springer
2016-04-30 08:49:22

Renting kills?

 
Comment by phony scandals
2016-04-30 14:42:40

I was going to ask if there had been a rent increase but decided not to.

Comment by Apartment 401
2016-04-30 17:10:25

405 had much deeper problems than paying the rent on time.

He made an unsuccessful attempt via narcotics overdose two months ago. All the warning sings were there. He had a small but loving support network, but that wasn’t enough to stop this.

Comment by phony scandals
2016-04-30 18:45:40

I’m sorry to hear that for everyone concerned.

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Comment by phony scandals
2016-04-30 20:22:59

Darlene Connor - ‘To Whom It Concerns’ - YouTube
http://www.youtube.com/watch?v=tWf25CfjYx0 - 342k -

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Comment by Apartment 401
2016-05-01 19:29:29

Talking Heads — Warning Signs:

https://www.youtube.com/watch?v=0rpYo4GFt2k

 
 
 
 
Comment by tresho
2016-04-30 16:33:05

My former next door neighbor died in September, 18 months after she moved away, the old house was foreclosed on & she went bankrupt. She had been dealing with cancer for years, & had missed a lot of days of work for 2 years before she moved out. I learned of her death through Googling her “name” + obituary.

 
Comment by rms
2016-05-01 07:17:59

“Apartment 405 hung himself in the closet of his apartment last week.”

That’s a long way from Palo Alto, CA.

 
 
Comment by The Selfish Hoarder
2016-04-30 06:59:14

You bring down he Fed and you will disrupt permanent war, and the hidden inflation tax. What’s not to like?

Hasten the collapse by buying physical precious metals and crypto currency.

Comment by Timothy Leary
2016-04-30 07:15:05

Tune in, turn on, drop out.

 
Comment by Raymond K Hessel
2016-04-30 07:52:52

When 95% of the electorate are stupid, the Fed is going to be around for a long, long time.

Comment by The Selfish Hoarder
2016-04-30 09:32:13

“Long time” is relative. Older boomers retiring or downsizing their work, young educated high skilled people going to miss the alarm on the biological clock because they are too busy paying student debt to be able to afford kids. More people will move into the lower tax brackets. The loan ownership rate is increasing while the home ownership rate is decreasing. The taxes have a limit before the people revolt, so the Feds will have to make blatant price inflation to move the tax brackets upward stealthily. That will be the collapse of the Fed.

 
Comment by The Selfish Hoarder
2016-04-30 09:36:42

Ron Paul: “How is this likely to end? The empire will not be ended legislatively or by the sudden embrace of common sense in directing our foreign policy. The course of interventionism overseas and assuming the role of world policeman will remain for the foreseeable future. Still the question remains, how long will that be since we can be certain that the end of the empire will come. Our military might and economic strength is now totally dependent on the confidence that the worldwide financial markets give to the value of the US dollar. In spite of all the reasons that the dollar will eventually be challenged as the world reserve currency, the competition, at present, by other currencies to replace it, is nil. Confidence can be related to objective facts such as how a country runs its fiscal affairs and monetary policy. Economic wealth and military strength also contribute artificial confidence to a currency. Perceptions and subjective reasons are much more difficult to define and anticipate. The day will come when the confidence in the dollar will be greatly diminished worldwide. Under those conditions the tremendous benefits that we in the United States have enjoyed as the issuer of the reserve currency will be reversed. It will become difficult if not impossible for us to afford huge budget deficits as well as very large current account deficits. National debt and foreign debt will serve as a limitation on how long the empire can last. Loss of confidence can come suddenly and overwhelmingly. Under those conditions we will no longer be able to afford our presence overseas nor will we be able to continue to export our inflation and debt to other nations. Then it will require that we pay for our extravagance, and market forces will require that we rein in our support for foreign, corporate, and domestic welfare spending. Hopefully this will not come for a long time, giving us a chance to educate more people as to its serious nature and give them insight into its precise cause. Nevertheless we live in a period of time when we should all consider exactly what is the best road to take to protect ourselves, not only our personal wealth but also to prepare to implement a system based on sound money, limited government, and personal liberty. This is a goal we can achieve. And when we do, America will enjoy greater freedom, more prosperity and a better chance for peace.”

Comment by Raymond K Hessel
2016-04-30 11:07:56

Dude…white space.

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Comment by The Selfish Hoarder
2016-04-30 11:22:08

Umm…tell that to Dr Paul.

Yes he tends to be wordy. People have unfairly called him nutty for that (but it’s the Statist puppets who have called him nutty). I don’t mind his words. I understand everything he says.

 
 
 
 
 
Comment by Ben Jones
2016-04-30 07:25:13

‘After the events of 2008, really since then, the central banks either collectively or individually have tried to implement policies which would, in effect, buy time for individual governments to take the actions they should take to put their houses in order,’ Thornton says. ‘By and large, the governments have not done that. So I feel as though we’re sitting in 2016 with many of the same problems that we’ve had for the last eight or 10 years.’

‘buy time for individual governments to take the actions they should take to put their houses in order…By and large, the governments have not done that’

Recall that what were emergency measures have turned into permanent economic landscape. Or permanent in the minds of people waiting for their turn at the $150,000 speeches.

Comment by Ben Jones
2016-04-30 07:35:58

‘In no place in America are the abrupt changes in the nation’s security posture so keenly reflected in real estate and lifestyle than the Washington, D.C. metropolitan area. In the decade after 9/11, it has grown into a sprawling, pretentious representation of the federal government’s growth, vices and prosperity, encompassing the wealthiest counties, the best schools, and some of the highest rates of income inequality in the country.’

‘A two-front war and Washington’s newly enlarged national-security state, much of which is hidden in plain sight, have ushered in a 21st-century gilded age only replicated in America’s few, most privileged enclaves. As Lofgren explains: “It is common knowledge that Wall Street and its inflated compensation packages have remade Manhattan into an exclusive playground for the rich, just as tech moguls have made San Francisco unaffordable for the middle class. It is less well known that the estimated $4 trillion spent since 9/11 on the war on terrorism and billions spent on political campaigns ($6 billion on the 2012 elections alone) have trickled down so extravagantly to the New Class settled around Washington’s Beltway that they have remade the landscape of our capital.”

“The federal government is a $3.6 trillion beast in the district’s backyard that keeps the lights burning and the paychecks printing from government office buildings on Capitol Hill down along the Dulles Toll Road to the tech consulting firms in Virginia,” wrote Derek Thompson in The Atlantic in 2011, when the area was growing at three times the rate of the rest of the country in its post-recession years.’

“Uncle Sam directly employs one-sixth of the district’s workforce and indirectly pays for much more.” It is the “much more” that Lofgren likes to focus on, pointing out that government workers, who might enjoy more job security and pensions, actually have a cap on annual salaries and benefits. It’s the private class that has remade the landscape, the worst characterized by “the K Street lawyers, political consultants, Beltway fixers and war on terrorism profiteers who run a permanent shadow government in the nation’s capital,” he writes.’

‘So where do they live? D.C. proper has transmogrified into an almost unrecognizable state with former badlands like the Navy Yard, U Street, Downtown, and Capitol Hill, joining the vanguards of wealth in old Georgetown, Northwest D.C. Just over the state line in Chevy Chase and Bethesda, Maryland, real estate and especially rents have skyrocketed as baby boomers with fat retirements have joined the yuppie migration to luxury living in urban centers.’

‘Travel out of what Lofgren calls the Imperial City, over the Potomac River on I-395 into Virginia and there you will see the first of many rings of the military-industrial complex, with major defense contractors cheek by jowl with government satellite offices in Crystal City. Just beyond is what remains of the more modest post-WWII boom neighborhoods (which include, believe it or not, remnants of a once agrarian culture) in Arlington, Virginia.’

‘These neighborhoods, especially those north of Route 50, are cluttered now with condos, single family ramblers, bungalows, Cape Cods, and brick box homes selling for $900,000 or more depending on the upgrades inside and out. Interspersed, like golden cohorts in a mouthful of well-maintained but otherwise white teeth, are blown-out, mostly neo-craftsman style rehabs, and completely new McMansions sometimes three times the size, looming often awkwardly, and squeezed into fenced-off, quarter-acre lots.’

‘These formerly modest zip codes are inhabited by a boom of singles and families with enough money to finance home improvements in a building market that’s jacked up its prices to accommodate demand. This is not the sport for the faint of heart, but of a proto-elite with expanding incomes and guilt-free debt.’

‘Further out, there are the rooted, old-money neighborhoods of North Arlington, McLean, and Potomac in Maryland, where the Washington establishment began migrating in the 1970s, and now overloaded with “the better heeled sort”—government executives, surgeons, politicians, venture capitalists, think tankers, lobbyists, and fundraisers who have made it. Just outside the Beltway are places like Great Falls, where the median home price is $1.3 million. In 2011, according to a Washington Post feature about the rewards of the contracting boom, 16 percent of Great Falls households were earning $500,000 or more a year and at least more than half made $250,000.’

‘In his latest book, The Deep State: The Fall of the Constitution and the Rise of a Shadow Government, Lofgren ponders this explosion of wealth, but goes well beyond the Beltway border into the exploding developments along the Dulles technology corridor, Tysons Corner, the newer “Mosaic District” supplanting a once desolate strip mall existence in Fairfax County, all the way out in the more rural, former Virginia Hunt country of Loudoun County. Here new “structures resemble the architecture of Loire Valley, Elizabethan England, or Renaissance Tuscany as imagined by Walt Disney, or Liberace.” He says even more than the strivers of Arlington, and the settled elite of the inner burbs, this metamorphosizing sprawl represents everything that is perverse about the last 15 years—the war machine, the big money politics, the hubris of the one-percent, and the brutality of losing, as professions that did not so easily escape the recession, left people unemployed, foreclosed, and priced out of an area they once called “home.”

“Loudoun is per capita the richest county in the country as well as one of the most Republican and is something of a world headquarters of the McMansion as a lifestyle statement,” Lofgren writes. Living in these totems of new wealth, he says are “executives of Beltway Bandit firms, totally dependent on the federal government for their livelihoods,” pretending “to lead the life of a free Jeffersonian squirearchy.”

‘Consider this: From 2009 to 2015, Virginia received $295 billion in federal contracting dollars. That’s more than the annual budgets of entire countries, including Saudi Arabia, Belgium, and Sweden. This has resulted in not only an exploding real estate market, but the wealthiest counties in the country, year over year.’

‘Lofgren takes particular aim at “The McMansion as symbol of the Deep State,” which he describes in his book as the Washington’s power elite, “the red thread that runs through the war on terrorism and the militarization of foreign policy, the financialization and deindustrialization of the American economy, the rise of the a plutocratic social structure that has given us the most unequal society in almost a century and the political dysfunction that has paralyzed day-to-day governance.”

‘If Lofgren sounds ticked off, it’s because he is. Living in the Fort Hunt area of Alexandria (close to the Potomac, near Mount Vernon and the Army’s Fort Belvoir) for more than three decades, he sees firsthand the razing of modest abodes once “good enough” for Washington’s commuter class. He worked on Capitol Hill before and after 9/11, and knows how the business of government changed along with national security and political trends. He has charted the disconnect with the rest of the country and the Republic as envisioned by the country’s founders, and senses that this Deep State is not working for us—but to sustain the power, privilege and lifestyle he sees right outside his window.’

“The incentives are positive for those engineering it all because they will get the promotions, the jobs, the contracts,” Lofgren adds, “even though it might be hurting the broad mass of people everywhere else.”

Comment by muhFeelins
2016-04-30 07:43:35

In other words, throw the bums out. Only one person still running with a chance would be even an inch in that direction.

Hint, rage cagers went cuckoo in Burlingame against him yesterday. Free publicity.

 
Comment by The Selfish Hoarder
2016-04-30 10:01:26

Glenn Greenwald’s book on Edward Snowden, “No Place To Hide” shocked the last of the neoconservatism out of my brain. The Warfare/Surveillance state is so economically entrenched, even “progressives” such as Diane Feinstein rubber stamp the Surveillance State’s crimes. NSA feeds industrial espionage secrets to the U.S. Chamber of commerce which likely feeds the information to big companies such as Facebook, Apple, Google, with the expectation that said companies and others will feed information privat to us back to Big Brother.

Instead of being passively waiting for the collapse, everyone of us should look for the way to both protect ourselves from the collapse and hasten. Collapse of this big government empire. Stack physical precious metals, buy Bitcoin, use Bitcoin. Vacate the banks so that you do not contribute to the fractional reserve. That is the mothers milk of imperialism.

 
Comment by tresho
2016-04-30 16:38:23

Liberace architecture!

 
Comment by snake charmer
2016-04-30 20:52:28

I read that piece yesterday. Repulsive. I keep expecting D.C. to morph into the type of capital portrayed in The Hunger Games, all bored leisure and narcissistic self-absorption while the outlying districts eke out a Dickensian existence. Donald Sutherland, who played President Snow in the films, has stated publicly his view that the fictional world of “Panem” is an allegory for this country.

 
Comment by Professor Bear
2016-05-01 10:37:31

‘…some of the highest rates of income inequality in the country.’

An interesting demographic comparison is between Baltimore and Bethesda. They are only separated by a few miles of physical distance but by far greater economic distance.

Comment by Professor Bear
2016-05-01 16:45:06

The driving distance from Bethesda, Maryland to Baltimore, Maryland is: 38 miles / 61 km

Bethesda is a very wealthy and well-educated area. According to the 2000 Census, Bethesda was the best-educated city in the United States of America with a population of 50,000 or more. 79% of residents 25 or older have bachelor’s degrees and 49% have graduate or professional degrees. According to a 2007 estimate,[10] the median income for a household in the CDP was $117,723, and the median income for a family was $168,385. Males had a median income of $84,797 versus $57,569 for females. The per capita income for the CDP was $58,479. About 1.7% of families and 3.3% of the population were below the poverty line, including 1.8% of those under age 18 and 4.1% of those age 65 or over. Many commute to Washington D.C. for work. The average price of a four bedroom, two bath home in Bethesda in 2010 was $806,817 (which ranks it as the twentieth most expensive community in America).[11]

At the 2010 Census, there were 620,961 people residing in Baltimore, a decrease of 4.6% since 2000; a substantially more significant decline of 23% happened among school age children (ages 5 to 17).[135] The 2012 Census estimate has the population of Baltimore at 621,342 as of July 2012, an increase of 1,100 residents over the previous year and the first increase in population since its peak (of 949,708) in 1950.

A statistical abstract prepared by the U.S. Census Bureau estimated the median income for a household in the city during 2008 at $30,078, and the median income for a family at $48,216. The same abstract also listed a per capita income of $22,885 for the city in 2008, with 15.4% of families and 19.3% of the population below the poverty line.[146]

Housing in Baltimore is relatively inexpensive for large, coastal cities of its size. The median sale price for homes in Baltimore in 2012 was $95,000.[147] Despite the housing collapse, and along with the national trends, Baltimore residents still face slowly increasing rent (up 3% in the summer of 2010).[148]

The homeless population in Baltimore is steadily increasing; it exceeded 4,000 people in 2011. The increase in the number of young homeless people was particularly severe.[149] The Baltimore—Towson metropolitan area is home to a self-identifying gay and bisexual community estimated at 100,031 individuals, the 18th largest in the United States.[150] In 2012, voters statewide approved the legalization of same-sex marriage in Maryland and authorized them to take place beginning January 1, 2013.[151]

Crime in Baltimore, generally concentrated in areas high in poverty and drug activity, has been above the national average for many years. Baltimore had 327 homicides in 2015, as of December 14,[156] continuing a higher per capita homicide rate (52.5 per 100,000 people) than the record set in 1993.

By contrast, the Bethesda annual murder rate is 6 per 100,000 people, and other crime rates are much lower than in Baltimore.

If you want low-cost housing, consider moving to an area with a murder rate over 50 per 100,000 people.

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Comment by rj chicago
2016-05-02 09:49:17

Yep - this bout sums up my experience in Arlington / Fairfax / Vienna VA when I go to visit my daughter there a couple of times a year. She is amazed at the wealth infiltrating the DC area.
The traffic - awful. The attitudes of the folks there - just getting worse all the time.
Last month on a visit I counted 25 - count ‘em 25 tower cranes in the district alone - building God knows what for the well heeled. OUT OF CONTROL the spending and the greed.

 
 
Comment by United States of Jerry Springer
2016-04-30 08:03:02

we’re sitting in 2016 with many of the same problems that we’ve had for the last eight or 10 years.

Idiot. The problems are bigger than ever.

Comment by Combotechie
2016-04-30 08:48:00

“The problems are bigger than ever.”

And these problems are nurtured and they are milked, much like one would do with a cow.

Comment by Ben Jones
2016-04-30 09:07:04

‘In 2011, according to a Washington Post feature about the rewards of the contracting boom, 16 percent of Great Falls households were earning $500,000 or more a year and at least more than half made $250,000′

http://www.tomwaits.com/songs/song/231/I_Cant_Wait_To_Get_Off_Work/

‘I don’t mind working, ’cause I used to be jerking off most of my time in bars,
I’ve been a cabbie and a stock clerk and a soda-fountain jock-jerk
And a manic mechanic on cars.
It’s nice work if you can get it, now who the hell said it?’

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Comment by The Selfish Hoarder
2016-04-30 10:10:11

My best year was 2005. In 2012 I woke up and decided. Don’t want to be part of imperialism anymore. I had 1700 square feet of living space and now down to 700 square feet, two buck chuck, and a 13 year old car. I am now one of you.

 
Comment by Neuromance
2016-04-30 16:35:17

I drove through Great Falls like a year or two ago. There’s a mansion district, but they’re not estates, just big custom houses on smallish lots. Not McMansions, those big cookie cutter boxes on small lots, but big custom houses - mansions.

I saw more Ferraris in 15 minutes than I typically see in a couple of years.

 
 
 
 
 
Comment by AbsoluteBeginner
2016-04-30 07:41:16

Went to a Dairy Queen last week to get ice cream with friends after a hike. Reasoning is a fail. Figured if Warren Buffett was an owner it had to be good. Have not been to one in years. Never again. Over-priced and the ice cream had no flavor. At least I know now for good. Same with the Olive Garden. Never again will I eat there. Food has no flavor. Dominoes or Little Caesars would be a better buy if I needed the calories.

Comment by muhFeelins
2016-04-30 10:00:31

Go Low Carb for a month, a plain piece of bread or bowl of rice or pasta will be delicious. Same with cutting sugar. Remember Bill and the apple story?

 
 
Comment by Oddfellow
2016-04-30 07:45:39

“If the Fed wasn’t doing this, and it fell to Congress, Congress would absolutely step up, because it would have had no choice.”

lol. The Congress with the majority party who said their first job was to make Obummer a one-term president? That Congress would “absolutely step up”? They haven’t yet, but that’s because what? They’ve been cowed by the Fed?

Entering fairy-tale land is a sure sign of a key weakness in an argument.

Comment by Oddfellow
2016-04-30 08:18:28

the events of 2008, really since then, the central banks either collectively or individually have tried to implement policies which would, in effect, buy time for individual governments to take the actions they should take to put their houses in order,’ Thornton says.”

“‘By and large, the governments have not done that.

Exactly.

Comment by United States of Jerry Springer
2016-04-30 09:07:18

“‘By and large, the governments have not done that.

Utter lies! Governments have done their jobs….they have given more power and authority to central banks.

 
 
Comment by Professor Bear
2016-04-30 08:27:20

Whether or not the Congress fulfilled its duty did not change the Fed’s authority to assume the Congress’s role.

I’m beginning to understand your inability to discern what actions are political.

Comment by Oddfellow
2016-04-30 08:49:02

the Fed’s authority to assume the Congress’s role.

What is the Fed doing that is Congress’ role?

Comment by Professor Bear
2016-04-30 09:41:10

The Fed’s supposed mandate concerns aggregate employment and inflation. If it includes providing low-interest financing to support a massive reallocation of wealth from Main Street to Wall Street, I’d love to see that in writing.

Not to suggest that Congress has the authority to do something like this; in fact this kind of activity to allocate money to select constituents occasionally earns Congressmen prison terms. Thanks to our Constitutional system of checks and balances, the Congress is not above the law.

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Comment by Oddfellow
2016-04-30 09:56:02

providing low-interest financing to support a massive reallocation of wealth from Main Street to Wall Street,

So lowering the interest rate was Congress’ role that the Fed usurped?

 
Comment by Professor Bear
2016-04-30 10:08:28

It is hard to get a man to understand something when his paycheck requires him to not understand it.

– Upton Sinclair

 
Comment by Prime_Is_Contained
2016-05-01 09:44:00

Thanks to our Constitutional system of checks and balances, the Congress is not above the law.

But apparently both Wall Street and the Fed are…

 
 
 
 
Comment by United States of Jerry Springer
2016-04-30 08:47:48

lol. The Congress with the majority party who said their first job was to make Obummer a one-term president?

Since Obama though he can’t work with Congress, he pressured the Fed to continue with its reckless policies. Isn’t that blatant political?

Comment by Oddfellow
2016-04-30 08:54:37

he pressured the Fed to continue with its reckless policies. Isn’t that blatant political?

Obama pressured the Fed to continue its own policies? Why would such pressure be required?

 
 
Comment by Professor Bear
2016-04-30 09:46:37

“Jacobs: It is certainly the case that Congress fell down on the job. But partly it is because the Fed has stepped into what used to be the normal arena of fiscal policy. … If the Fed wasn’t doing this, and it fell to Congress, Congress would absolutely step up, because it would have had no choice. But when the Fed steps in, it kind of gives an out to Congress to do its job. I think, in general, the movement of the Fed into fiscal policy is unsustainable. It far exceeds the Fed’s constitutional responsibility and it has brought upon itself this kind of erosion in trust and legitimacy.”

What part of the Constitution authorizes the Fed to step in and conduct fiscal policy when the Fed chair decides the Congress is falling down on the job?

Comment by Oddfellow
2016-04-30 10:19:11

What part of the Constitution authorizes the Fed to step in and conduct fiscal policy when the Fed chair decides the Congress is falling down on the job?

I guess the part that allows Congress to legislate. They used that power to create the Fed, and they could use it to end the Fed any time they may choose to do so.

Comment by Professor Bear
2016-04-30 11:40:37

Do you have any references to document how the Fed’s mandate allows them to reallocate wealth as they see fit, or are you making this up?

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Comment by Oddfellow
2016-04-30 12:11:54

Probably in the maintaining the stability of the financial system part, and/or the maximizing employment part.

They’re pretty broad mandates.

 
Comment by Professor Bear
2016-04-30 12:54:15

“They’re pretty broad mandates.”

Apparently so, at least as regards their interpretation.

 
 
 
 
 
Comment by Raymond K Hessel
2016-04-30 07:56:57

Meanwhile, Freddie Mac may need another bailout next week. Once again the sheeple will bend over on demand.

http://www.marketwatch.com/story/freddie-mac-may-need-another-taxpayer-bailout-next-week-2016-04-29

Comment by Ben Jones
2016-04-30 08:01:38

‘Zandi, who co-wrote a proposal for reforming Freddie and Fannie in March, thinks a loss will help make the case that change is needed. “It may light a fire under lawmakers,” he said. “They clearly don’t want to be in the position of giving Fannie or Freddie…another handout from taxpayers.”

‘READ: Homeownership rate falls to third lowest on record’

‘But both he and Goodman think a real overhaul of Fannie and Freddie that would get them out of the current limbo isn’t in the cards for some time. It may even take a crisis to spur lawmakers to act, Goodman said. That may be too late, Zandi noted, making another bailout — and more housing-market pain — inevitable.’

“The catalyst can’t be the next recession because [Fannie and Freddie] will be out of capital by then.”

Comment by Ben Jones
2016-04-30 08:14:43

‘The catalyst can’t be the next recession because [Fannie and Freddie] will be out of capital by then’

Come on Mark, use some imagination! What you mean is it would be catastrophic if the GSE’s ran out of money in a recession. Zandi is a can-kicker, but doesn’t like the big pile of beer cans outside his window.

It gets worse; the feds have been using the GSE’s as a money crutch. Gonna have to find something to plug the hole because they have bled it dry.

 
Comment by Professor Bear
2016-04-30 09:29:32

‘…making another bailout — and more housing-market pain — inevitable.’

Thanks to endless can kicking, it’s business as usual at the GSEs.

 
 
 
Comment by Raymond K Hessel
2016-04-30 08:10:00

Remember Obama telling the sheeple that Obamacare would save the average family $2500 a year? Um, yeah…how’s that hope ‘n change working out for ya, Merkans?

http://www.theburningplatform.com/2016/04/29/lies-lies-and-omg-more-lies/

Comment by snake charmer
2016-04-30 21:01:49

We wanted a European or Canadian-style system and instead got a crony healthcare bill whose intellectual origins were with the Heritage Foundation and Mitt Romney. If you couldn’t get health insurance before, and now you can, you come out better. The insurance industry comes out lots better. Everybody else loses.

Comment by Oddfellow
2016-04-30 21:12:15

We’re baby-stepping toward the inevitable (because it’s cheaper) “European or Canadian-style system”.

 
 
 
Comment by Dutch Spikes
Comment by The Selfish Hoarder
2016-04-30 10:04:21

Bitcoin has done a great job versus the Dollar.

 
 
Comment by Ben Jones
2016-04-30 08:41:47

‘The broader philosophy at the New York Fed has long been that, in the event of a crisis, it is important to “foam the runway.” The expression is a favorite of Timothy F. Geithner, former head of the New York Fed, and it was one of his guiding principles when he became Treasury secretary – with the implication that the authorities should do everything possible to cushion the blow for banking executives, shareholders, and creditors in the event of a systemic crisis (see Neil Barofsky’s book, “Bailout,” for context and details).’

‘But such instincts long predate Mr. Geithner; the New York Fed has been in the bailout business for 100 years. You can trace its origins (and the Federal Reserve System) to the crisis of 1907.’

‘Benjamin Strong arranged private bailouts on behalf of J.P. Morgan (the man) during the 1907 crisis. Mr. Strong went on to become the first president of the New York Fed and the dominant personality in the Federal Reserve System until his death in 1928.’

‘And the modern Fed can do a great deal to help banks and their creditors at times of stress, including quantitative easing, which pushes up asset prices and therefore helps all balance sheets.’

‘Market participants are wise not to take Mr. Bernanke at face value. And Senators Brown, Warren and Vitter are right to press Mr. Bernanke and his colleagues on these issues. Why should large banks get free insurance and implicit encouragement to become larger, take more risk and blow themselves up? The true downside costs to the economy of a financial crisis are far in excess of $80 billion. Most reasonable estimates are that we lost, in a tangible sense, at least one year’s worth of gross domestic product.’

‘The Federal Reserve should establish a transparent set of benchmarks, published regularly, that measure the funding subsidies received by very large financial institutions. This would help drive out the nonsense put forward by Wall Street deniers.’

http://www.vitter.senate.gov/newsroom/article/icymi-bernankes-credibility-on-too-big-to-fail-the-new-york-times

Comment by palmetto
2016-04-30 08:44:36

‘The Federal Reserve should establish a transparent set of benchmarks, published regularly, that measure the funding subsidies received by very large financial institutions. This would help drive out the nonsense put forward by Wall Street deniers.’

(Holds up index finger, makes a circle of thumb and middle finger) Excuse me: The Federal Reserve shouldn’t do anything other than cease to exist.

 
Comment by Ben Jones
2016-04-30 08:56:40

‘And the modern Fed can do a great deal to help banks and their creditors at times of stress, including quantitative easing, which pushes up asset prices and therefore helps all balance sheets’

Put down the crack pipe Senator. His remarks show how far out on the limb we’ve gone. If printing money-buying MBS or digging ditches and filling them in worked, all governments would prosper. It’s just fantasy.

Comment by Combotechie
2016-04-30 09:36:52

“… which pushes up asset prices and therefore helps all balance sheets”

Zillow! It’s time to pull up my weekly Zillow report!

(typing on my keyboard …)

Zowie! Zillow says the value of my home has increased by $5,637 over the past thirty days.

“It’s just fantasy.”

I hate it when people tell me that.

 
 
 
Comment by Raymond K Hessel
2016-04-30 08:44:35

Remind me again what the US gained from the neocon’s multi-trillion dollar debacle in Iraq.

https://www.yahoo.com/news/hundreds-protesters-storm-baghdads-green-zone-enter-parliament-124453656.html?nhp=1

 
Comment by Raymond K Hessel
2016-04-30 08:48:00

How’s that hope ‘n change working out for ya, ‘Murica?

http://nypost.com/2016/04/30/americans-havent-gotten-a-raise-in-16-years/

Comment by The Selfish Hoarder
2016-04-30 20:52:23

Many people this year still voting are expecting change of some sort but won’t get it. The constant is that government will keep working on getting more intrusive, more violent, and bigger.

But it is easy to bring it down. Very easy.

Hint is in the words of The Beatles’ “Day in the Life” lyrics. “I saw a film today oh boy, The English Army had just won the war, A crowd of people turned away” - suppose we shed all belief in statism and its glory, which is war, bloodshed, democide, theft, and kidnappings all concealed in jingoism? We only need to turn away.

 
 
Comment by Raymond K Hessel
2016-04-30 09:06:30
Comment by Professor Bear
2016-04-30 10:12:01

Any idea at what point the Asian housing market flu will make its way to California shores?

Comment by The Selfish Hoarder
2016-04-30 21:14:36

I would move to Hong Kong if 1) there were no departure tax, and 2) it was not so expensive to own a 2,000 square foot loft there.

 
 
 
Comment by Raymond K Hessel
 
Comment by Ben Jones
2016-04-30 09:12:45

I wonder about the significance of yahoo finance doing a Warren Buffet marathon this weekend?

http://finance.yahoo.com/brklivestream

How much would 100 shares of his company cost? It’s funny to me that the media adores him as he says “I should be paying more taxes,” when Berkshire is set up to be a giant tax avoidance scheme just for him.

Comment by Professor Bear
2016-04-30 09:50:56

Even Warren Buffett is confused by negative interest rates
By William Watts
Published: Apr 29, 2016 8:57 a.m. ET
Doesn’t mean world will end, but nobody knows ‘full implications’
Bloomberg
He’s never seen the likes of it, either.

Billionaire investor Warren Buffett may be known as the Oracle of Omaha, but even he never foresaw negative interest rates—nor does he quite know what they will end up meaning to the global economy and markets.

“You can read Adam Smith, you can read [John Maynard] Keynes, you can read anybody and you can’t find a word to my knowledge on prolonged zero interest rates—that is a phenomenon nobody dreamed would ever happen,” Buffett told CNBC in an interview Friday,…

Comment by United States of Jerry Springer
2016-04-30 10:04:10

This fool is a liar. I wouldn’t doubt at all he supports NIRP in private.

Comment by Professor Bear
2016-04-30 10:17:35

Saying that he is confused about the eventual effects of NIRP is not tantamount to complaining about it. It seems quite likely that Uncle Warren has personally made a bundle off recent central bank interest rate suppression policy.

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Comment by Professor Bear
2016-04-30 12:07:37

I hope Lil’ Sis followed Big Bro’s advice and loaded up on commodities fund shares earlier this year when they were in freefall. If so, she is making bank now off the Fed’s rollback of its rate normalization plans.

The Financial Times of London
Oil
Oil on track for biggest monthly gain in seven years
Weak dollar and decline in US production helps ease concern over supply glut
A pump jack operates in an oil field near Corpus Christi, Texas, U.S., on Thursday, Jan. 7, 2016. Crude oil slid Thursday to the lowest level since December 2003 as turbulence in China, the worlds biggest energy consumer, prompted concerns about the strength of demand. Photographer: Eddie Seal/Bloomberg
© Bloomberg
by: Anjli Raval, Oil and Gas Correspondent

Oil is on track for its biggest monthly gain in seven years, boosted by a weak dollar and a decline in US production that has helped to ease concern about a persistent supply glut.

Brent crude, the international benchmark, has gained over 22 per cent in April — up more than 70 per cent from its January lows. The US marker, West Texas Intermediate, has recorded a similar increase this month.

The rebound in prices has come as investors position themselves for the biggest decline in non-Opec supply in 25 years and what they hope will be a more balanced market later in the year.

Comment by Professor Bear
2016-04-30 13:09:09

Telegraph Business
Dallas Fed cautions on fresh oil bubble as glut keeps building
Robert Kaplan heads the Dallas Federal Reserve, the anchor of the US shale belt
Credit: Dallas News
Ambrose Evans-Pritchard
29 April 2016 • 7:41pm

The US Federal Reserve has warned that the world is awash with excess oil and starting to run out of places to store the glut, with no sustained recovery in sight for the oil industry until 2017 at the earliest.

Robert Kaplan, head of the Dallas Fed, poured cold water over talk of a fresh oil boom this year and said the US shale industry has taken far longer to cut output than many expected.

As we sit here today, Dallas Fed economists estimate that global daily oil production exceeds daily consumption by more than 1m barrels per day,” he told the Official Monetary and Financial Institutions Forum in London.

Excess inventories in the OECD member countries now stand at approximately 440m barrels. This is a record level and has raised concerns about whether there is sufficient storage capacity in certain geographic areas,” he said.
Floating storage for crude is spiking, a possible sign of trouble
Credit: Deutsche Bank

Oil prices have surged by 80pc since touching bottom at $26 in mid-February. West Texas crude reached a five-month high of $46.70 this week.

Speculative long positions on crude oil have risen to all-time highs on the futures markets, a sign that the rebound may have lost touch with fundamentals. There is an armada of tankers building up in the North Sea, while the latest loading data from China show that May deliveries are falling.

We think China has for now stopped filling its strategic petroleum reserve. They have filled up the sites,” said Ian Taylor, head to the giant trading group Vitol.

Commerzbank warned that the market is primed for an upset. “We see worrying parallels to 2015, when oil prices rose sharply well into May before collapsing in the second half of the year,” it said.

Mr Kaplan, a former banker at Goldman Sachs, said the oil markets have taken “too much comfort” from talk of a production freeze between the OPEC cartel and Russia. The cold reality is that Iran is ratcheting up output towards pre-sanctions levels.

The Dallas Fed’s team of energy experts is closely watched for clues about the health of the shale industry in Texas. Mr Kaplan said the break-even price of oil for US frackers has dropped to $35 to $50, lower than many assume.

He warned that there will be “more bankruptcies” as over-leveraged drillers are flushed out, but this poses no risks to US banking system as a whole. There is no plausible comparison to the subprime financial crisis. “People will lose money but it is not systemic,” he said.

Separately, Mr Kaplan dismissed the near halt in US growth in the first quarter as a temporary blip and issued a clear warning that the Fed is about to tighten monetary policy. “The markets may well be underestimating how soon we might move based on what I have seen. You’ll find the economic data in the second quarter may rebound,” he said.

Futures contracts are pricing in a very low likelihood of a rise in interest rates at the Fed’s next meeting in June, and a mere 61pc chance of any rise by the end of the year. The markets are effectively calling the Fed’s bluff, a risky assumption as China comes back to the boil and the emerging market worries subside.

Comment by United States of Jerry Springer
2016-05-01 09:34:24

Robert Kaplan?

Haysus, are there no wasps for these jobs anymore?

 
 
Comment by Professor Bear
2016-05-01 11:26:23

Big Oil still in turmoil even as rally relieves pressure
Oil giants report further losses even as prices start to head up
By Collin Eaton
April 29, 2016
Updated: April 29, 2016 9:53pm
This drilling rig is in the Skaanevik fjord in western Norway. Norway is counting on the Barents Sea to become its next big oil area.
Photo: Statoil, HOEP / Statoil via Scanpix

Crude prices are on the rise again, but even the biggest U.S. oil companies remain in turmoil, losing money on key operations, cutting jobs, and adding to the carnage of an oil bust that is pushing smaller companies into bankruptcy.

Chevron Corp., which has about 8,000 employees in Houston, on Friday reported just its second quarterly loss in a decade, signalling another round of layoffs after cutting 4,000 jobs during the two years since the downturn. Exxon Mobil, which has more than 11,000 local workers, reported that its profits in the first quarter fell more than 60 percent from a year ago.

The disappointing earnings were largely the result of substantial losses in U.S. operations. The two oil giants said they lost a combined $1.7 billion drilling in the United States, particularly in shale formations in Texas and North Dakota. Like their smaller rivals, Exxon Mobil and Chevron have sidelined scores of unprofitable rigs.

“It’s definitely quiet out there” in the oil fields, said Phillip Blower, a land manager at oil producer Whitmar Exploration Co. in Denver.

And it could get quieter. UltraPetroleum Corp., a small Houston driller, warned Friday there’s a “substantial risk” it may soon have to file for Chapter 11 bankruptcy as it tries to negotiate with creditors. If Ultra Petroleum does file, it would join more than 60 other U.S. and Canadian companies that have gone into bankruptcy.

“None of the shale plays are profitable,” said Scott Pope, a geologist at PNP Operating Co., an oil firm in San Antonio. “We’ve got a lot companies facing bankruptcy, and almost all of them are in serious trouble.”

The trouble began in mid-2014, when oil prices, which topped $100 a barrel, started to slide in the face of a global oil glut. The so-called shale revolution, which opened vast new sources of oil in the United States, lifted economies and made overnight millionaires in Texas, Oklahoma, North Dakota and elsewhere. But as it pumped more and more oil into an oversupplied market, domestic oil prices fell as low as $26 a barrel earlier this year, down 75 percent from its peak in 2014.

 
Comment by Professor Bear
2016-05-01 12:25:32

What is it that oil traders don’t get about the fundamentals of supply and demand? Today’s never-ending, always-increasing glut, fueled by above-market-equilibrium prices, presages tomorrow’s crash. It really is that simple.

NEWS
SEARCH ARTICLES
Oil Jumps 2% Despite Glut, Hits 2016 Peaks On Weak Dollar
by Reuters
Barani Krishnan
Thursday, April 28, 2016

NEW YORK, April 28 (Reuters) - Oil markets jumped 2 percent on Thursday, hitting 2016 highs for a third straight day as a weaker dollar had investors shrugging off record high U.S. crude inventories and relentless pumping by major producers.

Oil prices have surged nearly 80 percent since hitting 12-year lows of around $27 a barrel for Brent in late January and about $26 for U.S. crude in mid-February.

For April, the two benchmarks are up about 20 percent, on track for their largest monthly gain in a year.

The rally, partly driven by the 5 percent drop in the dollar this year, accelerated even though U.S. government data on Wednesday showed crude stockpiles swelled to all-time highs above 540 million barrels last week.

Brent settled up 96 cents at $48.14 a barrel, after hitting a 2016 high of $48.19.

U.S. crude finished up 70 cents at $46.03, after a year-to-date peak at $46.14.

The market seems invincible, and well supported by money flow,” said Scott Shelton, broker at ICAP in Durham, North Carolina.

The dollar tumbled, making oil denominated in the greenback more attractive to holders of the euro and other currencies.

Analysts believe the global oil glut will start to ease in the second half of this year, and traders and investors have been pushing prices higher in hopes they are right.

Clearly, the market is primarily focused on the forward supply-and-demand picture while continuing to push the bearish nearby fundamentals further into the background,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

While U.S. oil production has fallen, imports of crude have risen and the global glut looks to grow as major exporters from Saudi Arabia to Russia and Iran ramp up output in a battle for market share.

“Imports to U.S. Gulf Coast refineries have shown broad-based strength. Saudi imports haven’t been at this level since April 2015,” said Matt Smith of crude cargo trackers Clipperdata, which noted inflows above 1.2 million barrels of Saudi crude in the United States last month.

Oil near or above $50 a barrel could make drilling attractive again for U.S. shale producers, which would add to the glut and pressure prices.

 
Comment by Professor Bear
2016-05-01 21:25:56

OPEC Exacerbates Global Oil Glut with Near Record High Output
Monday May 2, 2016

A day after concerns were expressed that the current oil price rally would be short-lived due to increases in global stockpiles, the Organization of the Petroleum Exporting Countries’ (OPEC) output still looks to be near record levels.

Reuters data suggests supply rose to 32.64 million barrels per day (bpd) in April, compared to the 32.65 million bpd produced in January of this year, the highest output in Reuters survey records that began in 1997.

In its bid to return output to pre-sanction levels, Iran was responsible for posting the sharpest increase in production and is just .10 million bpd shy of reaching the daily rate of 3.50 million barrels it posted in 2011.

Southern exports from Iraq have risen to what may be a new April record, and the third largest supply increase came from the United Arab Emirates, following the end of oilfields maintenance work.

Saudi Arabia’s output remained steady at 10.15 million bpd (although sources say this figure will soon climb to 10.50 million bpd as buyers are found for oil-filled Saudi tankers floating at sea), and production in Nigeria, Kuwait, and Venezuela declined due to strikes, pipeline repairs, and loading problems.

Reuters reports that OPEC officials are encouraged by the price rally and that this may spell trouble for any positive outcome when the cartel meets on June 2 in Vienna to once more discuss freezing production; meanwhile, Eugen Weinberg, analyst at Commerzbank, echoed the sentiments of many colleagues by stating, “The market is massively oversupplied.

“This rally doesn’t have strong legs.”

 
 
Comment by Senior Housing Analyst
2016-04-30 14:51:40

Pawleys Island, SC Housing Prices Crater 11% YoY As Coastal And Vacation Markets Tank Nationally

http://www.zillow.com/pawleys-island-sc/home-values/

 
Comment by Gorilla Monsoon
2016-05-01 04:43:36

“There’s Some Crazy Stuff Going On In New York As Rental Glut Finally Hits The Bottom Line”

http://www.zerohedge.com/news/2016-04-29/there%E2%80%99s-some-crazy-stuff-going-new-york-rental-glut-finally-hits-bottom-line

 
Comment by Combotechie
2016-05-01 05:30:38

The Grilled Cheese Truck, Inc: The way to make a small fortune is to start with a large one.

The stock appeared on the scene in February of last year at which time (2-9-2015) it reached a peak price of $5.90 a share. Friday the stock closed out at $0.15 a share.

The earnings for all of 2015 are not in yet (a bit slow, eh?) so I’ll take a look at the Third quarter of 2015, which is Sept 30 …

So here we are: The total revenues for the company was a massive $630,000 and the loss for the company was but a trivial $1,177,000.

Or, another way to look at it, the loss incurred during the third quarter was only 1.8 times the total revenue.

The message is quite clear: Buy the dip. The company has definitely got its act together. Go all in if you can.

Here’s Exhibit A:

https://finance.yahoo.com/q/is?s=GRLD

Comment by United States of Jerry Springer
2016-05-01 06:03:43

Sounds like a social media company.

 
Comment by Oddfellow
2016-05-01 06:23:49

There’s still time to be an early investor in my peanut-butter-and-jelly truck.

 
Comment by Combotechie
2016-05-01 06:51:13

Another selling point is GRLD’s balance sheet. Some highlights (again from September of last year):

Total assets: $588,000.

Total liabilities: $4,914,000.

And the trend? Why it’s growing (growing in the negative direction).

The dip, just do it! All in.

Here’s Exhibit B:

https://finance.yahoo.com/q/bs?s=GRLD

 
Comment by The Selfish Hoarder
2016-05-01 09:02:02

My stock screener output First Solar FSLR. Perfect time to buy would have been 2012 at around $12. In 2008 it was around $291 and now it’s around $55.

But - its book value per share is $54.
- It has $1.8 billion cash and $388 million debt
- It’s just been upgraded by Standpoint Research.

 
 
Comment by Raymond K Hessel
 
Comment by Raymond K Hessel
Comment by United States of Jerry Springer
2016-05-01 07:21:40

But but why does zerohedge does not criticize Putin?

That’s the most important thing in news media these days apparently.

https://www.youtube.com/watch?v=rz5TGN7eUcM

Comment by Oddfellow
2016-05-01 08:01:54

He speaks better English than you.

Comment by United States of Jerry Springer
2016-05-01 08:16:05

Can he speak better Russian, Romanian and Esperanto than me?
Can you?

I doubt it.

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Comment by Oddfellow
2016-05-01 08:20:53

I doubt it.

I do too. English is my first language, I’m assuming Russian or Romanian is yours?

 
Comment by United States of Jerry Springer
2016-05-01 09:28:34

No Polski is my #1 language.

 
 
 
Comment by Combotechie
2016-05-01 08:32:12

“Obama told the press, ‘[I]t’s not enough just to give people a megaphone, and that’s why your power and your responsibility to dig, and to question, and to counter distortions and untruths is more important than ever. Taking a stand on behalf of what is true does not require you shedding your objectivity. In fact, it is the essence of good journalism.”

It’s also the essence of good science, and this digging and this questioning is indeed welcomed into most fields of science but it is punished if the field of science that is dug into and is questioned has anything to do with Climate Science.

Comment by Oddfellow
2016-05-01 09:06:01

This message brought to you by Exxon/Mobil.

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Comment by Combotechie
2016-05-01 09:21:01

Oddfellow, I asked you this question once before but you did not respond so I will ask it again:

Do you agree with the prediction of James Hansen, the man who is known as The Father of Global Warming, that the sea levels of the world will rise up from twenty to thirty feet over the next fifty years?

This is a simple yes or no question.

 
Comment by United States of Jerry Springer
2016-05-01 09:27:19

That question is bring to you by Saudi Aramco.

 
Comment by Oddfellow
2016-05-01 09:38:31

I agree with the vast majority of scientists that burning hundreds of millions of years worth of stored carbon over the course of a couple centuries has altered our environment. You agree with a tiny minority of mostly fossil fuel industry funded scientists that there has been little or no effect.

Which one of us is more likely the sucker?

 
Comment by Combotechie
2016-05-01 09:52:51

This is yes or no question; Is your answer yes or is it no?

 
Comment by Oddfellow
2016-05-01 09:57:15

You answer my question first. Who’s more likely the sucker: The guy who believes the vast majority of the world’s scientists, or the guy who believes the tiny minority that is funded by the fossil fuel industry?

 
Comment by palmetto
2016-05-01 09:57:50

“Which one of us is more likely the sucker?”

If you don’t know who it is, it’s probably you.

BTW, no one ever seems to mention over-population. Too many people. Way, way too many people.

 
Comment by Oddfellow
2016-05-01 10:08:29

If you don’t know who it is, it’s probably you.

I know who it is. I just want to see if he’ll admit it.

 
Comment by Combotechie
2016-05-01 10:16:15

“You answer my question first. Who’s more likely the sucker: The guy who believes the vast majority of the world’s scientists, or the guy who believes the tiny minority that is funded by the fossil fuel industry?”

I believe the vast majority of the world’s scientiests are least likely to be the suckers.

Now it’s your turn.

 
Comment by Oddfellow
2016-05-01 10:28:12

I believe the vast majority of the world’s scientiests are least likely to be the suckers.

So you admit to being the probable sucker. That’s big of you.

My answer: I believe it is frighteningly possible that we will see a major sea level rise in the next half century, possibly at the levels Hansen predicts.

 
Comment by Combotechie
2016-05-01 10:37:59

“My answer: I believe it is frighteningly possible that we will see a major sea level rise in the next half century, possibly at the levels Hansen predicts.”

So your answer to a yes or no question is “frighteningly possible” is this correct?

Do you consider the answer of “frighteningly possible” to be anywhere close to being an answer of “yes” or being an answer of “no”?

 
Comment by Oddfellow
2016-05-01 11:15:47

Why are you so obsessed with my answer to this specific question? We both apparently agree with the vast majority of the world’s scientists that we are indeed experiencing a greenhouse effect from the burning of fossil fuels, temperatures are rising, ice sheets are melting. Exactly how high the waters might rise seems like a distraction. Even a foot or two would be a major problem.

 
Comment by Combotechie
2016-05-01 11:40:53

“Even a foot or two would be a major problem.”

James Hansen is not projecting a foot or two, he is projecting twenty to thirty feet. A twenty to thirty feet of sea level rise over the next fifty years. This is his projection, his prediction.

I find this prediction absurd and I am wondering if you do too. I wonder if you question any of these predictions that are made in the name of science.

So my question to you remains to be answered: Is your answer “yes” or is it “no”?

 
Comment by Oddfellow
2016-05-01 12:04:51

It looks like he’s predicting at least a ten foot rise at some time this century, possibly as soon as 50 years. So your version of his question is questionable. His prediction is based on studying feedback loops of ocean currents, but it’s yet to be peer reviewed.

I think his hypothesis sounds quite reasonable. I hope it’s wrong, but I think it may well be correct. We may see a rise of ten feet or more in the next century, if indeed the feedback loops of ocean currents increase the melting of the Greenland and Antarctic ice sheets.

Does that answer suffice?

 
Comment by Gorilla Monsoon
2016-05-01 13:04:50

Irrelevant.

 
Comment by Combotechie
2016-05-01 14:18:30

Here. Link to follow …

“The paper, written by Dr. Hansen and 18 other authors, dwells on the last time Earth warmed naturally, about 120,000 years ago, when the temperature reached a level estimated to have been only slightly higher than today. Large chunks of the polar ice disintegrated then, and scientists have established that the sea level rose 20 to 30 feet.

“Climate scientists agree that humanity is about to cause an equal or greater rise in sea level, but they have tended to assume that such a large increase would take centuries, at least. The new paper argues that it could happen far more rapidly, with the worst case being several feet of sea-level rise over the next 50 years, followed by increases so precipitous that they would force humanity to beat a hasty retreat from the coasts.”

 
Comment by Combotechie
2016-05-01 14:38:21

Link …

http://www.nytimes.com/2016/03/23/science/global-warming-sea-level-carbon-dioxide-emissions.html?_r=0

This version is not the same version I read a month or so ago. This version does some waffling, the version I read before didn’t, but I can’t find the other version.

 
Comment by Combotechie
2016-05-01 15:10:32

Wiki-up “sea level rise” and you will learn that over the fifty years from 1950 to 2009 the sea level of planet earth rose an average of 0.067 inches a year. Do the math and this average becomes 3.35 inches of total sea level rise over this stretch of time.

Fifty-years produced 3.35 inches of total sea level rise.

Wiki-up “Intergovernmental Panel on Climate Change” and you will learn that the latest IPCC report predicts “Global mean sea level will continue to rise at a rate very likely to exceed the rate of the past four decades”.

Which means the sea level will “very likely” rise at a rate to exceed 0.067 inches a year which means it will “very likely” exceed a total rise of 3.35 inches over the next fifty years.

A sea level rise very likely to exceed 3.35 inches over the next fifty years.

This latest IPCC report reflects what the world’s leading scientists are saying.

 
Comment by Oddfellow
2016-05-01 15:23:47

I believe the vast majority of the world’s scientiests are least likely to be the suckers.

Then we agree on the big issue: man-made global warming is real and potentially disastrous.

 
Comment by Combotechie
2016-05-01 15:36:22

Correction: The span of time is sixty years, not fifty years. So doing the math reveals that over a sixty year span of time the earth’s sea level rose a total of 4.02 inches.

Another correction: A better source of information is obtained by doing a wiki-up of “IPCC Fifth Assessment Report”.

 
Comment by Combotechie
2016-05-01 15:39:27

“Then we agree on the big issue: man-made global warming is real and potentially disastrous.”

Wrong.

 
Comment by Oddfellow
2016-05-01 16:04:28

I believe the vast majority of the world’s scientiests are least likely to be the suckers.

Make up your mind.

 
 
 
 
 
Comment by Raymond K Hessel
2016-05-01 06:57:03

Add beer to the list of things Venezuela just ran out of. Coming soon to a corrupt, centrally-planned, collectivist permanent Democrat Supermajority regime by and for the takers near you.

http://reason.com/blog/2016/04/30/venezuela-runs-out-of-beer

 
Comment by Raymond K Hessel
2016-05-01 07:05:01

Another central bank “stimulus” binge coming to keep asset bubbles and Ponzi markets levitated….

http://www.telegraph.co.uk/business/2016/05/01/yen-surge-extremely-worrying-warns-japans-finance-minister/

 
Comment by Raymond K Hessel
2016-05-01 07:06:38

Spanish banks still trying to paper over billions in underwater mortgages.

http://wolfstreet.com/2016/04/30/spanish-banks-ultimate-showdown-full-recourse-mortgage-european-commission/

 
Comment by Raymond K Hessel
2016-05-01 07:08:50

Speculators are belatedly figuring out that Yellen the Felon is going to debase the dollar into worthlessness.

http://wolfstreet.com/2016/05/01/dollar-loses-yen-euro-risk-vix-vxx-fleeing-into-gold-silver/

 
Comment by Raymond K Hessel
2016-05-01 07:15:40

With Yellen the Felon and her Wall Street accomplices looking for any pretext to impose NIRP as the next escalation in the Fed’s War on Savers, owning physical precious metals is imperative to grow your wealth while giving our Keynesian central planners a well-deserved middle finger.

http://www.acting-man.com/?p=44583

 
Comment by Raymond K Hessel
2016-05-01 07:18:26

Why real reform of our rigged, broken, manipulated “markets” is impossible.

http://www.oftwominds.com/blogapr16/reform-impossible4-16.html

 
Comment by Ben Jones
2016-05-01 07:40:44

‘You likely don’t know much about the U.S. Foreign Intelligence Surveillance Court. Though it keeps a low profile, this is the court the Federal Bureau of Investigation and National Security Agency go to when they want permission to put someone under surveillance. And they don’t get turned down, according to Reuters, citing a Justice Department memo. In 2015 the court received and approved 1,457 requests from the FBI and NSA. There were a bit fewer requests in 2014, but all of those were approved as well.’

‘The surveillance requests are for email or telephone intercepts. If granted, which is apparently always, they generally are carried out with the assistance of Internet telecommunications service providers.’

‘The Foreign Intelligence Surveillance Court hears more than surveillance requests. The FBI can also file National Security Letters (NSLs), asking Internet and telecommunications providers for customer information on foreign residents and U.S. citizens. Some NSLs ask for subscriber names, addresses, and billing information only, while others also request browsing history. The majority of information requests also come with a gag order, prohibiting the companies from informing customers of the requests.’

https://www.yahoo.com/news/rubber-stamp-fbi-nsa-requests-005331279.html?ref=gs

This is a similar Harlem Globetrotter scenario; set up oversight that is phony.

We make fun of Venezuela running out of beer. It was Harvard, IIRC, that recently published a report that not one single county in the US had affordable housing. Not one. This news above would have been something we’d expect to hear about a third-world, banana republic 20 years ago.

Comment by Ben Jones
2016-05-01 08:27:48

‘More than 20,500 students in Oregon were experiencing homelessness in the 2014-15 school year — an 8 percent increase from the year before, according to the Oregon Department of Education. The majority of the increase was in the number of students identified as “unsheltered,” meaning they live in vehicles, tents or other forms of substandard housing. About 970 homeless students are in the Salem-Keizer School District.’

‘Without having basic necessities such as shelter and food, these students and families have to navigate a different world than those who do. Researchers Yvonne Rafferty and Marybeth Shinn found homeless children confront serious threats to their ability to succeed and their future well-being compared to other students.’

‘Some concerns include health problems, developmental delays, anxiety, depression and educational underachievement, according to Rafferty and Shinn.’

‘Wisner said families living paycheck to paycheck can be tipped over the edge with an unexpected or emergency expense, making them suddenly become homeless. And as housing prices increase in areas like Portland, families flock to areas like Salem, she said, where housing tends to be less expensive. But that may increase competition for local affordable housing.’

‘Irma Oliveros serves as the STEP program assistant and homeless liaison for the district. For the past 12 years, she has helped families and students in the community transition to a more stable living and learning environment.’

‘She said most people don’t realize that many of these families are able to obtain housing vouchers, but aren’t able to use them because they can’t find a place to rent. Additionally, some have poor credit, multiple past evictions or even criminal records that prevent them from being able to rent.’

“Just building more houses, yes, that’s needed, but that isn’t the only problem,” she said.’

http://www.dailyjournal.net/view/story/f5b88cf1e6c54048a1d416f9ebd9b77d/OR–Homeless-Students

But they can find all the $4/pint craft beer they can buy.

 
 
Comment by Senior Housing Analyst
2016-05-01 08:41:00

Andover, MA Housing Affordability Surges As Prices Crater 5% YoY

http://www.movoto.com/andover-ma/market-trends/

 
Comment by Ben Jones
2016-05-01 08:48:27

‘The Community Development Trust, a national investor in affordable housing, is one of the new owners of affordable housing for low-income families, seniors and people with special needs in New Mexico.’

‘The New York City-based real estate investment trust on Wednesday said it has partnered with New Mexico-based YES Housing Inc. to refinance existing mortgage loans and make capital improvements to three apartment complexes in Albuquerque, Roswell and Las Cruces.’

‘The co-owners will refinance existing mortgages to lower-interest Freddie Mac loans.’

‘The CDT-YES joint venture will preserve 262 units for tenants earning below 60 percent of the area median income in the three communities. Ortega noted that in terms of acquisitions, CDT targets either a property that’s coming toward the end of its low-income housing tax credit compliance period or a Section 8 property.’

http://www.abqjournal.com/764574/biz/biz-most-recent/investors-cash-will-help-low-income-housing.html

‘tenants earning below 60 percent of the area median income’

The federal rules say this median income number includes doctors, lawyers, not the median incomes of apartment tenants.

‘targets either a property that’s coming toward the end of its low-income housing tax credit compliance period or a Section 8 property’

A little paint in the parking lot, a dog-washing station, some carpet, and rents go up 40%.

Comment by Ben Jones
2016-05-01 09:01:13

‘With the L.A. vacancy rate about 4 percent or lower, local rent so high that one out of three tenants pay half their income to live indoors, and housing prices requiring six-figure salaries, the pressure is on. Something has to give.’

‘That something is people. A new report from real estate listings site Trulia titled “Priced Out: Big Cities Are Becoming Too Costly for Lower-Income Residents” says lower-income Angelenos are leaving town because they just can’t afford it anymore.’

‘Los Angeles is one of several American metro areas, including Orange County, New York, Chicago, Washington, D.C., San Francisco and San Jose, where rising housing costs are pushing out those in households with less than $30,000 per year in income. That kind of money is near poverty depending on the size of your family.’

“In these cities, rents paid by tenants on average have increased 13 percent,” Trulia said in a statement. “These lower-income residents have opted to move to less expensive areas of the country. In some cases, even those able to afford these expensive cities are leaving too.”

‘Angelenos with household incomes of $30,000 or less are moving out at a rate 18.6 percent greater than what would be expected with higher incomes and neutral economic conditions, Trulia indicated. About one in five (21.5 percent) of L.A. households fall into that income category, by the way, the site says.’

‘Los Angeles isn’t the worst city when it comes to lower-income people moving out, however. That title belongs to San Jose. The Silicon Valley city was followed by Silver Spring, Maryland, Washington, D.C., San Francisco and Oakland when it comes to lower-income folks moving out.’

http://www.laweekly.com/news/lower-income-residents-are-leaving-la-because-rents-just-too-high-6880062

The government is financing the destruction of affordable housing and its replacement with unaffordable housing:

‘The co-owners will refinance existing mortgages to lower-interest Freddie Mac loans.’

Comment by Gorilla Monsoon
2016-05-01 09:11:33

“California Is The Poorest State In America”

http://www.laweekly.com/news/california-is-americas-poorest-state-4177082

Comment by Raymond K Hessel
2016-05-01 11:17:41

Comrade Pelosi and the collectivist cabal in Sacramento can declare “mission accomplished” in importing millions of Democrat-on-Arrival dependency voters while relentlessly driving the productive taxpayer base out of the state. Venezuela, here we come!

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Comment by CalifoH20
2016-05-02 15:11:47

Whenever I go wine tasting, all I can think about is the poverty all around me.

 
 
 
Comment by Oddfellow
2016-05-01 09:17:27

Big cities are becoming the playgrounds of the rich and the young (who don’t mind rooming with multiple others). The lower and middle classes are being shunted out to Flyover. But really, what’s there in the big cities for them? The remaining manufacturing jobs are in Flyover, not San Francisco. Cost of living is a lot less.

This is what happens when you have great wealth inequality.

Comment by United States of Jerry Springer
2016-05-01 09:31:10

Get to work, Mr. Chairman!

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Comment by Combotechie
2016-05-01 09:15:34

“A little paint in the parking lot, a dog-washing station, some carpet, and rents go up 40%.”

“… rents go up 40%” = Rental income, both actual and imputed, go up 40%.

This means the numbers that go into making up …

(making up = a good choice of words as used here, IMO)

… our nation’s GDP gets a hefty boost.

IMO the entire concept of GDP needs to be questioned in that what makes up GDP has more to do with prices than with anything else.

Comment by Ben Jones
2016-05-01 09:27:40

Note the bars on the windows are included:

Home For Sale – Active
$275,000

1346 W Brazil St Compton, CA 90220

2 beds, 1 full bath, 768 sq ft

http://www.realtor.com/realestateandhomes-detail/1346-W-Brazil-St_Compton_CA_90220_M17098-75215

Compton, CA Real Estate and Homes for Sale
223 Homes

http://www.realtor.com/realestateandhomes-search/Compton_CA

Compton, CA Price Reduced Homes for Sale
46 Homes

http://www.realtor.com/realestateandhomes-search/Compton_CA/show-price-reduced

Comment by Ben Jones
2016-05-01 09:30:30

This one has bars over the boarded up window:

Home For Sale – Active
$219,900

717 W 131st St Compton, CA 90222

3 beds, 2 full baths, 1,488 sq ft

http://www.realtor.com/realestateandhomes-detail/717-W-131st-St_Compton_CA_90222_M19316-44839

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Comment by Eddie89
2016-05-02 15:22:58

And 1346 W Brazil St already has a wheelchair ramp, for when your ass gets shot!

If only they would upgrade the fridge to stainless steel and they could double the price to $400K! Fools!

Compton is an up and coming neighborhood! Starbucks is opening just a few blocks down!

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Comment by Justme
2016-05-01 11:41:00

Yeah, Combotechie, it is ridiculous that rent and imputed rent is included in GDP, but neither is part of the CPI (consumer price index). This is of course because the PTB want to keep wages and SSA benefit payments down. Wage inflation is the only kind of inflation the top 1% do not like.

Comment by Gorilla Monsoon
2016-05-01 11:56:44

“Wage inflation is the only kind of inflation”

Makes sense considering that is the definition of inflation.

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Comment by Apartment 401
2016-05-01 09:29:52

Out of staters, you can stop moving here now:

“A slow-growth movement in Douglas County’s largest community has reached a fever pitch, with parallel efforts underway to dial back the pace of development and toss out elected leaders not on board with the more-measured approach.

The resistance to rapid growth in this fast-expanding town of nearly 60,000 people was born not only of a concern over new homes and stores sprouting up in a seemingly nonstop fashion but from a sense that the Town Council wasn’t paying attention to its citizenry’s desires regarding development and quality of life.”

http://www.denverpost.com/news/ci_29834872/fight-over-development-castle-rock-reaches-crescendo

The Front Range is well on its way to becoming the most polluted region in the country.

P.S. and there’s no water here. No water.

Comment by Oddfellow
2016-05-01 09:46:29

P.S. and there’s no water here. No water.

What the f are you guys doing living out there, then?

https://www.youtube.com/watch?v=P0q4o58pKwA

 
Comment by palmetto
2016-05-01 10:13:40

“No water.”

Too many people. Way, way too many people.

 
 
Comment by Raymond K Hessel
2016-05-01 11:19:32

Savers and non-speculators must be ruthlessly punished by our central bankers.

http://www.zerohedge.com/news/2016-05-01/only-dumb-save-ecb-pens-incoherent-response-germanys-criticisms

Comment by Gorilla Monsoon
2016-05-01 12:04:46

Rather that than have zero cash and a mountain of debt on a rapidly depreciating asset like a house.

 
 
Comment by Oddfellow
2016-05-01 11:25:59

“The end of the republic has never looked better.”

 
Comment by Senior Housing Analyst
2016-05-01 11:54:40

Davis, CA Housing Affordability Rises As Prices Plummet 22% YoY

http://www.zillow.com/davis-ca-95616/home-values/

 
Comment by palmetto
2016-05-01 12:48:59

Really, Lindsey Graham? Another 9/11? Why would that be, you piece of navel fuzz? You and the Bushes planning another one with the help of the Saudis?

Comment by palmetto
2016-05-01 13:47:46

Geez, I’m tellin’ ya, one look at this depraved clown and you just know you are gazing at the depths of utter, drooling insanity.

Sigh. It really is Rome at the fall, all over again. Washington is infested with the most spectacular evil, corruption and perversion, of mind, spirit and body.

And don’t get me started on the MSM. The interviewers listen to this crap without so much as batting an eyelash. Any sane guy or gal would just say “Excuse me, Senator, I’m afraid I’m going to have to end off here. Please seek help.”

Comment by Raymond K Hessel
2016-05-01 15:22:01

We might be Rome at the fall, but don’t just blame the Beltway crowd or the MSM. Our national descent into IDIOCRACY is how we got here.

Comment by palmetto
2016-05-01 16:27:48

So how and why did people descend into IDIOCRACY? This doesn’t just happen on its own.

Ray, I agree with you on most things, and like you, sometimes I truly get annoyed with some of my fellow citizens. But the constant blame, denigration and degradation is not OK. People have to be deliberately dumbed down through lousy education, fed sh*tty food, herded into packs, degraded, shot full of poison medication, lured into drugs, etc. Add to that constant economic duress, where parents are too busy trying to make ends meet to provide the help their children need and you have a self-reinforcing downward spiral.

It’s being done, and it’s being done deliberately. It’s not that difficult to see those who are doing it, too, because these things always come from the top, and I don’t mean the prez. Top of everything: of finance, banking, entertainment, education, media, law, technology, etc.

You’re right, Washington and the MSM are not the only ones active, but they are the front for the men and women behind the curtain. And fortunately, many of those folks are now known. Heck, they’re not even pretending anymore.

My guess is you’ve tried to help some people and it didn’t work out. You can’t force help on people and sometimes they turn on you. But you have to just turn away and look for those who are receptive to your message and not waste time with those who are too far gone.

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Comment by Raymond K Hessel
Comment by palmetto
2016-05-01 16:38:52

I pray they take the House of Bush with them.

 
 
 
Comment by phony scandals
2016-05-01 13:29:04

When was the last time you had some really good Apple Strudel?

Comment by palmetto
2016-05-01 13:34:29

I can’t remember, lol.

I got a feeling you’ve got something else in mind, though.

 
Comment by Gorilla Monsoon
2016-05-01 13:36:53

Last week and frequently. And portions fit for a gorilla. I’m not bound by a diet of CraterTaters.

 
 
Comment by Gorilla Monsoon
Comment by Raymond K Hessel
2016-05-01 15:58:29

Bernie Sanders, for all his populist rabble-rousing, watered down Ron Paul’s original “Audit the Fed” bill, while Fauxahontas Warren, self-professed champion of the middle class, came out against the audit, thus showing her true colors.

 
 
Comment by Raymond K Hessel
2016-05-01 15:33:41

Get ready to fund yet another bailout, taxpayers, though the Republicrat duopoly will come up with some creative term other than bailout.

https://www.yahoo.com/news/deadlines-come-puerto-ricos-debt-crisis-grows-164914039.html?nhp=1

 
Comment by Raymond K Hessel
2016-05-01 15:36:23

Ante up, taxpayers. Corrupt, incompetent Democrat administrations cannot be forced to face a financial reckoning day, and their patronage networks aren’t self-funding, you know.

http://www.bloomberg.com/news/articles/2016-05-01/puerto-rico-will-default-on-government-development-bank-debt

 
Comment by CalifoH20
2016-05-01 16:07:52

Test drove 4 cars today. Going with a 2016.5 Mazda CX5. Quick and 32mpg. Honda CRV was a close second. $219 mo. $2k down.

I dont want a 8 yr old car that needs a $1500 water pump as you have to almost pull the engine to get to it on some Toyota V6’s. Or a $4400 trans or $400 o2 sensor.

Comment by palmetto
2016-05-01 16:31:59

Heh, I like a Honda CRV. I’m on the hunt for another vehicle myself. I’m going with used, though. I hate car payments. My mechanic will look it over and tell me what, if anything, needs fixed, so I can factor it in. I like to add $1500 to the price for repairs.

Comment by CalifoH20
2016-05-01 16:46:16

Too many cars at $12k with 100k miles on them. No way to tell when the trans fails or that $300 sensor throws a code.
This will be my first new one. They sure do accelerate and stop so much better than 10 yr old cars. and >30mpg and lots of air bags.

I saw a very nice, loaded 2007 Camry LXE, with under 100k for $12k, then read the blogs and what is in need of repairs and the costs…. no thanks… I like my money.

I calculated the last 5 yrs of driving, 1040 miles a mo.

 
Comment by CalifoH20
2016-05-01 16:48:50

What is the difference, $12k cash up from or $250 a mo. I’d prefer to spread it out. My $12k can earn $700-800 yr.

 
 
Comment by phony scandals
2016-05-01 16:38:02

You feel ok?

Comment by Gorilla Monsoon
2016-05-01 16:40:35

He’s feeling a little liberace.

Comment by CalifoH20
2016-05-01 17:39:06

I’m sure this wont break, give me your cash: http://slo.craigslist.org/cto/5565936027.html

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Comment by Gorilla Monsoon
2016-05-01 17:44:17

A rotting bucket of bolts to match your rotting shanty.

 
Comment by palmetto
2016-05-01 18:12:04

Jeebus, 12 grand for THAT??? They’re asking 6-8 for the same in the Tampa Bay area.

 
 
 
 
Comment by Yaan
2016-05-01 18:45:15

Go with the new car, even the “reliable” old ones can surprise you. My 06 Honda decided it needed a new EGR valve and a de-carburization last week, to the tune of $500.

 
 
Comment by Professor Bear
2016-05-01 16:15:38

Why would anyone bother saving money with rates so low, plus the ever-present threat that the Fed may allow inflation to get out of control the way they did in the 1970s, sucking away the value of savings from any fool who was enough of a sucker to build up a savings balance? Clearly the only way to go is to snap up houses and stocks.

Why Don’t Americans Save More Money?

Maybe the only way to make people richer in the long run is to take their money away from them.
Kai Pfaffenbach / Reuters
Derek Thompson
Apr 19, 2016 Business

It is a myth that Americans cannot save. For decades, they did.

When personal-finance columnists explain America’s poor saving habits, they sometimes start with the aspects of the human mind that make it challenging to plan for the future. Behavioral psychology is a useful scapegoat for many foibles. But the decline in savings is recent, and the human brain hasn’t evolved since the Ford administration. The bottom 90 percent of households saved 10 percent of their income in the first Reagan administration. By 2006, their savings rate was nearly negative-10 percent.

Other writers suggest that the country’s low saving rate is purely a matter of American exceptionalism. But it is also a myth that the U.S. is alone in its turn against saving in the last three decades. The personal savings rate has fallen in Canada, Germany, and Japan, as well.

Still, there is something about the U.S.: Nearly half of Americans would not be able to come up with $400 in savings in an emergency, according to a Federal Reserve study cited in The Atlantic’s cover story this month. America’s poor and its middle class live on the razor’s edge of financial security through their working years and are uniquely ill-prepared for retirement. The United States finished 19th for three consecutive years in a global analysis of retirement security, behind Australia, New Zealand, Japan, South Korea, Canada, and 13 European countries.

Comment by Professor Bear
2016-05-01 16:55:20

“Maybe the only way to make people richer in the long run is to take their money away from them.”

So long as the Fed continues fighting its War on Savers through rate suppression, coercion may be the only viable alternative to boost the U.S. savings rate.

Comment by The Selfish Hoarder
2016-05-01 17:34:05

So long as the Fed continues fighting its War on Savers through rate suppression, coercion may be the only viable alternative to boost the U.S. savings rat

It is going to backfire, particularly with bitcoin way outperforming the USD, then silver, gold, and platinum are viable means to outperform the USD as well.

I guess one way to do it if you really want to stay in cash, is to take paper money out of the bank and put it under the mattress. Also buy 52-week T-bills, two year notes and Series I bonds. Series I bonds sold from Novermber 1 2015 to April 30 (yesterday) yielded 1.64% (annual rate) which is 0.82% for six months plus the rate announced tomorrow. Much better than 52-week T-bills. But in all three cases they are not negative yield rates.

 
Comment by Oddfellow
2016-05-01 18:36:40

“Maybe the only way to make people richer in the long run is to take their money away from them.”

That’s what Social Security does, right?

Comment by Gorilla Monsoon
2016-05-01 18:53:33

Irrelevant

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Comment by Raymond K Hessel
2016-05-01 18:06:30

The Fed’s nightmare scenario is that the stoopids who mindlessly bent for for the Wall Street-Federal Reserve Looting Syndicate in 2008 and 2012 are finally, after a DELIVERANCE-style reaming instead of the promised hope ‘n change, starting to figure how how badly they’ve been screwed over, and by who.

 
Comment by Muggy
2016-05-01 18:33:23

I hope all is well. Too busy to post. I went to Home Depot FIVE TIMES today.

Replaced a toilet, locks, dug a hole for a reclaimed water bibb.

Comment by CalifoH20
2016-05-01 18:35:02

been there, done that.

 
Comment by Gorilla Monsoon
2016-05-01 18:35:21

Post a picture of this donkey fiasco.

Comment by Muggy
2016-05-01 19:46:59

No time for pics, bruh. Here’s a Cheetos Donk for you tho:

http://cdn.smosh.com/sites/default/files/bloguploads/cheetos-custom-car.jpg

Comment by Gorilla Monsoon
2016-05-02 08:14:50

Nothing

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Comment by Senior Housing Analyst
2016-05-01 18:52:29

Redmond, OR Housing Affordability Balloons; Prices Plummet 19% YoY On Cratering Housing Demand

http://www.movoto.com/redmond-or/market-trends/

 
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