So goes. Well within four years it should be complete, only three and a half more to go. Smoking ruins here and there, biggest torches being old bank buildings..
If housing values continue to fall as rapidly as they have in the past couple of months (more than 2% per month, no?) isn't it conceivable that they could bottom out by the end of the year? Afterall, 9 months x 2%/month is an additional 18%.
Also, Paul R. La Monica has an article on CNN talking about the bull market on homebuilder stocks..
oh well, at least he isn't teaching Defense Against the Dark Arts anymore. he should probably still be in St. Mungo's, but i'm sure can't do much harm at the Fed.
I think he also suggested that other institutions facing financial crisis should not expect the same FED help as was donated to BS and JP.
Does the Fed even have enough capital remaining to bail out the really big players? And aren't there bigger players than BS teetering on the edge of BK?
So if the BS bailout was required to minimize damage to the economy, however unseemly the "moral hazard" involved, but doesn't do the trick - as seems likely - than what next? More sovereign wealth?
And now we see the mad scrambling for regulating the system.
Any economist who was predicting a second half turn around in the economy based on housing should be flogged. Name me one housing/building bust that lasted only a year to 18 months come on just one...ya, thought so.
DownSouth - it's tempting to think they may have bottomed by year end... perhaps even many markets will be near bottom by year end. I really hope so, but I think this will last longer.
Inventories are going to skyrocket, but who really knows whether prices will be sticky enough to hang in there through low volumes while the excess clears... it could certainly happen in some local housing markets and not in others.
Life is too short to drink cheap coffee and cheap beer. Taco Hell? Why man? Why do you hate thyself? Bread and butter is far better.
Actually I'm amazed by how good the Maxwell House is with CoffeMate. I bought it when I was on kind of a masochistic streak and planning getting in touch with other peoples' pain by simulating the corporate coffee experience at home, but at least when I make it myself it turns out really well.
It makes me realize how overroasted Starbucks is.
I guess during recessions, charity is the first thing to go, and I've decided I'm not going to pay a 200% premium on a cup of coffee so somebody can get health insurance.
ac - your max in your 401k plan is 1.3% ... so does that mean that $15,500 is 1.3% of your income? If so maybe you are a little too stressed over this whole situation!!
--
"The recovery in growth I had expected in the second half of this year may be delayed."
These sworn agents of the Crooks are constantly behind the curve. "Worse than I expected, "worse than I thought," etc., is what you would hear from these goons. This charade would continue for decades. These morons said at the end of July 2007 that everything was fine except for slightly slower growth and they have been wrong since. The worst part from some of their apologists: No one could have anticipated. Agents of the Crooks are supported by a coterie of rogue economists.
America has no hope with this sort of leadership. And since the system produces and promotes this sort of leadership there is no hope for the Americans system except for collapse. The dye is cast.
Recovery? Recovery from what? Don't you need to be in "something" before you can recover from that "something"? What might that "something" be Mr. Lockhart?
Good God ac,Maxwell House? I am only a truck mechanic and if the owner of this company started buying that we would have a freakin revolt on our hands...
Heck we recently even started "Free lunch Tuesday". I'll give the food up to get good coffee...
"my forecast has been affected both by an economic slowdown that has been sharper than I had expected and the recurring spells of financial market turmoil."
Geez, sounds like a mother trying to hold off on a child asking, "are we there yet?"....."just a few more minutes honey".
The only reason people didn't expect correctly is because they didn't want to. Either they are not worth a salt as an economist and financial expert, or they are lying.
How anyone can say this is "unexpected" and in the same breath say that the recession won't happen because it's the most anticipated recession in history, are smoking dope.
I live in Los Angeles (the valley) and a unit in my townhome complex just sold for $325,000.
A year and a half ago another unit sold for $400,000.
That's a $75,000 haircut in my home's value (I bought my unit in 1991 for $150,000).
The idea that prices will 'bottom out' holds a sort of implicit asssumption that they will then rise from that point. I don't see it that way; I think prices are 'returning to normal'.
It might seem like a minor point, but until the hope of any form of renewed bubble is gone, we are still living in illusion.
ac - your max in your 401k plan is 1.3% ... so does that mean that $15,500 is 1.3% of your income? If so maybe you are a little too stressed over this whole situation!!
M-F (wonder what that stands for? I'm sure it can't be true):
If there are big pay inequities at the firm, and non-top-heavy employees contribute only peanuts to the 401K plan (or nothing), then top-heavy employees have their max contribution brought way down. At my firm, for example, the most anyone can contribute is about $5,000 - because our lower paid employees aren't contributing or contributing enough (and somehow we can't afford to give them the raises they deserve). Also, some of the company pension might be dispersed as company stock. That too can have a negative impact on the max allowable to plop in the 401K.
OT?
Shares of Lehman Brothers (NYSE:LEH - News) fell by nearly 10 percent in early New York trading on Thursday on rumors that the fourth largest U.S. investment bank could see a run on the bank similar to what happened to Bear Stearns (NYSE:BSC - News), traders said.
"DownSouth, yes, if prices fall fast enough, we could get close to the price bottom by the end of the year.
But usually these busts take longer to correct. My guess is some areas won't see a price bottom until 2012 or so."
"Bottom" is a misleading idea. It leads you to believe that there's some sort of static price point that housing has to reach.
But what if the bottom itself isn't static? What if, as housing falls in price, the "bottom" -- that magic price point -- also falls because of increasingly bad economic conditions?
It's that old feedback boogeyman again... chasing the bottom all the way to... what?
"Rest of the year for housing prices to bottom out..." Eh, okay - than I assume he's calling for an additional 20% to 30% off housing prices (or more!) on top of the 10% we've already seen by the end of the year. Surely, he can't just be calling for a minor correction and then back to the races with double-digit housing inflation vs. stagnant wages, right? Hahahaha...
I expect Mr. Lockhart knows well enough how things stand at the moment. But since the news is largely ipecac, what - other than what he is doing - is the man supposed to say?
Recovery? Recovery from what? Don't you need to be in "something" before you can recover from that "something"? What might that "something" be Mr. Lockhart?
Rob Dawg | Homepage | 03.27.08 - 1:46 pm | #
Remember that scene towards the end of "Fear and loathing in Las Vegas" where he wakes up amid the carnage of the hotel room with a microphone taped to has face, not remembering anything. The room is flooded, the glass is broken, the bed is burnt, a plastic animal is lodged in the toilet. A frenzied violent binge of epic proportions had obviously taken place.
What he meant to say was, "My forecast has been affected by all the happy spin, ignoring of negatives, and postive bullshit that I am required to say according to the Bush Administration"
At which time, had he really said that, Paulson and Bernake would have nodded their heads likewise....
Lehman said on March 18 that its holding company has $34 billion of assets it could easily sell, and another $64 billion of assets it could borrow against. Regulated subsidiaries have another $99 billion of assets it could borrow against
It appears Lockhart is still too optimistic on house prices
I should note that the end of the housing boom could not have been a complete surprise to most participants. Sure, its nice to sell your home when bidding wars and escalator clauses are common, as they were in 2005. But these conditions were fairly unusual in most markets, and its hard to believe many people seriously thought they would persist indefinitely. This is another reason to believe that most people are likely to be reasonably well-positioned for the end of the boom.
Jeffrey M. Lacker
October 11, 2006
Some observers have called this extraordinary behavior of the housing market in recent years a bubble. I don't find that term useful or particularly accurate, since the behavior of housing appears to have been based on solid fundamentals.
--
"I live in Los Angeles (the valley) and a unit in my townhome complex just sold for $325,000.
A year and a half ago another unit sold for $400,000."
tedzbear,
Sounds like building where my son rents in Sherman Oaks. He said that those condos were going for 75-80K during 1996-97 based on what he heard from the landlord and some others who have lived there for a long time (most are owners).
The delay will also be linked to The Fed holding a huge increase in toxic collateral, and the amount of cash taxpayers will forfeit as a result of this corruption! Just give the crooks more money every week -- who cares??
U.S. commercial paper market contracted for a fourth consecutive week. The outstanding amount of asset-backed commercial paper, which had been a key funding source for the U.S. mortgage market, fell $2.6 billion, but the amount of unsecured paper issued by financial companies increased by $2.2 billion in the week to Wednesday, according to the Fed.
Christopher Dodd, the chairman of the Senate Banking Committee, has already set April 3 as a hearing date and summoned the expected suspects: Federal Reserve chairman Bernanke, Bear Stearns CEO Alan Schwartz, J.P. Morgan CEO Jamie Dimon, Securities and Exchange Commission Chairman Christopher Cox and Treasury Secretary Hank Paulson.
--
Are some posters here suggesting that Fed Governors are lying?
Democracy trains the populace to expects lies from their leaders, no? Over time this had extended from the political leaders to economic leaders, including what are now corporate Crooks.
That is how leaders in democracy breeds dopes. Only a moron can be made to believe that democracy is sustainable for a very long period. What has been the average lifespan of a democracy thru history? Oh, I get it, it is different this time, or for America. LOL!
Democracy is a front for the rule of moneymen. Athenian democracy ended when moneymen became dominant. Peoples life declined precipitously while the moneymen were able to take their trade and wealth elsewhere. The same will happen in America. Living standards of the majority of the American People will go down the toilet and the capitalists will fare far better.
OT: With negative real rates, and banking tightening credit lines (commercial and residential), US Service economy outsources, no commodities in house worthy of making a dent on trade deficits - where is this new economy coming from?
NEW YORK/FRANKFURT (Reuters) - The U.S. Federal Reserve prepared to pump $75 billion into frozen credit markets following moves by European central banks on Thursday to help lenders who scrambled to meet quarter-end funding needs.
"Geez, sounds like a mother trying to hold off on a child asking, "are we there yet?"....."just a few more minutes honey"."
Average Joe, you just hit on one of the often overlooked tools of the Fed - their access to the bully pulpit and market psychology. Their job is to tell it straight, and they do that most times, but, to paraphrase the Heisenberg Uncertainty Principal, they are so big and listened to that for them to comment at all is to influence. Anyone remembering Alan Greenspan's "irrational exuberance" comment and the market drop that ensued would agree to that.
So, yes, they feed the market pablum or shade the truth now and then to get the market to go where they need it to head without the crude tools of interest rate hikes and regulation. This is really not so bad IMHO, so long as they don't abuse it and are mainly truthful. I also say this because I think that if they really told us what they were thinking the market reactions would make any of the recent moves look tame.
Bear hearing might be last chance for Dodd to show what a pussy he is:
The poll found that 47 percent of voters in Connecticut say the economy is the most important issue, followed by 25 percent who identify the war in Iraq and 11 percent who cited health care.
The same survey also found support for U.S. Sen. Christopher Dodd slipping in Connecticut.
Schwartz said the one-time Democratic presidential contenders job approval rating has dropped to its lowest level, at 51 percent. His highest approval rating, 71 percent, came in 2001.
"He really does not want to fall below 50 (percent)," Schwartz said.
The chairman of the Senate Banking Committee yesterday expressed concern that JPMorgan head Jamie Dimon held a Federal Reserve Bank of New York board seat while his bank was talking with the Fed over the Bear Stearns takeover.
Sen. Christopher Dodd made his remarks in a radio interview.
"He [Dimon] also sits on the board of directors at the Federal Reserve in New York. Having decisions being made over the weekend with an institution where its leader is also a member of that board raises some serious issues," Dodd said.
When asked if he suspects Dimon's New York Fed board seat might have been a conflict of interest, Dodd said: "This is what we needed to talk about."
On a different but related topic, Lockhart has repeated the same old stuff about targeting asset prices, but Stern says he is rethinking his view. He says it is now apparent that the cost of wating to clean up the mess afterwards can be very high. He seems to imply that one cost is the risk that the public will think the Fed is propping up private firms.
"Our system of representative democracy assumes that those who act for the public have superior knowledge but that they share the public's goals and values. But on many issues this assumption is invalid. Leaders and experts seek to advance their own values and interests. This is why so much emphasis is put on public relations. Correcting the public's understanding is rarely the goal of public relations. The ususal goal is to make it possible for special interests to achieve objectives and advance values the public does not fully share.
"Some of America's smartest lawyers and Wall Streeters are being paid massive fees to serve the interests of a hanful of entrepreneurs who pursue their own interests and values irrespective of the interests and values of the public.
"This situation is a formula for social and political instability. The history of this century shows that there is no more potent negative political force than downward mobility. If the American Dream becomes a mockery for tens of millions of vigorous young Americans...the nation can expect rising levels of violence, crime, drug addiction, rioting, sabotage, and social instability.
Daniel Yankelovich, "Coming to Public Judgment: Making Democracy Work in a Complex World"
Since I assume Fed branch presidents have substantial economic credentials that enable them to correctly understand economic fundamentals, is this economic genius telling us real incomes will increase to make homes at current prices affordable? If so, how about some evidence of where that substantial increase will come from.
Or does he think prices will drop so much in the next six months that houses will once again be affordable for the majority of us? Is that the source of the turmoil he expects?
I also wonder why he thinks home buyer's "confidence in asset values" will be restored in a few months. After the turmoil of the last couple of years, I would expect it to take decades for average people to regain any confidence.
And why is Jas posting a comment (Jas Jain | 03.27.08 - 2:08 pm) that does not include ranting at the system?
Yeah never a 'discouraging word' out of a government official until events squeeze it out. And then it is always sugar coated with lots of hope and "brighter days ahead" talk. Why anybody pays attention to these guys in the first place baffles me. You know they won't give you the straight poop.
Starbucks has always been a lousy imitation of good European coffee, the kind you would get automatically in France, Portugal or Italy, etc. It is bitter and harsh and probably made from cheap stuff from Africa mainly (my guess). Only Americans would think it something worth paying extra for. Interesting that Starbucks now thinks it can charge far less for it; that gives the impression they were previously charging far too much and they probably were. If you want strong coffee just use double the amount of Maxwell House instant.
Dimon learned the art of deal-making from his mentor, Sanford ``Sandy'' Weill, with whom he built what is now Citigroup into the largest U.S. bank. Vikram Pandit, the company's current CEO, is planning to dispose of almost $200 billion of the lender's assets to shore up capital. Doing so may lower the bank's ranking to third place.
A little game of chicken might be at work here, but that's not the most likely scenario. Unfortunately, it looks like Jamie Dimon just got this one wrong. He was wrong with the price, wrong with the guarantee, wrong about the Fed's resolve. It's hard to believe the least-toxic Wall Street firm, a firm with Dimon, M&A banker Doug Braunstein and dealmaker Jimmy Lee would make those mistakes.
--
Thanks, DownSouth, for the quote except that the author is a charlatan who promises that democracy can be made to work despite clear suggestion that there are fundamental flaws inherent in democracy leaders breed dopes, via propaganda, of course, so that they can easily and profitably lead!
Dont you see the problem success in a democracy goes to those who are better at propaganda? People with money can buy the best minds and those best adapt at propaganda, including economists? Rogue economists are far more harmful than lawyers, in general. Born-and-bred America dope simply cant understand how much harm the rogue economists, most of the policy sugggesters, are causing America in the name of science of economics. Americans are bred with faith in science and rogue economists exploit this trait.
"The Fed and it's members were clueless last year about the 'recession.'"
"Yet this particular Fed president has been drafted into the recession argument, clothed in sudden credibility."--Sebastian
Paul Krugman makes a similar observation over on his blog:
"Today, our public discourse is dominated by people who have been wrong about everything--but are still, mysteriously, treated as men of wisdom, whose judgments should be believed. Those who were actually right about the major issues of the day can't get a word in edgewise."
Just six months after leading a bailout of one its quantitative hedge funds, Goldman Sachs is following its investors by pulling most of its investment out.
The firm has withdrawn $1.8 billion from its Global Equity Opportunities Fund, the Financial Times reports. In August, the firm led a $3 billion capital injection, which included $1 billion from investor Eli Broad and hedge fund Perry Capital, as well as $2 billion of its own money, to shore up the fund, which like its fellow quants was beset by big investment losses and redemption requests. Broad and Perry have withdrawn their investments, as well.
Goldman is maintaining a $200 million investment in the fund, which now manages just $1.2 billion, down from more than $5 billion before it posted huge losses during this summers market turmoil. It withdrew the bulk of its investment at the end of last month, its first chance under the terms it set in making the investment in August.
The firm told investors in GEO of its redemption last week
Be careful with that "Morgan Stanley" report. This caught my eye early on.
"...Also, both the manufacturing and the non-manufacturing ISM surveys have fallen below the recession threshold of 50..."
Which flat-out isn't true. That "50" level is not a recession threshold, but a threshold between month-to-month expansion/contraction for the diffusion indices.
If you get the ISM data and chart it, you can see that there have been times when it went below 50 and there was no recession (1995, 1998, 2003).
--
"Why anybody pays attention to these guys in the first place baffles me. You know they won't give you the straight poop."
Jim,
What choice do Americans have? We don't a royal family to talk about!
BTW, these people have lot of power over the lives of the people. They can and do change rules (laws) that affect people's lives, no? So, you should learn to ignore those who have influence over your lives?
Democracy is f**ed up system that can only appeal to dopes, especially, born-and-bred dopes. The other way of saying is that there is a necessity to breed dopes in America to keep blind faith in democracy.
Denial is necessary for Americans to have faith in the system. Maintaining blind faith and denial go hand-in-hand.
Lehmans balance sheet isnt shrinking, as wed expect.
Lehman finished the first quarter was total assets of $786 billion, up almost 14 percent from the previous quarter and 40 percent from a year earlier. Other financial institutions are taking down their exposure right now amid the market turmoil to be prudent. Lehman says it wants to. It is not.
Lehman got more leveraged, not less.
The investment banks gross leverage hit 31.7 times equity, up from the fourth quarter and way up from last years 28.1. According to Brad Hintz, an analyst with Bernstein Research, Lehmans leverage reached its highest point since 2000. Lehman, like all the investment banks, prefers to look at net leverage, excluding hedges, and that went down. And the firm says that the asset rise was mainly a result of increases in short-term items that have low risk. But weve heard a lot of that lately across the financial world. Its quite simple: The more leverage Lehman has, the less room assets have to fall to wipe out its equity.
Lehman includes debt in its calculation of equity. Say what?
Its always worrisome when a company changes a key definition of a closely watched measure of financial performance. In a note in its earnings release, Lehman said it has a new definition of tangible equity, or the hard assets that it has left over after subtracting its liabilities. This is a measure of net worth, the yardstick by which investment banks are valued. Lehmans new definition allows for a higher portion of long-term subordinated borrowings (which it calls equity-like) in tangible equity. Previously, it had a cap on the percentage of perpetual preferred stock, a form of equity-like debt that doesnt have a maturity date, in its equity. Now, it doesnt have a cap. Think of it this way: If you borrow money from your parents to make your down payment on your house and they dont expect to get paid back right away (at least not before you pay your mortgage off) is it equity in your house? No, its a loan. And Lehman hasnt borrowed from mommy and daddy.
Lehman says it is merely conforming to the Securities and Exchange Commissions definition of tangible equity and had contemplated making the change for a while. And the firm says the change didnt result in any difference to its net leverage ratio.
ac - your max in your 401k plan is 1.3% ... so does that mean that $15,500 is 1.3% of your income? If so maybe you are a little too stressed over this whole situation!!
I was just making the same bad joke I make at most of our benefits overview meetings so they don't ask me to come to benefits overview meetings anymore.
Lehmans balance sheet isnt shrinking, as wed expect.
Lehman finished the first quarter was total assets of $786 billion, up almost 14 percent from the previous quarter and 40 percent from a year earlier. Other financial institutions are taking down their exposure right now amid the market turmoil to be prudent. Lehman says it wants to. It is not.
Lehman got more leveraged, not less.
Lehman is just following the fundamental guiding principle behind contemporary economics:
If banging on something causes it to break, bang on it ten times as hard to fix it.
Sebastian: Well, I'm not one of them. If I were in the market for a house here in early 2006 and waited until now to buy, I'd be paying +20% to +25% more.
So far, the same condo is down $100k in about 2 years. How's that for negative equity?
The local media used to pump real-estate like mad. Now... not so much...
I am still expecting a greater (longer) drop. Canada is supposed to lag the US economically not lead it.
ac said: "I was just making the same bad joke I make at most of our benefits overview meetings so they don't ask me to come to benefits overview meetings anymore."
Well, I know you can tell real jokes, too. "I don't have to read this report because I can just read the responses of other people who haven't read the report" is a gem.
The truth is that Yankelovich gives a rather thought provoking read and addresses some of the issues you bring up. I can't copy the whole book here, but here are some more quotes...
"But increasingly, there is a sense that modernism as a philosophy of life suffers from serious flaws. One such flaw is a certain spiritual thinness. People find it difficult to live by modernism as an ethic. And modernism has a tendency to be relentlessly destructive of values that conflict with its imperatives, particularly traitional values of community (what I've called communal values).
"A closely related flaw is the elevation--almost worship--of science, technology, and expertise at the expense of other values. It is this side of modernism that I have called the Culture of Technical Control...."
"The social thinker who has looked into this distorting tendency of modernism with the greatest prescience is the German social scientist and philosopher Max Weber who did his great work in the early part of this century. Weber was particularly concerned with modifying the work of Karl Marx, who, Weber believed, had gotten some of the fundamentals wrong. For Weber, the most destructive element in modernism is not its economic power relationships but its tendency to give 'instrumental rationality' precedence over all other forms of thinking, feeling, and valuing..."
"For many of these gatekeepers, journalists in particular, it is an article of faith that the more facts you have the less you need to depend on judgment and the sounder your decisions will be. I want to show that this article of faith is based on a deep misunderstanding of the relationship of informatin to judgment and that when decisions concern matters of policy, good judgment is as important, if not more important, than good information and different from it...
"No amount of good information can compensate for bad judgment...
"But good judgment cannot be taken for granted. In today's society it is in far shorter supply than factual information. Our culture is heavily biased toward informatin; good judgment is almost a forgotten afterthought...
"The desirability of giving the public more information is never questioned. Improving the judgment of the public is, however, an unfamiliar and alien concept...
Regarding financials (especially investment shacks and hedge funds):
At 40:1 leverage, a 2.5% decline in asset values wipes out the equity.
I just heard the fed is also exchanging treasuries for duct tape. Apparently, there is a growing fear that faith alone can no longer hold the system together.
Rob-
You can farm in Merced! Tear down all the fences in the neighborhood and have a co-op community garden..
That or park a military base nearby again. If not 2022 is being a optimist
You know, my partner and I are total food/wine/beer snobs and faced with Maxwell House as the only option with out a grocery run at my mom's house, we gritted our teeth and, you know, it was fine. There's been a worldwide coffee glut for most of a decade now, even the cheapies can buy decent beans for less now than they used to pay for the dregs.
BUT, going long on passable inexpensive substitutes sounds like a good tactic. All the stalwarts of my parent's era leap to mind as consumers flee the price-premium exotics and jump back to what feels like comfortable value.
And Bacon Dreamz, Lockhart escaped Ward 49 and is planning to return to his first love of writing books about himself.
Some areas will never recover. Entire neighborhoods in places like Philly, Camden, Chester, Toledo, Trenton, Cleveland, Detroit, Pittsburgh, etc. are all but worthless. At one time, they had value.
It's hard to talk about a recovery in isolation. Without REAL wage gains, I don't see how many areas can ever recover.
It's hard to talk about a recovery in isolation. Without REAL wage gains, I don't see how many areas can ever recover.
Angry Saver | 03.27.08 - 3:59 pm |
Again I have to ask where does anyone this will come from? Any hints?
I do not know how to make one of those football pools, but ...
Is it possible to create a pool where the participants pick the next IB to go crying to the Fed that it is insolvent and which financial institution will "buy" it? .
What was I thinking? The IBs can no longer go bankrupt. They just run down to Costco and grab a jumbo size pack of toilet paper and head to the Fed discount window.
Did everyone get the memo? Now that Lehman has exchanged its junk for treasuries, it's ok for clients to pull their money. Defacto nationalization has occured.
"You can farm in Merced! Tear down all the fences in the neighborhood and have a co-op community garden..
That or park a military base nearby again. If not 2022 is being a optimist."
There was a military base in the area, Castle AFB; closed years ago.
Merced was seriously overbuilt on sheer bubble madness. There's no real economy to support all the houses. About all they have outside of ag is an undernourished new UC campus that, right now, is no bigger than a large high school and not much better than a community college.
I'm not sure that housing in Merced will ever "recover," because it's never been all that well.
My point is how can there be a future for a society of born-and-bred dopes who have been led by evildoers -- Greenspan, Bush and Bernanke -- for the past several years? This was not so thru most of the US history. Evildoers never had this kind of power that they do. They gave themselves more and more power over the years. And we know why it is rooted in human nature.
This country absolutely will go down (system will collapse) because evildoers have an iron grip on the democratic system. Money-whores don't have values like honor and even the pride is of wrong kind -- see, how much money I got. Just look at the moral bankruptcy of the ordinary people, let alone the economic elite. We got lot of legalistic robots but few have the sense of right and wrong.
If you have not clicked through to read Lockhart's entire speech, I strongly recommend it. The most interesting section is the last:
The line that separates restoring market function from merely redistributing losses and gains is not a bright one. This is the reason that policymakers only rarely and reluctantly intervene in markets.
Also, the distinction between liquidity problems and insolvency is not a trivial one when monetary authorities respond to troubles of market players.
Bob Dobbs
Castle is what kept Merced alive..Can you imagine driving from Merced (99) to Pleasanton/Bayarea(580)back and forth to work each day. People are crazy to sit in traffic for 2 hours each way to live in a house they own.
Throw in gas prices and your looking at a depreciating paycheck and house.
Stockton to Bakersfield had thier wine and now has to get ready for the vinegar! Also this plus Sac valley is CRE explosion viewing point to monitor. It will happen here first...
"How can you tell who is wise?"--Interesting Times
That's a tough one.
Just a little anecdotal experience of my own.
Midland, Texas is located in one of the great oil producing basins of the U.S. and its economy is highly dependent on oil.
Oil PRICES peaked at $39.50 in the summer of 1980. From there they rapidly tapered off to around $30 where they remained until December of 1985.
In 1984 I moved to Midland from Dallas. Due to the 1980 fall in oil prices, Midland housing prices had already taken quite a beating, perhaps falling 10 or 15% from their 1981 peak. I felt they had bottomed out. I purchased a really beautiful home for something like $175,000, taking out a $155,000 loan.
Then in January 1986 the price of oil really fell, some months to as little as $11 or $12 a barrel, and remained at less than $20 until 2000.
The result was that I saw the value of my $175,000 house slowly but inexorably dwindle away over the next few years. By 1989 I was upside down and remained that way for years until real estate prices started to recover in 2000.
Needless to say, when the housing boom began in 1999, and the huge runup in mortgage and consumer debt, I was skeptical. I kept telling people that housing prices can go down. They thought I was crazy. But I was right in predicting the bubble would burst.
Was I wise? I suppose I wasn't as wise as the guy who bought the absolute biggest house he could afford in 1999 and sold in 2005 before the crash. I suppose I wasn't as wise as Greenspan's friend (is it Paulson?) who made $billions speculating on the end of the real estate bubble. But I was wise enough to avoid another depression in my life, and to preserve peace and calm in my life.
The Federal Reserve helped to liquefy $75 billion in securities today by offering that amount of its $650 billion of Treasury holdings to the nation's 20 primary dealers in exchange for so-called Schedule 2 collateral. This type of collateral includes agency collateralized mortgage obligations, AAA/Aaa-rated private-label residential mortgage-backed securities, AAA/Aaa-rated commercial mortgage-backed securities, as well as collateral eligible for the tri-party repurchase agreements that are arranged regularly in the Fed's daily open market operations.
By obtaining Treasuries in exchange for such collateral, dealers can then put the securities out on repo, which is to say that dealers can then exchange the Treasuries for cash with any willing counterparty, of which there are many more than for the other types of collateral, as Bear Stearns obviously learned recently.
The urgency to participate in today's operation on the surface does not appear to have been all that strong. In other words, dealers did not show any signs of being desperate to liquefy collateral much beyond what was available, as evidenced by the bid/cover ratio of 1.15. In addition, the fee rate paid by dealers for the lending service was just 0.33%, or 8 basis points, above the minimum. The premium appears to reflect normal gaming of the auction and not much else.
Additional information on the Street's urgency to swap collateral for Treasuries will be apparent in today's release of money supply data, which will include a figure on the Fed's new Primary Dealer Credit Facility, which was the facility used in the Bear Stearns deal.
The amount of new borrowing that will appear in today's data is expected to be small, similar to the increase in discount-window borrowing that occurred in the aftermath of the Fed's cut in the discount rate last August. Only a few dealers likely tapped the window, with the tally no more than in the low billions at most.
This first go-around indicates that the Fed may not need to auction all of the $200 billion in securities it has allotted for the TSLF.
It's hard to talk about a recovery in isolation. Without REAL wage gains, I don't see how many areas can ever recover.
Agreed. Long-term the value of housing in a given area is going to be closely related to the amount of per capita economic output in that area. Without that increasing it's hard to see any kind of recovery.
Plowing excess housing into the ground only helps so much -- it does nothing to increase the buying power of the population in that area.
Democracy is a front for the rule of moneymen. Athenian democracy ended when moneymen became dominant. Peoples life declined precipitously while the moneymen were able to take their trade and wealth elsewhere. The same will happen in America. Living standards of the majority of the American People will go down the toilet and the capitalists will fare far better.
Jas
Jas Jain
Jas,
Tell that to the people of Tibet how happy they should be not to live in a Constitutional Republic and a non-capitalistic economy. Man, you really have no idea. BTW: US is a Constitutional Republic, not a democracy, dude.
According to Meredith Whitney, the best financial analyst of late, on CNBC said that bankers and financiers are NOT selling the assets they need to sell because they think that they will get a higher price later. Another quote: Even the financial I like I dont like.!
James Cayne sold 5.66 million shares of the company's common stock, according to a filing with the U.S. Securities and Exchange Commission.
The share sale, which occurred on March 25, included one direct sale of 5,612,922 shares and the other an indirect sale of 45,669 shares by Cayne's spouse, according to the filing.
The shares were sold at $10.84, valuing the sale at $61.3 million.
I don't necessarily disagree with your prediction. What I don't understand is why you believe democracy to be worse than any other form of governace. Certainly the form of government that modern democracy replaced--the absolute monarchy--had its share of problems.
For instance, the snippet of history from the reign of Luis XIV:
"An early decision shocked the court: the Superintendent of Finance, Nicolas Fouquet, was in disgrace, arrested, and to be tried for corruption. He was the wealthiest man in France, popular among those he favored with gifts of money from the public treasury, and he had just given the king several days' magnificent entertainment at Vaux-le-Vicomte, his stupendous garden-estate. He was condemned to banishment, which the king interpreted as prison, in various towns."--Jacques Barzun, "From Dawn to Decadence"
"Not one provincial governor but commits some injustice, no body of troops but lead dissolute lives, no gentleman but acts the tyrant toward his peasants, no tax collector, no delegate, no common sergeant but performs his role with insolence. These crimes are the worse for being committed in the name of the king. Even the upright among officials get corrupted, unable as they are to go against the current. Instead of a single ruler that the people ought to have, they have a thousand."--Louis XIV
Good businesses can still get loans. And the rates are historically cheap. It's the dumb stuff that's been shut off - like private equity and asset inflation chasing schemes.
In my view, private equity morphed into a glorified house flipping venture. Casey Serin & Carlyle have a lot in common. Leverage, opm, and the need for greater fools.
You'll know the housing bottom by the large numbers of prime mortgage holders forced from their homes because they simply could not longer pay the monthly payments...having exhausted all MEWs, HELOCs, CCs, payday loan sharks, garage sales, 401k withdrawals, large mobile asset sales.
Yes, it will come to that all around this nation. Your friends, neighbors, even you may be one. That will be the extent of the bloodbath and mark the nadir. But of course you won't be able to buy in, having spent all your means to prop precious pride and hoping to ride it out. Yes it will happen to you.
A Hard Day: Bonds had a rough ride with the work to grind to better levels in the face of supply completely undone following the results of the Fed's latest liquidity tweaking toy. The shorter end got hurt, with the 2-yrs knocked around, selling off to push the yield up over 8 basis points into the end of the session. The TSLF (TSLAM) offering did not see huge demand out of the primary dealers but achieved the purpose of swaping out some banks' illiquid paper to take it off their hands for 28-days.
The stop-out rate in the auction was 0.33%, just eight basis points higher than the minimum 0.25% set by the Fed, another indication that the dealers had little urgency to participate, Crescenzi said. "That is a very tight implied spread between Treasury general collateral and private-label residential mortgage-backed securities," Crandall said.
The Fed said it would accept a broad range of securities, including private-label mortgages and mortgage-backed securities, as collateral for the U.S. government securities it is lending to the 20 primary dealers.
In next week's auction, the Fed will accept a more limited range of collateral.
I'm up here in Canada and I'd be interested to know where Condo prices have come off by the % you suggest.
Right now in Toronto (TO) the market appears to be moderating, but I gather it's still relatively strong out west (not sure about the east).
Anyhow, I think stuff is overpriced in TO. Indications are that affordability is worsening everywhere in Canada. But I don't think a market weakening of the type you suggest has yet occurred (although it may yet come).
"We got lot of legalistic robots but few have the sense of right and wrong."
Jas,
I disagree. People do have that sense of right and wrong, but in an declining empire, (not a democracy or Constitutional Republic) they have to say what they say and do what they do because otherwise they wouldn't be able to fit in the system. Which constitutional republic on this planet has army bases all over every continent ? I remember a conversation in July 2007 here, in which the emperor has no clothes syndrom is obvious even for the oldest member of the US senate.
By the way I'm proud of the fact that my prediction have been proven so far so good.
--
"...they have to say what they say and do what they do because otherwise they wouldn't be able to fit in the system."
Anon,
Yup, "fitting in the system" is part of the corruption. People get bought out, or paid off, to support the corrupt system. In Nazi Germany the key to good life for most professionals was to support the Nazis. here those who support the economic Crooks get good rewards. That is why we have so many rogue economists. They have all been bought out. High class whore make good money and that is what we got in America Pimps (Crooks) and Whores (rogue economists and like) leading a good material life.
One day this corrupt system will end. And it will end with a bang.
"For many of these gatekeepers, journalists in particular, it is an article of faith that the more facts you have the less you need to depend on judgment and the sounder your decisions will be."
--
"Could you point out your favorite place or two?"
When Americans go down they want to take everyone with them! Power corrupts and...
VERY FEW PLACES TO HIDE Switzerland, Switzerland, and Switzerland. I am sure there are one or two other countries, e.g., Japan that would maintain reasonable law-and-order.
One of the worst places would be India, the largest democracy, in terms of breakdown in law-and-order. China would be lot safer, relatively. Democratic dupes will get their just reward, or a Rude Awakening.
BTW, I have the copy of Jacques Barzun, "From Dawn to Decadence" I read part of it anf hope to finish one of these days.
Why democracy is worse than monarchy? Please look at the whole history and tell me why democracy only came after the success of a civilization and not at the beginning?
Would there be US of A but for the success of the British monarchy.
Did you know that the so-called democracy in Britain was a coupe my the moneymen of London, who invited William of Orange to invade Britain with assurances that resistance would be very low?
Who financed the bloody Cromwell Revolution?
Why did Cromwell permit Jews back to Enter England after being thrown out in 1290s (few decades later they were thrown out of most of France) because too many property owners were losing their property to Jews?
Too may discomforting questions, I suppose, for a blind faithful in democracy to answer. Gross ignorance of history is necessary to have faith in democracy. I was a rabid democrat at the ripe old age of ten!
There will be a huge deflation in Big Bang! That is why deflationary depressions are great to take down the prices of what only crooks could afford before the DD.
I am sure that a date with Scarlet Johansson would go for $300. I might bid for one. I would be a perfect gentleman, you can bet your last dollar on that.
If modernism depends on information and not judgement, then maybe post modernism depends on opinion and not on accurate information. Judgement is discarded altogether.
NervousRex, you're right for the wrong reason. "Die" as in a mold from which something is cast. Hence "the die is cast", meaning you can't change it. It doesn't mean someone threw a die (one dice).
Vancouver is the golden domino at the end of a line that topples from S to N.
San Diego long gone
LA gone
SF - going
Portland and Seattle - teetering
Vancouver - la la but it is lovely
Condos still valued at over 400xRent.
Local RE economists still trumpeting the soft landing line.
If the US keeps pumping commodities worldwide (and world central banks keep playing along despite the food riots in their own backyards), Canada could sit pretty for a while.
What are units like your renting for? Just curious.
I am leasing a house in Discovery Bay, CA for $1850 month. Houses like mine are listing at $600K+....but not selling. I peronally would not pay a dime over $325K.
NervousRex, you're right for the wrong reason. "Die" as in a mold from which something is cast. Hence "the die is cast", meaning you can't change it. It doesn't mean someone threw a die (one dice).
Julius Caesar is reputed to have said, "Alia jacta est!" when he crossed the Rubicon. Literally, "The other is cast" referring to a die.
Wright Model B? Anyone?
So goes. Well within four years it should be complete, only three and a half more to go. Smoking ruins here and there, biggest torches being old bank buildings..
If housing values continue to fall as rapidly as they have in the past couple of months (more than 2% per month, no?) isn't it conceivable that they could bottom out by the end of the year? Afterall, 9 months x 2%/month is an additional 18%.
Also, Paul R. La Monica has an article on CNN talking about the bull market on homebuilder stocks..
The housing disconnect - Mar. 27, 2008
What do you rekin that's all about?
Fed's Lockhart: "Recovery may be delayed"
oh well, at least he isn't teaching Defense Against the Dark Arts anymore. he should probably still be in St. Mungo's, but i'm sure can't do much harm at the Fed.
I think he also suggested that other institutions facing financial crisis should not expect the same FED help as was donated to BS and JP.
Does the Fed even have enough capital remaining to bail out the really big players? And aren't there bigger players than BS teetering on the edge of BK?
So if the BS bailout was required to minimize damage to the economy, however unseemly the "moral hazard" involved, but doesn't do the trick - as seems likely - than what next? More sovereign wealth?
And now we see the mad scrambling for regulating the system.
Oops, too late.
Well, I've switched from Starbucks and fancy dine-in restaurants to Maxwell House and Taco Bell.
I'm not kidding -- this situation is having an effect on my psychology even though I'm not personally in any trouble (yet).
I've maxed my 401k plan out to the 1.3% I can legally contribute, and am saving every spare penny I have just in case things get hairy.
DownSouth, yes, if prices fall fast enough, we could get close to the price bottom by the end of the year.
But usually these busts take longer to correct. My guess is some areas won't see a price bottom until 2012 or so.
Best Wishes.
Any economist who was predicting a second half turn around in the economy based on housing should be flogged. Name me one housing/building bust that lasted only a year to 18 months come on just one...ya, thought so.
Also, Paul R. La Monica has an article on CNN talking about the bull market on homebuilder stocks..
Sure sign that the market makers are stuffed with inventory and looking for help
DownSouth - it's tempting to think they may have bottomed by year end... perhaps even many markets will be near bottom by year end. I really hope so, but I think this will last longer.
Inventories are going to skyrocket, but who really knows whether prices will be sticky enough to hang in there through low volumes while the excess clears... it could certainly happen in some local housing markets and not in others.
Hey, I'm still up here on the 7th floor waiting for Tanta, and all I can see is the vanishing cabinet and a bunch of ponies.
ac,
Life is too short to drink cheap coffee and cheap beer. Taco Hell? Why man? Why do you hate thyself? Bread and butter is far better.
Actually Beans...and if you can snub out another $3 go for the hot dogs.
ac,
Life is too short to drink cheap coffee and cheap beer. Taco Hell? Why man? Why do you hate thyself? Bread and butter is far better.
Actually I'm amazed by how good the Maxwell House is with CoffeMate. I bought it when I was on kind of a masochistic streak and planning getting in touch with other peoples' pain by simulating the corporate coffee experience at home, but at least when I make it myself it turns out really well.
It makes me realize how overroasted Starbucks is.
I guess during recessions, charity is the first thing to go, and I've decided I'm not going to pay a 200% premium on a cup of coffee so somebody can get health insurance.
It must be humiliating to ladle out the bad news in tiny spoons. And then to have to do it again in a few weeks or months.
ac - your max in your 401k plan is 1.3% ... so does that mean that $15,500 is 1.3% of your income? If so maybe you are a little too stressed over this whole situation!!
--
"The recovery in growth I had expected in the second half of this year may be delayed."
These sworn agents of the Crooks are constantly behind the curve. "Worse than I expected, "worse than I thought," etc., is what you would hear from these goons. This charade would continue for decades. These morons said at the end of July 2007 that everything was fine except for slightly slower growth and they have been wrong since. The worst part from some of their apologists: No one could have anticipated. Agents of the Crooks are supported by a coterie of rogue economists.
America has no hope with this sort of leadership. And since the system produces and promotes this sort of leadership there is no hope for the Americans system except for collapse. The dye is cast.
Jas
Recovery? Recovery from what? Don't you need to be in "something" before you can recover from that "something"? What might that "something" be Mr. Lockhart?
"corporate coffee experience at home"
Good God ac,Maxwell House? I am only a truck mechanic and if the owner of this company started buying that we would have a freakin revolt on our hands...
Heck we recently even started "Free lunch Tuesday". I'll give the food up to get good coffee...
Chris
"Recovery may be delayed"
Why, because of a recession?
"my forecast has been affected both by an economic slowdown that has been sharper than I had expected and the recurring spells of financial market turmoil."
Geez, sounds like a mother trying to hold off on a child asking, "are we there yet?"....."just a few more minutes honey".
The only reason people didn't expect correctly is because they didn't want to. Either they are not worth a salt as an economist and financial expert, or they are lying.
How anyone can say this is "unexpected" and in the same breath say that the recession won't happen because it's the most anticipated recession in history, are smoking dope.
I live in Los Angeles (the valley) and a unit in my townhome complex just sold for $325,000.
A year and a half ago another unit sold for $400,000.
That's a $75,000 haircut in my home's value (I bought my unit in 1991 for $150,000).
Ask Sebastian what we are "recovering" from.
The idea that prices will 'bottom out' holds a sort of implicit asssumption that they will then rise from that point. I don't see it that way; I think prices are 'returning to normal'.
It might seem like a minor point, but until the hope of any form of renewed bubble is gone, we are still living in illusion.
M-F writes:
ac - your max in your 401k plan is 1.3% ... so does that mean that $15,500 is 1.3% of your income? If so maybe you are a little too stressed over this whole situation!!
M-F (wonder what that stands for? I'm sure it can't be true):
If there are big pay inequities at the firm, and non-top-heavy employees contribute only peanuts to the 401K plan (or nothing), then top-heavy employees have their max contribution brought way down. At my firm, for example, the most anyone can contribute is about $5,000 - because our lower paid employees aren't contributing or contributing enough (and somehow we can't afford to give them the raises they deserve). Also, some of the company pension might be dispersed as company stock. That too can have a negative impact on the max allowable to plop in the 401K.
OT?
Shares of Lehman Brothers (NYSE:LEH - News) fell by nearly 10 percent in early New York trading on Thursday on rumors that the fourth largest U.S. investment bank could see a run on the bank similar to what happened to Bear Stearns (NYSE:BSC - News), traders said.
Sounds "ridiculous" to me.
Siouxsie and the Banshees
YouTube - Kiss them for me videoclips 1991 90s 90's
Kiss Them For Me
I think i'll go long Maxwell House.
CR says:
"DownSouth, yes, if prices fall fast enough, we could get close to the price bottom by the end of the year.
But usually these busts take longer to correct. My guess is some areas won't see a price bottom until 2012 or so."
"Bottom" is a misleading idea. It leads you to believe that there's some sort of static price point that housing has to reach.
But what if the bottom itself isn't static? What if, as housing falls in price, the "bottom" -- that magic price point -- also falls because of increasingly bad economic conditions?
It's that old feedback boogeyman again... chasing the bottom all the way to... what?
"Rest of the year for housing prices to bottom out..." Eh, okay - than I assume he's calling for an additional 20% to 30% off housing prices (or more!) on top of the 10% we've already seen by the end of the year. Surely, he can't just be calling for a minor correction and then back to the races with double-digit housing inflation vs. stagnant wages, right? Hahahaha...
I expect Mr. Lockhart knows well enough how things stand at the moment. But since the news is largely ipecac, what - other than what he is doing - is the man supposed to say?
Recovery? Recovery from what? Don't you need to be in "something" before you can recover from that "something"? What might that "something" be Mr. Lockhart?
Rob Dawg | Homepage | 03.27.08 - 1:46 pm | #
Remember that scene towards the end of "Fear and loathing in Las Vegas" where he wakes up amid the carnage of the hotel room with a microphone taped to has face, not remembering anything. The room is flooded, the glass is broken, the bed is burnt, a plastic animal is lodged in the toilet. A frenzied violent binge of epic proportions had obviously taken place.
What he meant to say was, "My forecast has been affected by all the happy spin, ignoring of negatives, and postive bullshit that I am required to say according to the Bush Administration"
At which time, had he really said that, Paulson and Bernake would have nodded their heads likewise....
Lehman said on March 18 that its holding company has $34 billion of assets it could easily sell, and another $64 billion of assets it could borrow against. Regulated subsidiaries have another $99 billion of assets it could borrow against
and here i thought the celoc was closed
It appears Lockhart is still too optimistic on house prices
I should note that the end of the housing boom could not have been a complete surprise to most participants. Sure, its nice to sell your home when bidding wars and escalator clauses are common, as they were in 2005. But these conditions were fairly unusual in most markets, and its hard to believe many people seriously thought they would persist indefinitely. This is another reason to believe that most people are likely to be reasonably well-positioned for the end of the boom.
Jeffrey M. Lacker
October 11, 2006
Some observers have called this extraordinary behavior of the housing market in recent years a bubble. I don't find that term useful or particularly accurate, since the behavior of housing appears to have been based on solid fundamentals.
Jeffrey M. Lacker
December 21, 2006
Watch what they do not what they say.
--
"I live in Los Angeles (the valley) and a unit in my townhome complex just sold for $325,000.
A year and a half ago another unit sold for $400,000."
tedzbear,
Sounds like building where my son rents in Sherman Oaks. He said that those condos were going for 75-80K during 1996-97 based on what he heard from the landlord and some others who have lived there for a long time (most are owners).
Jas
The delay will also be linked to The Fed holding a huge increase in toxic collateral, and the amount of cash taxpayers will forfeit as a result of this corruption! Just give the crooks more money every week -- who cares??
Five Questions For Bear Stearns and the Fed
Five Questions For Bear Stearns and the Fed - Deal Journal - WSJ
Christopher Dodd, the chairman of the Senate Banking Committee, has already set April 3 as a hearing date and summoned the expected suspects: Federal Reserve chairman Bernanke, Bear Stearns CEO Alan Schwartz, J.P. Morgan CEO Jamie Dimon, Securities and Exchange Commission Chairman Christopher Cox and Treasury Secretary Hank Paulson.
--
Are some posters here suggesting that Fed Governors are lying?
Democracy trains the populace to expects lies from their leaders, no? Over time this had extended from the political leaders to economic leaders, including what are now corporate Crooks.
That is how leaders in democracy breeds dopes. Only a moron can be made to believe that democracy is sustainable for a very long period. What has been the average lifespan of a democracy thru history? Oh, I get it, it is different this time, or for America. LOL!
Democracy is a front for the rule of moneymen. Athenian democracy ended when moneymen became dominant. Peoples life declined precipitously while the moneymen were able to take their trade and wealth elsewhere. The same will happen in America. Living standards of the majority of the American People will go down the toilet and the capitalists will fare far better.
Jas
OT: With negative real rates, and banking tightening credit lines (commercial and residential), US Service economy outsources, no commodities in house worthy of making a dent on trade deficits - where is this new economy coming from?
I think this answered my question above... hahaha
Expired
NEW YORK/FRANKFURT (Reuters) - The U.S. Federal Reserve prepared to pump $75 billion into frozen credit markets following moves by European central banks on Thursday to help lenders who scrambled to meet quarter-end funding needs.
"Geez, sounds like a mother trying to hold off on a child asking, "are we there yet?"....."just a few more minutes honey"."
Average Joe, you just hit on one of the often overlooked tools of the Fed - their access to the bully pulpit and market psychology. Their job is to tell it straight, and they do that most times, but, to paraphrase the Heisenberg Uncertainty Principal, they are so big and listened to that for them to comment at all is to influence. Anyone remembering Alan Greenspan's "irrational exuberance" comment and the market drop that ensued would agree to that.
So, yes, they feed the market pablum or shade the truth now and then to get the market to go where they need it to head without the crude tools of interest rate hikes and regulation. This is really not so bad IMHO, so long as they don't abuse it and are mainly truthful. I also say this because I think that if they really told us what they were thinking the market reactions would make any of the recent moves look tame.
AIG Sues Ace Greenberg Claiming 20 Billion Stock Misappropriation (I want to read these depositions.)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aymfq5Wt2X_4&refer=home
Bear hearing might be last chance for Dodd to show what a pussy he is:
The poll found that 47 percent of voters in Connecticut say the economy is the most important issue, followed by 25 percent who identify the war in Iraq and 11 percent who cited health care.
The same survey also found support for U.S. Sen. Christopher Dodd slipping in Connecticut.
Schwartz said the one-time Democratic presidential contenders job approval rating has dropped to its lowest level, at 51 percent. His highest approval rating, 71 percent, came in 2001.
"He really does not want to fall below 50 (percent)," Schwartz said.
Black holes have no bottom.
Banking pussy takes on banking fraud?
The chairman of the Senate Banking Committee yesterday expressed concern that JPMorgan head Jamie Dimon held a Federal Reserve Bank of New York board seat while his bank was talking with the Fed over the Bear Stearns takeover.
Sen. Christopher Dodd made his remarks in a radio interview.
"He [Dimon] also sits on the board of directors at the Federal Reserve in New York. Having decisions being made over the weekend with an institution where its leader is also a member of that board raises some serious issues," Dodd said.
When asked if he suspects Dimon's New York Fed board seat might have been a conflict of interest, Dodd said: "This is what we needed to talk about."
On a different but related topic, Lockhart has repeated the same old stuff about targeting asset prices, but Stern says he is rethinking his view. He says it is now apparent that the cost of wating to clean up the mess afterwards can be very high. He seems to imply that one cost is the risk that the public will think the Fed is propping up private firms.
Jas Jain....
"Our system of representative democracy assumes that those who act for the public have superior knowledge but that they share the public's goals and values. But on many issues this assumption is invalid. Leaders and experts seek to advance their own values and interests. This is why so much emphasis is put on public relations. Correcting the public's understanding is rarely the goal of public relations. The ususal goal is to make it possible for special interests to achieve objectives and advance values the public does not fully share.
"Some of America's smartest lawyers and Wall Streeters are being paid massive fees to serve the interests of a hanful of entrepreneurs who pursue their own interests and values irrespective of the interests and values of the public.
"This situation is a formula for social and political instability. The history of this century shows that there is no more potent negative political force than downward mobility. If the American Dream becomes a mockery for tens of millions of vigorous young Americans...the nation can expect rising levels of violence, crime, drug addiction, rioting, sabotage, and social instability.
Daniel Yankelovich, "Coming to Public Judgment: Making Democracy Work in a Complex World"
Since I assume Fed branch presidents have substantial economic credentials that enable them to correctly understand economic fundamentals, is this economic genius telling us real incomes will increase to make homes at current prices affordable? If so, how about some evidence of where that substantial increase will come from.
Or does he think prices will drop so much in the next six months that houses will once again be affordable for the majority of us? Is that the source of the turmoil he expects?
I also wonder why he thinks home buyer's "confidence in asset values" will be restored in a few months. After the turmoil of the last couple of years, I would expect it to take decades for average people to regain any confidence.
And why is Jas posting a comment (Jas Jain | 03.27.08 - 2:08 pm) that does not include ranting at the system?
TheStreet.com (very good concise report on bank earnings includes 10 best & worst charts - nice.)
Banks Post Worst Earnings in 17 Years
Banks Post Worst Earnings in 17 Years | Top Business News | Financial Articles & Investing News | TheStreet.com
Interesting Times - this says to me it is a solventcy issue NOT liquidity.
Also on Yahoo home page this little ditty in the news section:
"California home prices falling $2800 per week" - now this does not contribute to the "Wealth Effect"
Although it makes my feet burn like fire to say so, Jas Jain brings up a good point.
The Fed and its members were clueless last year about the "recession."
Yet this particular Fed President has been drafted into the recession argument, clothed in sudden credibility?
Sebastia
Yeah never a 'discouraging word' out of a government official until events squeeze it out. And then it is always sugar coated with lots of hope and "brighter days ahead" talk. Why anybody pays attention to these guys in the first place baffles me. You know they won't give you the straight poop.
The results of the Fed's first TSLF auction are out. 0.33% and bid to cover 1.15. This is bad news for treasuries and good news for equities.
crispy&cole said: "Ask Sebastian what we are "recovering" from."
This is good news for me. If the recovery is delayed, maybe that means the recession will be delayed.
S.
Sebastian "This is good news for me. If the recovery is delayed, maybe that means the recession will be delayed.:)"
I just threw up a bit in my mouth...
gulp...
This is good news for me. If the recovery is delayed, maybe that means the recession will be delayed.
S.
Sebastian
Many books good and bad will be written about this period and few will flatter the Fed.
Starbucks has always been a lousy imitation of good European coffee, the kind you would get automatically in France, Portugal or Italy, etc. It is bitter and harsh and probably made from cheap stuff from Africa mainly (my guess). Only Americans would think it something worth paying extra for. Interesting that Starbucks now thinks it can charge far less for it; that gives the impression they were previously charging far too much and they probably were. If you want strong coffee just use double the amount of Maxwell House instant.
Looks like the Sebastian crash indicator is high today....better load up with some more stuff
Morgan Stanley - March 27, 2008
Recession, Recoupling and Reflation
Morgan Stanley - Global Economic Forum
I'd just love it if a Fed Gov pulled a Reagan.
Fed Gov: O.K., before the mic goes hot, how exactly do I sugar coat:
Run for the hills folks, it's over, we're doomed.
Sound Tech: Sir the mic IS hot.
Cheers,
It's a rondo. We always have a Starbucks ritornello.
2 year Treasury @ 1.72
3 year Treasury @ 1.58
Dimon learned the art of deal-making from his mentor, Sanford ``Sandy'' Weill, with whom he built what is now Citigroup into the largest U.S. bank. Vikram Pandit, the company's current CEO, is planning to dispose of almost $200 billion of the lender's assets to shore up capital. Doing so may lower the bank's ranking to third place.
FFDIC writes:
Many books good and bad will be written about this period and few will flatter the Fed
And many of those books will be used to heat homes....
A little game of chicken might be at work here, but that's not the most likely scenario. Unfortunately, it looks like Jamie Dimon just got this one wrong. He was wrong with the price, wrong with the guarantee, wrong about the Fed's resolve. It's hard to believe the least-toxic Wall Street firm, a firm with Dimon, M&A banker Doug Braunstein and dealmaker Jimmy Lee would make those mistakes.
How Jamie Dimon fumbled his biggest deal David Weidner's Writing on the Wall - MarketWatch
--
Thanks, DownSouth, for the quote except that the author is a charlatan who promises that democracy can be made to work despite clear suggestion that there are fundamental flaws inherent in democracy leaders breed dopes, via propaganda, of course, so that they can easily and profitably lead!
Dont you see the problem success in a democracy goes to those who are better at propaganda? People with money can buy the best minds and those best adapt at propaganda, including economists? Rogue economists are far more harmful than lawyers, in general. Born-and-bred America dope simply cant understand how much harm the rogue economists, most of the policy sugggesters, are causing America in the name of science of economics. Americans are bred with faith in science and rogue economists exploit this trait.
Jas
Found this picture of the Wright model B:
http://www.fiddlersgreen.net/AC/aircraft/Vin-Fiz/info/crash.jpg
Seriously, that is a Wright Model B.
"The Fed and it's members were clueless last year about the 'recession.'"
"Yet this particular Fed president has been drafted into the recession argument, clothed in sudden credibility."--Sebastian
Paul Krugman makes a similar observation over on his blog:
"Today, our public discourse is dominated by people who have been wrong about everything--but are still, mysteriously, treated as men of wisdom, whose judgments should be believed. Those who were actually right about the major issues of the day can't get a word in edgewise."
Economics and Politics - Paul Krugman Blog - NYTimes.com
O/T but worth noting:
Just six months after leading a bailout of one its quantitative hedge funds, Goldman Sachs is following its investors by pulling most of its investment out.
The firm has withdrawn $1.8 billion from its Global Equity Opportunities Fund, the Financial Times reports. In August, the firm led a $3 billion capital injection, which included $1 billion from investor Eli Broad and hedge fund Perry Capital, as well as $2 billion of its own money, to shore up the fund, which like its fellow quants was beset by big investment losses and redemption requests. Broad and Perry have withdrawn their investments, as well.
Goldman is maintaining a $200 million investment in the fund, which now manages just $1.2 billion, down from more than $5 billion before it posted huge losses during this summers market turmoil. It withdrew the bulk of its investment at the end of last month, its first chance under the terms it set in making the investment in August.
The firm told investors in GEO of its redemption last week
I have been out of town and this may have been posted...but this is a great article in the NYT about the seller phychology...
http://tinyurl.com/2rh6pz
Be careful with that "Morgan Stanley" report. This caught my eye early on.
"...Also, both the manufacturing and the non-manufacturing ISM surveys have fallen below the recession threshold of 50..."
Which flat-out isn't true. That "50" level is not a recession threshold, but a threshold between month-to-month expansion/contraction for the diffusion indices.
If you get the ISM data and chart it, you can see that there have been times when it went below 50 and there was no recession (1995, 1998, 2003).
Sebastia
DownSouth - How can you tell who is wise?
Look at those who are not sweating today and are saying I told you so (but are too polite to actualy say it).
I had the opportunity to buy my first home in early 2006 (the peak in Canadian market). A close friend jumped in and bought a $500k condo.
Never in my life have I witnessed such total devistation of friendly character and optimisism so quickly.
I'm not in a recession, but he certainly is. It will be a depression when I start to feel it too. I'm heavily invested in gold and oil.
--
"Why anybody pays attention to these guys in the first place baffles me. You know they won't give you the straight poop."
Jim,
What choice do Americans have? We don't a royal family to talk about!
BTW, these people have lot of power over the lives of the people. They can and do change rules (laws) that affect people's lives, no? So, you should learn to ignore those who have influence over your lives?
Democracy is f**ed up system that can only appeal to dopes, especially, born-and-bred dopes. The other way of saying is that there is a necessity to breed dopes in America to keep blind faith in democracy.
Denial is necessary for Americans to have faith in the system. Maintaining blind faith and denial go hand-in-hand.
Jas
TAF auction at 0.33% - awfully nice rate for unloading junk. Talk about a stealth bailout.
Interesting Times said: "Look at those who are not sweating today and are saying I told you so (but are too polite to actually say it)."
Well, I'm not one of them. If I were in the market for a house here in early 2006 and waited until now to buy, I'd be paying +20% to +25% more.
Anytown, U.S.A is not a bubble area.
Sebastia
The success of the fed's auction today is no surprise. If I was a bank holding doddgy MBSs I'd go all in exchanging them for treasuries.
You can't buy fire insurance after the fire.
Lehmans balance sheet isnt shrinking, as wed expect.
Lehman finished the first quarter was total assets of $786 billion, up almost 14 percent from the previous quarter and 40 percent from a year earlier. Other financial institutions are taking down their exposure right now amid the market turmoil to be prudent. Lehman says it wants to. It is not.
Lehman got more leveraged, not less.
The investment banks gross leverage hit 31.7 times equity, up from the fourth quarter and way up from last years 28.1. According to Brad Hintz, an analyst with Bernstein Research, Lehmans leverage reached its highest point since 2000. Lehman, like all the investment banks, prefers to look at net leverage, excluding hedges, and that went down. And the firm says that the asset rise was mainly a result of increases in short-term items that have low risk. But weve heard a lot of that lately across the financial world. Its quite simple: The more leverage Lehman has, the less room assets have to fall to wipe out its equity.
Lehman includes debt in its calculation of equity. Say what?
Its always worrisome when a company changes a key definition of a closely watched measure of financial performance. In a note in its earnings release, Lehman said it has a new definition of tangible equity, or the hard assets that it has left over after subtracting its liabilities. This is a measure of net worth, the yardstick by which investment banks are valued. Lehmans new definition allows for a higher portion of long-term subordinated borrowings (which it calls equity-like) in tangible equity. Previously, it had a cap on the percentage of perpetual preferred stock, a form of equity-like debt that doesnt have a maturity date, in its equity. Now, it doesnt have a cap. Think of it this way: If you borrow money from your parents to make your down payment on your house and they dont expect to get paid back right away (at least not before you pay your mortgage off) is it equity in your house? No, its a loan. And Lehman hasnt borrowed from mommy and daddy.
Lehman says it is merely conforming to the Securities and Exchange Commissions definition of tangible equity and had contemplated making the change for a while. And the firm says the change didnt result in any difference to its net leverage ratio.
Lennar swings to a loss
Sales fell 62 percent to $1.06 billion from $2.79 billion in the year-ago period. The average selling price fell 8 percent.
Deliveries of new homes were down 60 percent to 3,596 homes. New home orders were down 57 percent to 3,045, with a cancellation rate of 26 percent
Expired
If you want strong coffee just use double the amount of Maxwell House instant.
My entire body just went into spasm thiking about this.
Lehman is a house of cards. Absent the Fed changing the rules, they would have inploded along with Bear.
ALL periods of extreme financial leverage end badly. Are you prepared?
ac - your max in your 401k plan is 1.3% ... so does that mean that $15,500 is 1.3% of your income? If so maybe you are a little too stressed over this whole situation!!
I was just making the same bad joke I make at most of our benefits overview meetings so they don't ask me to come to benefits overview meetings anymore.
Lehmans balance sheet isnt shrinking, as wed expect.
Lehman finished the first quarter was total assets of $786 billion, up almost 14 percent from the previous quarter and 40 percent from a year earlier. Other financial institutions are taking down their exposure right now amid the market turmoil to be prudent. Lehman says it wants to. It is not.
Lehman got more leveraged, not less.
Lehman is just following the fundamental guiding principle behind contemporary economics:
If banging on something causes it to break, bang on it ten times as hard to fix it.
Sebastian: Well, I'm not one of them. If I were in the market for a house here in early 2006 and waited until now to buy, I'd be paying +20% to +25% more.
So far, the same condo is down $100k in about 2 years. How's that for negative equity?
The local media used to pump real-estate like mad. Now... not so much...
I am still expecting a greater (longer) drop. Canada is supposed to lag the US economically not lead it.
ac said: "I was just making the same bad joke I make at most of our benefits overview meetings so they don't ask me to come to benefits overview meetings anymore."
Well, I know you can tell real jokes, too. "I don't have to read this report because I can just read the responses of other people who haven't read the report" is a gem.
Sebastia
My guess is some areas won't see a price bottom until 2012 or so
CR, when you say some areas, which areas do you think will take that long for recovery ?
Regards.
Jas Jain,
The truth is that Yankelovich gives a rather thought provoking read and addresses some of the issues you bring up. I can't copy the whole book here, but here are some more quotes...
"But increasingly, there is a sense that modernism as a philosophy of life suffers from serious flaws. One such flaw is a certain spiritual thinness. People find it difficult to live by modernism as an ethic. And modernism has a tendency to be relentlessly destructive of values that conflict with its imperatives, particularly traitional values of community (what I've called communal values).
"A closely related flaw is the elevation--almost worship--of science, technology, and expertise at the expense of other values. It is this side of modernism that I have called the Culture of Technical Control...."
"The social thinker who has looked into this distorting tendency of modernism with the greatest prescience is the German social scientist and philosopher Max Weber who did his great work in the early part of this century. Weber was particularly concerned with modifying the work of Karl Marx, who, Weber believed, had gotten some of the fundamentals wrong. For Weber, the most destructive element in modernism is not its economic power relationships but its tendency to give 'instrumental rationality' precedence over all other forms of thinking, feeling, and valuing..."
"For many of these gatekeepers, journalists in particular, it is an article of faith that the more facts you have the less you need to depend on judgment and the sounder your decisions will be. I want to show that this article of faith is based on a deep misunderstanding of the relationship of informatin to judgment and that when decisions concern matters of policy, good judgment is as important, if not more important, than good information and different from it...
"No amount of good information can compensate for bad judgment...
"But good judgment cannot be taken for granted. In today's society it is in far shorter supply than factual information. Our culture is heavily biased toward informatin; good judgment is almost a forgotten afterthought...
"The desirability of giving the public more information is never questioned. Improving the judgment of the public is, however, an unfamiliar and alien concept...
Vikram:
Know you didn't ask me, but I vote for areas that:
a.) have a high percentage of paid-for houses.
b.) have terrible demographics (the ratio of over 60 to 20-40 year olds is relatively high)
These two variables are probably highly correlated, and are most likely both satisfied in the NE of the US
Just my two cents.
Regarding financials (especially investment shacks and hedge funds):
At 40:1 leverage, a 2.5% decline in asset values wipes out the equity.
I just heard the fed is also exchanging treasuries for duct tape. Apparently, there is a growing fear that faith alone can no longer hold the system together.
something happen to take market down just now?
sarcasm off
Vikram writes:
My guess is some areas won't see a price bottom until 2012 or so
CR, when you say some areas, which areas do you think will take that long for recovery ?
Not CR but I'll guess:
Orange County
San Diego
Las Vegas
Fort Meyers
Fresno
Bakersfield
Merced (2022 more likely)
Rob-
You can farm in Merced! Tear down all the fences in the neighborhood and have a co-op community garden..
That or park a military base nearby again. If not 2022 is being a optimist
You know, my partner and I are total food/wine/beer snobs and faced with Maxwell House as the only option with out a grocery run at my mom's house, we gritted our teeth and, you know, it was fine. There's been a worldwide coffee glut for most of a decade now, even the cheapies can buy decent beans for less now than they used to pay for the dregs.
BUT, going long on passable inexpensive substitutes sounds like a good tactic. All the stalwarts of my parent's era leap to mind as consumers flee the price-premium exotics and jump back to what feels like comfortable value.
And Bacon Dreamz, Lockhart escaped Ward 49 and is planning to return to his first love of writing books about himself.
Wave 4 coming next week already ?
Forgot TED spread:
http://www.bloomberg.com/apps/quote?ticker=.TEDSP%3AIND
Some Bruce music for today
because thiers a "Darkness on the edge of town" his intro is classic for what could be..
YouTube - Bruce Springsteen - Darkness On The Edge Of Town
Rob Dawg,
Some areas will never recover. Entire neighborhoods in places like Philly, Camden, Chester, Toledo, Trenton, Cleveland, Detroit, Pittsburgh, etc. are all but worthless. At one time, they had value.
It's hard to talk about a recovery in isolation. Without REAL wage gains, I don't see how many areas can ever recover.
It's hard to talk about a recovery in isolation. Without REAL wage gains, I don't see how many areas can ever recover.
Angry Saver | 03.27.08 - 3:59 pm |
Again I have to ask where does anyone this will come from? Any hints?
But usually these busts take longer to correct. My guess is some areas won't see a price bottom until 2012 or so.
Aren't all these Fed actions a deliberate attempt to TRY slowing down the pace of the bust?
Man, the PPT again!!
What a joke!
This market is so rigged.
Where is the press on this?!
I do not know how to make one of those football pools, but ...
Is it possible to create a pool where the participants pick the next IB to go crying to the Fed that it is insolvent and which financial institution will "buy" it?
.
awgee - check out the PUT options for LEH
Expire at close Fri, Apr 18, 2008
Strike Symbol Last Chg
2.50 LYHPZ.X 0.05 +0.01 (+25%)
There's your "Pool"
What was I thinking? The IBs can no longer go bankrupt. They just run down to Costco and grab a jumbo size pack of toilet paper and head to the Fed discount window.
Did everyone get the memo? Now that Lehman has exchanged its junk for treasuries, it's ok for clients to pull their money. Defacto nationalization has occured.
"You can farm in Merced! Tear down all the fences in the neighborhood and have a co-op community garden..
That or park a military base nearby again. If not 2022 is being a optimist."
There was a military base in the area, Castle AFB; closed years ago.
Merced was seriously overbuilt on sheer bubble madness. There's no real economy to support all the houses. About all they have outside of ag is an undernourished new UC campus that, right now, is no bigger than a large high school and not much better than a community college.
I'm not sure that housing in Merced will ever "recover," because it's never been all that well.
If I were in the market for a house here in early 2006 and waited until now to buy, I'd be paying +20% to +25% more.
You'd also be an ignorant fool also.
--
Thanks again, DownSouth, for the quotes.
My point is how can there be a future for a society of born-and-bred dopes who have been led by evildoers -- Greenspan, Bush and Bernanke -- for the past several years? This was not so thru most of the US history. Evildoers never had this kind of power that they do. They gave themselves more and more power over the years. And we know why it is rooted in human nature.
This country absolutely will go down (system will collapse) because evildoers have an iron grip on the democratic system. Money-whores don't have values like honor and even the pride is of wrong kind -- see, how much money I got. Just look at the moral bankruptcy of the ordinary people, let alone the economic elite. We got lot of legalistic robots but few have the sense of right and wrong.
Jas
Interesting Times,
I see no way for median incomes rise in real terms. Hence we need either zero CPI inflation or a more socialized economy.
A socialization of the economy has been happening for years. Just look at the growth of government in terms of jobs and spending. Prosperity?
If you have not clicked through to read Lockhart's entire speech, I strongly recommend it. The most interesting section is the last:
The line that separates restoring market function from merely redistributing losses and gains is not a bright one. This is the reason that policymakers only rarely and reluctantly intervene in markets.
Also, the distinction between liquidity problems and insolvency is not a trivial one when monetary authorities respond to troubles of market players.
Indeed.
Anon at 4:17 -
Not a truer statement has ever been written in these comments.
Nemo Nice!
And they are still treating it like a liquidity problem....
Bob Dobbs
Castle is what kept Merced alive..Can you imagine driving from Merced (99) to Pleasanton/Bayarea(580)back and forth to work each day. People are crazy to sit in traffic for 2 hours each way to live in a house they own.
Throw in gas prices and your looking at a depreciating paycheck and house.
Stockton to Bakersfield had thier wine and now has to get ready for the vinegar! Also this plus Sac valley is CRE explosion viewing point to monitor. It will happen here first...
Way overbuilt for a almond and raisen town...
"How can you tell who is wise?"--Interesting Times
That's a tough one.
Just a little anecdotal experience of my own.
Midland, Texas is located in one of the great oil producing basins of the U.S. and its economy is highly dependent on oil.
Oil PRICES peaked at $39.50 in the summer of 1980. From there they rapidly tapered off to around $30 where they remained until December of 1985.
In 1984 I moved to Midland from Dallas. Due to the 1980 fall in oil prices, Midland housing prices had already taken quite a beating, perhaps falling 10 or 15% from their 1981 peak. I felt they had bottomed out. I purchased a really beautiful home for something like $175,000, taking out a $155,000 loan.
Then in January 1986 the price of oil really fell, some months to as little as $11 or $12 a barrel, and remained at less than $20 until 2000.
The result was that I saw the value of my $175,000 house slowly but inexorably dwindle away over the next few years. By 1989 I was upside down and remained that way for years until real estate prices started to recover in 2000.
Needless to say, when the housing boom began in 1999, and the huge runup in mortgage and consumer debt, I was skeptical. I kept telling people that housing prices can go down. They thought I was crazy. But I was right in predicting the bubble would burst.
Was I wise? I suppose I wasn't as wise as the guy who bought the absolute biggest house he could afford in 1999 and sold in 2005 before the crash. I suppose I wasn't as wise as Greenspan's friend (is it Paulson?) who made $billions speculating on the end of the real estate bubble. But I was wise enough to avoid another depression in my life, and to preserve peace and calm in my life.
Tony Crescenzi Blog
Fed Sale Goes Well
By Tony Crescenzi
RealMoney.com Contributor
3/27/2008 3:26 PM EDT
URL: Financial Investments and Stock Market Tips for Real Money - TheStreet.com
The Federal Reserve helped to liquefy $75 billion in securities today by offering that amount of its $650 billion of Treasury holdings to the nation's 20 primary dealers in exchange for so-called Schedule 2 collateral. This type of collateral includes agency collateralized mortgage obligations, AAA/Aaa-rated private-label residential mortgage-backed securities, AAA/Aaa-rated commercial mortgage-backed securities, as well as collateral eligible for the tri-party repurchase agreements that are arranged regularly in the Fed's daily open market operations.
By obtaining Treasuries in exchange for such collateral, dealers can then put the securities out on repo, which is to say that dealers can then exchange the Treasuries for cash with any willing counterparty, of which there are many more than for the other types of collateral, as Bear Stearns obviously learned recently.
The urgency to participate in today's operation on the surface does not appear to have been all that strong. In other words, dealers did not show any signs of being desperate to liquefy collateral much beyond what was available, as evidenced by the bid/cover ratio of 1.15. In addition, the fee rate paid by dealers for the lending service was just 0.33%, or 8 basis points, above the minimum. The premium appears to reflect normal gaming of the auction and not much else.
Additional information on the Street's urgency to swap collateral for Treasuries will be apparent in today's release of money supply data, which will include a figure on the Fed's new Primary Dealer Credit Facility, which was the facility used in the Bear Stearns deal.
The amount of new borrowing that will appear in today's data is expected to be small, similar to the increase in discount-window borrowing that occurred in the aftermath of the Fed's cut in the discount rate last August. Only a few dealers likely tapped the window, with the tally no more than in the low billions at most.
This first go-around indicates that the Fed may not need to auction all of the $200 billion in securities it has allotted for the TSLF.
It's hard to talk about a recovery in isolation. Without REAL wage gains, I don't see how many areas can ever recover.
Agreed. Long-term the value of housing in a given area is going to be closely related to the amount of per capita economic output in that area. Without that increasing it's hard to see any kind of recovery.
Plowing excess housing into the ground only helps so much -- it does nothing to increase the buying power of the population in that area.
Democracy is a front for the rule of moneymen. Athenian democracy ended when moneymen became dominant. Peoples life declined precipitously while the moneymen were able to take their trade and wealth elsewhere. The same will happen in America. Living standards of the majority of the American People will go down the toilet and the capitalists will fare far better.
Jas
Jas Jain
Jas,
Tell that to the people of Tibet how happy they should be not to live in a Constitutional Republic and a non-capitalistic economy. Man, you really have no idea. BTW: US is a Constitutional Republic, not a democracy, dude.
O-Joe
Nemo Nice!
And they are still treating it like a liquidity problem....
It's not a liquidity problem. It's an "I don't want to buy stuff that sucks" problem.
How do you force people to buy garbage?
IMO you don't. You create stuff worth buying.
Now we're trying to turn savers and taxpayers into a dumping ground for financial garbage, without bothering to ask for their consent.
Pretty unethical if you ask me.
--
Bankers Imitating Home-Sellers!
According to Meredith Whitney, the best financial analyst of late, on CNBC said that bankers and financiers are NOT selling the assets they need to sell because they think that they will get a higher price later. Another quote: Even the financial I like I dont like.!
Jas
Banks in complete lock up; hoarding cash, not liquidating assets, leaning too heavily on CB.
FED is increasingly going to have to bypass Banks/IBs and lend directly to marketplace
Credit crisis squared.
James Cayne sold 5.66 million shares of the company's common stock, according to a filing with the U.S. Securities and Exchange Commission.
The share sale, which occurred on March 25, included one direct sale of 5,612,922 shares and the other an indirect sale of 45,669 shares by Cayne's spouse, according to the filing.
The shares were sold at $10.84, valuing the sale at $61.3 million.
Now why in the Hell would Bank of America ask the Fed to approve their purchase of Countrywide?
Why now?
CNNMoney.com: 404 Page Not Found
Some one in LA or Chicago please go to the hearings. It should be fun if you take your SuperSoaker.
Re: This market is so rigged.
Where is the press on this?!
We are the press, we the people are retarded and need accountability!
Sorry, but coffee has become a luxury, as has milk. It's tap water now, although it tastes like dead fish today, for some reason.
Here's hoping for a better tomorrow.
Jas Jain,
I don't necessarily disagree with your prediction. What I don't understand is why you believe democracy to be worse than any other form of governace. Certainly the form of government that modern democracy replaced--the absolute monarchy--had its share of problems.
For instance, the snippet of history from the reign of Luis XIV:
"An early decision shocked the court: the Superintendent of Finance, Nicolas Fouquet, was in disgrace, arrested, and to be tried for corruption. He was the wealthiest man in France, popular among those he favored with gifts of money from the public treasury, and he had just given the king several days' magnificent entertainment at Vaux-le-Vicomte, his stupendous garden-estate. He was condemned to banishment, which the king interpreted as prison, in various towns."--Jacques Barzun, "From Dawn to Decadence"
"Not one provincial governor but commits some injustice, no body of troops but lead dissolute lives, no gentleman but acts the tyrant toward his peasants, no tax collector, no delegate, no common sergeant but performs his role with insolence. These crimes are the worse for being committed in the name of the king. Even the upright among officials get corrupted, unable as they are to go against the current. Instead of a single ruler that the people ought to have, they have a thousand."--Louis XIV
Regarding the credit crisis:
Good businesses can still get loans. And the rates are historically cheap. It's the dumb stuff that's been shut off - like private equity and asset inflation chasing schemes.
In my view, private equity morphed into a glorified house flipping venture. Casey Serin & Carlyle have a lot in common. Leverage, opm, and the need for greater fools.
At my corp. job we only have Maxwell House.
Hey, it's free...for now.
You'll know the housing bottom by the large numbers of prime mortgage holders forced from their homes because they simply could not longer pay the monthly payments...having exhausted all MEWs, HELOCs, CCs, payday loan sharks, garage sales, 401k withdrawals, large mobile asset sales.
Yes, it will come to that all around this nation. Your friends, neighbors, even you may be one. That will be the extent of the bloodbath and mark the nadir. But of course you won't be able to buy in, having spent all your means to prop precious pride and hoping to ride it out. Yes it will happen to you.
A Hard Day: Bonds had a rough ride with the work to grind to better levels in the face of supply completely undone following the results of the Fed's latest liquidity tweaking toy. The shorter end got hurt, with the 2-yrs knocked around, selling off to push the yield up over 8 basis points into the end of the session. The TSLF (TSLAM) offering did not see huge demand out of the primary dealers but achieved the purpose of swaping out some banks' illiquid paper to take it off their hands for 28-days.
And upside down is good!
http://www.bloomberg.com/apps/news?pid=20601087&sid=amezsj3OeoeA&refer=home
"Bush Says Basra Offensive Shows Iraq's Progress"
If the entire US Army is wiped out, that will definitely be victory!
We are so doomed.
Doom on you!
I have an AK-47 and enough grape koolaid for 7 years. I luva the soylent green too.
The stop-out rate in the auction was 0.33%, just eight basis points higher than the minimum 0.25% set by the Fed, another indication that the dealers had little urgency to participate, Crescenzi said. "That is a very tight implied spread between Treasury general collateral and private-label residential mortgage-backed securities," Crandall said.
The Fed said it would accept a broad range of securities, including private-label mortgages and mortgage-backed securities, as collateral for the U.S. government securities it is lending to the 20 primary dealers.
In next week's auction, the Fed will accept a more limited range of collateral.
Interesting Times
I'm up here in Canada and I'd be interested to know where Condo prices have come off by the % you suggest.
Right now in Toronto (TO) the market appears to be moderating, but I gather it's still relatively strong out west (not sure about the east).
Anyhow, I think stuff is overpriced in TO. Indications are that affordability is worsening everywhere in Canada. But I don't think a market weakening of the type you suggest has yet occurred (although it may yet come).
"If the entire US Army is wiped out, that will definitely be victory!"
LMFAO!
Vote John McBush for more of the same.
wally writes: It might seem like a minor point, but until the hope of any form of renewed bubble is gone, we are still living in illusion.
and so go all bubbles
"We got lot of legalistic robots but few have the sense of right and wrong."
Jas,
I disagree. People do have that sense of right and wrong, but in an declining empire, (not a democracy or Constitutional Republic) they have to say what they say and do what they do because otherwise they wouldn't be able to fit in the system. Which constitutional republic on this planet has army bases all over every continent ? I remember a conversation in July 2007 here, in which the emperor has no clothes syndrom is obvious even for the oldest member of the US senate.
By the way I'm proud of the fact that my prediction have been proven so far so good.
We're nowhere near a housing bottom. People will hock their wedding silver before letting go of their houses.
Watch for cheap silver on craigslist this summer.
Later this year we'll see the desperation. Next year, realization. Maybe the following year a bottom may start forming.
--
"...they have to say what they say and do what they do because otherwise they wouldn't be able to fit in the system."
Anon,
Yup, "fitting in the system" is part of the corruption. People get bought out, or paid off, to support the corrupt system. In Nazi Germany the key to good life for most professionals was to support the Nazis. here those who support the economic Crooks get good rewards. That is why we have so many rogue economists. They have all been bought out. High class whore make good money and that is what we got in America Pimps (Crooks) and Whores (rogue economists and like) leading a good material life.
One day this corrupt system will end. And it will end with a bang.
Jas
Jas, will that "bang" cost $5k/hr?
Jas Jain: there is no hope for the Americans system except for collapse. The dye is cast.
I think you mean "die" as in singular of dice, unless you are painting with a broad brush or spray can :=-
AUE: FAQ excerpt: "The die is cast."
Alea iacta est - Wikipedia, the free encyclopedia
Nevertheless you seem quite pessimistic about the United States. Could you point out your favorite place or two?
"For many of these gatekeepers, journalists in particular, it is an article of faith that the more facts you have the less you need to depend on judgment and the sounder your decisions will be."
Talk about dated.
--
"Could you point out your favorite place or two?"
When Americans go down they want to take everyone with them! Power corrupts and...
VERY FEW PLACES TO HIDE Switzerland, Switzerland, and Switzerland. I am sure there are one or two other countries, e.g., Japan that would maintain reasonable law-and-order.
One of the worst places would be India, the largest democracy, in terms of breakdown in law-and-order. China would be lot safer, relatively. Democratic dupes will get their just reward, or a Rude Awakening.
Jas
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DownSouth,
BTW, I have the copy of Jacques Barzun, "From Dawn to Decadence" I read part of it anf hope to finish one of these days.
Why democracy is worse than monarchy? Please look at the whole history and tell me why democracy only came after the success of a civilization and not at the beginning?
Would there be US of A but for the success of the British monarchy.
Did you know that the so-called democracy in Britain was a coupe my the moneymen of London, who invited William of Orange to invade Britain with assurances that resistance would be very low?
Who financed the bloody Cromwell Revolution?
Why did Cromwell permit Jews back to Enter England after being thrown out in 1290s (few decades later they were thrown out of most of France) because too many property owners were losing their property to Jews?
Too may discomforting questions, I suppose, for a blind faithful in democracy to answer. Gross ignorance of history is necessary to have faith in democracy. I was a rabid democrat at the ripe old age of ten!
Jas
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"Jas, will that "bang" cost $5k/hr?"
There will be a huge deflation in Big Bang! That is why deflationary depressions are great to take down the prices of what only crooks could afford before the DD.
I am sure that a date with Scarlet Johansson would go for $300. I might bid for one. I would be a perfect gentleman, you can bet your last dollar on that.
Jas
If modernism depends on information and not judgement, then maybe post modernism depends on opinion and not on accurate information. Judgement is discarded altogether.
NervousRex, you're right for the wrong reason. "Die" as in a mold from which something is cast. Hence "the die is cast", meaning you can't change it. It doesn't mean someone threw a die (one dice).
Perhaps he really meant dye, as in the red dye will be cast over all your flags.
Don't know about Toronto.
Vancouver is the golden domino at the end of a line that topples from S to N.
San Diego long gone
LA gone
SF - going
Portland and Seattle - teetering
Vancouver - la la but it is lovely
Condos still valued at over 400xRent.
Local RE economists still trumpeting the soft landing line.
If the US keeps pumping commodities worldwide (and world central banks keep playing along despite the food riots in their own backyards), Canada could sit pretty for a while.
tedzbear,
What are units like your renting for? Just curious.
I am leasing a house in Discovery Bay, CA for $1850 month. Houses like mine are listing at $600K+....but not selling. I peronally would not pay a dime over $325K.
Jas says: "too many property owners were losing their property to Jews?"
Just let Jas talk long enough and the antisemitism raises its ugly head. No wonder he refers to Nazi's in such a chariable way. One sick MF.
"US is a Constitutional Republic"
not anymore it's not. more like an elective dictatorship, where the elections are routinely stolen.
NervousRex, you're right for the wrong reason. "Die" as in a mold from which something is cast. Hence "the die is cast", meaning you can't change it. It doesn't mean someone threw a die (one dice).
Julius Caesar is reputed to have said, "Alia jacta est!" when he crossed the Rubicon. Literally, "The other is cast" referring to a die.
I hate being wrong, especially when correcting someone else's correction.