Um, major banks with huge derivatives-
Step right this way!
Hoi polloi builders- um, please submit verified claims to the court for treatment in the settlement of your Chapter 7 claim.
An interesting "thing" I had researched in regard to TOLL, many months ago, is related to the fact that one of Toll's 500+ subsidiaries, is its own bank, which loan itself money for joint ventures. Nice huh!
Thus the history behind my screen name. When this is all over you'll know as I will switch to Bob Kat. IN the mean time anyone who is surprised is directed to look up an occasional poster her; Reggie Middleton of boombustblog.com who isn't surprised at all.
I suspect the Fed stepped in because Bear is behind at least some of Fidelity's money market funds. Imagine Fidelity having to explain that one...
"On Tuesday, a major asset-management company stopped trading with Bear."
"Bear risked defaulting on extensive "repo" loans, in which it pledges securities as collateral for overnight loans from money-market funds. If that happened, other securities dealers would see their repo loans reduced or cut off. The pledged securities behind those loans could be dumped in a fire sale, deepening the plunge in securities prices."
Which company insured the title on all these homes? Depending on mechanics lien laws, the title company would likely be on the hook to pay any contractor's liens.
A big builder taking a hit like this will mean big losses for the title insurance company(ies.)
Lenar: packing bong Chill Toll. Have a binger of this it's sweet.
Toll: thlllllppptt...cough, hack, cough, hack Dude, that's why I hate bingers man. KB, F man! lemme have a hit dude!.
KB: Dude your breath stinks like crap. I want mine before you put this joint to your lips. stoned guffaw..cough cough
Toll: KB, I paid for half the shite in that. Pass it dude or I'm gonna pound you.
Lenar: thhllllllppt.....hooooo Toll, bingers are bad ass! Your math sucks too. There's 3 of us so we all paid like a quarter each for the gange. Man you're stupid.
"Doesn't everybody know that sugar daddy Benny B. will make all the pain go away?"
Santa baby, slip a sable under the tree,
For me.
been an awful good girl,
Santa baby, so hurry down the chimney tonight.
Santa baby, a 54 convertible too,
Light blue.
I'll wait up for you dear,
Santa baby, so hurry down the chimney tonight.
Think of all the fun I've missed,
Think of all the fellas that I haven't kissed,
Next year I could be just as good,
If you'll check off my Christmas list,
Santa baby, I wanna yacht,
And really that's not a lot,
Been an angel all year,
Santa baby, so hurry down the chimney tonight.
Santa honey, there's one thing I really do need,
The deed
To a platinum mine,
Santa honey, so hurry down the chimney tonight.
Santa cutie, and fill my stocking with a duplex,
And checks.
Sign your 'X' on the line,
Santa cutie, and hurry down the chimney tonight.
Come and trim my Christmas tree,
With some decorations bought at Tiffany's,
I really do believe in you,
Let's see if you believe in me,
Santa baby, forgot to mention one little thing,
A ring.
I don't mean on the phone,
Santa baby, so hurry down the chimney tonight,
Hurry down the chimney tonight,
Hurry, tonight.
Bear's steep stock decline has been a blow to its 14,000 employees, who've been prohibited from trading the shares because of longstanding "lockups" weeks prior to the company's earnings announcements. Employees could only watch this week as a substantial portion of their net worth vaporized. "We're not allowed to touch it," said one. "We've just gotten toasted."
Crispy&Cole writes:
Just checked Fox news.com. BSC is not a top story, only Obama stuff. Keep the sheeple in the dark long enought to vote McBush in...
Saw a poll on CNN the other day - if Amerikans were to vote today:
McCain - 43%
Obama/Clinton - 47%
I just don't know what to think about this - almost 50% still willing to continue Bushinomics!
Did anybody else here see this Blurb on CNBC yesterday?:
In an interview, Senator Kay Bailey Hutchinson (is she Texas?) said that she thought the Government should step in and help the Homebuilders put a floor under prices to "avoid selling at bargain basement prices".
Who IS this nutcase Hutchinson? Apparently , a lot of our politicians think that 2- 3 X income is "bargain basement".
McBush will be the final nail in coffin for America as we knew it asshat !
The cost of Bush to America since 2000
is $32 Trillion dollars in total liabilities and unfunded commitments for future payments.
In a speech a couple months go ( before he retired ) GAO Comptroller General David Walker said:
"If the federal government was a private corporation and the same report came out this morning, our stock would be dropping and some people would be talking about whether the companys management directors needed a major shake-up".
The federal governments total liabilities, Walker explained, translates into a de facto mortgage of about $455,000 for every American household and theres no house to back that mortgage. In other words, our government has made a whole lot of promises that, in the long run, it cannot possibly keep without huge tax increases.
Obama or America will become a bigger version of Mexico or Argentina.
All McCain has to do is say he loves Country Western Music and is against abortion and bingo, he's in like Bush! The clincher will be to support our boys in Iraq (who should have never been sent there) and to claim that we have won the war, which has been worth every penny!
Don't get me wrong, I'm not "pro abortion" or for a society filled with retards, but when it comes down to taking attention away from $1000 gold, skyrocketing wheat, oil and other inflationary matters, including a systemic banking collapse, a war, a housing bubble implosion, damn near chaos...... country western music will probably make a difference between the winner and loser! America is that stupid! Count on it!
No screaming and waving of hands in the air for our glorious leader. As I remember it, his style of response to an all-out emergency is to sit still looking like a dear caught in the headlights while reading a book about pet goats.
That's why we'll have elections. But it seems to me that more "uneducated" (BY FAR) are democrat than republican. Go to anywhere there is high crime, drugs, and high drop-out ratios and see how they vote.
BTW, I live in the inner city. I live in high crime, etc.
I'm also not a replubican. I'll wait till the debates, see what they have to say, and then vote for the lessor evil.
The uneducated don't vote. The badly educated flyover country occupants who think they're smart and complain about the 15% taxes they're paying on their 40K income are the uneducated morons voting (R) because they hate obscenity, evolution, married gays, minorities and love Jeebus -- the moneyed interests hoodwinked them into voting for rich people. Since they're no longer RIHPO, it's going to be a wild election.
Wait for the currency to start inflating once we get exports running and see if they get a COLA to compensate. My guess-not.
I think it is time for you all to acknowledge that all these efforts by the Fed and others are an attempt to mitigate without causing harm. There is no easy way out and all the sniping from this blog is, frankly, kind of pathetic (CR and Tanta included).
Reasonable people are trying desperately to contain the disaster caused by their prior inattention to the risks.
Sugar Daddy Ben commentary may be self-satsifying but, perhaps, it is time to stop the self-righteous snarky sniping and give the Fed the rhetorial room it needs to maneuver through.
We all know, now, the whole deal sucks, but we are where we are.
It's been entertaining over the last few months to hear about helicopter Ben and all, but maybe, just maybe, he is doing the best he can under the circumstances.
My liberal perspective leads me to point the finger of blame at conservative anti-government and anti-regulation policies. Unfortunately, we all bought into the myth of financial engineering. Dems and Repubs are equally guilty.
It's been entertaining over the last few months to hear about helicopter Ben and all, but maybe, just maybe, he is doing the best he can under the circumstances.
Big Beng has been in Fed for many, many years.
If he is really 'just trying to help', then he is either kinda late, or kinda stupid...
And this is the same uni. that tried to impose a 'gag rule' on its students just a few years ago, prohibiting them from saying anything 'negative' about the university, even when they were off campus.
For the record (not that anybody cares) this is what I want in a president:
Re/war: Get out fast, don't invade anyone else, but let the whole world know if you mess with us, it will be nuke time on your ass. We'll destroy you from a distance. Your citizens will die too. They will hopefully keep you in check.
Re/abortion: If you're against it, don't YOU have one.
Re/healthcare: keep it private, government can't do anything right.
Re/Taxes: that's a tough one. How about no fed tax for first 200K of income. Then prorate with tax brackets. from 200k to 500K...10%. From 500k to 1 million 25% At 1 million to 5 million up it to about 50% And then screw all the filthy rich once they hit 5 million per year by taking 70 to 80% of their income. No more tax deductions. Somewhere along those lines. That will piss off the elite, but will make 90% of the country happier.
Re/Fed and financial policy: Apppoint CR and Tanta
As you can see, no candidate meets my needs. That's why I'll vote for the lessor evil.
This is so interesting to watch unfold. Just like a train wreck but interesting anyway. This must have been what it was like in 1930-31 and the banks bit it and people realized their houses were worth crapola. Oh the Humanity!
Yes, Kay Bailey Hutchinson is the senior Senator from Texas.
Sigh. To be fair, housing prices here are not very bubbly, depending on the market, because the dot-com bust hit hard and our punishing property taxes have to be paid year after year and you can't get a NINJA loan for that.
But homebuilders are an enormously powerful lobby in Texas and I imagine they think that's a great idea.
She might be stepping down to run for governor -- a job that a well-trained dog could do as the real power resides with the Lt Gov.
Sadly, few in the nation knew that little fact and thought that Gov of Texas was some sort of credential for Bush.
I live in a dark blue island in this red state and no here is surprised at the ham-fisted, tone-deaf, absolute destruction brought by that man.
Now that 30 years of the republican supply side lie has ravaged the country, is there any more need to discuss the failure of the borrow and spend mantra?
In an interview, Senator Kay Bailey Hutchinson (is she Texas?) said that she thought the Government should step in and help the Homebuilders put a floor under prices to "avoid selling at bargain basement prices".
In other words, we should take resources and labor from other efforts and focus them on deliberately misrepresenting asset prices.
Paul - I agree, with the sole exception that I don't see that CR and Tanta are joining in the irrational sniping.
There's no good or easy way out of this bipartisan disaster. There's no way to hand the pain solely to those we consider culpable. We're just going to have to start dealing with everything we didn't deal with before and work it all out as best we can.
km4, re/ education status, I stand corrected by you. Interesting. I went off my personal experiences in the inner city but I didn't take into account the bible belt trailer trash.
As you can see, I'm nothing like Bush. I admit my mistakes.
doom very cordial of you...like others have said or insinuated cumulative effects of mostly GOP polices over past 25 yrs has put this country in jeopardy and its accelerated in past 8 yrs under Bush.
This esp. has pissed me off...
Derivatives 'ticking bomb' starting to go off in blowback stages.
Wall Street didn't listen to Buffett as derivatives grew into a massive bubble, from about $100 trillion in 2000 to $516 trillion by 2007.
Will the perpetrators of this massive ponzi scheme and looting of the US Treasury be held accountable for passing this massive shitbag to America ?
km4 writes: Will the perpetrators of this massive ponzi scheme and looting of the US Treasury be held accountable for passing this massive shitbag to America ?
What makes you think there has ever been any justice in America? Are you an Obama-ite?
I am too and hope he can start to change the approach, but lets not be naive.
The game is rigged and you just have to realize that you have no chance to win. Having said that, the only way to win is to change the rules. This is the political appeal of Obama and why CR has attracted some newbies.
Yes we can! Maybe. I think this current financial panic provides an opportunity to purge some portion of the greed from the system. I know, silly me. What have we got to lose?
But I cannot support cheerleading for financial catastrophe - no matter how good it feels.
It's time to get serious. It's time to put aside partisan bickering and find common ground so we can find out way out of this mess. It's time to enforce sensible regulations to protect consumers and MBS investors - all of whom have been taken to the cleaners by unscrupulous mortgage brokers and so-called lenders.
No more cash out re-fi's.
No more tax deductable HELOC.
Hell, no more HELOC!
No more speculation in housing. If you want to cash out - sell and move.
No more market mortgage rates for speculators and landlords. Treat real estate speculators as small businesses or set up a margin call system for loans on real estate.
Owner-occupied housing is not an investment! It is a home.
I am a liberal, I guess. I am fiscally conservative but believe it is possible for a government (an accountable one subject to an educated population. . . I know, I know) to do some good.
I recognize the power of free markets and think they can be powerful tools. However, there are assumptions that those on the right do not explicitly recognize. The assumption is that the maximization of profit (this is the MEASURE for markets) is equal to maximization of public good.
For example, regarding health care I would argue that the maximization of profit and the maximization of public health are actually mutually exclusive. They are mutually exclusive because the nature of health care, it does not adhere to market forces. Take the supply and demand curves, so fundamental. I offer appendectomies half off, are you going to get one? You need an appendectomy or you will die, will you fall on the financial sword to live? Health care does not obey a fundamental assumption of free markets. So you need a single payer system (but how do you motivate it?) or you need a private system that is heavily REGULATED so extortion does not take place. But, the discussion is always framed in ideological ways that make a solution (and it will be hard) possible.
Really. What are our objectives?
Are free markets always the solution? Is government always the solution?
No.
This is a wonderful blog and commenters are great.
Ponzimonetizacorupticapitalsm writes:
Bear's steep stock decline has been a blow to its 14,000 employees, who've been prohibited from trading the shares because of longstanding "lockups" weeks prior to the company's earnings announcements. Employees could only watch this week as a substantial portion of their net worth vaporized. "We're not allowed to touch it," said one. "We've just gotten toasted."
Ponzimonetizacorupticapitalsm | 03.14.08 - 8:36 pm | #
------------------------------------------------------------------------------------------------Theyre not the only ones getting toasted. Wall Streets greed has toasted many Americans 401Ks. Let them join in with the rest in prayer.
Hutchinson is a Texas Senator. Coincidentally (HA!) the major Republican donor in the state is Bob Perry of Perry homes who has virtually purchased our state government including the gov, the leg, and the rest of the Republicans.
They coincidentally (HA!) pushed through "tort reform" here. You Californios who were smart enough to sell at the peak and move here for the lower prices are gonna find that you have no right whatsoever to sue - even if your crackerbox falls down around your ears the day you move in. You have to go to arbitration by a panel dominated by homebuilders.
Another poster upstream commented that electing a Dem would mean a tax increase. DUH! THERE IS NO FREE LUNCH!
We will be paying for the disastrous deficits of Reagan and Bush for generations! Not only will we pay the debt but we will pay interest.
Because the inflation caused by nonstop monetization has not hit yet (except in commodities) some of you have convinced yourself that there is indeed a free lunch. The ongoing catastrophe - and believe me, it is just beginning - was caused by cutting taxes and running up incredible debt.
Some people still believe, apparently, that it doesn't matter how much debt you run up and whether you have the capacity to pay it. The rest of us are gonna have to suffer for that stupidity.
Ben Bonner today started tearing apart all the Bull-doodoo assumptions blithely
made by model builders starting with using volatility as a proxy for risk and then going on from there.
Talk about a house of cards
Mogambo follows up with a story on butterfly effect
Which sedges into hard science. Behind in my reading I got to the 14 February issue of "Nature" today.
Jef Huisman of U. Amsterdam looks and ecosystems and chaos He suggests that ecology may never be able to make long range predictions.
We are observing a rarity in economics- a large scale field test of an economic model
To my outsiders eye human economic interactions are definitely an ecosystem. Where linearity is of very limited long-term utility. (I am sure this is not an original idea.)
Well Wright2 maybe being the exceptio
i took numbers off the treasury site for the gdp and the deficit since 93 and had to use wikipedia for numbers going back to bush 1 reagan and carter
clinton administration, and congress 92-2000 decreased the deficit in the final year of the administration and decelerated the growth in debt as a percentage of gdp compared to all administrations and years going back to carter.
said another way clinton was the only administration to have reduced the rate of growth of the debt as a percentage of gdp of any administration since reagans first year.
these numbers include ss tax as part of the general fund, as all presidents have done going back to at least carter i believe.
the way i computed this was first rounded off the treasury numbers to the nearest billion for gdp and deficit and then divided deficit by gdp to get a percent. below in table form are the raw numbers.
i realize the deficit is not the debt.
thus clinton decelerated growth of debt second half of term...only, and actually managed to reduce the debt in only one of his eight years coming close in another year.
all corrections to errors i may have made are welcome... i'm not an expert.
I am so upset by the way this country has handled itself .......I can't tell you. I'm an ex-navy submarine officer that proudly served this country for many years. Now, I see a bunch of derelects and acedemic assholes ruining the country. Let the free market do what it's supposed to do, root out the bad stuff and get going again. Not bailout the rich bastards that got us into this mess in the first place.
That's why we'll have elections. But it seems to me that more "uneducated" (BY FAR) are democrat than republican. Go to anywhere there is high crime, drugs, and high drop-out ratios and see how they vote.
BTW, I live in the inner city. I live in high crime, etc.
I'm also not a replubican. I'll wait till the debates, see what they have to say, and then vote for the lessor evil.
doom | 03.14.08 - 9:03 pm | #
So, the Republicans are educated, huh? And what about all of the "educated" people who believe the earth is 6,000 years old, stem cell research is immoral, intelligent design is science, and that our country was founded by Christians? These brain surgeons voted in droves for Bush and for the do nothing Congress.
Ever been to Texas? Strong, god fearin' Republicans in those parts.
Most Texans still support Bush - because he is from Texas. Honestly, that's all it takes, everything else is irrelevant (and, get this: the real joke is - he's NOT from Texas!).
Q: What separates the Okies from the idiots?
A: The Red River.
Highest drop out rates (2000, I couldn't find more recent):
Georgia
Nevada
Florida
DC
Arizona
Tennessee
South Carolina
Mississippi
Alabama
North Carolina
Don't look too Democratic to me.
BTW: George Bush has Business degrees from Yale AND Harvard. Apparently these people will sell a diploma to anyone with enough money and connections. Educated, my aching Roman ass.
Here's a suggestion for all of the educated Republicans who voted for Bush: Despite your elevated level of book learnin', you appear to be piss-poor judges of character. Please sit this election out. If you voted for him twice, please don't vote anymore.
Misean WE can't do anything. But individually we can take measures to defend against the coming storm.
Of course we should individually plan to deal with uncertainty and probable developments. But the reason I am not a wild-eyed libertarian is that unregulated financial markets are not free markets. They are markets in which the most plausible players win, and in which the biggest, most optimistic lies win - for a time - then the crash. Therefore I think we need more responsibility in government and more enforcement.
It really is no coincidence that we now find very similar economic developments to the period before the Great Depression. We effectively shortchanged regulators in the field for banks, CUs and thrifts and deconstructed the Glass-Steagall protections. The series of "panics" in the 1800s also come to mind.
Let me quote Einstein "The definition of insanity is doing the same thing over and over again and expecting different results."
It is completely believable that the US population could throw the government to either party and not get any realistic attempt to deal with the underlying problems in our economy. Neither party really wishes to discuss the bad news! Neither really wants to address the necessary adjustments. Both are promising impossibilities.
It's not that I don't agree that politics are very important. It's that politicking without understanding is very unlikely to produce a good result, and therefore a blog as good as this one is necessary to produce the economic comprehension necessary to guide voting and discussions with one's legislators.
Both knowledge and stupidity spread quickly through a population. Just consider CR a type of FactChecker.org for economics. The potential of embarrassment for politics-for-sale economists is there.
Re: It is time to stop the self-righteous snarky sniping and give the Fed the rhetorial room it needs to maneuver through.
Greenspan had plenty of rhetorial room to suggest that housing might be a touch frothy here and there, and for 2 years The Fed played and toyed with rhetorial masterbation as it acted in collusion with home builders, NAR and the banks on wall street!
What we have today, is a whole new level of rhetorial room which places The Fed in a very serious position of acting illegally to be supportive of antitrust market manipulation, which takes away free market trade. The Fed is acting in a conspiracy to support banks that should pay a very heavy penalty for being involved in false and misleading information, which amounts to fraud!
To assume that The Fed needs more room to hoodwink and mislead the taxpayers is absurd retardation!
Doom wrote about healthcare: "keep it private, government can't do anything right."
Medicare has 3% administrative cost (as opposed to 30% for private insurers). We pay more for healthcare than any industrial country - but we don't cover anybody, are way down on the list by every qualitative measure and regularly bankrupt our citizens for lack of National Healthcare.
Maybe medicare spends so much less on administration because they don't have to hire so many "managers" to deny benefits clients have paid for.
Governmtnt works fine when it isn't populated by thieves and anti-government fanatics with a vested interest in proving that it doesn't.
The wheels came OFF today. OK, so last year we had some razor-thinly capitalized mortgage originators go POOF.
Today Bear. No tell me what distinguishes BSC from LEH, MER,... or even C for that matter. If there's a bank run none of them have enough capital to make it 1 day.
Ben & the working group are going to be busy this weekend. Monday will be interesting. The government could step in and backstop the whole lot directly before there's nothing left to save.
IMO - The US government won't look the same by the and of March. They may nationalize the entire financial sector.
All this political stuff is really funny. You do realize that politicians are just like the birds on the Galapagos Islands; same DNA, different beak so as to feed off of a different part of the food chai
What we need are new birds, with new feathers, cross-linked DNA from mutated stock culled from around the universe. No beaks, just trough feeding clones that explode after being too greedy! Pop!
I don't think there's anyone out there who knows what to do, much less actually do it. So blaming one party or the other is useless, unless you happen to be a prosecutor.
I actually think that Ben is doing the best he can. Trouble is, that's not very good.
It is so kind of the Republicans to share blame for this "bipartisan" mess.
Oops! The Republicans have controlled all three branches of government since 2000 and until 06 when the Democrats gained a narrow (and impotent) majority in congress.
Clinton had a surplus. Six years of unchecked Republican power have brought disaster. God help the next president (who will take the blame for this one's irresponsibility) - like Carter did for the Nixon-Greenspan mess of the 70s.
How do we know that the mafia isn't going to pull a Spitzer blackmail thingadoo on Helipad Ben, i.e, what if Ben is being forced to illegally bail out these banks and to provide the means to challenge antirust laws? Bailing out bad banks smells of collusion and blackmail, if not out right fraud!
End the war Iraq monday morning and stop the stupidity there and then reduce debt and focus on our economy and not a retarded effort to bring Iraq a John Wayne Westernized version of democracy! Then start sending crooked CEOS to prison and regulate the markets!
Furthermore, we went to Iraq to stop terrorism but looked the other way with our homeboys here in America that had noses buried in the trough screwing everyone for more cash.....Paul, who is the greater threat? Wake up little guy, the terrorists work in America and they work at pumping out derivatives and selling snakeoil. These are the people that are the problem and these are the people fully backed by The Fed, who bails them out, because they all want more market share. You should be ashamed to think The Fed has a clue or that banks should be given any slack; these bastards need to go yo prison!
It's all just a massive conspiracy to steal your money so put it all under your mattress. Buy a shotgun, canned goods, and a can opener, then call us in a couple of years to see how it all worked out.
Otherwise, you can choose to assume that there are enough competing interests to keep the system generally honest and, while we have clearly drifted from optimum economic conditions, we will find our way home some time soon (or at least in your children's lifetime).
IMHO, we have a lot of reasons as to what has happened but what will happen needs to appear to be honest. Honesty at this point, is to watch the stock market fall, bond yields go down, the dollar to decay further, homes to fall in value and then a recession, and then honesty, which builds on integrity. If we allow The Fed to manipulate all these markets in an effort to build synthetic bridges of fantasy valuations, we will end up with massive destruction within this country, beyond your wildest dreams. Honesty, will be a very difficult challenge, because banks like Bears, need to collapse and vaporize, because they took it upon themselves to manage their affairs in a carefree risky manor, where they played casino games with real money that did not belong to them. The people that trusted bears to be honest were fooled by people that should go to jail; that would be honest, to send crooks to jail, so that they can take time to think about the crimes they committed. That type of honesty will help restore faith and integrity in a broken system, however, if we embrace these crooks and bail them out and give them rewards for stealing, the market will continue to hold these people in contempt and not trust the system, they will see this system as being dis-honest and lacking integrity.
An additional point would be to look across the pond at The frogs, who just had a market event, with a rouge trader "kid" who apparently bet too much money. That kid went to jail, so why is the story so different on wall street, do we not have laws in our American financial system?
There is a panic going on now. There is some truth to the statement that if we all would just calm down and proceed as we were, conditions would immediately improve.
Problem with that is, there would be no incentive other than prudence to prevent the same actions that created this mess in the first place.
Playing the "blame game" may seem counterproductive - but it couldn't be more necessary! The Republicans - assisted by some DINOs - have spent the last several decades dismantling the New Deal - including regulations enacted to prevent exactly what is happening now. They blamed "excess regulation" for all the ills in the world. Now there is preventable hell to pay.
Just wait until the bankruptcy "reform" really hits home and all the folks who are using CC debt to stay in that house finally hit the credit wall and give up. Then they will find out what indentured servitude and "non-dischargable" debt are.
Unless blame is properly assigned, necessary change won't happen. Unless real progressives are swept into office, there will be some fiddling around the edges but nothing will really change.
Unless blame is properly assigned, the Republicans will be able to blame the next four years of pain on Democrats - as thay successfully did with Carter.
Sometimes the truth is controversial and difficult. Too bad.
One man's manipulation is another man's bridge from the burning building.
It's a process; and it takes time. I would love to snap my fingers and see it all fixed tomorrow. Unfortunately life does not work that way.
If we learn anything from this mess, I hope we learn there is no free lunch. I would love to see Bear Stearns and Citigroup and Merril Lynch and all the rest of the SOBs collapse. But then I would be broke.
So, despite the fact that I rent and have a positive net worth, I have a dog in this fight. We all do.
Re: n a conference call on Friday, Bear Stearns Chief Executive Alan Schwartz suggested that the company may be working toward a long-term solution, which some observers interpreted as a sale of the company.
"We are also announcing at this time that we will continue to pursue some alternatives," he said in a conference call with analysts and investors, "with the focus on ensuring that we can handle and protect our customers well, and at the same time maximize shareholder value."
Schwartz said he would give an update on Monday, when the company reports its fiscal first-quarter earnings.
But Bear and its bankers could have a hard time drawing bidders from other brokers or big banks.
"I think they're finished," said Richard Bove, a bank analyst at Punk Ziegel. "Bear Stearns's biggest problem is that they're losing customers at a rapid rate. It's easier to get Bear's business by attacking it rather than buying it."
I don't know that you can blame this all on Schwartz, but IMHO, he is at the top, he signs on the dotted line, he gets the big bucks, and he mght as well go to jail, because he failed to disclose this systemic failure to shareholders and instead, he offered false and misleading information, which suggest, ala Enron, that all was well.
Why is he different than the kid in Paris that suggest all was well? Why is one person a criminal in one country for casino betting, while on wallstreet these types of CEOs are either bailed out or rewarded? Schwartz signed on The Patriot Act, he has obligations to shareholders, to SEC, to his employees; seems to me that he dropped the ball, just like all the other CEOs and all the people in The Fed, SEC, FTC, DOJ............this is retarded, because America is lawless and without any way out of this mess, because we fail to have justice in this land of anarchy!
Well, it seems this thread has gone off the deep end. I agree with Misean: If you want to rave about politicians, go the redstate.org or democratic underground.
As for the current mess, I an reminded of an essay by von Mises. Basically, prices are information transferred via markets on the relative value and scarcity of different goods and services. Consumers and producers use this info to adjust their consumption and production. When government interferes (thru subsidized home loans, abnormally low interest rates, etc), the system breaks down and information is lost. Then you have massive mal-investment (like in housing). This is an age old economic problem first discovered nearly a century ago by some very clever Austrians. Simply electing a vacuous Chicago pol is not going to cure this disease.
How can this dem orgy, frenzy, whatever go unchecked? Granted, current Republicans are...ummm..not so desirable...but as far as I can tell, the most abhorent bailout proposals are being made by dems (on the surface, these are for victimized "homeowners" but actually for the banks themselves (who contribute nicely of course to both parties).
And, in a grander scheme, the much-maligned (on this blog and rightfully so) federal reserve institution owes its formitive roots to early century socialist elite. Surprised???
As for Bush spending...you have to go far back to find any presidency welcomed with (1) 911 at onset of first term, and (2) Katrina at onset of second. I guaran-f'n-tee u that whoever held office these past 8 years would have run-up spending like nobody's busines...in fact, who can argue that dems would have created more gov't vs. privact sector (contracting) jobs, which are 11.8 times more difficult to "right-size" when the times call for it. Take the post office for example.
PS don't hate me; I'm just another JFK-style conservative republican who can't stand the stench on either side of the aisle.
You know, there is absolutely no one in the state of California with any credibility whatsoever. I request an earthquake to drop the entire state into the Pacific Ocean. First the dot.com disaster and now the mortgage broker disaster. Is there something in the water out there?
As for my liberal stench... I promise to take a shower when I can afford the water bill.
You are not paying attention. The SEC and the OCC are permitting the financial industry to stonewall on reporting their losses according to GAAP and done zero enforcement on Sarbanes Oxley & SEC reporting violations. Guess who controls the SEC and the OCC? Guess which party has led to the destruction of trust and confidence in our financial system? Get your priorities in order sir.
Folks,
A little history. Johnson pulled soc. security into gen fund to pay for his "great society" That moment screwed us all.
Regan blessed us with "supply side" That moment ended fiscal responsibility.
Clinton and Bush X 2 deployed NAFTA. Those moments will eventually relegate us to third world status.
It has taken both political parties over 40 years to get us to where we are now. Deriding one party or extolling the virtues of the other is futile. Politicans are in the bussiness of getting reelected. They are good at that and not much more. America was a great nation because of strong work and moral ethics. Those two ethics are now not as important and the resultant greed and dishonesty have ruined us. I hate reading on this blog that morality is unimportant. The lack of morality is the root cause of this crisis. The golden rule has been changed from "do unto others as you would have them do unto you" to "screw everyone but me"
Our society and country have been beaten into the ground - not by outsiders but by ourselves. Pogo was right..........
I thought that SS went into the gen fund during the Nixon administration - to pay for Vietnam.
I have noticed that several posters have suggested that commenters shut up about the politics - then they trash a Dem.
Politics and politicians got us into this mess. Politicians are gonna either make it worse or get us through it. A political appointee - BB - has decided to trash the dollar to save the banks. This is a political decision. This crisis was caused by the Republican tax-cutting-for-the-rich mania and the insane policies of the previous Fed chief, Greenspan - a Rand Devotee first appointed by Nixon.
"This crisis was caused by the Republican tax-cutting-for-the-rich mania and the insane policies of the previous Fed chief, Greenspan - a Rand Devotee first appointed by Nixon."
Yes, in thunder.
However -- and wouldn'tja know there's a catch? -- we cannot allow the Democrats' obsequiousness and subservience to Bushism pass without penalty.
Rolling over, fetching tax cuts, panting when markets go up, and laying at their master's feet all throughout the Bubble hardly speak well for the Bushwhipped Dems. A pack of kittens would have made a better opposition than those sad, beaten curs -- and certainly have been cuter, too.
The deeper, and ultimately more damning criticism, is to lay this crisis at the feet of Consumption Nation. Which is Everyman and Everywoman. Which is the center-right Dems and the hard-right Repubs alike.
Somebody was moving into the McMansions. Somebody was buying those SUVs and going to Cancun and dining out at -- snicker -- Olive Garden on MEW. Somebody couldn't control him/herself at Best Buy. Somebody didn't care how the money kept coming, as long as it did.
I note that when all the folks on this blog were pointing out the developing problem and suggesting various actions, the delusional crowd response was largely "shut up, pessimists". For several years now, in fact.
Now that the bill has come due, the response is "shut up, you're not helping"....with a big ole helping of "We're all in this together". You'll excuse me if I don't get all misty eyed....."We" better learn to live with disappointment.
In an interview, Senator Kay Bailey Hutchinson (is she Texas?) said that she thought the Government should step in and help the Homebuilders put a floor under prices to "avoid selling at bargain basement prices".
Centex, one of the largest builders, is based in Texas. So I wouldn't be surprised she is serving their interests.
JV blowups is going to be the theme of the next down leg in the home builder stocks, with a few of the biggies filing Chapter 11. Indeed, I'm surprised Beazer and Standard Pacific are still going -- probably keeping the banks at bay with the promise of a Hail Mary spring selling season. But that ain't gonna happen.
And no, even if you saw this coming it is no fun to watch.
It is clear from your post that you have a stake in the Toll Bros. joint venture in Las Vegas, and you are hoping that the California falls into the sea makes new beach front property in Nevada. It won't work, however -- we've all seen Superman 2.
Open the window back up Ben...you have some more customers.
Missed an interest payment? If I did that my charge card interest would be raised to 38%!
What's the big deal? Doesn't everybody know that sugar daddy Benny B. will make all the pain go away?
Toll Brothers currently $19.47 per share with a 3.09B cap.
Um, major banks with huge derivatives-
Step right this way!
Hoi polloi builders- um, please submit verified claims to the court for treatment in the settlement of your Chapter 7 claim.
Thank you, please move along and keep it orderly.
Someday this war's gonna end...
An interesting "thing" I had researched in regard to TOLL, many months ago, is related to the fact that one of Toll's 500+ subsidiaries, is its own bank, which loan itself money for joint ventures. Nice huh!
"Toll Brothers currently $19.47 per share with a 3.09B cap."
and they can't make a minor payment? WTF?
Projects in Default Dog Big Home Builders
Thus the history behind my screen name. When this is all over you'll know as I will switch to Bob Kat. IN the mean time anyone who is surprised is directed to look up an occasional poster her; Reggie Middleton of boombustblog.com who isn't surprised at all.
Man I have seen this movie already, having lived in Tokyo 1992-2000.
It wasn't horrible for me personally, obviously, but the drumbeat of Bad News never really let up.
and they can't make a minor payment? WTF?
didn't they move all their bubble-era profits back into their market-cap via buybacks?
Homebuilders? They're still around?
OT
I suspect the Fed stepped in because Bear is behind at least some of Fidelity's money market funds. Imagine Fidelity having to explain that one...
"On Tuesday, a major asset-management company stopped trading with Bear."
"Bear risked defaulting on extensive "repo" loans, in which it pledges securities as collateral for overnight loans from money-market funds. If that happened, other securities dealers would see their repo loans reduced or cut off. The pledged securities behind those loans could be dumped in a fire sale, deepening the plunge in securities prices."
Fed Races to Rescue Bear Stearns In Bid to Steady Financial System - WSJ.com
Just checked Fox news.com. BSC is not a top story, only Obama stuff. Keep the sheeple in the dark long enought to vote McBush in...
Which company insured the title on all these homes? Depending on mechanics lien laws, the title company would likely be on the hook to pay any contractor's liens.
A big builder taking a hit like this will mean big losses for the title insurance company(ies.)
Why doesn't Toll just make the payment? It's a joint venture. There's probably a shirkfest going on.
JOINT Venture:
Toll: KB, Quit bogarting man, pass it.
Lenar: packing bong Chill Toll. Have a binger of this it's sweet.
Toll: thlllllppptt...cough, hack, cough, hack Dude, that's why I hate bingers man. KB, F man! lemme have a hit dude!.
KB: Dude your breath stinks like crap. I want mine before you put this joint to your lips. stoned guffaw..cough cough
Toll: KB, I paid for half the shite in that. Pass it dude or I'm gonna pound you.
Lenar: thhllllllppt.....hooooo Toll, bingers are bad ass! Your math sucks too. There's 3 of us so we all paid like a quarter each for the gange. Man you're stupid.
Cheers,
"Doesn't everybody know that sugar daddy Benny B. will make all the pain go away?"
Santa baby, slip a sable under the tree,
For me.
been an awful good girl,
Santa baby, so hurry down the chimney tonight.
Santa baby, a 54 convertible too,
Light blue.
I'll wait up for you dear,
Santa baby, so hurry down the chimney tonight.
Think of all the fun I've missed,
Think of all the fellas that I haven't kissed,
Next year I could be just as good,
If you'll check off my Christmas list,
Santa baby, I wanna yacht,
And really that's not a lot,
Been an angel all year,
Santa baby, so hurry down the chimney tonight.
Santa honey, there's one thing I really do need,
The deed
To a platinum mine,
Santa honey, so hurry down the chimney tonight.
Santa cutie, and fill my stocking with a duplex,
And checks.
Sign your 'X' on the line,
Santa cutie, and hurry down the chimney tonight.
Come and trim my Christmas tree,
With some decorations bought at Tiffany's,
I really do believe in you,
Let's see if you believe in me,
Santa baby, forgot to mention one little thing,
A ring.
I don't mean on the phone,
Santa baby, so hurry down the chimney tonight,
Hurry down the chimney tonight,
Hurry, tonight.
BSC... sold to Citadel....
NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO
Bear's steep stock decline has been a blow to its 14,000 employees, who've been prohibited from trading the shares because of longstanding "lockups" weeks prior to the company's earnings announcements. Employees could only watch this week as a substantial portion of their net worth vaporized. "We're not allowed to touch it," said one. "We've just gotten toasted."
Crispy&Cole writes:
Just checked Fox news.com. BSC is not a top story, only Obama stuff. Keep the sheeple in the dark long enought to vote McBush in...
Saw a poll on CNN the other day - if Amerikans were to vote today:
McCain - 43%
Obama/Clinton - 47%
I just don't know what to think about this - almost 50% still willing to continue Bushinomics!
Ponzimonetizacorupticapitalsm,
Which is why I don't understand the anst against Bear's shareholders. Investors sure, but shareholders...not so much.
Cheers,
this is real, folks
Much of the 43% going for McCain probably don't like him much either, but the alternative is higher taxes and that kind of sucks, too.
So who do you want? Dumb, Dumber, or Dumbest?
Did anybody else here see this Blurb on CNBC yesterday?:
In an interview, Senator Kay Bailey Hutchinson (is she Texas?) said that she thought the Government should step in and help the Homebuilders put a floor under prices to "avoid selling at bargain basement prices".
Who IS this nutcase Hutchinson? Apparently , a lot of our politicians think that 2- 3 X income is "bargain basement".
it's not as if they did'nt have One chance as the story has been told here and elsewhere the last 9 months.
Doom,
Vote none of the above.
I actually couldn't care less. We're heading for a depression. They'll be running around the Oval Office screaming and waving their hands in the air.
Cheers,
hey doom get a clue and/or get educated
McBush will be the final nail in coffin for America as we knew it asshat !
The cost of Bush to America since 2000
is $32 Trillion dollars in total liabilities and unfunded commitments for future payments.
In a speech a couple months go ( before he retired ) GAO Comptroller General David Walker said:
"If the federal government was a private corporation and the same report came out this morning, our stock would be dropping and some people would be talking about whether the companys management directors needed a major shake-up".
The federal governments total liabilities, Walker explained, translates into a de facto mortgage of about $455,000 for every American household and theres no house to back that mortgage. In other words, our government has made a whole lot of promises that, in the long run, it cannot possibly keep without huge tax increases.
Obama or America will become a bigger version of Mexico or Argentina.
All McCain has to do is say he loves Country Western Music and is against abortion and bingo, he's in like Bush! The clincher will be to support our boys in Iraq (who should have never been sent there) and to claim that we have won the war, which has been worth every penny!
Don't get me wrong, I'm not "pro abortion" or for a society filled with retards, but when it comes down to taking attention away from $1000 gold, skyrocketing wheat, oil and other inflationary matters, including a systemic banking collapse, a war, a housing bubble implosion, damn near chaos...... country western music will probably make a difference between the winner and loser! America is that stupid! Count on it!
"If the federal government was a private corporation and the same report came out this morning, our stock would be dropping
INO Equities Stocks Indexes - U.S $ INDEX (NYBOT:DX) Price Chart and Quote
Don't worry it is. Just hope the bond holders don't notice.
Re: overnment should step in and help the Homebuilders put a floor under prices to "avoid selling at bargain basement prices".
LOL OTFLMFAO.hahahaha
No screaming and waving of hands in the air for our glorious leader. As I remember it, his style of response to an all-out emergency is to sit still looking like a dear caught in the headlights while reading a book about pet goats.
How do you spell Hoover? B-U-S-H
CathyG,
I was referring to the up coming occupant.
Cheers,
km4,
That's why we'll have elections. But it seems to me that more "uneducated" (BY FAR) are democrat than republican. Go to anywhere there is high crime, drugs, and high drop-out ratios and see how they vote.
BTW, I live in the inner city. I live in high crime, etc.
I'm also not a replubican. I'll wait till the debates, see what they have to say, and then vote for the lessor evil.
Look, McCain will be Bush III, and will keep the troops in Iran for 200 years!
Will Bush II be the first President to have two recessions, or does one recession and one depression get him off the hook?
The uneducated don't vote. The badly educated flyover country occupants who think they're smart and complain about the 15% taxes they're paying on their 40K income are the uneducated morons voting (R) because they hate obscenity, evolution, married gays, minorities and love Jeebus -- the moneyed interests hoodwinked them into voting for rich people. Since they're no longer RIHPO, it's going to be a wild election.
Wait for the currency to start inflating once we get exports running and see if they get a COLA to compensate. My guess-not.
Hey Doom no offense but you're out of your league
The Most Educated States are BLUE states which means Dem
Massachusetts
Colorado
Connecticut
Maryland
Virginia
New Jersey
Vermont
Minnesota
New Hampshire
Washington
here you can do the analysis for the least educated states which happen to be mostly red or GOP
Page Not Found - MSN Encarta
Doesn't Obama represent Cook County in Illinios.
That isn't exactly clean gov't . No great choice when
we really need one.
I think it is time for you all to acknowledge that all these efforts by the Fed and others are an attempt to mitigate without causing harm. There is no easy way out and all the sniping from this blog is, frankly, kind of pathetic (CR and Tanta included).
Reasonable people are trying desperately to contain the disaster caused by their prior inattention to the risks.
Sugar Daddy Ben commentary may be self-satsifying but, perhaps, it is time to stop the self-righteous snarky sniping and give the Fed the rhetorial room it needs to maneuver through.
We all know, now, the whole deal sucks, but we are where we are.
It's been entertaining over the last few months to hear about helicopter Ben and all, but maybe, just maybe, he is doing the best he can under the circumstances.
My liberal perspective leads me to point the finger of blame at conservative anti-government and anti-regulation policies. Unfortunately, we all bought into the myth of financial engineering. Dems and Repubs are equally guilty.
Now what do we do?
Republicans always seem to forget that much of the rural midwest is economically depressed and lives off of Fed. government handouts...
They do have the advantage, however, of being white and supported by Willie Nelson...
"Reasonable people are trying desperately to contain the disaster caused by their prior inattention to the risks. "
How could reasonable people get us into this mess?
You are all collateral now.
You are all depreciating.
Your leaders will foreclose on you soon.
You have been warned.
End of transmission.
It's been entertaining over the last few months to hear about helicopter Ben and all, but maybe, just maybe, he is doing the best he can under the circumstances.
Big Beng has been in Fed for many, many years.
If he is really 'just trying to help', then he is either kinda late, or kinda stupid...
Corruption is rampant. We're being overrun by greedy corporate types, who have also invaded academia.
Now we have university President's, and their wives, stealing money from their own families.
Suit Seeks Damages Against Tri-State U. President and His Wife in Alleged Swindle |
Indiana's NewsCenter: News, Sports, Weather, Fort Wayne WPTA-TV, WISE-TV, CW, and My Network
| Local & Regional
And this is the same uni. that tried to impose a 'gag rule' on its students just a few years ago, prohibiting them from saying anything 'negative' about the university, even when they were off campus.
Crazy world
For the record (not that anybody cares) this is what I want in a president:
Re/war: Get out fast, don't invade anyone else, but let the whole world know if you mess with us, it will be nuke time on your ass. We'll destroy you from a distance. Your citizens will die too. They will hopefully keep you in check.
Re/abortion: If you're against it, don't YOU have one.
Re/healthcare: keep it private, government can't do anything right.
Re/Taxes: that's a tough one. How about no fed tax for first 200K of income. Then prorate with tax brackets. from 200k to 500K...10%. From 500k to 1 million 25% At 1 million to 5 million up it to about 50% And then screw all the filthy rich once they hit 5 million per year by taking 70 to 80% of their income. No more tax deductions. Somewhere along those lines. That will piss off the elite, but will make 90% of the country happier.
Re/Fed and financial policy: Apppoint CR and Tanta
As you can see, no candidate meets my needs. That's why I'll vote for the lessor evil.
How could reasonable people get us into this mess?
I'm not making excuses for it.
As ye sow, so shall ye reap.
But, self-righteous indignation never solved a problem.
I'm not an economist so all I have to offer is social commentary.
This is so interesting to watch unfold. Just like a train wreck but interesting anyway. This must have been what it was like in 1930-31 and the banks bit it and people realized their houses were worth crapola. Oh the Humanity!
Yes, Kay Bailey Hutchinson is the senior Senator from Texas.
Sigh. To be fair, housing prices here are not very bubbly, depending on the market, because the dot-com bust hit hard and our punishing property taxes have to be paid year after year and you can't get a NINJA loan for that.
But homebuilders are an enormously powerful lobby in Texas and I imagine they think that's a great idea.
She might be stepping down to run for governor -- a job that a well-trained dog could do as the real power resides with the Lt Gov.
Sadly, few in the nation knew that little fact and thought that Gov of Texas was some sort of credential for Bush.
I live in a dark blue island in this red state and no here is surprised at the ham-fisted, tone-deaf, absolute destruction brought by that man.
"Now what do we do?"
Abolish the Fed. Article 1 Section 8
LII: Constitution
Oh be serious Glenda.
Can't we all just get along?
Now that 30 years of the republican supply side lie has ravaged the country, is there any more need to discuss the failure of the borrow and spend mantra?
In an interview, Senator Kay Bailey Hutchinson (is she Texas?) said that she thought the Government should step in and help the Homebuilders put a floor under prices to "avoid selling at bargain basement prices".
In other words, we should take resources and labor from other efforts and focus them on deliberately misrepresenting asset prices.
Sounds like a recipe for success to me.
I think everything which had to be said was already said on this blog.
We all know what's next, so that's rhetorical.
I suggest from now on we start talking in meaningless, confusing but ominous sounding phrases. No need for thoughtful discussions anymore.
Let me start:
In a few years those of you who still have homes will envy those who don't!
ac is right - we should kill a few home builders so as to reduce supply.
We need bargain basement prices so the average person can, if 5-10 years, afford to actually buy a house.
re: my last post.
never mind my suggestion, we have already been doing that for the past month already.
Sometimes there are no good options (kind of like our involvement in Iraq, but I digress) only containment.
Paul - I agree, with the sole exception that I don't see that CR and Tanta are joining in the irrational sniping.
There's no good or easy way out of this bipartisan disaster. There's no way to hand the pain solely to those we consider culpable. We're just going to have to start dealing with everything we didn't deal with before and work it all out as best we can.
ac,
Check.
"In other words, we should take resources and labor from other efforts and focus them on deliberately misrepresenting asset prices."
But why has this turned into a friggin' political post.
My Glod! Can't these newb's go find some politics blog to go vent on.
Sheesh!
Cheers,
Maxed out Mama - fair enough on CR and Tanta. REASONABLE people can disagree.
A few months ago I was disappointed that Tanta had taken to disparaging each half measure proposed.
I thought our policy makers were brain-storming and getting grief for unorthodox approaches from this blog. Perhaps I was mistaken.
I think it is time we all start thinking about the long-term common good.
Wow - I am so naive!
km4, re/ education status, I stand corrected by you. Interesting. I went off my personal experiences in the inner city but I didn't take into account the bible belt trailer trash.
As you can see, I'm nothing like Bush. I admit my mistakes.
And this is my last reference to politics.
MoM,
"There's no good or easy way out of this bipartisan disaster."
Just a quibble. It's a financial disaster. Both parties aided and abetted it.
"We're just going to have to start dealing with everything we didn't deal with before and work it all out as best we can."
WE can't do anything. But individually we can take measures to defend against the coming storm.
Cheers,
Misean - and those individual measures are...?
I looked at my 401(K) today and the only investments positive for the year are TIPS and "stable value".
I'm doing my part to support retail since I work in pharma and can count on y'all to abuse yourselves. Thanks for that, BTW.
doom very cordial of you...like others have said or insinuated cumulative effects of mostly GOP polices over past 25 yrs has put this country in jeopardy and its accelerated in past 8 yrs under Bush.
This esp. has pissed me off...
Derivatives 'ticking bomb' starting to go off in blowback stages.
Wall Street didn't listen to Buffett as derivatives grew into a massive bubble, from about $100 trillion in 2000 to $516 trillion by 2007.
Will the perpetrators of this massive ponzi scheme and looting of the US Treasury be held accountable for passing this massive shitbag to America ?
Unfortunately no they won't...
km4 writes: Will the perpetrators of this massive ponzi scheme and looting of the US Treasury be held accountable for passing this massive shitbag to America ?
What makes you think there has ever been any justice in America? Are you an Obama-ite?
I am too and hope he can start to change the approach, but lets not be naive.
The game is rigged and you just have to realize that you have no chance to win. Having said that, the only way to win is to change the rules. This is the political appeal of Obama and why CR has attracted some newbies.
Yes we can! Maybe. I think this current financial panic provides an opportunity to purge some portion of the greed from the system. I know, silly me. What have we got to lose?
But I cannot support cheerleading for financial catastrophe - no matter how good it feels.
It's time to get serious. It's time to put aside partisan bickering and find common ground so we can find out way out of this mess. It's time to enforce sensible regulations to protect consumers and MBS investors - all of whom have been taken to the cleaners by unscrupulous mortgage brokers and so-called lenders.
No more cash out re-fi's.
No more tax deductable HELOC.
Hell, no more HELOC!
No more speculation in housing. If you want to cash out - sell and move.
No more market mortgage rates for speculators and landlords. Treat real estate speculators as small businesses or set up a margin call system for loans on real estate.
Owner-occupied housing is not an investment! It is a home.
Done preaching. Good night.
Just a quibble. It's a financial disaster.
Misean, you have cracked me up on many more than one occasion. I hope you don't float away. Your posts are great.
OT As most here tonight.
I thought this was a financial Blog. Seems to me we have a political one here tonight. Maybe the news about Obama today wasnt to some posters liking.
I am a liberal, I guess. I am fiscally conservative but believe it is possible for a government (an accountable one subject to an educated population. . . I know, I know) to do some good.
I recognize the power of free markets and think they can be powerful tools. However, there are assumptions that those on the right do not explicitly recognize. The assumption is that the maximization of profit (this is the MEASURE for markets) is equal to maximization of public good.
For example, regarding health care I would argue that the maximization of profit and the maximization of public health are actually mutually exclusive. They are mutually exclusive because the nature of health care, it does not adhere to market forces. Take the supply and demand curves, so fundamental. I offer appendectomies half off, are you going to get one? You need an appendectomy or you will die, will you fall on the financial sword to live? Health care does not obey a fundamental assumption of free markets. So you need a single payer system (but how do you motivate it?) or you need a private system that is heavily REGULATED so extortion does not take place. But, the discussion is always framed in ideological ways that make a solution (and it will be hard) possible.
Really. What are our objectives?
Are free markets always the solution? Is government always the solution?
No.
This is a wonderful blog and commenters are great.
Ponzimonetizacorupticapitalsm writes:
Bear's steep stock decline has been a blow to its 14,000 employees, who've been prohibited from trading the shares because of longstanding "lockups" weeks prior to the company's earnings announcements. Employees could only watch this week as a substantial portion of their net worth vaporized. "We're not allowed to touch it," said one. "We've just gotten toasted."
Ponzimonetizacorupticapitalsm | 03.14.08 - 8:36 pm | #
------------------------------------------------------------------------------------------------Theyre not the only ones getting toasted. Wall Streets greed has toasted many Americans 401Ks. Let them join in with the rest in prayer.
Anyone know of a web site that tracks stock market futures throughout the weekend?
To WaitinginPNW:
Hutchinson is a Texas Senator. Coincidentally (HA!) the major Republican donor in the state is Bob Perry of Perry homes who has virtually purchased our state government including the gov, the leg, and the rest of the Republicans.
They coincidentally (HA!) pushed through "tort reform" here. You Californios who were smart enough to sell at the peak and move here for the lower prices are gonna find that you have no right whatsoever to sue - even if your crackerbox falls down around your ears the day you move in. You have to go to arbitration by a panel dominated by homebuilders.
Another poster upstream commented that electing a Dem would mean a tax increase. DUH! THERE IS NO FREE LUNCH!
We will be paying for the disastrous deficits of Reagan and Bush for generations! Not only will we pay the debt but we will pay interest.
Because the inflation caused by nonstop monetization has not hit yet (except in commodities) some of you have convinced yourself that there is indeed a free lunch. The ongoing catastrophe - and believe me, it is just beginning - was caused by cutting taxes and running up incredible debt.
Some people still believe, apparently, that it doesn't matter how much debt you run up and whether you have the capacity to pay it. The rest of us are gonna have to suffer for that stupidity.
Ben Bonner today started tearing apart all the Bull-doodoo assumptions blithely
made by model builders starting with using volatility as a proxy for risk and then going on from there.
Talk about a house of cards
Mogambo follows up with a story on butterfly effect
Which sedges into hard science. Behind in my reading I got to the 14 February issue of "Nature" today.
Jef Huisman of U. Amsterdam looks and ecosystems and chaos He suggests that ecology may never be able to make long range predictions.
We are observing a rarity in economics- a large scale field test of an economic model
To my outsiders eye human economic interactions are definitely an ecosystem. Where linearity is of very limited long-term utility. (I am sure this is not an original idea.)
Well Wright2 maybe being the exceptio
Misean
last night you asked to see numbers that show,
"had we continued to narrow the debt as we doing before dubya"...things might have been different" (my claim)
You asked, "There was such before W. Do you have evidence of that...I'd like to see it."
Cheers,
Misean | 03.14.08 - 12:10 am | #
misean cont
yes
i took numbers off the treasury site for the gdp and the deficit since 93 and had to use wikipedia for numbers going back to bush 1 reagan and carter
clinton administration, and congress 92-2000 decreased the deficit in the final year of the administration and decelerated the growth in debt as a percentage of gdp compared to all administrations and years going back to carter.
said another way clinton was the only administration to have reduced the rate of growth of the debt as a percentage of gdp of any administration since reagans first year.
these numbers include ss tax as part of the general fund, as all presidents have done going back to at least carter i believe.
the way i computed this was first rounded off the treasury numbers to the nearest billion for gdp and deficit and then divided deficit by gdp to get a percent. below in table form are the raw numbers.
i realize the deficit is not the debt.
thus clinton decelerated growth of debt second half of term...only, and actually managed to reduce the debt in only one of his eight years coming close in another year.
all corrections to errors i may have made are welcome... i'm not an expert.
misean cont
debt during administration by year all figures billions, rounded from number published for the last day of each calendar year
numbers after92 from:
Debt to the Penny (Daily History Search Application)
numbers before 92 from wikipedia
debt billions
carter 719 789 845 930
reagan 1029 1197 1411 1662 1946 2215 2432 2684
bush 1 2953 3365 3802 4177
clinton 4536 4800 4989 5323 5502 5614 5776 5662
bush 2 5943 6406 7001 7596 8170 8680 9120
gdp during each year of each administration
carter 2030 2295 2563 2789
reagan 3128 3255 3537 3993 4220 4462 4739 5104
bush 1 5484 5803 5996 6338
clinton 6657 7072 7398 7817 8304 8747 9268 9817
bush 2 10128 10467 10961 11686 12434 13195 13927
debt as a percent of gdp each year of each administration
carter 35.4 34.4 33.0 33.3
reagan 32.9 36.8 39.9 42.3 46.1 49.6 51.3 52.6
bush #1 d 53.8 58.0 63.4 65.9
clinton 68.1 67.9 67.4 68.1 66.3 64.2 62.3 57.7
bush #2 58.7 61.2 63.9 65.0 65.0 65.7 65.5
best wishes for the future
mt
I am so upset by the way this country has handled itself .......I can't tell you. I'm an ex-navy submarine officer that proudly served this country for many years. Now, I see a bunch of derelects and acedemic assholes ruining the country. Let the free market do what it's supposed to do, root out the bad stuff and get going again. Not bailout the rich bastards that got us into this mess in the first place.
km4,
That's why we'll have elections. But it seems to me that more "uneducated" (BY FAR) are democrat than republican. Go to anywhere there is high crime, drugs, and high drop-out ratios and see how they vote.
BTW, I live in the inner city. I live in high crime, etc.
I'm also not a replubican. I'll wait till the debates, see what they have to say, and then vote for the lessor evil.
doom | 03.14.08 - 9:03 pm | #
So, the Republicans are educated, huh? And what about all of the "educated" people who believe the earth is 6,000 years old, stem cell research is immoral, intelligent design is science, and that our country was founded by Christians? These brain surgeons voted in droves for Bush and for the do nothing Congress.
Ever been to Texas? Strong, god fearin' Republicans in those parts.
Most Texans still support Bush - because he is from Texas. Honestly, that's all it takes, everything else is irrelevant (and, get this: the real joke is - he's NOT from Texas!).
Q: What separates the Okies from the idiots?
A: The Red River.
Highest drop out rates (2000, I couldn't find more recent):
Georgia
Nevada
Florida
DC
Arizona
Tennessee
South Carolina
Mississippi
Alabama
North Carolina
Don't look too Democratic to me.
BTW: George Bush has Business degrees from Yale AND Harvard. Apparently these people will sell a diploma to anyone with enough money and connections. Educated, my aching Roman ass.
Here's a suggestion for all of the educated Republicans who voted for Bush: Despite your elevated level of book learnin', you appear to be piss-poor judges of character. Please sit this election out. If you voted for him twice, please don't vote anymore.
Misean WE can't do anything. But individually we can take measures to defend against the coming storm.
Of course we should individually plan to deal with uncertainty and probable developments. But the reason I am not a wild-eyed libertarian is that unregulated financial markets are not free markets. They are markets in which the most plausible players win, and in which the biggest, most optimistic lies win - for a time - then the crash. Therefore I think we need more responsibility in government and more enforcement.
It really is no coincidence that we now find very similar economic developments to the period before the Great Depression. We effectively shortchanged regulators in the field for banks, CUs and thrifts and deconstructed the Glass-Steagall protections. The series of "panics" in the 1800s also come to mind.
Let me quote Einstein "The definition of insanity is doing the same thing over and over again and expecting different results."
It is completely believable that the US population could throw the government to either party and not get any realistic attempt to deal with the underlying problems in our economy. Neither party really wishes to discuss the bad news! Neither really wants to address the necessary adjustments. Both are promising impossibilities.
It's not that I don't agree that politics are very important. It's that politicking without understanding is very unlikely to produce a good result, and therefore a blog as good as this one is necessary to produce the economic comprehension necessary to guide voting and discussions with one's legislators.
Both knowledge and stupidity spread quickly through a population. Just consider CR a type of FactChecker.org for economics. The potential of embarrassment for politics-for-sale economists is there.
How much evidence is required for the "educated" republicans to see the complete and utter failure of globalism and the supply side insanity?
Re: It is time to stop the self-righteous snarky sniping and give the Fed the rhetorial room it needs to maneuver through.
Greenspan had plenty of rhetorial room to suggest that housing might be a touch frothy here and there, and for 2 years The Fed played and toyed with rhetorial masterbation as it acted in collusion with home builders, NAR and the banks on wall street!
What we have today, is a whole new level of rhetorial room which places The Fed in a very serious position of acting illegally to be supportive of antitrust market manipulation, which takes away free market trade. The Fed is acting in a conspiracy to support banks that should pay a very heavy penalty for being involved in false and misleading information, which amounts to fraud!
To assume that The Fed needs more room to hoodwink and mislead the taxpayers is absurd retardation!
Doom wrote about healthcare: "keep it private, government can't do anything right."
Medicare has 3% administrative cost (as opposed to 30% for private insurers). We pay more for healthcare than any industrial country - but we don't cover anybody, are way down on the list by every qualitative measure and regularly bankrupt our citizens for lack of National Healthcare.
Maybe medicare spends so much less on administration because they don't have to hire so many "managers" to deny benefits clients have paid for.
Governmtnt works fine when it isn't populated by thieves and anti-government fanatics with a vested interest in proving that it doesn't.
to: Shadow
from: Sam
subject: urgent code transmission
The Wall has been breached.
Our Chinese friends cannot remember where they put the mines on this field.
We are unable to locate the Bankerdome.
If you can still read this, hide in the Conjure Bag now.
The wheels came OFF today. OK, so last year we had some razor-thinly capitalized mortgage originators go POOF.
Today Bear. No tell me what distinguishes BSC from LEH, MER,... or even C for that matter. If there's a bank run none of them have enough capital to make it 1 day.
Ben & the working group are going to be busy this weekend. Monday will be interesting. The government could step in and backstop the whole lot directly before there's nothing left to save.
IMO - The US government won't look the same by the and of March. They may nationalize the entire financial sector.
Maybe this is just part of The Bush Ownership Society, where we all will own our banks and health care, and food supplies and vodka plants?
All this political stuff is really funny. You do realize that politicians are just like the birds on the Galapagos Islands; same DNA, different beak so as to feed off of a different part of the food chai
What we need are new birds, with new feathers, cross-linked DNA from mutated stock culled from around the universe. No beaks, just trough feeding clones that explode after being too greedy! Pop!
I don't think there's anyone out there who knows what to do, much less actually do it. So blaming one party or the other is useless, unless you happen to be a prosecutor.
I actually think that Ben is doing the best he can. Trouble is, that's not very good.
It is so kind of the Republicans to share blame for this "bipartisan" mess.
Oops! The Republicans have controlled all three branches of government since 2000 and until 06 when the Democrats gained a narrow (and impotent) majority in congress.
Clinton had a surplus. Six years of unchecked Republican power have brought disaster. God help the next president (who will take the blame for this one's irresponsibility) - like Carter did for the Nixon-Greenspan mess of the 70s.
So sorry, but even this ultra-lefty-liberal can't bring himself to pin this problem entirely on the Republicans. God - I wish I could.
CR is a business blog, but it is the business folks who demonized the Democrats so...
We are all political now.
Barely - Lehman went out for a 2 bil credit line. Blomberg article
.
To assume that The Fed needs more room to hoodwink and mislead the taxpayers is absurd retardation!
As Jon Stewart said last night: You're Not Helping!
How do we know that the mafia isn't going to pull a Spitzer blackmail thingadoo on Helipad Ben, i.e, what if Ben is being forced to illegally bail out these banks and to provide the means to challenge antirust laws? Bailing out bad banks smells of collusion and blackmail, if not out right fraud!
Paul, You want help.
End the war Iraq monday morning and stop the stupidity there and then reduce debt and focus on our economy and not a retarded effort to bring Iraq a John Wayne Westernized version of democracy! Then start sending crooked CEOS to prison and regulate the markets!
Fed Aiding & Abetting criminal | 03.14.08 - 11:16 pm |
It's bee fraud since July, 1944, criminal fraud since 1971.
Furthermore, we went to Iraq to stop terrorism but looked the other way with our homeboys here in America that had noses buried in the trough screwing everyone for more cash.....Paul, who is the greater threat? Wake up little guy, the terrorists work in America and they work at pumping out derivatives and selling snakeoil. These are the people that are the problem and these are the people fully backed by The Fed, who bails them out, because they all want more market share. You should be ashamed to think The Fed has a clue or that banks should be given any slack; these bastards need to go yo prison!
How do we know...
You know FAAC? We don't.
It's all just a massive conspiracy to steal your money so put it all under your mattress. Buy a shotgun, canned goods, and a can opener, then call us in a couple of years to see how it all worked out.
Otherwise, you can choose to assume that there are enough competing interests to keep the system generally honest and, while we have clearly drifted from optimum economic conditions, we will find our way home some time soon (or at least in your children's lifetime).
But what do I know?
Paul:
Concur with you, Liz and MoM.
Although I think that it's going to be our children's lifetime.
Generational event.
Now for a beer.
Paul,
IMHO, we have a lot of reasons as to what has happened but what will happen needs to appear to be honest. Honesty at this point, is to watch the stock market fall, bond yields go down, the dollar to decay further, homes to fall in value and then a recession, and then honesty, which builds on integrity. If we allow The Fed to manipulate all these markets in an effort to build synthetic bridges of fantasy valuations, we will end up with massive destruction within this country, beyond your wildest dreams. Honesty, will be a very difficult challenge, because banks like Bears, need to collapse and vaporize, because they took it upon themselves to manage their affairs in a carefree risky manor, where they played casino games with real money that did not belong to them. The people that trusted bears to be honest were fooled by people that should go to jail; that would be honest, to send crooks to jail, so that they can take time to think about the crimes they committed. That type of honesty will help restore faith and integrity in a broken system, however, if we embrace these crooks and bail them out and give them rewards for stealing, the market will continue to hold these people in contempt and not trust the system, they will see this system as being dis-honest and lacking integrity.
Is this too complicated?
An additional point would be to look across the pond at The frogs, who just had a market event, with a rouge trader "kid" who apparently bet too much money. That kid went to jail, so why is the story so different on wall street, do we not have laws in our American financial system?
There are a couple of things here, Paul.
There is a panic going on now. There is some truth to the statement that if we all would just calm down and proceed as we were, conditions would immediately improve.
Problem with that is, there would be no incentive other than prudence to prevent the same actions that created this mess in the first place.
Playing the "blame game" may seem counterproductive - but it couldn't be more necessary! The Republicans - assisted by some DINOs - have spent the last several decades dismantling the New Deal - including regulations enacted to prevent exactly what is happening now. They blamed "excess regulation" for all the ills in the world. Now there is preventable hell to pay.
Just wait until the bankruptcy "reform" really hits home and all the folks who are using CC debt to stay in that house finally hit the credit wall and give up. Then they will find out what indentured servitude and "non-dischargable" debt are.
Unless blame is properly assigned, necessary change won't happen. Unless real progressives are swept into office, there will be some fiddling around the edges but nothing will really change.
Unless blame is properly assigned, the Republicans will be able to blame the next four years of pain on Democrats - as thay successfully did with Carter.
Sometimes the truth is controversial and difficult. Too bad.
FAAC - It's not complicated, it just takes time.
One man's manipulation is another man's bridge from the burning building.
It's a process; and it takes time. I would love to snap my fingers and see it all fixed tomorrow. Unfortunately life does not work that way.
If we learn anything from this mess, I hope we learn there is no free lunch. I would love to see Bear Stearns and Citigroup and Merril Lynch and all the rest of the SOBs collapse. But then I would be broke.
So, despite the fact that I rent and have a positive net worth, I have a dog in this fight. We all do.
That's what makes it complicated.
Unless blame is properly assigned, necessary change won't happen.
I have no argument with this. Give the Dems 61 or more votes in the Senate. Until then, we can't do much.
Re: n a conference call on Friday, Bear Stearns Chief Executive Alan Schwartz suggested that the company may be working toward a long-term solution, which some observers interpreted as a sale of the company.
"We are also announcing at this time that we will continue to pursue some alternatives," he said in a conference call with analysts and investors, "with the focus on ensuring that we can handle and protect our customers well, and at the same time maximize shareholder value."
Schwartz said he would give an update on Monday, when the company reports its fiscal first-quarter earnings.
But Bear and its bankers could have a hard time drawing bidders from other brokers or big banks.
"I think they're finished," said Richard Bove, a bank analyst at Punk Ziegel. "Bear Stearns's biggest problem is that they're losing customers at a rapid rate. It's easier to get Bear's business by attacking it rather than buying it."
Why is he different than the kid in Paris that suggest all was well? Why is one person a criminal in one country for casino betting, while on wallstreet these types of CEOs are either bailed out or rewarded? Schwartz signed on The Patriot Act, he has obligations to shareholders, to SEC, to his employees; seems to me that he dropped the ball, just like all the other CEOs and all the people in The Fed, SEC, FTC, DOJ............this is retarded, because America is lawless and without any way out of this mess, because we fail to have justice in this land of anarchy!
Switching to latest post now....
Well, it seems this thread has gone off the deep end. I agree with Misean: If you want to rave about politicians, go the redstate.org or democratic underground.
As for the current mess, I an reminded of an essay by von Mises. Basically, prices are information transferred via markets on the relative value and scarcity of different goods and services. Consumers and producers use this info to adjust their consumption and production. When government interferes (thru subsidized home loans, abnormally low interest rates, etc), the system breaks down and information is lost. Then you have massive mal-investment (like in housing). This is an age old economic problem first discovered nearly a century ago by some very clever Austrians. Simply electing a vacuous Chicago pol is not going to cure this disease.
How can this dem orgy, frenzy, whatever go unchecked? Granted, current Republicans are...ummm..not so desirable...but as far as I can tell, the most abhorent bailout proposals are being made by dems (on the surface, these are for victimized "homeowners" but actually for the banks themselves (who contribute nicely of course to both parties).
And, in a grander scheme, the much-maligned (on this blog and rightfully so) federal reserve institution owes its formitive roots to early century socialist elite. Surprised???
As for Bush spending...you have to go far back to find any presidency welcomed with (1) 911 at onset of first term, and (2) Katrina at onset of second. I guaran-f'n-tee u that whoever held office these past 8 years would have run-up spending like nobody's busines...in fact, who can argue that dems would have created more gov't vs. privact sector (contracting) jobs, which are 11.8 times more difficult to "right-size" when the times call for it. Take the post office for example.
PS don't hate me; I'm just another JFK-style conservative republican who can't stand the stench on either side of the aisle.
You know, there is absolutely no one in the state of California with any credibility whatsoever. I request an earthquake to drop the entire state into the Pacific Ocean. First the dot.com disaster and now the mortgage broker disaster. Is there something in the water out there?
As for my liberal stench... I promise to take a shower when I can afford the water bill.
anoinCA,
You are not paying attention. The SEC and the OCC are permitting the financial industry to stonewall on reporting their losses according to GAAP and done zero enforcement on Sarbanes Oxley & SEC reporting violations. Guess who controls the SEC and the OCC? Guess which party has led to the destruction of trust and confidence in our financial system? Get your priorities in order sir.
Folks,
A little history. Johnson pulled soc. security into gen fund to pay for his "great society" That moment screwed us all.
Regan blessed us with "supply side" That moment ended fiscal responsibility.
Clinton and Bush X 2 deployed NAFTA. Those moments will eventually relegate us to third world status.
It has taken both political parties over 40 years to get us to where we are now. Deriding one party or extolling the virtues of the other is futile. Politicans are in the bussiness of getting reelected. They are good at that and not much more. America was a great nation because of strong work and moral ethics. Those two ethics are now not as important and the resultant greed and dishonesty have ruined us. I hate reading on this blog that morality is unimportant. The lack of morality is the root cause of this crisis. The golden rule has been changed from "do unto others as you would have them do unto you" to "screw everyone but me"
Our society and country have been beaten into the ground - not by outsiders but by ourselves. Pogo was right..........
I thought that SS went into the gen fund during the Nixon administration - to pay for Vietnam.
I have noticed that several posters have suggested that commenters shut up about the politics - then they trash a Dem.
Politics and politicians got us into this mess. Politicians are gonna either make it worse or get us through it. A political appointee - BB - has decided to trash the dollar to save the banks. This is a political decision. This crisis was caused by the Republican tax-cutting-for-the-rich mania and the insane policies of the previous Fed chief, Greenspan - a Rand Devotee first appointed by Nixon.
Too bad if you don't like hearing about that.
Where's Eliot Spitzer when we need him?
Sez UnEasyOne:
"This crisis was caused by the Republican tax-cutting-for-the-rich mania and the insane policies of the previous Fed chief, Greenspan - a Rand Devotee first appointed by Nixon."
Yes, in thunder.
However -- and wouldn'tja know there's a catch? -- we cannot allow the Democrats' obsequiousness and subservience to Bushism pass without penalty.
Rolling over, fetching tax cuts, panting when markets go up, and laying at their master's feet all throughout the Bubble hardly speak well for the Bushwhipped Dems. A pack of kittens would have made a better opposition than those sad, beaten curs -- and certainly have been cuter, too.
The deeper, and ultimately more damning criticism, is to lay this crisis at the feet of Consumption Nation. Which is Everyman and Everywoman. Which is the center-right Dems and the hard-right Repubs alike.
Somebody was moving into the McMansions. Somebody was buying those SUVs and going to Cancun and dining out at -- snicker -- Olive Garden on MEW. Somebody couldn't control him/herself at Best Buy. Somebody didn't care how the money kept coming, as long as it did.
^ IOW, A Nation of Serins.
I note that when all the folks on this blog were pointing out the developing problem and suggesting various actions, the delusional crowd response was largely "shut up, pessimists". For several years now, in fact.
Now that the bill has come due, the response is "shut up, you're not helping"....with a big ole helping of "We're all in this together". You'll excuse me if I don't get all misty eyed....."We" better learn to live with disappointment.
In an interview, Senator Kay Bailey Hutchinson (is she Texas?) said that she thought the Government should step in and help the Homebuilders put a floor under prices to "avoid selling at bargain basement prices".
Centex, one of the largest builders, is based in Texas. So I wouldn't be surprised she is serving their interests.
JV blowups is going to be the theme of the next down leg in the home builder stocks, with a few of the biggies filing Chapter 11. Indeed, I'm surprised Beazer and Standard Pacific are still going -- probably keeping the banks at bay with the promise of a Hail Mary spring selling season. But that ain't gonna happen.
And no, even if you saw this coming it is no fun to watch.
Paul | 03.15.08 - 12:14 am | #
Paul,
It is clear from your post that you have a stake in the Toll Bros. joint venture in Las Vegas, and you are hoping that the California falls into the sea makes new beach front property in Nevada. It won't work, however -- we've all seen Superman 2.