By the time they finish converting their factories with that dough (if that's what they really use it for), they'll need to convert then to the next latest trend.
Jane Quinn was on The News Hour last night saying that one thing everyone could do to improve their personal, household finances was to not buy a car! True. But knowing how grim the sales figures are I was surprised to hear her say "I don't need a new car this year, do you?"
Ouch. Who is going to buy a new car this year? Not many.
Bought a new car last year, paid cash. They still ran my FICO score, which was 720 at the time. Good, but not magnificent. Salesman told me he almost never saw one that high.
Auto Industry = Subprime Financing Industry? Probably.
Ford/Big 3 sell products the public doesn't want at a price they can't afford, for a lifestyle they don't need. And the revenue is used to fund bloated pension plans and union employee salaries and health benefits that are unsustainable. Headquartered in a city that is a burned out dead shell of it's former self.
But check out the chrome details and the vroom-vroom engine !
This should cause a real problem to those that think that the recent three-month pause in the decline of Detroit Case-Shiller prices means they've found a "bottom" there. Even a $100 house might end up losing you a lot of money.
From the last thread: I just changed my etrade sweep account from the default, to a NY muni bond fund, effective yield 8.5% ... I'll take that over stock picking any day!
(for those interested in chasing higher yield CDs)
Anonymous
Comrade Misean writes: AH SHIT! Why didn't I realize this before. If this passes the Senate it goes to conference committee. No house floor vote. This is PURE BULLSHIT!
There will still need to be a final floor vote on the final bill. The trickiness was needed because only the House can initiate a revenue bill.
That would be 120,788 idiots. Who in their right mind would buy a new car right now, let alone a Ford? Wonder what the weakly breakdown was my bet is that 75% or more was in the first half of the month.
Jim Willie, in his newsletter, reported that BOA branch managers got a letter from the Fed telling them to be ready for a one-week universal shut-down of the banking system, including access to checking accounts, savings accounts and credit cards.
that was what Luna (i thinbk) was trying to point out over the weekened when they said it is an ammendment to the house ammendment to the senate ammendment to the house bill....HR 3997. And not a 7000 resolution...
Jim Willie, in his newsletter, reported that BOA branch managers got a letter from the Fed telling them to be ready for a one-week universal shut-down of the banking system, including access to checking accounts, savings accounts and credit cards.
Tinfoil hats, anyone?
bubba
I would be wondering about the timing of this. Not so much as to whether it's a possibility, because with these Criminals, Anything is possible.
Comrade Misean, I believe the House still has to vote on the appropriations part of this bill (TARP and IRS changes). This tactic was used just to allow the Senate to go first. They apparently keep a cupboard full of these type of bills just for this purpose. I have read that the House will most probably vote Friday if this passes the Senate.
I would at least assume that the insurance is possibly worthless, and would want them backed by the general taxing authority of the local gov't ("General Obligation"). Bonds issued with only backing by future "revenue streams" from public works (hospitals, toll roads, etc.) are most likely to default without a backstop when the project fails to earn its keep.
re the muni ..
yeah tax exempt for NY, but they have a CA one, and a general one as well, all similar yields.
my reasoning goes that this is a sweep account, at the press of a button i can use the cash to buy a treasury or something ( I have one as well ).
My second line of reasoning goes that defaulting AAA rated munis while not impossible in a meltdown scenario are not likely to happen before more large banks and insurance companies go belly up. Even etrade itself is more risky (albeit insured by FDIC).
So I figure there are gonna be plenty of warning signs before I need to get so conservative that it goes back to earning 0.5% in a tbill.
By the way it is a muni bond FUND, not a bond. I have no time to hand pick munis. If one bond in the fund blows up, the yield of the fund might drop, but it won't break a buck or anything. And that would be a warning sign to sweep it right back to something safer.
"Jim Willie, in his newsletter, reported that BOA branch managers got a letter from the Fed telling them to be ready for a one-week universal shut-down of the banking system, including access to checking accounts, savings accounts and credit cards."
Auto Industry = Subprime Financing Industry? Probably.
Bob Dobbs | Homepage | 10.01.08 - 12:42 pm | #
I think in many ways the auto industry primed the pump for the housing debacle. People become very accustomed to "buying" cars they really couldn't afford. Back at my old apartment in LA, everyone in the building had a BMW or Lexus. A stoner roofer owned a 7-series BMW, a new truck, an ATV, and his girlfriend owned a Lexus. This was before I understood anything about the credit bubble. I couldn't understand how I was the only one to own a Corolla.
So if the senate tacked this onto a bill already passed by the house, does the house get to vote again? Or does the senate pass and then a committee rubber stamp it?
"Doesn't a 8.5% Muni sound kind of risky right about now? What if they default?"
Muni defaults are still very rare, extremely rare if you take out southern states.
I'm sure someone will post a list of muni defaults, but it is difficult to find one where people didn't get their interest, never mind losing any principal.
I foresee decent business prospects for auto parts dealers, and as Cobradriver said in a previous thread, honest repair shops. It is remarkable how much money you can save if you do your own repairs on your cars. I've replaced brake pads, spark plugs, distributor caps, drive belts, lights, and a few other things.
The test of our progress is not whether we add more to the abundance of those who have much,it is whether we provide enought for those who have little. FDR
This is a SCAM and a POX on The American Tax Payer, and all about bailing "Foreign Investors".
We may be begging for Rice as our next Currency, if Washington doesn't go home and let the People in flyover figure it out.
"So if the senate tacked this onto a bill already passed by the house, does the house get to vote again? Or does the senate pass and then a committee rubber stamp it?"
The House will get to vote again on whatever the Senate passes.
Those of you who think you've found some defect in the Congress' legislative procedures are barking up the wrong tree.
NY munis overvalued at 8.75%? Nothing compared to the shit storm that is going to hit California, where real estate is worse and the state is hamstrung both in budgeting and in taxing. And it won't hurt california alone
the disaster on the horizon is making Osama giggle uncontrollably.
That SoCal foreclosure alley video is really sad and frightening at the same time. Sad to see people lose their homes and their cherished posessions, but frightening to see that this might just be the trend going forward....
If anyone out there has access to the right data and some graphing skills, I think a chart of Median Income vs median new car price over the last 30 years would be fantastic.
Like someone further up the thread, I live in a working class neighborhood with luxury cars and SUVs in every driveway. 20 years ago everyone wouldve been driving a well used and paid off beater.
$50k a year households should not be driving Escalades. This whole country went nuts the last few years, now the bill has come due.
how does the manufacturing index compare to the great depression at this point?
also how can manufacturing go down by a lot if china manufactures most things now?
Exactly, my consensus is that we are not declining economically, our credit is not tightened up... but that we are returning to a normal lifestyle... some will be tuning in their key rings and should enjoy the taste they got...
As far as credit... well thats what got us here to begin with, the prudent are buying on credit now.
A stoner roofer owned a 7-series BMW, a new truck, an ATV, and his girlfriend owned a Lexus. This was before I understood anything about the credit bubble.
I don't think "own" means what you thinks it means.
Sorry can't find a link to the short ban extension. It was on CNBC a minute ago. I think it was Gasperino (sp?) reporting that the ban would be extended until the 17th.
if muni rates keep going up then the amount you invested in the bond fund goes down.
long before any defaults hit you would be losing money, if rates go up more, as they have been going up
I am probably dense but I don't get what you are saying. Muni rates have definitely gone up and down but over the last 7 years the returns on the fund have varied from sub 1% to 3%. They are high now because muni rates have shot up. However, barring defaults or a lot of missed interest payments, I don't see how anyone invested in the fund from 1st Jan lost money.
"rentersittingoncash writes:
Why is the concept of saving up for a car with cash such a foreign concept?"
Because if you did, you'd have to admit you were poor. And could only really afford a much smaller car. You'd be a failure, a dweeb, not keeping up with the Joneses.
Or so the propaganda goes. 15 minutes of it in every hour of commercial TV every day.
You get a monthly salary, and forward it to various corporations that in return supply you with various trinkets or services.
saving up would deny those corporations the ability to double-dip - to get into the financing biz, which I heard was very profitable (up until the end of last year).
Muni yields go up, the NAV on the bond fund goes down.
Yield and price move in opposite directions.
If you buy a bond and hold it, you get your principal back at the end if there is no default . . . you might pay the opportunity cost of not getting higher rates, should rates rise, but you get your principal back (unless there is a default)
If you buy a fund, at some point you need to cash out of the fund, and then you get the NAV of the fund. The NAV goes down as yields go up; NAV rises if yields drop.
"NY munis overvalued at 8.75%? Nothing compared to the shit storm that is going to hit California, where real estate is worse and the state is hamstrung both in budgeting and in taxing. "
The state budget may be a mess, but LA County had an 8% increase in property tax revenue last year. Prop 13 smooths it out.
This is terrible. And it shows what pigs we are to just throw that stuff away. There are people with very little that would love to have that stuff.
I am disgusted by the U.S.
Anonymous | 10.01.08 - 12:50 pm | #
You ain't kiddin'!
What a waste of money, time, resources, you name it, wasted.
Disgusted isn't the right word. I am just pissed. Heck, if you know that the time is up, donate that stuff. Heck, it wasn't like they did not know.
"Gee, Barb, let's get the kids and run from the house. We can't make the payments anymore!"
This housing fiasco can be summed up by what a woman told me about 7-8 years ago.
"All this is is just adolescents with mortgages."
She was so right. Look at that one guy in the video paying 399K for his house. I hate to be judgmental, but could he pick out old cue ball or Bernanke-panky from his neighbor? Just wondering.
Short selling:
The ban, which was originally scheduled to expire Thursday, could be extended at least until the third week of October, according to SEC spokesman John Nester.
The idea was to ban the short selling while Congress debated the bailout plan, he said.
Mr. Nester declined to comment on whether the fact that the bailout plan remains unresolved 12 days after the short-selling ban was enacted will lead to an extension of the ban.
This is simply the endgame of a decade long trend of raiding Americans' car equity to accelerate sales. Once upon a time your old car was the downpayment for your new car, and many Americans had thousands of dollars of equity to trade in. The rise of leasing was the first step of reducing this, but in recent years over 100% LTV lending took off, leaving many customers with negative equity before they even drove off the lot. There's now no car equity left to raid.
What I like about the current market is how someone painted the tape on Wells Fargo (WFC) a few days ago, which now disguises the fact that basically they're hitting new all-time highs in the middle of this crisis...
@NY Munis - if it were a bond fund, the risk of loss would be interesting, but the chance of gain would also be interesting. But this is a muni money market fund. The risk is that if enough people redeem their securities in a falling market, the fund may not be able to pay everyone at $1.00/share (without some kind of intervention). Fortunately the Fed is offering to insure all money market deposits as of 9/19, with funds to decide whether to participate by 10/8. See details on (e.g.) Vanguard.com.
I am holding onto my California muni money market fund, enjoying the yield spike, and trusting that someone else will backstop me if the muni market seizes up. After all, if they're going to be providing moral hazard across the board, why shouldn't I get my fair share?
Sigh...
Too bad it's only 5% of my capital since a large chunk of the rest is earning ~nil at TreasuryDirect...
I gotta feeling that despite the best efforts of all involved, somehow in this fiasco the grim reaper is going to hit every asset class.
Absolutely agree with Nemo... what gets underfunded if the giveaway bill gets passed?
$700 billion invested in alternate energy technology, especially for personal transportation, has the potential to pay back by saving $700 billion - the amount of energy we pay to import every year. Plus create jobs and clean up the air. That's a far better deal than covering sunk debts for banks.
"She was so right. Look at that one guy in the video paying 399K for his house. I hate to be judgmental,"
Then dont be! The guy had a wife and baby and was massively underwater, apparently lured by his accountant and yet was honourably continuing to pay his mortgage.
What aspect of integrity dont you understand? Be who you say you want to be please.
Absolutely agree with Nemo... what gets underfunded if the giveaway bill gets passed?
Right now, the working capital market. The restrictions on Congress from increasing the debt are long-term. Long-term, probably out of the Department of War; we're not going to be able to afford that anymore.
yeah it is a muni money market fund and they endeavor (but do not guarantee) to maintain nav at $1.00) .. so now i understand your point as it relates to all bonds, but as a money market fund i'm not so concerned.
worried in Finland writes:
"She was so right. Look at that one guy in the video paying 399K for his house. I hate to be judgmental,"
Then dont be! The guy had a wife and baby and was massively underwater, apparently lured by his accountant and yet was honourably continuing to pay his mortgage.
What aspect of integrity dont you understand? Be who you say you want to be please.
worried in Finland | 10.01.08 - 1:41 pm | #
Sorry, but not buying it. When this guy signed up for this monster loan, did he think he would make 360 consecutive timely payments at $3,100/month?
Good grief at that cost, he should be netting $9K a month. What does he do for a living? I can ask, can't I? This is why we are in this mess. Buyers didn't do the math and we can argue all we want about the failure of public education all we want.
Still doesn't make sense. If you don't understand the 200-page mortgage doc, then hire a good lawyer for 300 bucks to decode it for you.
People signed up for these loans and now claim it was the accountants fault or the LO's fault.
Get a grip.
I am disgusted and pissed. Man uop duhmerica. Stop playing the blame game. You bought at basically $400K and someone is going to be your neighbor at $189K or lower. Wake up.
"Jane Quinn was on The News Hour last night saying that one thing everyone could do..."
I saw that; why does she even get airtime? Last year, I recall her telling people to cover their credit card debt by taking out reverse mortgages. Brilliant.
One thing to add about conference committees and bills:
The conference committee can add things that were not in either bill and send it back to both houses for passage. That is how concepts such as the REAL ID Act, which failed a vote in both houses, got passed when they were added back in to unrelated conference committee bills.
So don't watch what the Senate passes--watch what the conference committee adds to the bill (or takes out), and bet that the conf. committee bill gets rushed through even faster than the original bills.
joe shmoe is right talking about bond funds. Bond funds are not at all like purchasing a bond outright that you can expect to pay you 8.5% interest on top of a stable principle value.
Some people don't like bond funds, but there have been years when they have made good money for me and effectively counter-balanced the movement in stock funds. After 911 when Greenspan lowered interest rates, this long-term treasury bond fund that I was in did very, very well. With Fed rates already low today, can't expect that to replicate.
The NY muni bonds seem viable for us New Yorkers because taxes are high in NY state and city. Outside of NY, purchase makes much less sense because you don't get the full tax break and it's virtually certain not to earn 8.5% in the manner that some think. With Wall Street industries imploding, I am keeping some money in municiples (a) for the tax relief they offer, (b) diversification, (c) taxable money markets are offering even less than what I expect to net from this and (d) because I am not knowledgeable about trading, buying and selling like you guys. I am playing like a rather dumb squirrel that puts an acorn here, an acorn there all over the yard and hopes to find a few of them worth eating some time next year, but really don't know which one it will be. God willing, the squirrel does not wind up as road kill.
"The guy had a wife and baby and was massively underwater"
OCDan is right. People with median incomes at best jumped into overpriced RE expecting to ride the appreciation train. The train failed to deliver all the goodies, so they're walking, leaving the debris behind.
The IE is/was filled with folks who could have maintained some dignity and financial stability if they had remained renters. And these deadbeats on now leaving this mess on the taxpayers' dime.
No sympathy for these schmucks, none.
The auto industry gave to the consumer exactly what they wanted. Big SUV's. Until gas prices went up.
The housing industry gave to the consumer exactly what they wanted. Big houses with liar loans.
Generally in the US of A. The herd gets what it wants.
I hope the herd does not get what they want this time. Which appears from this board is that the congress should not vote on a rescue plan to place stability in the financial markers.
How many banks have to fail before the herd gets the message that this is a real crisis today. Hmm....... 41Cadillac
NBC and CNBC is owned by GE, who is represented by ... you guessed it -- Goldman Sachs. Like you I wondered why do they keep pushing this bailout as a last resort? So I did some research (always follow the money) and found the financial relationship between GS and GE.
"You bought at basically $400K and someone is going to be your neighbor at $189K or lower. Wake up."
Please explain to me how this man was supposed to have anticipated that half the homes around him were going to foreclose, and that the value of the home he purchased at $400K would drop to less than $189K.
And while you're at it, please explain to me how the millions of others who purchased homes during this decade should have anticipated that their homes would also soon be underwater?
And in explaining this to me, please take into consideration the fact that many, many of those purchasers did NOT buy with a sub-prime loan, and did NOT buy in a sub-prime neighborhood. A person who put 20% down and took out a 30-yr fixed-rate mortgage and bought into a higher-income area might still be looking at a 35% or more drop in value -so far!-and have an underwater mortgage, despite being what would normally be considered "responsible".
"The auto industry gave to the consumer exactly what they wanted."
The auto industry deliberately built that market through advertising and pricing stategies because they felt it gave them a profit margin edge over foreign manufacturers. It was shortsighted, against national interest and may be the death of the industry.
There is so much crap that needs to be cleaned out in this country!
Please explain to me how this man was supposed to have anticipated that half the homes around him were going to foreclose, and that the value of the home he purchased at $400K would drop to less than $189K."
oh brother, houses like those were selling for $120K just a few years before. Are you saying that people who spend hundreds of thousands of dollars shouldn't spend enough effort to understand the right price for what they are buying? Then they should be renting.
Even more reason to wait before blowing $700B on banks.
Every Congressperson who rises to support the bail-out should have to explain what, precisely, they intend to underfund by $700 billion in the future.
"Here I come to save the day!" -- Mighty Mouse.
good thing the big 3 got their $50B in loans.
By the time they finish converting their factories with that dough (if that's what they really use it for), they'll need to convert then to the next latest trend.
Cars are not selling because the subprime auto loan market is gone. Everyone with money and a prime borrower has a car....sound familiar?
I'm excerpting a post from last thread:
Tad - are these your words, and if so, may I repost your piece elsewhere and attribute it to you and CR?
This is a first-class piece of writing.
That and the cost of running a car these days...
A lot of auto dealers acted as little more than fronts for subprime lending.
I think americans are going to start to drive their cars more than 5 years for a while....
Lets hope the big three pull their heads out of their a**es and start producing things that frugal americans need / want.
......
Jane Quinn was on The News Hour last night saying that one thing everyone could do to improve their personal, household finances was to not buy a car! True. But knowing how grim the sales figures are I was surprised to hear her say "I don't need a new car this year, do you?"
Ouch. Who is going to buy a new car this year? Not many.
CR,
Do you still believe there will only be a "mild/moderate" recession?
60,000 fewer cars at $20,000 per car.
That's $1.2B less per month in revenue...ouch.
From previous thread:
Comrade Whereismyretirement,
"This is a bill that has already passed the House, that is the only way that the Senate could "vote first" on an appropriation bill."
AH SHIT! Why didn't I realize this before. If this passes the Senate it goes to conference committee. No house floor vote. This is PURE BULLSHIT!
Nostrovia,
Curlydan, didn't the automakers "only" get $25B? I know they asked for it to be doubled, but I thought they didn't get it?
Bought a new car last year, paid cash. They still ran my FICO score, which was 720 at the time. Good, but not magnificent. Salesman told me he almost never saw one that high.
Auto Industry = Subprime Financing Industry? Probably.
Ford/Big 3 sell products the public doesn't want at a price they can't afford, for a lifestyle they don't need. And the revenue is used to fund bloated pension plans and union employee salaries and health benefits that are unsustainable. Headquartered in a city that is a burned out dead shell of it's former self.
But check out the chrome details and the vroom-vroom engine !
sigh
This should cause a real problem to those that think that the recent three-month pause in the decline of Detroit Case-Shiller prices means they've found a "bottom" there. Even a $100 house might end up losing you a lot of money.
"If this passes the Senate it goes to conference committee. No house floor vote."
Both Houses always need to vote on the final bill.
From the last thread: I just changed my etrade sweep account from the default, to a NY muni bond fund, effective yield 8.5% ... I'll take that over stock picking any day!
(for those interested in chasing higher yield CDs)
Anonymous
Do you have to be an NY resident?
....
AH SHIT! Why didn't I realize this before. If this passes the Senate it goes to conference committee. No house floor vote. This is PURE BULLSHIT!
Nostrovia,
Comrade Misean
I learn stuff here, that would NEVER get mentioned elsewhere.
Thanks to all the intelligent posters here, who sift through the manure to help us see the light.
Do you have to be an NY resident?
....
nades
Probably not, but the interest would not be State Tax Exempt.
the fundamentals of the economy are strong.
there is no recession.
there is no credit crisis.
there really wasn't a housing bubble.
free markets work.
George W Bush is still President.
no wonder why everyone is so fucking confused.
Comrade Misean writes: AH SHIT! Why didn't I realize this before. If this passes the Senate it goes to conference committee. No house floor vote. This is PURE BULLSHIT!
There will still need to be a final floor vote on the final bill. The trickiness was needed because only the House can initiate a revenue bill.
Doesn't a 8.5% Muni sound kind of risky right about now? What if they default?
That would be 120,788 idiots. Who in their right mind would buy a new car right now, let alone a Ford? Wonder what the weakly breakdown was my bet is that 75% or more was in the first half of the month.
Jim Willie, in his newsletter, reported that BOA branch managers got a letter from the Fed telling them to be ready for a one-week universal shut-down of the banking system, including access to checking accounts, savings accounts and credit cards.
Tinfoil hats, anyone?
Misean,
that was what Luna (i thinbk) was trying to point out over the weekened when they said it is an ammendment to the house ammendment to the senate ammendment to the house bill....HR 3997. And not a 7000 resolution...
For the interested, senate debate begins at 2pm EDT on CSPAN2.
Bonus drinking game idea: any time a senator uses the words "Wall Street" and "Main Street" in the same sentence, take a drink.
This game, however, may cause quick and fatal alchohol poisoning.
"Comrade Scared Shitless writes:
Doesn't a 8.5% Muni sound kind of risky right about now? What if they default?"
What does IF mean? Why not WHEN?
No, no credit crisis here.
CSS, thanks..
Jim Willie, in his newsletter, reported that BOA branch managers got a letter from the Fed telling them to be ready for a one-week universal shut-down of the banking system, including access to checking accounts, savings accounts and credit cards.
Tinfoil hats, anyone?
bubba
I would be wondering about the timing of this. Not so much as to whether it's a possibility, because with these Criminals, Anything is possible.
merciless, I'd be passed out in the first hour! I'm definitely tired of the "Wall street and main street" phrase.
Best Wishes.
Here's a brutal video of how BAD Southen Ca housing market is now...
http://corgiguy.gohds.net/?ch=1....RECLOSURE-
ALLEY.
This is terrible. And it shows what pigs we are to just throw that stuff away. There are people with very little that would love to have that stuff.
I am disgusted by the U.S.
Comrade Scared Shitless writes:
Jim Willie, in his newsletter
Link please????
Lets hope the big three pull their heads out of their a**es and start producing things that frugal americans need / want.
Ford's 2009 model F150 has a built-in squirrel trap. And the tree-shaker attachment now comes with the power option package.
Comrade Misean, I believe the House still has to vote on the appropriations part of this bill (TARP and IRS changes). This tactic was used just to allow the Senate to go first. They apparently keep a cupboard full of these type of bills just for this purpose. I have read that the House will most probably vote Friday if this passes the Senate.
Link please????
crispy& cole
This was posted by Bubba, I just replied.
Anonymous that link didnt work can you try again?
maybe put it on a separate line?
Do you have to be an NY resident?
I think that you do have to be a resident.
This is indirectly one of the reasons why HIG crapped the bed yesterday.
Can't finance what people are not buying. That says nothing about the crap they have on the books. Top 15 in overall leverage too...
Ciao
MS
Comrade ferg,
"Both Houses always need to vote on the final bill."
Bills comming out of conference rarely fail.
Nostrovia,
Re: Muni bonds
I would at least assume that the insurance is possibly worthless, and would want them backed by the general taxing authority of the local gov't ("General Obligation"). Bonds issued with only backing by future "revenue streams" from public works (hospitals, toll roads, etc.) are most likely to default without a backstop when the project fails to earn its keep.
Ford's 2009 model F150 has a built-in squirrel trap. And the tree-shaker attachment now comes with the power option package.
Shnaps
LOL. At least its practical.
I actually live near the ocean so I'm looking for seagull recipes. Anyone have any good ones?
......
Do you have to be an NY resident?
I think that you do have to be a resident.
Anonymous
I'm not sure why you would have to be a resident to buy a Muni bond. I have some non-NY clients who have NY Muni bonds.
Thaddeus Kosciuszko was a historical figure contemporary to Casimir Pulaski from the times of the American Revolutionary War.
Tadeusz Kościuszko - Wikipedia, the free encyclopedia
Please refer to the originals not to the CR reposts.
Thanks.
re the muni ..
yeah tax exempt for NY, but they have a CA one, and a general one as well, all similar yields.
my reasoning goes that this is a sweep account, at the press of a button i can use the cash to buy a treasury or something ( I have one as well ).
My second line of reasoning goes that defaulting AAA rated munis while not impossible in a meltdown scenario are not likely to happen before more large banks and insurance companies go belly up. Even etrade itself is more risky (albeit insured by FDIC).
So I figure there are gonna be plenty of warning signs before I need to get so conservative that it goes back to earning 0.5% in a tbill.
Here's a brutal video of how BAD Southen Ca housing market is now...
This is terrible. And it shows what pigs we are to just throw that stuff away. There are people with very little that would love to have that stuff.
I am disgusted by the U.S.
try this:
http://corgiguy.gohds.net/?ch=1.0.143.0.SOCAL:FORECLOSURE-ALLEY
Dont need to be a resident, although if you live in another state the income is still subject to your state income tax.
try this:
http://corgiguy.gohds.net/?ch=1....RECLOSURE- ALLEY
Anonymous
Got it thanks!
....
By the way it is a muni bond FUND, not a bond. I have no time to hand pick munis. If one bond in the fund blows up, the yield of the fund might drop, but it won't break a buck or anything. And that would be a warning sign to sweep it right back to something safer.
"Jim Willie, in his newsletter, reported that BOA branch managers got a letter from the Fed telling them to be ready for a one-week universal shut-down of the banking system, including access to checking accounts, savings accounts and credit cards."
I don't believe it.
Auto Industry = Subprime Financing Industry? Probably.
Bob Dobbs | Homepage | 10.01.08 - 12:42 pm | #
I think in many ways the auto industry primed the pump for the housing debacle. People become very accustomed to "buying" cars they really couldn't afford. Back at my old apartment in LA, everyone in the building had a BMW or Lexus. A stoner roofer owned a 7-series BMW, a new truck, an ATV, and his girlfriend owned a Lexus. This was before I understood anything about the credit bubble. I couldn't understand how I was the only one to own a Corolla.
So if the senate tacked this onto a bill already passed by the house, does the house get to vote again? Or does the senate pass and then a committee rubber stamp it?
"Doesn't a 8.5% Muni sound kind of risky right about now? What if they default?"
Muni defaults are still very rare, extremely rare if you take out southern states.
I'm sure someone will post a list of muni defaults, but it is difficult to find one where people didn't get their interest, never mind losing any principal.
U.S. Postal Service to deliver antibiotics in case of anthrax attack.
US mail carriers to bring drugs in anthrax attack
| Reuters
zoom, zoom, zoom.... well, not so much
Ford is forked. They make their profit off of pickups and SUVs - not the smartest purchase in these times.
Does Ford still mean Fix or Repair Daily?
Bills comming out of conference rarely fail.
Misean, focus on the bill, not the procedure. This is no ordinary bill, there will be a full house vote in plain view.
So our energy should go into giving folks knowledge about the stupidity of the bill. JMHO.
I foresee decent business prospects for auto parts dealers, and as Cobradriver said in a previous thread, honest repair shops. It is remarkable how much money you can save if you do your own repairs on your cars. I've replaced brake pads, spark plugs, distributor caps, drive belts, lights, and a few other things.
ford makes some nice cars in europe, maybe if they let the european ford design the american lineup for 2008 things would have been healthier.
Outer Beltway:
You may do so and are encouraged to do so.
Please credit myself and Free Lunch, who wrote the initial piece I quoted at the beginning.
I don't think CR-the-man contributed, but CR-the-place should certainly be credited.
U.S. Postal Service to deliver antibiotics in case of anthrax attack.
m...151020820081001
Page Not Found | Reuters.com
PTDBD
More government/MSM fear mongering. Sigh...
suecris writes: Curlydan, didn't the automakers "only" get $25B? I know they asked for it to be doubled, but I thought they didn't get it?
Oops, thanks for the correction.
Gordon Browne "Your electronic money in our computer is safe."
http://www.dailymail.co.uk/news/article-1065453/Brown-pressure-reveal-details-1-9trillion-bank-bail-gamble.html
Please refer to the originals not to the CR reposts.
The original Tadeusz Kościuszko did not write that post.
The test of our progress is not whether we add more to the abundance of those who have much,it is whether we provide enought for those who have little. FDR
This is a SCAM and a POX on The American Tax Payer, and all about bailing "Foreign Investors".
We may be begging for Rice as our next Currency, if Washington doesn't go home and let the People in flyover figure it out.
"So if the senate tacked this onto a bill already passed by the house, does the house get to vote again? Or does the senate pass and then a committee rubber stamp it?"
The House will get to vote again on whatever the Senate passes.
Those of you who think you've found some defect in the Congress' legislative procedures are barking up the wrong tree.
Sylvester: Thanks much for the assist.
anonymous re muni bond funds
if muni rates keep going up then the amount you invested in the bond fund goes down.
long before any defaults hit you would be losing money, if rates go up more, as they have been going up.
so if you think the credit crisis is going to stabilize and rates stay at current levels, you could well.
If the crisis is resolved (hail mary historic record?) and rates drop, you'd make a killing.
but I suspect most here would think Muni rates have more climbing to do, and some imminent budgetary implosions coming.
CNBC hoping for a plung and agitprop about how this has to pass. Incredible. Welcome to 1936
My advice to the big auto companies: Build less cars. Build more buses.
NY munis at 8.75 are massivily overvalued
Imagine the deal you could get on an Excursion ... of course, you'd need your own oil well to keep it fueled.
Who is paying CNBC to be so one sided?
There is a reason I had suggested 3 weeks ago investing in campbells soup, Kraft cheese, and fuller brush company...
And low and behold ....
1 of 500...
Short ban to be extended.
Who is paying CNBC to be so one sided?
One Dope Dope
Who's your Daddy?...GE;)
Fred
NY munis overvalued at 8.75%? Nothing compared to the shit storm that is going to hit California, where real estate is worse and the state is hamstrung both in budgeting and in taxing. And it won't hurt california alone
the disaster on the horizon is making Osama giggle uncontrollably.
Extended in time or extended to more stocks?
Couldn't find anything about BOA and closings, but did find this (from 2006 about safe deposit boxes:
BELLACIAO - Homeland Security To Confiscate Bank Safe Deposit Box Contents - notepad
Probably still applies. Time to buy stock in safe companies...
Anonymous:
Thanks for the link...
That SoCal foreclosure alley video is really sad and frightening at the same time. Sad to see people lose their homes and their cherished posessions, but frightening to see that this might just be the trend going forward....
does fuller brush co still exist?
I remember them going door to door when I was a kid in the mid 1960's
I suggest Tanta Ubernerds on the removal of the uptick and removal of the 1:20 rule.....and how that helped to get from housing to where we are now...
Link for the short sale ban extension???
If anyone out there has access to the right data and some graphing skills, I think a chart of Median Income vs median new car price over the last 30 years would be fantastic.
Like someone further up the thread, I live in a working class neighborhood with luxury cars and SUVs in every driveway. 20 years ago everyone wouldve been driving a well used and paid off beater.
$50k a year households should not be driving Escalades. This whole country went nuts the last few years, now the bill has come due.
how does the manufacturing index compare to the great depression at this point?
also how can manufacturing go down by a lot if china manufactures most things now?
Latest version of Senate bailout bill
http://senateconservatives.files.wordpress.com/2008/10/ayo08c32_xml.pdf
I think my favorite section is 503: "EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN."
Who was it that said, "history doesn't completely repeat iself, but it does rhyme"?
Some light historical reading:
President Jackson's Veto Message Regarding the Bank of the United States; July 10, 1832
J shmoe,
Them and encylopedia's
2nd amendment rights must be protected?
I think my favorite section is 503: "EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN."
Latest version of Senate bailout bill
More pork please!
RE: the Jim Willie Fed bank holiday comment
Jim Willie's website is goldenjackass.com. Something about the name makes it less credible.
Damn! ...tags striped.
Here's the link:
The Avalon Project : Documents in Law, History and Diplomacy
FLL Renter,
Exactly, my consensus is that we are not declining economically, our credit is not tightened up... but that we are returning to a normal lifestyle... some will be tuning in their key rings and should enjoy the taste they got...
As far as credit... well thats what got us here to begin with, the prudent are buying on credit now.
A stoner roofer owned a 7-series BMW, a new truck, an ATV, and his girlfriend owned a Lexus. This was before I understood anything about the credit bubble.
I don't think "own" means what you thinks it means.
Sigh. The Senate appears fixated on propping up home values. Never mind the income isn't there.
We need leaders--not politicians or ideologues.
Jim Willie's website is goldenjackass.com. Something about the name makes it less credible.
LOLOLOLOLOLOL
Yes, read Jackson's message on the Bank. Also his 2nd inuagural speech about Cherokee removal . . . compare to Bush.
Then read Richard Hoftadter's The Paranoid Style in American Politics, and maybe also Anti-Intellectualism in American Life.
It rhymes very well with the present.
Steveo writes:
Who was it that said, "history doesn't completely repeat iself, but it does rhyme"?
Some light historical reading:
President Jackson's Veto Message Regarding the Bank of the United States; July 10, 1832
Why is the concept of saving up for a car with cash such a foreign concept?
Man, the wooden arrow lobbists got to them....
We're all Custer(ed) now!
Sorry can't find a link to the short ban extension. It was on CNBC a minute ago. I think it was Gasperino (sp?) reporting that the ban would be extended until the 17th.
rentersittingoncash writes:
Why is the concept of saving up for a car with cash such a foreign concept?
Foreign concept.. it's them damn furrners again! ARRR.
"http://corgiguy.gohds.net/?ch=1....RECLOSURE- ALLEY"
Terrible. I ended up crying. And the broadcaster ends by saying how "we would love to hear" how the economy is affecting you..........
JPM chart
Contained!
Why is the concept of saving up for a car with cash such a foreign concept?
because it's un-America
Their finance are will blow to smithereens soon and then the fun starts.
Welcome to Bush's new WMD ... the economy, sub-prime, short selling, stocks falling.
anonymous re muni bond funds
if muni rates keep going up then the amount you invested in the bond fund goes down.
long before any defaults hit you would be losing money, if rates go up more, as they have been going up
I am probably dense but I don't get what you are saying. Muni rates have definitely gone up and down but over the last 7 years the returns on the fund have varied from sub 1% to 3%. They are high now because muni rates have shot up. However, barring defaults or a lot of missed interest payments, I don't see how anyone invested in the fund from 1st Jan lost money.
Prospectus Express
In the Risks section, which "risk" explains your suggestion that further rising muni rates causes losses to existing investors?
"rentersittingoncash writes:
Why is the concept of saving up for a car with cash such a foreign concept?"
Because if you did, you'd have to admit you were poor. And could only really afford a much smaller car. You'd be a failure, a dweeb, not keeping up with the Joneses.
Or so the propaganda goes. 15 minutes of it in every hour of commercial TV every day.
Mount S&P 500 has been scaled today. What a view!
Time for the downclimb.
"I think it was Gasperino (sp?) reporting that the ban would be extended until the 17th."
The Gasbag has inside sources, as he loves to say. Was he hanging up the phone when he said it? He's so theatrical.
everything today is about the monthly payment.
You get a monthly salary, and forward it to various corporations that in return supply you with various trinkets or services.
saving up would deny those corporations the ability to double-dip - to get into the financing biz, which I heard was very profitable (up until the end of last year).
Anonymous
Muni yields go up, the NAV on the bond fund goes down.
Yield and price move in opposite directions.
If you buy a bond and hold it, you get your principal back at the end if there is no default . . . you might pay the opportunity cost of not getting higher rates, should rates rise, but you get your principal back (unless there is a default)
If you buy a fund, at some point you need to cash out of the fund, and then you get the NAV of the fund. The NAV goes down as yields go up; NAV rises if yields drop.
Porsche U.S sales down 42.5% - proof that crisis reaches the average man
"NY munis overvalued at 8.75%? Nothing compared to the shit storm that is going to hit California, where real estate is worse and the state is hamstrung both in budgeting and in taxing. "
The state budget may be a mess, but LA County had an 8% increase in property tax revenue last year. Prop 13 smooths it out.
Anonymous writes:
Here's a brutal video of how BAD Southen Ca housing market is now...
http://corgiguy.gohds.net/?ch=1....1....RECLOSURE- ALLEY.
This is terrible. And it shows what pigs we are to just throw that stuff away. There are people with very little that would love to have that stuff.
I am disgusted by the U.S.
Anonymous | 10.01.08 - 12:50 pm | #
You ain't kiddin'!
What a waste of money, time, resources, you name it, wasted.
Disgusted isn't the right word. I am just pissed. Heck, if you know that the time is up, donate that stuff. Heck, it wasn't like they did not know.
"Gee, Barb, let's get the kids and run from the house. We can't make the payments anymore!"
This housing fiasco can be summed up by what a woman told me about 7-8 years ago.
"All this is is just adolescents with mortgages."
She was so right. Look at that one guy in the video paying 399K for his house. I hate to be judgmental, but could he pick out old cue ball or Bernanke-panky from his neighbor? Just wondering.
Short selling:
The ban, which was originally scheduled to expire Thursday, could be extended at least until the third week of October, according to SEC spokesman John Nester.
The idea was to ban the short selling while Congress debated the bailout plan, he said.
Mr. Nester declined to comment on whether the fact that the bailout plan remains unresolved 12 days after the short-selling ban was enacted will lead to an extension of the ban.
The SEC hasnt made an official decision as to whether the ban will be extended beyond Thursday.
Hedge industry grapples with short-selling ban - Investment News
The problem with America is the mainstream media doesn't have news anymore but opinions of events.
The infotainment society.
The motto must be "Keep the dumb, dumber but entertained"
57 channels.. and nothin' on.
This is simply the endgame of a decade long trend of raiding Americans' car equity to accelerate sales. Once upon a time your old car was the downpayment for your new car, and many Americans had thousands of dollars of equity to trade in. The rise of leasing was the first step of reducing this, but in recent years over 100% LTV lending took off, leaving many customers with negative equity before they even drove off the lot. There's now no car equity left to raid.
What I like about the current market is how someone painted the tape on Wells Fargo (WFC) a few days ago, which now disguises the fact that basically they're hitting new all-time highs in the middle of this crisis...
@NY Munis - if it were a bond fund, the risk of loss would be interesting, but the chance of gain would also be interesting. But this is a muni money market fund. The risk is that if enough people redeem their securities in a falling market, the fund may not be able to pay everyone at $1.00/share (without some kind of intervention). Fortunately the Fed is offering to insure all money market deposits as of 9/19, with funds to decide whether to participate by 10/8. See details on (e.g.) Vanguard.com.
I am holding onto my California muni money market fund, enjoying the yield spike, and trusting that someone else will backstop me if the muni market seizes up. After all, if they're going to be providing moral hazard across the board, why shouldn't I get my fair share?
Sigh...
Too bad it's only 5% of my capital since a large chunk of the rest is earning ~nil at TreasuryDirect...
I gotta feeling that despite the best efforts of all involved, somehow in this fiasco the grim reaper is going to hit every asset class.
Absolutely agree with Nemo... what gets underfunded if the giveaway bill gets passed?
$700 billion invested in alternate energy technology, especially for personal transportation, has the potential to pay back by saving $700 billion - the amount of energy we pay to import every year. Plus create jobs and clean up the air. That's a far better deal than covering sunk debts for banks.
thanks Steveo I will have to read it a few times
"She was so right. Look at that one guy in the video paying 399K for his house. I hate to be judgmental,"
Then dont be! The guy had a wife and baby and was massively underwater, apparently lured by his accountant and yet was honourably continuing to pay his mortgage.
What aspect of integrity dont you understand? Be who you say you want to be please.
Absolutely agree with Nemo... what gets underfunded if the giveaway bill gets passed?
Right now, the working capital market. The restrictions on Congress from increasing the debt are long-term. Long-term, probably out of the Department of War; we're not going to be able to afford that anymore.
wisdom seeker
muni bond funds and tax exempt money market accounts are different beasts, though latter are also muni investments.
both scare me too much these days.
Well, at least the American automobile manufacturers can burn away another $25-50 billion before finally filing for bankruptcy.
yeah it is a muni money market fund and they endeavor (but do not guarantee) to maintain nav at $1.00) .. so now i understand your point as it relates to all bonds, but as a money market fund i'm not so concerned.
worried in Finland writes:
"She was so right. Look at that one guy in the video paying 399K for his house. I hate to be judgmental,"
Then dont be! The guy had a wife and baby and was massively underwater, apparently lured by his accountant and yet was honourably continuing to pay his mortgage.
What aspect of integrity dont you understand? Be who you say you want to be please.
worried in Finland | 10.01.08 - 1:41 pm | #
Sorry, but not buying it. When this guy signed up for this monster loan, did he think he would make 360 consecutive timely payments at $3,100/month?
Good grief at that cost, he should be netting $9K a month. What does he do for a living? I can ask, can't I? This is why we are in this mess. Buyers didn't do the math and we can argue all we want about the failure of public education all we want.
Still doesn't make sense. If you don't understand the 200-page mortgage doc, then hire a good lawyer for 300 bucks to decode it for you.
People signed up for these loans and now claim it was the accountants fault or the LO's fault.
Get a grip.
I am disgusted and pissed. Man uop duhmerica. Stop playing the blame game. You bought at basically $400K and someone is going to be your neighbor at $189K or lower. Wake up.
Bruce Springsteen - 57 Channels (And Nothin' On) Acoustic
YouTube - Bruce Springsteen - 57 Channels (And Nothin' On) Acoustic
Well, at least the American automobile manufacturers can burn away another $25-50 billion before finally filing for bankruptcy.
Of taxpayer money.
They called Andrew Jackson "jackass" so he took it as his mascot. It become the Democratic donkey.
Fixed Or Repaired Daily
CR, how does this process end? Will the houses sit and rot, or get repriced at 150G?
WOW!!! Thank you for posting that foreclosure video link. Unbelievable waste.. and spray painting lawns green?????? WOW
GE Held
"Jane Quinn was on The News Hour last night saying that one thing everyone could do..."
I saw that; why does she even get airtime? Last year, I recall her telling people to cover their credit card debt by taking out reverse mortgages. Brilliant.
Add on from previous thread:
One thing to add about conference committees and bills:
The conference committee can add things that were not in either bill and send it back to both houses for passage. That is how concepts such as the REAL ID Act, which failed a vote in both houses, got passed when they were added back in to unrelated conference committee bills.
So don't watch what the Senate passes--watch what the conference committee adds to the bill (or takes out), and bet that the conf. committee bill gets rushed through even faster than the original bills.
maybe that they are primitive pieces of shit compared to, for example, a BMW has something to do with it?
joe shmoe is right talking about bond funds. Bond funds are not at all like purchasing a bond outright that you can expect to pay you 8.5% interest on top of a stable principle value.
Some people don't like bond funds, but there have been years when they have made good money for me and effectively counter-balanced the movement in stock funds. After 911 when Greenspan lowered interest rates, this long-term treasury bond fund that I was in did very, very well. With Fed rates already low today, can't expect that to replicate.
The NY muni bonds seem viable for us New Yorkers because taxes are high in NY state and city. Outside of NY, purchase makes much less sense because you don't get the full tax break and it's virtually certain not to earn 8.5% in the manner that some think. With Wall Street industries imploding, I am keeping some money in municiples (a) for the tax relief they offer, (b) diversification, (c) taxable money markets are offering even less than what I expect to net from this and (d) because I am not knowledgeable about trading, buying and selling like you guys. I am playing like a rather dumb squirrel that puts an acorn here, an acorn there all over the yard and hopes to find a few of them worth eating some time next year, but really don't know which one it will be. God willing, the squirrel does not wind up as road kill.
Ford is not the worst of them.... a complete list is posted at Big Picture.
Overall lowest auto sales since 1993.
"The guy had a wife and baby and was massively underwater"
OCDan is right. People with median incomes at best jumped into overpriced RE expecting to ride the appreciation train. The train failed to deliver all the goodies, so they're walking, leaving the debris behind.
The IE is/was filled with folks who could have maintained some dignity and financial stability if they had remained renters. And these deadbeats on now leaving this mess on the taxpayers' dime.
No sympathy for these schmucks, none.
$50k a year households should not be driving Escalades. This whole country went nuts the last few years, now the bill has come due.
I see new-ish Benzes and BMW's up and down the local run-down apartment complex. I guess they're on a lease program. It's ridiculous though.
CR, how does this process end? Will the houses sit and rot, or get repriced at 150G?
gerald
GM/GMAC/FORD bonds are being dumped in mass quantities. They are going for 25 to 56% yields, starting from 2 weeks of maturities.
What are the chance that these companies default on their loans in two weeks?
The next run is on car makers?
The auto industry gave to the consumer exactly what they wanted. Big SUV's. Until gas prices went up.
The housing industry gave to the consumer exactly what they wanted. Big houses with liar loans.
Generally in the US of A. The herd gets what it wants.
I hope the herd does not get what they want this time. Which appears from this board is that the congress should not vote on a rescue plan to place stability in the financial markers.
How many banks have to fail before the herd gets the message that this is a real crisis today. Hmm....... 41Cadillac
@One Dope Dope
NBC and CNBC is owned by GE, who is represented by ... you guessed it -- Goldman Sachs. Like you I wondered why do they keep pushing this bailout as a last resort? So I did some research (always follow the money) and found the financial relationship between GS and GE.
"You bought at basically $400K and someone is going to be your neighbor at $189K or lower. Wake up."
Please explain to me how this man was supposed to have anticipated that half the homes around him were going to foreclose, and that the value of the home he purchased at $400K would drop to less than $189K.
And while you're at it, please explain to me how the millions of others who purchased homes during this decade should have anticipated that their homes would also soon be underwater?
And in explaining this to me, please take into consideration the fact that many, many of those purchasers did NOT buy with a sub-prime loan, and did NOT buy in a sub-prime neighborhood. A person who put 20% down and took out a 30-yr fixed-rate mortgage and bought into a higher-income area might still be looking at a 35% or more drop in value -so far!-and have an underwater mortgage, despite being what would normally be considered "responsible".
"The auto industry gave to the consumer exactly what they wanted."
The auto industry deliberately built that market through advertising and pricing stategies because they felt it gave them a profit margin edge over foreign manufacturers. It was shortsighted, against national interest and may be the death of the industry.
There is so much crap that needs to be cleaned out in this country!
Considering the state of their corporate bonds, FORD might stand for Found On Road Dead.
"oh brother writes:
Please explain to me how this man was supposed to have anticipated that half the homes around him were going to foreclose, and that the value of the home he purchased at $400K would drop to less than $189K."
oh brother, houses like those were selling for $120K just a few years before. Are you saying that people who spend hundreds of thousands of dollars shouldn't spend enough effort to understand the right price for what they are buying? Then they should be renting.