Financial Times: US builders forced to sell off holdings
Submitted by
CalculatedRisk on Sat, 07/19/2008 - 7:42am (118 comments)
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I need $3,000, Tito Vazquez, 45, says as he looks at his gleaming Harley-Davidson motorcycle. But the economy's a mess right now and my credit cards are all maxed out.
Which brings him here, to Collateral Lender, a few blocks east of ultra-posh Rodeo Drive, in Beverly Hills. In short, it is a pawn shop. Like most pawn shops in Los Angeles - home to not one but two failed mortgage lenders, Countrywide Financial and IndyMac Bank - it is doing a roaring trade.
For Mr Vazquez, that is not good news: Collateral Lender has so many Harleys it does not have room for any more.
Boom times for American pawnbrokers as rich hit hard times - Times Online
No Honey not the Harley! LMAO
Mmmmmmmmmmmmmm................
"Soyabeans"
Mmmmmmmmmmmmmm................
How stupid can people be. being from Charlotte NC I wonder if Wachovia goes tits up will we have the same problem. People here seem to be doing ok. I do all my grocery shopping at Wally world and did watch a lady and two kids put back a couple food items for lack of money. The low income people are hurting I'm sure.
Capital One, you are approved..........
The popunder with the article.....
I think I'm gonna start a co-op that will farm using realtors handpicking to build sweat equity.
Houses are a cash crop you can only harvest once.
We haven't had any private jets yet, but we've had a half-million-dollar racing boat, a Lamborghini, a Ferrari, an Emmy, a couple of Grammys, gold records, platinum records, Cartier watches, Rolexes, Pete says.
Hahahaaa.........
Building houses on good farmland is truly Obscene.
One of the things that isn't discussed often enough these days is the externalized cost of developing these new suburbs. New roads/highways, schools, sewers may be seen as helping generate employment.
However, the costs are often externalized onto the existing taxpayer base, which has basically a zero savings rate as it is. Which is to say, the costs are often externalized into debt on books of everyone but the new developer and new homeowners.
One of perhaps dozens of reasons that the ever-expanding suburbanization of this country is a horrible idea in the long term.
Driving to myrtle beach from Charlotte you see a lot of these building sites where once was corn, cotton, or tobacco. The land would be treeless as flat as a pancake and in the middle of no where. They would build row after row of cheap houses packed on the the land. Each house looks the same and you wonder who in the hell would live in these things.
Now you see some falling apart and 2 with plywood boarding the windows. Yuck
Josh I agree with you.
The builders build subpar roads to these new developments and then hand the maintenance of the roads over to the city.
"Yeah Sonny,I remember back in ought 8 there used to be a beautiful mall right over there.A parking lot as far as the eye could see.Those times are never coming back.Good times. Good times.Now get them mules moving,we got to get home before dark and the wolves come out."
Here in the piedmont of Virginia I know a guy who owns a small sign business - does a lot of lettering of contractor trucks. We were talking about housing and developers in the area. Said the home building contracting business was dead but mentionned that one of his customers, a logger, was doing BOOMING business. Seems that one of the larger local developers was turning beautiful wooded lots into barren parcels to raise the $$'s to pay the property taxes.
At $9650/acre the ag investor expects real estate to come back eventually. It doesn't add up otherwise.
Bankrate.com's "Safe and Sound" list:
Bankrate.com Safe & Sound (tm): Bankrate free rating system for banks, thrifts, credit unions
Washington Mutual has the same rating as IndyMac . . .
In Central Florida I have already seen buiders sell individual lots for 5-6 cents on the $. It looks like I was wrong 3 years ago when I said there would be a ~ 90% price decline on vacant land in CF.(from the peak 05-06)
P.S. It is going to be worse for large residential parcels and commercial land. (mostly due to taxes)
Keep a close eye on California. They are having their worst fire season ever --- and they have two more months to go (at least).
http://www.telegraph.co.uk/news/2308470/Volunteer-heroes-hold-the-line-in-California's-wildfire-battle.html
I used to work for one of the aerial firefighting companies, and I can tell you: It costs the state a lot of money to put out those fires. The pilots and firemen earn every dollar, but the dollars stack up fast.
If California has too many foreclosures and bank failures, added to the current debt, they'll need emergency money from somewhere else to prevent the state from burning.
Milkman, the time for emergency money for California was last year. This year there is a $22b hole that they only admit is $18b and the "solutions" being proposed are non-starters. The politicos actually think the people will vote (required) a sales tax increase on themselves.
Milkman,the fire season in california usually ends in October.This is the worst fire season in history aand is going to be something to see (2 mile visibility in Auburn yessterday).If Marin County goes,it could be a BIG boost for the building trades.It hasn't burned since the 20's and the fuel load is incredible...
What, selling the lottery to Wall Street isn't a good idea? As if the lottery isn't predatory enough...
Argento,Lotteries are a tax on stupidity,nothing wrong with that...
Tom Stone writes:
Building houses on good farmland is truly Obscene.
Tom Stone | 07.19.08 - 12:11 pm
Amen, Tom.
Good article by Mike Whitney:
"Swan Song for Fannie Mae"
Mike Whitney: Swan Song for Fanny Mae
This article covers more than Fannie Mae. Whitney sums up the current crisis.
If the guy plants corn, which is in high demand, will this not pencil out? And if the ag land is really near town, eventually it will be used for houses. However, eventually could be 20 years. After the Fla land boom of '26 some of those platted lots were not used for
30 years, and some for 60 years.
I think that bubble, which got into tulip buib territory, is comparable to our bubble.
So I hope the would be farmer can pay the mtg out of his crops.
And I wonder how much that Lamb. would costs if the borrower defaults?
Sigh.
We don't need taxes to pay for budget shortfalls, we can declare a "war on meltdown." We had a little trouble at our last auction, but who wouldn't buy war bonds?
You don't plant corn, you plant all sorts of heirloom crops that ripen at different stages of the summer & fall, constantly generating income. Fence it off and have free range chickens & turkeys eating the bugs.
An emergency move by U.S. securities regulators this week aimed at curbing manipulative short-selling in some major financial firms should be expanded to all publicly traded banks, or it could erode confidence in the banking industry, a top trade group said.
U.S. banks ask SEC to expand stock trade protection
| Reuters
Knew it was coming, every insolvent company is the US is going to be screaming it's those wicked short sellers. Folks time to dump US financial assets because the crash is going to be spectacular and you don't want to get any on your shoes.
Whoa. How far will the SEC go? I also feared this was coming.
In California new developments contend with something called "Mello-Roos", and no, it's not a soft drink or a '70's easy listening 8-track. It's a bond measure that puts the cost of developing infrastructure (roads, sewer, schools, etc.) directly on the buyers in the new sub-division. And it's not tax deductible.
In some parts of Orange County (Ladera Ranch, or as it's affectionately know, Fraudera Ranch), this boosts the effective property tax rate from 25% to 80% of the nominal state tax rate of 1%.
In the boom, buyers were paying $600k - $3 million or more, and paying up to 1.9% tax rates.
Mello-Roos
Did anybody else notice BAC has increased its CD rates? The 7-month one is at 4.11%. Any ideas what this could spell for Monday report?
Desperate times, dumbass measures. Typical admin. blowholes thinking they can bully their way out of this by shutting out short-sellers and the dreaded 'rumors,' and whispering about the massive burden taxpayers will be taking. Like every other move of this kind they made - it just makes it worse.
What I wouldn't give for a true reform party to rear its head out of the aftermath.
Exit: something weird -- the l.a. times published an article a week or two ago that claimed property tax revenue was actually increasing in Los Angeles. They attributed this to prop 13, which they said smoothes out the bumps.
I really do not understand this if you consider that volume of sales is way down, as are values.
Even with no debt on the land, it would be hard to make a 5% return on that land by growing corn. Try %5,000 an acre.
This is true sometimes but not always. In many states, exurban infrastructure has been financed with special district/special assessment tax-exempt revenue bonds. This are not "externalized" debts on the larger community and its tax base, in most cases. Special assessments are created against homeowners, businesses, and commerce within the district to pay off revenue bonds.
These bond issues tend to be tiny but there are many hundreds of them. They will start going belly-up pretty soon, with steady frequency.
A lot of them managed to find investors only with MBIC or Ambac insurance. Well...
good luck!
Uncle Billy: It may have something to do with the annual increases in assessed value. My house dropped from 700k to 500k (based on the same floor plan selling) and my property tax bill was raised the maximum amount allowed due to "an increase in value" determined by the county. (Orange)
So if the current owners all get bumped up, it may overpower the losses from foreclosures and slow sales.
BTW...Im a prop 13 case. Dont know how much that matters.
Here in the piedmont of Virginia I know a guy who owns a small sign business - does a lot of lettering of contractor trucks. We were talking about housing and developers in the area. Said the home building contracting business was dead but mentionned that one of his customers, a logger, was doing BOOMING business. Seems that one of the larger local developers was turning beautiful wooded lots into barren parcels to raise the $$'s to pay the property taxes.
I remember during the 1980's recession helping a friend by going out to construction lots and sawing up the knocked down trees. He would then sell it as firewood. He was a bricklayer and out of work.
I can also recall during the 70's when I worked for the local Parks that we went on alert for people coming into the local parks and taking down trees for firewood to keep their homes warm. They would put mufflers on the chainsaws to make them run quiet.
Both of these practices may be making a comeback this winter.
CSC: I think that's exactly what happened.
There are probably huge numbers of homes which haven't been reasssessed upt to the 2% limit in many years -- which is why you had people still paying like $1,000 a year in property taxes on homes that are valued in the million dollar range. So to increase revenue, all they need to do is pick a group and up the taxes to where they should be.
Here's the link:
Property tax funds rise as market falls - Los Angeles Times
No doubt. We are setting up for a national crisis this winter among poor people who are behind on their utility bills, may soon be shut off, and won't be able to afford heat next winter.
I'm not sure what it's like in the Midwest or Great Plains. But in upstate NY and northern New England, a lot of people are just scratching by. Utility disconnections are way up, and costs are going through the roof. In Vermont, all of the industries have dried up. Loggers can't afford diesel. Summer tourism died, and I'm sure winter ski tourism will be negatively affected by oi/gas. The only real industries they have left are retirement communities, government, and colleges.
This is interesting. Kevin Drum refers to the liquidity injections from the rest of the world as the next bubble.
The Washington Monthly
I can't remember when the college tuition went down. Ironically, some colleges predict rising enrollment because of the recession. If it does increase, it will because of shift to "inferior" goods. i.e. state college instead of private ones.
How soon till government and colleges realize it's deflationary?
Imagine...food prices skyrocketing along with oil, and subdivisions on farm land an hour out of town no longer make economic sense.
Folks begin thinking before filling up either of their gas tanks or stomachs. They actually get a little exercise walking or biking to the store and office that they had to move closer to.
This actually could work out quite nicely. Keep printing those dollars Ben. We'll be happier and healthier in the long run, after our collective eight-step program of weening ourselves of a cheap food and energy addiction.
Mankind was never meant to sit in an air-conditioned SUV ordering fries and a milkshake at a drive-thru. Maybe those days will pass.
"Even with no debt on the land, it would be hard to make a 5% return on that land by growing corn. Try %5,000 an acre."
Ross | 07.19.08 - 2:06 pm | #
Agreed. Most people who were not raised in Ag don't understand this. In 2000-2001,when dad sold the last of the good farmland it went for 3050.00 an acre. I wouldn't touch 9k an acre with a 10 ft pole. He could be looking at 20+ years for any land appreciation in this market...After weathering more of a downturn.
Chris
I don't think anyone has yet mentioned the very prominent page 1 article in today's NY Times about our sinking economy.
On Every Front, Anxious Questions and Uncomfortable Answers - NY Times
"Something has clearly gone wrong with the economy. But how bad are things, really? And how bad might they get before better days return? Even to many economists who recently thought the gloom was overblown, the situation looks grim. The economy is in the midst of a very rough patch. The worst is probably still ahead.
"Job losses will probably accelerate through this year and into 2009, and the job market will probably stay weak even longer. Home prices will probably keep falling, shrinking household wealth and eroding spending power.
'The open question is whether were in for a bad couple of years, or a bad decade, said Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, now a professor at Harvard.'"
This is one of the most unvarnished negative takes on the economy that I've seen yet. It's like the NY Times threw in the towel on it's usually quasi-optimistic reporting and decided to "tell it like it is." (CR style)
It's also displayed and written like the editors did not want readers to miss the significance..."nobody can say we missed it or sugar-coated it."
It's the kind of article that makes people pull in their horns and batten down the hatches.
Surviving winter in Vermont, upstate NY?
Buy a bunch of haybales in September, brick your northfacing wall with them and cover with black plastic. Works as insulation and as they decompose they even generate heat.
It's the kind of article that makes people pull in their horns and batten down the hatches.
Now that's the ultimate Catch-22 situation; to fix our imbalances, we need to save a lot. Ergo. Long and protracted recession...
Uncle Billy: Thanks for the link. I don't usually read the LAT.
I can't complain, however, about my taxes. Even though they were raised again this year, my house is still assessed at ~$35k because I purchased the house from family and preserved the original Prop 13 assessment.
Thank god for stupid loopholes.
It's not just out in the boonies that developers are selling off land. Entire developments (some partially finished, others finished) are being sold to any knife-catchers available by Beazer and others here in Atlanta. Also recently three privately-developed luxury subdivisions went bankrupt over in North Fulton and Gwinnett counties.
It's survival of the fittest time. T-minus 30 days until WCI files for bankruptcy, says the c_s crystal ball.
"P.S. It is going to be worse for large residential parcels and commercial land. (mostly due to taxes)"
Broker | 07.19.08 - 12:41 pm | #
Broker,
You talking about something like this?
Charlotte County lot...
12/2003 VACANT $29,000
3 /2005 VACANT $32,000
7 /2008 VACANT $1,400
There are 80+ lots that sold for less thank 5k in the last 45 days. Peakk prices were 35-50k.
Chris
In Iowa there are over 10,000 acres (that's what we know of in southern Iowa alone) of mostly cropland that are presently under the threat of eminent domain by different local governments. Three of these projects are for lakes and two are for airports that are wanted.
The lakes are wanted mostly for recreation but are being advertised as needed for water supply.(in order to use eminent domain in Iowa) The lake planned that will take my home and all of our land (by eminent domain - because we won't sell willingly) is roughly 3 times the size of our current supply lake and we sell 1/3 of that water to other counties.
The NRCS, a division of the DNR, are helping local planners come up why they need this big of a lake. Almost all southern Iowa counties have lost population for many years. These lakes will be 50% cost share with the federal government.
The two airports that I know of are being planned basically because one or two corporate big-wigs bought larger airplanes the local airports could handle. Corporations then are putting pressure on locals to expand, so there goes the land and home owner!!!
Some of the projects are taking century farms, better the ave. farm land , and large cattle operations.
I'm fed up!!!!!
Here's real crop rotation, financial style: in the '70s-'80s I met the developers who were buying Bay Area farmland and building warehouses. After dot.bomb in late 2002 I met another Bay Area developer who told me they were buying vacant warehouse projects, tearing them down and building houses. And now just 6 years later, with median home prices in freefall, I won't be surprised to meet the developer who is tearing down houses to convert back to agricultural.
Eminent domain is being abused. Blame the Supreme Court's egregious Kelo decision, partly.
Friend of mine who lives in MO was subdividiing a farm he inherited on the fringes of the city. Tells me has didn't sell a single lot in 2007 nor any this year either.
Blame the Supreme Court's egregious Kelo decision, partly.
True, but often emminent domain has very important uses. I'm more worried about the politicians who are in the pockets of corporations and private donors.
How about a constitutional amendment making public campaign financing mandatory?
I'm more worried about the politicians who are in the pockets of corporations and private donors.
That would be all of them.
I'd bring up Ron Paul here, but some people might not realize I'd be joking.
Don't get me started with Ron Paul. What a disappointment. He was like a lamb in comparison with Senator Bunning.
Kelo is such a stupid rallying point.
I live in a state where we just got an additional set of laws that are really stupid for zoning based on out of state libertarian fools wasting money promoting fear that Kelo could happen here.
Well, the state constitution prohibits taking for private use, and a prominent case from five years ago upheld it without a problem.
But hey, a moron with more money than sense was taken by some slick thinktank folks whose friends in the signature gathering industry made some nice coin off that moron.
But, ya know, that is free enterprise is sooooo wonderful.
Puhleeze.
Kelo.
Har.
How about something important like using the IRS to persecute your political enemies, or the donut fly list. (gee, a little purposeful mispelling to keep me off that dratted thing;-}
Of all the things to complain about.
Someday this war's gonna end...
Economics of corn...
Real good Illinois land in the hands of an experienced intensive input farmer produces about 200 bu an acre... near Chicago that's reasonable as land there is pretty good. Where Newark is its ass-kick... I think Carl Sandburg referred to land like that as 'good enough to eat with growing crops on it first'. It really is that good - you have to see it to believe it. Like acres and acres of the best potting soil you can buy.
But even at 200bu/acre at $6/bu... thats $1200 an acre revenue... with $2/bu input cost (informed guestimate - could be more or less) that puts it at $800/acre net... At $9650/ac that produces a cap rate of about 8.3% - of course you have to 'work' to receive that (not including time & effort spent plowing, planting, cultivating & harvesting). We aren't talking 'gentleman farmer' returns.
And that assumes 200bu/acre at $6/bu... what if prices fall to $3/bu and you only produce 180bu/acre... far closer to long term averages for both typical Midwest yield & price.
I've heard land prices farther south (central Illinois) are closer to $6000/acre and that's considered dangerously inflated by locals... >$9000 is crazy unless future development expectation is embedded in that price.
Newark is a LOOOOONG way from Chicago jobs considering $5/gal gas.
Make your own decision if that makes it crazy to buy or not. I think its crazy. Call me when that land gets back to about $2000/acre.
Ah. Good old NY Times.
The Debt Trap.
A series about the surge in consumer debt and the lenders who made it possible.
When is it OK to blame the borrower?
Disclosure: I have 30K of student loans, but it was my choice.
To follow up on CRs point about turning development lots back into orange groves... I recently saw a 'funny'.
I was driving across S Minnesota - off interstate - went through a small town that was turning 'exurb'. It had a newish development just outside town where only half the lots had been sold and the rest empty. Clearly the builder had thrown in the towel on building out those lots this year - he had corn planted on them.
It was like a checker board of house, house, corn, house, corn. I wish I had taken a picture.
Iowa after Kelo tried to tighten their eminent domain laws. You can't use eminent domain for private use as it always has been, but added language specifically to restrict lake size to actual water need. We were overjoyed!
Next the NRSC (DNR) just raised their guidelines that any lake built has to go by certain standards. Funny how all the lake sizes previously wanted just so happened to meet their new guidelines. They found a loop hole, and we couldn't get it brought back up this last years legislative session!
Doggy Dog World asked: "How about a constitutional amendment making public campaign financing mandatory?"
No, thank you.
How about a Constitutional Amendment for term limits, line item veto, and a balanced budget?
How about a Constitutional Amendment for term limits, line item veto, and a balanced budget?
You're asking for Congress to propose three amendments that specifically limit its own powers...
Good luck on that one.
argento correctly noted: "You're asking for Congress to propose three amendments that specifically limit its own powers...
Good luck on that one."
Yes, but it sounds better, to me, than funding their election champagnes. Umm... sorry - campaigns.
Term limits guarantees that only lobbyists will get to write the laws(not that it doesn't happen already.)
Line item veto I have no problem with, but the supreme court does.
Balanced budget is poor policy and would make economic downturns worse(just wait for state governments to crater budgets.) Now you want to cap the % that one can go over in a 5 year period after which paygo comes into effect, now were talking.
Borrowing money to invest in infrastructure and energy independence, sure. Borrowing money for a tax rebate, the height of folly.
OT but maybe close.
Commercial bankruptcies soar, reflecting widening economic woes | McClatchy
Business bankruptcies soar, reflecting economic woe
By Tony Pugh | McClatchy Newspapers
WASHINGTON Driven by a sour economy and skittish consumers, U.S. business bankruptcies saw their sharpest quarterly rise in two years, jumping 17 percent in the second quarter of 2008, according to an analysis by McClatchy.
Line item veto I have no problem with, but the supreme court does.
Well, in fairness, the Constitution only allows the President to accept or reject a bill in whole.
I think it was Richard Nixon who operated under the belief that selectively executing appropriations was the equivalent of the line item veto...
Can't remember how that ended up.
Oranges don't grow well in SoCal anymore because of the smog.
A little midsummers day theme music:
YouTube -
This was posted by a Brad DeLong commenter. Who knew?
Line item veto is a disastrous idea - might as well abolish congress or just make them a rubber stamp & executive a dictator.
Better idea - elect responsible executives, ones who aren't scared to veto. Novel concept.
Excerpt from Mary Poppins video above:
"You can purchase first and second trust deeds
Think of the foreclosures!
Bonds! Chattels! Dividends! Shares!
Bankruptcies! Debtor sales!
Opportunities!
All manner of private enterprise!
Shipyards! The mercantile!
Collieries! Tanneries!
Incorporations! Amalgamations! Banks!"
Sovereign funds cut exposure to weak dollar
FT.com / In depth - Sovereign funds cut exposure to weak dollar
Next leg down is coming. Agriculture looks appealing now.
Sovereign funds cut exposure to weak dollar
And as they do that:
Saudi Arabia has begun negotiating farming contracts with Brazil, Ukraine, Thailand and India, while Emirati officials are expected to travel to Pakistan later this year to strike a US$500m deal to purchase farmland.
UAE ‘should invest in foreign farms’ - The National Newspaper
Wait, was this what they meant by "decoupling"?
Sounds like a sight, dryfly. I'd have loved to have seen that.
From BB's link...
Some of the worlds largest sovereign wealth funds are seeking to scale back their exposure to the US dollar in a sign of global concern about the currency.
Key words 'are seeking' - notice they didn't say 'have found way to'.
Until their countries more completely 'decouple' and they no longer need access to our markets to keep their masses employed they will continue to seek but will not find. The minute they DO think they've decoupled they will drop USD like soiled underwear. Then it gets interesting.
It is ironic that coupling to the sick US economy is what is keeping the US alive - not the decoupling of global growth as the bullish crowd thought would happen.
naked capitalism had a good piece on this... here.
Iran Snubs Western Efforts to Suspend Its Nuclear Enrichment
Iran Snubs Western Efforts to Suspend Its Nuclear Enrichment - Bloomberg.com
I predict a huge short squeeze taking us to 150 dollars per barrel. Remember Nigeria is suffering higher that usual Summer crude slowdown. Dow will hit new lows next week and so will the dollar.
Nigeria is who was important in the market anyways light sweet crude vs. Iran's and Middle east mostly sour crude and nat Gas.
dj, neither do children.
When pest control manuals have pictures of smog damage to crops you know times are interesting.
check out this new website created by FDIC to help customers of failed banks:
http://www4.fdic.gov/dip/Index.asp
indymac is the first in list, any guess how long list will be by end of 2008. WaMu is next?
thanks to Bank Deals - Best Rates and Deals
I've lived in Chicago-land my whole life and I had to Mapquest Newark IL, and then stare at the map for a minute or 2 to figure out where it is. I absolutely cannot conceive of anybody commuting to the city from there. Even getting to our so-called "Silicon Prairie" would be excruciating.
@ rich:
The NYT should cover Riverside. No cars on the streets, nobody in the stores or restaurants. Where is everybody?
I'll predict a baby boom starting in March '09. The Love Bust.
OT:
The political vision of a summer gas tax holiday died a quick death in Congress, losing to a view that federal excise taxes on gasoline and diesel fuel will have to go up if they go anywhere.
Despite calls from the presidential campaign trail for a Memorial Day-to-Labor Day tax freeze, lawmakers quickly concluded - with a prod from the construction industry - that having $9 billion less to spend on highways could create a pre-election specter of thousands of lost jobs.
Business, financial, personal finance news - CNNMoney.com
What recession?
A rise on diesel taxes would be a death knell to every O&O truck driver, they're getting killed as it is.
I know a guy who is a manager at Swift who used to drive a rig and tries to explain to drivers that they'll make more money as a contract driver than an O&O(no insurance, discounted fuel, but most of them don't want to hear it. And Swift thanks their LDS gods every day that they don't listen.
Most of these ham n eggers view it as the first rung on the american dream being an O&O, next they'll have 2 rigs, then they'll be as big as Swift.
Born and bred dopes, just like Jas writes.
"Did anybody else notice BAC has increased its CD rates? The 7-month one is at 4.11%. Any ideas what this could spell for Monday report?"
BAC=too big to fail
BAC=FDIC insured
BAC=capital crunch so offering unacceptably high rates.
Me= need a place to park some cash short term.
I think I've found my solution.
Moral Hazard due to the FDIC (and its loose regulation of member banks) and too big to fail policies indeed!
You can get burned just as quickly expecting corn prices to stay high as you can expecting housing prices to stay high. I watched this happen in the 80s.
Some Democrats in Congress are quietly working on raising the Federal gas tax 10 cents a gallon:
"Now, lawmakers quietly are talking about raising fuel taxes by a dime from the current 18.4 cents a gallon on gasoline and 24.3 cents on diesel fuel."
"Oberstar, D-Minn., said his committee is working on the next long-term highway bill. . . 'We'll put all things on the table,' Oberstar said, but the gas tax 'is the cornerstone. Nothing else will work without the underpinning of the higher user fee gas tax.'
By the way, the 1980 independent candidate for President, John Anderson, also wanted to raise the federal gas tax, and he got just under 7% of the popular vote.
There is a Republican administration only because so many elected Democrats are morons.
Re: "Is that you posting all the Brownian stock market stuff? If you turn out to be the Unabomber, I'm really going to be pissed off."
Yes, I was bored, ok... I'm better now, but my back feels like crap, but no time to waste; see Seneca, "On The Shortness Of Life"
However, this is getting fun enough to go back to the cartoon section: Itos lemma was discovered by a mathematician, K. Ito, in 1951.
In mathematics, Itō's lemma is used in Itō stochastic calculus to find the differential of a function of a particular type of stochastic process. It is the stochastic calculus counterpart of the chain rule in ordinary calculus and is best memorized using the Taylor series expansion and retaining the second order term related to the stochastic component change. The lemma is widely employed in mathematical finance..
http://en.wikipedia.org/wiki/Itô's_lemma
In another part of the galaxy>> Re: "Take any number you like and call it Z (t). This is our starting point. Now move ahead in time t+1 and draw a number from the standard normal probability distribution. Call it e(t+1)..." blah,blah...
We are to read: Chance, Don M.
"The ABCs of Geometric Brownian Motion."
Brought to you by those fine folks over there @ Derivatives Quarterly (Winter 1994), 41-47
See: Speed of light and writing variable stuff faster than... interesting that Brownian motion allows for calculating crap faster than light waves... I'm on the phone right now to Warsh and we think we can make one large derivative to clear up this whole thing...
dryfly writes: It was like a checker board of house, house, corn, house, corn. I wish I had taken a picture.
You can visit many neighborhoods in Detroit to see advanced versions of this transformation. The city has a policy of actively encouraging people to plant gardens on empty lots to free the city from costly (and infrequent) mowing responsibilities on never-to-be-rebuild lots.
(As a side note, many of these neighborhoods have so few homes left they look like they might tempt green-field development, but its a deception. To save money during demolition, the city pushed the building debris into the old basement, covering the toxic grave with a thin layer of topsoil. Talk about negative equity: restoring a lot to an empty developable state would cost tens of thousands! The Detroit News had a great series on one such neighborhood, and by no means the worst. Check out Zillow on one home, 1995 Elmhurst in Detroit, for a frightening reality-check on how bad things can get when there is no bottom. Ignore the ZEstimates, bad as they are: check out the asking prices, and worse, the recent sales prices. This one went for $300.)
There is a Republican administration only because so many elected Democrats are morons.
El Cliffo | 07.19.08 - 6:20 pm | #
LOL, BTW did you mean "maroons"?
YouTube -
Ah, Ito's lemma...thanks for refreshing the nostalgic memories of having to derive Black-Scholes using Ito's lemma for Dr. Davis in Advanced Asset Valuation...good times, good good times!
energyecon,
Yah know, some of the people get fat and lazy and then they assume they can put this stuff off -- then it bites them in the ass (and then keeps going). I'm glad you enjoyed a nudge, as the new dynamics in the inefficient mkt will behave in new and exciting ways! Never tamper with laws of nature!
Oh its those assumptions about the stochastic process that just ain't so...but the seductive power of plug and chug is hard to resist so it all rests on GBM...
Oh I hate this stupid crap. It's the magical thinking that since We The People: Clearly Suck and therefore regularly elect a representative congress, which represents us by also: Clearly Sucking, then these clever rules some libertarian college students thought up during a sad "sausage party" are going to make some difference.
And like the TV commercial who tries to see you a piece of crap, we get But Wait, There's more: we throw in term limits!!! Because us selfsame Sucky Voters will somehow manage to not vote an equally Sucky Representative in 2 yrs later.
What is the percentage of decently capable people that are gonna drop their entire career for 6, let alone 2 years to volunteer for this crap? And consider if you get it then you are a member of a group of say, no more than about 1000 people (figuring in the VIPs in the White House, the Justice Dept, the Judiciary, the military, all those shadowy figures Fox Muldur was always chasing around) that have a significant responsibilty for the world's biggest economic and military power, and about 1/2 that group are experienced lifers in wielding that power... then who the hell would have any expectation of being able to barely grok the needs and responsibilities of that position in 2 years, let alone actually accomplish something.
The day after you wake up and say "Hey, I just realized why that stupid air-to-air refuelling contract went thru and how to stop it next time" you are out on your arse, waiting on hold to try to explain it to the poor sucker that replaced you.
It isn't easy being president of your local school board. Why do you think fixing DC could be so simple?
(the balanced thing is a separate, encapsulated act of Magical Thinking well dismissed by Alec)
I agree that no sane farmer would buy land at this price. This is just another risky play but somebody who doesn't know any better.
So a republic or democracy is no good?
Actually I sometimes think that we should break up the Central Gov't into 5 or 6 or 7 pieces, have a sub representative system, and then have the Central govt for only war and diplomacy and stuff that truly affects the whole country.
Maybe there is no republic or democracy and never really was, either in modern times or with the ancients, only illusions perpetrated by oligarchs.
I can certainly testify that we are a govt of laws not of men stuff is and was the completest, utterest crap. Anyone who doesn't think so should go sit in on some judge's court or chamber for a while, and then several others.
I think the courts exist to keep people from murder and fist fights, not to actually decide anything in any fair way. Which is not to say that creating an illusion of justice isn't a good thing if it prevents the said fistfights from happening.
Justice so far is an incomplete art form. Justice is a glorious idea invented by people, which accomplishes something once in a while, but more often resembles whimsy more than anything else.
Time-varying volatility also generates a fat-tailed unconditional distribution, but has little impact on the higher moments of one-day conditional distributions.
Re: The asymptotic behavior of self-similar fragmentations has been studied quite extensively. Inone sense, it is trivial, in that F(t) → 0 a.s. as t → ∞, whatever the value of the index α(provided the process is not trivially constant, i.e. equal to its initial value for all times t). Forα ≥ 0, rescaled versions of the empirical measures of the lengths of the blocks have law of largenumbers-type behavior (see Bertoin [5] and Bertoin and Rouault [7]). For α < 0, however, thesituation is completely different. Here, there exists an almost surely finite random time ζ, calledthe extinction time, when the state is entirely reduced to dust. The manner in which mass islost has been studied in detail in [12] and [13].
Hi Vader (Doc is that you?) You don't sit still long enough for me to focus.
From what I can tell, the math behind wall street is used mostly to obfuscate and capitalize on inefficiencies. The things that really make them the money is the creation of structures that people don't understand and their exploitation of fear and greed.
I guess it's worthwhile to try to understand what they're doing mathwise, but I'm also guessing that the moment you have a really good handle on it that you go over to the dark side.
I've been thinking (and it hurts) more and more that the technicalities of the stock market have reproduced the times when only the nobility and priesthood could read. We've come full circle.
Hey, UB
What are you doing here, I thought this was a dead thread?
Damn,
I thought this data collection would help, but nooo.
Anyway, I keep wondering about money theory and the inefficient market, and I guess that relates to your comment on private languages, or at least the language of those in the know. Hmmm, there was a saying about that.... those that control the language control everything... something like that. That refers to people, like The Bush Coup, who are able to re-write laws and re-organize departments, re-organize the SEC, DOJ, FTC, etc, and then write in new language to modify power. The abuse of law in the form of discretionary abuse.
Oh well, inefficient mkts.. just pondering
I should do this all at once..
Re: Vader and The Dark Side
Ah yes, the condition of greed and lusting after cash. I guess it gives some people meaning, ... LOL, that was vader talking through a black voice box.....
Anon:
Hehe, threads never die they just go to the great wayback machine in the sky.
I have to go make more food for family. They are exploiting my inefficiencies!
Re: I have to go make more food for family
Yes, you should put food on your family, just as I put food on my dog, and now time for a walk! I shall return with clarity at some point.
Long Term Capital Management footnote 1:
Holy Cameo, Batman! Its a Senator!
A Bigger Stage for a Senator - NY Times
The senator steps forward. Were not intimidated by you thugs, he says. The man, saying, You remind me of my father I hated my father, grabs the senators head, and thrusts a knife to his face. The senator freezes, eyes wide.
Not your typical Capitol Hill brouhaha. No, this scene is pure Hollywood, straight out of the new Batman movie, The Dark Knight. But that really is the senior senator from Vermont: Patrick J. Leahy Democrat, Judiciary Committee chairman and lifelong Batman fan has a cameo in the film and gets to be held at knifepoint by Heath Ledgers Joker.
Just in case the thread is not dead: have been reading about Eliz I and her pirates.
England was broke at the time of her accession & favored her pirates, the best of whom were Drake and Raleigh.
You couldn't tell the pirates from the non-pirates then either. Half the time the pirates were really naval officers and helped defeat the Armada. Then they went back to being pirates again.
The privateers were they not - the ones with letters of marque (if that is the term) - the crown's license to loot...hmmm...
Liz: What is it you're reading? I remember something about Pirates and economies from another blog last year... someone either wrote a great book or did a research paper.
I think this is what I was remembering:
SSRN-Pirational Choice: The Economics of Infamous Pirate Practices by Peter Leeson
This is a direct link:
http://www.peterleeson.com/Pirational_Choice.pdf
John Rackham is most remembered for two things: 1) his Hollywood-preferred black flag featuring the skull and crossed cutlasses, & 2) employing the two notorious female pirates of The Golden Age of Piracy Anne Bonny and Mary Read in his crew.
Calico Jack - Wikipedia, the free encyclopedia
Bonny is reported to have chastised the imprisoned Rackham (who wanted to see her one last time) by saying, "I am sorry to see you here Jack, but if you had fought like a man, you need not be hanged like a dog."
Oh great, here we go again:
Pirates in petticoats
Pirates in petticoats
Scared her man would lose, and knowing herself to be a better shot, Read picked a fight with the quartermaster and set the time of her duel for an earlier hour. The duellists went off to a nearby island before dawn. At 20 paces, they turned and fired.
The quartermaster missed, but Reads shot hit the mark. She walked over to him, bared her breasts, and said: You called me a woman and struck me on the cheek. Well! It is in truth a woman who kills you that she may teach others to respect her.
It was her 17th duel.
Or so they say. The truth about women pirates is hard to establish.
Stolen Crude Oil versus Conflict (Blood) Diamonds: Comparing Apples and Oranges?
Stolen Crude Oil versus Conflict (Blood) Diamonds: Comparing Apples and Oranges? | Nigerian Muse
First, I wish to congratulate Mr. President and also my respected uncle, Dele Cole, for championing the idea of treating stolen Nigerian crude oil put in the international crude oil markets by international oil thieves in the same way conflict/stolen (blood) diamonds are treated under the model style called Kimberly Process in the international diamonds trade and markets.
A long time ago, I tapped into the new oil pipeline through my land. They don't know a thing and I'm crazy rich.
A rise on diesel taxes would be a death knell to every O&O truck driver, they're getting killed as it is.
I know a guy who is a manager at Swift who used to drive a rig and tries to explain to drivers that they'll make more money as a contract driver than an O&O(no insurance, discounted fuel, but most of them don't want to hear it. And Swift thanks their LDS gods every day that they don't listen.
Most of these ham n eggers view it as the first rung on the american dream being an O&O, next they'll have 2 rigs, then they'll be as big as Swift.
Born and bred dopes, just like Jas writes.
Gosh, an equal opportunity pirate!!
There were letters of marque and reprisal.
Reprisal meant you were allowed to mess with the King of Spain and his treasure fleets because the King of
Spain had messed with Elizabethan England.
Eliz the First was probably one of the smartest people in history. Her entire life was one long chess game, seeing 6 or 7 moves ahead on probably dozens of issues, all at the same time. The King of Spain was no dope either; he just had his (religious) values all wrong. And he had to micro manage everything.
One wonders what their kids would have been like if he married her in the beginning of her reign as he wanted to. The intelligence would have probably been trumped by being psychologically messed up.
Re: Gosh, an equal opportunity pirate
Pirates are not all bad and the good ones never got caught!