Currently, there is an oversupply of housing. Tax breaks for homebuilders may allow some homebuilders at risk of bankruptcy to continue to stay in business. Homebuilders know how to do one thing, which is build homes (duh), which is exactly what the market doesn't need when supply is far exceeding demand. The bankruptcy of some homebuilders would help relieve supply that is being added to the market.
A tax break for homebuilders is the last thing Congress should be doing. Its demise would be a positive.
Seems unnecessary to keep some builders alive - we have a surplus of new homes and, apparently, they were building way too many every year. Someone's gotta find another job.
Besides, if we give yet another tax break we're spending more money we don't have, monetizing the losses that instead should be, need to be, distributed among the crowd that caused the losses, including the builders.
What on God's green earth would be the reason for such a provision ? Are we now just down to simply handing out money to corporations in plain daylight ? Oh, to go back to the days when one had to hide these things a bit and be creative about how kick-backs were given. It made the movies documenting such activities much more interesting.
My take:
If the builders didn't put some of those spectacular profits away for a rainy day, then tough shit. Now they get to eat the shit sandwich.
If I was a builder in a stronger position (i.e. recognized the downturn before my peers) I wouldn't support this provision either. Not having it would clear out the competition.
According to Kudlow, this might be a good thing about the burst, which is weeding out the excess. But I'm not sure if he's balking about the tax changes or complaining if they are removed. Don't expect consistency from a political hack.
Um, Congress just might not have missed that puny of an amount of money.
Anybody that needs a tax refund to survive won't be stumping up megabucks for congress critters.
I bet they let them die, after all a new industry of foreclosure flippers is already arising from the ashes, and less competition is well, less competition.
Yes! We, the people, are now in the business of student loans. Yippie!
WASHINGTON, April 9 (Reuters) - The $85 billion student loan business is in turmoil and with millions of U.S. students locking in funding for the coming school year, Congress is scrambling to make sure enough money is available.
In another case of fallout from the mortgage crisis, some student lenders are having trouble bundling and selling off their loans due to a general paralysis in securitized debt markets, prompting lawmakers to take action.
A congressional committee on Wednesday approved a bill to let the U.S. Department of Education buy federally guaranteed student loans from lenders unable to sell the loans.
The bill did include some good ideas, like funds to sate/local gv't to buy up foreclosed properties and some provisions that would help people refi into FHA backed mortgages. I'm sure that those ideas are the heart of W's opposition to the bill, not the hand out to the homebuilders. Seems unlikely that anything meaningful will happen to help ameiliorate the situation. The admin is devoted to doing nothing, except a few PR type stunts like the Hope(?) No(w) alliance. At least Nero could play the fiddle, I doubt W is capable of even playing pocket pool.
I can hear Bush and the GOP - fresh from a meeting with NAHB lobbyists meeting - screaming at the Democrats in Congress for being against "nation re-building."
"The court heard arguments Nov. 5 on the special tax breaks that 42 states provide to municipal bonds issued within their borders. At the time, many analysts and lawyers predicted a quick decision that would allow in-state exemptions and overturn a Kentucky court ruling that declared them unconstitutional.
"Five months later, the bond market is still waiting -- and in some quarters wondering whether the holdup signals something other than a clear-cut victory for existing tax rules."
If the Supreme Court re-thinks municipal bond tax rules, the muni market (and the host of accompanying development projects funded by them) could be in very serious trouble.
Again, why is it that we need to spend public tax dollars to keep these specific corporate entities afloat. If there's a need for housing, is Congress absolutely sure that no new building companies will be created to fill the demand??
"Are we down to handing out money in broad daylight?"
Umm ... yep.
One of the premises in the movie "The Sting" (Redford, Newman, et al.) is that for a big con to be really successful, it is vital that the mark never realize that he has been conned.
German Regulator BaFin Orders Closure of Weserbank (Update2)
German financial-market regulator BaFin ordered Weserbank AG to stop doing business, making it the first German bank to close since the subprime crisis started.
BaFin closed the Bremerhaven, Germany-based bank to preserve remaining assets and started insolvency proceedings, it said in an e-mailed statement today. The lender is over-indebted and would struggle to cover operating costs, BaFin said.
Weserbank, founded in 1912 as a cooperative lender for butchers and cattle dealers, more recently invested in floating- rate notes and government debt. Led by Chief Executive Officer Gerold Lehmann, it is the first German lender since 2006 to file for insolvency.
The IMF is in debt. Maybe they sell some gold. Billions of dollars worth. What does this mean? It means once they sell their gold they will need more funding.
I suspect that countries such as China, Saudi Arabia etc. will be foaming at the mouth to get a great asset such as gold....dump some of the paper crap.
How much would they buy? Let us put it this way? How much does the IMF want to sell?
The builders have already cut most of their employees loose. This bail-out will serve only the top-level management of these firms (pretty much all that's left for most of them), and do nothing for the broader economy.
Welfare whores, and "conservatives" to a man (and one woman, that I know of).
As a matter of fact....these countries could make a deal with The Federal Reserve and buy the whole lot of gold from them in case the Fed has to improve it's balance sheet.
I urge everyong reading this to call their U.S. Senators pronto and urge them to vote NO on the pending mortgage foreclosure legislation. Debate will expire at 8:45 PM this evening (April 9) and they could vote immediately thereafter.
This is the one bailout that's just completely unjustified.
Say half the builders in the country went bankrupt tomorrow. There would be no shortage of new building, and when the market turns, new, smaller builders would spring up everywhere.
There's no infrastructure that needs to be maintained, if the land they hold gets sold off at a discount, it will just speed the turnaround.
Homebuilders can be written off at almost no cost to the over-all economy.
How much does Fort Knox have anyway?
Anonymous | 04.09.08 - 3:30 pm
From what I understand, there hasn't been an accounting of US Govt. gold holdings in close to 30 years, and the Fed has been leasing gold out during that time.
I would not be surprised if Ft. Knox currently holds the same kinds of treasures they found in Al Capone's vault.
Barley and giacutter -
I guess you 2 were a couple rich kids who didnt need student loans to go to college...
The middle class of America seeks your forgiveness for wanting an education.
Although I'm sure you dont think we (and America in general) would be much better without one.
Lets lighten up on the student loans. Too many of us benefited tremendously from their existence.
Marcus, just go to Wikipedia, it's a reported figure. It's current as of 2007 and the US has 8,133.5 tonnes which is the most in the world bar none. Except the Indian people who have 13,000 tonnes in jewelery.
respectfully, i think some of the kneejerk reactions are odd.
if the tax code allows a two year carryback, what's inherently wrong with 4 years vs. 2? I'm not saying that an industry-specific provision makes sense, but you can't complain about a loss carryback w/o explaining whether you oppose them entirely or only in part.
this provision is indirectly adding liquidity to banks, who will ultimately take every penny the builders have. again, not saying that's good or bad (it's certainly better than the Treasury taking lousy loans as collateral), just that you should understand who really benefits from this provision.
My point was that college is too expensive. Congress funding student loans indefinitely will help students go to college, but then put them in debt for a very, very, very long time.
Reminds me of something else that was considered really good to have, but then became prohibitively expensive, then the prices continued to go up unchecked because of easy lending that put people up to their eyeballs in debt until it became unaffordable by nearly any measure. Hmmmmmm, what was that.....?
I've been following this industry for a while now and back when the builders should have been paying down debt and shoring up balance sheets with their outsized profits, they were instead paying exhorbitant salaries to their executives, borrowing more money, which they used to buy overpriced land and buy back overpriced stock.
And now, because some venal congressfolk have been threatened with lost contributions, we have legislation that will bail out these failed businesses?
It is just outrageous. I have both emailed and phoned the Washington offices of my CA senators to tell them that the tax carryback provision is unfair to honest market participants and extremely poor tax policy.
Those builders straddling solvency SHOULD go out of business; because those of us who have been observing this for years, and saw this day coming, knew this is exactly what would happen when the bubble finally collapsed. And don't let anyone claim those builders didn't see it coming, too. Let them accept the consequences of their bad business decisions.
FWIW, builder MDC is among the few that DID NOT squander resources during the bubble years. In 2005 and 2006, I recall listening to HB conference calls and have to endure UBS analyst Margaret Whelan imploring executives to use their cash to buy back shares. Every single one that I followed - KB Home, Meritage, Beazer, Hovnanian, Toll, Ryland, Centex - did exactly that. The lone exception was Mizel at MDC. He refused and was the lone voice of fiscal responsibility.
These builders were not beset by circumstances outside their control. They CREATED THE SITUATION. And now, taxpayers are supposed to help them out of the position they themselves, and with great selfishness, made for themselves? Absolutely not.
This should not and, if enough people raise their voices loudly and strongly, will not stand.
I urge everyong reading this to call their U.S. Senators pronto and urge them to vote NO on the pending mortgage foreclosure legislation. Debate will expire at 8:45 PM this evening (April 9) and they could vote immediately thereafter.
Michael Gonsior | 04.09.08 - 3:30 pm | #
Encouraging folks to tell their reps "no" without entailing what a NO vote means is a bit out of line, innit, Tonto?
I know a woman who gets 15K a month just for waking up in the morning because she is a McMillan.
I don't think they need a break.
Homebuilders profited, now they can suck the loss.
I do feel bad for the workers, though. All the workers. Their country has not treated them well, and it's time for some payback. The rich have profited long enough now.
I don't see this as a bailout. The builders are asking that their tax accounting reflect that they made bad investment decisions three to four years ago when they negotiated to buy the land. The investment time-horizon for the average builder is longer than two years, and the tax law should reflect the realities of their industry. That's only fair.
What I think is important is that they need this provision because -- ostensibly -- they do not expect to be able to carry forward the losses and deduct them from future earnings, which implies a grim view toward future earnings. That's plain for readers of this blog; but will the wider public see this as an admission by the builders that housing will see no recovery for the next several years?
Student loans? Are you crazy? They don't get wiped out in BK. Instead, buy a house, HELOC the bejezzus out of it no matter what the terms, pay off the student loans, pocket rent money and then BK.
One of the premises in the movie "The Sting" (Redford, Newman, et al.) is that for a big con to be really successful, it is vital that the mark never realize that he has been conned.
The better movie reference is "Witness" where the perpetrator turns out to be a well trusted policeman.
I guess you 2 were a couple rich kids ....Too many of us benefited tremendously from their existence.
Anonymous | 04.09.08 - 3:35 pm | #
An apology would be nice! I kept three part time jobs while in my first two years @ University. I worked part time the other four years.
I actually saved money while in school by working and by accepting scholarships and bursaries (based on ability).
I come from a single parent home. We were comfortable but not rich by any stretch.
I think social funding for post secondary education is fine for those not mentally challenged but not for sorry ass “savings challenged” people who view an education as a right and not a privilege. Not directing this at anybody. Just my pov.
Try this link. In light of the other financial/accounting shenanigans, I think this might be a more accurate "accounting" of our gold "holdings" (it might be toatlly false, but then why would the USG need or want physical gold in light of the failure of Breton Woods?)
"I think social funding for post secondary education is fine for those not mentally challenged but not for sorry ass “savings challenged” people who view an education as a right and not a privilege. Not directing this at anybody. Just my pov."
Personally, I'd offer social funding selectively. Student who's majoring in teaching or law enforcement or other low-paid and difficult public-service profession: PAID. Student majoring in advertising: get Mommy to pay it for you.
I 've got a nice 6 figure capital loss on bogus earnings from the 2003 equity rocket ride...
the only way for me to take them is to have mark-to-market accounting, for indivudual traders.
Price Stout, characterizing this as really a bailout of the banks, who are indeed on the hook for billions of dollars in loans to the major homebuilders, does anything to make the case for a bailout persuasive.
cant stand Marcus Aurelius writes:
Can you say: SHUT UP Marcus Aurelius. Why don't you stay OT? Go to a political blog!!
cant stand Marcus Aurelius | 04.09.08 - 3:43 pm
A most informative post, if somewhat shrill. They have pills for that kind of thing (I think they're called cyanide). Take one and lay down for a while.
The investment time-horizon for the average builder is longer than two years, and the tax law should reflect the realities of their industry. That's only fair.
Pat, that is just complete and utter bullshit.
The reality is these builders were overbuilding, using mortgage servicing units to put people into unaffordable homes, and generally leading the charge toward higher home prices and drastically diminished affordability.
They have contributed to one of the most spectacular economic calamities in U.S. history and you want to excuse this as the realities of land investment dynamics?
Ben be cookin' up a heap ol' batch of Taxpayer Whoopass with Investment Bank cream gravy. A little midles class creamed lifestyle for dessert and you gots yurself a banquet.
nades writes:
I went on vacation for one week and the threads got this jacked up? What gives?
Seems to be a lot of pent up frustration. This is what happens when fundamental rules are broken via bail-outs. It was unexpected, non-transparent, and causes uncertainty of how to make value-based decisions.
When you write your Congressman, be sure to say that you represent people at Calculated Risk who care about the survivial of the housing market and homebuilders.
Don't say you represent short-sellers who curse against the PPT and hope the stock market crashes and home builders go bust.
Instead of tax breaks going to the builders, why doesn't money just go to the people who buy new homes. Calcualte how much Builders would have been entitled to in tax refunds over the last 4 years. Divide that figure by half the new homes on the market. First people to buy the first half of the inventory on sale now, gets a gift.
Not that I like that idea, either.
But being that I'm getting screwed by eventually paying more in taxes, I may as well help individuals and lower new home inventories (which helps communities and homebuilders).
Can somebody explain to me how saving some of the home builders is necessary for the overall stability of the national or world economy? It's one thing to bail out Bear Stearns because it might lead to a domino effect of defaults and economic collapse, but home builders? If poorly-managed, overextended home builders get a tax refund because their income has decreased, then I want one, too.
The notion that the markets are frozen and lack liquidity is nonsense.
Basically, if the banks accepted actual market prices, they would be admitting insolvency. We are witnessing a massive asset re-inflation attempt.
Banks got stuck holding junk dot-bomb style mortgage debt. No buyers will pay enough to keep them solvent. The fed is recycling this junk debt on and off its balance sheet just to keep the banks from imploding. In the interim, banks are raising capital.
Eventually, banks will raise capital to minimum levels and then the junk assets will get marked accordingly. So far, all the capital raises have been extremely dilutive to existing shareholders. The future is for reduced bank earnings which are diluted by the increased share counts. Not good.
So, I'm heading to the PO tomorrow to make a gigantic payment to the IRS. One of the downsides of being in business is lack of predictability in revenue, and sometimes you owe more than you thought.
I have a great idea for governmental efficiency.
Just send me a list of local rich people, and I'll stop by and hand them the checks directly. Cut out the middleman. Knock, knock, Mr IB or Mrs Developer, here's my, um, your money.
As long as I don't have to physically touch their hands; I have a sensitive immune system.
So what. Another day, another dollar, or whatever.
I am starting to suffer from financial breakdown fatigue.
Too much bad news, utterly unreflected in the mainstream media, combined with Wall Street fairy tales has made me jaded.
Let's just have a big 3k drop in the dow and get it over with, the suspense is killing me.
Just like this eternal election.
Or the eternal police action keeping a state that should be divided into three parts...at least J.C. knew where to draw the lines.
My brow grows so heavy with worry that I am going for a walk.
Price Stout, well, I guess you'd agree that it would be fair to make long-term capital gains anything over a month. After all, if it's OK in principal, what difference does it make?
And I guess since we have mortgage interest deductibility, it's only fair that renters should be able to deduct credit card interest.
And....
Hey, where'd all the tax revenue go?
You are redistributing wealth, albeit indirectly, from other tax payers to one of the biggest culprits in the whole mess, and with little or no benefit to economy at large.
April 9 (Bloomberg) -- Kenneth Moelis, the former president of UBS AG's investment bank, said Wall Street firms may have to eliminate as much as 35 percent of employees as leveraged lending dwindles and the pace of mergers and acquisitions slows.
The Street got staffed up to support what was a slight bubble in M&A,'' Moelis, 49, said in an interview on Bloomberg Television today.You're going to see a significant retrenchment.''
Don't say you represent short-sellers who curse against the PPT and hope the stock market crashes and home builders go bust.
rich, if you truly believe that the majority of people opposed to this are doing so to profit on short positions, then you are more jaded than you are wise.
You are redistributing wealth, albeit indirectly, from other tax payers to one of the biggest culprits in the whole mess, and with little or no benefit to economy at large.
Well said, Bob. Maybe it's because I have to write a check to the IRS next week myself that I'm so exercised about this issue. That and the fundamental unfairness of rewarding the primary villains in this debacle.
Marcus, for what it's worth you're one of my favorite posters here. I'm always disappointed by the number of nutter libertarian fools and greedy, self-serving daytraders slumming in here, who can't seem to fathom they are no better than the sleazy scumbags who created this mess.
And will still vote GOP after the fiscal holocaust of the last three republican administrations and the Gingrich congress. Some people are ineducable.
rich, remember these are politicians. Tell them you have some shorts and if they want to grab some of the proceeds (via the brown paper bag) they have to vote NO.
cant stand Marcus Aurelius writes:
Can you say: SHUT UP Marcus Aurelius. Why don't you stay OT? Go to a political blog!!
cant stand Marcus Aurelius | 04.09.08 - 3:43 pm
We are headed into an epic financial/economic crisis where corruption was rampant and you want people to stay away from strident political comments?
Man oh man, your life is going to suck come fall. I am expecting social unrest, and then you will really see the rhetoric ramp up.
Economics has more to do with politics than science. The economic and financial "models" aren't quite newtonian mechanics yet, in case you didn't notice.
says the doofus who did the whole Obama/Osama gaffe. Go F yourself.
Please. If you want to be outraged, be outraged over what the Republicans spent investigating Whitewater (that ought to drag some nutters up!) and the worse things that generally come out of Rush's mouth. That slippage of a letter bothers me least. But, then again, I think Obama is an empty suit.
You give more credit to this populace than I do then. After all, they voted in Bush twice. There will be no social unrest at all. 30% of America thinks he's still done a bang-up job!
Oh, and back on topic, I too am writing a check next week for more than expected . . . And there is absolutely no excuse to turn around and funnel that money back to failing land speculators. No more corporate welfare!
[I]f the tax code allows a two year carryback, what's inherently wrong with 4 years vs. 2? I'm not saying that an industry-specific provision makes sense, but you can't complain about a loss carryback w/o explaining whether you oppose them entirely or only in part.
I don't have any formal education on taxation issues. Strictly folk wisdom.
It's my understanding that there's two justifications for taxes: Pay for government spending, and encourage/discourage desirable/undesirable behavior. Retroactive changes to the tax code don't accomplish the goals, unless the "desirable behavior" the government is encouraging is campaign contributions. It isn't like homebuilding is a strategic, export-oriented industry with a highly trained mobile workforce which will relocate to Brazil if THESE homebuilders aren't saved from BK.
You give more credit to this populace than I do then. After all, they voted in Bush twice. There will be no social unrest at all. 30% of America thinks he's still done a bang-up job!
ipodius | 04.09.08 - 4:36 pm | #
I was in complete agreement with you on this point 6 months ago. However, I have recently been impressed by fear as a motivator to get people to educate themselves.
Cd - libertarians, not liberals. And I'm not saying everybody here falls in those two categories . . . Most commentators and both proprietors are the tops. But those are the two species of commentators that turn my stomach. But politics and economics, as I've said here many times, are inextricably linked.
Also OT, but whoever had the comment about Conjure getting a dog ball lodged in his throat last night - priceless!
My letter to Chuck (the schmuck) Schumer
Re: Tax giveback to home builders
While I completely support your work on the mortgage bill elsewise, I utterly oppose another you support of the tax giveback to the building industry.
What do builders do with money? Build more houses.
And what will that do? Increase the housing supply and lower housing prices.
Its pouring Gas on a fire. Or better put it is naked capitulation to the builders lobby.
You must have gone to the Yiddish Theater a lot as a kid because your little speech at the Bear Stearns hearing was poor schmaltz. Oh don't forget we need money for the poor people, not just the rich (sob sob). So how much of sum given to buy Bear Stearns paper will be given as a pure gift to builders? Its got to be a sizable fraction of the BSC money and unlike it has no possility of being returned.
And you and the cowardly Senate Democrats passed the builders tax gift by voice vote. Was there a reason that you didn't ask for a roll call?
"The talk of not acting from fear is mere parliamentary cant. From what motive but fear, I should like to know, have all the improvements in our constitution proceeded? If I say, Give this peple what they ask because it is just, do you think I should get ten people to listen to me? The only way to make the mass of mankind see the beauty of justice is by showing them in pretty plain terms the consequence of injustice."--Sydney Smity, England, 1829
By and large. I think libertarianism is fine in theory, and find the notions romantic and attractive, in the abstract. In practice it is useless. Lack of regulation and a willfull failure to enforce existing laws, as well as gutting existing protections, is what got us into this mess.
I am socially very liberal, which often parallels libertarian thinking . . . think vice crimes, for example. But libertarianism as a practical political philosophy is masturbation.
I think lack of regulation wasn't really the problem. Most regulation results in more government waste and more waste spent by corporations to get around the regulation.
The "willfull failure to enforce existing laws" was the problem. Starting with ignoring the constitutional powers and limits regarding money, the government mandated monopolies, and the acceptance of fraud(as long as it is sophisticated enough).
Enforcing the true intent of simple understandable laws eliminates the need for most regulation.
I called both of my US Senators today and expressed strong opposition to any tax breaks for homebuilders. I added some angry comments about bailing out Bear Stearns shareholders and bondholders.
Call your congressman. Let's get this ball rolling.
This is a terrible idea. Does anyone in DC know a land-shark? What would keep a group of land developers from colluding to defraud the government? Landshark A offers Landshark B a deal - "I will sell you my land for $.15 on the dollar if you will sell me yours. We'll both make money on our taxes and will both have developable land." This is the kind of stuff these boyz do everyday. Stupid, stupid, stupid idea. Far better would be encouraging them to give the land to charity and to take the deduction.
This is a terrible idea. Does anyone in DC know a land-shark? What would keep a group of land developers from colluding to defraud the government?
It's already happening. Look at the deal Centex recently concluded with a consortium in which they have a minority interest. If that weren't enough, the deal was structured so Centex would benefit disproportionate to its interest.
i'm in favor of any backward (or back-dating of current losses to previous profits, to any # of years, as long as the same provisions are made available to individuals, under the same or similar terms, and same or similiar time applicability
Don't know the Woody Allen line but
"May the Schwartz be with you"
On Schumer
"During the nine terms Schumer served in Congress, a new verb was coined among Hill staffers who work for House Democrats from downstate New York.
To Schume.
The verb comes from what Hill staffers say is Schumer's periodic habit of stealing the limelight from other House members. Three senior Hill staffers who have worked for downstate New York Democrats and who do not want their names published agreed on this definition:
"When you wake up in the morning and find out a colleague has issued a press release on an issue that you have been working on for days, weeks, months or years, then you have been Schumed."
WaPo 10/5/98
in reply to: "One of the premises in the movie "The Sting" (Redford, Newman, et al.) is that for a big con to be really successful, it is vital that the mark never realize that he has been conned."
Rob Dawg said: "The better movie reference is "Witness" where the perpetrator turns out to be a well trusted policeman."
More-nuanced movie reference is "House of Games", a David Mamet joint.
"The basic idea is this," the con man (Joe Mantegna) explains to the woman who has become his student (Lindsay Crouse). "It's called a confidence game. Why? Because you give me your confidence? No. Because I give you mine."
If there isn't a wash rule in the legislation all of the homebuilders will just swap land at a loss and get all of their taxes back from the last 6 years. Pretty stupid idea if you ask me.
WHAT EXACTLY MAKES BUILDERS SPECIAL? Why not give a tax refund to ALL THOSE who are hurt by this decline in housing markets? I would include companies that make woodboards, gpysum panels, marble countertops....as well as those people such as electricians, carpenters, title insurers...ALL OF THEM are hurt by this as much as homebuilders.
REALTORS, real estate agencies are probably next in the line.
AARP will get in the line too.
Thanks CONGRESS for spending my taxes and handing out $ to corporate America with strong lobbying powers.
Lemmie see now - politicians make a corrupt decision and posters here aren't supposed to talk politics? Riiiiight.
I enjoy your commentary Marcus - keep it up. I find it topical and I suspect your critic just doesn't like the content.
I notice a lot of leftest commentary here - and as much of a newbie as I am here, more all the time. Maybe because any sane individual who has the brains to balance a checkbook has watched in horror ( now fast becoming incredulous disbelief) for the last 7 1/2 years now. Nothing irritates an irrational ideologue more than an inconvenient fact.
BTW (and more on topic), it would appear that we're gonna shovel out some cash to these builders after they've had the big layoffs. Not gonna help a single worker keep a job.
Uh, except caddies and servants at the fatcat country club, that is.
They all have upwards of a billion in cash. Another item they are asking Congress for is a tax credit for consumers who specifically buy new homes. not any home on the market, or foreclosed home, just new homes.
"The investment time-horizon for the average builder is longer than two years, and the tax law should reflect the realities of their industry. That's only fair."
So the investment time horizon for the oil industry is 25 years or more, should they be allowed tax loss arry backs for a 1/4 century? The investment time horizon should have nothing to do with it.
"Even owning gold will not protect you from this."
Safe Haven | Who Will Bail Out the FED?
First?
I could be first?
Currently, there is an oversupply of housing. Tax breaks for homebuilders may allow some homebuilders at risk of bankruptcy to continue to stay in business. Homebuilders know how to do one thing, which is build homes (duh), which is exactly what the market doesn't need when supply is far exceeding demand. The bankruptcy of some homebuilders would help relieve supply that is being added to the market.
A tax break for homebuilders is the last thing Congress should be doing. Its demise would be a positive.
More ponies for corporations...
"Thank you sir" "May I have another?"
Let them eat wood!
sixth...too bad.
The NAHB better start lobbying harder. Dont they know democracy is influnced by $$$ and not the people?
Seems unnecessary to keep some builders alive - we have a surplus of new homes and, apparently, they were building way too many every year. Someone's gotta find another job.
Besides, if we give yet another tax break we're spending more money we don't have, monetizing the losses that instead should be, need to be, distributed among the crowd that caused the losses, including the builders.
Ray
The NAHB pulls their lobbying money in protest earlier this year and the Congress shows them that maybe that isn't the best idea.
Last?
we need bulldozers, lot of 'em.
Take the training wheels off big capitalism, and let 'em fall.
What on God's green earth would be the reason for such a provision ? Are we now just down to simply handing out money to corporations in plain daylight ? Oh, to go back to the days when one had to hide these things a bit and be creative about how kick-backs were given. It made the movies documenting such activities much more interesting.
My take:
If the builders didn't put some of those spectacular profits away for a rainy day, then tough shit. Now they get to eat the shit sandwich.
If I was a builder in a stronger position (i.e. recognized the downturn before my peers) I wouldn't support this provision either. Not having it would clear out the competition.
we need a moratorium on silly election year tax breaks. plz
According to Kudlow, this might be a good thing about the burst, which is weeding out the excess. But I'm not sure if he's balking about the tax changes or complaining if they are removed. Don't expect consistency from a political hack.
Um, Congress just might not have missed that puny of an amount of money.
Anybody that needs a tax refund to survive won't be stumping up megabucks for congress critters.
I bet they let them die, after all a new industry of foreclosure flippers is already arising from the ashes, and less competition is well, less competition.
Someday this war's gonna end...
Yes! We, the people, are now in the business of student loans. Yippie!
WASHINGTON, April 9 (Reuters) - The $85 billion student loan business is in turmoil and with millions of U.S. students locking in funding for the coming school year, Congress is scrambling to make sure enough money is available.
In another case of fallout from the mortgage crisis, some student lenders are having trouble bundling and selling off their loans due to a general paralysis in securitized debt markets, prompting lawmakers to take action.
A congressional committee on Wednesday approved a bill to let the U.S. Department of Education buy federally guaranteed student loans from lenders unable to sell the loans.
potentially, some builders afloat
I love that word "Potentially". Screw'em.
The bill did include some good ideas, like funds to sate/local gv't to buy up foreclosed properties and some provisions that would help people refi into FHA backed mortgages. I'm sure that those ideas are the heart of W's opposition to the bill, not the hand out to the homebuilders. Seems unlikely that anything meaningful will happen to help ameiliorate the situation. The admin is devoted to doing nothing, except a few PR type stunts like the Hope(?) No(w) alliance. At least Nero could play the fiddle, I doubt W is capable of even playing pocket pool.
I can hear Bush and the GOP - fresh from a meeting with NAHB lobbyists meeting - screaming at the Democrats in Congress for being against "nation re-building."
Privatize the profits and socialize the losses. This is supposed to be capitalism?
At least in a socialist society, the bottom 90% get to share in some of the profits. They deal we're getting seems like the worst of both worlds.
On a related note:
Supreme Court Muni-Bond Delay Has Lawyers, Markets Puzzling
"The court heard arguments Nov. 5 on the special tax breaks that 42 states provide to municipal bonds issued within their borders. At the time, many analysts and lawyers predicted a quick decision that would allow in-state exemptions and overturn a Kentucky court ruling that declared them unconstitutional.
"Five months later, the bond market is still waiting -- and in some quarters wondering whether the holdup signals something other than a clear-cut victory for existing tax rules."
If the Supreme Court re-thinks municipal bond tax rules, the muni market (and the host of accompanying development projects funded by them) could be in very serious trouble.
Yes! We, the people, are now in the business of student loans. Yippie!
Yes, we definitely need Congress to make sure that hyperinflationary college tuition increases continue unfettered forever.
Maybe Congress should just put the government in charge of all lending in this country. There. Problem solved.
/snark
Again, why is it that we need to spend public tax dollars to keep these specific corporate entities afloat. If there's a need for housing, is Congress absolutely sure that no new building companies will be created to fill the demand??
Same goes for banks.
"Are we down to handing out money in broad daylight?"
Umm ... yep.
One of the premises in the movie "The Sting" (Redford, Newman, et al.) is that for a big con to be really successful, it is vital that the mark never realize that he has been conned.
Look around ... can you spot the mark?
Pretty soon we might think we are still in a credit crunch...that the Fed stopped with the bailout of Bear......right?!?!
Ach! Mein bank ist kaput!!!
German Regulator BaFin Orders Closure of Weserbank (Update2) - Bloomberg.com
German Regulator BaFin Orders Closure of Weserbank (Update2)
German financial-market regulator BaFin ordered Weserbank AG to stop doing business, making it the first German bank to close since the subprime crisis started.
BaFin closed the Bremerhaven, Germany-based bank to preserve remaining assets and started insolvency proceedings, it said in an e-mailed statement today. The lender is over-indebted and would struggle to cover operating costs, BaFin said.
Weserbank, founded in 1912 as a cooperative lender for butchers and cattle dealers, more recently invested in floating- rate notes and government debt. Led by Chief Executive Officer Gerold Lehmann, it is the first German lender since 2006 to file for insolvency.
The IMF is in debt. Maybe they sell some gold. Billions of dollars worth. What does this mean? It means once they sell their gold they will need more funding.
I suspect that countries such as China, Saudi Arabia etc. will be foaming at the mouth to get a great asset such as gold....dump some of the paper crap.
How much would they buy? Let us put it this way? How much does the IMF want to sell?
The builders have already cut most of their employees loose. This bail-out will serve only the top-level management of these firms (pretty much all that's left for most of them), and do nothing for the broader economy.
Welfare whores, and "conservatives" to a man (and one woman, that I know of).
The fleecing continues.
BTW: These welfare queens claimed to have "pulled themselves up by their bootstraps".
Hey, let's just save everyone from everything everytime. Then we are all winners!! Right?
As a matter of fact....these countries could make a deal with The Federal Reserve and buy the whole lot of gold from them in case the Fed has to improve it's balance sheet.
How much does Fort Knox have anyway?
I still think we will see more bankruptcies in the public homebuilder space.
I just don't see a bottom in housing let alone a recovery.
I urge everyong reading this to call their U.S. Senators pronto and urge them to vote NO on the pending mortgage foreclosure legislation. Debate will expire at 8:45 PM this evening (April 9) and they could vote immediately thereafter.
This is the one bailout that's just completely unjustified.
Say half the builders in the country went bankrupt tomorrow. There would be no shortage of new building, and when the market turns, new, smaller builders would spring up everywhere.
There's no infrastructure that needs to be maintained, if the land they hold gets sold off at a discount, it will just speed the turnaround.
Homebuilders can be written off at almost no cost to the over-all economy.
How much does Fort Knox have anyway?
Anonymous | 04.09.08 - 3:30 pm
From what I understand, there hasn't been an accounting of US Govt. gold holdings in close to 30 years, and the Fed has been leasing gold out during that time.
I would not be surprised if Ft. Knox currently holds the same kinds of treasures they found in Al Capone's vault.
Barley and giacutter -
I guess you 2 were a couple rich kids who didnt need student loans to go to college...
The middle class of America seeks your forgiveness for wanting an education.
Although I'm sure you dont think we (and America in general) would be much better without one.
Lets lighten up on the student loans. Too many of us benefited tremendously from their existence.
Anonymous | 04.09.08 - 3:35 pm
Student loans are a thing of the past, but higher education is not.
How will anyone afford higher education?
Military service.
No draft and plenty of our best and brightest to serve as cannon fodder.
Can you say, Bomb, bomb, bomb Iran"?
Marcus, just go to Wikipedia, it's a reported figure. It's current as of 2007 and the US has 8,133.5 tonnes which is the most in the world bar none. Except the Indian people who have 13,000 tonnes in jewelery.
respectfully, i think some of the kneejerk reactions are odd.
Can you say: SHUT UP Marcus Aurelius. Why don't you stay OT? Go to a political blog!!
Rich parents? No. Not that it matters.
My point was that college is too expensive. Congress funding student loans indefinitely will help students go to college, but then put them in debt for a very, very, very long time.
Reminds me of something else that was considered really good to have, but then became prohibitively expensive, then the prices continued to go up unchecked because of easy lending that put people up to their eyeballs in debt until it became unaffordable by nearly any measure. Hmmmmmm, what was that.....?
I've been following this industry for a while now and back when the builders should have been paying down debt and shoring up balance sheets with their outsized profits, they were instead paying exhorbitant salaries to their executives, borrowing more money, which they used to buy overpriced land and buy back overpriced stock.
And now, because some venal congressfolk have been threatened with lost contributions, we have legislation that will bail out these failed businesses?
It is just outrageous. I have both emailed and phoned the Washington offices of my CA senators to tell them that the tax carryback provision is unfair to honest market participants and extremely poor tax policy.
Those builders straddling solvency SHOULD go out of business; because those of us who have been observing this for years, and saw this day coming, knew this is exactly what would happen when the bubble finally collapsed. And don't let anyone claim those builders didn't see it coming, too. Let them accept the consequences of their bad business decisions.
FWIW, builder MDC is among the few that DID NOT squander resources during the bubble years. In 2005 and 2006, I recall listening to HB conference calls and have to endure UBS analyst Margaret Whelan imploring executives to use their cash to buy back shares. Every single one that I followed - KB Home, Meritage, Beazer, Hovnanian, Toll, Ryland, Centex - did exactly that. The lone exception was Mizel at MDC. He refused and was the lone voice of fiscal responsibility.
These builders were not beset by circumstances outside their control. They CREATED THE SITUATION. And now, taxpayers are supposed to help them out of the position they themselves, and with great selfishness, made for themselves? Absolutely not.
This should not and, if enough people raise their voices loudly and strongly, will not stand.
I urge everyong reading this to call their U.S. Senators pronto and urge them to vote NO on the pending mortgage foreclosure legislation. Debate will expire at 8:45 PM this evening (April 9) and they could vote immediately thereafter.
Michael Gonsior | 04.09.08 - 3:30 pm | #
Encouraging folks to tell their reps "no" without entailing what a NO vote means is a bit out of line, innit, Tonto?
PPT on the move..Can't have a dow 100 point loss. Or sp500 end below 1350 god forbid...
Is the schmuck/shyster/shylock end of day chump pump by the I-banking cabal going to stick?
C'mon red!
I wrote emails to both Ca Senators..no reply yet...
I know a woman who gets 15K a month just for waking up in the morning because she is a McMillan.
I don't think they need a break.
Homebuilders profited, now they can suck the loss.
I do feel bad for the workers, though. All the workers. Their country has not treated them well, and it's time for some payback. The rich have profited long enough now.
I don't see this as a bailout. The builders are asking that their tax accounting reflect that they made bad investment decisions three to four years ago when they negotiated to buy the land. The investment time-horizon for the average builder is longer than two years, and the tax law should reflect the realities of their industry. That's only fair.
What I think is important is that they need this provision because -- ostensibly -- they do not expect to be able to carry forward the losses and deduct them from future earnings, which implies a grim view toward future earnings. That's plain for readers of this blog; but will the wider public see this as an admission by the builders that housing will see no recovery for the next several years?
Student loans? Are you crazy? They don't get wiped out in BK. Instead, buy a house, HELOC the bejezzus out of it no matter what the terms, pay off the student loans, pocket rent money and then BK.
One of the premises in the movie "The Sting" (Redford, Newman, et al.) is that for a big con to be really successful, it is vital that the mark never realize that he has been conned.
The better movie reference is "Witness" where the perpetrator turns out to be a well trusted policeman.
I guess you 2 were a couple rich kids ....Too many of us benefited tremendously from their existence.
Anonymous | 04.09.08 - 3:35 pm | #
An apology would be nice! I kept three part time jobs while in my first two years @ University. I worked part time the other four years.
I actually saved money while in school by working and by accepting scholarships and bursaries (based on ability).
I come from a single parent home. We were comfortable but not rich by any stretch.
I think social funding for post secondary education is fine for those not mentally challenged but not for sorry ass “savings challenged” people who view an education as a right and not a privilege. Not directing this at anybody. Just my pov.
I am glad the system helped you.
ipodius:
Try this link. In light of the other financial/accounting shenanigans, I think this might be a more accurate "accounting" of our gold "holdings" (it might be toatlly false, but then why would the USG need or want physical gold in light of the failure of Breton Woods?)
Half of gold in central banks gone?
"I think social funding for post secondary education is fine for those not mentally challenged but not for sorry ass “savings challenged” people who view an education as a right and not a privilege. Not directing this at anybody. Just my pov."
Personally, I'd offer social funding selectively. Student who's majoring in teaching or law enforcement or other low-paid and difficult public-service profession: PAID. Student majoring in advertising: get Mommy to pay it for you.
I 've got a nice 6 figure capital loss on bogus earnings from the 2003 equity rocket ride...
the only way for me to take them is to have mark-to-market accounting, for indivudual traders.
Price Stout, characterizing this as really a bailout of the banks, who are indeed on the hook for billions of dollars in loans to the major homebuilders, does anything to make the case for a bailout persuasive.
Indeed, it makes even more odious.
cant stand Marcus Aurelius writes:
Can you say: SHUT UP Marcus Aurelius. Why don't you stay OT? Go to a political blog!!
cant stand Marcus Aurelius | 04.09.08 - 3:43 pm
A most informative post, if somewhat shrill. They have pills for that kind of thing (I think they're called cyanide). Take one and lay down for a while.
Barley,
You want an apology from anonymous?
Do you live on big rock candy mountain?
Why are people conflating the corporate tax carryback with student loans? Apples and oranges, folks.
Fisher-Fed has not exhausted its liquidity options
Fisher: Fed has not exhausted its liquidity options
| Reuters
I hear helicopters.
Bob Dobbs I'd agree
Student loans...check
Sheeple...check
IB's....check
Homebuilders..check
open door...check
garbage in...check
ohh my gootness, what's cookin Be
The investment time-horizon for the average builder is longer than two years, and the tax law should reflect the realities of their industry. That's only fair.
Pat, that is just complete and utter bullshit.
The reality is these builders were overbuilding, using mortgage servicing units to put people into unaffordable homes, and generally leading the charge toward higher home prices and drastically diminished affordability.
They have contributed to one of the most spectacular economic calamities in U.S. history and you want to excuse this as the realities of land investment dynamics?
Bull shit!
Wow, the chump pump may fail!
Waahaahaahaa!
Ben be cookin' up a heap ol' batch of Taxpayer Whoopass with Investment Bank cream gravy. A little midles class creamed lifestyle for dessert and you gots yurself a banquet.
Oil making new highs today.
I may have to start sleeping at work during the week.
I went on vacation for one week and the threads got this jacked up? What gives?
...................
Heartbreaking news:
Moelis Says Wall Street's Banks May Cut 35% of Jobs (Update1) - Bloomberg.com
nades writes:
I went on vacation for one week and the threads got this jacked up? What gives?
Seems to be a lot of pent up frustration. This is what happens when fundamental rules are broken via bail-outs. It was unexpected, non-transparent, and causes uncertainty of how to make value-based decisions.
Rome my friends is burning.
ades, M-A- started it.
When you write your Congressman, be sure to say that you represent people at Calculated Risk who care about the survivial of the housing market and homebuilders.
Don't say you represent short-sellers who curse against the PPT and hope the stock market crashes and home builders go bust.
Rome my friends is burning.
There was a little smoke, but the Fed arrived with a big hose.
Instead of tax breaks going to the builders, why doesn't money just go to the people who buy new homes. Calcualte how much Builders would have been entitled to in tax refunds over the last 4 years. Divide that figure by half the new homes on the market. First people to buy the first half of the inventory on sale now, gets a gift.
Not that I like that idea, either.
But being that I'm getting screwed by eventually paying more in taxes, I may as well help individuals and lower new home inventories (which helps communities and homebuilders).
GS dumps chrysler debt at $.64 per dollar-
Goldman sells $500 mln of Chrysler debt at very deep discount - MarketWatch
Can somebody explain to me how saving some of the home builders is necessary for the overall stability of the national or world economy? It's one thing to bail out Bear Stearns because it might lead to a domino effect of defaults and economic collapse, but home builders? If poorly-managed, overextended home builders get a tax refund because their income has decreased, then I want one, too.
The notion that the markets are frozen and lack liquidity is nonsense.
Basically, if the banks accepted actual market prices, they would be admitting insolvency. We are witnessing a massive asset re-inflation attempt.
Banks got stuck holding junk dot-bomb style mortgage debt. No buyers will pay enough to keep them solvent. The fed is recycling this junk debt on and off its balance sheet just to keep the banks from imploding. In the interim, banks are raising capital.
Eventually, banks will raise capital to minimum levels and then the junk assets will get marked accordingly. So far, all the capital raises have been extremely dilutive to existing shareholders. The future is for reduced bank earnings which are diluted by the increased share counts. Not good.
So, I'm heading to the PO tomorrow to make a gigantic payment to the IRS. One of the downsides of being in business is lack of predictability in revenue, and sometimes you owe more than you thought.
I have a great idea for governmental efficiency.
Just send me a list of local rich people, and I'll stop by and hand them the checks directly. Cut out the middleman. Knock, knock, Mr IB or Mrs Developer, here's my, um, your money.
As long as I don't have to physically touch their hands; I have a sensitive immune system.
OT: -Fitch Ratings has placed two classes from PARTS Student Loan Trust 2007-CT1 asset-backed securities (ABS) on Rating Watch Negative.
Fitch's rating action follows Monday's bankruptcy filing by The Education Resource Institute (TERI).
Brennt Paris?
So what. Another day, another dollar, or whatever.
I am starting to suffer from financial breakdown fatigue.
Too much bad news, utterly unreflected in the mainstream media, combined with Wall Street fairy tales has made me jaded.
Let's just have a big 3k drop in the dow and get it over with, the suspense is killing me.
Just like this eternal election.
Or the eternal police action keeping a state that should be divided into three parts...at least J.C. knew where to draw the lines.
My brow grows so heavy with worry that I am going for a walk.
Someday this war's gonna end...
Price Stout, well, I guess you'd agree that it would be fair to make long-term capital gains anything over a month. After all, if it's OK in principal, what difference does it make?
And I guess since we have mortgage interest deductibility, it's only fair that renters should be able to deduct credit card interest.
And....
Hey, where'd all the tax revenue go?
You are redistributing wealth, albeit indirectly, from other tax payers to one of the biggest culprits in the whole mess, and with little or no benefit to economy at large.
Default Research posted California March defaults:
Sorry. Page not found.
March-08 : 10,846
MONTHLY CHANGE: 40.95%
YEARLY CHANGE: 178.60%
Averaging Q1 07: 3426
Avergaing Q1 08: 9475
DQ should have their Q1 report in a couple of weeks which breaks out NOD and NTS and takes out dupes.
Thanks, c&c; that is big news.
Nice shaft job by one shyster to another, selling at a big discount before the other schmucks get out.
It really breaks my heart to see members of the cabal backstabbing each other.
Where's Banker to explain how omniscient, omnipotent Golden Schmucks
could take a 35% haircut?
Some schadenfreude for those of you with bailout fatigue...
Moelis Says Wall Street Banks May Be Forced to Cut 35% of Jobs
By Zachary R. Mider and Erik Schatzker
April 9 (Bloomberg) -- Kenneth Moelis, the former president of UBS AG's investment bank, said Wall Street firms may have to eliminate as much as 35 percent of employees as leveraged lending dwindles and the pace of mergers and acquisitions slows.
The Street got staffed up to support what was a slight bubble in M&A,'' Moelis, 49, said in an interview on Bloomberg Television today.You're going to see a significant retrenchment.''
[snip]
They have stats for all of California, the stats I posted was for LA County only.
Don't say you represent short-sellers who curse against the PPT and hope the stock market crashes and home builders go bust.
rich, if you truly believe that the majority of people opposed to this are doing so to profit on short positions, then you are more jaded than you are wise.
You are redistributing wealth, albeit indirectly, from other tax payers to one of the biggest culprits in the whole mess, and with little or no benefit to economy at large.
Well said, Bob. Maybe it's because I have to write a check to the IRS next week myself that I'm so exercised about this issue. That and the fundamental unfairness of rewarding the primary villains in this debacle.
If we didn't bail out Bear Sterns, the entire global banking system was going to screech to a halt and the world as we know it was going to end.
What lame brain excuse can they cook up for bailing out these guys?
All these pigs bellied up to the trough, along with the politicians they own, have no shame.
``The Street got staffed up to support what was a slight bubble in M&A,'' Moelis, 49, said in an interview on Bloomberg Television today.
Bwaaaa haaaa hhaaaaaa!
slight bubble.....cough.....weeeez....
Marcus, for what it's worth you're one of my favorite posters here. I'm always disappointed by the number of nutter libertarian fools and greedy, self-serving daytraders slumming in here, who can't seem to fathom they are no better than the sleazy scumbags who created this mess.
And will still vote GOP after the fiscal holocaust of the last three republican administrations and the Gingrich congress. Some people are ineducable.
jg writes:
nades, M-A- started it.
jg | 04.09.08 - 4:09 pm
...says the doofus who did the whole Obama/Osama gaffe. Go F yourself.
"that is just complete and utter bullshit"
Sums it up pretty nicly me thinks.
More civility, please.
rich writes:
When you write your Congressman...
rich, remember these are politicians. Tell them you have some shorts and if they want to grab some of the proceeds (via the brown paper bag) they have to vote NO.
M-, you and gary, consider yourselves in a timeout.
cant stand Marcus Aurelius writes:
Can you say: SHUT UP Marcus Aurelius. Why don't you stay OT? Go to a political blog!!
cant stand Marcus Aurelius | 04.09.08 - 3:43 pm
We are headed into an epic financial/economic crisis where corruption was rampant and you want people to stay away from strident political comments?
Man oh man, your life is going to suck come fall. I am expecting social unrest, and then you will really see the rhetoric ramp up.
Economics has more to do with politics than science. The economic and financial "models" aren't quite newtonian mechanics yet, in case you didn't notice.
says the doofus who did the whole Obama/Osama gaffe. Go F yourself.
Please. If you want to be outraged, be outraged over what the Republicans spent investigating Whitewater (that ought to drag some nutters up!) and the worse things that generally come out of Rush's mouth. That slippage of a letter bothers me least. But, then again, I think Obama is an empty suit.
Gary, wouldnt a liberal vote Democrat?
Remember no politics here per Tanta.
I don't agree with the fools analogy either. I'm not smart but I pick up a lot of smarts from the commentors here.
OT-I believe BOE will cut tomorrow, residually pushing yen higher against dollar and markets will hope for strong GE report. Next week ugly..
I am expecting social unrest
You give more credit to this populace than I do then. After all, they voted in Bush twice. There will be no social unrest at all. 30% of America thinks he's still done a bang-up job!
Remember no politics here per Tanta.
Oh right! You must cloak your agenda in economic and housing cloth as usual. Carry on.
i-, I did slip the letter on purpose. Just to get some libs' dander up. Good clean fun, you know.
Seems to have worked.
Oh, and back on topic, I too am writing a check next week for more than expected . . . And there is absolutely no excuse to turn around and funnel that money back to failing land speculators. No more corporate welfare!
Come fall, it will be ugly in here. And everywhere else.
The politicians will be discussing the economy and housing. That is what this blog is about.
I can't see politics being left out. As long as it is economically specific and civil.... make that just economically specific.
[I]f the tax code allows a two year carryback, what's inherently wrong with 4 years vs. 2? I'm not saying that an industry-specific provision makes sense, but you can't complain about a loss carryback w/o explaining whether you oppose them entirely or only in part.
I don't have any formal education on taxation issues. Strictly folk wisdom.
It's my understanding that there's two justifications for taxes: Pay for government spending, and encourage/discourage desirable/undesirable behavior. Retroactive changes to the tax code don't accomplish the goals, unless the "desirable behavior" the government is encouraging is campaign contributions. It isn't like homebuilding is a strategic, export-oriented industry with a highly trained mobile workforce which will relocate to Brazil if THESE homebuilders aren't saved from BK.
"The economic and financial 'models' aren't quite Newtonian mechanics yet..."--Red Pill
Don't tell the neo-liberals that.
You give more credit to this populace than I do then. After all, they voted in Bush twice. There will be no social unrest at all. 30% of America thinks he's still done a bang-up job!
ipodius | 04.09.08 - 4:36 pm | #
I was in complete agreement with you on this point 6 months ago. However, I have recently been impressed by fear as a motivator to get people to educate themselves.
Cd - libertarians, not liberals. And I'm not saying everybody here falls in those two categories . . . Most commentators and both proprietors are the tops. But those are the two species of commentators that turn my stomach. But politics and economics, as I've said here many times, are inextricably linked.
Also OT, but whoever had the comment about Conjure getting a dog ball lodged in his throat last night - priceless!
My letter to Chuck (the schmuck) Schumer
Re: Tax giveback to home builders
While I completely support your work on the mortgage bill elsewise, I utterly oppose another you support of the tax giveback to the building industry.
What do builders do with money? Build more houses.
And what will that do? Increase the housing supply and lower housing prices.
Its pouring Gas on a fire. Or better put it is naked capitulation to the builders lobby.
You must have gone to the Yiddish Theater a lot as a kid because your little speech at the Bear Stearns hearing was poor schmaltz. Oh don't forget we need money for the poor people, not just the rich (sob sob). So how much of sum given to buy Bear Stearns paper will be given as a pure gift to builders? Its got to be a sizable fraction of the BSC money and unlike it has no possility of being returned.
And you and the cowardly Senate Democrats passed the builders tax gift by voice vote. Was there a reason that you didn't ask for a roll call?
Just Say No to Lobbyists
Red Pill....
"The talk of not acting from fear is mere parliamentary cant. From what motive but fear, I should like to know, have all the improvements in our constitution proceeded? If I say, Give this peple what they ask because it is just, do you think I should get ten people to listen to me? The only way to make the mass of mankind see the beauty of justice is by showing them in pretty plain terms the consequence of injustice."--Sydney Smity, England, 1829
gary-
What makes one a nutty libertarian fool?
Do you consider all libertarians to be fools, and why?
Toll Brothers is laying off alot of the top brass and underlings according to my source.
Y'all go ahead with your political diatribes.
Catch you tomorrow.
Nice letter, pls-.
Everytime I read your name, I read, 'Please, Schwartz!' muttered by Woody Allen in a movie scene.
Kind of like, 'You're killing me, Larry.
By and large. I think libertarianism is fine in theory, and find the notions romantic and attractive, in the abstract. In practice it is useless. Lack of regulation and a willfull failure to enforce existing laws, as well as gutting existing protections, is what got us into this mess.
I am socially very liberal, which often parallels libertarian thinking . . . think vice crimes, for example. But libertarianism as a practical political philosophy is masturbation.
gary-
I think lack of regulation wasn't really the problem. Most regulation results in more government waste and more waste spent by corporations to get around the regulation.
The "willfull failure to enforce existing laws" was the problem. Starting with ignoring the constitutional powers and limits regarding money, the government mandated monopolies, and the acceptance of fraud(as long as it is sophisticated enough).
Enforcing the true intent of simple understandable laws eliminates the need for most regulation.
I called both of my US Senators today and expressed strong opposition to any tax breaks for homebuilders. I added some angry comments about bailing out Bear Stearns shareholders and bondholders.
Call your congressman. Let's get this ball rolling.
jg writes:
nades, M-A- started it.
jg | 04.09.08 - 4:09 pm
When you hit adolescence, that excuse will no longer work.
gary | 04.09.08 - 4:28 pm
Thank you.
This is a terrible idea. Does anyone in DC know a land-shark? What would keep a group of land developers from colluding to defraud the government? Landshark A offers Landshark B a deal - "I will sell you my land for $.15 on the dollar if you will sell me yours. We'll both make money on our taxes and will both have developable land." This is the kind of stuff these boyz do everyday. Stupid, stupid, stupid idea. Far better would be encouraging them to give the land to charity and to take the deduction.
This is a terrible idea. Does anyone in DC know a land-shark? What would keep a group of land developers from colluding to defraud the government?
It's already happening. Look at the deal Centex recently concluded with a consortium in which they have a minority interest. If that weren't enough, the deal was structured so Centex would benefit disproportionate to its interest.
Only in America.
i'm in favor of any backward (or back-dating
of current losses to previous profits, to any # of years, as long as the same provisions are made available to individuals, under the same or similar terms, and same or similiar time applicability
jpg
Don't know the Woody Allen line but
"May the Schwartz be with you"
On Schumer
"During the nine terms Schumer served in Congress, a new verb was coined among Hill staffers who work for House Democrats from downstate New York.
To Schume.
The verb comes from what Hill staffers say is Schumer's periodic habit of stealing the limelight from other House members. Three senior Hill staffers who have worked for downstate New York Democrats and who do not want their names published agreed on this definition:
"When you wake up in the morning and find out a colleague has issued a press release on an issue that you have been working on for days, weeks, months or years, then you have been Schumed."
WaPo 10/5/98
in reply to: "One of the premises in the movie "The Sting" (Redford, Newman, et al.) is that for a big con to be really successful, it is vital that the mark never realize that he has been conned."
Rob Dawg said: "The better movie reference is "Witness" where the perpetrator turns out to be a well trusted policeman."
More-nuanced movie reference is "House of Games", a David Mamet joint.
"The basic idea is this," the con man (Joe Mantegna) explains to the woman who has become his student (Lindsay Crouse). "It's called a confidence game. Why? Because you give me your confidence? No. Because I give you mine."
S.
If there isn't a wash rule in the legislation all of the homebuilders will just swap land at a loss and get all of their taxes back from the last 6 years. Pretty stupid idea if you ask me.
"May the Schwartz be with you"
That's from Mel Brooks' "Spaceballs"
The thing that surprises me is that the AARP hasn't pulled out the walkers to demand tighter monetary policy to protect their fixed income yields?
Maybe I'm getting ahead of the game?
WHAT EXACTLY MAKES BUILDERS SPECIAL? Why not give a tax refund to ALL THOSE who are hurt by this decline in housing markets? I would include companies that make woodboards, gpysum panels, marble countertops....as well as those people such as electricians, carpenters, title insurers...ALL OF THEM are hurt by this as much as homebuilders.
REALTORS, real estate agencies are probably next in the line.
AARP will get in the line too.
Thanks CONGRESS for spending my taxes and handing out $ to corporate America with strong lobbying powers.
This retroactive income tax refunding sounds like a great idea to me -- as long as they extend it so individuals can take advantage of it, too.
If individuals could get the same kind of deal, I should be able to quit work and get back all those taxes I paid in previous years, right?
Stated above:
If the builders didn't put some of those spectacular profits away for a rainy day, then tough shit.
It bore repeating.
Anyone know the associated bill #s in the congress and senate?
Lemmie see now - politicians make a corrupt decision and posters here aren't supposed to talk politics? Riiiiight.
I enjoy your commentary Marcus - keep it up. I find it topical and I suspect your critic just doesn't like the content.
I notice a lot of leftest commentary here - and as much of a newbie as I am here, more all the time. Maybe because any sane individual who has the brains to balance a checkbook has watched in horror ( now fast becoming incredulous disbelief) for the last 7 1/2 years now. Nothing irritates an irrational ideologue more than an inconvenient fact.
BTW (and more on topic), it would appear that we're gonna shovel out some cash to these builders after they've had the big layoffs. Not gonna help a single worker keep a job.
Uh, except caddies and servants at the fatcat country club, that is.
With the speaker of the house and the chairman of house ways and means against this, it is pretty much DOA.
The president also opposes the senate bill.
The homebuilders are corporate pigs:
404
- CharlotteObserver.com
They all have upwards of a billion in cash. Another item they are asking Congress for is a tax credit for consumers who specifically buy new homes. not any home on the market, or foreclosed home, just new homes.
"The investment time-horizon for the average builder is longer than two years, and the tax law should reflect the realities of their industry. That's only fair."
So the investment time horizon for the oil industry is 25 years or more, should they be allowed tax loss arry backs for a 1/4 century? The investment time horizon should have nothing to do with it.
As Karl Marx once wrote, "...the will of one class made into Law for all."