This blog has never been a cult. To me that sounds like a put-down from someone who is trying to justify why the MSM ignored these issues.
Like many others, I found this blog through CR's posts on Angry Bear. The first post I encountered was on virtuous and vicious cycles. Still one of the most brilliant insights in modern macroeconomics. It's hard to remember now, but anomalous housing prices and trade deficits were a big mystery at the time. Go CR!
I just want to say how gratifying it is to see Tanta remembered in the media. It is somehow all too rare for selflessness and brilliance to be remembered, and I'm grateful that her contribution to humanity is appreciated. Best wishes to Calculated Risk and commenters.
It is heartening to see so much recongition come to Tanta, because the great ones are really never recognized in their time. I've really enjoyed looking back over the Tanta archives, CR, thanks for that. What a resource. I think we are obviously living through really significant and unprecedented economic times, and these entries of hers are really going to be part of the record. My comments will always be on the low end, mostly unhelpful and not meant for serious consumption. I'm not very knowledgeable and don't pretend to be.
LA Times BK, Rocky MTN news for sale, Tribune Troubles : it seems to me that blogs like CR ( and many others, obviously) have gone from zero to 60 in a matter of a few years, and have eaten the MSM newspapers breakfast, lunch, and dinner. Couple the real-time insight with the loss of revenue due to classified ads that have gone to eBay and craigslist and it shouldn't be a wonder why there are so many coming BK's/shutterings in the newspaper world. Most of my news/info comes off about 10 blogs, twitter searches and AP/UPI/sky wires. Free on the tubes : tough to compete for the once a day newspaper or 6 o'clock news.
Full disclosure : My local paper is the MN Star Tribune (sigh), however I have a paying subscription to the print WSJ. I sometimes read the McPaper on the aeroplanes, or when I stay at a Holiday Inn Express.
Sports Guy Lafleur - Agree. The MSM model of reliance on car companies and real estate has proved to be their failure. Meanwhile blogs like this one break news 24 hours a day, provide insight from knowledable experts (host and commentors) and you can filter the usual spin...MSM is dead, long live the bloggers!
It's too bad we could not have been a little more responsible as a country, avoided this financial meltdown, and invested this new-found debt capacity in cancer research.
London-based GFC Economics is making a frightening prediction: By spring 2009, the United States could be facing more than 1 million layoffs every successive month.
Sunday morning, during an appearance on Meet the Press, President-elect Obama cautioned Americans that the crisis would only get worse before it begins to ease. He also outlined a new stimulus package some senior Democrats have said could cost as much as $1 trillion.
David Frost, director-general of the British Chamber of Commerce, paints a grim deadline.
"The worry is that next year the job losses will be just horrendous," he said. "All sectors are taking the hit. In the middle of the year it was construction and estate agencies. Now it is services, the automotive industry, retailers. Firms are waiting for Christmas and if they can't see any improvement they will cut their payrolls."
In our current financial quagmire, there have also been those who had the wisdom to sound alarms before Rubin, Summers or Geithner did. Among them were not just economists like Joseph Stiglitz and Nouriel Roubini but also Doris Dungey, a 47-year-old financial blogger known as Tanta, who died of cancer in Upper Marlboro, Md., last Sunday. As the Times obituary observed, her first post, in December 2006, took issue with an optimistic Citigroup report that maintained that the mortgage industry would rationalize in 2007, to the benefit of larger players like, well, Citigroup. It was months before the others publicly echoed her judgment.
Bond Girl: So many 'rules' have been broken in 2008, we can widen our expectations without feeling foolish. Expanded cancer research --- and just about any other intelligent use of money --- may be on its way.
Remember folks: Just because the sky IS falling, that doesn't mean we're headed into the darkness. It is likely that this new Depression will bring out the best in people.
After all, we did elect a president who is smart, classy, and appears to care about public service rather than profits.
Uncle Billy Snorts writes:
Check it out. Chinese citizens scouring the country looking for deals:
Didn't the Japanese do this in hte 80's-90's? Then took it in the shorts on resale?
Agree with UB Snorts. A few hundred Chinese investors are in no way going to sop up all the current and future inventory in SoCal much less the country as a whole.
---- Hawley Smoot writes: \tAfter all, we did elect a president who is smart, classy, and appears to care about public service rather than profits. \t Hawley Smoot | \t\t\t\t12.07.08 - 8:47 pm ---- Sarcasm or optimism? Either way, you had me until "...rather than profits".
It is definitely too soon to pass judgment on Oclinton, but to make such a claim about "service over profits" is hellaciously premature...? naive?
With the scare the cliff-drop in housing prices, the huge overhang of unoccupied houses, and the prospect that future appreciation may not even keep up with inflation, I can't see how even the 4-5% mortgage interest rates will get housing moving again.
The effects of the bubble may be 7-15 years, or even generational.
Why would anyone even consider housing as a potential good use of capital anytime in the next five years or more?
What, then, will the next stage of the downturn be about?
It is likely to revolve around the worst slump in worker pay since you knew this was coming the Great Depression.
This slump wont be anywhere near as bad as the one during the Depression, but it also wont be like anything the country has experienced in a long time.
I'm sorry to say, but Tanta never did get stated income right.
A very successful dentist or architect who files as a sole proprietor will apply for a stated income personal mortgage, even if that person has employees, pays business rent, has a CPA and buttoned-up books.
There is simply no accurate and reliable third-party verification possible of sole proprietor net income. The Schedule C speaks and you have to take it at face value -- i.e., stated income.
The US better send some AWACS planes to the area to keep the Pak/Indian planes attacking each other from being interferred with by the Israeli/Iran planes swapping blows.
Hell, and if it gets real heated, add in the US, Russian and Chinese jets protecting their 'interests'.
Rich: Why can't they show their bank statements (or any other statements the lender needs to qualify them?)
Point is moot to me though anyway, because if the lender is not allowed to pass the risk down the chain of bagholders, it's their problem and the problem of their shareholders.
I let me WSJ subsc end. Jason called to offer $99 year rate. I declined. I can walk over to Bush's new home on Daria Place and read it for free now. Get a nice cup of coffee from Laura.
There is simply no accurate and reliable third-party verification possible of sole proprietor net income. The Schedule C speaks and you have to take it at face value -- i.e., stated income.
Btw, gun people out there... are firearms being hoarded in the United States? Friend reports he went to go buy a home defense shotgun, but the only thing available was a cheap turkish made gun. Merchant said that the warehouse was out and so were their distributors. Same story with the shells. Any way to track purchases of large lots of firearms? Does the federal govt. report this info?
Damn shame the arms manufacturers are making a killing on all the fear.
Look, these people were probably understating their income to the IRS, so this was the only way they could get a loan. The bankers were essentially winking at tax evasion.
Of course, this opens the door to all sorts of liars..
"Federal securities regulators won't suspend the mark-to-market accounting rule that banking lobbyists and some conservative Republican lawmakers blame for exacerbating the credit crunch, according to a person familiar with the matter.
Instead, the Securities and Exchange Commission will discuss ways to refine the rule's application, this person said.
The agency is completing a study on mark-to-market accounting ordered up by Congress as part of the bailout bill. The study, due Jan. 2 and still in draft form, likely won't include new guidance on how to apply the accounting rule, ..."
And there I was thinking Paulson had gone to Ch for the Strategic Economic Dialogue to hear how the Ch had gotten through the 98/99 coastal CRE and RRE bust, at the same time as the Asian financial crisis.
But there seems to have been some jawboning on currencies and investment positions?
As a young person, I feel fortunate to have found CR and the community of smart, good-humored and extraordinarily well-informed folks who contribute here.
My instincts have long told me that things aren't right. Looking to find out how and why it got this way, I wound up here somehow about a year ago. I don't talk much, but it's fun and educational for me to just hang out here and listen.
I'm not trying to make money. I'm just trying to witness history and deconstruct some lies. It's excellent to have such great company while doing so.
H.S., I too am (and have always been) skeptical of Obama, but I like your optimism just the same.
The Australian government delivered more than A$8 billion ($5.2 billion) in cash payments to families and pensioners from Monday and urged people spend the money to help the economy avoid recession.
I don't think "infrastructure spending" is going to fix this. One of the most significant (and least discussed) changes during the Great Depression was a shift from a 48-hour workweek to a 40-hour workweek.
In my opinion, many of the current problems are about distribution of work, not creation of work.
Central Bank Cash May Discourage Money-Market Lending, BIS Says
By Kim-Mai Cutler
Dec. 8 (Bloomberg) -- Money markets may remain frozen if financial institutions become reliant on central bank cash, discouraging them from lending to each other, the Bank for International Settlements said.
Interbank lending has not resumed, and money markets remain dysfunctional despite increased central bank intermediation and state guarantees, Francois-Louis Michaud and Gert Schnabel, analysts at the Basel, Switzerland-based BIS, wrote in a report published today. Increased central bank intermediation may in some cases weaken banks incentives to resume their intermediation function. Central Bank Cash May Discourage Money-Market Lending, BIS Says - Bloomberg.com
I think blogging is a democratized academia. Pretty much anybody can address any issue; but they must compete with others who actively and aggressively criticize them. To succeed in this environment, one must have both ringing rhetoric - to make people read - and a solid factual basis - to survive the pounding criticism. Tanta was superlative by both measures and that's a lot of why we miss her so.
Like academia, blogging tends to provide a good approach to the truth and often can generate broad consensus on very hot issues. It's a far better information channel than mainstream media because the spectrum of opinions is much broader, producing more acute criticism, and the response time is far faster, producing faster results. The advantage is particularly acute in more technical fields, where journalists cannot realistically get "up to speed" to deal with the problem du jour, but blogging on the subject tends to attract highly knowledgeable specialists with deep understanding and background.
The contrast between the bloggers, who have been out in front of the economic crisis, with a small vanguard years ahead, and the MSM, which is still not up to current issues like deflation, massive corruption, the shipping collapse, or the need for fair pricing of assets like housing, is stunning. Why would anybody want to read the MSM now for econ issues when you could just scan CR, or for that matter almost any of the sidebar blogs? It's like getting next March's paper today.
I saw a story on the news about how people were rushing to stock up on guns before Obama banned them altogether. Of course, the people advancing this theory and urging people to buy were gun dealers, so make of it what you will. Kinda reminiscent of realtors, actually. "Buy before it's too late!"
Oil Contango Pays Most in Decade as Shell Holds Crude in Ships
By Robert Tuttle and Alexander Kwiatkowski
Dec. 8 (Bloomberg) -- In the worst year ever for oil, investors can lock in the biggest profits in a decade by storing crude.
Traders who bought oil at the $40.81 a barrel on Dec. 5 could sell futures contracts for delivery next December at $54.65, a 34 percent gain. After taking into account storage and financing costs investors would earn about 11 percent, according to Andy Lipow, president of Houston consultant Lipow Oil Associates LLC. The premium, known as contango, is the biggest for a 12-month span of futures since 1998, when a glut drove crude down to $10. Contango Pays Most in Decade as Shell Stores Crude (Update4) - Bloomberg.com
JimPortlandOR writes:
With the scare the cliff-drop in housing prices, the huge overhang of unoccupied houses, and the prospect that future appreciation may not even keep up with inflation, I can't see how even the 4-5% mortgage interest rates will get housing moving again.
Fair Economist, it also helps to be independently wealthy or at least financially secure because it pays even less than mainstream media journalism, which is really saying something.
I'm not afraid to be wrong, but I tend to follow this rule: you can't get in trouble for something you never said.
Like our friend Lefty here. At least the toothbrush in question belongs to your wife, who is not merely your roommate! Thanks for spiking the Kool-Aid for us.
As in life, it's just easier for me to pay attention to the ones who pay attention themselves. Humorless morons are distracting but forgettable.
First time posting, been lurking since early this year. Like many others, I was looking for information on the economy, and CR and Tanta were providing the real deal. Especially Tanta with her entertaining writing style; she demonstrated her understanding of the mess through her ability to explain it to a layman like me.
I don't remember exactly how I found this blog, but I regularly see links to here from other blogs which are not necessarily about economics. Atrios regularly links here, as does an astrophysicist whose blog I regularly read (and whose name I have occasionally seen in comments here). Other economics bloggers I regularly read include Barry Ritholtz and Brad DeLong.
I knew that something wasn't quite right with the housing markets, but I didn't know what questions to ask. Had I known in 2005 even a third of what I know thanks to this blog, I too would have seen the disaster coming.
Thank you again, CR. And though I'm too late with this, thanks also to Tanta.
just heard about this blog and love what i've seen so far. can i ask why no politician seems to understand that the economy is in the tank because of the massive redistribution of wealth upward (as the republicans, see: herbert hoover and george bush) have always done. this economy will continue to worsen until the money starts flowing down from the people who won't spend it to the people who will.
sanity claus, we get some excellent work on this blog without pay. A lot of people care about truth, and will talk about it eagerly without renumeration. One of the grotesque parts of the Homo economus fallacy is the idea that people only do good things if paid.
Certainly we get enough between-jobs/part-time/self-supported effort here to beat the pants off media for this crisis. That may say more about truly profound failures in the media than a super-optimal operation of blogging, but there it is.
--- Counterpointerwrites: But not a dang soul responded to my shipping stuff two threads back. This is an emergency. C \t Counterpointer | \t\t\t\t12.07.08 - 9:39 pm --- Link or repost it.
I've been following the shipping situation (e.g. BDI), and any new news or insight is muchly appreciated
Broward, Do you subscribe to any of WSE's news services? I let my WSJ/Barrons subscription lapse. I probably read 3 WSJ stories all year because of their lack of timeliness.
Counterpointer- if it's really important, put up a blog of your own, put up a post, and refer to it periodically. The rapid-fire thread system here is good for discussion but bad for focusing attention. A thread can only handle 2 or 3 ideas - the rest must wait for another.
But not a dang soul responded to my shipping stuff two threads back. This is an emergency
Baltic Index collapse happened a while ago, it's a matter of degree now. Was it you that posted the rail shipping numbers?
Again, what's surprising is not that they're down 30%, but that they're not down more.
I suppose I'm not as shccked as many others, I've been expecting this for awhile. It's not quite how I envisioned it but... close enough.
I know I sound repetitious but I'd really recommend reading "The Great Reckoning", it's a 600-page intro that covers an amazing amount of relevant history. A corollary of Davidson's "fading hegemon" theory is that the US should be relatively better off than most of the rest of the world, particularly Asia.
Broward, Do you subscribe to any of WSE's news services? I let my WSJ/Barrons subscription lapse.
I subscribe to nothing. In 1996, the Rocky Mountain News called to push a subscription and my ex-wife said,
"We get all our news from the Internet".
The guy laughed and said, "Oh, right, how reliable is that?"
More reliable than YOU, chum. I had to dig for my own source information about the Waco Fire, the media censored all KINDS of stuff. Likewise, many people can see the same myopia now during The Crash.
I hope the Tribco BK means Cuban gets the cubs. Sheer desperation for cash on the part of Zell (and Cuban's willingness to fork over a quarter billion more than the next guy) is the only thing that would let that happen in the Seligverse.
Just imagine if we had the likes of TANTA in the treasury or FED. The world would be such a different place. Well maybe not, they probably would have come up with a reason to let her go. Sad that we have such talent and knowledgable people in this country and what we end up having running thins in both business and government comes from the bottom of the barrel. Just sad...indeed. America has yet to show off her talent and innovative thinkers. They are here. I am just a twit who gets to accumulate little nuggets of knowledge from those who post here. Combine that mustard seed of gained knowledge with old fashioned common sense and you have one dangerous consumer...I mean saver. TANTA 4 EVER!
Aww, c'mon stdfs, we're a network. You'll set off Broward with those kinds of comments. Then I'll get all linguisticky in response, and we all know how that wee concerto plays.
I think PJ Harvey must must be a leading indicator, she's now positive after years of the alternative:
Here's an idea for bailing out companies like Citibank. Instead of the government "loaning" them money, their credit card customers with 0 balance loan them money into their credit card accounts. They carry negative balances, and they earn 1/2 of the base APR back (not 0% offers and a universal minimum APR is imposed). It's FDIC insured and interest is made non-taxable for a period of time. At least this way, responsible savers get something out of it- or a way to break even with the tax burden. This will encourage saving, and it will give power to the people.
Fair Economist, I don't disagree about that here (or several other places), but I will miss the newspapers when they die. Television has no reporters, just producers that translate the AP wire and newspapers into scripts, and people that go on location to read them. That's where the vast majority of the country gets it information, and that well will just become dryer.
Expertise alone will not necessarily produce investigative journalists with the time and resources to break stories inside the government, and whistleblowers without backing can get stomped if they ever have the bravery to come out.
Of course, the newspapers themselves have less resources to develop these stories, including money to pay senior personel with working knowledge of their beat.
Plenty of newspaper writers worked for good too. They certainly never made any money.
I see CR as a gathering place for a junta of future warlords. Highly capable, unafraid of risk and able to admit failure (and learn and grow from said failure).
As well as being smarter than J6P, I "think" most of us profit and lose by action and applied theory, not merely spending time mired in conjecture.
CR's posts are invaluable, but the comments are a Phase 2 if you will, and often eclipse the original post.
Kind of the best of American post-secondary education, but with de Vincian twist.
As far as the 'bagholder', the bank's mortgage application strategy in the 'credit bubble' days was specifically NOT to ask for income documentation and leave it to the borrower to just put in a figure. That's not true in some cases. There was a pre-application form sometimes just one page that asked for income amount to be filled out by the borrower.
If the borrower told the truth about income, that original form was destroyed by the lender and then the mortgage representative would then fill in the amount that would make it work.
The banks knew what they were going in leaving the borrower as the 'bagholder' but it was tricky on the part of the banks paper shuffle and shredding of loan docs filled out early by the borrower.
I've talked to mortgage reps about this.
EHP went on hiatus after the Great Canadian Flame Wars, don't know about Misean. I think we'd be able to tell if they just changed handles, they're fairly distinctive.
I called Tanta an 'ultra liberal' this weekend. A number of people pointed out that I was wrong.
Maybe I was.
I don't claim to be in anyway always right. I just call them as I see them.
She was a joy to read though because she had the expertise in her field that I didn't have.
That can be both a blessing an a curse
though. Long time ago I was offered a job as a 'real estate appraiser'. I demurred. You can't walk in dirt and not expect to get your feet muddy. You, can't wash your hands in a muddy stream and cry foul when people see the water is polluted.
And in 3 years Britain will be overtaken by Estonia
Britain's economy overtaken by France, new figures show
Britain's economy has been overtaken by France and could fall behind Italy's next year, according to leading economists.
I remember Countrywide in late 2006 doing a lending presentation and their mortgage rep saying repeatedly to bring buyers in and tell the buyer to not bring any income documentation and/or tax returns for the mortgage appliction process.
sanity clause -providing data is an important function. Blogs currently work from government or other statistics, or from personal experience from non-anonymous bloggers. There's certainly a class of investigative reporting that blogging doesn't do well, although blogswarms can be impressive.
I think the way this will have to be addressed is with more extensive public information a la Google Street, public webcams, and online access to governmental records.
Counterpointer - dang, that's a hassle to be partially gagged. The way the current legal system restricts online free speech is something else that will need to be addressed.
The Raw Story | In racially exclusive neighborhood, residents worried Bush will make it a 'target'
Bush's Dallas hood had a nasty race covenant until 2000. (These are common in Texas and my own Houston hood had one still in place when I moved there in 1985 but it was quickly amended and deleted unlike Bush's hood where it stayed on the books until 2000 apparently. However, the City of Dallas which includes this hood has enforcement rules in place outlawing discrimination based on race, sexual orientation and other factors.)
"Until 2000, the neighborhood association's covenant said only white people were allowed to live there, though an exception was made for servants.
Enacted in 1956, part of the original document reads: "Said property shall be used and occupied by white persons except those shall not prevent occupancy by domestic servants of different race or nationality in the employ of a tenant."
ronfromnewhampshire writes:
just heard about this blog and love what i've seen so far. can i ask why no politician seems to understand that the economy is in the tank because of the massive redistribution of wealth upward (as the republicans, see: herbert hoover and george bush) have always done. this economy will continue to worsen until the money starts flowing down from the people who won't spend it to the people who will.
Well, 50% of the politicians might, but unfortunately not everyone agrees with you.
What you are witnessing is the failure of managed markets (capitalism and communism are BOTH managed markets) to react to multiple input variables.
Your position, while obviously left leaning, is not necessarily correct 100% of the time. Neither is it incorrect 100% of the time. Not all options work or don't work 100% of the time.
You don't get to install a "perfect" system and neglect the largest variable of all, human greed.
You lose (or at the very least will be very disappointed), every time.
With all due respect to the newspapers (and they deserve respect), some of them also deserve to go...
The opinion columnists at my paper haven't changed for over 20 years. Same two guys (one's been there for 40 years), same hobbyhorses, and they are just getting older and older. The paper splurged on hiring a fairly good light humor columnist a few years ago, so I guess that's where the budget went. This community desperately needs a (serious) younger viewpoint, but the editors seem to believe that the only stuff young people want to read is music and entertainment related.
It's not all about crushing pressures of the ad industry or new media... it's also about them not wanting to get out of their comfort zones.
I am an appraiser who successfully avoided getting dirty. My cleanliness has caused my poverty. I will happily walk barefoot because I still have my feet. The others will be kneecapped shortly and will not ever walk again.
I guess two years from now if we still have electricity some here who have nothing better to contribute will be debating if steel toe bunny slippers were a type of liberal apparel reserved mostly for the terminally ill. Lets leave poor Tanta with some hard earned respect guys. Others read this thing.
All I can say over and over again is "God bless her". I'm an old P&C underwriter. I've seen the same sh*t for years. I mean the feeling that your approach, your philosophy, your business plan is better, will always hit plan, etc, etc, etc. Christ, if I had a nickel for everytime I saw an old mistake being repeated again, I could bail out the country.
As to newspapers, I am a regular reader of the Financial Times. I find it a first-rate read six days a week, with lots of fascinating news I do not find elsewhere (although I no longer see the WSJ or IBD), and lively commentary. Moreover, they print my letters to the editor!
In addition, the FT has excellent painting, theatre, dance and classical music/opera criticism from Europe the UK and the U.S. The arts stuff appears every day, and is head and shoulders above anything in the WaPo except Anne Midgette. Their recent listing of Christmas book recommendations from their staff was awesome, even though their admiration for El-Erian is to my way of thinking somewhat excessive.
I've got my fingers crossed that The FT survives as a print medium, because I love to get ink on my fingers while sipping my coffee each morning but Sunday.
"I think blogging is a democratized academia. Pretty much anybody can address any issue; but they must compete with others who actively and aggressively criticize them.
To succeed in this environment, one must have both ringing rhetoric - to make people read - and a solid factual basis - to survive the pounding criticism.
Tanta was superlative by both measures and that's a lot of why we miss her so."
Well put.
This part is the key, I believe:
". . . but they must compete with others who actively and aggressively criticize them."
Rich takes on Tanta over stated income above -- even now she's taking shots.
And that's not a criticism of Rich. He's more than earned his keep here. That's what he and the other quality readers do: push, challenge, propose new angles.
CR and Tanta, it seemed to me, welcomed the criticism.
It wasn't like an appraiser would always actually show up at the house under a purchase contract when there was the trusty automated appraisal based on sq.ft. Automated appraisals were great for HELOC applications also.
The Boston Globe article nicely recognizes the growing importance of blogs. We're witnessing a rapid evolution of a new mode of communication. Readers and posters on this blog have not only been part of history, we've made history. Pat yourself on the back, CR.
I guess two years from now if we still have electricity some here who have nothing better to contribute will be debating if steel toe bunny slippers were a type of liberal apparel reserved mostly for the terminally ill. Lets leave poor Tanta with some hard earned respect guys. Others read this thing. FFDIC | 12.07.08 - 10:20 pm | #
There's something fundamentally wrong with labeling Tanta as an "ultra liberal" or anything else. Regardless of your beliefs, she (like CR) provided facts, background, and insight. She enriched a debate that could no longer be simply a tribal battle of received wisdom. I put a lot of stock in people who truly add to the debates.
It's still kind of hard to believe this whole credit bubble was allowed to happen with all the early warnings of doom especially on the bubble blogs. The legal 'discovery' process about how this all happened or was allowed to happen should be interesting.
Fair Economist - thanks for the recognition. It's simply the way things are. It's a way of managing a difficult internal volume of information environment, and its sec'y. Usual sheet. I'm used to it.
Anyhow, turns out the Wiggles have got it right:
Is he a rooster
Or a PIRATE
Well, I just don't know
Quack quack quack quack
A-doodleydoo.
Rich,I Disagree with your criticism of Tanta's understanding of "Stated Income" Loans.She differentiated between Stated loans and "Exceptions" for a reason.Self employed persons and persons who had unusual income streams or lots of writeoffs traditionally got loan "exceptions" which went to a senior underwriter who understood how to measure risk."Stated Income" especially "W2 Stated" programs were designed to promote fraud and offload the risk onto the borrower.reread Tanta,she was quite clear about this.
I had thought you an informative source of information but now I realize you are just an embittered ex employee fired for reasons I don't wont' to explore.
Given the state of the economy, I would not use the F.
What will fix it Broward Horne? Do you have any ideas? Or Are you just a nay sayer?
I challenge you for one positive suggestion. Cisco Kid | 12.07.08 - 10:38 pm | #
To paraphrase Mark Ames, identifying a problem doesn't obligate you find a solution, especially if the problem has no solution. That said, how about ending the wars and cutting military (I refuse to use the word "defense") spending in half?
Breakout, That railfax thing is scary, but interesting.. Thank you for the link. Would you happen to have any knowledge of how rail traffic generally correlates with economic activity?
Cisco,
Broward is saying that NOTHING is going to solve this problem right now. That is a perfectly valid viewpoint. He does not have to propose a solution.
I'm going to take tomorrow off. I can do that.
Rich has about convinced me I should buy gold. I think electricity is a better option but I may buy 500 shares of KGC.
A BK judge ruled earlier this year that lenders could not have a bk set aside on the basis of a fraudelently stated income because the lender did no underwriting (Due Diligence).he ruled that "Stated Income" loans were purely Collateral based and the borrowers representation of income was not material to the decision to grant the loan.Or maybe the lender might have used the T4506 for something other than filler in the file...
If I was Obama I would solve the USA problem by :Legalize Pot , Free up the prison system , Use the by product Hemp for Biofuel , bring troops home , Stop congress from spending more money , Change the tax code , cap lawsuits , Abolish all lobbyist , stop bailing out the banks and start lending with a new bank, bring back manufacturing ,get us off of over seas energy , stop corn ethanol , bring down medical cost and then I show the world my birth certificate .Building more roads will take forever and will not spur the economy
Infrastructure spending is a good way to employ large numbers of people and maintain a semblance of social stability. In that sense its certainly highly beneficial... Everything else depends on the long-term economic value of the projects. So far I haven't heard too many useful ones mentioned. Making government buildings energy-efficient is so like 2 years ago. Who is really concerned about energy prices at this point? Investment in schools is generally considered good. Will it lead to more engineers or more lawyers? One is useful for economic growth, the other not so much (no offense to any lawyers here).
I don't know how many of you are average-joe shoppers that purchase food from grocery stores such as Saveway/Vons, Ralphs, etc rather than yuppie Whole Foods and Trader Joe's...
But I started to notice that perishable goods seem to be staying on shelves longer. Things like bread, orange juice, milk, sandwich meats can be found within days of their expiration, use-by and best-by dates.
I'm not sure if this is a reduction in consumption, or if grocers are starting to keep items on their shelves longer before pulling them and sending them to their discount counterpart, e.g. Food4Less, etc.
Some items just aren't being restocked at all. Maybe there's something here, or maybe not...
Since the crowd here tends to chat about making money off inverse ETF's such as SKF and EEV, it might make sense to cover those positions if the S&P closes above 885. Since September, the 30 day SMA has been the resistance level and we are almost there again after Friday's action. Next level of resistance, 50 day SMA is roughly at 936.
Not all infrastructure spending is created equal. I personally could do without spending on new roads, highways, prisons, and military boondoggles. The energy efficiency proposal is interesting to the extent that it has a tangible economic payoff. It might spur further development, but that shouldn't be the raison d'etre (i.e. no green bubble).
When you see kids going to school in trailers, boiler rooms, or classrooms reeking of sewage, you tend to think building new schools is a good idea regardless.
"I'm sorry to say, but Tanta never did get stated income right."
lama - Yes she did. Thank you for saying you're sorry.
"A very successful dentist or architect who files as a sole proprietor will apply for a stated income personal mortgage, even if that person has employees, pays business rent, has a CPA and buttoned-up books."
lama-dentists and architects do not file as sole propietors unless they are crazy. The personal exposure to risk is such that I doubt that 1 in 1000 in either profession files a Schedule C.
"There is simply no accurate and reliable third-party verification possible of sole proprietor net income. The Schedule C speaks and you have to take it at face value -- i.e., stated income."
lama-The IRS regularly provides signed copies of tax returns to authorized parties, including lenders. A borrower would file IRS form 4506 and the return would be mailed directly to the lender. An additional form of substantiation includes business bank statements (which will subtantially mirror the tax return's transactionally derrived figures).
Tanta was spot on as usual. I am a CPA with over 20 years of experience and can easily verify legally reported income for anyone who earned it in the US, Canada or Western Europe. There are no 'what if's' for which I do not have an answer.
Tantas' NY Times obituary was published on the 2nd page of my small-ish home town newspaper (Bellingham, WA.) last week.
It was in the "national and international headlines" section where they give a paragraph or two or three to any news deemed important enough for the day, out of the billions of things that happened around the world.
I'm going to go out on a limb here and guess that no more than a hundred people, if that, in this area have ever read or heard of CR.
And now the tributes to Tanta and CR keep pouring in from newspapers across the US.
On Tantas' side, it reminds me of van Gogh selling his first painting only after he died and then - finally- everyone recognizing his genius from that point on.
On CRs' side, I'm thankful that his work is finally getting the attention it deserves, while he's around to keep on doing it.
It was an under-educated public that helped get us into this mess. A better educated public will help get us out.
When we've got half the people in the US getting their news from sources like CR, we won't be in as much danger from the portion that clings to the NAR and their mouthpieces for it's news.
Thanks so much CR for promoting Tanta from the comments section to regular contributer.
It was a brilliant move on your part.
And, I'm sure, it was a a huge boost to Tanta to be able to apply and share her knowledge with an appreciative, hungry crowd in the most flexible way, on her own schedule, while she was sick.
Thankyou CR. You did a great thing for us, and for Tanta.
someone just wrote "it's hard to see how this credit crisis could happen". let me tell you a little story. here in new hampshire we had exactly the same thing happen in 1989-91 culminating with the selling of the largest banks in new england to other out-of-state banks. it was exactly what is happening nationally now. at the time i asked a senior vp of the amoskeag bank in manchester (now defunct)how it could happen. he sat in on their board meetings and he said they had an economist on the board who cointinually told them they would fail. he said, "we were making so much money no one was willing to listen" so when you ask how it could happen, that is how. greed has a very strong power.
please give us one recommendation as to what we CAN do that will positively effect this mess mock turtle | 12.07.08 - 11:06 pm | #
0. Fire Larry Summers. Why is Obama listening to the sexist pig who destroyed the economy of Lithuania? 1. Nationalize the banks and the auto industry. 2. Go on prime time TV and explain to Americans why they can no longer go back to the way things were, borrowing money to finance a consumer-driven economy. Throw in why home prices aren't going to get reinflated. 3. Raise capital gains taxes to be higher than the highest marginal tax rate.
Ponyless in NJ - I'm not even sure of the definition any more.
What I'm trying to suggest to this board is that there are fractures in the global trading system. A JIT model based on reliable credit is not working and has not recently worked. Will it uptick tomorrow? I don't think so but I don't have the forward demand data. My gut says no.
I'm neutral on infrastructure spending. I think the plan has some flaws.
1) Takes a long time to implement.
2) Replaces desirable white collar jobs with less desirable blue collar jobs
3) Does not address the real imbalances in our economy (government and financial system are too large).
Frankly, I think the real problems with our economy are caused by a huge "overhead burden" on the real, productive elements of our economy. Therefore, direct government spending, requiring further taxation (existing debt burden is unsustainable) will not have much of a benefit.
If you want to stimulate the economy, we should invest in startups. Government financing of new ventures. VCs are pulling funding and upstart businesses (even promising ones) will fail. We do not need more GOVERNMENT jobs. We need more entrepreneurs pursuing productive ventures.
Start an administration that identifies good ideas and funds them.
Also, this will be politically incorrect, but we should encourage more people (not necessarily women) to stay home and raise their families. There is no reason for BOTH parents to have to work, simply to pay for the essentials. That is one of the worst aspects of this asset bubble. The increase of 2-worker families has resulted in a lot of menial jobs, inflation of prices, and a weakening of our education system. There is no substitute for good parenting. Plus, this would serve to decrease unemployment. The improved "productivity" associated with the rise of women in the workforce is artificial, as many of those jobs are simply pushing paper, enabled by our bubble economy.
Globalization was always a pipe dream and ultimately a trap for sovereign nations.
Geographically set trade zones have always been the norm and will be again. Certain items, rare and necessary for manufacturing, will continue to be traded globally but nearly everything else will be traded/created locally.
The shift back to locality and sustainability will be tumultuous but will create a better lifestyle driven by responsible shepherding of resources and a commitment to community. There is my optimism and hope in a nutshell.
War is still a high probability and can change everything. Pray to what you pray too that cooler heads prevail.
"Fair Economist - I can't do a blog, in-house counsel has ruled, and that's basically it. But I can post non-proprietary thoughts here."
Don't understand what basis for objection is if (i) you blog on your own time as a hobby (non remunerative), and (ii) do not divulge any proprietary info. Have you asked this question?
Tantas' NY Times obituary was published on the 2nd page of my small-ish home town newspaper (Bellingham, WA.) last week. waitinginPNW | 12.07.08 - 11:13 pm | #
I wonder if John Stark had anything to do with that...
The dot com bubble needs to be used as a template for what not to do in funding start ups. Small business need some billions in low interest loans to keep them viable during the current and future crisis.
counterpointer, I think most people on this board get the picture... The definitions for this will be satisfied long after its apparent to anyone paying attention to international news. I am sure the symptoms will take some significantly more visible and violent forms than just cars piling up in Bremen. Thanks for the links. Keep them coming.
Brock Sampson writes:
It'll be a great thing when blogs really hit the mainstream. Hopefully then we can finally leave the self-congratulation and circle-jerking behind.
Meh, at least in the tech circles I've noticed the circle-jerking continues, the self-congratulations have risen 10%.
If the long bond rate soars, that's not "bye bye bond market", that's "hello bond market" and a return to sanity. The long bond shouldn't be at 3%; that implies a nasty combination of depression and deflation. If the rate doubled - to 6% - that would be just fine.
Well, equity futures are through the roof. If the run on treasuries is over, does that signal a move back into equities? Or a bond market collapse that would usher in a GD?
Tanta was spot on as usual. I am a CPA with over 20 years of experience and can easily verify legally reported income for anyone who earned it in the US, Canada or Western Europe. There are no 'what if's' for which I do not have an answer.
All that you are describing would still be called "stated income" for a sole proprietor. The key number for a sole proprietor's mortgage application purposes is net income, the bottom line of the Schedule C.
You can't verify it. No how. No way.
There are too many variables on a Schdule C to track them all back through bank accounts. Nobody would bother.
Agreed. It is madness. At least there were more people who didn't want to be the guy who bought the 30-yr at a 2-handle yield, and kept it at 3% than there were people who don't grasp what that level of long rate means economically and would buy it like a hot stock.
I'm pretty sure the foods going to its' expired date because...wait for it.........it's too freaking expensive for people to buy at full price!!!
Thanks Ben and Congress for forcing food inflation on the grocery stores. Here's hoping they , and we, can overcome the immense problems you've foisted on us. First houses and now...food!
Anyway, I've started taking advantage of these "deals" now. I make a mental note of the exp. date on these now pricey foods and then, when it gets close to exp. date, I go and pick them up half price.
Granted, I've got a killer memory for detail. And, in the past year, I've come to look upon food shopping as akin to HUNTING in terms of skill involved, thrill of the take, etc.
But there are some dang good deals out there if you're paying attention.
And now that i know how many people have started reading CR, I'm a bit reluctant to post this inside info. Would that it were three years ago when only a handful would be privy to the shopping secrets!
Ken- i wondered the same thing. Looked for some mention of his name as being a compliler, by way of an explanation. Didn't find who's responsible. Who knows?
mock turtle writes: please give us one recommendation as to what we CAN do that will positively effect this mess
Before giving suggestions on actions, I'd like to take the time to remind people of what needs to be the GOAL of all actions at this point: employment.
The key link in the possible death-spiral is collapsing employment -- if we get around to losing 1M jobs a month by spring 2009, arguments over whether something "replaces desirable white collar jobs with less desirable blue collar jobs" or if we need to "raise capital gains taxes to match the highest marginal rate" will seem quaint and purposeless. As, at that point, they will be.
(That said, I'd sure as hell keep someone as smart as Summers close, but nudge Volcker to tell him to STFU every once in a while.)
DC,
My point about the white collar vs. blue collar, is I don't see a lot of able-bodied people that are going to be anxious to ditch the office job and start doing manual labor. With our current entitlements program, do you really think they'll buckle down and start digging ditches?
The only way this program works is if we bring our military back and put them to work. Otherwise there are a lot of older, overweight men and women that are completely unfit for the job.
Repeat of today's Book TV with Kevin Phillips, on right now on CSPAN 2, from 9 PM PST to Midnight PST.
Author, former political strategist and historian Kevin Phillips will be our guest for In Depth on Sunday, December 7 (LIVE from 12 to 3 pm ET). Mr. Phillips was formerly a special assistant to the U.S. Attorney General in 1969 and was a regular political contributor to CBS News, NPR, and the Los Angeles Times. He is the author of over a dozen books including, "The Emerging Republican Majority," "Wealth and Democracy: A Political History of the American Rich," "American Dynasty: Aristocracy, Fortune and the Politics of Deceit in the House of Bush," and his latest book "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism."
"fiends" above, was meant to be friends mock turtle | 12.07.08 - 11:26 pm | #
I prefer fiends myself . I don't believe there is a Solution, either, or at least one that leads us to the same world we've been living in since Bretton Woods collapsed. Solutions should mean articulating a new economic model to pursue.
Dream on.. change in emergent systems is irreversible. Even if the system collapses you can never go back to the starting state. satan | 12.07.08 - 11:53 pm | #
Especially after an underlying bifurcation that causes a stable equilibrium to become an unstable one.
What to do about the current method of operation by many of the large corporations (ie, shed jobs but keep the dividend intact)? This is SOP in normal downturns, but eventually (as in early next year) I think everyone will start questioning the role of Big Business in maintaining the stability of global/national/local economies over a higher profit margin.
GH, certainly, you are correct: people with visions of 1930's Civilian Conservation Corps crews stuffed with former staffers from Lehman Brothers are not thinking what a "jobs program" will need to look like. A better start would be to start looking at all of our crisis policies and ask: what does this do to help employment, or to help the unemployed?
I guess my bias is showing. Screw trying to fix the broken system: start to focus more on alleviating the worst social effects before they cause nasty 30's style feedback loops.
With our current entitlements program, do you really think they'll buckle down and start digging ditches?
No. But you know you don't always have to dig them by hand, there are backhoes that don't require great strength to operate. And FWIW- I worked as a glorified ditch digger (jack hammer and hand shovel for a pool plumber) for about nine months years ago,...I wouldn't expect office workers to be able to do it, but it might be something for the young and restless to do. We got to give them something constructive to do.
Agree, but let's make sure we're not hiring people to dig holes....then fill them. We need to find a productive channel for labor. Therefore my interest in funding startups (though certainly no dotcom 2., rather than reinflating our bubble economy.
weepstah writes: What to do about the current method of operation by many of the large corporations (ie, shed jobs but keep the dividend intact)?
It will be interesting to see if the new administration tries to use tax policy to twist the arms of companies here. Currently, most firms consider employment changes (i.e., layoffs) easier to performs than changes to dividends or changes to executive perks (which are often contractual).
With respect to journalists, has anyone seen Spot.us - Home ? It is "community funded reporting" - pretty cool.
I'm with Gavshire and Whiskey. There are many things we can do to stimulate private investment in the short term without going the massive infrastructure route. Tax changes could be an easy one.
I'd like the feds to think about funding a bunch of technology related X prizes. Wind energy, solar, efficient diesel engines, gas engines, etc. Maybe we can get some of those phd people out of finance and back into R&D.
Gavshire Hathaway writes: Agree, but let's make sure we're not hiring people to dig holes....then fill them. We need to find a productive channel for labor. Therefore my interest in funding startups (though certainly no dotcom 2., rather than reinflating our bubble economy.
As rich has pointed out in a prior thread, many biotech firms will be failing in the next 24 months due to the collapse of their usual credit sources... a good example of an ecosystem that we need to keep from simply withering as the gov't becomes the defacto only source of credit.
(Is it too late to moan the failure of the gov't to nationalize the banks, wipe out equity, and force the losses onto the bondholders? Only then, a capital injection could have let them be re-privatized without their debt overhang... instead, we still have zombie banks, massive unrealized losses, and a frozen credit market. Biotech is only one small ecosystem chocked to death by this...)
Is it too late to moan the failure of the gov't to nationalize the banks, wipe out equity, and force the losses onto the bondholders? Only then, a capital injection could have let them be re-privatized without their debt overhang... instead, we still have zombie banks, massive unrealized losses, and a frozen credit market. Biotech is only one small ecosystem chocked to death by this...
No. Not so long as it's still possible to start fair and efficient policies towards the banking crisis. And not so long as it's possible to rub the politicians' noses in the damage they caused.
"As rich has pointed out in a prior thread, many biotech firms will be failing in the next 24 months due to the collapse of their usual credit sources... a good example of an ecosystem that we need to keep from simply withering as the gov't becomes the defacto only source of credit. "
I worked in biotech for 8 years at 4 different companies. One went public, one got bought out, one went bankrupt and the other was already public.
The company that went bankrupt deserved it; bad management, bad bets, bad execution.
I was surprised the other got bought as it was badly run as well with a lot of failed trials.
Biotech has been through booms and busts before and will survive this as well.
We don't need more of the government teat, we need innovation and hunger and the ability to work on a shoe-string budget.
Now that I think about it, it seems we're giving short shrift to the young people entering the work force. I'm not too worried about displaced office workers, but I am worried about a cohort of able bodies that have nothing to do and don't have too solid an idea of right and wrong anyway.
sdtfs,
Yes you are giving young people short shrift. Many bright college grads end up in menial administrative jobs getting paid peanuts. It takes years to work up the hierarchical chain, and frequently promotions are dictated by tenure rather than merit.
In many cases, showing ingenuity is not rewarded, as bosses see it as a threat.
Homes are unaffordable, social security is a scam, and educational costs force students into debt slavery for life.
But feel free to give us some manual labor too. Maybe it will build character:)
Pissed Off In California, you're right that biotech has had such a history of boom-and-bust, this latest squeeze will won't be the first (but might be the biggest). But a bust of this magnitude will cull not just chaff, but lots of creative companies, just started at an unlucky time.
For firms with no product, running on cash flow will not be an option, and the flight of so many VC firms to the hills will mean their end once their cash runs out. While I am not arguing for direct gov't cash here, I cannot but look at the billions in bailout money, and think that the "pool of credit" is being drained by failing firms like GS and GM, to the detriment of startups we will never know, who would have survived, and prospered, in normal times. We're destroying our true future to bailout our past.
Would you think the same if you had cancer, had your pension cut (which was a term of your employment for 30+ years), or work in a business that exported to the world market. You sound like a juvenile ass w/ rules that are at the expense of everybody else but you. I'm glad you're not the emperor.
Problem is that step one out of this was to nationalize the banks.
Say you don't do that. You still need to provide loans to small businesses. The current going rates are loan shark rates that small businesses can't afford to pay and still be profitable. The mass failure of small businesses is what is going to drive the unemployment rate above double digits. The gov't must provide loans to these businesses immediately. Maybe it requires a nation-wide parallel system of clean banks that are willing to lend. Maybe there are more creative ways to go about providing credit to companies that are too small for the CP market. Are they being packaged? Can the government step in and start buying them up to drive down the going rates for small/mid-size business lending? These are things I don't know, but to me it seems obvious that is where the effort needs to take place.
Next thing that would be needed is to create a national economic strategy, which we seem to be missing, best as I can tell. That means the government driving investment through tax incentives and government research subsidies to create new industries that employ Americans.
Come to think of it perhaps a condition of receiving TARP funds should have been some kind of commitment to not outsource jobs. Some of these banks like to tout their international stature but seem to run back to the US taxpayer for help when TSHTF. It is a complete travesty that they are still outsourcing jobs after receiving aid from the taxpayers.
Now that we are on it. How many extra jobs can be created in this country if the US Military instituted a policy of purchasing only vehicles/weapons/everything assembled in America consisting of 90%+ American-made parts. That should create at least a base for reindustrializing this country, because truly that is what is needed.
I need sleep now. I can rant for another couple of pages, but here is the rough outline of the rest of the rant:
more public universities. more technical schools. more technical high schools. not everyone needs to go to college. no one needs to go to private colleges. publicly funded career transition centers. more government sponsorship of productive higher education - engineering, science, math, etc.. More emphasis on the hard sciences in schools. More protection of infant industries. More restrictions on outsourcing. More compensation for good teachers. Weakening of all labor unions - they slow down job creation. Major tax hikes on the well-to-do, tax cuts to lower middle class and poor. Higher inheritance taxes. Harsher prosecution of tax evasion. Mandatory national service for 1-2 year at the age of 18 - military or civilian - use these at home and abroad to provide after school activities, hospital assistance, career transition, disaster relief...
enough. sleepy time. hope the above doesn't sound too stupid...
Gavshire Hathaway writes:
Agree, but let's make sure we're not hiring people to dig holes....then fill them. We need to find a productive channel for labor.
BINGO...just because building dams 70 years ago worked doesn't mean it will work now. I'm not buying the return to stone age scenario.
What public works program would work now?
For those interested in miners, I would not ignore AUY. If you needdetails on their business strategy, listen to the Financial Senseinterview from November 27, 2008.
BINGO...just because building dams 70 years ago worked doesn't mean it will work now. I'm not buying the return to stone age scenario. What public works program would work now? Now is a Great time to... | 12.08.08 - 1:30 am | #
Some rudimentary analysis of the age distribution would suggest that service employment related to in-home care, nursing homes, and other geriatric services should be needed.
Likewise, some investment in law enforcement might be timely. I'd love to see some of that bailout money going to an army of agents hired to track down fraud. And let's get rid of the statute of limitations on this stuff too...if you lied on your mortgage, or on your company's balance sheet, if it takes us 15 years to find you, you're going to a North Dakota gulag.
Lots of need for health care.
Not a lot of need for roads that we won't be able to keep around long-term anyway.
"Homes are unaffordable, social security is a scam, and educational costs force students into debt slavery for life."
I am so mad about this; every social and economic institution is hitting the wall at the same time, and -- human beings being what they are -- the minions of each dysfunctional establishment just carry on and hope we won't notice.
I didn't know just how mad I was until I hit jury duty this week and found myself telling the judge and prosecutor that I didn't trust the legal system, or them, to deliver anything like real justice. They were unhappy with me. (I did have my reasons, wasn't just ranting.)
I didn't know just how mad I was until I hit jury duty this week and found myself telling the judge and prosecutor that I didn't trust the legal system, or them, to deliver anything like real justice. They were unhappy with me. (I did have my reasons, wasn't just ranting.)
"I didn't know just how mad I was until I hit jury duty this week and found myself telling the judge and prosecutor that I didn't trust the legal system, or them, to deliver anything like real justice. They were unhappy with me. (I did have my reasons, wasn't just ranting.)
Further detail on this?
Hoopajoops LTD | 12.08.08 - 2:00 am | # [kill][hide comment]"
I'm going to have to blog it; it would take too long. Short answer: the only witness for the prosecution was the only other guy who could have done it, apparently, and he took a pleas bargain for his testimony.
On top of that, there were two other men in the car, apparently (drive-by shooting) but the judge told us we were not to think about them at all, that they had nothing to do with this case.
I called bullshit, because I'd been caught up in this sort of thing before as a juror, where there were multiple charges but you're not told about all of them. Makes it damned hard to jury the trial, and when they tell you what 's really going on afterward, you feel like a goddamn marionnette.
It would have been eight weeks of this. I was ready to man up and take my medicine until the judge snapped at another prospective and told her to stop thinking about the other men in the car. F*ck that. You want my judgment, give me the all the facts. I'm not being a pawn in your little games.
Just because I said the pension needs to be cut does not mean that I want them to suffer. They hard earned that with their blood and sweat. But they earned their pension in an inflation world where the money was loosing its value. But going forward (in a deflationary world for decades) where the money is going to gain value, there is nothing wrong in loosing some number while retaining purchasing power parity.
Have you ever been to a Hospital run by Developing countries. They hospital service is free. Yes, you may feel that the Dr's are not caring exclusively but they do care people.
Private medical does not mean that high quality care while the public sponsored hospital care wouldn't have to be always poor in quality.
Yea, if you are not even willing to sacrifice your 8 work hours/week for another person who does not have job, yep I am jack ass.
Dream never provides anything. It is willingness to compromise something for the better of everyone is the one which provides solid foundation for good quality of life everyone.
You can dream that PGBC would take care of pension when the US government is bankrupt. You can dream that we will have a calm and peaceful society where some have 40hrs job while others doesn't have any job at all to take care of their families
Yes, people die every year on accidents and violence. Are they any lower than people die on fatal disease.
In my parents generation, if they live for 60 years then that is blessed life. Now we live 80+.
But think of our children who couldn't afford a good quality of life while jobs are hard to come by.
We already destroyed our children's life by borrowing from them.
Just because they don't voice now doesnt mean that we can go on destroy their feature.
Man, money is not every thing. Millions may not be enough in an inflationary environment but even few dollars would be manna in a coming great deflation of our mankind.
Don't stick with the past. The feature is different. We need to sacrifice lot for our children's prospects. We need to take care of our parents rather than leaving them in foster care.
Unit472, I've just realised now that the discussion about Tanta being or not being an ultra-liberal went on in the other thread, and referring to my post as if I was disagreeing with you. It doesn't really matter, but I just want to point out that 1) Tanta was very careful to keep away from "politician politics" (although most of what she said could certainly be called "political", and rightly so; 2) from a few things she said I think it is quite obvious that she was not a conservative, and I would even say she was a liberal; 3) calling someone a liberal is definitely not an insult for me; 4) nothing that I've read from Tanta made me think she was an ultra-liberal, but that might be a matter of definition: your "ultra" could very well be my "reasonable, thoughtful, intelligent"
In any case, I'd rather not put a label on her but let her writings speak for herself because, fortunately, and unlike many of us, she could say exactly and precisely what she wanted.
Full disclaimer, that should be obvious: I am not American, not even English-speaker, so my use of words can be a bit, or a lot, off sometimes and, especially, the concepts I'm referring to might be quite different from what the average American (if such thing exists) would understand from my language.
first
....second ?....maybe not....
BREAKING NEWS
LAtimes owner bk filing
Tribune Co. Taps Lazard,Weighs Filing for Chapter 11 - WSJ.com
Tribune May Face Potential Bankruptcy Filing - DealBook Blog - NYTimes.com
Every time I come back to check posts I see that "Email Tanta" link at the top and want click.
You are at the top of the pecking order in the world of truth CR. Peck away.
*Tribune prepares bankruptcy - LA Biz Observed
(one more link)
Obviously, Mr. Mihm wasn't referring to any of my comments. But to all the rest of you, keep up the great work!
Wow.. did Tribune ever manage to find buyers for its real estate?
Do we now get a paper Tarp?
Calculated Risk quickly developed a cult following...
Hey! I resemble that remark.
This blog has never been a cult. To me that sounds like a put-down from someone who is trying to justify why the MSM ignored these issues.
Like many others, I found this blog through CR's posts on Angry Bear. The first post I encountered was on virtuous and vicious cycles
. Still one of the most brilliant insights in modern macroeconomics. It's hard to remember now, but anomalous housing prices and trade deficits were a big mystery at the time. Go CR!
Rob, you play Tom Cruise to CR's Scientology. {wink wink}
I just want to say how gratifying it is to see Tanta remembered in the media. It is somehow all too rare for selflessness and brilliance to be remembered, and I'm grateful that her contribution to humanity is appreciated. Best wishes to Calculated Risk and commenters.
It is heartening to see so much recongition come to Tanta, because the great ones are really never recognized in their time. I've really enjoyed looking back over the Tanta archives, CR, thanks for that. What a resource. I think we are obviously living through really significant and unprecedented economic times, and these entries of hers are really going to be part of the record. My comments will always be on the low end, mostly unhelpful and not meant for serious consumption. I'm not very knowledgeable and don't pretend to be.
LA Times BK, Rocky MTN news for sale, Tribune Troubles : it seems to me that blogs like CR ( and many others, obviously) have gone from zero to 60 in a matter of a few years, and have eaten the MSM newspapers breakfast, lunch, and dinner. Couple the real-time insight with the loss of revenue due to classified ads that have gone to eBay and craigslist and it shouldn't be a wonder why there are so many coming BK's/shutterings in the newspaper world. Most of my news/info comes off about 10 blogs, twitter searches and AP/UPI/sky wires. Free on the tubes : tough to compete for the once a day newspaper or 6 o'clock news.
Full disclosure : My local paper is the MN Star Tribune (sigh), however I have a paying subscription to the print WSJ. I sometimes read the McPaper on the aeroplanes, or when I stay at a Holiday Inn Express.
Wow, people care about the economy. Fancy that.
Sports Guy Lafleur - Agree. The MSM model of reliance on car companies and real estate has proved to be their failure. Meanwhile blogs like this one break news 24 hours a day, provide insight from knowledable experts (host and commentors) and you can filter the usual spin...MSM is dead, long live the bloggers!
Somebuddy is going to get firesale prices on hugh swaths of downtown L.A. and Chicago methinks
This blog is awesome. This is one of the few places in the world where people who want to talk economics and finance can actually find an audience.
It's too bad we could not have been a little more responsible as a country, avoided this financial meltdown, and invested this new-found debt capacity in cancer research.
London-based GFC Economics is making a frightening prediction: By spring 2009, the United States could be facing more than 1 million layoffs every successive month.
Sunday morning, during an appearance on Meet the Press, President-elect Obama cautioned Americans that the crisis would only get worse before it begins to ease. He also outlined a new stimulus package some senior Democrats have said could cost as much as $1 trillion.
David Frost, director-general of the British Chamber of Commerce, paints a grim deadline.
"The worry is that next year the job losses will be just horrendous," he said. "All sectors are taking the hit. In the middle of the year it was construction and estate agencies. Now it is services, the automotive industry, retailers. Firms are waiting for Christmas and if they can't see any improvement they will cut their payrolls."
Buck up !!!
CR developed a cult following????
Wouldn't it be more accurate to describe David Lereah's readership as a cult? CR is more of a deprogrammer.
OP-ED COLUMNIST; The Brightest Are Not Always the Best - NY Times
Frank Rich op-ed in the NY Times:
In our current financial quagmire, there have also been those who had the wisdom to sound alarms before Rubin, Summers or Geithner did. Among them were not just economists like Joseph Stiglitz and Nouriel Roubini but also Doris Dungey, a 47-year-old financial blogger known as Tanta, who died of cancer in Upper Marlboro, Md., last Sunday. As the Times obituary observed, her first post, in December 2006, took issue with an optimistic Citigroup report that maintained that the mortgage industry would rationalize in 2007, to the benefit of larger players like, well, Citigroup. It was months before the others publicly echoed her judgment.
Viva la Tanta! She wrote so well. She was the Lewis Lapham of blogs.
mort_fin | 12.07.08 - 8:37 pm | #
Amen! erm... that is - what is the opposite of drinking the koolaid?
Check it out. Chinese citizens scouring the country looking for deals:
Chinese tourists' hot souvenir: U.S. homes - Los Angeles Times
London-based GFC Economics is making a frightening prediction:
They need someone to proof their posts. Way tomanyrun togetherwords.
Bond Girl: So many 'rules' have been broken in 2008, we can widen our expectations without feeling foolish. Expanded cancer research --- and just about any other intelligent use of money --- may be on its way.
Remember folks: Just because the sky IS falling, that doesn't mean we're headed into the darkness. It is likely that this new Depression will bring out the best in people.
After all, we did elect a president who is smart, classy, and appears to care about public service rather than profits.
Bagholders: we used to call them "suckers."
Lots of friends in Beijing have been asking me about buying US real estate; I tell them to wait another year before jumping in.
X Man: these are just one offs. I'm still waiting to see who is going to be buying up thousands and 10's of thousands at a pop.
Uncle Billy Snorts writes:
Check it out. Chinese citizens scouring the country looking for deals:
Didn't the Japanese do this in hte 80's-90's? Then took it in the shorts on resale?
Agree with UB Snorts. A few hundred Chinese investors are in no way going to sop up all the current and future inventory in SoCal much less the country as a whole.
Nothing to see here. Move along.
----
Hawley Smoot writes:
\tAfter all, we did elect a president who is smart, classy, and appears to care about public service rather than profits.
\t Hawley Smoot | \t\t\t\t12.07.08 - 8:47 pm
----
Sarcasm or optimism? Either way, you had me until "...rather than profits".
It is definitely too soon to pass judgment on Oclinton, but to make such a claim about "service over profits" is hellaciously premature...? naive?
With the scare the cliff-drop in housing prices, the huge overhang of unoccupied houses, and the prospect that future appreciation may not even keep up with inflation, I can't see how even the 4-5% mortgage interest rates will get housing moving again.
The effects of the bubble may be 7-15 years, or even generational.
Why would anyone even consider housing as a potential good use of capital anytime in the next five years or more?
What, then, will the next stage of the downturn be about?
It is likely to revolve around the worst slump in worker pay since you knew this was coming the Great Depression.
This slump wont be anywhere near as bad as the one during the Depression, but it also wont be like anything the country has experienced in a long time.
CR,
I don't mind being part of a cult, but I won't drink the Koolaid.
First, CR you are great. I love this place
Second, The Boston Globe is a POS.
When will Kimberly Blanton (BG Business/RE Editor) write about CR?
She's a major cheerleader (shill) who called the housing bottom 18 months ago on Chronicle TV!!!!!!!!!!! WTF does she say now...?
I wish the BG would go back to it's hole - perhaps is will close shop (we can only hope).
Another Tip From Wall Street:
"Leave your stock certificates in your mother's attic."
Another Tip From Wall Street | dagblog.com
I'm sorry to say, but Tanta never did get stated income right.
A very successful dentist or architect who files as a sole proprietor will apply for a stated income personal mortgage, even if that person has employees, pays business rent, has a CPA and buttoned-up books.
There is simply no accurate and reliable third-party verification possible of sole proprietor net income. The Schedule C speaks and you have to take it at face value -- i.e., stated income.
Tanta was right on almost everything else!
Service/profits, what's the difference in our new corporate state?
OT, on the southcentral asia nightmare:
The US better send some AWACS planes to the area to keep the Pak/Indian planes attacking each other from being interferred with by the Israeli/Iran planes swapping blows.
Hell, and if it gets real heated, add in the US, Russian and Chinese jets protecting their 'interests'.
Rich: Why can't they show their bank statements (or any other statements the lender needs to qualify them?)
Point is moot to me though anyway, because if the lender is not allowed to pass the risk down the chain of bagholders, it's their problem and the problem of their shareholders.
After all, we did elect a president who is smart, classy, and appears to care about public service rather than profits.
Hawley Smoot | 12.07.08 - 8:47 pm | #
Sadly, I am too old to believe this anymore.
Uncle Billy Snorts writes:
Check it out. Chinese citizens scouring the country looking for deals
I could see it as good an investment as any right now if the yuan was to be devalued.
Sadly, I am too old to believe this anymore.
Look at the upside. You (and I) won't suffer intense disappointment in the very near future.
I let me WSJ subsc end. Jason called to offer $99 year rate. I declined. I can walk over to Bush's new home on Daria Place and read it for free now. Get a nice cup of coffee from Laura.
There is simply no accurate and reliable third-party verification possible of sole proprietor net income. The Schedule C speaks and you have to take it at face value -- i.e., stated income.
Raise those ad rates CR
Mao: Agreed.
Btw, gun people out there... are firearms being hoarded in the United States? Friend reports he went to go buy a home defense shotgun, but the only thing available was a cheap turkish made gun. Merchant said that the warehouse was out and so were their distributors. Same story with the shells. Any way to track purchases of large lots of firearms? Does the federal govt. report this info?
Damn shame the arms manufacturers are making a killing on all the fear.
Haloscam ate the rest of my post!
Look, these people were probably understating their income to the IRS, so this was the only way they could get a loan. The bankers were essentially winking at tax evasion.
Of course, this opens the door to all sorts of liars..
Look at the upside. You (and I) won't suffer intense disappointment in the very near future.
Broward Horne | Homepage | 12.07.08 - 9:14 pm | #
You mean when we find out that Obama is not Batman after all?
Mark-to-Market Likely to Remain - WSJ.com
Mark-to-Market Likely to Remain
SEC Is Expected to Keep Accounting Rule but Seek Ways to Refine Its Use
"Federal securities regulators won't suspend the mark-to-market accounting rule that banking lobbyists and some conservative Republican lawmakers blame for exacerbating the credit crunch, according to a person familiar with the matter.
Instead, the Securities and Exchange Commission will discuss ways to refine the rule's application, this person said.
The agency is completing a study on mark-to-market accounting ordered up by Congress as part of the bailout bill. The study, due Jan. 2 and still in draft form, likely won't include new guidance on how to apply the accounting rule, ..."
And there I was thinking Paulson had gone to Ch for the Strategic Economic Dialogue to hear how the Ch had gotten through the 98/99 coastal CRE and RRE bust, at the same time as the Asian financial crisis.
But there seems to have been some jawboning on currencies and investment positions?
My bad.
Or just wondering about how so few seem to learn.
C
Deprogrammer indeed...
As a young person, I feel fortunate to have found CR and the community of smart, good-humored and extraordinarily well-informed folks who contribute here.
My instincts have long told me that things aren't right. Looking to find out how and why it got this way, I wound up here somehow about a year ago. I don't talk much, but it's fun and educational for me to just hang out here and listen.
I'm not trying to make money. I'm just trying to witness history and deconstruct some lies. It's excellent to have such great company while doing so.
H.S., I too am (and have always been) skeptical of Obama, but I like your optimism just the same.
The Australian government delivered more than A$8 billion ($5.2 billion) in cash payments to families and pensioners from Monday and urged people spend the money to help the economy avoid recession.
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
Get out there you little debt slaves and spend money! Your government needs impoverish you with more inflation and taxes so get with it.
megsley - para 1 - you've not noticed certain posters who don't quite fit the bill?
C
You mean when we find out that Obama is not Batman after all?
Why would anyone think he was Batman? Did he hit his mom?!
There's an interesting post over on BearChat about China.
Bears' Chat - Message Detail
I'm inclined to believe the source (Mike Morgan).
I don't think "infrastructure spending" is going to fix this. One of the most significant (and least discussed) changes during the Great Depression was a shift from a 48-hour workweek to a 40-hour workweek.
In my opinion, many of the current problems are about distribution of work, not creation of work.
Central Bank Cash May Discourage Money-Market Lending, BIS Says
By Kim-Mai Cutler
Dec. 8 (Bloomberg) -- Money markets may remain frozen if financial institutions become reliant on central bank cash, discouraging them from lending to each other, the Bank for International Settlements said.
Interbank lending has not resumed, and money markets remain dysfunctional despite increased central bank intermediation and state guarantees, Francois-Louis Michaud and Gert Schnabel, analysts at the Basel, Switzerland-based BIS, wrote in a report published today. Increased central bank intermediation may in some cases weaken banks incentives to resume their intermediation function.
Central Bank Cash May Discourage Money-Market Lending, BIS Says - Bloomberg.com
BH,
First superhero that came to mind...
shotguns a plenty at walmart.
and ammo is dirt cheap...
Say what you want, I feel like I belong to a cult. Kinda edgy huh? And sometimes I use my wifes tootbrush, and don't tell her.
Lefty - TMI...
I think blogging is a democratized academia. Pretty much anybody can address any issue; but they must compete with others who actively and aggressively criticize them. To succeed in this environment, one must have both ringing rhetoric - to make people read - and a solid factual basis - to survive the pounding criticism. Tanta was superlative by both measures and that's a lot of why we miss her so.
Like academia, blogging tends to provide a good approach to the truth and often can generate broad consensus on very hot issues. It's a far better information channel than mainstream media because the spectrum of opinions is much broader, producing more acute criticism, and the response time is far faster, producing faster results. The advantage is particularly acute in more technical fields, where journalists cannot realistically get "up to speed" to deal with the problem du jour, but blogging on the subject tends to attract highly knowledgeable specialists with deep understanding and background.
The contrast between the bloggers, who have been out in front of the economic crisis, with a small vanguard years ahead, and the MSM, which is still not up to current issues like deflation, massive corruption, the shipping collapse, or the need for fair pricing of assets like housing, is stunning. Why would anybody want to read the MSM now for econ issues when you could just scan CR, or for that matter almost any of the sidebar blogs? It's like getting next March's paper today.
I saw a story on the news about how people were rushing to stock up on guns before Obama banned them altogether. Of course, the people advancing this theory and urging people to buy were gun dealers, so make of it what you will. Kinda reminiscent of realtors, actually. "Buy before it's too late!"
Leftys supplies the Kool-Aid.
Oil Contango Pays Most in Decade as Shell Holds Crude in Ships
By Robert Tuttle and Alexander Kwiatkowski
Dec. 8 (Bloomberg) -- In the worst year ever for oil, investors can lock in the biggest profits in a decade by storing crude.
Traders who bought oil at the $40.81 a barrel on Dec. 5 could sell futures contracts for delivery next December at $54.65, a 34 percent gain. After taking into account storage and financing costs investors would earn about 11 percent, according to Andy Lipow, president of Houston consultant Lipow Oil Associates LLC. The premium, known as contango, is the biggest for a 12-month span of futures since 1998, when a glut drove crude down to $10.
Contango Pays Most in Decade as Shell Stores Crude (Update4) - Bloomberg.com
JimPortlandOR writes:
With the scare the cliff-drop in housing prices, the huge overhang of unoccupied houses, and the prospect that future appreciation may not even keep up with inflation, I can't see how even the 4-5% mortgage interest rates will get housing moving again.
Comrad Ramrod writes:
shotguns a plenty at walmart.
and ammo is dirt cheap...
Comrad Ramrod | 12.07.08 - 9:33 pm | #
Maybe that explains it. Walmart has bought it all up.
Fair Economist, it also helps to be independently wealthy or at least financially secure because it pays even less than mainstream media journalism, which is really saying something.
C- Oh, I sure have.
I'm not afraid to be wrong, but I tend to follow this rule: you can't get in trouble for something you never said.
Like our friend Lefty here. At least the toothbrush in question belongs to your wife, who is not merely your roommate! Thanks for spiking the Kool-Aid for us.
As in life, it's just easier for me to pay attention to the ones who pay attention themselves. Humorless morons are distracting but forgettable.
Fair Economist: spot-on, as always.
Fair Economist | Homepage | 12.07.08 - 9:34 pm | #
Takes peer review to another level...interesting thesis.
First time posting, been lurking since early this year. Like many others, I was looking for information on the economy, and CR and Tanta were providing the real deal. Especially Tanta with her entertaining writing style; she demonstrated her understanding of the mess through her ability to explain it to a layman like me.
I don't remember exactly how I found this blog, but I regularly see links to here from other blogs which are not necessarily about economics. Atrios regularly links here, as does an astrophysicist whose blog I regularly read (and whose name I have occasionally seen in comments here). Other economics bloggers I regularly read include Barry Ritholtz and Brad DeLong.
I knew that something wasn't quite right with the housing markets, but I didn't know what questions to ask. Had I known in 2005 even a third of what I know thanks to this blog, I too would have seen the disaster coming.
Thank you again, CR. And though I'm too late with this, thanks also to Tanta.
Fair Economist - March's papers today. Brilliant.
But not a dang soul responded to my shipping stuff two threads back. This is an emergency.
Whatever.
C
Of course CR is not a cult. Cult implies a small cadre of wackos. CR has grown, now there are thousands of wackos; we're a sect.
just heard about this blog and love what i've seen so far. can i ask why no politician seems to understand that the economy is in the tank because of the massive redistribution of wealth upward (as the republicans, see: herbert hoover and george bush) have always done. this economy will continue to worsen until the money starts flowing down from the people who won't spend it to the people who will.
sdtfs - that was awesome.
sanity claus, we get some excellent work on this blog without pay. A lot of people care about truth, and will talk about it eagerly without renumeration. One of the grotesque parts of the Homo economus fallacy is the idea that people only do good things if paid.
Certainly we get enough between-jobs/part-time/self-supported effort here to beat the pants off media for this crisis. That may say more about truly profound failures in the media than a super-optimal operation of blogging, but there it is.
---
Counterpointer writes:
But not a dang soul responded to my shipping stuff two threads back. This is an emergency.
C
\t Counterpointer | \t\t\t\t12.07.08 - 9:39 pm
---
Link or repost it.
I've been following the shipping situation (e.g. BDI), and any new news or insight is muchly appreciated
this economy will continue to worsen until the money starts flowing down from the people who won't spend it to the people who will.
ronfromnewhampshire | 12.07.08 - 9:41
Our problem is that we have relied on the people who will spend money to date. Well, the ones that will spend their future earnings at least.
Broward, Do you subscribe to any of WSE's news services? I let my WSJ/Barrons subscription lapse. I probably read 3 WSJ stories all year because of their lack of timeliness.
Counterpointer- if it's really important, put up a blog of your own, put up a post, and refer to it periodically. The rapid-fire thread system here is good for discussion but bad for focusing attention. A thread can only handle 2 or 3 ideas - the rest must wait for another.
But not a dang soul responded to my shipping stuff two threads back. This is an emergency
Baltic Index collapse happened a while ago, it's a matter of degree now. Was it you that posted the rail shipping numbers?
Again, what's surprising is not that they're down 30%, but that they're not down more.
I suppose I'm not as shccked as many others, I've been expecting this for awhile. It's not quite how I envisioned it but... close enough.
I know I sound repetitious but I'd really recommend reading "The Great Reckoning", it's a 600-page intro that covers an amazing amount of relevant history. A corollary of Davidson's "fading hegemon" theory is that the US should be relatively better off than most of the rest of the world, particularly Asia.
Broward, Do you subscribe to any of WSE's news services? I let my WSJ/Barrons subscription lapse.
I subscribe to nothing. In 1996, the Rocky Mountain News called to push a subscription and my ex-wife said,
"We get all our news from the Internet".
The guy laughed and said, "Oh, right, how reliable is that?"
More reliable than YOU, chum. I had to dig for my own source information about the Waco Fire, the media censored all KINDS of stuff. Likewise, many people can see the same myopia now during The Crash.
I hope the Tribco BK means Cuban gets the cubs. Sheer desperation for cash on the part of Zell (and Cuban's willingness to fork over a quarter billion more than the next guy) is the only thing that would let that happen in the Seligverse.
Just imagine if we had the likes of TANTA in the treasury or FED. The world would be such a different place. Well maybe not, they probably would have come up with a reason to let her go. Sad that we have such talent and knowledgable people in this country and what we end up having running thins in both business and government comes from the bottom of the barrel. Just sad...indeed. America has yet to show off her talent and innovative thinkers. They are here. I am just a twit who gets to accumulate little nuggets of knowledge from those who post here. Combine that mustard seed of gained knowledge with old fashioned common sense and you have one dangerous consumer...I mean saver. TANTA 4 EVER!
Aww, c'mon stdfs, we're a network. You'll set off Broward with those kinds of comments. Then I'll get all linguisticky in response, and we all know how that wee concerto plays.
I think PJ Harvey must must be a leading indicator, she's now positive after years of the alternative:
YouTube - Good Fortune - PJ Harvey
C
Here's an idea for bailing out companies like Citibank. Instead of the government "loaning" them money, their credit card customers with 0 balance loan them money into their credit card accounts. They carry negative balances, and they earn 1/2 of the base APR back (not 0% offers and a universal minimum APR is imposed). It's FDIC insured and interest is made non-taxable for a period of time. At least this way, responsible savers get something out of it- or a way to break even with the tax burden. This will encourage saving, and it will give power to the people.
Fair Economist, I don't disagree about that here (or several other places), but I will miss the newspapers when they die. Television has no reporters, just producers that translate the AP wire and newspapers into scripts, and people that go on location to read them. That's where the vast majority of the country gets it information, and that well will just become dryer.
Expertise alone will not necessarily produce investigative journalists with the time and resources to break stories inside the government, and whistleblowers without backing can get stomped if they ever have the bravery to come out.
Of course, the newspapers themselves have less resources to develop these stories, including money to pay senior personel with working knowledge of their beat.
Plenty of newspaper writers worked for good too. They certainly never made any money.
The Great Reckoning
I just added it to my wishlist. Thanks.
I see CR as a gathering place for a junta of future warlords. Highly capable, unafraid of risk and able to admit failure (and learn and grow from said failure).
As well as being smarter than J6P, I "think" most of us profit and lose by action and applied theory, not merely spending time mired in conjecture.
CR's posts are invaluable, but the comments are a Phase 2 if you will, and often eclipse the original post.
Kind of the best of American post-secondary education, but with de Vincian twist.
Invaluable. Who cares if "they" get it.
CR has grown, now there are thousands of wackos; we're a sect.
And there is no doubt that it will grow and give rise to others too; some great and others less so.
Who would have thought that I would look forward to great sects on CR.
Fair Economist - I can't do a blog, in-house counsel has ruled, and that's basically it. But I can post non-proprietary thoughts here.
BTW, where the fk are EHP and Misean? Serf AG?
C
Duarte | 12.07.08 - 9:59 pm
I like it.
But please ditch the tax-free aspect. Tax prep is already too complicated, just give me my 8% and I'll be happy to pay the tax.
Broward, any recomendations about memes?
JP
Groan!
Diverse manufacturer 3M Co. is cutting 1,800 jobs and urging some workers to take time off without pay or take vacation time in December.
As far as the 'bagholder', the bank's mortgage application strategy in the 'credit bubble' days was specifically NOT to ask for income documentation and leave it to the borrower to just put in a figure. That's not true in some cases. There was a pre-application form sometimes just one page that asked for income amount to be filled out by the borrower.
If the borrower told the truth about income, that original form was destroyed by the lender and then the mortgage representative would then fill in the amount that would make it work.
The banks knew what they were going in leaving the borrower as the 'bagholder' but it was tricky on the part of the banks paper shuffle and shredding of loan docs filled out early by the borrower.
I've talked to mortgage reps about this.
EHP went on hiatus after the Great Canadian Flame Wars, don't know about Misean. I think we'd be able to tell if they just changed handles, they're fairly distinctive.
mort_fin writes:
"CR developed a cult following????
Wouldn't it be more accurate to describe David Lereah's readership as a cult? CR is more of a deprogrammer."
Deprogrammer -- direct hit, Mor_fin.
CR and Tanta brought data and reason to bear on the questions. The blog format allowed dissenting views to be heard.
Doesn't sound like a freakin' cult to me.
Senorito On-Topico - most of us are already there, or near, that's potentially the problem!
But spreading the de Vincian wings is worth doing.
Always.
C
I called Tanta an 'ultra liberal' this weekend. A number of people pointed out that I was wrong.
Maybe I was.
I don't claim to be in anyway always right. I just call them as I see them.
She was a joy to read though because she had the expertise in her field that I didn't have.
That can be both a blessing an a curse
though. Long time ago I was offered a job as a 'real estate appraiser'. I demurred. You can't walk in dirt and not expect to get your feet muddy. You, can't wash your hands in a muddy stream and cry foul when people see the water is polluted.
And in 3 years Britain will be overtaken by Estonia
Britain's economy overtaken by France, new figures show
Britain's economy has been overtaken by France and could fall behind Italy's next year, according to leading economists.
Britain's economy overtaken by France, new figures show - Telegraph
Railfax Report - North American Rail Freight Traffic Carloading Report
Autos down 53% last week, even coal down 7% on rails.
... and mp is mostly only lurking ...
I called Tanta an 'ultra liberal' this weekend.
Depends on what you mean by 'Ultra'- she was definitely not far left, but she was what we 'Bubble-headed Bleeding-Heart Liberals' aspire to.
I remember Countrywide in late 2006 doing a lending presentation and their mortgage rep saying repeatedly to bring buyers in and tell the buyer to not bring any income documentation and/or tax returns for the mortgage appliction process.
We are all bagholders now!
Tanta was so awesome.
sanity clause -providing data is an important function. Blogs currently work from government or other statistics, or from personal experience from non-anonymous bloggers. There's certainly a class of investigative reporting that blogging doesn't do well, although blogswarms can be impressive.
I think the way this will have to be addressed is with more extensive public information a la Google Street, public webcams, and online access to governmental records.
Counterpointer - dang, that's a hassle to be partially gagged. The way the current legal system restricts online free speech is something else that will need to be addressed.
The Raw Story | In racially exclusive neighborhood, residents worried Bush will make it a 'target'
Bush's Dallas hood had a nasty race covenant until 2000. (These are common in Texas and my own Houston hood had one still in place when I moved there in 1985 but it was quickly amended and deleted unlike Bush's hood where it stayed on the books until 2000 apparently. However, the City of Dallas which includes this hood has enforcement rules in place outlawing discrimination based on race, sexual orientation and other factors.)
"Until 2000, the neighborhood association's covenant said only white people were allowed to live there, though an exception was made for servants.
Enacted in 1956, part of the original document reads: "Said property shall be used and occupied by white persons except those shall not prevent occupancy by domestic servants of different race or nationality in the employ of a tenant."
The entire covenant can be seen here."
ronfromnewhampshire writes:
just heard about this blog and love what i've seen so far. can i ask why no politician seems to understand that the economy is in the tank because of the massive redistribution of wealth upward (as the republicans, see: herbert hoover and george bush) have always done. this economy will continue to worsen until the money starts flowing down from the people who won't spend it to the people who will.
Well, 50% of the politicians might, but unfortunately not everyone agrees with you.
What you are witnessing is the failure of managed markets (capitalism and communism are BOTH managed markets) to react to multiple input variables.
Your position, while obviously left leaning, is not necessarily correct 100% of the time. Neither is it incorrect 100% of the time. Not all options work or don't work 100% of the time.
You don't get to install a "perfect" system and neglect the largest variable of all, human greed.
You lose (or at the very least will be very disappointed), every time.
With all due respect to the newspapers (and they deserve respect), some of them also deserve to go...
The opinion columnists at my paper haven't changed for over 20 years. Same two guys (one's been there for 40 years), same hobbyhorses, and they are just getting older and older. The paper splurged on hiring a fairly good light humor columnist a few years ago, so I guess that's where the budget went. This community desperately needs a (serious) younger viewpoint, but the editors seem to believe that the only stuff young people want to read is music and entertainment related.
It's not all about crushing pressures of the ad industry or new media... it's also about them not wanting to get out of their comfort zones.
Until 2000, the neighborhood association's covenant said only white people were allowed to live there, though an exception was made for servants.
Isn't that most white peoples immigration policy?
I am an appraiser who successfully avoided getting dirty. My cleanliness has caused my poverty. I will happily walk barefoot because I still have my feet. The others will be kneecapped shortly and will not ever walk again.
I guess two years from now if we still have electricity some here who have nothing better to contribute will be debating if steel toe bunny slippers were a type of liberal apparel reserved mostly for the terminally ill. Lets leave poor Tanta with some hard earned respect guys. Others read this thing.
All I can say over and over again is "God bless her". I'm an old P&C underwriter. I've seen the same sh*t for years. I mean the feeling that your approach, your philosophy, your business plan is better, will always hit plan, etc, etc, etc. Christ, if I had a nickel for everytime I saw an old mistake being repeated again, I could bail out the country.
As to newspapers, I am a regular reader of the Financial Times. I find it a first-rate read six days a week, with lots of fascinating news I do not find elsewhere (although I no longer see the WSJ or IBD), and lively commentary. Moreover, they print my letters to the editor!
In addition, the FT has excellent painting, theatre, dance and classical music/opera criticism from Europe the UK and the U.S. The arts stuff appears every day, and is head and shoulders above anything in the WaPo except Anne Midgette. Their recent listing of Christmas book recommendations from their staff was awesome, even though their admiration for El-Erian is to my way of thinking somewhat excessive.
I've got my fingers crossed that The FT survives as a print medium, because I love to get ink on my fingers while sipping my coffee each morning but Sunday.
Fair Economist writes:
"I think blogging is a democratized academia. Pretty much anybody can address any issue; but they must compete with others who actively and aggressively criticize them.
To succeed in this environment, one must have both ringing rhetoric - to make people read - and a solid factual basis - to survive the pounding criticism.
Tanta was superlative by both measures and that's a lot of why we miss her so."
Well put.
This part is the key, I believe:
". . . but they must compete with others who actively and aggressively criticize them."
Rich takes on Tanta over stated income above -- even now she's taking shots.
And that's not a criticism of Rich. He's more than earned his keep here. That's what he and the other quality readers do: push, challenge, propose new angles.
CR and Tanta, it seemed to me, welcomed the criticism.
My hat is off to them. I couldn't have taken it.
It wasn't like an appraiser would always actually show up at the house under a purchase contract when there was the trusty automated appraisal based on sq.ft. Automated appraisals were great for HELOC applications also.
The Boston Globe article nicely recognizes the growing importance of blogs. We're witnessing a rapid evolution of a new mode of communication. Readers and posters on this blog have not only been part of history, we've made history. Pat yourself on the back, CR.
I guess two years from now if we still have electricity some here who have nothing better to contribute will be debating if steel toe bunny slippers were a type of liberal apparel reserved mostly for the terminally ill. Lets leave poor Tanta with some hard earned respect guys. Others read this thing.
FFDIC | 12.07.08 - 10:20 pm | #
There's something fundamentally wrong with labeling Tanta as an "ultra liberal" or anything else. Regardless of your beliefs, she (like CR) provided facts, background, and insight. She enriched a debate that could no longer be simply a tribal battle of received wisdom. I put a lot of stock in people who truly add to the debates.
I'll also note that you do the same thing.
It's still kind of hard to believe this whole credit bubble was allowed to happen with all the early warnings of doom especially on the bubble blogs. The legal 'discovery' process about how this all happened or was allowed to happen should be interesting.
Fair Economist - thanks for the recognition. It's simply the way things are. It's a way of managing a difficult internal volume of information environment, and its sec'y. Usual sheet. I'm used to it.
Anyhow, turns out the Wiggles have got it right:
Is he a rooster
Or a PIRATE
Well, I just don't know
Quack quack quack quack
A-doodleydoo.
YouTube - The Wiggles ~ Quack Quack Cock-A-Doodle Do
If I'd had a dollar for every CEO who fit that description while talking quarterly results...
C
Rich,I Disagree with your criticism of Tanta's understanding of "Stated Income" Loans.She differentiated between Stated loans and "Exceptions" for a reason.Self employed persons and persons who had unusual income streams or lots of writeoffs traditionally got loan "exceptions" which went to a senior underwriter who understood how to measure risk."Stated Income" especially "W2 Stated" programs were designed to promote fraud and offload the risk onto the borrower.reread Tanta,she was quite clear about this.
Broward Horne writes: 929pm
"You mean when we find out that Obama is not Batman after all?...
I don't think "infrastructure spending" is going to fix this."
What will fix it Broward Horne?
Do you have any ideas?
Or Are you just a nay sayer?
I challenge you for one positive suggestion.
Thank you FFDIC,
I had thought you an informative source of information but now I realize you are just an embittered ex employee fired for reasons I don't wont' to explore.
Given the state of the economy, I would not use the F.
What will fix it Broward Horne?
Do you have any ideas?
Or Are you just a nay sayer?
I challenge you for one positive suggestion.
Cisco Kid | 12.07.08 - 10:38 pm | #
To paraphrase Mark Ames, identifying a problem doesn't obligate you find a solution, especially if the problem has no solution. That said, how about ending the wars and cutting military (I refuse to use the word "defense") spending in half?
Breakout, That railfax thing is scary, but interesting.. Thank you for the link. Would you happen to have any knowledge of how rail traffic generally correlates with economic activity?
Cisco,
Broward is saying that NOTHING is going to solve this problem right now. That is a perfectly valid viewpoint. He does not have to propose a solution.
Frankly I agree with him.
Counterpointer writes:
Fair Economist - March's papers today. Brilliant.
But not a dang soul responded to my shipping stuff two threads back. This is an emergency.
i followed what you said, and believed
I'm going to take tomorrow off. I can do that.
Rich has about convinced me I should buy gold. I think electricity is a better option but I may buy 500 shares of KGC.
Is that a good idea or not?
After seeing the Tribune BK story, all I can think is that Cablevision overpaid for Newsday this past summer.
Looks like they could have gotten it for a firesale price very shortly.
A BK judge ruled earlier this year that lenders could not have a bk set aside on the basis of a fraudelently stated income because the lender did no underwriting (Due Diligence).he ruled that "Stated Income" loans were purely Collateral based and the borrowers representation of income was not material to the decision to grant the loan.Or maybe the lender might have used the T4506 for something other than filler in the file...
Gaveshir Hathaway
Broward Horne
"Broward is saying that NOTHING is going to solve this problem right now"
Fair enough
But some policies move us in the right direction and some are counterproductive.
What say you GH or Broward Horne? Is infra structure spending an amelioration of the problem or will it make things worse???
Thanks mock turtle, I like your posts.
Here's another link to shipping disaster stories:
Lloyd's List - Home
And maybe another to fill out the picture:
Pacific Shipper
Not looking that great. Seriously.
C
If I was Obama I would solve the USA problem by :Legalize Pot , Free up the prison system , Use the by product Hemp for Biofuel , bring troops home , Stop congress from spending more money , Change the tax code , cap lawsuits , Abolish all lobbyist , stop bailing out the banks and start lending with a new bank, bring back manufacturing ,get us off of over seas energy , stop corn ethanol , bring down medical cost and then I show the world my birth certificate .Building more roads will take forever and will not spur the economy
Infrastructure spending is a good way to employ large numbers of people and maintain a semblance of social stability. In that sense its certainly highly beneficial... Everything else depends on the long-term economic value of the projects. So far I haven't heard too many useful ones mentioned. Making government buildings energy-efficient is so like 2 years ago. Who is really concerned about energy prices at this point? Investment in schools is generally considered good. Will it lead to more engineers or more lawyers? One is useful for economic growth, the other not so much (no offense to any lawyers here).
I don't know how many of you are average-joe shoppers that purchase food from grocery stores such as Saveway/Vons, Ralphs, etc rather than yuppie Whole Foods and Trader Joe's...
But I started to notice that perishable goods seem to be staying on shelves longer. Things like bread, orange juice, milk, sandwich meats can be found within days of their expiration, use-by and best-by dates.
I'm not sure if this is a reduction in consumption, or if grocers are starting to keep items on their shelves longer before pulling them and sending them to their discount counterpart, e.g. Food4Less, etc.
Some items just aren't being restocked at all. Maybe there's something here, or maybe not...
Since the crowd here tends to chat about making money off inverse ETF's such as SKF and EEV, it might make sense to cover those positions if the S&P closes above 885. Since September, the 30 day SMA has been the resistance level and we are almost there again after Friday's action. Next level of resistance, 50 day SMA is roughly at 936.
counterpointer, global depression?
Not all infrastructure spending is created equal. I personally could do without spending on new roads, highways, prisons, and military boondoggles. The energy efficiency proposal is interesting to the extent that it has a tangible economic payoff. It might spur further development, but that shouldn't be the raison d'etre (i.e. no green bubble).
When you see kids going to school in trailers, boiler rooms, or classrooms reeking of sewage, you tend to think building new schools is a good idea regardless.
BTW, I found this site thru bankrate.com. Thank you, Holden!
Broward Horne
just like 2big2fail
i'd like to see a recommendations
i hear criticism of obama from you and many others but not much in the way of suggestions
ok thats alright you are entitled
but hey the guy has not even served one single effing day and yet and a lot of people (not you) are already in the middle of his shiznet
i realize (thanx counterpointer) we are going over the falls...
but failing around at everybody and everything isnt going to help
please give us one recommendation as to what we CAN do that will positively effect this mess
btw broward, its decided Obama is BIA
rich | 12.07.08 - 8:59 pm |
"I'm sorry to say, but Tanta never did get stated income right."
lama - Yes she did. Thank you for saying you're sorry.
"A very successful dentist or architect who files as a sole proprietor will apply for a stated income personal mortgage, even if that person has employees, pays business rent, has a CPA and buttoned-up books."
lama-dentists and architects do not file as sole propietors unless they are crazy. The personal exposure to risk is such that I doubt that 1 in 1000 in either profession files a Schedule C.
"There is simply no accurate and reliable third-party verification possible of sole proprietor net income. The Schedule C speaks and you have to take it at face value -- i.e., stated income."
lama-The IRS regularly provides signed copies of tax returns to authorized parties, including lenders. A borrower would file IRS form 4506 and the return would be mailed directly to the lender. An additional form of substantiation includes business bank statements (which will subtantially mirror the tax return's transactionally derrived figures).
Tanta was spot on as usual. I am a CPA with over 20 years of experience and can easily verify legally reported income for anyone who earned it in the US, Canada or Western Europe. There are no 'what if's' for which I do not have an answer.
The future of news. Today.
Sites on the rise: Business models remain elusive
Tantas' NY Times obituary was published on the 2nd page of my small-ish home town newspaper (Bellingham, WA.) last week.
It was in the "national and international headlines" section where they give a paragraph or two or three to any news deemed important enough for the day, out of the billions of things that happened around the world.
I'm going to go out on a limb here and guess that no more than a hundred people, if that, in this area have ever read or heard of CR.
And now the tributes to Tanta and CR keep pouring in from newspapers across the US.
On Tantas' side, it reminds me of van Gogh selling his first painting only after he died and then - finally- everyone recognizing his genius from that point on.
On CRs' side, I'm thankful that his work is finally getting the attention it deserves, while he's around to keep on doing it.
It was an under-educated public that helped get us into this mess. A better educated public will help get us out.
When we've got half the people in the US getting their news from sources like CR, we won't be in as much danger from the portion that clings to the NAR and their mouthpieces for it's news.
Thanks so much CR for promoting Tanta from the comments section to regular contributer.
It was a brilliant move on your part.
And, I'm sure, it was a a huge boost to Tanta to be able to apply and share her knowledge with an appreciative, hungry crowd in the most flexible way, on her own schedule, while she was sick.
Thankyou CR. You did a great thing for us, and for Tanta.
somebody remind me to think twice before i even think about mixing it up with lama
so i don get hurt
lama...word
someone just wrote "it's hard to see how this credit crisis could happen". let me tell you a little story. here in new hampshire we had exactly the same thing happen in 1989-91 culminating with the selling of the largest banks in new england to other out-of-state banks. it was exactly what is happening nationally now. at the time i asked a senior vp of the amoskeag bank in manchester (now defunct)how it could happen. he sat in on their board meetings and he said they had an economist on the board who cointinually told them they would fail. he said, "we were making so much money no one was willing to listen" so when you ask how it could happen, that is how. greed has a very strong power.
please give us one recommendation as to what we CAN do that will positively effect this mess
mock turtle | 12.07.08 - 11:06 pm | #
0. Fire Larry Summers. Why is Obama listening to the sexist pig who destroyed the economy of Lithuania?
1. Nationalize the banks and the auto industry.
2. Go on prime time TV and explain to Americans why they can no longer go back to the way things were, borrowing money to finance a consumer-driven economy. Throw in why home prices aren't going to get reinflated.
3. Raise capital gains taxes to be higher than the highest marginal tax rate.
Ponyless in NJ - I'm not even sure of the definition any more.
What I'm trying to suggest to this board is that there are fractures in the global trading system. A JIT model based on reliable credit is not working and has not recently worked. Will it uptick tomorrow? I don't think so but I don't have the forward demand data. My gut says no.
It just doesn't look good.
C
Whiskey
i support suggestions 0, 1, and 3 and i support the first half of number 2
with that one exception , can we still be fiends!
but really what i wanted to hear, was a positive suggestion from broward
but appreciate your ideas as well
ouch
Whiskey, foregive me
"fiends" above, was meant to be friends
yikes
for want of an R
i changed the entire meaning
yeeesh
I'm neutral on infrastructure spending. I think the plan has some flaws.
1) Takes a long time to implement.
2) Replaces desirable white collar jobs with less desirable blue collar jobs
3) Does not address the real imbalances in our economy (government and financial system are too large).
Frankly, I think the real problems with our economy are caused by a huge "overhead burden" on the real, productive elements of our economy. Therefore, direct government spending, requiring further taxation (existing debt burden is unsustainable) will not have much of a benefit.
If you want to stimulate the economy, we should invest in startups. Government financing of new ventures. VCs are pulling funding and upstart businesses (even promising ones) will fail. We do not need more GOVERNMENT jobs. We need more entrepreneurs pursuing productive ventures.
Start an administration that identifies good ideas and funds them.
Also, this will be politically incorrect, but we should encourage more people (not necessarily women) to stay home and raise their families. There is no reason for BOTH parents to have to work, simply to pay for the essentials. That is one of the worst aspects of this asset bubble. The increase of 2-worker families has resulted in a lot of menial jobs, inflation of prices, and a weakening of our education system. There is no substitute for good parenting. Plus, this would serve to decrease unemployment. The improved "productivity" associated with the rise of women in the workforce is artificial, as many of those jobs are simply pushing paper, enabled by our bubble economy.
Again, my $.02
GH
Globalization was always a pipe dream and ultimately a trap for sovereign nations.
Geographically set trade zones have always been the norm and will be again. Certain items, rare and necessary for manufacturing, will continue to be traded globally but nearly everything else will be traded/created locally.
The shift back to locality and sustainability will be tumultuous but will create a better lifestyle driven by responsible shepherding of resources and a commitment to community. There is my optimism and hope in a nutshell.
War is still a high probability and can change everything. Pray to what you pray too that cooler heads prevail.
I also like all of Whiskey's suggestions.
Counterpointer writes:
"Fair Economist - I can't do a blog, in-house counsel has ruled, and that's basically it. But I can post non-proprietary thoughts here."
Don't understand what basis for objection is if (i) you blog on your own time as a hobby (non remunerative), and (ii) do not divulge any proprietary info. Have you asked this question?
Tantas' NY Times obituary was published on the 2nd page of my small-ish home town newspaper (Bellingham, WA.) last week.
waitinginPNW | 12.07.08 - 11:13 pm | #
I wonder if John Stark had anything to do with that...
Again, my $.02
GH
Gavshire Hathaway | 12.07.08 - 11:26 pm | #
Good stuff.
The dot com bubble needs to be used as a template for what not to do in funding start ups. Small business need some billions in low interest loans to keep them viable during the current and future crisis.
Bloody hell we have gone mainstream. eh, gads.
corelation between msn going under and blogs being mainstream...mmm
ba bye bond market
132.468750 -0.953125
YouTube - Best bottle opener ever
Best bottle opener ever
Bond Bear -- can you elaborate? What does that mean?
It'll be a great thing when blogs really hit the mainstream. Hopefully then we can finally leave the self-congratulation and circle-jerking behind.
counterpointer, I think most people on this board get the picture... The definitions for this will be satisfied long after its apparent to anyone paying attention to international news. I am sure the symptoms will take some significantly more visible and violent forms than just cars piling up in Bremen. Thanks for the links. Keep them coming.
"Bond Bear -- can you elaborate? What does that mean?"
NewBondBear was posting the March Tbond futures contract price in electronic trading. It's down almost a point from its 3% yield high of Friday.
You can buy gold if you want. But buy at least a little miners.
GDX
Re: Bond future
To be more correct, the USH9 future is down about a point and a half from its Friday high; down a point from its close.
Brock Sampson writes:
It'll be a great thing when blogs really hit the mainstream. Hopefully then we can finally leave the self-congratulation and circle-jerking behind.
Meh, at least in the tech circles I've noticed the circle-jerking continues, the self-congratulations have risen 10%.
If the long bond rate soars, that's not "bye bye bond market", that's "hello bond market" and a return to sanity. The long bond shouldn't be at 3%; that implies a nasty combination of depression and deflation. If the rate doubled - to 6% - that would be just fine.
Well, equity futures are through the roof. If the run on treasuries is over, does that signal a move back into equities? Or a bond market collapse that would usher in a GD?
Thoughts?
All that you are describing would still be called "stated income" for a sole proprietor. The key number for a sole proprietor's mortgage application purposes is net income, the bottom line of the Schedule C.
You can't verify it. No how. No way.
There are too many variables on a Schdule C to track them all back through bank accounts. Nobody would bother.
@Fair Economist
Agreed. It is madness. At least there were more people who didn't want to be the guy who bought the 30-yr at a 2-handle yield, and kept it at 3% than there were people who don't grasp what that level of long rate means economically and would buy it like a hot stock.
GM,
Dream on.. change in emergent systems is irreversible. Even if the system collapses you can never go back to the starting state.
localandbitter@10:57-
I'm pretty sure the foods going to its' expired date because...wait for it.........it's too freaking expensive for people to buy at full price!!!
Thanks Ben and Congress for forcing food inflation on the grocery stores. Here's hoping they , and we, can overcome the immense problems you've foisted on us. First houses and now...food!
Anyway, I've started taking advantage of these "deals" now. I make a mental note of the exp. date on these now pricey foods and then, when it gets close to exp. date, I go and pick them up half price.
Granted, I've got a killer memory for detail. And, in the past year, I've come to look upon food shopping as akin to HUNTING in terms of skill involved, thrill of the take, etc.
But there are some dang good deals out there if you're paying attention.
And now that i know how many people have started reading CR, I'm a bit reluctant to post this inside info. Would that it were three years ago when only a handful would be privy to the shopping secrets!
Ken- i wondered the same thing. Looked for some mention of his name as being a compliler, by way of an explanation. Didn't find who's responsible. Who knows?
mock turtle writes: please give us one recommendation as to what we CAN do that will positively effect this mess
Before giving suggestions on actions, I'd like to take the time to remind people of what needs to be the GOAL of all actions at this point: employment.
The key link in the possible death-spiral is collapsing employment -- if we get around to losing 1M jobs a month by spring 2009, arguments over whether something "replaces desirable white collar jobs with less desirable blue collar jobs" or if we need to "raise capital gains taxes to match the highest marginal rate" will seem quaint and purposeless. As, at that point, they will be.
(That said, I'd sure as hell keep someone as smart as Summers close, but nudge Volcker to tell him to STFU every once in a while.)
DC,
My point about the white collar vs. blue collar, is I don't see a lot of able-bodied people that are going to be anxious to ditch the office job and start doing manual labor. With our current entitlements program, do you really think they'll buckle down and start digging ditches?
The only way this program works is if we bring our military back and put them to work. Otherwise there are a lot of older, overweight men and women that are completely unfit for the job.
Repeat of today's Book TV with Kevin Phillips, on right now on CSPAN 2, from 9 PM PST to Midnight PST.
Author, former political strategist and historian Kevin Phillips will be our guest for In Depth on Sunday, December 7 (LIVE from 12 to 3 pm ET). Mr. Phillips was formerly a special assistant to the U.S. Attorney General in 1969 and was a regular political contributor to CBS News, NPR, and the Los Angeles Times. He is the author of over a dozen books including, "The Emerging Republican Majority," "Wealth and Democracy: A Political History of the American Rich," "American Dynasty: Aristocracy, Fortune and the Politics of Deceit in the House of Bush," and his latest book "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism."
DCRogers
i agree
and wanted to hear broward horne get off the nay sayer train and give us a suggestion
you, GH and Whiskey have pinch hit some good points and thats fine
am i wrong or is broward to often playing the role of torpedo...maybe its just my perception
"fiends" above, was meant to be friends
mock turtle | 12.07.08 - 11:26 pm | #
I prefer fiends myself
. I don't believe there is a Solution, either, or at least one that leads us to the same world we've been living in since Bretton Woods collapsed. Solutions should mean articulating a new economic model to pursue.
Dream on.. change in emergent systems is irreversible. Even if the system collapses you can never go back to the starting state.
satan | 12.07.08 - 11:53 pm | #
Especially after an underlying bifurcation that causes a stable equilibrium to become an unstable one.
DCRogers,
Right. Jobs, Jobs, Jobs, Jobs, Jobs.
What to do about the current method of operation by many of the large corporations (ie, shed jobs but keep the dividend intact)? This is SOP in normal downturns, but eventually (as in early next year) I think everyone will start questioning the role of Big Business in maintaining the stability of global/national/local economies over a higher profit margin.
GH, certainly, you are correct: people with visions of 1930's Civilian Conservation Corps crews stuffed with former staffers from Lehman Brothers are not thinking what a "jobs program" will need to look like. A better start would be to start looking at all of our crisis policies and ask: what does this do to help employment, or to help the unemployed?
I guess my bias is showing. Screw trying to fix the broken system: start to focus more on alleviating the worst social effects before they cause nasty 30's style feedback loops.
With our current entitlements program, do you really think they'll buckle down and start digging ditches?
No. But you know you don't always have to dig them by hand, there are backhoes that don't require great strength to operate. And FWIW- I worked as a glorified ditch digger (jack hammer and hand shovel for a pool plumber) for about nine months years ago,...I wouldn't expect office workers to be able to do it, but it might be something for the young and restless to do. We got to give them something constructive to do.
Whiskey
i agree we are not going back any time soon, if ever at all, to the way it was (standard of living etc)
but certainly there are relatively good policy decisions the next administration can make as well as bad or inferior policies
saying energy and transportation infrastructure in and of itself aint gonna make it all better
does that mean this proposal is not a positive???
or does it mean it is a "necessary", but not a sufficient condition (policy) by itself
that is we need to do infrastructure, and much much more!!!
im just tired of all the nay saying
i want to hear suggestions
sitting back in our bunkers and just letting the whole thing go to hell is not an optio
Agree, but let's make sure we're not hiring people to dig holes....then fill them. We need to find a productive channel for labor. Therefore my interest in funding startups (though certainly no dotcom 2.
, rather than reinflating our bubble economy.
mock turtle,
Simple,
9 Revamp medical insurance to cover for only extreame unexpected cases like accidents.
I can go on say lot more.
Yes, for appearance sake, these ideas would sound terrible. But they would yield much better quality of life for every one.
weepstah writes: What to do about the current method of operation by many of the large corporations (ie, shed jobs but keep the dividend intact)?
It will be interesting to see if the new administration tries to use tax policy to twist the arms of companies here. Currently, most firms consider employment changes (i.e., layoffs) easier to performs than changes to dividends or changes to executive perks (which are often contractual).
SN
thanks for the ideas put forward
much to think about, thanks
i like more than half...and will consider the rest
mock turtle,
did I read you correctly that you would like to home prices reflated?
With respect to journalists, has anyone seen Spot.us - Home ? It is "community funded reporting" - pretty cool.
I'm with Gavshire and Whiskey. There are many things we can do to stimulate private investment in the short term without going the massive infrastructure route. Tax changes could be an easy one.
I'd like the feds to think about funding a bunch of technology related X prizes. Wind energy, solar, efficient diesel engines, gas engines, etc. Maybe we can get some of those phd people out of finance and back into R&D.
Oh, and I'd shut down a lot more banks. Pronto.
Gavshire Hathaway writes: Agree, but let's make sure we're not hiring people to dig holes....then fill them. We need to find a productive channel for labor. Therefore my interest in funding startups (though certainly no dotcom 2.
, rather than reinflating our bubble economy.
As rich has pointed out in a prior thread, many biotech firms will be failing in the next 24 months due to the collapse of their usual credit sources... a good example of an ecosystem that we need to keep from simply withering as the gov't becomes the defacto only source of credit.
(Is it too late to moan the failure of the gov't to nationalize the banks, wipe out equity, and force the losses onto the bondholders? Only then, a capital injection could have let them be re-privatized without their debt overhang... instead, we still have zombie banks, massive unrealized losses, and a frozen credit market. Biotech is only one small ecosystem chocked to death by this...)
Is it too late to moan the failure of the gov't to nationalize the banks, wipe out equity, and force the losses onto the bondholders? Only then, a capital injection could have let them be re-privatized without their debt overhang... instead, we still have zombie banks, massive unrealized losses, and a frozen credit market. Biotech is only one small ecosystem chocked to death by this...
No. Not so long as it's still possible to start fair and efficient policies towards the banking crisis. And not so long as it's possible to rub the politicians' noses in the damage they caused.
"As rich has pointed out in a prior thread, many biotech firms will be failing in the next 24 months due to the collapse of their usual credit sources... a good example of an ecosystem that we need to keep from simply withering as the gov't becomes the defacto only source of credit. "
I worked in biotech for 8 years at 4 different companies. One went public, one got bought out, one went bankrupt and the other was already public.
The company that went bankrupt deserved it; bad management, bad bets, bad execution.
I was surprised the other got bought as it was badly run as well with a lot of failed trials.
Biotech has been through booms and busts before and will survive this as well.
We don't need more of the government teat, we need innovation and hunger and the ability to work on a shoe-string budget.
Now that I think about it, it seems we're giving short shrift to the young people entering the work force. I'm not too worried about displaced office workers, but I am worried about a cohort of able bodies that have nothing to do and don't have too solid an idea of right and wrong anyway.
sdtfs,
Yes you are giving young people short shrift. Many bright college grads end up in menial administrative jobs getting paid peanuts. It takes years to work up the hierarchical chain, and frequently promotions are dictated by tenure rather than merit.
In many cases, showing ingenuity is not rewarded, as bosses see it as a threat.
Homes are unaffordable, social security is a scam, and educational costs force students into debt slavery for life.
But feel free to give us some manual labor too. Maybe it will build character:)
Pissed Off In California, you're right that biotech has had such a history of boom-and-bust, this latest squeeze will won't be the first (but might be the biggest). But a bust of this magnitude will cull not just chaff, but lots of creative companies, just started at an unlucky time.
For firms with no product, running on cash flow will not be an option, and the flight of so many VC firms to the hills will mean their end once their cash runs out. While I am not arguing for direct gov't cash here, I cannot but look at the billions in bailout money, and think that the "pool of credit" is being drained by failing firms like GS and GM, to the detriment of startups we will never know, who would have survived, and prospered, in normal times. We're destroying our true future to bailout our past.
Ole Karl sat down and wrote a treatise today.
The Market Ticker
Hey SN,
Would you think the same if you had cancer, had your pension cut (which was a term of your employment for 30+ years), or work in a business that exported to the world market. You sound like a juvenile ass w/ rules that are at the expense of everybody else but you. I'm glad you're not the emperor.
mock turtle,
Problem is that step one out of this was to nationalize the banks.
Say you don't do that. You still need to provide loans to small businesses. The current going rates are loan shark rates that small businesses can't afford to pay and still be profitable. The mass failure of small businesses is what is going to drive the unemployment rate above double digits. The gov't must provide loans to these businesses immediately. Maybe it requires a nation-wide parallel system of clean banks that are willing to lend. Maybe there are more creative ways to go about providing credit to companies that are too small for the CP market. Are they being packaged? Can the government step in and start buying them up to drive down the going rates for small/mid-size business lending? These are things I don't know, but to me it seems obvious that is where the effort needs to take place.
Next thing that would be needed is to create a national economic strategy, which we seem to be missing, best as I can tell. That means the government driving investment through tax incentives and government research subsidies to create new industries that employ Americans.
Come to think of it perhaps a condition of receiving TARP funds should have been some kind of commitment to not outsource jobs. Some of these banks like to tout their international stature but seem to run back to the US taxpayer for help when TSHTF. It is a complete travesty that they are still outsourcing jobs after receiving aid from the taxpayers.
Now that we are on it. How many extra jobs can be created in this country if the US Military instituted a policy of purchasing only vehicles/weapons/everything assembled in America consisting of 90%+ American-made parts. That should create at least a base for reindustrializing this country, because truly that is what is needed.
I need sleep now. I can rant for another couple of pages, but here is the rough outline of the rest of the rant:
more public universities. more technical schools. more technical high schools. not everyone needs to go to college. no one needs to go to private colleges. publicly funded career transition centers. more government sponsorship of productive higher education - engineering, science, math, etc.. More emphasis on the hard sciences in schools. More protection of infant industries. More restrictions on outsourcing. More compensation for good teachers. Weakening of all labor unions - they slow down job creation. Major tax hikes on the well-to-do, tax cuts to lower middle class and poor. Higher inheritance taxes. Harsher prosecution of tax evasion. Mandatory national service for 1-2 year at the age of 18 - military or civilian - use these at home and abroad to provide after school activities, hospital assistance, career transition, disaster relief...
enough. sleepy time. hope the above doesn't sound too stupid...
Cool, I got here just in time for an accounting face-off between Rich and Lama.
Yeah, the general public is going to stick around for that one. That's what makes this "can't miss PC".
Gavshire Hathaway writes:
Agree, but let's make sure we're not hiring people to dig holes....then fill them. We need to find a productive channel for labor.
BINGO...just because building dams 70 years ago worked doesn't mean it will work now. I'm not buying the return to stone age scenario.
What public works program would work now?
For those interested in miners, I would not ignore AUY. If you needdetails on their business strategy, listen to the Financial Senseinterview from November 27, 2008.
http://www.financialsense.com/fsn/main.html
BINGO...just because building dams 70 years ago worked doesn't mean it will work now. I'm not buying the return to stone age scenario.
What public works program would work now?
Now is a Great time to... | 12.08.08 - 1:30 am | #
Some rudimentary analysis of the age distribution would suggest that service employment related to in-home care, nursing homes, and other geriatric services should be needed.
Likewise, some investment in law enforcement might be timely. I'd love to see some of that bailout money going to an army of agents hired to track down fraud. And let's get rid of the statute of limitations on this stuff too...if you lied on your mortgage, or on your company's balance sheet, if it takes us 15 years to find you, you're going to a North Dakota gulag.
Lots of need for health care.
Not a lot of need for roads that we won't be able to keep around long-term anyway.
cd
The anonymous at 1:44 was me.
cd
Gavshire Hathaway writes:
"Homes are unaffordable, social security is a scam, and educational costs force students into debt slavery for life."
I am so mad about this; every social and economic institution is hitting the wall at the same time, and -- human beings being what they are -- the minions of each dysfunctional establishment just carry on and hope we won't notice.
I didn't know just how mad I was until I hit jury duty this week and found myself telling the judge and prosecutor that I didn't trust the legal system, or them, to deliver anything like real justice. They were unhappy with me. (I did have my reasons, wasn't just ranting.)
Nikkei up 5%
What the hell
I didn't know just how mad I was until I hit jury duty this week and found myself telling the judge and prosecutor that I didn't trust the legal system, or them, to deliver anything like real justice. They were unhappy with me. (I did have my reasons, wasn't just ranting.)
Further detail on this?
Hoopajoops LTD writes:
Nikkei up 5%
What the hell.
Bro, we're all just pretending that it will be good in the morning.
Just get up each morning and do what we do.
"I didn't know just how mad I was until I hit jury duty this week and found myself telling the judge and prosecutor that I didn't trust the legal system, or them, to deliver anything like real justice. They were unhappy with me. (I did have my reasons, wasn't just ranting.)
Further detail on this?
Hoopajoops LTD | 12.08.08 - 2:00 am | # [kill][hide comment]"
I'm going to have to blog it; it would take too long. Short answer: the only witness for the prosecution was the only other guy who could have done it, apparently, and he took a pleas bargain for his testimony.
On top of that, there were two other men in the car, apparently (drive-by shooting) but the judge told us we were not to think about them at all, that they had nothing to do with this case.
I called bullshit, because I'd been caught up in this sort of thing before as a juror, where there were multiple charges but you're not told about all of them. Makes it damned hard to jury the trial, and when they tell you what 's really going on afterward, you feel like a goddamn marionnette.
It would have been eight weeks of this. I was ready to man up and take my medicine until the judge snapped at another prospective and told her to stop thinking about the other men in the car. F*ck that. You want my judgment, give me the all the facts. I'm not being a pawn in your little games.
Hi FZ,
Just because I said the pension needs to be cut does not mean that I want them to suffer. They hard earned that with their blood and sweat. But they earned their pension in an inflation world where the money was loosing its value. But going forward (in a deflationary world for decades) where the money is going to gain value, there is nothing wrong in loosing some number while retaining purchasing power parity.
Have you ever been to a Hospital run by Developing countries. They hospital service is free. Yes, you may feel that the Dr's are not caring exclusively but they do care people.
Private medical does not mean that high quality care while the public sponsored hospital care wouldn't have to be always poor in quality.
Yea, if you are not even willing to sacrifice your 8 work hours/week for another person who does not have job, yep I am jack ass.
Dream never provides anything. It is willingness to compromise something for the better of everyone is the one which provides solid foundation for good quality of life everyone.
You can dream that PGBC would take care of pension when the US government is bankrupt. You can dream that we will have a calm and peaceful society where some have 40hrs job while others doesn't have any job at all to take care of their families
Yes, people die every year on accidents and violence. Are they any lower than people die on fatal disease.
In my parents generation, if they live for 60 years then that is blessed life. Now we live 80+.
But think of our children who couldn't afford a good quality of life while jobs are hard to come by.
We already destroyed our children's life by borrowing from them.
Just because they don't voice now doesnt mean that we can go on destroy their feature.
Man, money is not every thing. Millions may not be enough in an inflationary environment but even few dollars would be manna in a coming great deflation of our mankind.
Don't stick with the past. The feature is different. We need to sacrifice lot for our children's prospects. We need to take care of our parents rather than leaving them in foster care.
Unit472, I've just realised now that the discussion about Tanta being or not being an ultra-liberal went on in the other thread, and referring to my post as if I was disagreeing with you. It doesn't really matter, but I just want to point out that 1) Tanta was very careful to keep away from "politician politics" (although most of what she said could certainly be called "political", and rightly so; 2) from a few things she said I think it is quite obvious that she was not a conservative, and I would even say she was a liberal; 3) calling someone a liberal is definitely not an insult for me; 4) nothing that I've read from Tanta made me think she was an ultra-liberal, but that might be a matter of definition: your "ultra" could very well be my "reasonable, thoughtful, intelligent"
In any case, I'd rather not put a label on her but let her writings speak for herself because, fortunately, and unlike many of us, she could say exactly and precisely what she wanted.
Full disclaimer, that should be obvious: I am not American, not even English-speaker, so my use of words can be a bit, or a lot, off sometimes and, especially, the concepts I'm referring to might be quite different from what the average American (if such thing exists) would understand from my language.