« Previous « PreviousNext » Next »View GalleryTAXPAYERS could face an even bigger bill for Northern Rock as more and more customers default on mortgage payments.
Northern Rock borrowers falling more than 90 days behind on mortgage payments are reportedly rising much faster than the overall mortgage market.
Independent financial research has shown that Granite, the £40 billion offshore trust holding many of the Rock's mortgages, is performing badly. Between the first and second quarter of this year, customers have defaulted on £508 million of loans.
That is a great graph, I would have started it 1 more unit to the right. Right now the Q1 data point is on the start/end of year line and its a little confusing. I think Q4 should be on the yearly line marker.
I was watching a Valuation video for a BPO company last night and they were recommending to determine market direction to look at the median 6 months previously compared to present day. I emailed them back to recommend to them to change that suggestion as it introduced a high degree of seasonality. I suggested the take the rate of change from the same period a year before and compare rate of changes between periods to give them a better sense of where the market was going.
"Son, you studied extemely hard and excelled in college. You are the top talent that people want to hire. You can work anywhere and for anybody. What do you want to do? Who do you want to work for?"
"That is easy, Father. I want to work for the gov't or a quasi-gov'tal company like Freddie Mac or Fannie Mae."
"That is a strange answer. Why."
"Because expectations are low. You are expected to screw up. There is no pressure. You get lots of holidays and you don't have to push yourself. After all this work in school, I'd rather loaf the rest of my life."
What do you expect from a quasi-gov't company? Report optimism. Gloss over everything else. Buffoons.
I'm sorry, I take slight issue with this. Do you think that it would be any different if they were fully private? are you insinuating that there is anything different with Countrywide or BofA or Wells' or Goldman Sachs or Lehman or WAMU's books?
if anything, it's a pervasive sickness throughout the entire American economy and the rot runs deeeeeeep.
Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks.
"or maybe I'll go work for a few years in corporate America, take a bunch of stock options and cash them in based on false accounting and then retire at the age of 26. who needs a pension and lots of vacation if you can stop working by 30"
That said: I don't disagree that the public workplace is getting a little... uh... generous (to say the least) the vacations and pensions are out of control.
but I cringe when I hear how "wasteful" the US Govt is when I see how much corporate America can waste.
Entire counties can run an entire health system for the same cost as the salary for a few executives at United Health Group.
And I'm sure hedgies work hard. But 2/20 hard? doubtful at best.
somewhat OT and sorry if this is a repost - the FDIC's head lawyer resigned today. Look where she used to work - NY State banking, Skadden Arps, and Chase. She began her career at the Fed.
What would you do if I sang out of tune,
Would you stand up and walk out on me?
Lend me your ears and I'll sing you a song
And I'll try not to sing out of key.
Oh, I get by with a little help from my friends
Mm, I get high with a little help from my friends
Yearning to Learn writes:
That said: I don't disagree that the public workplace is getting a little... uh... generous (to say the least) the vacations and pensions are out of control.
Maybe this "generosity" only appears so because the private sector had been stalled for eight years, barely keeping pace at best, and falling behind in too frequent cases.
Sebastian writes:
"Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks."
Example the SPX: on the monthly trends - 10 years it is pretty clear where we are going.
hope you are "just posting" and not trading
"Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks."
You mean coming out of the recession that we haven't even had yet?
And according to your metrics we're still in a secular bull market. So how can we start a major new secular bull market when we're in one.
You need to change your model from the WrightB to the HindenbergB model. Much more apropos IMO.
Sebastian's comments add a lot to this blog.
It's good to get input from folks using different models, even if you don't like their models & disagree with them.
Back to the topic, there is no conceivable excuse for the ignorance on seasonality at this late date. It's been pointed out to the numbskulls over and over. Clearly the confusion is intentional--which will be proven by the sudden loss of interest in month-to-month and quarter-to-quarter figures during the winter.
Sebastian writes:
Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks.
Hahaha! Seb, you are too much. I'm sure you will be reminded of this little prediction in due time.
"Sebastian's comments add a lot to this blog.
It's good to get input from folks using different models, even if you don't like their models & disagree with them."
I'm open to different models. I just like models and methodologies that have some sort of relationship to the real-world. I'm not even asking for a strong relationship, just SOME sort of relationship.
Models that ignore reality, attempt to relate two time periods that bear absolutely no relationship and other flim-flam are exactly what got us into this horrid mess in the first place.
Sebastian reminds me of what is so wrong with our current financial system. An insistence on sticking with the models one holds so dear even with overwhelming evidence that the model sucks.
Monolines! MBIA up about 200% in last month. Raking in the money. I told you. Just as I said about FNM and FRE a week back. You gotta be buying these, get in there with both fists!
"Bizarro writes:
Monolines! MBIA up about 200% in last month. Raking in the money. I told you. Just as I said about FNM and FRE a week back. You gotta be buying these, get in there with both fists!"
I wouldn't recommend those companies' equities on one side or another. But with the market cap so low relative to the size of their total balance sheets, it doesn't take much for their stock price to double.
Shorting stocks that have fallen 90% or so has the same risk characteristics as shorting an option. If you're right, great, but your downside can be a multiple of your potential profits.
BLK - Stock Market ends up for the day
RED - Stock Market ends down for the day
ODD - Stock Market ends with odd number for the day
EVN - Stock Market ends with even number for the day
but I cringe when I hear how "wasteful" the US Govt is when I see how much corporate America can waste.
"
Well
There is a small difference between Gov and Corporate waste of money.
US Govt uses our tax money.
Corporations do not use our money. And since corporations do not use our money, we have little entitlement to count it or complain about the waste. (its up to shareholders to chose corporations in their portfolios that do not waste money )
Besides, if it is true and an Inc does waste money, it will not survive the competition because it does not have unlimited ability of taking on debt or raising taxes, etc.
Private companies don't spend govt money. I'm sure some learned person here can link to the potential of gdp that consists of private companies paid by the govt.
Various military contractors have disappeared trillions in Iraq. Not wasting govt money? Hazard pay I get. But this was much worse.
Besides, closer to home the various banks are taking and wasting billions from the treasury window, just to keep from closing down. How is this not my taxes at work?
"Corporations do not use our money. And since corporations do not use our money, we have little entitlement to count it or complain about the waste. (its up to shareholders to chose corporations in their portfolios that do not waste money )"
Ever heard of pork-barrel politics? You are correct that corporations in a truly capitalistic society don't user our money. Unfortunately that is not what we have right now. And we haven't had that since, oh I don't know, about the time the US was created?
Fannie Mae shakes up management team
Wednesday August 27, 5:33 pm ET
By Alan Zibel, AP Business Writer
Mortgage finance firm Fannie Mae shakes up executive ranks as shares rise for 3rd straight day
WASHINGTON (AP) -- Mortgage finance giant Fannie Mae shook up its executive ranks Wednesday, after shares in it and sibling company Freddie Mac rose for a third straight day as investors appeared less certain a government bailout of the two troubled companies is imminent.
Fannie Mae, the largest buyer and backer of U.S. home mortgages, said its chief financial officer and two other top executives are leaving the company. Three current executives were promoted to replace them.
Fannie Chairman Stephen B. Ashley said in a statement that board members remain "firmly committed" to Chief Executive Daniel Mudd.
Mudd was elevated to the top post in December 2004 when former CEO Franklin Raines and chief financial officer Timothy Howard were swept out of office in an accounting scandal.
Fannie and Freddie saw their stock prices plummet last week as fears mounted they would soon need government support and that any bailout would leave stockholders in the lurch.
The government-sponsored companies hold or guarantee half the U.S. mortgage debt and are considered crucial to the mortgage market's continued operation.
I had posted earlier that Fannie and Freddie have decreased commitments to purchase MBS to $16.3 billion in July from $55.1 billion in June (WSJ, today) net including planned sales.
From the link posted by Anonymous at 6:35 pm Fannie, Freddie Mortgage Profit Rises With Debt Costs (Update2) - Bloomberg.com
i see that they "plan to limit growth to preserve capital, after boosting holdings by $115 billion in the first seven months of this year." If this refers to portfolio MBS, it averages to $16 B or so a month so the decrease in July may be anomalous. Or they may be speaking of a different portfolio. From the same article:
"Fannie and Freddie's holdings are shrinking at a monthly rate of about $20 billion because of refinancings, home sales and borrower defaults, according to an Aug. 21 report from New York- based Citigroup analysts Scott Peng, Brad Henis, and Brett Rose."
Does this mean that they have actually shrunk their holdings by $4B in July ?
Anonymous writes:
"Sebastian's comments add a lot to this blog.
It's good to get input from folks using different models, even if you don't like their models & disagree with them"
A "model" usually does not involve just one isolated number by itself
Markel writes:
" there is no conceivable excuse for the ignorance on seasonality at this late date... Clearly the confusion is intentional"
that would be my conclusion as well.
It is funny that Cox is chasing those false rumors (those helping the downside mostly).
However the media is plastered -in all meanings of the term- daily by what one could see as "fake news" : because the analysis is so poor, partial, biased, unscientific, unprofessional, insulting to common sense. But basically you cannot call it fraud if it can be passed as incompetence.
Sebastian's comments do add alot to this blog. It increases the comedy level significantly every time he posts. He is like the guy who is absolutely sure the world is flat in 1950.
I think this is on-topic for housing in general...
Fear grips immigrants after Miss. plant raid
Nearly 600 immigrants suspected of being in the country illegally were detained, creating panic among dozens of families in this small southern Mississippi town
One worker caught in Monday's sweep at the plant said fellow workers applauded as immigrants were taken into custody. Federal officials said a tip from a union member prompted them to start investigating several years ago.
I don't know if this will become a trend or not... But no matter where you stand on this issue ideologically, you can't deny its potential impact on demand for housing. Kicking out all the illegals isn't going to help matters.
Geez, if there were similar raids on Silicon Valley Tech companies, you could really put a dent in our labor force here. I don't imagine all the H1B Visas of the software engineers are up-to-date.
Guess what? There is a strong seasonal component to the series, and I see nothing encouraging about this "moderation" when seasonal factors are considered.
The headline could have read:
"Worst Second Quarter Ever for Freddie Mac CMHPI Purchase-Only House Price Series" - CR
Thanks CR that is debunking some pretty astonishing spin - it makes a person wonder how they can say crap like that and not have it thrown back in their face by the media - instead it takes bloggers to ferret out the real story...
::::
Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks.
But I'm sure it's different this time.
Sebastian
Sebastian | 08.27.08 - 6:14 pm | #
Seb (fake or real) that is just complete nonsense - look back over that trend NOWHERE on that trend line did it cliff dive like this before - nowhere - we really are in new territory if that chart is accurate.
Might rebound tomorrow or never - that chart isn't saying.
Yeah, and it is politicians that give those away. So technically if the government official gives away federal funding without competitive biding, it is the government official that wastes money.
Since the government official works for the GOVERNMENT hence technically it is still government and not corporations that waste money.
There are corporations that waste money and those rather sooner than later go bankrupt.
Geez, that is one scary graph, given the second half of the year is yet to come.
I am beginning to believe this is going to much worse than most of us believe possible.
But Seb continues to believe all is well. At this point, it is a badge of delusional honor to keep spouting off Kudlowian bromides.
Your comment above is right up there with Bagdad Bob.
The total profits of the banking industry are pathetic. $5 billion in the latest quarter- a reasonable valuation for the entire sector would only total $400 billion. For every single bank covered by FDIC.
I think we need to start the USA Postal Savings Bank to fund fannie and freddie. 6% CD's as far as the eye can see.
Is there any correlation between the price movement and "events" such as spikes in recasts for certain (popular) mortgage products popular from various vintages?
Dry,
Exactly.
That chart is scary looking, but if you can even tell me what it will look like in a year, I'll make you a lot of money.
By the time the data is compiled, the vector has changed.
That is arrant fatous drivel - wait, let me tell you what I really think - competitive bidding was absolutely involved, through the contribution and lobbying process.
Some of the best ROI money private enterprise has spent is on those government handouts.
"A 250-pound black bear has surprised observers by recovering from injuries suffered in a collision with a Toyota Camry that damaged the car so badly it was totaled."
Bear's name is 'Braveheart' - there's a handle for somebody.
Oooops - looks like we need 'registration'... so here is the story:
:::
A 250-pound black bear has surprised all observers by recovering from injuries suffered in a collision with a Toyota Camry that damaged the car so badly it was totaled.
The bear was part of the ongoing research of Ely bear expert Lynn Rogers and carried a radio transmitting collar.
After the accident, Rogers immediately found the collar broken off the bear from the July 10 collision along Minnesota Highway 169 between Tower and Ely. But the bear, named Braveheart, escaped the crash scene.
A sheriffs deputy took the time to search near the crash to see if Braveheart might be suffering, with thoughts of having to dispatch the wounded animal. But he could find no sign of the bear.
Its estimated the car was traveling at about 60 mph, and the bear hit it square in the middle of the front end.
I assumed she was a goner. I mean, if you look at the car, theres no way, Rogers said, noting the 1996 Camrys front end was smashed with damage estimated at more than $6,000.
But last week, five weeks after the accident, Braveheart reappeared. Rogers, as usual, walked up to the 6-year-old bear that he has been working with since it was a cub.
I felt her all over and the only place she pulled away was the right rear leg, so that was still hurting, he said.
Rogers fitted Braveheart with a new radio transmitter collar and shes back in the woods, appar-ently recovered one of 10 bears that Rogers team is tracking as part of a long-term bear behavior study that has brought Rogers considerable national and even international attention.
For more of this story, read tomorrow's Duluth News Tribune.
dryfly...I'm not really a 'bear' in the market sense, but I do like 'bears' in the wildlife sense, having seen grizzly, Alaska brown (basically a super-sized grizzly), and black bears in the wild. Cool story.
Plus, I was just in Boundary Waters/Quetico, mostly Quetico, in early July. I didn't see any bears, sadly. I did see a moose.
On a related topic, I think I need a new handle since I've noticed for a while there's another "Tom" here, who appears to live somewhere in the east. So now I'm "Left Coast Tom".
I don't know if this will become a trend or not... But no matter where you stand on this issue ideologically, you can't deny its potential impact on demand for housing. Kicking out all the illegals isn't going to help matters.
Housing is the least of it. The round-ups put huge strain on social services. For every person rounded up and deported, probably two or three fall into the social services/welfare system.
We have a country where some of the most expensive and comprehensive medical care goes to the poorest people for free, via Medicaid. The U.S. citizen children and spouses that illegals leave behind are fully entitled to Medicaid. Food stamp entitlements are blowing the ceiling out, as are SSI payments and state welfare costs. And of course, the jails, shelters, halfway houses and abuse treatment facilities are beyond full, all courtesy of your tax dollars.
Before this recession is over, the massive cost of social welfare in the U.S. will explode from the shadows into the open. It will help to put states like CA deep into the red.
"Before this recession is over, the massive cost of social welfare in the U.S. will explode from the shadows into the open."
Ya think?
"No combination of tax hikes and spending cuts, though, will change the total burden borne by current and future generations. For the existing unfunded liabilities to be covered in the end, someone must pay $99.2 trillion more or receive $99.2 trillion less than they have been currently promised. This is a cold, hard fact. The decision we must make is whether to shoulder a substantial portion of that burden today or compel future generations to bear its full weight."
Richard W. Fisher
Storms on the Horizon
Remarks before the Commonwealth Club of California
San Francisco, California
May 28, 2008
Plus, I was just in Boundary Waters/Quetico, mostly Quetico, in early July. I didn't see any bears, sadly. I did see a moose.
Where did you go? I mostly go in from the north, near Atikokan [Beaverhouse then into Quetico Lake where we could just about go anywhere] but it has been about a decade since I've done that... and I've seen moose & bear up there many a time. Sometimes the bears would trash the campsites while we out fishing looking for food even though the food was hung up - then run off like bandits when we return [black bears aren't grizzlies as you know - not so brave but plenty opportunistic]...
We usually tried to go in right after ice out when the trout were still up - fabulous fishing. Fall is okay too - especially mid to late September - but right after iceout is the best for lake trout. My late father & I were nuts about chasing lake trout.
But like I said - its been a decade since I went there [kids got older and seriously into sports - year around, some national meets even - last one is now a senior in HS so Quetico is likely to be on the docket again assuming my wife & I retain good health].
Up Moose Lake to Prairie Portage, through Sunday and Meadow to Agnes (cool pictographs/petroglyphs), then through the S-chain back to Basswood, and out at Fall Lake.
Sadly I saw two moose, the other one was dead. The live moose was in the swamps between South and Basswood, the dead one was just in front of Basswood Falls on the US side.
No, I'm not wringing hands on TWM - have gone ahead and reloaded for more.
But I'm frankly taken aback by the absolute disconnect between reality and the markets. And yes, I'm brushing up on the credit markets.
Heard the other day that because the dollar was rallying and most small caps had minimal foreign exposure, no wonder the small cap sector was prospering.
Playing that against the other screen with contracting credit and highly indebted public, I almost had a stroke.
On the subject of corporate waste, and who pays for it...
The most wasteful corporations are typically those with limited market pressure to acheive more efficient results due to imperfect competition. One of the major causes of imperfect competition is market concentration. At the extreme, this is known as monopoly. In a somewhat less concentrated form this may be a cartel. In a slightly less coordinated form this is oligopoly. Since capitalism is ultimately rent-seeking, these are the natural forms of "free" but uncompetitive markets. Government regulation is the appropriate means of creating the competitive environment in markets necessary to improve corporate efficiency. Unfortunately, due to the idiotic opinions of true believers in laissez-faire "free enterprise," antitrust in this country lost its fangs a long time ago.
"TOO big to fail" is another way to say "should never have been allowed to exist/merge/concentrate"
BTW, corporate revenue streams come ultimately at the expense of consumers, so the corporate waste by business bureaucracy, and the excess profits allowed by market imperfections (so eagerly created and exploited by their corpulent corporate creators), are both coming out of Joe Six-Pack's paychecks.
Joe pays these excess costs before (lower wages), during (inflated benefit deductions and excess individual taxes), and after his compensation (higher consumer prices).
For the existing unfunded liabilities to be covered in the end, someone must pay $99.2 trillion more or receive $99.2 trillion less than they have been currently promised
LOL. Single Payer = no problemo.
60-80% of the unfunded liability is medicare. Hell, $8T of it is Part D -- price supports to Big Pharma -- alone.
As soon as going to the hospital doesn't result in a $100,000 bill the unfunded liability problem goes away, permanently.
The nation is already throwing an immense amount of national income into health insurance and health providers.
It doesn't have to be this way, but we are idiots. Well, 62,040,606 of us, anyway.
Japan's top government spokesman said on Thursday he would decline to comment on a media report that the United States, Europe, and Japan had planned in March to intervene if the dollar fell too far.
"I suppose currency authorities may sometimes make announcements and sometime they don't. But I will not comment on this matter," Chief Cabinet Secretary Nobutaka Machimura told a news conference.
Machimura said stability of currencies is important but he could not say in which direction they should move.
"On the subject of corporate waste"
well let's answer several questions:
1) If corporations make money for their shareholders, who contributed the capital, do they really waste money for them?
2) IF we volunteered in the most of the cases to spend our money for corporate produced goods, do we really have any claim on those?
The answers are,
1) No if corporations make money for their shareholders, they are not subject of corporate waste.
2) No if we made the payments with our own free will, we do not have any claim on those.
Does government waste money of its shareholders?
well we are government shareholders because we pay taxes. It has been mention before that government officials waste tax money = pork barrels, none competitive bids, bailouts. Etc
So in order to make the situation FAIR to consumer, we propose more regulations, which means more power for the government to WASTE money and less ability for Corporate Shareholders to MAKE money.
Will the allocating capital & power to the part of our social fabric that wastes money from the part that AT LEAST makes money WILL MAKE US all better off.
Well the answer is obvious and yet, our feelings of FAIR/UNFAIR will keep clouding our logical judgement.
Also let me remind you that while WE buy goods on our free will, we are not taxed on our free will. So extra regulations will move resources from the free will part of equation into not free will part of equation. IS IT REALLY FAIR?
Of cause due to imperfection of humans and our society there should be certain regulation of our activity.
However the sake of regulation should be making sure everyone plays by the same rule and not establishment of some ABSTRACT fairness concept.
What seem fair for one will not seem fair for another, so real fairness is the same rules for everyone and not giving the power to WASTEFUL politicians from our Corporations that at least don't waste money for their shareholders.
Now, if we want to be less wasteful, we can always safe more and become corporate shareholders, right?
"Will the allocating capital & power to the part of our social fabric that wastes money from the part that AT LEAST makes money, MAKE us all better off."
sorry, kinda lost it.
(and the answer is NO with huge probability)
"If corporations make money for their shareholders, who contributed the capital"
The capital you refer to was generated on the IPO, that money was spent before the share holders other then insiders bought those shares. The secondary market called the stock exchange does not provide capital for the corporation unless more shares are sold or some held by the company used as collateral for a loan. When you buy a stock on the stock exchange you are not providing capital to that corporation you are buying future earnings income streams which may be paid out in dividends some other payment such as more shares or you find some greater fool will pay you more then what you bought them for.
The thing to ask ones self before buying is if this is such a great deal why in the hell would they sell them to me. The boomer's have made this an easy process for the broker dealers who have made a ton of money selling this crap, generating trading fees while holding little of the risk.
WSJ
B of A agreed to buy back $43 million in auction-rate securities from government agencies in Massachusetts, according to state securities regulators... BofA to Buy Securities Back From State - WSJ.com
Sadly I saw two moose, the other one was dead. The live moose was in the swamps between South and Basswood, the dead one was just in front of Basswood Falls on the US side.
Left Coast Tom | 08.27.08 - 11:11 pm |
Brain worm - its a parasite that doesn't cause a lot of damage in deer but raises havoc among caribou & moose. They get stupider & stupider until they just drop dead right out in the open.
The over-population of deer are driving the moose out - its happening all over the north.
Sounds like brain worm might have infected central bankers too over the last decade or so but maybe that's a different problem.
Been up through Agnes & have seen the petroglyph's - stunning. We'd go up the 'south way' from the US side out of Moose Lake, Basswood & up that way IF we were after smallmouth - we'd do that mid-summer after the trout had gone down. Canadians consider the smallies 'vermin' and pretty much don't care how many you eat - they are invasive from south of the border. Trout & 'pickerel' are regulated pretty heavy & we mostly caught & released with one a day heading into the frying pan.
I don't know if this will become a trend or not... But no matter where you stand on this issue ideologically, you can't deny its potential impact on demand for housing. Kicking out all the illegals isn't going to help matters.
The big anti-immigrant restriction of the early 20's coincided with a massive drop in house values, so, yeah, further drops in house prices would be no surprise.
Brain worm - its a parasite that doesn't cause a lot of damage in deer but raises havoc among caribou & moose.
I knew it pushed the caribou well north of their former range, didn't know how bad a threat it was to moose. I could only wish it had similar effects on central bankers (je suis desole, un canadien avec popcorn...).
Mmmm, pickerel...
(This was mostly sightseeing, not fishing, but I grew up in Michigan, and am quite familiar with the taste of fresh walleye. Mmmm...).
While there is substantial seasonality here, it doesn't take a genius to recognize that you need to go back to the 70s to see a seasonal upswing of this size.
Of course, you need to go back that far to see a seasonal downswing of the size we just experienced, too.
I agree that the Freddie Mac spin is completely unwarranted, but Sebastian has a point that the last upswing of this size was in the early 80s.
One data point is not a trend, however. It's just noise in the signal. And right now, from the looks of it, that signal is "SOS."
If I live in Seattle and I say it is going to be sunny today, I'm right about 25% of the time. Should people start claiming I am a genius every time I say something that turns out to be correct? No, they should call me an idiot, because I'm generally incorrect and have very little sense about what I am saying. This is Sebastian.
AllenM aka Joliet Jake writes:
Best canoeing trip in my youth was a Turtle river- Lake Eltrut eight day trip when I was 14.
Wildest trip we've ever done was about 6 hrs drive NW of Thompson Manitoba (which is like what... 8-10 hours north of Winnipeg?) It was right on the Manitoba Saskatchewan border not too far from Reindeer Lake (big lake - you can even find it on a road map). Our destination was an abandoned mine near an almost deserted mining town called 'Lynn Lake'. We'd go in through the mine to a chain of lakes then see no one for days. It was above the 56th parallel... about even w/ Hudson's Bay.
Really good fishing - catching 15lb pike on a fly rod at 11PM and it was still light out - nice.
"The capital you refer to was generated on the IPO"
I am aware of it. I mean spent $(capital) to become shareholders.
And it could be obvious from context. Sorry for discrepancy, however I am trying to illustrate an idea rather to write well edited research paper.
And the idea is, it might be technically incorrect to call corporate america a wasteful mechanism of our tax and consumer $$$.
It's only a 36,000 sq foot tact. Not sure that would cover the Mansion.
The developer really screwed up. They had a paltry $5,000 in earnest money up and didn't want it to go hard. Next day, they wanted a new contract. Fat chance.
Wifie says Gloryeus (sp) is better for dinner. Only after closing! My treat.
"Your specious appeal to choice ignores the fact that imperfect competition IS inadequate choice by definition."
why?
Perfect competition provides 0 long term economic profits and limits consumer choices. If consumers demand more choices, monopolistic competition is by far more adequate model. Unless you would want to live in the world of identical clones (example commodity goods), would you?
As for 0 economic profits, those are not always the best motivation for good management and especially INNOVATION.
In addition, you would have to force perfect competition on natural monopolies and similar and the excessive regulation to establish perfect competition everywhere could carry additional Dead Weight Loses.
and the bear hit it square in the middle of the front end.
Seems a little unfair to say the bear hit the car. Okay, the impact was there, but the bear didn't seem to have much to say about it. Must have been one of those short selling bears.
I'm not sure I'm getting any smarter reading this blog tonight so I will unchain the dog, and put the safety on the peacemaker. Who is the patron saint of bear markets? St. Red?
Henry Cisneros, former secretary of the US Department of Housing and Urban Development (HUD), declared today that the housing industry is in a "truly dangerous place" and that significant steps must be taken by the next administration to address the mounting problems...
With the economy staggering along, Mr. Cisneros said the new administration next year will be forced to pass a second stimulus package. He said it must contain measures to deal with the credit crunch that is curtailing investments and lending. "We won't get the job machine started without credit..."
And credit is simply a financial engagement motivated by the honesty, reliability, and wisdom of the participants.
Credit can only flourish in an environment of trust and commitment.
How can a stimulus package confer these qualities to US borrowers and lenders?
Handing out money makes us more responsible and restores faith in the character of the participants in the credit markets?
Or does it create a monetary incentive for not developing these traits?
Afterall, would we have a stimulus package if we did the right thing by taking on reasonable debt and meeting our obligations?
"have to force perfect competition on natural monopolies"
You admit to the existence of natural monopolies? Maybe I'm wrong about you and you aren't completely deluded about the genius of capitalism. Or is this thing (natural monopoly) a hypothetical in your doctrine (sort of like a unicorn). I bet that you're a deregulation proponent (deregulation of natural monopolies having been government policy in the U.S. for some time now).
FYI Howard Transformers quality control is/has been so bad that at least one major utility has done full shop tests and internal inspection of every unit shipped over multi-year periods.
BTW, I'd sell utility stocks for their major customers first thing tomorrow before the names get publicized.
p.s.
If apple would be perfect competition, you would never see 5 different iPods and the only one produced would be identical to Sony and rest of the products.
As of deregulating your local electricity provider, the technology we have is not sufficient for that. Having 10 separate power lines to your house is not practical.
As of deregulating your local electricity provider, the technology we have is not sufficient for that. Having 10 separate power lines to your house is not practical.
The technology is easy.
Rather, the budget normal people have is not sufficient...
So you don't think electricity deregulation was a good idea?
I don't remember the details of it and it did not address your energy company being natural monopoly.
As I mention, regulation for the purpose of creating equal market rules for all players is NEEDED. Regulation because we think that market is unfair, is usually excessive.
There was a historic precedent of such regulation, South America during 60-90's. Those countries had better staring conditions then Asian Tigers, however mostly due to the populist movement (caused too much of regulation) they fell behind by huge margin.
The Wright Model B was powered by a secret Tesla Engine. It could fly over 100,000 miles without mantainance and required no fuel. Ford aquired the patents (with some help from the Rothchilds and their Reptilian friends) to ensure that his Model T would have no competition. The Andromedains, who had telepathically communicated their technology to Tesla, gave up in disgust, and henceforth communicated only with dolphins
Neva mind, I give up. The correct answer is NO. Deregulation of electricity was/is rent seeking and was/is advocated by the same fine fellows spouting the party line on the income tax which you are parroting.
"The Wright Model B was powered by a secret Tesla Engine. It could fly over 100,000 miles without mantainance and required no fuel. Ford aquired the patents (with some help from the Rothchilds and their Reptilian friends) to ensure that his Model T would have no competition. The Andromedains, who had telepathically communicated their technology to Tesla, gave up in disgust, and henceforth communicated only with dolphins"
LoL
by the way, the probability of Rothchilds assisting Mr. Ford is close to NULL. I mean they didn't exactly like each other, )
Dr. chaos
It's supposed to be a mythdirective comment. I just wanted to mention a financier who wasn't a Morgan. (J.P. morgan did finance Tesla for a while)
The Wright Model B is the result of curve-fitting to data from past economic cycles, when conditions were much different. It's accuracy of fit was significantly lower for the last recession than for those before it.
It's important to note that the Wright Model B never predicted any recession -- the paper describing the model was published in 2006! (Probably based on work done in 2005.)
It shouldn't be too surprising that looking back from 2005 one can curve-fit a formula with yield-curve related independent variables closely to most recessions of the post-WWII period, since most recessions of that period were caused by Fed tightening. But just because you can back-fit a formula to data from the past doesn't necessarily mean you have a useful predictive tool. One of my favorite tricks for speeding up the software I work on is to curve-fit cubic expressions to data whose actual values are determined by formulae that are much more complex and time-consuming to compute; over a restricted range you can usually get a very close approximation, but the cubic expression "model" will usually have little or no predictive power outside the range used for the curve-fitting, because it does not actually model the mechanisms that underlie the data.
And even within the range used for the curve-fit, the predictions of the curve-fit "model" often begin to differ from the actual data values near the ends of that range -- just as we see with the Wright Model B.
Since current macro- and micro-economic conditions are so different from those of the 20th Century post-WWII, there's no good reason to think that the Wright Model B is going to be a useful predictive tool in the current environment.
It didn't take me rules, or models or anything other than common-sense to see what was coming from several years ago.
Common-sense told me the lending programs out there were crazy.
Common-sense told me that this was going to end badly.
Common-sense tells me that the biggest credit bubble, followed by the biggest housing bust and financial melt-down since GD 1.0 don't equate to a minor bear market.
It doesn't take science, it doesn't take models and it doesn't take logic to figure this all out.
6 County SoCal
Bank REOs.......110,300...........112,700
Aug. REO
Sales Est.............8,863...............8,863
MOs. of
Inventory:............12.4.................12.7
Bank REO inventories currently rising at a 10% plus rate per month, with a rising 12 month supply based on continued July REO sales rates, means lower prices, and IMHO, some possible shock and awe with YOY price declines in Cali heading into the minus 50% twilight zone.
The headline also could have read "Frank Nothaft seen whistling through the graveyard, encourages everyone to pick up the tune".
That seasonal spike is as obvious as the nose on my face. It is huge, in fact.
Geez CR, way to throw a wet blanket over what, most assuredly, passes for good news these days...
Sort of on topic:
Remember Northern Rock:
Northern Rock bill is growing
« Previous « PreviousNext » Next »View GalleryTAXPAYERS could face an even bigger bill for Northern Rock as more and more customers default on mortgage payments.
Northern Rock borrowers falling more than 90 days behind on mortgage payments are reportedly rising much faster than the overall mortgage market.
Independent financial research has shown that Granite, the £40 billion offshore trust holding many of the Rock's mortgages, is performing badly. Between the first and second quarter of this year, customers have defaulted on £508 million of loans.
What do you expect from a quasi-gov't company? Report optimism. Gloss over everything else. Buffoons.
That is a great graph, I would have started it 1 more unit to the right. Right now the Q1 data point is on the start/end of year line and its a little confusing. I think Q4 should be on the yearly line marker.
I was watching a Valuation video for a BPO company last night and they were recommending to determine market direction to look at the median 6 months previously compared to present day. I emailed them back to recommend to them to change that suggestion as it introduced a high degree of seasonality. I suggested the take the rate of change from the same period a year before and compare rate of changes between periods to give them a better sense of where the market was going.
Glorious National Output of Tractors Reaches Second Place Worst, while Worst finishes Next to Last.
You gotta accentuate the positive, eliminate the negative, latch on to the affirmative... and don't mess with Mr. In-Between.
"Son, you studied extemely hard and excelled in college. You are the top talent that people want to hire. You can work anywhere and for anybody. What do you want to do? Who do you want to work for?"
"That is easy, Father. I want to work for the gov't or a quasi-gov'tal company like Freddie Mac or Fannie Mae."
"That is a strange answer. Why."
"Because expectations are low. You are expected to screw up. There is no pressure. You get lots of holidays and you don't have to push yourself. After all this work in school, I'd rather loaf the rest of my life."
So Calculated Risk is calling a bottom in home prices?
No, but he is calling an idiot an idiot.
lies, damned lies, statistics, and government statistics = decending to hell.
What do you expect from a quasi-gov't company? Report optimism. Gloss over everything else. Buffoons.
I'm sorry, I take slight issue with this. Do you think that it would be any different if they were fully private? are you insinuating that there is anything different with Countrywide or BofA or Wells' or Goldman Sachs or Lehman or WAMU's books?
if anything, it's a pervasive sickness throughout the entire American economy and the rot runs deeeeeeep.
Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks.
But I'm sure it's different this time.
Sebastia
"or maybe I'll go work for a few years in corporate America, take a bunch of stock options and cash them in based on false accounting and then retire at the age of 26. who needs a pension and lots of vacation if you can stop working by 30"
That said: I don't disagree that the public workplace is getting a little... uh... generous (to say the least) the vacations and pensions are out of control.
but I cringe when I hear how "wasteful" the US Govt is when I see how much corporate America can waste.
Entire counties can run an entire health system for the same cost as the salary for a few executives at United Health Group.
And I'm sure hedgies work hard. But 2/20 hard? doubtful at best.
somewhat OT and sorry if this is a repost - the FDIC's head lawyer resigned today. Look where she used to work - NY State banking, Skadden Arps, and Chase. She began her career at the Fed.
FDIC: Press Releases - PR-71-2008 8/27/2008
So who will Sheila "I'm not a Bear, I'm a Bair" turn to for advice?
U.S., Europe, Japan Devised Plan to Prop Up Dollar, Nikkei Says
U.S., Europe, Japan Devised Plan to Prop Up Dollar, Nikkei Says - Bloomberg.com
What would you do if I sang out of tune,
Would you stand up and walk out on me?
Lend me your ears and I'll sing you a song
And I'll try not to sing out of key.
Oh, I get by with a little help from my friends
Mm, I get high with a little help from my friends
Fannie and Freddie profits up?
Fannie, Freddie Mortgage Profit Rises With Debt Costs (Update2) - Bloomberg.com
Yearning to Learn writes:
That said: I don't disagree that the public workplace is getting a little... uh... generous (to say the least) the vacations and pensions are out of control.
Maybe this "generosity" only appears so because the private sector had been stalled for eight years, barely keeping pace at best, and falling behind in too frequent cases.
Sebastian writes:
"Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks."
Example the SPX: on the monthly trends - 10 years it is pretty clear where we are going.
hope you are "just posting" and not trading
OT- Fannie Mae replaces CFO, CRO, and CBO.
"OT- Fannie Mae replaces CFO, CRO, and CBO."
BFD
"Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks."
You mean coming out of the recession that we haven't even had yet?
And according to your metrics we're still in a secular bull market. So how can we start a major new secular bull market when we're in one.
You need to change your model from the WrightB to the HindenbergB model. Much more apropos IMO.
Sebastian's comments add a lot to this blog.
It's good to get input from folks using different models, even if you don't like their models & disagree with them.
No one is always right.
Thanks, Sebastian posting as Anonymous.
Back to the topic, there is no conceivable excuse for the ignorance on seasonality at this late date. It's been pointed out to the numbskulls over and over. Clearly the confusion is intentional--which will be proven by the sudden loss of interest in month-to-month and quarter-to-quarter figures during the winter.
Offtopic, but what's the story with the monolines? Haven't heard much about them recently.
But if the headline had read as you suggest, it might have caused the sheep to look up. Can't have that happen.
Sebastian writes:
Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks.
Hahaha! Seb, you are too much. I'm sure you will be reminded of this little prediction in due time.
"Sebastian's comments add a lot to this blog.
It's good to get input from folks using different models, even if you don't like their models & disagree with them."
I'm open to different models. I just like models and methodologies that have some sort of relationship to the real-world. I'm not even asking for a strong relationship, just SOME sort of relationship.
Models that ignore reality, attempt to relate two time periods that bear absolutely no relationship and other flim-flam are exactly what got us into this horrid mess in the first place.
Sebastian reminds me of what is so wrong with our current financial system. An insistence on sticking with the models one holds so dear even with overwhelming evidence that the model sucks.
Monolines! MBIA up about 200% in last month. Raking in the money. I told you. Just as I said about FNM and FRE a week back. You gotta be buying these, get in there with both fists!
Freddie has to join in NAR in soft peddling the problem as both need to find people who will give then their money.
So what was different between now and 1982?
A 15% difference in the saving rate?
A fed that was looking to strangle inflation, not give it Viagra?
Only a troll or a stockbroker in his fifties can be that stupid.
Whether you believe stocks are at/near a "generational low" ala 1982, I'd wait until SPX 1200.44 - because we will revisit that motherf*cking number
"Bizarro writes:
Monolines! MBIA up about 200% in last month. Raking in the money. I told you. Just as I said about FNM and FRE a week back. You gotta be buying these, get in there with both fists!"
I wouldn't recommend those companies' equities on one side or another. But with the market cap so low relative to the size of their total balance sheets, it doesn't take much for their stock price to double.
Shorting stocks that have fallen 90% or so has the same risk characteristics as shorting an option. If you're right, great, but your downside can be a multiple of your potential profits.
New ETF's I would like to see
BLK - Stock Market ends up for the day
RED - Stock Market ends down for the day
ODD - Stock Market ends with odd number for the day
EVN - Stock Market ends with even number for the day
but I cringe when I hear how "wasteful" the US Govt is when I see how much corporate America can waste.
"
There is a small difference between Gov and Corporate waste of money.
US Govt uses our tax money.
Corporations do not use our money. And since corporations do not use our money, we have little entitlement to count it or complain about the waste. (its up to shareholders to chose corporations in their portfolios that do not waste money )
Besides, if it is true and an Inc does waste money, it will not survive the competition because it does not have unlimited ability of taking on debt or raising taxes, etc.
What a mess of a comment above: I'd wait until SPX 1200.44 is tested on lighter volume and rejected before I went long, is what I meant to say.
Private companies don't spend govt money. I'm sure some learned person here can link to the potential of gdp that consists of private companies paid by the govt.
Various military contractors have disappeared trillions in Iraq. Not wasting govt money? Hazard pay I get. But this was much worse.
Besides, closer to home the various banks are taking and wasting billions from the treasury window, just to keep from closing down. How is this not my taxes at work?
Stupid levereaged organization cannot be trusted with any thing they say or do.
"Corporations do not use our money. And since corporations do not use our money, we have little entitlement to count it or complain about the waste. (its up to shareholders to chose corporations in their portfolios that do not waste money )"
Ever heard of pork-barrel politics? You are correct that corporations in a truly capitalistic society don't user our money. Unfortunately that is not what we have right now. And we haven't had that since, oh I don't know, about the time the US was created?
Fannie Mae shakes up management team
Wednesday August 27, 5:33 pm ET
By Alan Zibel, AP Business Writer
Mortgage finance firm Fannie Mae shakes up executive ranks as shares rise for 3rd straight day
WASHINGTON (AP) -- Mortgage finance giant Fannie Mae shook up its executive ranks Wednesday, after shares in it and sibling company Freddie Mac rose for a third straight day as investors appeared less certain a government bailout of the two troubled companies is imminent.
Fannie Mae, the largest buyer and backer of U.S. home mortgages, said its chief financial officer and two other top executives are leaving the company. Three current executives were promoted to replace them.
Fannie Chairman Stephen B. Ashley said in a statement that board members remain "firmly committed" to Chief Executive Daniel Mudd.
Mudd was elevated to the top post in December 2004 when former CEO Franklin Raines and chief financial officer Timothy Howard were swept out of office in an accounting scandal.
Fannie and Freddie saw their stock prices plummet last week as fears mounted they would soon need government support and that any bailout would leave stockholders in the lurch.
The government-sponsored companies hold or guarantee half the U.S. mortgage debt and are considered crucial to the mortgage market's continued operation.
I had posted earlier that Fannie and Freddie have decreased commitments to purchase MBS to $16.3 billion in July from $55.1 billion in June (WSJ, today) net including planned sales.
From the link posted by Anonymous at 6:35 pm
Fannie, Freddie Mortgage Profit Rises With Debt Costs (Update2) - Bloomberg.com
i see that they "plan to limit growth to preserve capital, after boosting holdings by $115 billion in the first seven months of this year." If this refers to portfolio MBS, it averages to $16 B or so a month so the decrease in July may be anomalous. Or they may be speaking of a different portfolio. From the same article:
"Fannie and Freddie's holdings are shrinking at a monthly rate of about $20 billion because of refinancings, home sales and borrower defaults, according to an Aug. 21 report from New York- based Citigroup analysts Scott Peng, Brad Henis, and Brett Rose."
Does this mean that they have actually shrunk their holdings by $4B in July ?
As for taking up the slack left by FNM/FRE cutbacks, some of it seems to be going to Ginnie via FHA:
Venturis Capital Launches Distressed Mortgage Fund
sidd
Hussman: Widening Credit Spreads Spell Doom For Stocks, Economy
Hussman: Widening Credit Spreads Spell Doom For Stocks, Economy
potential = percentage.
typing too fast.
"Hussman: Widening Credit Spreads Spell Doom For Stocks, Economy"
The WrightB model indicates that when credit spreads it covers a larger area, which means more volume.
We'll make it up on volume.
"But I'm sure it's different this time.:)"
Is that you pump monkey or is this an impostor pump monkey?
Anonymous writes:
"Sebastian's comments add a lot to this blog.
It's good to get input from folks using different models, even if you don't like their models & disagree with them"
A "model" usually does not involve just one isolated number by itself
Markel writes:
" there is no conceivable excuse for the ignorance on seasonality at this late date... Clearly the confusion is intentional"
that would be my conclusion as well.
It is funny that Cox is chasing those false rumors (those helping the downside mostly).
However the media is plastered -in all meanings of the term- daily by what one could see as "fake news" : because the analysis is so poor, partial, biased, unscientific, unprofessional, insulting to common sense. But basically you cannot call it fraud if it can be passed as incompetence.
Sebastian's comments do add alot to this blog. It increases the comedy level significantly every time he posts. He is like the guy who is absolutely sure the world is flat in 1950.
Sebastian is the guy in the movie Airplane who responds to "what do you make of this?" with "Oh, I don't know...a brooch? a pterydactyl?
Highly entertaining, as long as one hasn't arrived in the middle of the movie and mistaken it for a drama.
I think this is on-topic for housing in general...
Fear grips immigrants after Miss. plant raid
Nearly 600 immigrants suspected of being in the country illegally were detained, creating panic among dozens of families in this small southern Mississippi town
One worker caught in Monday's sweep at the plant said fellow workers applauded as immigrants were taken into custody. Federal officials said a tip from a union member prompted them to start investigating several years ago.
Expired
I don't know if this will become a trend or not... But no matter where you stand on this issue ideologically, you can't deny its potential impact on demand for housing. Kicking out all the illegals isn't going to help matters.
Geez, if there were similar raids on Silicon Valley Tech companies, you could really put a dent in our labor force here. I don't imagine all the H1B Visas of the software engineers are up-to-date.
Guess what? There is a strong seasonal component to the series, and I see nothing encouraging about this "moderation" when seasonal factors are considered.
The headline could have read:
"Worst Second Quarter Ever for Freddie Mac CMHPI Purchase-Only House Price Series" - CR
Thanks CR that is debunking some pretty astonishing spin - it makes a person wonder how they can say crap like that and not have it thrown back in their face by the media - instead it takes bloggers to ferret out the real story...
::::
Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks.
But I'm sure it's different this time.
Sebastian
Sebastian | 08.27.08 - 6:14 pm | #
Seb (fake or real) that is just complete nonsense - look back over that trend NOWHERE on that trend line did it cliff dive like this before - nowhere - we really are in new territory if that chart is accurate.
Might rebound tomorrow or never - that chart isn't saying.
Sheeesh.
Call me paranoid, but could the departure of the Fannie Mae executives be portrayed as a house-cleaning that gives the green-light to a bailout?
model: Michelle Merki - Wikipedia, the free encyclopedia
"Ever heard of pork-barrel politics?"
Yeah, and it is politicians that give those away. So technically if the government official gives away federal funding without competitive biding, it is the government official that wastes money.
Since the government official works for the GOVERNMENT hence technically it is still government and not corporations that waste money.
There are corporations that waste money and those rather sooner than later go bankrupt.
A man goes in for a physical and the doctor tells him, "Bob, I'm afraid I've got good news and bad news. You've only got a day to live."
"A day to live?! My God, what's the good news?"
"That was the good news. The bad news I was supposed to tell you yesterday."
Something about that graph reminded me of that joke.
Geez, that is one scary graph, given the second half of the year is yet to come.
I am beginning to believe this is going to much worse than most of us believe possible.
But Seb continues to believe all is well. At this point, it is a badge of delusional honor to keep spouting off Kudlowian bromides.
Your comment above is right up there with Bagdad Bob.
The total profits of the banking industry are pathetic. $5 billion in the latest quarter- a reasonable valuation for the entire sector would only total $400 billion. For every single bank covered by FDIC.
I think we need to start the USA Postal Savings Bank to fund fannie and freddie. 6% CD's as far as the eye can see.
We really will have no other choice.
Someday this war's gonna end...
Is there any correlation between the price movement and "events" such as spikes in recasts for certain (popular) mortgage products popular from various vintages?
and more will be revealed
Dry,
Exactly.
That chart is scary looking, but if you can even tell me what it will look like in a year, I'll make you a lot of money.
By the time the data is compiled, the vector has changed.
we will be watching for signs of stabilization in indicators of real housing activity, such as a leveling off in home sales and for-sale inventories.
so we can expand our tax funded drunken mission...
we will revisit that motherf*cking number
Then fall below. Bear markets are a 30% decline on average and last at least 2 years. This will not be an average recession...
DrC,
That is arrant fatous drivel - wait, let me tell you what I really think - competitive bidding was absolutely involved, through the contribution and lobbying process.
Some of the best ROI money private enterprise has spent is on those government handouts.
Anonymous | 08.27.08 - 6:48 pm |
was me.
S and his model correctly called no recession for 2006 & 2007.
And did it before the years started.
Better macro calls than most the commenters here.
So the insults and baiting are out of place.
[ducks]
Some of the best ROI money private enterprise has spent is on those government handouts.
While Our countries greatest minds are also hard at work figuring out how to dodge taxes
I must be a little pixelated but I haven't been here long enough to understand Sebastian and a Wright model 'B'.
I sense from his posts that Seb is a Don Luskin or Kudlow clone but the Wright model B eludes me.
If this refers to some magic yield differential that Greenspan always championed, Ok. But what the hell is it?
Best I can figure out is that it was a conspiricy between Wilber and Orville to upgrade Ford's A.
Is there a Wright model T?
Oh well.
Former HUD Secretary Cisneros Cites Housing Decline as Unprecedented Drag on US Economy; Calls for New Stimulus Package With Strong Housing Measures
Former HUD Secretary Cisneros Cites Housing Decline as Unprecedented Drag on US Economy; Calls for New Stimulus Package With Strong Housing Measures
Another one for the dipshit pile, the more they do the worse this will get.
S and his model correctly called no recession for 2006 & 2007.
$1.5T in deficit spending 2006-now has been one helluva drug.
At an average of $80K/yr x 2.75 years that's SEVEN MILLION JOBS supported by federal DEFICIT spending.
That's not even counting the FIVE TRILLION of added household & business indebtedness 2006-now.
yeah, borrowing & spending six point five trillion dollars over 2+ years will hold off the recession.
Wright Model B:
Political Calculations: Reckoning the Odds of Recession
Actual data-driven estimation:
Econbrowser: Recession indicators
LOL, Wright Model B spits out a probability of recession of 0.001 arriving in 2009 right now.
Actually, doing more research on Wright Model B it actually did cross the threshold into signalling recession for 2008:
http://4.bp.blogspot.com/_5aAsxFJOeMw/SK3I1nQ6AjI/AAAAAAAABLo/wVLAkr8o_QY/s1600-h/recession-probability-track-20-August-2004-through-20-August-2008.JPG
In April 2007 the Model B hit 0.5, implying a high probability that NBER would date the recession as to starting in 1Q08.
Since it is late & way off topic... thought you bears might like this:
Bear recovers, but Toyota doesnt
"A 250-pound black bear has surprised observers by recovering from injuries suffered in a collision with a Toyota Camry that damaged the car so badly it was totaled."
Bear's name is 'Braveheart' - there's a handle for somebody.
Oooops - looks like we need 'registration'... so here is the story:
:::
A 250-pound black bear has surprised all observers by recovering from injuries suffered in a collision with a Toyota Camry that damaged the car so badly it was totaled.
The bear was part of the ongoing research of Ely bear expert Lynn Rogers and carried a radio transmitting collar.
After the accident, Rogers immediately found the collar broken off the bear from the July 10 collision along Minnesota Highway 169 between Tower and Ely. But the bear, named Braveheart, escaped the crash scene.
A sheriffs deputy took the time to search near the crash to see if Braveheart might be suffering, with thoughts of having to dispatch the wounded animal. But he could find no sign of the bear.
Its estimated the car was traveling at about 60 mph, and the bear hit it square in the middle of the front end.
I assumed she was a goner. I mean, if you look at the car, theres no way, Rogers said, noting the 1996 Camrys front end was smashed with damage estimated at more than $6,000.
But last week, five weeks after the accident, Braveheart reappeared. Rogers, as usual, walked up to the 6-year-old bear that he has been working with since it was a cub.
I felt her all over and the only place she pulled away was the right rear leg, so that was still hurting, he said.
Rogers fitted Braveheart with a new radio transmitter collar and shes back in the woods, appar-ently recovered one of 10 bears that Rogers team is tracking as part of a long-term bear behavior study that has brought Rogers considerable national and even international attention.
For more of this story, read tomorrow's Duluth News Tribune.
:::
Hope the Copyright Nazi's are sleeping...
dryfly...I'm not really a 'bear' in the market sense, but I do like 'bears' in the wildlife sense, having seen grizzly, Alaska brown (basically a super-sized grizzly), and black bears in the wild. Cool story.
Plus, I was just in Boundary Waters/Quetico, mostly Quetico, in early July. I didn't see any bears, sadly. I did see a moose.
On a related topic, I think I need a new handle since I've noticed for a while there's another "Tom" here, who appears to live somewhere in the east. So now I'm "Left Coast Tom".
Housing is the least of it. The round-ups put huge strain on social services. For every person rounded up and deported, probably two or three fall into the social services/welfare system.
We have a country where some of the most expensive and comprehensive medical care goes to the poorest people for free, via Medicaid. The U.S. citizen children and spouses that illegals leave behind are fully entitled to Medicaid. Food stamp entitlements are blowing the ceiling out, as are SSI payments and state welfare costs. And of course, the jails, shelters, halfway houses and abuse treatment facilities are beyond full, all courtesy of your tax dollars.
Before this recession is over, the massive cost of social welfare in the U.S. will explode from the shadows into the open. It will help to put states like CA deep into the red.
Maybe Henry Cisneros can get his government job back, and administer the funds too.
Doctor tells patient: "You've got TB, plague of both kinds, flu, ebola, and marburg. All highly infectious and very serious."
Patient turns very pale.
"Don't worry, I'm admitting you to the hospital immediately. We have a good treatment in mind, and we're putting you on a pancake and flounder diet."
"But why pancakes and flounder?"
"Because that's what's easiest to slide under the door."
"Before this recession is over, the massive cost of social welfare in the U.S. will explode from the shadows into the open."
Ya think?
"No combination of tax hikes and spending cuts, though, will change the total burden borne by current and future generations. For the existing unfunded liabilities to be covered in the end, someone must pay $99.2 trillion more or receive $99.2 trillion less than they have been currently promised. This is a cold, hard fact. The decision we must make is whether to shoulder a substantial portion of that burden today or compel future generations to bear its full weight."
Richard W. Fisher
Storms on the Horizon
Remarks before the Commonwealth Club of California
San Francisco, California
May 28, 2008
Plus, I was just in Boundary Waters/Quetico, mostly Quetico, in early July. I didn't see any bears, sadly. I did see a moose.
Where did you go? I mostly go in from the north, near Atikokan [Beaverhouse then into Quetico Lake where we could just about go anywhere] but it has been about a decade since I've done that... and I've seen moose & bear up there many a time. Sometimes the bears would trash the campsites while we out fishing looking for food even though the food was hung up - then run off like bandits when we return [black bears aren't grizzlies as you know - not so brave but plenty opportunistic]...
We usually tried to go in right after ice out when the trout were still up - fabulous fishing. Fall is okay too - especially mid to late September - but right after iceout is the best for lake trout. My late father & I were nuts about chasing lake trout.
But like I said - its been a decade since I went there [kids got older and seriously into sports - year around, some national meets even - last one is now a senior in HS so Quetico is likely to be on the docket again assuming my wife & I retain good health].
Re: Quetico/BCWAW: Where did you go?
Up Moose Lake to Prairie Portage, through Sunday and Meadow to Agnes (cool pictographs/petroglyphs), then through the S-chain back to Basswood, and out at Fall Lake.
Sadly I saw two moose, the other one was dead. The live moose was in the swamps between South and Basswood, the dead one was just in front of Basswood Falls on the US side.
Best canoeing trip in my youth was a Turtle river- Lake Eltrut eight day trip when I was 14.
North of Canada One, nothing between you and the north pole but trees, water, and skeeters.
Someday this war's gonna end...
OT to Rich:
No, I'm not wringing hands on TWM - have gone ahead and reloaded for more.
But I'm frankly taken aback by the absolute disconnect between reality and the markets. And yes, I'm brushing up on the credit markets.
Heard the other day that because the dollar was rallying and most small caps had minimal foreign exposure, no wonder the small cap sector was prospering.
Playing that against the other screen with contracting credit and highly indebted public, I almost had a stroke.
Bah.
On the subject of corporate waste, and who pays for it...
The most wasteful corporations are typically those with limited market pressure to acheive more efficient results due to imperfect competition. One of the major causes of imperfect competition is market concentration. At the extreme, this is known as monopoly. In a somewhat less concentrated form this may be a cartel. In a slightly less coordinated form this is oligopoly. Since capitalism is ultimately rent-seeking, these are the natural forms of "free" but uncompetitive markets. Government regulation is the appropriate means of creating the competitive environment in markets necessary to improve corporate efficiency. Unfortunately, due to the idiotic opinions of true believers in laissez-faire "free enterprise," antitrust in this country lost its fangs a long time ago.
"TOO big to fail" is another way to say "should never have been allowed to exist/merge/concentrate"
BTW, corporate revenue streams come ultimately at the expense of consumers, so the corporate waste by business bureaucracy, and the excess profits allowed by market imperfections (so eagerly created and exploited by their corpulent corporate creators), are both coming out of Joe Six-Pack's paychecks.
Joe pays these excess costs before (lower wages), during (inflated benefit deductions and excess individual taxes), and after his compensation (higher consumer prices).
For the existing unfunded liabilities to be covered in the end, someone must pay $99.2 trillion more or receive $99.2 trillion less than they have been currently promised
LOL. Single Payer = no problemo.
60-80% of the unfunded liability is medicare. Hell, $8T of it is Part D -- price supports to Big Pharma -- alone.
As soon as going to the hospital doesn't result in a $100,000 bill the unfunded liability problem goes away, permanently.
The nation is already throwing an immense amount of national income into health insurance and health providers.
It doesn't have to be this way, but we are idiots. Well, 62,040,606 of us, anyway.
benamery21
Thx.
Japan's top government spokesman said on Thursday he would decline to comment on a media report that the United States, Europe, and Japan had planned in March to intervene if the dollar fell too far.
"I suppose currency authorities may sometimes make announcements and sometime they don't. But I will not comment on this matter," Chief Cabinet Secretary Nobutaka Machimura told a news conference.
Machimura said stability of currencies is important but he could not say in which direction they should move.
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
Being that they are the biggest currency manipulators in the world I wouldn't comment either if I were him.
"On the subject of corporate waste"
well let's answer several questions:
1) If corporations make money for their shareholders, who contributed the capital, do they really waste money for them?
2) IF we volunteered in the most of the cases to spend our money for corporate produced goods, do we really have any claim on those?
The answers are,
1) No if corporations make money for their shareholders, they are not subject of corporate waste.
2) No if we made the payments with our own free will, we do not have any claim on those.
Does government waste money of its shareholders?
well we are government shareholders because we pay taxes. It has been mention before that government officials waste tax money = pork barrels, none competitive bids, bailouts. Etc
So in order to make the situation FAIR to consumer, we propose more regulations, which means more power for the government to WASTE money and less ability for Corporate Shareholders to MAKE money.
Will the allocating capital & power to the part of our social fabric that wastes money from the part that AT LEAST makes money WILL MAKE US all better off.
Well the answer is obvious and yet, our feelings of FAIR/UNFAIR will keep clouding our logical judgement.
Also let me remind you that while WE buy goods on our free will, we are not taxed on our free will. So extra regulations will move resources from the free will part of equation into not free will part of equation. IS IT REALLY FAIR?
Of cause due to imperfection of humans and our society there should be certain regulation of our activity.
However the sake of regulation should be making sure everyone plays by the same rule and not establishment of some ABSTRACT fairness concept.
What seem fair for one will not seem fair for another, so real fairness is the same rules for everyone and not giving the power to WASTEFUL politicians from our Corporations that at least don't waste money for their shareholders.
Now, if we want to be less wasteful, we can always safe more and become corporate shareholders, right?
Bankruptcy filings surge to 1 million - up 29%
Number of bankruptcy filings in recent 12-month period rises to nearly 1 million.
Bankruptcy filings surge 29% - Aug. 27, 2008
"Will the allocating capital & power to the part of our social fabric that wastes money from the part that AT LEAST makes money, MAKE us all better off."
sorry, kinda lost it.
(and the answer is NO with huge probability)
The Guardian comment cartoon
FOX NEWS LIVE
Is America Ready For A Largely Hawaiian President?
Steve Bell on Fox News's take on Barack Obama |
World news |
The Guardian
DR Chonfusion: free will doesn't defy gravity, OR the market.
Your specious appeal to choice ignores the fact that imperfect competition IS inadequate choice by definition.
Choose not to make, spend, or own money and you can avoid taxes just as surely as you can avoid spending money on corporate waste.
WAPO
Small Banks, Tight Credit
Reliance on Souring Development Loans Is Leading To a Cash Crunch, Limiting Funds for Other Businesses
Small Banks, Tight Credit - washingtonpost.com
FFDIC, that cartoon would be pretty innocuous by Fox News standards. (What am I saying--they have no standards!)
"If corporations make money for their shareholders, who contributed the capital"
The capital you refer to was generated on the IPO, that money was spent before the share holders other then insiders bought those shares. The secondary market called the stock exchange does not provide capital for the corporation unless more shares are sold or some held by the company used as collateral for a loan. When you buy a stock on the stock exchange you are not providing capital to that corporation you are buying future earnings income streams which may be paid out in dividends some other payment such as more shares or you find some greater fool will pay you more then what you bought them for.
The thing to ask ones self before buying is if this is such a great deal why in the hell would they sell them to me. The boomer's have made this an easy process for the broker dealers who have made a ton of money selling this crap, generating trading fees while holding little of the risk.
WSJ
B of A agreed to buy back $43 million in auction-rate securities from government agencies in Massachusetts, according to state securities regulators...
BofA to Buy Securities Back From State - WSJ.com
Sadly I saw two moose, the other one was dead. The live moose was in the swamps between South and Basswood, the dead one was just in front of Basswood Falls on the US side.
Left Coast Tom | 08.27.08 - 11:11 pm |
Brain worm - its a parasite that doesn't cause a lot of damage in deer but raises havoc among caribou & moose. They get stupider & stupider until they just drop dead right out in the open.
The over-population of deer are driving the moose out - its happening all over the north.
Sounds like brain worm might have infected central bankers too over the last decade or so but maybe that's a different problem.
Been up through Agnes & have seen the petroglyph's - stunning. We'd go up the 'south way' from the US side out of Moose Lake, Basswood & up that way IF we were after smallmouth - we'd do that mid-summer after the trout had gone down. Canadians consider the smallies 'vermin' and pretty much don't care how many you eat - they are invasive from south of the border. Trout & 'pickerel' are regulated pretty heavy & we mostly caught & released with one a day heading into the frying pan.
I don't know if this will become a trend or not... But no matter where you stand on this issue ideologically, you can't deny its potential impact on demand for housing. Kicking out all the illegals isn't going to help matters.
The big anti-immigrant restriction of the early 20's coincided with a massive drop in house values, so, yeah, further drops in house prices would be no surprise.
In Pakistan, stock prices only go up.
Now why didn't we think of that?
Brain worm - its a parasite that doesn't cause a lot of damage in deer but raises havoc among caribou & moose.
I knew it pushed the caribou well north of their former range, didn't know how bad a threat it was to moose. I could only wish it had similar effects on central bankers (je suis desole, un canadien avec popcorn...).
Mmmm, pickerel...
(This was mostly sightseeing, not fishing, but I grew up in Michigan, and am quite familiar with the taste of fresh walleye. Mmmm...).
While there is substantial seasonality here, it doesn't take a genius to recognize that you need to go back to the 70s to see a seasonal upswing of this size.
Of course, you need to go back that far to see a seasonal downswing of the size we just experienced, too.
I agree that the Freddie Mac spin is completely unwarranted, but Sebastian has a point that the last upswing of this size was in the early 80s.
One data point is not a trend, however. It's just noise in the signal. And right now, from the looks of it, that signal is "SOS."
Yeah, that Karachi stock exchange measure is astonishing, here's the memo:
404 Not Found
I'm gonna watch the KSE today and onwards at : 404 Not Found
How the heck is this going to work ? People will just stop trading as when they put the limit down price to 99% of price at their previous attempt.
I suppose the blackmarket will get going. Its gotta.. Isn't this how the gutter traders got going outside the Wall Street NYSE once upon a time..
We live in very very strange times !
-K
Ok, brain worm. It obviously jumped species to IB'ers et al.
I had an IB guy once named Moose. Ex NFL way back in the 70's. Said he went to the line too often without his helmet.
FFFFFFFFDIC Pullese don't disparage the IQ of bankers.. Still got a piece of dirt for sale.
The developer actually got some dirt and above dirt money but his contract expired with me. I'm going to hold him up for another buck a foot.
At least Sebastian understands my fine work.
If I live in Seattle and I say it is going to be sunny today, I'm right about 25% of the time. Should people start claiming I am a genius every time I say something that turns out to be correct? No, they should call me an idiot, because I'm generally incorrect and have very little sense about what I am saying. This is Sebastian.
AllenM aka Joliet Jake writes:
Best canoeing trip in my youth was a Turtle river- Lake Eltrut eight day trip when I was 14.
Wildest trip we've ever done was about 6 hrs drive NW of Thompson Manitoba (which is like what... 8-10 hours north of Winnipeg?) It was right on the Manitoba Saskatchewan border not too far from Reindeer Lake (big lake - you can even find it on a road map). Our destination was an abandoned mine near an almost deserted mining town called 'Lynn Lake'. We'd go in through the mine to a chain of lakes then see no one for days. It was above the 56th parallel... about even w/ Hudson's Bay.
Really good fishing - catching 15lb pike on a fly rod at 11PM and it was still light out - nice.
Ross,
Oh good we can move lunch to the Mansion on Turtle Creek...
Dallas Fine Dining & Award-Winning Restaurants | Rosewood Mansion on Turtle Creek - Dining
RE: Sebastion.
Why don't you guys just draw straws and the winner gets to shoot/or not Seb.
You can always point to brain worms or the demonic revenge of the BBQed squirrels clan.
Poor Seb. He reminds me of a kid in my 6th grade PE class that everyone referred to as 'Nature Boy'. He too never figured it out!
"I agree that the Freddie Mac spin is completely unwarranted, but Sebastian has a point that the last upswing of this size was in the early 80s."
And what other data-points compare favorably?
I could take any point in the last 6 months and find a similar data-point that compares to the 30's, 70's, 80's, 90's and 2000.
If Sebastian wants to compare data-points to the 80's then he needs to compare the sum of these data-points, not just a single one.
According to Sebastians data-points we've barely even hit a recession.
With this logic why not just compare this upswing to 2001/2002 and extrapolate from that point in time.
"The capital you refer to was generated on the IPO"
I am aware of it. I mean spent $(capital) to become shareholders.
And it could be obvious from context. Sorry for discrepancy, however I am trying to illustrate an idea rather to write well edited research paper.
And the idea is, it might be technically incorrect to call corporate america a wasteful mechanism of our tax and consumer $$$.
FFDIC,
It's only a 36,000 sq foot tact. Not sure that would cover the Mansion.
The developer really screwed up. They had a paltry $5,000 in earnest money up and didn't want it to go hard. Next day, they wanted a new contract. Fat chance.
Wifie says Gloryeus (sp) is better for dinner. Only after closing! My treat.
"Your specious appeal to choice ignores the fact that imperfect competition IS inadequate choice by definition."
why?
Perfect competition provides 0 long term economic profits and limits consumer choices. If consumers demand more choices, monopolistic competition is by far more adequate model. Unless you would want to live in the world of identical clones (example commodity goods), would you?
As for 0 economic profits, those are not always the best motivation for good management and especially INNOVATION.
In addition, you would have to force perfect competition on natural monopolies and similar and the excessive regulation to establish perfect competition everywhere could carry additional Dead Weight Loses.
and the bear hit it square in the middle of the front end.
Seems a little unfair to say the bear hit the car. Okay, the impact was there, but the bear didn't seem to have much to say about it. Must have been one of those short selling bears.
I'm not sure I'm getting any smarter reading this blog tonight so I will unchain the dog, and put the safety on the peacemaker. Who is the patron saint of bear markets? St. Red?
Henry Cisneros, former secretary of the US Department of Housing and Urban Development (HUD), declared today that the housing industry is in a "truly dangerous place" and that significant steps must be taken by the next administration to address the mounting problems...
With the economy staggering along, Mr. Cisneros said the new administration next year will be forced to pass a second stimulus package. He said it must contain measures to deal with the credit crunch that is curtailing investments and lending. "We won't get the job machine started without credit..."
And credit is simply a financial engagement motivated by the honesty, reliability, and wisdom of the participants.
Credit can only flourish in an environment of trust and commitment.
How can a stimulus package confer these qualities to US borrowers and lenders?
Handing out money makes us more responsible and restores faith in the character of the participants in the credit markets?
Or does it create a monetary incentive for not developing these traits?
Afterall, would we have a stimulus package if we did the right thing by taking on reasonable debt and meeting our obligations?
FFDIC - When did the name change to "Rosewood" Mansion on Turtle Creek?
My turn to plead imprecision of expression.
For imperfect competition read the degree of imperfect competition we were talking about--that illustrated by wasteful corporate America.
"have to force perfect competition on natural monopolies"
You admit to the existence of natural monopolies? Maybe I'm wrong about you and you aren't completely deluded about the genius of capitalism. Or is this thing (natural monopoly) a hypothetical in your doctrine (sort of like a unicorn). I bet that you're a deregulation proponent (deregulation of natural monopolies having been government policy in the U.S. for some time now).
FFDIC:
The cartoon is just a good satire of Fox news (among others) IMO
The Guardian article itself however is excellent
Timothy Garton Ash: Soon Obama must heed Canute |
Comment is free |
The Guardian
Nearly 600 Arrested in US Immigration Raid
Error Redirect
Howard Industries-The Perpetrator
Howard Industries, Inc.
Welcome to The New World Order
So much for wage/price spirals
Conjure Bag says, "Haw, Haw, Hawww!"
FYI Howard Transformers quality control is/has been so bad that at least one major utility has done full shop tests and internal inspection of every unit shipped over multi-year periods.
BTW, I'd sell utility stocks for their major customers first thing tomorrow before the names get publicized.
"You admit to the existence of natural monopolies?"
Yeah, your local electricity provider is natural monopoly. The maker of iconic IPod is probably monopolistic competition.
So you don't think electricity deregulation was a good idea?
p.s.
If apple would be perfect competition, you would never see 5 different iPods and the only one produced would be identical to Sony and rest of the products.
As of deregulating your local electricity provider, the technology we have is not sufficient for that. Having 10 separate power lines to your house is not practical.
As of deregulating your local electricity provider, the technology we have is not sufficient for that. Having 10 separate power lines to your house is not practical.
The technology is easy.
Rather, the budget normal people have is not sufficient...
Dr. Chaos: Don't dodge the question. Was or was not deregulation of electricity in the U.S. a good idea as proposed and implemented?
So you don't think electricity deregulation was a good idea?
I don't remember the details of it and it did not address your energy company being natural monopoly.
As I mention, regulation for the purpose of creating equal market rules for all players is NEEDED. Regulation because we think that market is unfair, is usually excessive.
There was a historic precedent of such regulation, South America during 60-90's. Those countries had better staring conditions then Asian Tigers, however mostly due to the populist movement (caused too much of regulation) they fell behind by huge margin.
Was or was not deregulation of electricity in the U.S. a good idea as proposed and implemented?
What a stupid question.
Is any program wholly good or wholly bad?
Anyway, who cares?
"Dr. Chaos: Don't dodge the question. Was or was not deregulation of electricity in the U.S. a good idea as proposed and implemented?"
Deregulation of electricity was not dissolution of natural monopolies, so it Irrelevant to the topic.
And I answered the question, I DON"T KNOW.
The Wright Model B was powered by a secret Tesla Engine. It could fly over 100,000 miles without mantainance and required no fuel. Ford aquired the patents (with some help from the Rothchilds and their Reptilian friends) to ensure that his Model T would have no competition. The Andromedains, who had telepathically communicated their technology to Tesla, gave up in disgust, and henceforth communicated only with dolphins
Neva mind, I give up. The correct answer is NO. Deregulation of electricity was/is rent seeking and was/is advocated by the same fine fellows spouting the party line on the income tax which you are parroting.
Thank goodness benemery knows the correct answer.
Whew!
Whew!
x 3
How is introducing competition in an industry you describe as a natural monopoly not germane?
"The Wright Model B was powered by a secret Tesla Engine. It could fly over 100,000 miles without mantainance and required no fuel. Ford aquired the patents (with some help from the Rothchilds and their Reptilian friends) to ensure that his Model T would have no competition. The Andromedains, who had telepathically communicated their technology to Tesla, gave up in disgust, and henceforth communicated only with dolphins"
LoL
by the way, the probability of Rothchilds assisting Mr. Ford is close to NULL. I mean they didn't exactly like each other,
)
Sorry for biting at Elvis' bait and hijacking the thread, everyone.
Anonymous: perhaps your definition of a good idea differs from mine.
I'm in favor of NET positives, and don't require good ideas to be washed in the blood of the lamb.
There's a lot of good definitions of good.
Sometimes it's a good idea to dodge a question, like
Is program X good or not? Yes or no?
Wow, that's a good one to dodge.
Anyway, as they say, it's all good.
And good night.
Dr. chaos
It's supposed to be a mythdirective comment. I just wanted to mention a financier who wasn't a Morgan. (J.P. morgan did finance Tesla for a while)
The Wright Model B is the result of curve-fitting to data from past economic cycles, when conditions were much different. It's accuracy of fit was significantly lower for the last recession than for those before it.
It's important to note that the Wright Model B never predicted any recession -- the paper describing the model was published in 2006! (Probably based on work done in 2005.)
It shouldn't be too surprising that looking back from 2005 one can curve-fit a formula with yield-curve related independent variables closely to most recessions of the post-WWII period, since most recessions of that period were caused by Fed tightening. But just because you can back-fit a formula to data from the past doesn't necessarily mean you have a useful predictive tool. One of my favorite tricks for speeding up the software I work on is to curve-fit cubic expressions to data whose actual values are determined by formulae that are much more complex and time-consuming to compute; over a restricted range you can usually get a very close approximation, but the cubic expression "model" will usually have little or no predictive power outside the range used for the curve-fitting, because it does not actually model the mechanisms that underlie the data.
And even within the range used for the curve-fit, the predictions of the curve-fit "model" often begin to differ from the actual data values near the ends of that range -- just as we see with the Wright Model B.
Since current macro- and micro-economic conditions are so different from those of the 20th Century post-WWII, there's no good reason to think that the Wright Model B is going to be a useful predictive tool in the current environment.
"It's accuracy of fit .." --> "Its accuracy of fit ..."
It didn't take me rules, or models or anything other than common-sense to see what was coming from several years ago.
Common-sense told me the lending programs out there were crazy.
Common-sense told me that this was going to end badly.
Common-sense tells me that the biggest credit bubble, followed by the biggest housing bust and financial melt-down since GD 1.0 don't equate to a minor bear market.
It doesn't take science, it doesn't take models and it doesn't take logic to figure this all out.
All it takes is common-sense.
For Freddie and Fannie, the LIGHT AT THE END OF THE TUNNEL is a TRAIN coming hither.
You're going to get a monster rally on any Fannie/Freddie plan, no matter how bad it is.
S&P looks to me like it's in a new triangle.
In Monopoly, the rules clearly state the bank can never run out of money. What could possibly go wrong?
FTR:.....................8/20................8/28
6 County SoCal
Bank REOs.......110,300...........112,700
Aug. REO
Sales Est.............8,863...............8,863
MOs. of
Inventory:............12.4.................12.7
Bank REO inventories currently rising at a 10% plus rate per month, with a rising 12 month supply based on continued July REO sales rates, means lower prices, and IMHO, some possible shock and awe with YOY price declines in Cali heading into the minus 50% twilight zone.