lawyerliz (profile) wrote on Sat, 5/23/2009 - 9:19 am edit reply Alas, in South Florida, refinancing at 3% isn't working. When you are down half, owe 300 on a 150 place, they
could charge 2% and it wouldn't change anything. Maybe 1/2%!!! Those 3% deals only last 5 years by the way,
and if anyone thinks the property will be anywhere close to 300k, well I have a bridge I could sell them.
I am selling one of my rentals and the young girl with kids is getting the down payment from the county. My guess is she will walk in with little or zero down. A couple of years after identifying part of the problem is DAP's they are still at it. Disgusting! Interest rates in over blown markets won't cure a thing but maybe slow foreclosure at our expense.
A client in the above position had had her loans 1st & 2nd, modified down to 5%, and got in trouble again.
The bank was eager to modify some more. Well, down to 3% would reduce the payment 500 a month for
the 5 years, and where would they be then? Still hopelessly underwater. In 5 years if they walk, they could qualify for an fha loan, with a decent down payment on a house they could really afford. Defaulting today is one thing, defaulting in 5 years when everyone else has finished defaulting (I hope) is something else.
Liz - I am in FL in zip 32828/Orlando. Much of the carnage in price drops seems to be over, at least for now. Prices have dropped about 50%, plenty of homes at less than $100/sq ft.
Inventory in 32828 has gone from 1000+ units to 550 units although there is shadow inventory still to come on the market, I am sure. Of those 550 units, 440 are Single Family Homes, and of those 440 homes, about 160 of them are below 200k in asking price.
Insane. Default oning debt is the solution.
It's stupid to hold a high cost basis on land ... seems like an artificially inflated overhead on everyone.
Yet in the past decade this was our "road to wealth"?
Hope everyone feels awesomely rich now... oh wait... you're not really rich until you sell that land to a "greater fool"?
All new money enters the economy through the banking system. If the banks lend enough for inflation to occur, the Federal Reserve raises the inter-bank lending rate. This will force the banks to increase the rate they pay to depositors.
On the other hand, all creditors with fixed rate loans will continue to pay the banks at historic low levels (given how people have been refinancing to lower rates whenever possible). Creditors with floating rates are likely to be pressured by the higher interest rates, increasing default rates.
Thus, the implication of lending large enough amounts to cause inflation seems to be that the banks will incur severe losses (since they will have pay depositors more than what they will get from creditors). It then stands to reason that it is not in the interest of the banks to reflate the current bubble.
The only argument for reflation is that it would allow the banks to mark their current assets to higher levels, decreasing the losses they must realize. Given the credit they have been extended by the Federal Reserve, the banks could hold out and recognize the losses over many years, perhaps the better part of a decade.
Is it likely that the 'savings' from reflation would exceed the losses they will make from the accompanying inflation?
I don't understand how they are measuring "recession"? Is it merely the stock market prices? Is it unemployment? It's GDP, correct? Isn't GDP directly correlated to unemployment? How is it possible to end the recession and have unemployment rising?
I guess the bigger picture is, what is a "2nd half recovery" supposed to look like? I'll admit we got some good news (maybe very nuanced?) wrt unemployment yesterday. CA was down from 11.2 to 11 percent; and it was the first time unemployment didn't drop. However, state employees are about to go onto the unemployment rolls (or will they just cut back on services? Little confused on that). Additionally according to the report private companies were still laying off.
Even the Illusion of Prosperity will be a distant memory, a fable grandparents tell their bitter grandkids (who are tasked with paying for this illusion) about.
I just don't see us coming out of this in a positive way without some earth shattering discovery which fuels a new generation of ideas, products, and services. The information age may give birth to this, but it isn't the end in itself. I hope I live another 50 years to see how this all turns out even with diminished expectations.
Current policymaking is shifting the debt burden from the private sector to the federal government sector - and, in the process, increasing the total system (non-productive) debt burden by another $2.0 Trillion or so annually. Moreover, I would argue that this momentous government (Fed and Treasury) intervention in the pricing of finance further corrodes our system’s process of allocating financial and real resources. The “debt bomb” is not being diffused. Rather, the fuse is being somewhat lengthened as the bomb enlarges.
broward made an interesting point regarding "yes-men".
How do you grow up to be a yes-man? You do everything just the way management wants you to. Even though we don't realize it, management is watching our whole lives. Hence, they go after the people willing to sacrifice everything to keep the 4.0 through college, even if that person admits the GPA is just BS. Hence, workplace is full of people who are willing to sacrifice greatly in order to achieve "success".
beoward,
I wouldn't mind you teaching my kids, you might be too cynical. If they are in the path of a meat grinder I want them to see they are in the path of a meatgrinder and also believe there is some action they can take that will get them off that path (even if eventually it is hopeless). You seem like someone who would accept the meatgrinder fate, and would find a way to enjoy the time between now and when the meatgrinder is here...
If none of this makes sense its because I have been up all night and morning with a fussy baby with teeth coming in...
Such a double-dip slowdown has been nicknamed by economists a “W-shaped” recession, where recovery is so fragile, the country could be plunged into another slowdown as soon as it emerged from the last.
Drudge has a flash report on an interview with Obama from C-Span, described as "a break from meek Washington press corps...".
SCULLY: When you see GM though as “Government Motors,” you're reaction?
OBAMA: Well, you know – look we are trying to help an auto industry that is going through a combination of bad decision making over many years and an unprecedented crisis or at least a crisis we haven't seen since the 1930's. And you know the economy is going to bounce back and we want to get out of the business of helping auto companies as quickly as we can. I have got more enough to do without that. In the same way that I want to get out of the business of helping banks, but we have to make some strategic decisions about strategic industries...
Seems like he is pushing health-care costs into the limelight. So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit.
I don't understand all the focus of health care costs. Our unhealthy living the past 20+ years is adding to health care costs, and it doesn't seem like many have done anything to change their lifestyle. Honestly I too am overweight and concerned about my own weight. And honestly I have a hard time fitting "workout" into a schedule of "work+family". It would be nice if our baby stopped waking up the whole house at some point... guess I need to try a bit harder.
Someone yesterday also mentioned self-driving automobiles. Think of all the cost reduction we'll have in auto-insurance, accident body shops, etc. Additionally increased productivity as one can "work from their car". Imagine people pulling the same scam as the "work from home" scam (** I know there are many legitimate folks who work from home **). This has been my dream as well after having my first major auto-accident.
We've been putting people on the moon for 40 fucking years; yet we haven't figured out how to use sensors and network cars together in an efficient method of mass-transportation?! Wait; wouldn't this be a technology that we can potentially export and get a nice ROI on? Hello; stimulus package! Oh wait... I guess engineers have plenty of work and don't need the money as bad as those unionized construction workers... SNARK!
Also; reducing healthcare costs ==> reducing future payments of healthcare workers. So shouldn't that make any education in health care less expensive. Oh wait; education costs have no bearing on the benefit of future employment... (I guess that helps those of us who get allegedly useful degrees).
Someone yesterday also mentioned self-driving automobiles. Think of all the cost reduction we'll have in auto-insurance, accident body shops, etc. Additionally increased productivity as one can "work from their car". Imagine people pulling the same scam as the "work from home" scam (** I know there are many legitimate folks who work from home **). This has been my dream as well after having my first major auto-accident.!
Or, you could just take the train. But Rob Dawg does not approve.
On existing infrastructure? You would think Google would be working on this given their success with Google-Street Maps. Google can work to create "precision road maps" with an automaker + integrated GPS link... as well as the automaker's working to improve their "collision avoidance". It's a first step in driving independence... I know not everyone would want to drive this way. I can't stand driving anymore and I'm not even in my 30s yet.
I don't understand how they are measuring "recession"? Is it merely the stock market prices? Is it unemployment? It's GDP, correct? Isn't GDP directly correlated to unemployment? How is it possible to end the recession and have unemployment rising?
Welcome to the wonderful world of monetary inflation. Growth is measured in monetary units. To get "growth" all you have to do is force more money through the system, and, even if physical output of goods and services don't actually rise, but even fall, you can get this growth by systematically undermeasuring inflation, which governments around the world do even in good times.
Senator Hutchinson was trying to intervene on behalf of Chrysler dealership closings with the following amendment: No funds shall be expended from the Treasury to an auto manufacturer which has notified a dealership that it will be terminated without providing at least 60 days for that dealership to wind down its operations and sell its inventory.
It was not in the appropriations bill as Reid said it was "non-germane".
Another Amendment which may be of interest was proposed by Senator Isakson You heard me many times come to the floor to talk about the housing tax credit. The tax credit we finally amended to repeal the payback provision of $8,000 for first-time home buyers has brought an improvement in home sales of 40 percent at the entry level. This amendment merely removes the means test of a maximum income of $150,000 for a couple and $75,000 for an individual, and it removes the means test that they have to be a first-time home buyer, which means any home buyer buying a home for their principal residence would receive an $8,000 tax credit and there would be no limitation to their income to disqualify them.
I have always fought on this floor for a maximum tax credit of $15,000, and I know how difficult that has been. But in the evidence of what has happened with the current $8,000 with the means test, by removing it I am confident we will have a significant improvement in the housing market in America, which in turn will cause a significant improvement in the economy of the United States of America, as happened in 1968, 1974, 1981, 1982 and 1990 to 1991. Housing took America into a recession, and it was only when it recovered that America began to come out.
This improvement in that amendment, with this amendment, will be better for the people of the United States of America and better for our economy. I encourage my colleagues at an appropriate time to cast a favorable vote.
This amendment wasn't placed into the Supplemental... as it was ruled to be "non-germane".
In short; these are some of the items that some Senators are considering. I'm guessing since these were Republican amendments to the supplemental they wouldn't have passed anyway? But there is a potential they might come back at some point in the future as part of other legislation.
Vonbek: I just don't see us coming out of this in a positive way without some earth shattering discovery which fuels a new generation of ideas, products, and services. The information age may give birth to this, but it isn't the end in itself.
No, it won' be IT - that horse is dead. Biomedical engineering - genes, tissues, borgification of humans (post-biological evolution) will the the thing. I suspect that it will happen faster than the masses expect, but not fast enough to save us from some hard times over the next decade.
We live in interesting times - both a curse and a blessing.
You would think Google would be working on this given their success with Google-Street Maps.
The integration of satellite photos and map photos with actual locations and addresses is almost 100% based on data from the US Census Bureau. Their TIGER files are free to download and use for whatever purpose you can think of.
I had a project a couple years ago in which I needed to get the GPS location of thousands of addresses. The Google Maps API terms of service prohibited me using it for what I needed, so I dug around until I found TIGER. I coded up a system in less than 4 hours. It's really well documented!
If you want your dream to come true, push your congressfolk to keep funding available for continuous improvements to TIGER.
YSLP: We've been putting people on the moon for 40 fucking years; yet we haven't figured out how to use sensors and network cars together in an efficient method of mass-transportation?!
Two words: 1) Liability 2) Lawsuit - who wants to place themselves in front of that meat grinder to enrich bastards like John Edwards? Besides, the auto industry is brutal in terms of sales cycles. We've spent many years working with some vehicle technology and they still won't field it, The stuff you see in vehicles today is almost a decade old, in military vehicles older.
I had to start a whole new company for one client, because of their four page list of commercial liability coverages that they required and I could not find an insurer who would underwrite our current company because of some of the other work we do. The overhead sucks. I spend > 50% of my time on BS, instead of technical work.
I have to agree with Vonbeck777, unless and until I see sector virtually exploding with innovation-driven growth, and I'm not seeing it. What I do see is the same people doing the same things in hopes of returning to the Good Times (tm). Just a bit more evidence in my own personal trial that the majority of people have learned nothing. Of course, it wasn't the majority of people who created this mess, so the correlation is weak.
YLSP, there are engineers who have been working on autonomous cars for three decades. They have made tremendous progress, but it isn't the engineers who get to say whether something enters production. That's a management decision. As was mentioned previously, our current best bet is to go by train. When I lived in Manhattan, I loved the subway! Same in Paris.
I really enjoyed what one person wrote some time back, we are allegedly the richest country in the world, but we look at subway projects as unaffordable. Unlike other, less wealthy countries. Go figure.
Isakson is mistaken to say housing took America into recession.
In the instances he gives, the FRB responded to inflationary pressures, and housing purchases declined in consequence. So long as politicos, however well-meaning, fail to grasp what an end-stage credit cycle is, we'll have irrelevant policies proposed and enacted.
Coud be a sign of more of these kind of deals - another trough for another class of the PIGpeople.
BankUnited Sale May Signal FDIC Shift in Buyout Rules
May 22 (Bloomberg) -- WL Ross & Co., Blackstone Group LP and Carlyle Group’s purchase of BankUnited Financial Corp., the largest U.S. bank to collapse this year, came with a signal from regulators that they may be willing to let more buyout firms snap up banks as failures soar to a 15-year high.
The Federal Deposit Insurance Corp., citing the interest of private-equity firms in buying banks in receivership, said yesterday that it will soon provide “policy guidance” for potential investors. Spokesman David Barr declined to elaborate on the statement.
As was mentioned previously, our current best bet is to go by train. When I lived in Manhattan, I loved the subway! Same in Paris.
The commuter trains here in Chicago (commuter train is Metra, not the "EL" & subway) still allow alcohol on the evening rush hour trains. They got rid of the last of the bar cars last year because they needed the seating capacity (trains are already maximum length that the platforms allow), so you have to bring your own. A lot of people do work in the morning on the way in, and have a beer and chat with friends on the way home as a way to unwind. It's very popular.
Bond market dislocation will bring on the right side of the W. US and UK sovereign borrowing costs are escalating, which will impede government's ability to keep mortgage rates low. Increasing mortgage rates leads to further detioration (correction) in home prices. We all know what that leads to. Increasing corporate borrowing costs will also result from both the bond market dislocation and Obama's erosion of the concept of debt seniority, leading to further corporate bankruptcies and unemployment.
More from the article: Senator Jack Reed today wrote to regulators including Treasury Secretary Timothy Geithner raising “serious concerns” about private-equity firms buying banks.
“These activities represent another, particularly dangerous example of regulatory arbitrage whereby institutions and firms are shopping around a potentially risky activity until they find a regulatory who will allow it,” the Rhode Island Democrat wrote. Reed leads a Senate Banking subcommittee that oversees the securities industry.
... BankUnited’s acquisition marked “the first time, to my knowledge, that private capital has come in on such short notice and at such size and begun to run a bank literally the next day,” he said on the call.
Other potential suitors would have instituted “drastic consolidation,” closing branches and eliminating “a great number of jobs,” Kanas said. He said his group would mostly avoid that and allow management to stay “largely intact.”
So what if BankUnited fails again? Seeing they didn't change anything? Oh wait; taxpayers are on the hook for like 80% of the loosses...
Just wondering because my daughter brought up today that her Korean friends at school tell her that in Korea, the students go to school from 8:30-3:00, come home, and then go to tutoring from 5:00-11:00. I have a hard time (in my western mindset) imagining that.
Chicago dude: I live in OC, CA, but visit Chicago a lot. I love the alcohol policy on the Metra trains. Here's a conversation I had with my eight year old on the way back from a Cubs game.
Child: Daddy, you can't drink beer on the train.
Me: It's legal on these trains.
Child: Then why do you have it in a paper bag?
Me: Habit.
Everyone who says dumb home debtors should take the hit for their mistakes should now rise in a chorus of outrage that Chrysler dealers were suckered by Chrysler into taking more cars up until the moment of bankruptcy! Outrage! Protect the car dealers! Car dealers are the stuff America is made of! Down with Obamerika!
Everyone who says that foreclosure moratoriums only delay the pain of deleveraging and price correction and make things worse should now rise in a chorus of outrage that Chrysler dealers who were suckered into taking more cars from an obviously insolvent company on government life support are now being shuttered without 60 day or longer warnings, as if they were just common workers who could be laid off anytime the company says that they have no money to pay them. Outrage! Moratorium on closing down car dealers! Save the innocent and abused car dealers! Down with Obamerika!
doesn't debt seniority in a bankruptcy liquidation mainly come into play at the stage of liquidation?
isn't Chrysler being handled as a restructuring, which is done by negotiating concessions all around?
If so, then the rage of a few bondholders and car dealers is really just negotiation tactics, nothing more, nothing less.
All the critics of PIMPCO's bond barons now rise in a chorus to shout: But the primacy of the bondholders must be protected at all costs! Anthying else is a threat to the existence of the USA!
On the W double dip . . . yeah, quite possibly. Or it could be an L. Or it could be a VL.
If only some of the geniuses on this board were in charge then the recovery would be so assured.... right.
There is no good way out in the near to medium term.
Personally, I'd rather see the banks treated a little more like Chysler than the way they have been treated (not sold to Italians, necessarily, but give the bondholders a nice Marine style crew cut and tell them to take it like a Capitalist).
Yeah, well the momster has a pacemaker, glasses, hearing aide, cane. But she still enjoys life.
And she's had the hearing aid and glasses for over 45 years.
"Damn it, Dagny! I need the government to get out of the way and let me do my job!"
She sat across the desk from him. She appeared casual but confident, a slim body with rounded shoulders like an exquisitely engineered truss. How he hated his debased need for her, he who loathed self-sacrifice but would give up everything he valued to get in her pants ... Did she know?
"I heard the thugs in Washington were trying to take your Rearden metal at the point of a gun," she said. "Don't let them, Hank. With your advanced alloy and my high-tech railroad, we'll revitalize our country's failing infrastructure and make big, virtuous profits."
"Oh, no, I got out of that suckers' game. I now run my own hedge-fund firm, Rearden Capital Management."
"What?"
He stood and adjusted his suit jacket so that his body didn't betray his shameful weakness. He walked toward her and sat informally on the edge of her desk. "Why make a product when you can make dollars? Right this second, I'm earning millions in interest off money I don't even have."
He gestured to his floor-to-ceiling windows, a symbol of his productive ability and goodness.
"There's a whole world out there of byzantine financial products just waiting to be invented, Dagny. Let the leeches run my factories into the ground! I hope they do! I've taken out more insurance on a single Rearden Steel bond than the entire company is even worth! When my old company finally tanks, I'll make a cool $877 million."
Their eyes locked with an intensity she was only beginning to understand. Yes, Hank ... claim me ... If we're to win the battle against the leeches, we must get it on ... right now ... Don't let them torture us for our happiness ... or our billions.
He tore his eyes away.
"I can't. Sex is base and vile!"
"No, it's an expression of our highest values and our admiration for each other's minds."
"Your mind gives me the biggest boner, Dagny Taggart."
He fell upon her like a savage, wielding his mouth like a machete, and in the pleasure she took from him her body became an extension of her quarterly earnings report—proof of her worthiness as a lover. His hard-on was sanction enough.
Outsider:
True. My wife is a product of their system. Very competitive. I don't think they have proms, sports or other social activities we have in American high school. She ended up going to University of Maryland program in Korea and into Arizona State.
As great as their education system is she mentioned to me recently that a number of graduates go to job interviews with their parents...
EvilHenryPaulson (profile) wrote on Sat, 5/23/2009 - 11:37 am
just occurred to me, it wasn't only children playing the games
MTV's My Super Sweet 16, Bridezilla, Renovate my house, ...
the unnatural conditions of profligate credit extension created an entire culture and corresponding set of values. you can believe anything until the money runs out - and the money becomes self-validating. we don't live in a bubble economy merely, but a bubble culture. it's going to take a lot of time to undo the damage, if it is even possible to recover. we'll see, I guess.
km4
Adelson doesn't have the reserves, he'll lose control of the company in bankruptcy later this year. He's just hanging on, extracting concessions from creditors when he can. He no longer has any edge. Tech conventions have been on the decline for years, the Macau concession he swindled is gone, retail rents are down especially at the high end. He gambled too big at the wrong time. Pennsylvania + Casino, not going to save him. Best hope is for the Singapore hotel, which the government bailed out, to make enough money to meet some interest payments
The local fishwrap had an article that homes in Central Fla are becoming even more unaffordable. I guess
because salaries are dropping, 'cause the prices certainly are dropping.
Thanx to the poster who posted the Barron's article.
Article Discussing Korean Helicopter Parents Some write their kids' resumes, while others show up at job fairs and even call hiring managers to land interviews. With the job market continuing to shrink, helicopter parents'' have started descending into the hiring process to rescue their grown-up, jobless children.
Among the first to notice the chopper moms and dads were recruiters like Ki Eun-joo, a headhunter who has recently been getting more inquiries from parents.From the application procedure to the salary negotiation, they want to know anything and everything,'' says Ki, who mainly recruits for medium-sized domestic firms. ``Some insist that they come and meet me in person.''
I'm gonna have to keep an eye on my wife...
Another article Helicopter parents are not limited to teenagers. They fly overhead even for some university students or career professionals. A group of adults in their 20s or 30s who rely on their parents for money are classified as the “Mother and Father” fund. These so-called adults frequently ask their parents, “Which TV brand should I buy?” or “Mom, where should we go for dinner?”
“They [helicopter kids] discuss matters with parents that should be discussed with their wives or husbands,” Sohn said.
In an April survey organized by Career, a recruiting portal site, 49.6 percent of 1,700 job-seekers in their 20s said parental influence or involvement is critical when applying for a job. “The survey showed that about seven out of 10 job seekers have helicopter parents,” said Moon Ji-young, an official at Career.
In America seems like most parent-child relationships are opposite poles of a magnet once they hit the teen years...
Highly worthwhile piece in weekend FT on path dependency in economic development, using the U.S.'s 20th century rise and Argentina's decline as examples:
Everyone remembers the world-changing events of the morning of September 11, 2001. Everyone remembers the planes commandeered by terrorists slamming into the twin towers of the Centro Mundial de Comercio in Buenos Aires. As the richest country on earth and the modern world’s first global hyperpower, Argentina was a prime target for malcontents revolting against the might of the western capitalist order.
Fewer recall the disaster that befell the United States of America three months later. Fewer recall the wrenching moment when the US federal government, crushed by the huge debts it had run up borrowing abroad in pesos, announced it was bankrupt. The economic implosion that followed, in which thousands of jobless, homeless Americans slept rough and picked through trash tips at night in Central Park, shocked only those still used to thinking of the US as a first-world country.
Well, no. It happened the other way round. But that was not inevitable. And the crisis that has hit the US – and then the entire global financial system, threatening to plunge the world into another Great Depression – should be a warning. The US could have gone the way of Argentina. It could still go that way, if the painfully learnt lessons of the past are forgotten.
A short century ago the US and Argentina were rivals. Both were riding the first wave of globalisation at the turn of the 20th century. Both were young, dynamic nations with fertile farmlands and confident exporters. Both brought the beef of the New World to the tables of their European colonial forebears. Before the Great Depression of the 1930s, Argentina was among the 10 richest economies in the world. The millions of emigrant Italians and Irish fleeing poverty at the end of the 19th century were torn between the two: Buenos Aires or New York? The pampas or the prairie?
A hundred years later there was no choice at all. One had gone on to be among the most successful economies ever. The other was a broken husk.
The new hot Christmas toys will come from G.I. Joe. Wall Street Banksters collection, Helicopter support dollar gun ship with Pilot Ben, Bank evictor Shelia, Turbo Timmy with his insult weapons and don't forget Propaganda Oprahbama! Buy them all now, easy credit available for everyone but you!
Been thinking about the Pakistani government takeout of the Taliban in progress, beginning to see it as playing the game on the Taliban's terms - 1.5 to 2 million IDP's right at the peak of harvest time, all they have to do is drag this out just long enough to seriously destabilize society there as crops rot in the field - in other areas, harvest is brought in but basically no surplus due to all the extra mouths to feed in the area. Fall back into the mountains and then come back out to bring the pot to a boil once the simmer is in progress...hard to see this going well regardless of the military outcome.
@EvilHenryPaulson
Yes I read about this....Las Vegas is really hurting but that new casino in Bethlehem, PA is going to do just fine Wink
the real casino is going to be in carbon cap-and-trade speculation. but hey, it may well revitalize the financial industry, and put a lot of laid-off traders back to work. we just finished gambling on shelter and lost, so why not try basic utilities and energy production next?
Christmas this year should be interesting...I don't know how retail sales will go...I mean I know they will be down drastically but I am trying to figure out whether Mrs. and Mr. America will buck the trend with a good ole fashion yule tide cheer...a finally gasp before the lights go out, or if bunker mentality will have Mrs. America knitting sweaters and socks for gift-giving. I really can't tell yet.
10yr interest rates have gone from 2.94 last month to 3.13 last week to 3.45 Friday. No more buyers for gov't long term paper. My guess is the gov't dealers (and TARP recipiants) are stuffed to the gills, and the Fed has little left of its $300 Billion debt monetization fund. What to do? Monetize more debt? This is starting to look like the end game to me. My take on the recession shape is a backslash \ .
I remember the CB&Q trains in Chicago for their smoker cars. You didn't have to light up, just breath the second hand smoke. Gone now of course.
Vonbek777 (profile) wrote on Sat, 5/23/2009 - 11:58 am
Christmas this year should be interesting...I don't know how retail sales will go...I mean I know they will be down drastically but I am trying to figure out whether Mrs. and Mr. America will buck the trend with a good ole fashion yule tide cheer...a finally gasp before the lights go out, or if bunker mentality will have Mrs. America knitting sweaters and socks for gift-giving. I really can't tell yet.
I can't imagine the birth rate won't go up. A lot more evenings staying at home, colder houses to lower heating bills, need for low-cost distraction from a punishing reality (besides teevee, which many can't live without any more), and fewer malls to shop in. Gotta do something with all that extra time.
YLSP -- The only ivy league acceptance in my daughter's (very small, private) class was a Korean student, into Cornell. When I found out her family had hired a "college tutor" to help her in the application/entrance process, I thought - d'oh - why didn't I think of that?
Outsider
the better way is to have 2-4 kids and pit them against each other in competition, and never give congratulations
You could have helped with the applications as much as a tutor would. As for the night school stuff. It gives the slower kids more practice, but frequently they just memorize the process to answer a fixed set of questions. For the smarter kids who get bored, they get the chance to be exposed to new stuff faster. There is not the hangup of letting kids skip grades (was a big deal at my school because the school loses a year of funding per student)
Outsider (profile) wrote on Sat, 5/23/2009 - 12:07 pm
When I found out her family had hired a "college tutor" to help her in the application/entrance process, I thought - d'oh - why didn't I think of that?
probably for the same reason that a peer in ability to Roger Clemens a decade ago never thought of taking steroids at the time, but now in retrospect it seems such an obvious choice.
Thus, the implication of lending large enough amounts to cause inflation seems to be that the banks will incur severe losses (since they will have pay depositors more than what they will get from creditors).
I think the answer to this is, and has been, securitization. It is the way to offload interest rate risk, and that risk must be offloaded if long-term fixed rate mortgages are to be offered. We have found out lately that everybody who borrowed short and loaned long came to sorrow: S&Ls in the 80s, hedge funds now.
just so it is clear, I have absolutely nothing against Italians owning banks, no less supplying pizza to the FDIC.
I do, on the other hand, have grave reservations about the historical and economic knowledge possessed by anyone who thinks a rapid and relatively full recovery is possible from the massive asset bubble and debt binge that is being deflated/deleveraged. Sorry. Similar historical episodes seem to have all played out for years . . . and sometimes decades.
Are mistakes being made? Of course. But to pretend that the alternative is a quick and happy fix is mistaken, and possibly disingenuous or delusional.
In the last thread you seemed to agree in principle that Keynesian stimulus does nothing to fix an economy. I agree with you that it can "buy time," however. But I don't see our leaders doing ANYTHING to fix the underlying problems. Where's new leveraging regulation? Where's government intervention in the mortgage markets - requiring 20% down on everything always? (I'm not a sadist or that unrealistic - Obama should make it a tiered system - 5% down in '09, 10% down in '10, and then 20% down by '11 in perpetuity).
Vonbeck, one of my grandfathers was sent away during the GD from CA to Kansas to live with an aunt he did not know at the age of 7. He was seperated from his younger siblings who his parents kept at home. My other grandfather was kicked out of the house at age 13 or 14, his belongings left on the front steps. His mother had died and his father was a drunken bastard.
Vonbek777 (profile) wrote on Sat, 5/23/2009 - 12:13 pm
I think the birth rate will go up too, I also see the number of kids being donated to orphanages going up next year as families collapse under strain.
it seems counter to rationality (birth rate rising) but there are also survival factors that come back into play especially at the very bottom of the ladder. I agree with your second observation, unfortunately. often kids were seen as "too expensive" in the past few decades, but now it may become literally true again for far more people squeezed down the lower-middle class but not impoverished enough to qualify for assistance, and not on the dole. IMHO we will actually see a period in history where a substantial number of non-working people will effectively out-earn lower-middle class families once government benefits are taken into consideration. a sad state of affairs.
EvilHenryPaulson (profile) wrote on Sat, 5/23/2009 - 1:13 pm reply Ignore user Outsider
the better way is to have 2-4 kids and pit them against each other in competition, and never give congratulations
I have filipino family by marriage who fit this description. They competed against each other in school. To this day their work ethic (and family cohesiveness) is exceptional. I never thought about the "no congratulations" part - how do you think that fits in?
I think my daughter would have responded better to a college app tutor, plus I don't really know what they look for in the essays. She's valedictorian, but no ivy league acceptances (applied to 2). Which is fine.
or they could band together in groups, create communities, contribute to the common good of those communities and then, dare I say it, pay taxes and raise expectations and create the kind of quality public schools that served the U.S. so well for so long.
It is not just about the money. It is about the entire cultural and political and economic commitment to making quality education matter. Under capitalism, however, you can generally judge the importance of things by what people are willing to pay for them.
Money spent may not always be the best criteria to judge quality, but it is often a reasonably fair indicator of desire. That is, in addition to an economic issue it is also a symbolic issue. It communicates priorities. Looked at that way, as well as from a dozen other perspectives, Americans as a collectivity really have not cared much about the quality of their children's education for a few decades.
With regret I must say that this provides an explanation for the mechanics of the famous refrain of Jas. It is how a society births and breeds dopes.
The forward sloping shaped non-recovery (shaped like this: ) is indeed possible. In places like california the odds of it are getting greater.
Danny (profile) wrote on Sat, 5/23/2009 - 12:23 pm
ResistanceisFeudal-
But I don't see our leaders doing ANYTHING to fix the underlying problems.
neither do I. hence the observation about "buying time", and unfortunately wasting the opportunity. temporary jobs in the census or public works construction aren't growth, nor is creating new positions in an already-bloated and unsustainable government (especially the type that should be temporary, like FDIC's recent expansion and that of other agencies expanding now based on immediate demand), but will become "perm-orary"). the nearest bit we have out of all is "green technology", but rest assured it will produce even bigger boondoggles than corn-based ethanol. not that public works projects didn't help once upon a time but that was over 70 years ago and marshalled a lot of engineering expertise and meaningful sorts of labor plus skill and intellectual capital that were transferrable to the private sector. building a bridge or revitalizing existing, aging infrastructure... will have a much more muted impact IMHO.
ED;
Am I understanding the implications.
More inventory = lower prices = "cash flow investors" might think they can cash flow positive at the low basis = pressure on rents?
Perhaps that is too convoluted... I imagine trustee buyers are those who are buying to rent it out instead of buying to live in it...
In all seriousness, an L-shaped recovery is precisely what we should hope for. Last September when this crisis kicked into high gear, an economics reporter (forget his name) from the WaPo said on Charlie Rose that the truth of the matter was that our entire economy was a bubble. That we had excess economic capacity not supported by our fundamental needs or abilities. So that every single asset class and component of our economy would need to deflate to a sustainable level. Not deflate and then re-inflate. But deflate permanently.
That is an L-shaped recession. And that is the only healthy, sustainable outcome.
"I think my daughter would have responded better to a college app tutor, plus I don't really know what they look for in the essays. She's valedictorian, but no ivy league acceptances (applied to 2). Which is fine."
Outsider,
if your daughter wants an ivy degree, let her transfer after her sophomore year. There are always drop-outs or burn-outs, and transfers are often easier. I have an Ivy degree, but at today's prices, I would be tempted to do a state u for the first year or two and transfer afterwards...
"the truth of the matter was that our entire economy was a bubble. That we had excess economic capacity not supported by our fundamental needs or abilities."
So true. In fact, we have an Agrarian Economy. Consumers are the soil, big finance and government are the farmers. The soil has been so over-farmed at this point that, rather than let it lie fallow to recover, we are pouring on the XXX power fertilizer in order to squeeze out one more harvest. This is despite the label on the XXX fertilizer bag warning that its use may lead to the need for a complete topsoil transplant.
lawyerliz (profile) wrote on Sat, 5/23/2009 - 9:19 am edit reply Alas, in South Florida, refinancing at 3% isn't working. When you are down half, owe 300 on a 150 place, they
could charge 2% and it wouldn't change anything. Maybe 1/2%!!! Those 3% deals only last 5 years by the way,
and if anyone thinks the property will be anywhere close to 300k, well I have a bridge I could sell them.
Hmmm, a "W" shaped recovery, how apropos...
Christmas.
Let's all clap our hands and believe real real hard in Santa Clause.
I am selling one of my rentals and the young girl with kids is getting the down payment from the county. My guess is she will walk in with little or zero down. A couple of years after identifying part of the problem is DAP's they are still at it. Disgusting! Interest rates in over blown markets won't cure a thing but maybe slow foreclosure at our expense.
A client in the above position had had her loans 1st & 2nd, modified down to 5%, and got in trouble again.
The bank was eager to modify some more. Well, down to 3% would reduce the payment 500 a month for
the 5 years, and where would they be then? Still hopelessly underwater. In 5 years if they walk, they could qualify for an fha loan, with a decent down payment on a house they could really afford. Defaulting today is one thing, defaulting in 5 years when everyone else has finished defaulting (I hope) is something else.
Must do some housework.
Hmmm, a "W" shaped recovery, how apropos...
Exactly!
If the US has a W then it could be called the George "W" Bush recovery!
Who should we blame this one on??
Liz - I am in FL in zip 32828/Orlando. Much of the carnage in price drops seems to be over, at least for now. Prices have dropped about 50%, plenty of homes at less than $100/sq ft.
Inventory in 32828 has gone from 1000+ units to 550 units although there is shadow inventory still to come on the market, I am sure. Of those 550 units, 440 are Single Family Homes, and of those 440 homes, about 160 of them are below 200k in asking price.
Insane. Default oning debt is the solution.
It's stupid to hold a high cost basis on land ... seems like an artificially inflated overhead on everyone.
Yet in the past decade this was our "road to wealth"?
Hope everyone feels awesomely rich now... oh wait... you're not really rich until you sell that land to a "greater fool"?
All new money enters the economy through the banking system. If the banks lend enough for inflation to occur, the Federal Reserve raises the inter-bank lending rate. This will force the banks to increase the rate they pay to depositors.
On the other hand, all creditors with fixed rate loans will continue to pay the banks at historic low levels (given how people have been refinancing to lower rates whenever possible). Creditors with floating rates are likely to be pressured by the higher interest rates, increasing default rates.
Thus, the implication of lending large enough amounts to cause inflation seems to be that the banks will incur severe losses (since they will have pay depositors more than what they will get from creditors). It then stands to reason that it is not in the interest of the banks to reflate the current bubble.
The only argument for reflation is that it would allow the banks to mark their current assets to higher levels, decreasing the losses they must realize. Given the credit they have been extended by the Federal Reserve, the banks could hold out and recognize the losses over many years, perhaps the better part of a decade.
Is it likely that the 'savings' from reflation would exceed the losses they will make from the accompanying inflation?
I don't understand how they are measuring "recession"? Is it merely the stock market prices? Is it unemployment? It's GDP, correct? Isn't GDP directly correlated to unemployment? How is it possible to end the recession and have unemployment rising?
I guess the bigger picture is, what is a "2nd half recovery" supposed to look like? I'll admit we got some good news (maybe very nuanced?) wrt unemployment yesterday. CA was down from 11.2 to 11 percent; and it was the first time unemployment didn't drop. However, state employees are about to go onto the unemployment rolls (or will they just cut back on services? Little confused on that). Additionally according to the report private companies were still laying off.
Even the Illusion of Prosperity will be a distant memory, a fable grandparents tell their bitter grandkids (who are tasked with paying for this illusion) about.
Good thimes.
I just don't see us coming out of this in a positive way without some earth shattering discovery which fuels a new generation of ideas, products, and services. The information age may give birth to this, but it isn't the end in itself. I hope I live another 50 years to see how this all turns out even with diminished expectations.
[Hmmm, a "W" shaped recovery, how apropos]
Oh, you mean an inherited recovery ? LOL.
We're living in ObamAmerika now. The inheritance period is way over. Obama OWNS this economy, for better or worse.
Prediction - Longest. Lame duck session. Ever.
I really pity whoever inherits the mess Obama leaves.
Current policymaking is shifting the debt burden from the private sector to the federal government sector - and, in the process, increasing the total system (non-productive) debt burden by another $2.0 Trillion or so annually. Moreover, I would argue that this momentous government (Fed and Treasury) intervention in the pricing of finance further corrodes our system’s process of allocating financial and real resources. The “debt bomb” is not being diffused. Rather, the fuse is being somewhat lengthened as the bomb enlarges.
PrudentBear
I'm seeing a "F" shaped bomb of an economy...
broward made an interesting point regarding "yes-men".
How do you grow up to be a yes-man? You do everything just the way management wants you to. Even though we don't realize it, management is watching our whole lives. Hence, they go after the people willing to sacrifice everything to keep the 4.0 through college, even if that person admits the GPA is just BS. Hence, workplace is full of people who are willing to sacrifice greatly in order to achieve "success".
beoward,
I wouldn't mind you teaching my kids, you might be too cynical. If they are in the path of a meat grinder I want them to see they are in the path of a meatgrinder and also believe there is some action they can take that will get them off that path (even if eventually it is hopeless). You seem like someone who would accept the meatgrinder fate, and would find a way to enjoy the time between now and when the meatgrinder is here...
If none of this makes sense its because I have been up all night and morning with a fussy baby with teeth coming in...
YLSP,
I feel for you. Up all night too, my 16 month old seems to have all the rest of his teeth coming in at once. More coffee please.
Such a double-dip slowdown has been nicknamed by economists a “W-shaped” recession, where recovery is so fragile, the country could be plunged into another slowdown as soon as it emerged from the last.
It's W's all the way down.
Drudge has a flash report on an interview with Obama from C-Span, described as "a break from meek Washington press corps...".
SCULLY: When you see GM though as “Government Motors,” you're reaction?
OBAMA: Well, you know – look we are trying to help an auto industry that is going through a combination of bad decision making over many years and an unprecedented crisis or at least a crisis we haven't seen since the 1930's. And you know the economy is going to bounce back and we want to get out of the business of helping auto companies as quickly as we can. I have got more enough to do without that. In the same way that I want to get out of the business of helping banks, but we have to make some strategic decisions about strategic industries...
Seems like he is pushing health-care costs into the limelight.
So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit.
I don't understand all the focus of health care costs. Our unhealthy living the past 20+ years is adding to health care costs, and it doesn't seem like many have done anything to change their lifestyle. Honestly I too am overweight and concerned about my own weight. And honestly I have a hard time fitting "workout" into a schedule of "work+family". It would be nice if our baby stopped waking up the whole house at some point... guess I need to try a bit harder.
YLSP--May I recommend sweet red wine rubbed onto the baby's gum and a cold wet washcloth to chew on.
Someone yesterday also mentioned self-driving automobiles. Think of all the cost reduction we'll have in auto-insurance, accident body shops, etc. Additionally increased productivity as one can "work from their car". Imagine people pulling the same scam as the "work from home" scam (** I know there are many legitimate folks who work from home **). This has been my dream as well after having my first major auto-accident.
We've been putting people on the moon for 40 fucking years; yet we haven't figured out how to use sensors and network cars together in an efficient method of mass-transportation?! Wait; wouldn't this be a technology that we can potentially export and get a nice ROI on? Hello; stimulus package! Oh wait... I guess engineers have plenty of work and don't need the money as bad as those unionized construction workers... SNARK!
Also; reducing healthcare costs ==> reducing future payments of healthcare workers. So shouldn't that make any education in health care less expensive. Oh wait; education costs have no bearing on the benefit of future employment... (I guess that helps those of us who get allegedly useful degrees).
Whenever I read "bank seizure" I've begun to look at the verb as from the medical side. At some point we're going to have a "bank aneurysm".
Someone yesterday also mentioned self-driving automobiles. Think of all the cost reduction we'll have in auto-insurance, accident body shops, etc. Additionally increased productivity as one can "work from their car". Imagine people pulling the same scam as the "work from home" scam (** I know there are many legitimate folks who work from home **). This has been my dream as well after having my first major auto-accident.!
Or, you could just take the train. But Rob Dawg does not approve.
On existing infrastructure? You would think Google would be working on this given their success with Google-Street Maps. Google can work to create "precision road maps" with an automaker + integrated GPS link... as well as the automaker's working to improve their "collision avoidance". It's a first step in driving independence... I know not everyone would want to drive this way. I can't stand driving anymore and I'm not even in my 30s yet.
Yes, Virginia, there is a ........ oh, crap, Liz beat me to it.
As always, Doug Noland has some insightful things to say about our madness.
YSLP asked:
I don't understand how they are measuring "recession"? Is it merely the stock market prices? Is it unemployment? It's GDP, correct? Isn't GDP directly correlated to unemployment? How is it possible to end the recession and have unemployment rising?
Welcome to the wonderful world of monetary inflation. Growth is measured in monetary units. To get "growth" all you have to do is force more money through the system, and, even if physical output of goods and services don't actually rise, but even fall, you can get this growth by systematically undermeasuring inflation, which governments around the world do even in good times.
Update on some of the Senate Actions:
Senator Hutchinson was trying to intervene on behalf of Chrysler dealership closings with the following amendment:
No funds shall be expended from the Treasury to an auto manufacturer which has notified a dealership that it will be terminated without providing at least 60 days for that dealership to wind down its operations and sell its inventory.
It was not in the appropriations bill as Reid said it was "non-germane".
Another Amendment which may be of interest was proposed by Senator Isakson
You heard me many times come to the floor to talk about the housing tax credit. The tax credit we finally amended to repeal the payback provision of $8,000 for first-time home buyers has brought an improvement in home sales of 40 percent at the entry level. This amendment merely removes the means test of a maximum income of $150,000 for a couple and $75,000 for an individual, and it removes the means test that they have to be a first-time home buyer, which means any home buyer buying a home for their principal residence would receive an $8,000 tax credit and there would be no limitation to their income to disqualify them.
I have always fought on this floor for a maximum tax credit of $15,000, and I know how difficult that has been. But in the evidence of what has happened with the current $8,000 with the means test, by removing it I am confident we will have a significant improvement in the housing market in America, which in turn will cause a significant improvement in the economy of the United States of America, as happened in 1968, 1974, 1981, 1982 and 1990 to 1991. Housing took America into a recession, and it was only when it recovered that America began to come out.
This improvement in that amendment, with this amendment, will be better for the people of the United States of America and better for our economy. I encourage my colleagues at an appropriate time to cast a favorable vote.
This amendment wasn't placed into the Supplemental... as it was ruled to be "non-germane".
In short; these are some of the items that some Senators are considering. I'm guessing since these were Republican amendments to the supplemental they wouldn't have passed anyway? But there is a potential they might come back at some point in the future as part of other legislation.
Vonbek: I just don't see us coming out of this in a positive way without some earth shattering discovery which fuels a new generation of ideas, products, and services. The information age may give birth to this, but it isn't the end in itself.
No, it won' be IT - that horse is dead. Biomedical engineering - genes, tissues, borgification of humans (post-biological evolution) will the the thing. I suspect that it will happen faster than the masses expect, but not fast enough to save us from some hard times over the next decade.
We live in interesting times - both a curse and a blessing.
intersting article on housing from a FL perspective
The Housing Hurricane Will Howl Again - Barrons.com
You would think Google would be working on this given their success with Google-Street Maps.
The integration of satellite photos and map photos with actual locations and addresses is almost 100% based on data from the US Census Bureau. Their TIGER files are free to download and use for whatever purpose you can think of.
I had a project a couple years ago in which I needed to get the GPS location of thousands of addresses. The Google Maps API terms of service prohibited me using it for what I needed, so I dug around until I found TIGER. I coded up a system in less than 4 hours. It's really well documented!
If you want your dream to come true, push your congressfolk to keep funding available for continuous improvements to TIGER.
YSLP: We've been putting people on the moon for 40 fucking years; yet we haven't figured out how to use sensors and network cars together in an efficient method of mass-transportation?!
Two words: 1) Liability 2) Lawsuit - who wants to place themselves in front of that meat grinder to enrich bastards like John Edwards? Besides, the auto industry is brutal in terms of sales cycles. We've spent many years working with some vehicle technology and they still won't field it, The stuff you see in vehicles today is almost a decade old, in military vehicles older.
I had to start a whole new company for one client, because of their four page list of commercial liability coverages that they required and I could not find an insurer who would underwrite our current company because of some of the other work we do. The overhead sucks. I spend > 50% of my time on BS, instead of technical work.
I have to agree with Vonbeck777, unless and until I see sector virtually exploding with innovation-driven growth, and I'm not seeing it. What I do see is the same people doing the same things in hopes of returning to the Good Times (tm). Just a bit more evidence in my own personal trial that the majority of people have learned nothing. Of course, it wasn't the majority of people who created this mess, so the correlation is weak.
YLSP, there are engineers who have been working on autonomous cars for three decades. They have made tremendous progress, but it isn't the engineers who get to say whether something enters production. That's a management decision. As was mentioned previously, our current best bet is to go by train. When I lived in Manhattan, I loved the subway! Same in Paris.
I really enjoyed what one person wrote some time back, we are allegedly the richest country in the world, but we look at subway projects as unaffordable. Unlike other, less wealthy countries. Go figure.
Isakson is mistaken to say housing took America into recession.
In the instances he gives, the FRB responded to inflationary pressures, and housing purchases declined in consequence. So long as politicos, however well-meaning, fail to grasp what an end-stage credit cycle is, we'll have irrelevant policies proposed and enacted.
Coud be a sign of more of these kind of deals - another trough for another class of the PIGpeople.
BankUnited Sale May Signal FDIC Shift in Buyout Rules
May 22 (Bloomberg) -- WL Ross & Co., Blackstone Group LP and Carlyle Group’s purchase of BankUnited Financial Corp., the largest U.S. bank to collapse this year, came with a signal from regulators that they may be willing to let more buyout firms snap up banks as failures soar to a 15-year high.
The Federal Deposit Insurance Corp., citing the interest of private-equity firms in buying banks in receivership, said yesterday that it will soon provide “policy guidance” for potential investors. Spokesman David Barr declined to elaborate on the statement.
Pete
HT/ the oil drum
We have got to form the CR Bank Holding Company!
As was mentioned previously, our current best bet is to go by train. When I lived in Manhattan, I loved the subway! Same in Paris.
The commuter trains here in Chicago (commuter train is Metra, not the "EL" & subway) still allow alcohol on the evening rush hour trains. They got rid of the last of the bar cars last year because they needed the seating capacity (trains are already maximum length that the platforms allow), so you have to bring your own. A lot of people do work in the morning on the way in, and have a beer and chat with friends on the way home as a way to unwind. It's very popular.
It's a lot easier to see the pain coming in your neighbour's house than your own...
Bond market dislocation will bring on the right side of the W. US and UK sovereign borrowing costs are escalating, which will impede government's ability to keep mortgage rates low. Increasing mortgage rates leads to further detioration (correction) in home prices. We all know what that leads to. Increasing corporate borrowing costs will also result from both the bond market dislocation and Obama's erosion of the concept of debt seniority, leading to further corporate bankruptcies and unemployment.
My take is not a W, but a VL.
More from the article:
Senator Jack Reed today wrote to regulators including Treasury Secretary Timothy Geithner raising “serious concerns” about private-equity firms buying banks.
“These activities represent another, particularly dangerous example of regulatory arbitrage whereby institutions and firms are shopping around a potentially risky activity until they find a regulatory who will allow it,” the Rhode Island Democrat wrote. Reed leads a Senate Banking subcommittee that oversees the securities industry.
...
BankUnited’s acquisition marked “the first time, to my knowledge, that private capital has come in on such short notice and at such size and begun to run a bank literally the next day,” he said on the call.
Other potential suitors would have instituted “drastic consolidation,” closing branches and eliminating “a great number of jobs,” Kanas said. He said his group would mostly avoid that and allow management to stay “largely intact.”
So what if BankUnited fails again? Seeing they didn't change anything? Oh wait; taxpayers are on the hook for like 80% of the loosses...
YLSP - Do you have family ties to S.Korea?
Just wondering because my daughter brought up today that her Korean friends at school tell her that in Korea, the students go to school from 8:30-3:00, come home, and then go to tutoring from 5:00-11:00. I have a hard time (in my western mindset) imagining that.
And, as for the second of a double dipper... aren't we all still hurtling down the first V's slope still?
shakes head
Chicago dude: I live in OC, CA, but visit Chicago a lot. I love the alcohol policy on the Metra trains. Here's a conversation I had with my eight year old on the way back from a Cubs game.
Child: Daddy, you can't drink beer on the train.
Me: It's legal on these trains.
Child: Then why do you have it in a paper bag?
Me: Habit.
All together now:
Everyone who says dumb home debtors should take the hit for their mistakes should now rise in a chorus of outrage that Chrysler dealers were suckered by Chrysler into taking more cars up until the moment of bankruptcy! Outrage! Protect the car dealers! Car dealers are the stuff America is made of! Down with Obamerika!
Everyone who says that foreclosure moratoriums only delay the pain of deleveraging and price correction and make things worse should now rise in a chorus of outrage that Chrysler dealers who were suckered into taking more cars from an obviously insolvent company on government life support are now being shuttered without 60 day or longer warnings, as if they were just common workers who could be laid off anytime the company says that they have no money to pay them. Outrage! Moratorium on closing down car dealers! Save the innocent and abused car dealers! Down with Obamerika!
Or should I just say: BULLSHIT.
Fiat, Italian for Chrysler!
doesn't debt seniority in a bankruptcy liquidation mainly come into play at the stage of liquidation?
isn't Chrysler being handled as a restructuring, which is done by negotiating concessions all around?
If so, then the rage of a few bondholders and car dealers is really just negotiation tactics, nothing more, nothing less.
All the critics of PIMPCO's bond barons now rise in a chorus to shout: But the primacy of the bondholders must be protected at all costs! Anthying else is a threat to the existence of the USA!
Car dealers are the stuff America is made of!
WTF?
More like an "O" Recession. Just keeps going round and round.
On the W double dip . . . yeah, quite possibly. Or it could be an L. Or it could be a VL.
If only some of the geniuses on this board were in charge then the recovery would be so assured.... right.
There is no good way out in the near to medium term.
Personally, I'd rather see the banks treated a little more like Chysler than the way they have been treated (not sold to Italians, necessarily, but give the bondholders a nice Marine style crew cut and tell them to take it like a Capitalist).
More like an "O" Recession. Just keeps going round and round.
but it is a cheery O
Bubblisimo
My point, exactly. The outrage voice here over the past few days is, as I said at the end of the post, "BULLSHIT."
Car dealers are realtors locked in a showroom, nothing more, nothing less.
M-F, I think Orlando is prolly the best market in the state. That sez to me
south Fla should bottom at 45 cents on the dollar off peak.
Can you get conventional loans there.
Any houses get drowned in your area?
"Biomedical engineering - genes, tissues, borgification of humans (post-biological evolution) will the the thing."
Very likely, if profitable. If it does happen it will change human society in profound ways, perhaps not to everyone's liking.
Thank glod my kids are 28 and 40.
they actually didn't keep me up too much.
@ nova (profile) wrote on Sat, 5/23/2009 - 9:23 am
More like an "O" Recession. Just keeps going round and round.
but it is a cheery O
Sounds like a circle jerk because that's what essentially the pundits and MSM happy talk is all about.
A bit lower please
Yeah, well the momster has a pacemaker, glasses, hearing aide, cane. But she still enjoys life.
And she's had the hearing aid and glasses for over 45 years.
Hey it's worth a report because it's just so damn appropo for this bullshit happy talk US economy from pundits and MSM.
ATLAS SHRUGGED UPDATED FOR THE CURRENT FINANCIAL CRISIS.
BY JEREMIAH TUCKER
McSweeney's Internet Tendency: Atlas Shrugged Updated for the Current Financial Crisis.
1.
"Damn it, Dagny! I need the government to get out of the way and let me do my job!"
She sat across the desk from him. She appeared casual but confident, a slim body with rounded shoulders like an exquisitely engineered truss. How he hated his debased need for her, he who loathed self-sacrifice but would give up everything he valued to get in her pants ... Did she know?
"I heard the thugs in Washington were trying to take your Rearden metal at the point of a gun," she said. "Don't let them, Hank. With your advanced alloy and my high-tech railroad, we'll revitalize our country's failing infrastructure and make big, virtuous profits."
"Oh, no, I got out of that suckers' game. I now run my own hedge-fund firm, Rearden Capital Management."
"What?"
He stood and adjusted his suit jacket so that his body didn't betray his shameful weakness. He walked toward her and sat informally on the edge of her desk. "Why make a product when you can make dollars? Right this second, I'm earning millions in interest off money I don't even have."
He gestured to his floor-to-ceiling windows, a symbol of his productive ability and goodness.
"There's a whole world out there of byzantine financial products just waiting to be invented, Dagny. Let the leeches run my factories into the ground! I hope they do! I've taken out more insurance on a single Rearden Steel bond than the entire company is even worth! When my old company finally tanks, I'll make a cool $877 million."
Their eyes locked with an intensity she was only beginning to understand. Yes, Hank ... claim me ... If we're to win the battle against the leeches, we must get it on ... right now ... Don't let them torture us for our happiness ... or our billions.
He tore his eyes away.
"I can't. Sex is base and vile!"
"No, it's an expression of our highest values and our admiration for each other's minds."
"Your mind gives me the biggest boner, Dagny Taggart."
He fell upon her like a savage, wielding his mouth like a machete, and in the pleasure she took from him her body became an extension of her quarterly earnings report—proof of her worthiness as a lover. His hard-on was sanction enough.
"Scream your secret passions, Hank Rearden!"
"Derivatives!"
"Yes!"
"Credit-default swaps!"
"Oh, yes! Yes!"
"Collateralized debt obligation."
"YES! YES! YES!"
Yeah, sell the banks to the Italians!! An excellent idea.
What have been the popular toys for kids these days? Wondering if we'll see a shift in pass-times at that level
Like Princess + Ponies to basic Dolls + Tea set
Video games + Remote Control Cars to basic Building Blocks + Shovel and Pail
km4 - that was great!
There is some proof that not sleeping makes you fat.
just occurred to me, it wasn't only children playing the games
MTV's My Super Sweet 16, Bridezilla, Renovate my house, ...
Outsider:
True. My wife is a product of their system. Very competitive. I don't think they have proms, sports or other social activities we have in American high school. She ended up going to University of Maryland program in Korea and into Arizona State.
As great as their education system is she mentioned to me recently that a number of graduates go to job interviews with their parents...
not sleeping makes you lethargic, and more likely to eat processed foods
You actually burn a lot more calories just sitting while awake than you do when sleeping
If we did sell them to Italy the would the FDIC BBF team get imported Italian pizza? Wine as well? Beer still goes better with pizza.
A Casino Rises in the Place of a Fallen Steel Giant - NYTimes.com
A Casino Rises in the Place of a Fallen Steel Giant - NYTimes.com
Gambling AND financial ponzi schemes are now what's driving the new America economy
How the once mighty USA has fallen....
Now back to the happy talk about 'green shoot's from the MSM and government official clowns !
tickle me elmo, furby, tamagotchi, barney, pokemon
those toys have no place in any rational real economy
When is the last time you heard about "the hot christmas toy" phenomenon outside credit bubble land
EvilHenryPaulson (profile) wrote on Sat, 5/23/2009 - 11:37 am
just occurred to me, it wasn't only children playing the games
MTV's My Super Sweet 16, Bridezilla, Renovate my house, ...
the unnatural conditions of profligate credit extension created an entire culture and corresponding set of values. you can believe anything until the money runs out - and the money becomes self-validating. we don't live in a bubble economy merely, but a bubble culture. it's going to take a lot of time to undo the damage, if it is even possible to recover. we'll see, I guess.
This must be the new dream for Americans because most the better paying jobs are NOT coming back and U6 is likely headed to 20 - 25 %
km4
Adelson doesn't have the reserves, he'll lose control of the company in bankruptcy later this year. He's just hanging on, extracting concessions from creditors when he can. He no longer has any edge. Tech conventions have been on the decline for years, the Macau concession he swindled is gone, retail rents are down especially at the high end. He gambled too big at the wrong time. Pennsylvania + Casino, not going to save him. Best hope is for the Singapore hotel, which the government bailed out, to make enough money to meet some interest payments
hahahaha.
Here's comes the "W" recovery!
The local fishwrap had an article that homes in Central Fla are becoming even more unaffordable. I guess
because salaries are dropping, 'cause the prices certainly are dropping.
Thanx to the poster who posted the Barron's article.
Article Discussing Korean Helicopter Parents
Some write their kids' resumes, while others show up at job fairs and even call hiring managers to land interviews. With the job market continuing to shrink, helicopter parents'' have started descending into the hiring process to rescue their grown-up, jobless children.
Among the first to notice the chopper moms and dads were recruiters like Ki Eun-joo, a headhunter who has recently been getting more inquiries from parents.From the application procedure to the salary negotiation, they want to know anything and everything,'' says Ki, who mainly recruits for medium-sized domestic firms. ``Some insist that they come and meet me in person.''
I'm gonna have to keep an eye on my wife...
Another article
Helicopter parents are not limited to teenagers. They fly overhead even for some university students or career professionals. A group of adults in their 20s or 30s who rely on their parents for money are classified as the “Mother and Father” fund. These so-called adults frequently ask their parents, “Which TV brand should I buy?” or “Mom, where should we go for dinner?”
“They [helicopter kids] discuss matters with parents that should be discussed with their wives or husbands,” Sohn said.
In an April survey organized by Career, a recruiting portal site, 49.6 percent of 1,700 job-seekers in their 20s said parental influence or involvement is critical when applying for a job. “The survey showed that about seven out of 10 job seekers have helicopter parents,” said Moon Ji-young, an official at Career.
In America seems like most parent-child relationships are opposite poles of a magnet once they hit the teen years...
@EvilHenryPaulson
Yes I read about this....Las Vegas is really hurting but that new casino in Bethlehem, PA is going to do just fine
Also, it's amazing that the published this.
Sign of capitulation?
Article said that prices would go lower. In the Real Estate Section.
U.S. vs Argentina: Path Dependency in Economic Ascent/Decline
U.S. vs Argentina: Path Dependency in Economic Ascent/Decline
Highly worthwhile piece in weekend FT on path dependency in economic development, using the U.S.'s 20th century rise and Argentina's decline as examples:
Everyone remembers the world-changing events of the morning of September 11, 2001. Everyone remembers the planes commandeered by terrorists slamming into the twin towers of the Centro Mundial de Comercio in Buenos Aires. As the richest country on earth and the modern world’s first global hyperpower, Argentina was a prime target for malcontents revolting against the might of the western capitalist order.
Fewer recall the disaster that befell the United States of America three months later. Fewer recall the wrenching moment when the US federal government, crushed by the huge debts it had run up borrowing abroad in pesos, announced it was bankrupt. The economic implosion that followed, in which thousands of jobless, homeless Americans slept rough and picked through trash tips at night in Central Park, shocked only those still used to thinking of the US as a first-world country.
Well, no. It happened the other way round. But that was not inevitable. And the crisis that has hit the US – and then the entire global financial system, threatening to plunge the world into another Great Depression – should be a warning. The US could have gone the way of Argentina. It could still go that way, if the painfully learnt lessons of the past are forgotten.
A short century ago the US and Argentina were rivals. Both were riding the first wave of globalisation at the turn of the 20th century. Both were young, dynamic nations with fertile farmlands and confident exporters. Both brought the beef of the New World to the tables of their European colonial forebears. Before the Great Depression of the 1930s, Argentina was among the 10 richest economies in the world. The millions of emigrant Italians and Irish fleeing poverty at the end of the 19th century were torn between the two: Buenos Aires or New York? The pampas or the prairie?
A hundred years later there was no choice at all. One had gone on to be among the most successful economies ever. The other was a broken husk.
More here.
The new hot Christmas toys will come from G.I. Joe. Wall Street Banksters collection, Helicopter support dollar gun ship with Pilot Ben, Bank evictor Shelia, Turbo Timmy with his insult weapons and don't forget Propaganda Oprahbama! Buy them all now, easy credit available for everyone but you!
Been thinking about the Pakistani government takeout of the Taliban in progress, beginning to see it as playing the game on the Taliban's terms - 1.5 to 2 million IDP's right at the peak of harvest time, all they have to do is drag this out just long enough to seriously destabilize society there as crops rot in the field - in other areas, harvest is brought in but basically no surplus due to all the extra mouths to feed in the area. Fall back into the mountains and then come back out to bring the pot to a boil once the simmer is in progress...hard to see this going well regardless of the military outcome.
km4 (profile) wrote on Sat, 5/23/2009 - 11:50 am
@EvilHenryPaulson
Yes I read about this....Las Vegas is really hurting but that new casino in Bethlehem, PA is going to do just fine Wink
the real casino is going to be in carbon cap-and-trade speculation. but hey, it may well revitalize the financial industry, and put a lot of laid-off traders back to work. we just finished gambling on shelter and lost, so why not try basic utilities and energy production next?
Christmas this year should be interesting...I don't know how retail sales will go...I mean I know they will be down drastically but I am trying to figure out whether Mrs. and Mr. America will buck the trend with a good ole fashion yule tide cheer...a finally gasp before the lights go out, or if bunker mentality will have Mrs. America knitting sweaters and socks for gift-giving. I really can't tell yet.
10yr interest rates have gone from 2.94 last month to 3.13 last week to 3.45 Friday. No more buyers for gov't long term paper. My guess is the gov't dealers (and TARP recipiants) are stuffed to the gills, and the Fed has little left of its $300 Billion debt monetization fund. What to do? Monetize more debt? This is starting to look like the end game to me. My take on the recession shape is a backslash \ .
I remember the CB&Q trains in Chicago for their smoker cars. You didn't have to light up, just breath the second hand smoke. Gone now of course.
A member of the TickerForum has been keeping track of the Fed buyback. Link here
Fed has spent $123B. At this rate their $300B will be done on August 11.
For some reason I think they will announce more money for buy-back and less for buying MBS'?
Vonbek777 (profile) wrote on Sat, 5/23/2009 - 11:58 am
Christmas this year should be interesting...I don't know how retail sales will go...I mean I know they will be down drastically but I am trying to figure out whether Mrs. and Mr. America will buck the trend with a good ole fashion yule tide cheer...a finally gasp before the lights go out, or if bunker mentality will have Mrs. America knitting sweaters and socks for gift-giving. I really can't tell yet.
I can't imagine the birth rate won't go up. A lot more evenings staying at home, colder houses to lower heating bills, need for low-cost distraction from a punishing reality (besides teevee, which many can't live without any more), and fewer malls to shop in. Gotta do something with all that extra time.
YLSP -- The only ivy league acceptance in my daughter's (very small, private) class was a Korean student, into Cornell. When I found out her family had hired a "college tutor" to help her in the application/entrance process, I thought - d'oh - why didn't I think of that?
I don't think we'll have a "double-U" shaped recession.
More like "one-and-a-half-U" shaped. If we're really lucky, it extends horizontally from there.
I don't think we'll be really lucky.
I think the birth rate will go up too, I also see the number of kids being donated to orphanages going up next year as families collapse under strain.
Outsider
the better way is to have 2-4 kids and pit them against each other in competition, and never give congratulations
You could have helped with the applications as much as a tutor would. As for the night school stuff. It gives the slower kids more practice, but frequently they just memorize the process to answer a fixed set of questions. For the smarter kids who get bored, they get the chance to be exposed to new stuff faster. There is not the hangup of letting kids skip grades (was a big deal at my school because the school loses a year of funding per student)
Outsider (profile) wrote on Sat, 5/23/2009 - 12:07 pm
When I found out her family had hired a "college tutor" to help her in the application/entrance process, I thought - d'oh - why didn't I think of that?
probably for the same reason that a peer in ability to Roger Clemens a decade ago never thought of taking steroids at the time, but now in retrospect it seems such an obvious choice.
Thus, the implication of lending large enough amounts to cause inflation seems to be that the banks will incur severe losses (since they will have pay depositors more than what they will get from creditors).
I think the answer to this is, and has been, securitization. It is the way to offload interest rate risk, and that risk must be offloaded if long-term fixed rate mortgages are to be offered. We have found out lately that everybody who borrowed short and loaned long came to sorrow: S&Ls in the 80s, hedge funds now.
just so it is clear, I have absolutely nothing against Italians owning banks, no less supplying pizza to the FDIC.
I do, on the other hand, have grave reservations about the historical and economic knowledge possessed by anyone who thinks a rapid and relatively full recovery is possible from the massive asset bubble and debt binge that is being deflated/deleveraged. Sorry. Similar historical episodes seem to have all played out for years . . . and sometimes decades.
Are mistakes being made? Of course. But to pretend that the alternative is a quick and happy fix is mistaken, and possibly disingenuous or delusional.
ResistanceisFeudal-
In the last thread you seemed to agree in principle that Keynesian stimulus does nothing to fix an economy. I agree with you that it can "buy time," however. But I don't see our leaders doing ANYTHING to fix the underlying problems. Where's new leveraging regulation? Where's government intervention in the mortgage markets - requiring 20% down on everything always? (I'm not a sadist or that unrealistic - Obama should make it a tiered system - 5% down in '09, 10% down in '10, and then 20% down by '11 in perpetuity).
Vonbeck, one of my grandfathers was sent away during the GD from CA to Kansas to live with an aunt he did not know at the age of 7. He was seperated from his younger siblings who his parents kept at home. My other grandfather was kicked out of the house at age 13 or 14, his belongings left on the front steps. His mother had died and his father was a drunken bastard.
Vonbek777 (profile) wrote on Sat, 5/23/2009 - 12:13 pm
I think the birth rate will go up too, I also see the number of kids being donated to orphanages going up next year as families collapse under strain.
it seems counter to rationality (birth rate rising) but there are also survival factors that come back into play especially at the very bottom of the ladder. I agree with your second observation, unfortunately. often kids were seen as "too expensive" in the past few decades, but now it may become literally true again for far more people squeezed down the lower-middle class but not impoverished enough to qualify for assistance, and not on the dole. IMHO we will actually see a period in history where a substantial number of non-working people will effectively out-earn lower-middle class families once government benefits are taken into consideration. a sad state of affairs.
EvilHenryPaulson (profile) wrote on Sat, 5/23/2009 - 1:13 pm reply Ignore user Outsider
the better way is to have 2-4 kids and pit them against each other in competition, and never give congratulations
I have filipino family by marriage who fit this description. They competed against each other in school. To this day their work ethic (and family cohesiveness) is exceptional. I never thought about the "no congratulations" part - how do you think that fits in?
I think my daughter would have responded better to a college app tutor, plus I don't really know what they look for in the essays. She's valedictorian, but no ivy league acceptances (applied to 2). Which is fine.
V777,
People can either worship the god of status quo and keep believing in the old assumptions.. and inflict needless suffering on themselves.
Or you can be realistic and objective about it. Easier said than done ...
I predict an & shaped recovery
My take is not a W, but a VL.
That's what I was trying to say - you said it much better. And your nick is cool too.
parents could hire tutors . . .
or they could band together in groups, create communities, contribute to the common good of those communities and then, dare I say it, pay taxes and raise expectations and create the kind of quality public schools that served the U.S. so well for so long.
It is not just about the money. It is about the entire cultural and political and economic commitment to making quality education matter. Under capitalism, however, you can generally judge the importance of things by what people are willing to pay for them.
Money spent may not always be the best criteria to judge quality, but it is often a reasonably fair indicator of desire. That is, in addition to an economic issue it is also a symbolic issue. It communicates priorities. Looked at that way, as well as from a dozen other perspectives, Americans as a collectivity really have not cared much about the quality of their children's education for a few decades.
With regret I must say that this provides an explanation for the mechanics of the famous refrain of Jas. It is how a society births and breeds dopes.
The forward sloping shaped non-recovery (shaped like this: ) is indeed possible. In places like california the odds of it are getting greater.
Or a ^ shaped recovery
Or a $&@#*!! shaped recovery
A rumor regarding REO inventory coming on market:
Effective Demand: Rumor...
I'm in favor of Zero Growth coupled with population control. In my mind, THAT is a healthy economy.
Danny (profile) wrote on Sat, 5/23/2009 - 12:23 pm
ResistanceisFeudal-
But I don't see our leaders doing ANYTHING to fix the underlying problems.
neither do I. hence the observation about "buying time", and unfortunately wasting the opportunity. temporary jobs in the census or public works construction aren't growth, nor is creating new positions in an already-bloated and unsustainable government (especially the type that should be temporary, like FDIC's recent expansion and that of other agencies expanding now based on immediate demand), but will become "perm-orary"). the nearest bit we have out of all is "green technology", but rest assured it will produce even bigger boondoggles than corn-based ethanol. not that public works projects didn't help once upon a time but that was over 70 years ago and marshalled a lot of engineering expertise and meaningful sorts of labor plus skill and intellectual capital that were transferrable to the private sector. building a bridge or revitalizing existing, aging infrastructure... will have a much more muted impact IMHO.
ED;
Am I understanding the implications.
More inventory = lower prices = "cash flow investors" might think they can cash flow positive at the low basis = pressure on rents?
Perhaps that is too convoluted... I imagine trustee buyers are those who are buying to rent it out instead of buying to live in it...
In all seriousness, an L-shaped recovery is precisely what we should hope for. Last September when this crisis kicked into high gear, an economics reporter (forget his name) from the WaPo said on Charlie Rose that the truth of the matter was that our entire economy was a bubble. That we had excess economic capacity not supported by our fundamental needs or abilities. So that every single asset class and component of our economy would need to deflate to a sustainable level. Not deflate and then re-inflate. But deflate permanently.
That is an L-shaped recession. And that is the only healthy, sustainable outcome.
"I think my daughter would have responded better to a college app tutor, plus I don't really know what they look for in the essays. She's valedictorian, but no ivy league acceptances (applied to 2). Which is fine."
Outsider,
if your daughter wants an ivy degree, let her transfer after her sophomore year. There are always drop-outs or burn-outs, and transfers are often easier. I have an Ivy degree, but at today's prices, I would be tempted to do a state u for the first year or two and transfer afterwards...
Thanks bobn. Of course, you know where the "nick" comes from. ;>
"the truth of the matter was that our entire economy was a bubble. That we had excess economic capacity not supported by our fundamental needs or abilities."
So true. In fact, we have an Agrarian Economy. Consumers are the soil, big finance and government are the farmers. The soil has been so over-farmed at this point that, rather than let it lie fallow to recover, we are pouring on the XXX power fertilizer in order to squeeze out one more harvest. This is despite the label on the XXX fertilizer bag warning that its use may lead to the need for a complete topsoil transplant.