We had a "vando" attack in my Temecula neighborhood last week. The garage door was lifted and jarred from the track and the garage door was used to gain entry to the house. I don't know if the interior was vandalized. I called the listing agent number and left a message which evidently was ignored. The house is still accessible one week later. This vandalism is the first incident in my more expensive (by Temecula standards) neighborhood.

OT but interesting

Wachovia Is Under Renewed Scrutiny After Report on U.S. Probe

By David Mildenberg

April 26 (Bloomberg) -- Wachovia Corp.'s business practices drew scrutiny for the second time in as many days after a report that the bank has been ensnared in a federal probe of drug-money laundering tied to Mexican and Colombian transfer companies.

The Wall Street Journal reported today that Charlotte, North Carolina-based Wachovia is one of several large U.S. banks that have drawn the attention of federal authorities for their relationships with remittance companies. The companies transmit an estimated $50 billion a year to Latin America, mostly wages earned by immigrants to the U.S. The Journal cited unidentified people familiar with the probe.

Separately, the U.S. Office of the Comptroller of the Currency said yesterday that Wachovia, the nation's fourth- largest bank by assets, will pay as much as $144 million to settle claims that poor oversight allowed telemarketers and payment processors to withdraw millions of dollars from customers' accounts.

snip

Wachovia is talking with the U.S. Justice Department about a deferred-prosecution agreement that would require federal oversight of its compliance system, the Journal reported. Wachovia spokeswoman Christy Phillips Brown denied that such talks were taking place.

snip

I reported on this squatter phenomena last August:
410pets.JPG (image)
What I am noticing is that we've yet to find a bottom in the precipitous drop in personal behavior. Does not bode well for expectations of shouldering debt obligations.

It is better than being a vando -- down by the river.

A guy who works from me has bandos living across the street. Seems the NY flipper rented the house (in Poinciana FL) to a single mom with a bunch of kids. After two months she moved out because she couldn't afford it. A relative and his clan moved in with a copy of her key and has been there rent free for over six months. The owner is clueless, and everyone in the neighborhood is afraid of this guy. He is an intimidating druggie suspected for several robberies in the area.

I wanted to add a little more spice to the stock vs. commodities angle. I was quite curious how both relate on a historical basis in real terms (CPI-U). I therefore posit the following chart:

Dow Jones vs. CRB Spot - Historical

When some people talk about a commodities bubble, I find it fascinating how they can at the same time ignore that parabola in deep red. This is the real outlier!

Another interesting tidbit is that after strong rises in stocks there are years of decline. Doesn't bode well for the DOW, now does it?

As to commodities, doesn't exactly look like a bubble to me but simply a solid correction from a very long time low.

Perspective is everything...

Thanks Rich, greatly appreciated.

I don’t see it that way Doc. Naked Capitalism had a good piece the other night.

Here is some of it.

America, of course, is already in recession – although the cascade of defaults, business closures, and job losses has barely begun.

Japan is in recession too, according to Goldman Sachs. It is still the world’s second biggest economy by far, lest we forget.

Britain, Ireland, Spain, Italy, and New Zealand, are tipping into housing slumps and demand implosions of varying severity.

Ontario and Quebec have stalled. Canada’s growth is the weakest in fifteen years, hence the half point cut by the Bank of Canada yesterday.

Australia is on borrowed time, whatever the price of coal and iron ore. Household debt is 175pc of disposable income, up in La La Land with England, Ireland, Denmark, and the Dutch. The wholesale funding market for mortgages that underpins this nonsense remains frozen.

Together these countries and regions make up roughly 45pc of the global economy, and over half global demand. My hunch is that this bloc will be sliding towards full-blown deflation within a year as the commodity bubble pops and job losses set off a self-feeding downward spiral.

The alleged parallel with the oil spike of the early 1970s is a snare. Debt leverage has been more reckless this time. It must contract more viciously. Inflation is less sticky (going down) in the Anglo-Saxon world, if not flexless Europe, where stagflation awaits.

If you think that core Europe - Greater Germany, Benelux, and the Scandies (France is faltering) - can somehow tough it out as the rest of the OECD’s industrial family hurtles into a brick wall, read the IMF’s “Regional Economic Outlook: Europe”, published this week.

The Fund has cut its eurozone growth forecast to 1.4pc this year, and 1.2pc next – with perma-slump pencilled in for Italy. This puts it at daggers drawn with the European Central Bank, the fervent apostle of decoupling.

Europe will suffer 40pc of the entire $940bn global losses stemming from the credit crunch. Euro banks alone will lose $123bn (compared to $144bn for the US). "Loss recognition will need to catch up," said the IMF.

"Liquidity remains seriously impaired. Lenders are tightening credit standards, particularly for loans to enterprises," it said.

"The deteriorating economic outlook could weaken European and corporate balance sheets appreciably," it said.

On it goes, more or less dire, if you adjust for the IMF’s softly-softly style.

I don't think it is in the public interest to find and evict bandos, as long as they keep a low profile in the abandoned house. If the property owner complains, OK, then the bandos have to go, but otherwise they protect the house from vandos and worse.

My numero uno tinfoil fear-o-meter issue made the NYT op-ed page:

Stem Rust Never Sleeps
By NORMAN E. BORLAUG
Published: April 26, 2008

WITH food prices soaring throughout Asia, Africa and Latin America, and shortages threatening hunger and political chaos, the time could not be worse for an epidemic of stem rust in the world’s wheat crops. Yet millions of wheat farmers, small and large, face this spreading and deadly crop infection.

{snip}

I find it fascinating how they can at the same time ignore that parabola in deep red. This is the real outlier!

As a college kid in 1972, I was working in an investment office, ripping, folding and stuffing envelopes to send out the stock sales. On Nov. 14, 1972 we worked overtime, because the DJ broke 1000. I still remember my carbon-papery hands, riding my bike home before dawn.

In hanging out at these economics blogs, it strikes me that an awful lot of measures cut loose between 1970 and '75. Those years turn up again and again. I know this must be a real "duh" for a lot of you guys, but why is that?

Noni

Noni - my first best guess would be closing of the gold window by Nixon in 1971. Inflation was already baked in, but that's what really got things going.

I always thought Bando was a reference to My Side of the Mountain, the kids book about running away to live in the wilderness of the Catsklls. A guy he calls Bando finds him out, and comes back to live in the tree with the kid, eventually getting his own tree guesthouse- free of course!

Sequoia writes:
What scares me is that society is in much worse shape than the last depression. We have meth,crack, gang violence, and general lack of community. This scares me much worse than job loss or market declines

You really need to read about the Great Depression. It was really ugly, society was coming part at the seams. Machine gun nests at the White House, squatter camps dispersed by tanks and machine guns. The rise of the great crime gangs. We made it though by rather slim margin.

Interesting enough the GOP was for rescuing bankers and not the unemployed in the 1930s too. I read some of the speeches and I though McCain or Bush gave them.

This time, thanks to the GOP the lower classes are much better armed thank you.

Gonna be interesting.

Randos - authorities, experts, technicians who claim through their connections at an important foundation that "the bottom is in"

Quandos - people who continually ask other people when the bottom will be in. Often journalists (originally used to describe smug, self-satisfied foreign journalists)

Landos - people who try to tell you that real estate will always go up, usually because they’re not making any more land (Except in Holland see comments above re: Holland)

Lladros - statues, artifacts, figurines that have so flooded the illegal goods trade that fences won’t buy them from Bandos any longer

Zimbando - someone who wants, hopes, editorializes that inflating the money supply is the right thing to do to get us out of the housing mess (Often big promoters of glod and sliver)

CDOdos - someone who collects (by any method) the paper of risky tranches of CDOs (possibly in the hope of selling them on Ebay in ten years time as mementos)

Canabados - hemp growing Bando (see comments above)

Porndos, Bandominuims (see other comments above)

In this neck of the woods (where our motto used to be 'it's different here') we call 'em squatters:

Foreclosures in Jamaica now home to squatters, druggies - making ghost town

Can anyone offer insight as to why these foreclosed homes tend to sit vacant so long? Is it really banks waiting for a full-price bailout (or a full-price buyer), or is it legal holdups (I thought once an owner is out, the house can be put on the market). Defnintely seems like a problem our any "housing reform" advocates should be required to deal with.

NYC once had a terrible problem with vacant properties sitting idle, and bringing drugs, prostitution and other crimes to neighborhoods, and those days are coming back again.

(Often big promoters of glod and sliver)

Huh?

"If I'm not mistaken, in the 1980s there was quite a large 'squat this building' movement in the NYC area. There were scores (the number I recall was in the thousands) of abandoned mid rise buildings."

San Francisco also had plenty of squatters in the 80s, though mainly in abandoned industrial buildings in the South of Market area. I went to huge punk and performance art shows in abandoned factory buildings. The punks would even steal electricity from PG&E.

A lot of cities underwent big changes in the 70s and 80s -- outflow of middle class, factory closings -- and this led to a lot of abandoned property and, inevitably, squatting.

Now the old South of Market is the trendy SOMA, and luxury hotels and condos and a ball park have replaced the old industrial buildings. And the squatters. So it goes.

Now the old South of Market is the trendy SOMA, and luxury hotels and condos and a ball park have replaced the old industrial buildings. And the squatters. So it goes.
Bob Dobbs | Homepage | 04.27.08 - 10:50 am | #

Ya now the squatters are moving into suburbia... looks like the middle classies who wanted to get away from the urban riff raff can't shake'em. Not surprising - they are more closely connected than the middle class want to believe... it doesn't take much of a fall to go from middle class 'respectability' to would be squatter... most all of us are just a job loss & fore closure away from squatting, either 'for real' or on a friend/family couch.

OT: Barrons finds a copy of Greespan's long-lost Ph.D. dissertation at NYU. For a guy that didn't anticipate or even see the developing housing bubble, he sure had a lot to say about it in his 1977 dissertation...

Looking at Greenspan's Long-Lost Thesis - Barrons.com

cd

As to commodities, doesn't exactly look like a bubble to me but simply a solid correction from a very long time low.

Why would they have been low for a long time? Seems like corrections are more typically from short-term aberrations.

I think the two major factors commodity bulls need to address (again, talking generally, not about specific commodities) are 1) why did commodities take off the very day the Fed cut rates at the discount window and 2) why are surges in the prices of commodities like oil directly associated with speculative long positions in futures contracts?

As far as Krugman pointing out low levels of inventory in commodities, he could have pointed out the low availability of tech stocks at the beginning of the tech bubble or the low housing inventory during the housing bubble.

Inventory is not the issue. The issue is whether credit is allowing people and institutions to pay unsustainable prices. The interaction between commodity prices, speculative long positions, and Federal Reserve rate cuts suggests to me that it is the latter rather than the former.

In any case gold is looking less like a bubble every day.

ATA Truck Tonnage index DECLINES 3.3 PERCENT in March

BARLINGTON, VA — The American Trucking Associations’ advanced seasonally adjusted For-Hire Truck Tonnage Index fell 3.3 percent in March 2008, after remaining unchanged in February.

{snip}

Inventory is not the issue. The issue is whether credit is allowing people and institutions to pay unsustainable prices. The interaction between commodity prices, speculative long positions, and Federal Reserve rate cuts suggests to me that it is the latter rather than the former.

Inventory IS part of the issue.

It takes both ac - money supply AND a tight inventory condition somewhere preferably in an 'inelastic' product/service - to get one of these feedback loops going.

If there was a glut of inventory (like there is NOW in housing) or a product with highly elastic demand then the spec's moving in would have been met with a ton of supply being 'released' & the price wouldn't have budged enough to feed their appreciation jones... they would have moved on to something else. They don't buy just to buy - they buy to appreciate. Not enough appreciation & they move on.

But that is the nature of all spec markets - keep turning over rocks until you find one that responds then work it hard. Those that get there firstest with mostest win. They KNOW those opportunities are out there given enough liquidity... they just don't know before hand which one will respond... so go find it & they did - commodities.

whosonfirst - don't take this as legal advice, but:

In New Jersey, the duration of such possession is sixty (60) years for uncultivated land and thirty (30) years for other real estate. New Jersey Code §2A-14-30.

Pretty g-damn hard to accomplish but it's still there. Every state in the union has some form of adverse possession. The doctrine comes from old English common law (like most our laws).

Nova wrote:

Wachovia Is Under Renewed Scrutiny After Report on U.S. Probe

By David Mildenberg

April 26 (Bloomberg) -- Wachovia Corp.'s business practices drew scrutiny for the second time in as many days after a report that the bank has been ensnared in a federal probe of drug-money laundering tied to Mexican and Colombian transfer companies.

mock turtle adds

not the first time the powerful have been associated with corrupt banking practices.

the current prez's family held an account at now defunct BCCI (investigated and busted by none other than sen John Kerry and others for drug money laundering and financing terrorist related activities)

and prez received very timely contracts and "support from BCCI affiliated individuals when his wanna be oil company was nearly bust, amidst the front page news stories and investigations of corruption.

(note john h sonunu was B1s chief of staff)

Essay; B.C.C.I. and Sununu - The New York Times

http://www.motherjones.com/news/feature/1992/09/bushboys.html

Too much coincidence for my simple mind.

But some stuff DIDN'T go up after that date - financial assets not much, RE went down, etc.

You need two ingredients - from a tactical level - to generate a bubble. A target product that is both limited in supply and inelastic in demand AND a lot of money supply. After August we had both - and they intersected in 'commodities'... should not come as a surprise to anyone.

The thing about steep & inelastic demand curves is they can reverse just about as fast. I think mp has been sounding that alarm for awhile - I think he is right. People ought to be aware of how these things reverse even before they jump in with both feet. That's exactly why I DON'T get into that stuff - I'm too slow getting out. I'd be a casualty for sure.

But that doesn't mean I can't recognize the ingredients - I'm just a lousy cook.

Dryfly-

Absolutely the squatters have followed the move out to the boonies^d^d^d^d^d^d^d suburbs. They're exploiting the lack of a market. Squatters are a lagging indicator of housing (over) growth.

First really saw this in mid 80s LA, but only because they bulldozed so many of the empty houses in Texas (mostly outside Houston). Don't remember the movie about it, but RepoMan had an example or two.

joeblo - squatters have always been a part of rural life (farm country)... they will come as a real shock to suburbanites... but they are coming.

For those of you who cling to the notion that commodities are a "bubble"... IMO, commodities are going up because the price of oil is going up.. Oil is a commodity upon which all the others are based. We have an oil based civilization. We are at peak oil. If don't agree with that notion, fine. But do your research first. We have reached the limits of population exponential growth and are bumping up against resource limits...Erlich was correct, he just got the timing wrong. Understand what exponential growth means...the day before the pond was full of lilly pads, it was only half full. Ponder that.

"" Otherwise local governments should seize them and knock them down. The Feds should be turning empty developments into wheat fields.""

John, I told friends in Phoenix five years ago that it would come to this. Phoenix (and almost every American metro) paved over productive farmland almost everywhere. That was essentially the only land use plan that Phoenix Metro has ever seen.

Draw the curve of declining value for suburbs, the upward curve for commodities, and at some point they meet.. and it makes economic sense to rip out the suburbs and return to more agriculture.