Very few - if any - new homes are small & appropriate for young families. With folks looking to downsize, more of the smaller sized housing stock is existing homes. Sounds plausible to me, but what do I know?
Whoever said "think globally, drink locally" is genius!
I was supposed to go to some future homebuyers thingy but hell with it. Nothing worth buying at these price points yet. Might as well stay home and watch the cormorants go fishing for frogs over a nice glass of wine.
/sips her Todd Taylor reserve primativo; nom nom nom....
I think it would be valuable to overlay a zip code foreclosure map with locations of new home projects. Might give some clarity as to what the builders are fighting.
From ZeroHedge Alan Grayson Letter To Neil Barofsky Requesting Audit of Citi First, Darrel Issa taking on Bernanke in what may prove a fateful and timely opposition against the Federal Reserve, now Alan Grayson going for Bernanke, Geithner, and Vikram's jugular. Just when it seemed that the D.C.-Wall Street crony alliance would last forever (don't worry Barney, we still love you), opposition voices finally emerge and take on the biggest culprits head on.
From Bloomberg June 24 -- Former Treasury Secretary Henry Paulson will appear next month before a congressional panel looking into whether regulators pressured Bank of America Corp. to complete its takeover of Merrill Lynch & Co., a spokeswoman for the committee said.
Yes, the wheels of justice indeed grind slowly. I hope they will grind fine, as promised
I love the term 'mind the gap' and it's very appropriate these days on this side of the pond.
Development near me that is still building came out with an affordable option: a 1400 sqft duplex. The problem is they still want 280k and up when existing inventory is $100 sqft or less. No amount of tax incentive is going to fix that gap.
Just say it out loud to your friends, family and coworkers: We are in a depression and it is going to be nasty.
Be firm and factual and be ready to defend your position but with the droves of negative reports and graphs to be drawn from the internet, printed or emailed, how can you lose the argument?
The sooner we start believing the hard truths the sooner we can make the adjustments and start climbing out of the hole we've dug.
Go forth and be loud and proud in your declaration of the obvious. Hell, it might even make a difference.
yep, In my neck of the woods, new home means track home (or glorified McMansion) about a hour from the center of town, not to mention HOA and streets littered with foreclosures.
Audit of Citi? Don't we own Citi? Why order what is routine and normal?
Then again, audit of AIG disclosed lots of juicy bits but had precisely zero real impact.
For some strange reasons, the Congress is not at all angry with the banksters
/snark off
The fed has been ripping off the public since its inception. Since Nixon defaulted on gold promises in 1971, annualized CPI inflation has been ~ 4.5%. However, the actual theft has been larger. Absent the fed, the natural tendency would have been falling prices, approximately 2% or 3% per year in my estimation.
What's my basis? Since 1995, MZM has grown at a rate > 50% above nominal GDP. Therein lies the foolishness of Greenspan, the enabler of the finance capitalism ripoff machine.
The rich love inflation. It's the source of their wealth. Is it any wonder we are heading towards a society where the middle class is just a whisker away from poverty?
CR: I find it strange that most analysts are looking at existing home sales for stability in the housing market. I think the new home market is the place to look.
I think that accurate total (new and existing) inventory is the place to look, because declining inventory will precede significant increases in new home starts (excepting friction from custom dream homes and location assymetries).
The issue connects with the leading indicators discussion from the last thread.
WSJ weighs in According to the documents, the second set unearthed by congressional investigators, Federal Deposit Insurance Corp. Chairman Sheila Bair wrote to Fed Chairman Ben Bernanke before the aid was unveiled, saying there was "strong discomfort with this deal at the FDIC." Ms. Bair was referring to a plan to have the FDIC provide guarantees against losses on BofA assets. "My board does not want to do this," Ms. Bair wrote Jan. 14.
Two days later the FDIC announced it would help provide protection from losses on about $118 billion of BofA assets. The loan guarantee was part of a $20 billion package designed to help the bank close its deal for Merrill Lynch & Co.
...
Mr. Bernanke is scheduled to appear Thursday, testifying two weeks after Bank of America Chief Executive Kenneth D. Lewis. Lawmakers, especially House Republicans increasingly hostile to the Fed, are expected to ask Mr. Bernanke about Mr. Lewis's suggestion that the government pressured him to not disclose details about the discussions, and that officials made clear that they would consider ousting management.
...
This documents, and a set released at the time of the Lewis hearing, show Fed staffers critical of bank management. Malcolm Alfriend, senior vice president of the Fed Bank of Richmond, provided in a Dec. 20 email "preliminary thoughts on getting a pound of flesh out of Lewis." Subsequent emails showed Fed staff wanted BofA to have a "price to pay" for any assistance.
"Personally, I think management should be downgraded, no more acquisitions, raise some 'real' capital," Deborah Bailey, then the deputy director of the Fed's division of banking supervision and regulation, wrote to Mr. Alfriend.
Four months later, around the time Mr. Lewis lost his chairman's seat in late April, regulators stepped up their involvement in BofA, putting the bank under supervisory action. Such confidential actions are not publicly disclosed. They give the bank time to address serious problems with regulators without triggering alarm among depositors.
...
The dispute between the FDIC and other regulators flared in January. Mr. Warsh, in a Jan. 8 email to fellow top Fed officials, relayed a conversation with Ms. Bair and Comptroller of the Currency John Dugan. "Dugan is fine; Sheila hates it and doesn't want to play," Mr. Warsh wrote from his BlackBerry.
What's the big deal about "the gap"? I mean, heck, you can't build'em (for long) at a loss, but you can sell an existing home for $1 if need be. Isn't Flint MI the poster child for this kind of thing???
This is just silly, see my prior comment, less new houses less sales, more used houses, better value more sales, more used houses: why build more new, fewer new sales...
It is pretty simple and a natural part of the adjustment process.
Just say it out loud to your friends, family and coworkers: We are in a depression and it is going to be nasty.
EC,
That's how I see it. No soup lines. But a drastic shift down in living standards for many. That and a realization that the future will not be as big or as bright as previously expected.
The fed with its bailouts will make matters worse. Consider. From 1930 to 1940, the S&P 500 had a real annualized return of 1.9% (thanks to a 2% annualized deflation). From 2000 until 5/2009, the S&P 500 has had annualized returns of NEGATIVE 5.51%! And house prices have fallen more since 2006 than during the GD.
I'm still short vanity and long free time. Unfortunately, bankers are still long venality. sigh
I am an appraiser and I will defend our profession. The honest appraisers were "Black Listed" years ago. Not for being bad appraisers but because WE ARE HONEST. The banks and lenders wanted appraisers who would "make the deal work". We are not coming in low today on purpose. It is the market....we only report. Our opinions are based on stats and data. The lenders wanted shitty appraisals and got them. The crooks made their money and are GONE. THE HVCC MANDATES lenders order through a 3rd party. When this 1st passed the lenders COULD NOT hold ownership interest in these Appraiser Management Companies. When it finally went through....THAT WAS STRUCK FROM THE AGREEMENT. The 3rd party management companies have in no uncertain terms told us the appraisers that if we want to work...the fee is $150-200. We used to make $300-500. Costs to appraisers for data and other essential items has RISEN...fees are cut in 1/2....and frankly...I could give a crap where your value comes in at. How hard will you work for 1/2 of your salary. It is a disgrace that your biggest asset will be evaluated by a guy making $8 bucks an hour. A honest and ethical appraiser can only do 1 House per day. We spend 20-30 minutes doing the inspection and HOURS compiling data and typing up the report. EVERY GOOD appraiser I know has had enough...What other profession has seen it's fees decrease on average for the past 2 DECADES?
Obama signs $106 billion bill for Iraq, Afghan wars
Barfly,
Fortunately, the $106 billion, as well as most other war funding, is "off" budget" and therefore won't be included in the budget deficit. Whew! Thank the lord for "off" budget budgeting!
And now NY Times.
Enjoy the fireworks - it is almost July 4th!
A memo written by Republicans, citing e-mail and internal Fed documents that were subpoenaed from the central bank, is building a case that Mr. Bernanke was a Machiavellian autocrat who forced Bank of America to go through with a disastrous merger that it no longer wanted to complete.
But the committee’s Democratic chairman, Representative Edolphus Towns of New York, is investigating whether Bank of America executives were engaged in an elaborate shakedown, demanding that the Fed and the Treasury provide more than $100 billion in fresh capital and guarantees against the losses that were building up at Merrill Lynch.
Republicans are circulating newly unearthed e-mail that suggests Fed officials kept the Securities and Exchange Commission and the Office of the Comptroller of the Currency in the dark about its efforts to keep the merger alive by informally reassuring Kenneth D. Lewis, the chief executive of Bank of America, that the government would provide the bank with extra help if it was needed.
By that point, however, the S.E.C. had abdicated to the Fed its authority over investment banks like Merrill Lynch. And the comptroller’s office was responsible for overseeing commercial banks, but not the umbrella holding company.
The new e-mail message reinforces the impression that Fed officials badly wanted Bank of America to complete the Merrill takeover, despite Merrill’s spiraling losses.
But other e-mail between Fed officials shows that Bank of America executives were pressuring the Fed and the Treasury up to the last minute on Dec. 30, when the deal was scheduled to close, to provide written promises that the government would provide billions in new capital and other protection.
The documents show that Fed officials refused to provide any specific commitments, though a top official did assure the bank’s chief financial officer, Joe L. Price, that the government would provide help, if needed.
“I told Joe that we were not yet in a position to proffer a package, but we were working toward something that works for them and for us,” wrote Kevin M. Warsh, a Fed governor, in an e-mail message to a senior Treasury official on Dec. 30.
A little more than two weeks later, the Fed and the Treasury indeed provided huge assistance — $20 billion in new capital and guarantees against losses for $118 billion in Merrill Lynch assets — over the protests of Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, whose agency would be the guarantor.
Yes, more power to the Fed. Heck, give it the right to declare war!
To summarise: the world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30.
We care a lot about the gamblers and the pushers and the geeks
We care a lot about the smack and crack and whack that hits the street
We care a lot about the welfare of all the boys and girls
We care a lot about you people cause we're out to save the world
--Faith No More
And Darrell Issa is a worthless turd - he was a prime shaker behind the recall Gray Davis movement. Poor Gray Davis - screwed by the GOP energy deregulation boondoggle, screwed by ENRON while the Bush Energy Department held him down, and then screwed by the California electorate, which got its just desserts: The Governator.
Without taking any position on your forecast, your argument about the S&P 500 returns in the 1930s and decade of 2000-2009 is seeriously flawed. You are comparing two vastly different periodizations. The Great Depression started with a crash in 1929, so you are leaving out that giant loss by startiing with the S&P in 1930, whereas by starting in 2000 you are starting before the dot.com crash. It would make as much sense to chart the S&P from March 2009 to the present and declare that we are in a secular bull market. In other words, comparing decades is meaningless at best.
As to your forecast, I also think we are looking at a long tough slog. But I would not discount the massive difference between a Japan style stagnation for 20 years and a Great Depression-like depression. If we end up with a true GD 2.0, you will know and feel the difference
I don't think so. In any event, I'm positive Bush and CONgress kept it "off" budget. Almost $1 trillion of it! It's public record.
Don't believe me? For a quick and dirty analysis, just compare the budget deficits with the increase in the national debt since the wars started. It's astounding.
Angry Saver - I'm in total agreement that BushCo kept war spending off budget, but I seem to recall that that was one of Obama's first changes when he took office, though, like I said, I can't prove it. I'll keep looking.
Uh, SS runs a surplus that IS included in the budget. This "unified budget" has understated deficits for decades and given cover for Reagan and Bush the Lesser to cut income taxes on the wealthy, driving the nation deep into debt.
Gray Davis was lame, but his budgets were closer to balanced than Arnolds.
Arnold tossed away more in revenue than Davis ever gave anyone or anything, let alone union contracts. Arnold jettisoned $3-4 billion a year on car registration fees and engineered another $2 billion annual give away to the biggest corporations in the state. He didn't cut up the credit cards. He tossed out $6 billion a year of stable income.
More than a revenue problem, California has an idiocy problem.
I was talking about the NPV of future liabilities incurred. The promises owed by SS and Medicare. I think the last CBO estimate I read shows that SS cash flow turns negative next year, Medicare in 2017. So, either taxes go up or benefits go down or both.
The Great Depression started with a crash in 1929, so you are leaving out that giant loss by startiing with the S&P in 1930
Au CONtraire. For the decade from 1/1929 to 1/1939 (which includes the 1929 "crash") the annualized gains for the S&P 500 were 0.55%, far less than the 1.88% in my previous example.
Our capacity to produce now is much greater than in the GD. But in relative terms of a decreased standard of living, I'm calling it a depression. And as for Japan, I'm not discounting anything. But I am mindful that their slog is still going strong and arguably worsening after 2 decades!
The jury is still out on Japan and the current U.S. debacles. Sadly, both were easily avoidable but for the mischief of wall street and venal central banks.
There's actually a brand-new dynamic here in Chicago that I've started noticing. There are some neighborhoods, especially on the northwest side of the city, where all of the homes are extremely ideal for first-time homebuyers - 1500-2000 sq ft, 3 bedrooms, modest, solid construction and the local public K-8 school is rated up there with the best in the state. These homes are almost never put up for sale (for as long as I've been paying attention) - they've always been passed from parent to child. They now are starting to show up on the MLS in decent numbers and are a true alternative to new-construction crapboxes out in the far suburbs. Unfortunately the asking prices are usually way too high, but as reality sets in for those that have inherited a 60-year old home and have become only the second owner, I think more and more people in this area are going to question the logic of paying for a poorly-built home out in the burbs where the school districts are being decimated by the foreclosures and bond issues to build new schools based on 2005 estimates of student population.
Great Depresion II, Great Resesion I, Less Ice Cream for All.
Call it what you want. The middle class becomes lower middle, the poor become hungry and desititue, upper middle class goes a notch or so down. The mega rich stay mega rich.
Most peoples standard of living will be lower two years from now. And most people aren't ready or won't know what happened until it is far too late.
I've invested in both - currently holding a bit of UNG.
UNG is interesting on many levels, very beaten on now especially relative to crude, very prone to manipulation, interesting relationship to russia and gazprom in particular...
also, the fuel of the future.
palladium is similar in many ways, (substitute norilsk for gazprom) and occupies kind of the 'basest' corner of the PM market, the least monetary of them if that makes sense.
and, yes, the relationship to autos is a big part of that, much as the relationship to other fossil fuels is interesting in terms of nat gas.
I think they are going to have a difficult time portraying Bernanke as a "Machiavellian autocrat," however. That's more like Paulson. They might have better luck with mad scientist bent on revisiting an old experiment.
I think they are going to have a difficult time portraying Bernanke as a "Machiavellian autocrat," however. That's more like Paulson. They might have better luck with mad scientist bent on revisiting an old experiment.
I can't tell which image is scarier.
The Central Bank of the people, for the people and by the people.
And we all know who these people are.
Thanks for the explanation. I know palladium is used heavily in catalytic converters (and platinum), and I agree about it being the most industrial. Silver acts mostly industrial these days, too. I need to reflect more on nat gas and its place in the world.
Gary (profile) wrote (in reply to...) on Wed, 6/24/2009 - 7:03 pm
Uh, SS runs a surplus that IS included in the budget. This "unified budget" has understated deficits for decades and given cover for Reagan and Bush the Lesser to cut income taxes on the wealthy, driving the nation deep into debt.
But did nothing for William Jefferson apparently in between. This is the worst form of selective bias and has no place in these discussions.
Sorry TJ, I'm with Gary and the others. Gray Davis was a mere imp of satan compared to Arnold.
Now here is something really interesting, especially as I'm token city of Davis hater here:
Brown Sues to Invalidate Pleasanton's Illegal Housing Cap
"Pleasanton's draconian and illegal limit on new housing forces people to commute long distances, adding to the bumper-to-bumper traffic along 580 and 680 and increasing dangerous air pollution," Brown said. "It's time for Pleasanton to balance its housing and its jobs and take full advantage of its underutilized land and proximity to BART."
Peterson: "To stress the point a bit more, the stability in the housing market that we want for economic recovery is stable prices and new home construction."
"[S]table" prices might mean a freeze at 2005 prices or a freeze at 80% below 2005 prices but most people who say "stable" want bubble pricing.
Increasing home prices or home construction (neither necessarily a good thing) might be an indicator of "recovery" but not causal of recovery ("bullish" housing as consequence, not cause, of underlying/preceding real growth).
Central planners tried to pump the housing indicator artificially through credit and regulation and inadvertantly brought the world financial system to its knees.
A late start this evening for me, courtesy the DC Red Line, "welcome cattle, thank-you for riding metro!!!"
Well, what's up, looks like Nikki's up 1.58% which shows remarkable green shoot divining powers in the FOMC statement, especially since US longer bonds tumbled, and yields are still ticking up after hours, the 10year just made 3.7% and the 30 looks headed for 3.45%. Tomorrow's action may be choppy.
I need to reflect more on nat gas and its place in the world.
It will be the energy source of the future, at least as far as transportation is concerned. T. Boone Pickins has an article in this month's Playboy (non-linkable).
Bond Girl (homepage, profile) wrote on Thu, 6/25/2009 - 2:16 am
I think they are going to have a difficult time portraying Bernanke as a "Machiavellian autocrat," however. That's more like Paulson. They might have better luck with mad scientist bent on revisiting an old experiment.
Unfortunately, Igor brought back the brain named, "Abby Normal."
June 25 (Bloomberg) -- Goldman Sachs Group Inc. refused to grant the government’s auditor access to advisory work it did for the U.K. Treasury during the rescue of Northern Rock Plc, a panel of lawmakers in Parliament said.
The Public Accounts Committee in the House of Commons said the U.S. bank withheld access to its work on Northern Rock from the National Audit Office. It also said the Treasury was poorly prepared to cope with the run on deposits at the Newcastle-based lender, which was nationalized in 2008.
“Goldman Sachs refused the National Audit Office access to the financial modeling underpinning its analyses for the Treasury, even though this work had been paid for by the taxpayer,” the committee said in a report in London today.
The report is the latest to criticize the bailout and is based on work from the government’s auditor, which found that the Treasury failed to adequately examine Northern Rock’s books before nationalizing it. Lawmakers also said the Treasury knew bank supervision was weak in 2004 and failed to act.
Today’s report said it was “wholly unacceptable” that the Treasury had signed a contract with Goldman that denied access for auditors to financial modeling underpinning Northern Rock’s rescue.
The lawmakers drawn from the main three political parties in Parliament also said the Treasury “unthinkingly followed” demands to pay a 4 million-pound ($6.6 million) bonus to the U.S. bank “even though there was no clear definition of success.”
Northern Rock’s business plan, approved by ministers in early 2008, assumed a 5 percent drop in house prices between 2008 and 2011. U.K. average house prices had fallen as much as 20.6 percent in March since peaking at 186,044 pounds in October 2007, according Nationwide Building Society.
Goldman Sachs earned a total of 4.8 million pounds from the Treasury, according to the report. Legal and accounting firms Slaughter & May, Clifford Chance, Ernst & Young and BDO Stoy Hayward and other advisers also earned fees from the U.K. Treasury, which in total paid the advisers 26.8 million pounds.
kitco used to have it available for something like 5% or so over bid. last time i was interested (think it hit 170 a year ago) i couldn't find any. i'm not sure what the story is now. it is generally the worst PM in terms of getting jacked by dealers for spreads over bid (though the premium folks pay for silver eagles is insane, of course).
Arnold's certainly no saint, but Gray Davis sold the state's future for campaign contributions. Arnold's work may hurt the state, but it's Gray's that'll kill it.
"typical boomers" . There are no "typical boomers", unless you count truck drivers, waitresses, school teachers, cops, construction workers, you name it, but Governors and their silver-spoon fed wives don't quite fill the bill, unless I'm way off base.
pavel.chichikov (homepage, profile) wrote on Thu, 6/25/2009 - 2:10 am
That's Swiftian. But if true, what does that mean for the personalities - never mind assets - of the young growing up now?
That's quite a compliment, thank you.
I am trying to fathom your question. Maybe the other commenters can help.
Maybe they just thought the models were proprietary information.
Then it was a very poorly written contract with Goldman, if it allowed treating models as black boxes
And Goldman went "Gotcha!" on those foolish taxpayers
The one no one is looking at is inorganic phosphorus. We need it to grow food, and there is a finite supply, that is fast coming to a endpoint. Palladium, silver, etc can be used over and over.
Of course, many of us will probably not be eating on a regular basin in the future anyway.
Arnold was the governor a majority of Californians wanted and deserved, and now they must pay the big price not so much for Arnold, but for wanting to believe in something for nothing and stupid stunts like dropping a wrecking ball on a car.
Arnold caused more of a problem than Gray Davis, but that is all relative and small potatoes. The big PROBLEM in California is structural and Constitutional.
I am trying to fathom your question. Maybe the other commenters can help. "
If saving is useless, many people may decide that living in the present is the only rational way to live - or they may live that way without reasoning it out. People who live in the present do not make sacrifices, raise families, make long-term plans. Those people will be 'different' in may important ways from people who live in stable societies. It's not only the currency that's affected by instability.
Look at post-Soviet society in the 90s for an example.
The big PROBLEM in California is structural and Constitutional.
The big problem is we don't have the energy or wealth to maintain this amount of social complexity, a problem happening everywhere.
Tainter was right in his analysis. Anyone thinking we are going back to equilibrium with a business as usual world is not paying attention.
Well. Duh. New housing in the bubble cities was built pretty far away from the major job centers - long commute time. The new housing is also overpriced, not to mention saddled with crap like HOA and Mello Roos. New housing is for move up buyers, not first time buyers. Right now, it is first time buyers driving the market, and what they can afford is the older, smaller existing homes closer to jobs.
Arnie? Narcissistic in the truest sense. He wants to be everything to everyone - a true macho republican, yet an ex-pothead social liberal from showbiz that loves nothing more than funding school programs (which was his first real foray into CA politics). A steroid abuser that was on the presidential counsel of fitness for kids. Utterly self-interested as a significant california landlord, yet, in his mind, a champion of the people.
All of the above are classic boomer ingredients. Narcissism blossoming into a true Munchausen condition. And, I suppose, California deserves him.
I'm still back on the appraiser thread. The NAR must be shut down on this. We finally are getting real appraisals.
What's the NAR's #1 complaint? That foreclosures and short sales are determining the appraisal. Hey, if there were enough 'normal' sales, the appriasers could ignore them. In most of the nation, they are the market.
TJ,
I'm holding onto my "Deep Recession" prediction. Right now, because of what is happening around me, I do not want to "look into" changing that prediction... but man, you're looking more and more correct on where things are going.
"Arnold was the governor a majority of Californians wanted and deserved, and now they must pay the big price not so much for Arnold, but for wanting to believe in something for nothing and stupid stunts like dropping a wrecking ball on a car."
One state elected a pro wrestler. Another elected a body builder. Is there a pattern here?
it is the 2/3rds supermajoirty for budgets and taxation, PLUS referenda like 3 strikes and term limits, and also the ridiculously gerrymandered districts. Those are Constitutional problems. Fix them and prison spending goes down, revenues go up and become more stable, and electoral responsibility will keep spending and revenues closer to synch with each other.
turnips to bleed? The 8th largest economy in the world can only afford per pupil spending ranked in the bottom half of the US? Ain't no turnips here. Just people who want something for nothing.
HollywoodHack---
I'm getting the message you have some issues with boomers-- so do I, and I'm one of them.
However, the world that is emerging around you is going to be hard and nasty, with most of what you value materially no longer a option.
The boomers rode the wave of energy and wealth surplus, squander it, and everyone is dealing with it now.
As all humans discount the future over the present, it would of happen to the best of us.
The big problem is we don't have the energy or wealth to maintain this amount of social complexity, a problem happening everywhere.
The total value of the world's wealthy -- people with net assets of more than $1 million excluding their main home and everyday possessions -- dropped below 2005 levels to $32.8 trillion, the 13th annual Merrill Lynch/Capgemini World Wealth Report found. (italics mine)
Apologies for tone of my previous response to you. SS has been so thoroughly demagogued from the right that I get frustrated with this topic quickly.
The received wisdom of the masses is that SS is in a crisis or soon to be. Absolutely not the case.
The problem that needs to be addressed is that marginal income tax rates are set too low, and worse, have been for years. It's next to impossible to fairly claw back that tax revenue . . . which is exactly what the GOP and their base intended.
Medicare is another story altogether. There are serious problems there but they have to do with the entire bloated execrable structure of the US healthcare system.
It was absolutely clear to me at that time that after Lehman, the hedgies would turn on Merrill, then Morgan Stanley. Finally Goldman would be taken to zero.
Really, all they had was their prime brokerage accounts. If no one would trade with them, they had no business. If they were downgraded, they'd have to put up additional collateral.
no, they aren't. bernanke is still in power. W's policies are largely unchanged by BHO. the worst attributes of american boomer culture have found a tragic resonance with the zombie bank policies of Japan circa 1995. the market rallied on bogus durable goods horseshit this morning. we still want to believe. we haven't dealt with the developing boomer legacy or begun to do the necessary work of their political disenfranchisement in the slightest.
Ah, "living in the present" increases instability and dependency. The shift to living in the present increased in America with pay-as-you-go Social Security so the associated social changes might shed light on future personalities of today's children.
"Strange, I don't know anybody who's taken steroids."
Broward, not my point. Do you know anyone who did absurd and self-destructive things to maintain an image and then used that image for purely hypocritical means?
In any case, my father was not a boomer. And I actually quite like my uncle and aunt who are - I often find boomers to be fascinating, entertaining people in person. They're just toxic as a political entity.
it is the 2/3rds supermajoirty for budgets and taxation, PLUS referenda like 3 strikes and term limits, and also the ridiculously gerrymandered districts.
Well, at least you got the last one right. Heck, I'll be generous and give you 1/4 credit on "referenda" (mostly ill-advised bonds).
As long as we have a union-owned liberal Dem majority in the legislature you'll never see a dime collected for which 15 cents isn't spent now and 25 more obligated.
If there were a revenue problem then we wouldn't already have among the highest taxes in the nation. It's not a matter of having the money, it's a matter of where it's going.
If Bush had successfully "reformed" SS in his second term (his top priority) they would have not only destroyed one of the most successful programs in US history, but also would have covered their tracks and kept the bubble going by shoveling all of the worthless assets (CDOs, etc.) gebnerated in the credit bubble into the newly privatized system. Thank glod they didn't get away with it. We'd be 10X as screwed as we already are.
Yep, raise the taxes on the "wealthy" (whoever THEY are this week), get rid of all Republicans and all boomers, legalize drugs and prostitution, and save the planet. Does that pretty much sum it up?
"The big problem is we don't have the energy or wealth to maintain this amount of social complexity, a problem happening everywhere."
I think it is less about maintaining social complexity than about enough wealth to maintain a society with an absolutely permissive social contract for the high end. That requires an economic pie that is expanding quickly enough to satisfy unlimited desire at the top without immiserating the bulk of the population in the manner Marx erroneously ascribed to the essence of capitalism. We don't have the wealth (i.e, the potential for economic growth) to sustain that.
Pretty much all other industrialized and post-industrialized countries address the problem by admixing it with a vastly different kind of social contract, as much about social services on the low end as about limits on the high end.
"You can't apply the faults of some people to everyone in the same cohort. "
that's the perspective that would never have had the will to have dropped those firebombs on hamburg or tokyo when it mattered 60 years ago. nor would have had the will to have fought off legions of chinese irregulars in the korean snow. one of many, many thing that separates boomers from their frequently heroic older brothers and uncles.
I really don't think it's a good idea for foreigners to buy land in the US en masse. A single person buying a single property is fine and dandy, but a bunch of people buying up huge tracts or even single parcels all concentrated in one area is bad. You can't vote, and the locals can conspire to raise your property taxes without you being able to do much about it.
Many Japanese got hosed big time, the Chinese may make the same mistake.
Caifornia is in the middle of the pack in terms of taxatiion.
Not only do you need to included property taxes, where california is low, but also when you look at income tax you need to look at actual tax collected as a percent of income. The top income tax rate is second highest in the US, but the real tax take is much lower. In fact, people in the highest bracket effectively pay less on a percentage basis than most middle income people. The income tax code is full of loopholes for the rich and exemptions for corporations.
yet the most fiscally toxic and powerful unions are the law-and-order ones - cops and guards. and that has been the bread and butter of "conservative" california politicians since at least Nixon, if not going back to the Vigilance Committee. Hence, no way out.
"That requires an economic pie that is expanding quickly enough to satisfy unlimited desire at the top without immiserating the bulk of the population in the manner Marx erroneously ascribed to the essence of capitalism. We don't have the wealth (i.e, the potential for economic growth) to sustain that."
That could describe the evolution of many societies. It's the essence of social development in a universal sense. Marx asserted that economic relations determine social relations. It's more likely that the opposite is true.
He tweets in the tree tops all day long
Hoppin' and a-boppin' and smoking his bong
All the little birdies on Wall Street
Love to hear Hollywood go tweet tweet tweet
....no chance of China replacing any of their Treasuries for US land - it makes too much sense. Lets talk them into buying a couple National Parks, the LA Coliseum or the Rose Bowl, how about all of the Inland Empire....
Doing well! Pardon me if it takes a while to get to that e-mail. Life is good but busy. The baby is such the joy! She talks now! Ok, it sounds more like a small dog barking... But we just had our first phone conversation! (Ok, in single word sentances... But hey, one starts somewhere. She is only 10 months old.) Before it was me talking and her going "blaaa blaaa blaa." (I'm on travel tonight).
Look at post-Soviet society in the 90s for an example....pavel
Yes. Very disconcerting. I've talked to a couple of colleagues at work from Ukraine and Russia and also a few scientists from Russia. Brilliant, most of them! Russia's problems have always been a mystery to me. Maybe it's the cold....
And whatever happened to Gorbachev? I thought he was a good leader.
That's my understanding too, that 'saving' SS is a matter of an extra buck or two in withholding.
Treated as a truly independent program, yes. Too bad it's not an island unto itself.
Unfortunately it has been financing government excesses for decades in return for a nice cabinet full of IOUs that cannot even be tendered on the open market. There's absolutely no stomach in DC to cut the other programs that SS has funded all this time, let alone eventually take cash from other revenue sources to actually pay off those IOUs.
It's never been about when the system has to start tapping IOUs, it's about when the SS gravy train of excess cash started declining.
"Russia's problems have always been a mystery to me."
they never had a middle class which was invested in society. this is why stalin so fiercely crushed the kulaks - they were the closest thing to it, and he knew that those types of people made for awkward slaves.
....no chance of China replacing any of their Treasuries for US land - it makes too much sense.
You don't think we could sell them Pebble Beach? Hell, they can read, they'll probably want North Dakota.
"We did it then, so that makes it OK today, is that it? "
no. solipsistic narcissists make for poor soldiers. that's it. when all that matters to you is an individual journey towards self-realization, larger projects - wars against the truly evil, fiscal stability for the future, preservation of natural and cultural treasures - are impossible. that's why boomers are complete, utter failures at such things, at least as compared to the generation born in the 20s and 30s.
I agree with some of the posters above in that I don't know if we will be able to discern much from the ratio of new versus existing homes pointing to a recovery. There are just too many factors at work.
I think the old tried and true Inventory is going to be more telling, along with some additional useful measures, like estimates of shadow inventory. Shadow inventory will be tough to measure exactly, but can be estimated by estimating the number of homes underwater that become in the money as house prices start increasing again, laid against the suppressed turnover numbers until that happens.
But in any case, like any market, it ultimately hinges on supply and demand, with the supply side of the equation being much more relevant than any time in the past.
"Yes. Very disconcerting. I've talked to a couple of colleagues at work from Ukraine and Russia and also a few scientists from Russia. Brilliant, most of them!"
The Russians are very strong in physics, mathematics, etc. They have found ways, for instance, of working around certain deficits in super-computing.
"Russia's problems have always been a mystery to me. Maybe it's the cold....
And whatever happened to Gorbachev? I thought he was a good leader."
A very different national history.
Gorbachov? I don't think he's held in very high esteem these days.
The per-capita tax burden is second in the nation when all taxes (including state, county, city, etc.) are taken into consideration. Sure, it may not be distributed equitably -- what taxes ever are -- but it's still damned high enough.
We've already had the highest state tax hike in US history, so now it's time for cuts.
sorry for dragging this OT - the topic is genuinely interesting. I wish the graph had actual #s instead of relative %.
i think it is safe to say that the construction binge of the past few years went hand-in-glove with the bubble as a whole, and that the resultant oversupply is the main culprit (paging Victorville...)
please don't forget the sales tax hike - a delightful kick in the crotch to both the working poor and retailers competing with national on-line folks. perfect timing, really.
"no. solipsistic narcissists make for poor soldiers. that's it. when all that matters to you is an individual journey towards self-realization,"
When a society loses its capacity for sacrifice, the end is inevitable. It means that people don't love it any more, and that which is unloved, withers.
yes, the sales tax is egregious and stupid. it is a product of the constitutional crumble - any sensible state government would have drawn revenue from other sources and sales tax should have been last in line for an increase in a recession (not to mention in a depression).
no, but i may be channeling the under-30s there that are frustrated and mad as hell at a formerly revolutionary generation that descended into corrupt self-interest and destroyed the dreams of what was once a proud nation through their toxic narcissism. sound familiar?
"What haven't Asians been buying around the world??? "
they have been hoarding commodities. overseas investments frequently have political risk, and often involve cultural niceties which may not seem worth the bother.
Right at 47 seconds is that quote- and the feel of that quote describes how this entire experience has been for me.
More and more at work I feel just like Col. Kilgore, patching up problems and pointing out mistakes while the whole dang show goes down in flames. And that war did end, eventually.
no, but i may be channeling the under-30s there that are frustrated and mad as hell at a formerly revolutionary generation that descended into corrupt self-interest and destroyed the dreams of what was once a proud nation through their toxic narcissism. sound familiar?
Yes. Every generation bitches about the one that came before it.
The Xers bitching about the boomers for [insert your arg here]
Boomers bitched about their fathers for the stupidity of Vietnam.
Their fathers bitched about the 20s that led to WWII
Their fathers bitched about the stodgy attitude that resisted the 20s.
" channeling the under-30s there that are frustrated and mad as hell "
I presume you are describing yourself. As for the rest of your cohort...what an uninteresting group. They have distinguished themselves, how? Their banality and self-involvement as evidenced by Facebook, Myspace and twitter? I still think you should shoot your father, you'd feel better.
"The Xers bitching about the boomers for [insert your arg here]
Boomers bitched about their fathers for the stupidity of Vietnam.
Their fathers bitched about the 20s that led to WWII
Their fathers bitched about the stodgy attitude that resisted the 20s."
And Eve bitched about the snake. If you're human, you're complicit.
I'm not mad at the boomers, but they represent certain demographic and political realities and limitations on gen X/Y. Perhaps I should just go to some place where the population is mostly younger than me.
Have you looked at historical tax data? Like for the US in the WWII era? Or when the top US bracket was over 90% under the Republican Eisenhower?
Or, in california, at the time when Reagan raised the top bracket from 7% to 11%?
The main difference between my data and the data you are referring to (source unknown) is that the data I linked looks at taxes collected as a percentage of income (i.e., the actual percent of income paid in taxes) , rather than at abstract tax rates (which tell you nothing about the effects of loopholes, exemptions, etc).
that's why boomers are complete, utter failures at such things, at least as compared to the generation born in the 20s and 30s.
Rather than the decades, perhaps it was the situation? If the mostly first and second generation immigrants were going to make a better world for their children, they'd have to work at all the salient virtues; but we were born in the midst of plenty, and decadence has taken it's toll. We're all such terrible people.
But then, that generation did a shitty job of making sure their kids were going to be virtuous and carry on the struggle, but don't worry, we're currently involved in making the world into a character building place again, full of trouble and strife. And maybeyou'll get a chance to see someone prove their steadfastness and use those nuclear weapons again!
I'm not mad at the boomers, but they represent certain demographic and political realities and limitations on gen X/Y.
Great. Take notes and do things "correctly". Do you really think the next gen won't curse you for representing certain demographic and political realities and limitations?
As an addendum: Suppose the Bush War had involved the draft, like the folks older than me. You think you have limitations now?
I for one am glad that you had to volunteer to go die for that stupidity, rather than be drafted into dying for someone's overblown ego.
EDIT: And if the connection isn't obvious, the reaction to vietnam was what allowed me to not have to be drafted. (In truth, I was the first cohort to have to even register for the draft in the post-vietnam era.)
"He had the grace to end the Soviet Empire without the massive bloodletting that usually accompanied to end of a failed system."
Y'know, I heard people talking about the possibility of civil war then. But it seems to me that not enough people loved the system any more, and that's why it fell. It could have been saved if people cared about saving it. In fact, many despised it.
Gorbachev (common spelling in English)? I have the sense that he was more of an onlooker than a presider.
But there was one striking story. I knew someone whose neighbor was one of Gorbachev's KGB bodyguards, and when the compound was surrounded during the attempted putsch, the rebels told this bodyguard that if he gave up his weapon he would be allowed to leave the scene unharmed. The guard replied that he appreciated the offer, but that it was his duty to protect the leader, and he just didn't see himself sneaking away, so he would hold onto the gun even if he had to die for it.
He survived without harm. As we know, the putsch collapsed.
I have a soft spot for Gorbachev, even though I don't know the first thing about what happened behind the scenes. From my point of view, he had the courage to bring the old system down with a soft landing, at least compared to other possible outcomes.
I really don't know and can't know how much control he had over the situation. But we can grant that it could have been a lot bloodier than it was.
@pavel,
I have a soft spot for Gorbachev, even though I don't know the first thing about what happened behind the scenes. From my point of view, he had the courage to bring the old system down with a soft landing, at least compared to other possible outcomes.
The worst of times, the worst of times. Boomers, Fed failures and the illusion of Gorbachov's hollow reality and the acidic tapeworm -like eating-away of hopefulness and the delusion of future cycles.
And not only a lot bloodier in Russia. I believe the whole world was in serious danger when the system fell. When that much power moves the consequences can be deadly. People both here in the US and there knew it, too. Some of them told me. One was the adviser to the Russian government on nuclear weapons, a general named Batenin.
He thinks he has his smoking gun for the shotgun wedding of BAC/ML from the fed. What he has is the Fed pointing out the obvious.
Gee, Ken Lewis looks like a frigging maroon.
Um, we didn't do a good job on our due diligence, so we want to MAC>Fed correctly responds that it is now too late, KL and BAC look too weak to finish the deal due to their own losses, since the Fed has already put together help for the ML burial with the deal. So essentially, BAC was bust (insolvent) too- that is the smoking gun, not that BAC had to be pushed into the deal against the best interests of shareholders.
Ye gawds, the Fed just made one pile with a chance of propping it up out of two that would include at least one bk, if not two.
The scandal here is the Fed and the Treasury were doing such massive prop jobs behind the scenes- the real question is who else has had such favorable treatment to be allowed to survive.
Citizen AllenM, I agree with most everything you say in your posts. Your tagline just gets on my nerves, but that's just me. Sorry to bring it up. Carry on, sir!
Is that like a Mine Shaft Gap?
Dang nemo!!
My thoughts exactly.
We cannot have a sales gap!
Mind Shaft Gap
Supply and demand are way over-rated as eCONomic metrics.
maybe it's because I don't know much, but it seems to me that this is a sucker indication for knife catchers
I think we need to give tax credits for house flipping. That and we should re-incentivize mortgage fraud.
New homes at close to a million are selling out like hot-cakes in San Ramon right now. How do you spell knife catcher in Hindi or Mandarin?
Um, CR, right now I think of new housing as a sort of sink hole.
A big sinkhole. Here in the Valley of the Sun, building lots seem to be an anathema for investment.
Remember when I was pasted as a total doom and gloomer for my half million new homes or less prediction?
Something about receding horizons and a long time with zero return.
Someday this war's gonna end...
Very few - if any - new homes are small & appropriate for young families. With folks looking to downsize, more of the smaller sized housing stock is existing homes. Sounds plausible to me, but what do I know?
Whoever said "think globally, drink locally" is genius!
I was supposed to go to some future homebuyers thingy but hell with it. Nothing worth buying at these price points yet. Might as well stay home and watch the cormorants go fishing for frogs over a nice glass of wine.
/sips her Todd Taylor reserve primativo; nom nom nom....
Bubble/Bailout glossary:
"Stabilize" = Sabotage the solution
Why would you use an average number of sales '75-'06 when the supply of housing increases some 20%? Zero ain't zero in this case.
Citizen AllenM - this war's never "gonna end". Please re-think your tagline. TIA.
If you, say, have a strong bias towards wanting to see a recovery in the data, it wouldn't be that strange to look to existing home sales, would it?
I think it would be valuable to overlay a zip code foreclosure map with locations of new home projects. Might give some clarity as to what the builders are fighting.
Contractors still think "regular" size is 3000sqft.
The end of the Middle Class, as we knew it!
What will be the next "American Dream" ?
Angry Saver, they slipped up with the $8k tax credit by authorizing it for buying a house (asset) instead of buying a mortgage (debt).
Someone will get fired for that.
From ZeroHedge
Alan Grayson Letter To Neil Barofsky Requesting Audit of Citi
First, Darrel Issa taking on Bernanke in what may prove a fateful and timely opposition against the Federal Reserve, now Alan Grayson going for Bernanke, Geithner, and Vikram's jugular. Just when it seemed that the D.C.-Wall Street crony alliance would last forever (don't worry Barney, we still love you), opposition voices finally emerge and take on the biggest culprits head on.
From Bloomberg
June 24 -- Former Treasury Secretary Henry Paulson will appear next month before a congressional panel looking into whether regulators pressured Bank of America Corp. to complete its takeover of Merrill Lynch & Co., a spokeswoman for the committee said.
Yes, the wheels of justice indeed grind slowly. I hope they will grind fine, as promised
There seems to be some type of a shock that is driving existing homes sale up relative to new homes sales.
Has this guy ever heard of a foreclosure or distressed sale?
I love the term 'mind the gap' and it's very appropriate these days on this side of the pond.
Development near me that is still building came out with an affordable option: a 1400 sqft duplex. The problem is they still want 280k and up when existing inventory is $100 sqft or less. No amount of tax incentive is going to fix that gap.
Audit of Citi? Don't we own Citi? Why order what is routine and normal? We the stockholders are most certainly kept up to date right? Right?
"Here in the Valley of the Sun" , yup it's sizzling now baby, and not in a good way.
Just say it out loud to your friends, family and coworkers: We are in a depression and it is going to be nasty.
Be firm and factual and be ready to defend your position but with the droves of negative reports and graphs to be drawn from the internet, printed or emailed, how can you lose the argument?
The sooner we start believing the hard truths the sooner we can make the adjustments and start climbing out of the hole we've dug.
Go forth and be loud and proud in your declaration of the obvious. Hell, it might even make a difference.
Anybody want to buy my scintilla of our country's 79.9% stake in AIG?
What will be the next "American Dream" ?
new housing as a sort of sink hole.
yep, In my neck of the woods, new home means track home (or glorified McMansion) about a hour from the center of town, not to mention HOA and streets littered with foreclosures.
Nothing wrong with the housing market that a little less democracy can't fix.
I suggest we all just agree to focus on the existing home sales. Something is clearly wrong with the new home sales data.
Tract home.
This has been your moment of pedantry.
Audit of Citi? Don't we own Citi? Why order what is routine and normal?
Then again, audit of AIG disclosed lots of juicy bits but had precisely zero real impact.
For some strange reasons, the Congress is not at all angry with the banksters
/snark off
We can not have an obfuscation gap!
The fed has been ripping off the public since its inception. Since Nixon defaulted on gold promises in 1971, annualized CPI inflation has been ~ 4.5%. However, the actual theft has been larger. Absent the fed, the natural tendency would have been falling prices, approximately 2% or 3% per year in my estimation.
What's my basis? Since 1995, MZM has grown at a rate > 50% above nominal GDP. Therein lies the foolishness of Greenspan, the enabler of the finance capitalism ripoff machine.
The rich love inflation. It's the source of their wealth. Is it any wonder we are heading towards a society where the middle class is just a whisker away from poverty?
Am I the only person who is more worried that it is Darrel Issa that started asking for the Cit audit?
Per wikipedia, Darrell Issa is one of the voices to the "Viper" car alarm warnings.
CR: I find it strange that most analysts are looking at existing home sales for stability in the housing market. I think the new home market is the place to look.
I think that accurate total (new and existing) inventory is the place to look, because declining inventory will precede significant increases in new home starts (excepting friction from custom dream homes and location assymetries).
The issue connects with the leading indicators discussion from the last thread.
But wait! There is more!
WSJ weighs in
According to the documents, the second set unearthed by congressional investigators, Federal Deposit Insurance Corp. Chairman Sheila Bair wrote to Fed Chairman Ben Bernanke before the aid was unveiled, saying there was "strong discomfort with this deal at the FDIC." Ms. Bair was referring to a plan to have the FDIC provide guarantees against losses on BofA assets. "My board does not want to do this," Ms. Bair wrote Jan. 14.
Two days later the FDIC announced it would help provide protection from losses on about $118 billion of BofA assets. The loan guarantee was part of a $20 billion package designed to help the bank close its deal for Merrill Lynch & Co.
...
Mr. Bernanke is scheduled to appear Thursday, testifying two weeks after Bank of America Chief Executive Kenneth D. Lewis. Lawmakers, especially House Republicans increasingly hostile to the Fed, are expected to ask Mr. Bernanke about Mr. Lewis's suggestion that the government pressured him to not disclose details about the discussions, and that officials made clear that they would consider ousting management.
...
This documents, and a set released at the time of the Lewis hearing, show Fed staffers critical of bank management. Malcolm Alfriend, senior vice president of the Fed Bank of Richmond, provided in a Dec. 20 email "preliminary thoughts on getting a pound of flesh out of Lewis." Subsequent emails showed Fed staff wanted BofA to have a "price to pay" for any assistance.
"Personally, I think management should be downgraded, no more acquisitions, raise some 'real' capital," Deborah Bailey, then the deputy director of the Fed's division of banking supervision and regulation, wrote to Mr. Alfriend.
Four months later, around the time Mr. Lewis lost his chairman's seat in late April, regulators stepped up their involvement in BofA, putting the bank under supervisory action. Such confidential actions are not publicly disclosed. They give the bank time to address serious problems with regulators without triggering alarm among depositors.
...
The dispute between the FDIC and other regulators flared in January. Mr. Warsh, in a Jan. 8 email to fellow top Fed officials, relayed a conversation with Ms. Bair and Comptroller of the Currency John Dugan. "Dugan is fine; Sheila hates it and doesn't want to play," Mr. Warsh wrote from his BlackBerry.
What's the big deal about "the gap"? I mean, heck, you can't build'em (for long) at a loss, but you can sell an existing home for $1 if need be. Isn't Flint MI the poster child for this kind of thing???
This is just silly, see my prior comment, less new houses less sales, more used houses, better value more sales, more used houses: why build more new, fewer new sales...
It is pretty simple and a natural part of the adjustment process.
Just say it out loud to your friends, family and coworkers: We are in a depression and it is going to be nasty.
EC,
That's how I see it. No soup lines. But a drastic shift down in living standards for many. That and a realization that the future will not be as big or as bright as previously expected.
The fed with its bailouts will make matters worse. Consider. From 1930 to 1940, the S&P 500 had a real annualized return of 1.9% (thanks to a 2% annualized deflation). From 2000 until 5/2009, the S&P 500 has had annualized returns of NEGATIVE 5.51%! And house prices have fallen more since 2006 than during the GD.
I'm still short vanity and long free time. Unfortunately, bankers are still long venality. sigh
PIGGED from last thread....
I am an appraiser and I will defend our profession. The honest appraisers were "Black Listed" years ago. Not for being bad appraisers but because WE ARE HONEST. The banks and lenders wanted appraisers who would "make the deal work". We are not coming in low today on purpose. It is the market....we only report. Our opinions are based on stats and data. The lenders wanted shitty appraisals and got them. The crooks made their money and are GONE. THE HVCC MANDATES lenders order through a 3rd party. When this 1st passed the lenders COULD NOT hold ownership interest in these Appraiser Management Companies. When it finally went through....THAT WAS STRUCK FROM THE AGREEMENT. The 3rd party management companies have in no uncertain terms told us the appraisers that if we want to work...the fee is $150-200. We used to make $300-500. Costs to appraisers for data and other essential items has RISEN...fees are cut in 1/2....and frankly...I could give a crap where your value comes in at. How hard will you work for 1/2 of your salary. It is a disgrace that your biggest asset will be evaluated by a guy making $8 bucks an hour. A honest and ethical appraiser can only do 1 House per day. We spend 20-30 minutes doing the inspection and HOURS compiling data and typing up the report. EVERY GOOD appraiser I know has had enough...What other profession has seen it's fees decrease on average for the past 2 DECADES?
Obama signs $106 billion bill for Iraq, Afghan wars
Obama signs $106 billion bill for Iraq, Afghan wars
| Reuters
Obama signs $106 billion bill for Iraq, Afghan wars
Barfly,
Fortunately, the $106 billion, as well as most other war funding, is "off" budget" and therefore won't be included in the budget deficit. Whew! Thank the lord for "off" budget budgeting!
And now NY Times.
Enjoy the fireworks - it is almost July 4th!
A memo written by Republicans, citing e-mail and internal Fed documents that were subpoenaed from the central bank, is building a case that Mr. Bernanke was a Machiavellian autocrat who forced Bank of America to go through with a disastrous merger that it no longer wanted to complete.
But the committee’s Democratic chairman, Representative Edolphus Towns of New York, is investigating whether Bank of America executives were engaged in an elaborate shakedown, demanding that the Fed and the Treasury provide more than $100 billion in fresh capital and guarantees against the losses that were building up at Merrill Lynch.
Republicans are circulating newly unearthed e-mail that suggests Fed officials kept the Securities and Exchange Commission and the Office of the Comptroller of the Currency in the dark about its efforts to keep the merger alive by informally reassuring Kenneth D. Lewis, the chief executive of Bank of America, that the government would provide the bank with extra help if it was needed.
By that point, however, the S.E.C. had abdicated to the Fed its authority over investment banks like Merrill Lynch. And the comptroller’s office was responsible for overseeing commercial banks, but not the umbrella holding company.
The new e-mail message reinforces the impression that Fed officials badly wanted Bank of America to complete the Merrill takeover, despite Merrill’s spiraling losses.
But other e-mail between Fed officials shows that Bank of America executives were pressuring the Fed and the Treasury up to the last minute on Dec. 30, when the deal was scheduled to close, to provide written promises that the government would provide billions in new capital and other protection.
The documents show that Fed officials refused to provide any specific commitments, though a top official did assure the bank’s chief financial officer, Joe L. Price, that the government would provide help, if needed.
“I told Joe that we were not yet in a position to proffer a package, but we were working toward something that works for them and for us,” wrote Kevin M. Warsh, a Fed governor, in an e-mail message to a senior Treasury official on Dec. 30.
A little more than two weeks later, the Fed and the Treasury indeed provided huge assistance — $20 billion in new capital and guarantees against losses for $118 billion in Merrill Lynch assets — over the protests of Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, whose agency would be the guarantor.
Yes, more power to the Fed. Heck, give it the right to declare war!
barfly (profile) wrote on Thu, 6/25/2009 - 1:41 am
Obama signs $106 billion bill for Iraq, Afghan wars
Obama signs $106 billion bill for Iraq, Afghan wars
| Reuters
- 74 billion less than the AIG bailout (180 billion?)
The final bill for the Global War on Savers will be vastly larger than the bill for the Global War on Terror.
From John Mauldin's newsletter:
To summarise: the world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30.
We care a lot about the gamblers and the pushers and the geeks
We care a lot about the smack and crack and whack that hits the street
We care a lot about the welfare of all the boys and girls
We care a lot about you people cause we're out to save the world
--Faith No More
MrM,
Thanks for the WSJ link. That is an incredible article.
Angry Saver, I think Obama made war spending "on budget", though I can't pull up a link to prove it.
Clearly, we need to nuke the existing homes in order to grow.
barfly is correct.
And Darrell Issa is a worthless turd - he was a prime shaker behind the recall Gray Davis movement. Poor Gray Davis - screwed by the GOP energy deregulation boondoggle, screwed by ENRON while the Bush Energy Department held him down, and then screwed by the California electorate, which got its just desserts: The Governator.
That Mer/Bac deal reeks. It's no wonder after John Thain's $35k crapper was dumped on the taxpayer.
Screw you John Thain. Thain deserves a big fat knuckle sandwich. What an @ss.
Yancey Ward (profile) wrote on Thu, 6/25/2009 - 1:49 am
Clearly, we need to nuke the existing homes in order to grow.
Existing homes hate America for our freedom.
Angry Saver
Without taking any position on your forecast, your argument about the S&P 500 returns in the 1930s and decade of 2000-2009 is seeriously flawed. You are comparing two vastly different periodizations. The Great Depression started with a crash in 1929, so you are leaving out that giant loss by startiing with the S&P in 1930, whereas by starting in 2000 you are starting before the dot.com crash. It would make as much sense to chart the S&P from March 2009 to the present and declare that we are in a secular bull market. In other words, comparing decades is meaningless at best.
As to your forecast, I also think we are looking at a long tough slog. But I would not discount the massive difference between a Japan style stagnation for 20 years and a Great Depression-like depression. If we end up with a true GD 2.0, you will know and feel the difference
MrM wrote:
Yes, more power to the Fed. Heck, give it the right to declare war!
The Fed is always at war with dollar bagholders.
Gray Davis? It's his sweetheart deals for all the state's labor unions that's screwing the state over this very moment.
Barfly,
I don't think so. In any event, I'm positive Bush and CONgress kept it "off" budget. Almost $1 trillion of it! It's public record.
Don't believe me? For a quick and dirty analysis, just compare the budget deficits with the increase in the national debt since the wars started. It's astounding.
Bush kept it off budget. Obama put it back in.
Obama did put the wars back in, but continues to exclude the Social Security and Medicare liabilities. Telling half the truth is still lying.
Angry Saver - I'm in total agreement that BushCo kept war spending off budget, but I seem to recall that that was one of Obama's first changes when he took office, though, like I said, I can't prove it. I'll keep looking.
The Fed is always at war with dollar bagholders.
... and with taxpayers
Technocrats bending laws and hiding facts - all for the greater good, of course
Iraq was never part of the Defense Budget--
BushCo would make Enron blush.
Uh, SS runs a surplus that IS included in the budget. This "unified budget" has understated deficits for decades and given cover for Reagan and Bush the Lesser to cut income taxes on the wealthy, driving the nation deep into debt.
Gray Davis was lame, but his budgets were closer to balanced than Arnolds.
Arnold tossed away more in revenue than Davis ever gave anyone or anything, let alone union contracts. Arnold jettisoned $3-4 billion a year on car registration fees and engineered another $2 billion annual give away to the biggest corporations in the state. He didn't cut up the credit cards. He tossed out $6 billion a year of stable income.
More than a revenue problem, California has an idiocy problem.
Gary,
I was talking about the NPV of future liabilities incurred. The promises owed by SS and Medicare. I think the last CBO estimate I read shows that SS cash flow turns negative next year, Medicare in 2017. So, either taxes go up or benefits go down or both.
The Great Depression started with a crash in 1929, so you are leaving out that giant loss by startiing with the S&P in 1930
Au CONtraire. For the decade from 1/1929 to 1/1939 (which includes the 1929 "crash") the annualized gains for the S&P 500 were 0.55%, far less than the 1.88% in my previous example.
Our capacity to produce now is much greater than in the GD. But in relative terms of a decreased standard of living, I'm calling it a depression. And as for Japan, I'm not discounting anything. But I am mindful that their slog is still going strong and arguably worsening after 2 decades!
The jury is still out on Japan and the current U.S. debacles. Sadly, both were easily avoidable but for the mischief of wall street and venal central banks.
There's actually a brand-new dynamic here in Chicago that I've started noticing. There are some neighborhoods, especially on the northwest side of the city, where all of the homes are extremely ideal for first-time homebuyers - 1500-2000 sq ft, 3 bedrooms, modest, solid construction and the local public K-8 school is rated up there with the best in the state. These homes are almost never put up for sale (for as long as I've been paying attention) - they've always been passed from parent to child. They now are starting to show up on the MLS in decent numbers and are a true alternative to new-construction crapboxes out in the far suburbs. Unfortunately the asking prices are usually way too high, but as reality sets in for those that have inherited a 60-year old home and have become only the second owner, I think more and more people in this area are going to question the logic of paying for a poorly-built home out in the burbs where the school districts are being decimated by the foreclosures and bond issues to build new schools based on 2005 estimates of student population.
Welcome to the London Underground, mind the gap.
C
/edit - oops, one thread late, housework intervened.
"The final bill for the Global War on Savers will be vastly larger than the bill for the Global War on Terror."
That's Swiftian. But if true, what does that mean for the personalities - never mind assets - of the young growing up now?
"...all for the greater good, of course"
Vsegda. The only infinity about human beings - aside from the immortality of the soul - is the capacity to rationalize self-interest.
Great Depresion II, Great Resesion I, Less Ice Cream for All.
Call it what you want. The middle class becomes lower middle, the poor become hungry and desititue, upper middle class goes a notch or so down. The mega rich stay mega rich.
Most peoples standard of living will be lower two years from now. And most people aren't ready or won't know what happened until it is far too late.
CC, from previous thread:
I've invested in both - currently holding a bit of UNG.
UNG is interesting on many levels, very beaten on now especially relative to crude, very prone to manipulation, interesting relationship to russia and gazprom in particular...
also, the fuel of the future.
palladium is similar in many ways, (substitute norilsk for gazprom) and occupies kind of the 'basest' corner of the PM market, the least monetary of them if that makes sense.
and, yes, the relationship to autos is a big part of that, much as the relationship to other fossil fuels is interesting in terms of nat gas.
Arnold tossed away more in revenue than Davis ever gave anyone or anything, let alone union contracts.
LOL! The money Arnold "gave back" wouldn't make a dent in the costs those union contracts are hitting us with NOW, let alone in the future.
But it's still Chicago. FD, never been there.
I think they are going to have a difficult time portraying Bernanke as a "Machiavellian autocrat," however. That's more like Paulson. They might have better luck with mad scientist bent on revisiting an old experiment.
California doesn't elect leaders. They elect punching bags to get mad at when dream land fails. Red or Blue.
I think they are going to have a difficult time portraying Bernanke as a "Machiavellian autocrat," however. That's more like Paulson. They might have better luck with mad scientist bent on revisiting an old experiment.
I can't tell which image is scarier.
The Central Bank of the people, for the people and by the people.
And we all know who these people are.
They might have better luck with mad scientist bent on revisiting an old experiment.
Captain Ahab chasing a whale named Moby Deflation?
@HollywoodHack,
Thanks for the explanation. I know palladium is used heavily in catalytic converters (and platinum), and I agree about it being the most industrial. Silver acts mostly industrial these days, too. I need to reflect more on nat gas and its place in the world.
Ben Dover,
As goes California, so goes the nation.
TJ,
Yes is does!
Things I would like to hear Dept;
Berneke:
We did what we thought we had to do to keep the system stable.
Mr Issa, would you have preferred that we let Merrill go under?
Silver acts mostly industrial these days, too.
Silver has two advantages. One, the supply line is tight, and two, it's considered the poor man's gold.
Platinum & palladium took huge hits when auto production went from ~18M to ~10M.
Hollywood,
how do you buy palladium?
Gary (profile) wrote (in reply to...) on Wed, 6/24/2009 - 7:03 pm
Uh, SS runs a surplus that IS included in the budget. This "unified budget" has understated deficits for decades and given cover for Reagan and Bush the Lesser to cut income taxes on the wealthy, driving the nation deep into debt.
But did nothing for William Jefferson apparently in between. This is the worst form of selective bias and has no place in these discussions.
Berneke:
We did what we thought we had to do to keep the system stable.
Mr Issa, would you have preferred that we let Merrill go under?
I would have preferred to have the Fed take over it, wipe out shareholders and convert debt into new equity.
This is capitalism, no?
Sorry TJ, I'm with Gary and the others. Gray Davis was a mere imp of satan compared to Arnold.
Now here is something really interesting, especially as I'm token city of Davis hater here:
Brown Sues to Invalidate Pleasanton's Illegal Housing Cap
"Pleasanton's draconian and illegal limit on new housing forces people to commute long distances, adding to the bumper-to-bumper traffic along 580 and 680 and increasing dangerous air pollution," Brown said. "It's time for Pleasanton to balance its housing and its jobs and take full advantage of its underutilized land and proximity to BART."
rich,
There are palladium coins & bars, although in not many forms. My dealer has 1oz bars right in stock for $287 today.
Peterson: "To stress the point a bit more, the stability in the housing market that we want for economic recovery is stable prices and new home construction."
"[S]table" prices might mean a freeze at 2005 prices or a freeze at 80% below 2005 prices but most people who say "stable" want bubble pricing.
Increasing home prices or home construction (neither necessarily a good thing) might be an indicator of "recovery" but not causal of recovery ("bullish" housing as consequence, not cause, of underlying/preceding real growth).
Central planners tried to pump the housing indicator artificially through credit and regulation and inadvertantly brought the world financial system to its knees.
A late start this evening for me, courtesy the DC Red Line, "welcome cattle, thank-you for riding metro!!!"
Well, what's up, looks like Nikki's up 1.58% which shows remarkable green shoot divining powers in the FOMC statement, especially since US longer bonds tumbled, and yields are still ticking up after hours, the 10year just made 3.7% and the 30 looks headed for 3.45%. Tomorrow's action may be choppy.
C
I need to reflect more on nat gas and its place in the world.
It will be the energy source of the future, at least as far as transportation is concerned. T. Boone Pickins has an article in this month's Playboy (non-linkable).
Bond Girl (homepage, profile) wrote on Thu, 6/25/2009 - 2:16 am
I think they are going to have a difficult time portraying Bernanke as a "Machiavellian autocrat," however. That's more like Paulson. They might have better luck with mad scientist bent on revisiting an old experiment.
Unfortunately, Igor brought back the brain named, "Abby Normal."
One last bit of cheerful news for tonight
June 25 (Bloomberg) -- Goldman Sachs Group Inc. refused to grant the government’s auditor access to advisory work it did for the U.K. Treasury during the rescue of Northern Rock Plc, a panel of lawmakers in Parliament said.
The Public Accounts Committee in the House of Commons said the U.S. bank withheld access to its work on Northern Rock from the National Audit Office. It also said the Treasury was poorly prepared to cope with the run on deposits at the Newcastle-based lender, which was nationalized in 2008.
“Goldman Sachs refused the National Audit Office access to the financial modeling underpinning its analyses for the Treasury, even though this work had been paid for by the taxpayer,” the committee said in a report in London today.
The report is the latest to criticize the bailout and is based on work from the government’s auditor, which found that the Treasury failed to adequately examine Northern Rock’s books before nationalizing it. Lawmakers also said the Treasury knew bank supervision was weak in 2004 and failed to act.
Today’s report said it was “wholly unacceptable” that the Treasury had signed a contract with Goldman that denied access for auditors to financial modeling underpinning Northern Rock’s rescue.
The lawmakers drawn from the main three political parties in Parliament also said the Treasury “unthinkingly followed” demands to pay a 4 million-pound ($6.6 million) bonus to the U.S. bank “even though there was no clear definition of success.”
Northern Rock’s business plan, approved by ministers in early 2008, assumed a 5 percent drop in house prices between 2008 and 2011. U.K. average house prices had fallen as much as 20.6 percent in March since peaking at 186,044 pounds in October 2007, according Nationwide Building Society.
Goldman Sachs earned a total of 4.8 million pounds from the Treasury, according to the report. Legal and accounting firms Slaughter & May, Clifford Chance, Ernst & Young and BDO Stoy Hayward and other advisers also earned fees from the U.K. Treasury, which in total paid the advisers 26.8 million pounds.
"how do you buy palladium? "
kitco used to have it available for something like 5% or so over bid. last time i was interested (think it hit 170 a year ago) i couldn't find any. i'm not sure what the story is now. it is generally the worst PM in terms of getting jacked by dealers for spreads over bid (though the premium folks pay for silver eagles is insane, of course).
Deflationary Jane,
Arnold's certainly no saint, but Gray Davis sold the state's future for campaign contributions. Arnold's work may hurt the state, but it's Gray's that'll kill it.
What was Goldman's reason?
"it's Gray's that'll kill it"
just a natural function of the boomer mindset. hard to think of more typical boomers than arnie and his shrew of a wife from that crime family.
just a natural function of the boomer mindset.
Please explain (although I agree with the Arnie/Maria sentiment).
What was Goldman's reason?
We will never know, will we?
What was Goldman's reason?
Excuse me, but they ask the questions around here.
Maybe they just thought the models were proprietary information.
(shrug)
(though the premium folks pay for silver eagles is insane, of course)
These days, without a doubt. Not so much when I bought mine.
...typical boomers ...
Good one.
pavel.chichikov (homepage, profile) wrote on Thu, 6/25/2009 - 2:10 am
That's Swiftian. But if true, what does that mean for the personalities - never mind assets - of the young growing up now?
That's quite a compliment, thank you.
I am trying to fathom your question. Maybe the other commenters can help.
Maybe they just thought the models were proprietary information.
Then it was a very poorly written contract with Goldman, if it allowed treating models as black boxes
And Goldman went "Gotcha!" on those foolish taxpayers
The one no one is looking at is inorganic phosphorus. We need it to grow food, and there is a finite supply, that is fast coming to a endpoint. Palladium, silver, etc can be used over and over.
Of course, many of us will probably not be eating on a regular basin in the future anyway.
What was anyone going to do about it...
Arnold was the governor a majority of Californians wanted and deserved, and now they must pay the big price not so much for Arnold, but for wanting to believe in something for nothing and stupid stunts like dropping a wrecking ball on a car.
Arnold caused more of a problem than Gray Davis, but that is all relative and small potatoes. The big PROBLEM in California is structural and Constitutional.
Oh no, not another "the 2/3rd's super-majority rule is the problem" argument again. Go find a turnip to bleed.
Go find a turnip to bleed.
They sent me to the Deficit with an IOU and said, "Fix this".
Bullshit Dawg. The difference is that Clinton raised marginal income tax rates.
"That's quite a compliment, thank you.
I am trying to fathom your question. Maybe the other commenters can help. "
If saving is useless, many people may decide that living in the present is the only rational way to live - or they may live that way without reasoning it out. People who live in the present do not make sacrifices, raise families, make long-term plans. Those people will be 'different' in may important ways from people who live in stable societies. It's not only the currency that's affected by instability.
Look at post-Soviet society in the 90s for an example.
Taxes are set at the margins
The big PROBLEM in California is structural and Constitutional.
The big problem is we don't have the energy or wealth to maintain this amount of social complexity, a problem happening everywhere.
Tainter was right in his analysis. Anyone thinking we are going back to equilibrium with a business as usual world is not paying attention.
Well. Duh. New housing in the bubble cities was built pretty far away from the major job centers - long commute time. The new housing is also overpriced, not to mention saddled with crap like HOA and Mello Roos. New housing is for move up buyers, not first time buyers. Right now, it is first time buyers driving the market, and what they can afford is the older, smaller existing homes closer to jobs.
"Of course, many of us will probably not be eating on a regular basin in the future anyway."
That would cut down on portion size.
The difference is that Clinton raised marginal income tax rates.
Most people want to be lied to.
Oh, well.
This piece was being sent around today.... we've all talked about it before:
charles hugh smith-Devolution: 20 Predictions
Some of the predictions are trivial. I think some of it will be a lot more jarring than he predicts.
"Please explain"
Arnie? Narcissistic in the truest sense. He wants to be everything to everyone - a true macho republican, yet an ex-pothead social liberal from showbiz that loves nothing more than funding school programs (which was his first real foray into CA politics). A steroid abuser that was on the presidential counsel of fitness for kids. Utterly self-interested as a significant california landlord, yet, in his mind, a champion of the people.
All of the above are classic boomer ingredients. Narcissism blossoming into a true Munchausen condition. And, I suppose, California deserves him.
I'm still back on the appraiser thread. The NAR must be shut down on this. We finally are getting real appraisals.
What's the NAR's #1 complaint? That foreclosures and short sales are determining the appraisal. Hey, if there were enough 'normal' sales, the appriasers could ignore them. In most of the nation, they are the market.
TJ,
I'm holding onto my "Deep Recession" prediction. Right now, because of what is happening around me, I do not want to "look into" changing that prediction... but man, you're looking more and more correct on where things are going.
Got Popcorn?
Neil
As stated over at Finem Respice, the last bubble is government.
many people may decide that living in the present is the only rational way to live
I'm there, Pavel.
I did my part for a different outcome but overwhelming forces are at work.
The Constitution is not a suicide pact.
HH,
Yeah, you nailed him.
"Arnold was the governor a majority of Californians wanted and deserved, and now they must pay the big price not so much for Arnold, but for wanting to believe in something for nothing and stupid stunts like dropping a wrecking ball on a car."
One state elected a pro wrestler. Another elected a body builder. Is there a pattern here?
Chinese official urges buying of gold, U.S. land: report
Chinese official urges buying of gold, U.S. land - MarketWatch
The Jig is up.....I'm convinced.
it is the 2/3rds supermajoirty for budgets and taxation, PLUS referenda like 3 strikes and term limits, and also the ridiculously gerrymandered districts. Those are Constitutional problems. Fix them and prison spending goes down, revenues go up and become more stable, and electoral responsibility will keep spending and revenues closer to synch with each other.
turnips to bleed? The 8th largest economy in the world can only afford per pupil spending ranked in the bottom half of the US? Ain't no turnips here. Just people who want something for nothing.
the end of the pound?
green shoots from the pound of Brown ground.
shock'n ya'll with FX.
classic boomer ingredients
Strange, I don't know anybody who's taken steroids.
I'm amused by your stereotype and anger.
Perhaps if would if you beat the crap out of your dad?
Neil - I think you'll find since at least November 20 it's been termed the Manic Depression around here....
C
Neil,
Howz it goin' bud! Long time no talk -- have to chat soon. Hope everything's well with the wife & kid.
Not to depress you, but I'm shooting you an interesting piece via email right now...
"I'm there, Pavel.
I did my part for a different outcome but overwhelming forces are at work."
I can understand that, broward. No judgment on my part. Sincerely.
HollywoodHack---
I'm getting the message you have some issues with boomers-- so do I, and I'm one of them.
However, the world that is emerging around you is going to be hard and nasty, with most of what you value materially no longer a option.
The boomers rode the wave of energy and wealth surplus, squander it, and everyone is dealing with it now.
As all humans discount the future over the present, it would of happen to the best of us.
The big problem is we don't have the energy or wealth to maintain this amount of social complexity, a problem happening everywhere.
The total value of the world's wealthy -- people with net assets of more than $1 million excluding their main home and everyday possessions -- dropped below 2005 levels to $32.8 trillion, the 13th annual Merrill Lynch/Capgemini World Wealth Report found. (italics mine)
Apologies for tone of my previous response to you. SS has been so thoroughly demagogued from the right that I get frustrated with this topic quickly.
The received wisdom of the masses is that SS is in a crisis or soon to be. Absolutely not the case.
The problem that needs to be addressed is that marginal income tax rates are set too low, and worse, have been for years. It's next to impossible to fairly claw back that tax revenue . . . which is exactly what the GOP and their base intended.
Medicare is another story altogether. There are serious problems there but they have to do with the entire bloated execrable structure of the US healthcare system.
It was absolutely clear to me at that time that after Lehman, the hedgies would turn on Merrill, then Morgan Stanley. Finally Goldman would be taken to zero.
Really, all they had was their prime brokerage accounts. If no one would trade with them, they had no business. If they were downgraded, they'd have to put up additional collateral.
"Chinese official urges buying of gold, U.S. land: report"
That is rather unsettling. Is it policy or a signal?
"and everyone is dealing with it now."
no, they aren't. bernanke is still in power. W's policies are largely unchanged by BHO. the worst attributes of american boomer culture have found a tragic resonance with the zombie bank policies of Japan circa 1995. the market rallied on bogus durable goods horseshit this morning. we still want to believe. we haven't dealt with the developing boomer legacy or begun to do the necessary work of their political disenfranchisement in the slightest.
"The received wisdom of the masses is that SS is in a crisis or soon to be. Absolutely not the case."
That's my understanding too, that 'saving' SS is a matter of an extra buck or two in withholding.
Ah, "living in the present" increases instability and dependency. The shift to living in the present increased in America with pay-as-you-go Social Security so the associated social changes might shed light on future personalities of today's children.
All of the above are classic boomer ingredients. - HH
"Strange, I don't know anybody who's taken steroids."
Broward, not my point. Do you know anyone who did absurd and self-destructive things to maintain an image and then used that image for purely hypocritical means?
In any case, my father was not a boomer. And I actually quite like my uncle and aunt who are - I often find boomers to be fascinating, entertaining people in person. They're just toxic as a political entity.
it is the 2/3rds supermajoirty for budgets and taxation, PLUS referenda like 3 strikes and term limits, and also the ridiculously gerrymandered districts.
Well, at least you got the last one right. Heck, I'll be generous and give you 1/4 credit on "referenda" (mostly ill-advised bonds).
As long as we have a union-owned liberal Dem majority in the legislature you'll never see a dime collected for which 15 cents isn't spent now and 25 more obligated.
If there were a revenue problem then we wouldn't already have among the highest taxes in the nation. It's not a matter of having the money, it's a matter of where it's going.
If Bush had successfully "reformed" SS in his second term (his top priority) they would have not only destroyed one of the most successful programs in US history, but also would have covered their tracks and kept the bubble going by shoveling all of the worthless assets (CDOs, etc.) gebnerated in the credit bubble into the newly privatized system. Thank glod they didn't get away with it. We'd be 10X as screwed as we already are.
Yep, raise the taxes on the "wealthy" (whoever THEY are this week), get rid of all Republicans and all boomers, legalize drugs and prostitution, and save the planet. Does that pretty much sum it up?
"The big problem is we don't have the energy or wealth to maintain this amount of social complexity, a problem happening everywhere."
I think it is less about maintaining social complexity than about enough wealth to maintain a society with an absolutely permissive social contract for the high end. That requires an economic pie that is expanding quickly enough to satisfy unlimited desire at the top without immiserating the bulk of the population in the manner Marx erroneously ascribed to the essence of capitalism. We don't have the wealth (i.e, the potential for economic growth) to sustain that.
Pretty much all other industrialized and post-industrialized countries address the problem by admixing it with a vastly different kind of social contract, as much about social services on the low end as about limits on the high end.
For anyone who thinks our politicians are awful, we could be getting this:
BBC NEWS | Europe | Kadyrov pledges 'cruel revenge'
the stupidity of the young used to be limited to 16-year old retards.
I always get a chuckle when I see Generation Twitter complain about narcissism of The Boomers.
"You can't apply the faults of some people to everyone in the same cohort. "
that's the perspective that would never have had the will to have dropped those firebombs on hamburg or tokyo when it mattered 60 years ago. nor would have had the will to have fought off legions of chinese irregulars in the korean snow. one of many, many thing that separates boomers from their frequently heroic older brothers and uncles.
Ah, your generation just doesn't have what it takes, Hack.
Too busy tweeting.
It's an ugly truth.
I really don't think it's a good idea for foreigners to buy land in the US en masse. A single person buying a single property is fine and dandy, but a bunch of people buying up huge tracts or even single parcels all concentrated in one area is bad. You can't vote, and the locals can conspire to raise your property taxes without you being able to do much about it.
Many Japanese got hosed big time, the Chinese may make the same mistake.
TJ
Caifornia is in the middle of the pack in terms of taxatiion.
Not only do you need to included property taxes, where california is low, but also when you look at income tax you need to look at actual tax collected as a percent of income. The top income tax rate is second highest in the US, but the real tax take is much lower. In fact, people in the highest bracket effectively pay less on a percentage basis than most middle income people. The income tax code is full of loopholes for the rich and exemptions for corporations.
"a union-owned liberal Dem majority"
yet the most fiscally toxic and powerful unions are the law-and-order ones - cops and guards. and that has been the bread and butter of "conservative" california politicians since at least Nixon, if not going back to the Vigilance Committee. Hence, no way out.
"That requires an economic pie that is expanding quickly enough to satisfy unlimited desire at the top without immiserating the bulk of the population in the manner Marx erroneously ascribed to the essence of capitalism. We don't have the wealth (i.e, the potential for economic growth) to sustain that."
That could describe the evolution of many societies. It's the essence of social development in a universal sense. Marx asserted that economic relations determine social relations. It's more likely that the opposite is true.
@Chicago Dude - leave it to the appraisers, and Consumer Protection. All will be well.
C
He tweets in the tree tops all day long
Hoppin' and a-boppin' and smoking his bong
All the little birdies on Wall Street
Love to hear Hollywood go tweet tweet tweet
BSR
there are a few republicans and boomers who are not bad, but, as for the rest, yes, that would make for a decent start.
BTW, taxation is one of the best ways to restructure compensation on Wall St.
"there are a few republicans "
Richard Lugar, for one.
....no chance of China replacing any of their Treasuries for US land - it makes too much sense. Lets talk them into buying a couple National Parks, the LA Coliseum or the Rose Bowl, how about all of the Inland Empire....
I highly recommend the Boomer Bible.
Amazon.com: The Boomer Bible (0019628030757): R. F. Laird: Books
TJ,
Doing well! Pardon me if it takes a while to get to that e-mail. Life is good but busy. The baby is such the joy! She talks now! Ok, it sounds more like a small dog barking... But we just had our first phone conversation! (Ok, in single word sentances... But hey, one starts somewhere. She is only 10 months old.) Before it was me talking and her going "blaaa blaaa blaa." (I'm on travel tonight).
Got Popcorn?
Neil
Look at post-Soviet society in the 90s for an example....pavel
Yes. Very disconcerting. I've talked to a couple of colleagues at work from Ukraine and Russia and also a few scientists from Russia. Brilliant, most of them! Russia's problems have always been a mystery to me. Maybe it's the cold....
And whatever happened to Gorbachev? I thought he was a good leader.
"Lets talk them into buying a couple National Parks"
The Grand Canyon could use a few good restaurants.
That's my understanding too, that 'saving' SS is a matter of an extra buck or two in withholding.
Treated as a truly independent program, yes. Too bad it's not an island unto itself.
Unfortunately it has been financing government excesses for decades in return for a nice cabinet full of IOUs that cannot even be tendered on the open market. There's absolutely no stomach in DC to cut the other programs that SS has funded all this time, let alone eventually take cash from other revenue sources to actually pay off those IOUs.
It's never been about when the system has to start tapping IOUs, it's about when the SS gravy train of excess cash started declining.
90% of the empty acreage here is owned by East Asians - it used to be alfalfa & cotton with water 150' down - You figure it out..
that's the perspective that would never have had the will to have dropped those firebombs on hamburg or tokyo when it mattered 60 years ago.
We did it then, so that makes it OK today, is that it?
"Russia's problems have always been a mystery to me."
they never had a middle class which was invested in society. this is why stalin so fiercely crushed the kulaks - they were the closest thing to it, and he knew that those types of people made for awkward slaves.
....no chance of China replacing any of their Treasuries for US land - it makes too much sense.
You don't think we could sell them Pebble Beach? Hell, they can read, they'll probably want North Dakota.
I will be a bit of a conspirator for a moment $134 billion in bonds maybe scared a few...again pure speculation Kudlow like.
And there is something about the Deflation call today on behalf of the Fed, I usually interpret the FED speak and go the total opposite way.
Look around we are deflating ......rapidly.
Could $2 Trillion be sucked away that quick?
"We did it then, so that makes it OK today, is that it? "
no. solipsistic narcissists make for poor soldiers. that's it. when all that matters to you is an individual journey towards self-realization, larger projects - wars against the truly evil, fiscal stability for the future, preservation of natural and cultural treasures - are impossible. that's why boomers are complete, utter failures at such things, at least as compared to the generation born in the 20s and 30s.
I agree with some of the posters above in that I don't know if we will be able to discern much from the ratio of new versus existing homes pointing to a recovery. There are just too many factors at work.
I think the old tried and true Inventory is going to be more telling, along with some additional useful measures, like estimates of shadow inventory. Shadow inventory will be tough to measure exactly, but can be estimated by estimating the number of homes underwater that become in the money as house prices start increasing again, laid against the suppressed turnover numbers until that happens.
But in any case, like any market, it ultimately hinges on supply and demand, with the supply side of the equation being much more relevant than any time in the past.
Pavel
Yes, Mr Lugar is a sane man.
"Yes. Very disconcerting. I've talked to a couple of colleagues at work from Ukraine and Russia and also a few scientists from Russia. Brilliant, most of them!"
The Russians are very strong in physics, mathematics, etc. They have found ways, for instance, of working around certain deficits in super-computing.
"Russia's problems have always been a mystery to me. Maybe it's the cold....
And whatever happened to Gorbachev? I thought he was a good leader."
A very different national history.
Gorbachov? I don't think he's held in very high esteem these days.
lurker,
The per-capita tax burden is second in the nation when all taxes (including state, county, city, etc.) are taken into consideration. Sure, it may not be distributed equitably -- what taxes ever are -- but it's still damned high enough.
We've already had the highest state tax hike in US history, so now it's time for cuts.
longtimelurker (profile) wrote on Wed, 6/24/2009 - 11:23 pm
"Pavel
Yes, Mr Lugar is a sane man."
Yes, longtimelurker, that's my impression too.
one of the most successful programs in US history [SS]
Ponzi schemes are bad.
sorry for dragging this OT - the topic is genuinely interesting. I wish the graph had actual #s instead of relative %.
i think it is safe to say that the construction binge of the past few years went hand-in-glove with the bubble as a whole, and that the resultant oversupply is the main culprit (paging Victorville...)
no. solipsistic narcissists make for poor soldiers. that's it. when all that matters to you is an individual journey towards self-realization, ...
"all taxes "
please don't forget the sales tax hike - a delightful kick in the crotch to both the working poor and retailers competing with national on-line folks. perfect timing, really.
"begun to do the necessary work of their political disenfranchisement in the slightest."
Channeling Khamenei tonight? Really, just shoot your father, you'll feel better.
TJ
as a share of income, california hovers just above the national average for the states .
here is data and a chart trhough 2007:
http://www.ccsce.com/pdf/Numbers-oct07-HighTaxState.pdf
"no. solipsistic narcissists make for poor soldiers. that's it. when all that matters to you is an individual journey towards self-realization,"
When a society loses its capacity for sacrifice, the end is inevitable. It means that people don't love it any more, and that which is unloved, withers.
HH,
Yeah, and now they propose again more cig & car taxes. Not regressive at all, nope. Sheesh.
Asians have been buying farmland around the world.
Hack
yes, the sales tax is egregious and stupid. it is a product of the constitutional crumble - any sensible state government would have drawn revenue from other sources and sales tax should have been last in line for an increase in a recession (not to mention in a depression).
Gorbachov? I don't think he's held in very high esteem these days.
Gorbachev is a lot more popular abroad than he is in Russia.
Putin is far more popular in Russia than Gorbachev
Good night, all
Lurker,
Um, check the date on that study. Here, I'll help you with the key detail...
IT'S BEFORE THE BIGGEST STATE TAX HIKE IN US HISTORY.
"Channeling Khamenei tonight? "
no, but i may be channeling the under-30s there that are frustrated and mad as hell at a formerly revolutionary generation that descended into corrupt self-interest and destroyed the dreams of what was once a proud nation through their toxic narcissism. sound familiar?
"Asians have been buying farmland around the world."
From their point of view, a prudent step.
What haven't Asians been buying around the world???
Gorbachov? I don't think he's held in very high esteem these days.
Certainly not in Russia. We'll see what history has to say.
"What haven't Asians been buying around the world??? "
they have been hoarding commodities. overseas investments frequently have political risk, and often involve cultural niceties which may not seem worth the bother.
"Certainly not in Russia."
That's what I meant.
I was in Fort Myers Florida a few years ago, and there was Gorbachev's name on a sign. He was giving a speech at a local college.
I have a kind of personal connection to him, although I'm almost certain he doesn't know of my existence.
barfly- it is an old inside joke relating to how weird things were getting back three years ago.
CR had a much smaller audience then.
YouTube - Apocalypse Now - smell of napalm
Right at 47 seconds is that quote- and the feel of that quote describes how this entire experience has been for me.
More and more at work I feel just like Col. Kilgore, patching up problems and pointing out mistakes while the whole dang show goes down in flames. And that war did end, eventually.
Someday this war's gonna end...
no, but i may be channeling the under-30s there that are frustrated and mad as hell at a formerly revolutionary generation that descended into corrupt self-interest and destroyed the dreams of what was once a proud nation through their toxic narcissism. sound familiar?
Yes. Every generation bitches about the one that came before it.
The Xers bitching about the boomers for [insert your arg here]
Boomers bitched about their fathers for the stupidity of Vietnam.
Their fathers bitched about the 20s that led to WWII
Their fathers bitched about the stodgy attitude that resisted the 20s.
You do realize you are cliche, right?
TJ and The Bear (profile) wrote on Thu, 6/25/2009 - 3:34 am
What haven't Asians been buying around the world???
MBS and UST
...(relatively speaking).
Not One Cent,
LOL!!!
" channeling the under-30s there that are frustrated and mad as hell "
I presume you are describing yourself. As for the rest of your cohort...what an uninteresting group. They have distinguished themselves, how? Their banality and self-involvement as evidenced by Facebook, Myspace and twitter? I still think you should shoot your father, you'd feel better.
"The Xers bitching about the boomers for [insert your arg here]
Boomers bitched about their fathers for the stupidity of Vietnam.
Their fathers bitched about the 20s that led to WWII
Their fathers bitched about the stodgy attitude that resisted the 20s."
And Eve bitched about the snake. If you're human, you're complicit.
Citizen AllenM wrote:
Someday this war's gonna end...
How about "Someday this war's gonna start", because I don't think it has really started yet.
Gorbachov? I don't think he's held in very high esteem these days.
I hope history is kind to Comrade Gorbachov.
He had the grace to end the Soviet Empire without the massive bloodletting that usually accompanied to end of a failed system.
I hope our leaders have similar grace and courage, but I doubt it.
I'm not mad at the boomers, but they represent certain demographic and political realities and limitations on gen X/Y. Perhaps I should just go to some place where the population is mostly younger than me.
"How about "Someday this war's gonna start", because I don't think it has really started yet."
Maybe his point is that the war never ended.
I say we take off and nuke the Fed from orbit. It's the only way to be sure.
I think that on these late night threads, instead of drinking every time someone says 'contained', we change it to 'boomers'.
now to go uncork another bottle >. )
How about "Someday this war's gonna start", because I don't think it has really started yet.
Amen.
TJ
The biggest tax increase in US History? Really?
Have you looked at historical tax data? Like for the US in the WWII era? Or when the top US bracket was over 90% under the Republican Eisenhower?
Or, in california, at the time when Reagan raised the top bracket from 7% to 11%?
The main difference between my data and the data you are referring to (source unknown) is that the data I linked looks at taxes collected as a percentage of income (i.e., the actual percent of income paid in taxes) , rather than at abstract tax rates (which tell you nothing about the effects of loopholes, exemptions, etc).
I say we take off and nuke the Fed from orbit. It's the only way to be sure.
Love it!!!
that's why boomers are complete, utter failures at such things, at least as compared to the generation born in the 20s and 30s.
Rather than the decades, perhaps it was the situation? If the mostly first and second generation immigrants were going to make a better world for their children, they'd have to work at all the salient virtues; but we were born in the midst of plenty, and decadence has taken it's toll. We're all such terrible people.
But then, that generation did a shitty job of making sure their kids were going to be virtuous and carry on the struggle, but don't worry, we're currently involved in making the world into a character building place again, full of trouble and strife. And maybeyou'll get a chance to see someone prove their steadfastness and use those nuclear weapons again!
I'm not mad at the boomers, but they represent certain demographic and political realities and limitations on gen X/Y.
Great. Take notes and do things "correctly". Do you really think the next gen won't curse you for representing certain demographic and political realities and limitations?
good night boomers and anti-boomers.
As an addendum: Suppose the Bush War had involved the draft, like the folks older than me. You think you have limitations now?
I for one am glad that you had to volunteer to go die for that stupidity, rather than be drafted into dying for someone's overblown ego.
EDIT: And if the connection isn't obvious, the reaction to vietnam was what allowed me to not have to be drafted. (In truth, I was the first cohort to have to even register for the draft in the post-vietnam era.)
In case it hasn't been linked before, Bond Tangent has a post on the advent of California IOUs. BOHICA in about a week.
Blogger: Blog not found
Thank you, Bond Girl.
"He had the grace to end the Soviet Empire without the massive bloodletting that usually accompanied to end of a failed system."
Y'know, I heard people talking about the possibility of civil war then. But it seems to me that not enough people loved the system any more, and that's why it fell. It could have been saved if people cared about saving it. In fact, many despised it.
Gorbachev (common spelling in English)? I have the sense that he was more of an onlooker than a presider.
But there was one striking story. I knew someone whose neighbor was one of Gorbachev's KGB bodyguards, and when the compound was surrounded during the attempted putsch, the rebels told this bodyguard that if he gave up his weapon he would be allowed to leave the scene unharmed. The guard replied that he appreciated the offer, but that it was his duty to protect the leader, and he just didn't see himself sneaking away, so he would hold onto the gun even if he had to die for it.
He survived without harm. As we know, the putsch collapsed.
I would expect that the millenials and post-millenials are going to be bigger generations again since there are fewer jobs to go around right now...
Does that answer Mish's question?
Mish argued that those believing in inflation should be advocating real estate--and he demanded to know who was advocating real estate.
@pavel,
I have a soft spot for Gorbachev, even though I don't know the first thing about what happened behind the scenes. From my point of view, he had the courage to bring the old system down with a soft landing, at least compared to other possible outcomes.
Asians have been buying farmland around the world."
From their point of view, a prudent step.
HH, I hear you. But not all are to blame. Many of us fought for just the opposite results, and lost.
Comrade Coinz,
I really don't know and can't know how much control he had over the situation. But we can grant that it could have been a lot bloodier than it was.
@pavel,
I have a soft spot for Gorbachev, even though I don't know the first thing about what happened behind the scenes. From my point of view, he had the courage to bring the old system down with a soft landing, at least compared to other possible outcomes.
The worst of times, the worst of times. Boomers, Fed failures and the illusion of Gorbachov's hollow reality and the acidic tapeworm -like eating-away of hopefulness and the delusion of future cycles.
Things would be much simpler if people were not so human.
And not only a lot bloodier in Russia. I believe the whole world was in serious danger when the system fell. When that much power moves the consequences can be deadly. People both here in the US and there knew it, too. Some of them told me. One was the adviser to the Russian government on nuclear weapons, a general named Batenin.
can it be off-topic time now?
because its close to my heart:
OC Watchdog
grand jury slams local good old boys clubs for self dealing and other dirty deeds.
california is feeling a little punchy lately
uce
"Things would be much simpler if people were not so human."
Hey, animals don't have such easy lives either.
can it be off-topic time now?
Geez, was there a topic???
Hey, animals don't have such easy lives either.
Especially when there's not-so-considerate humans around.
Tyler Durden is getting funny.
Zero Hedge: The Fed's Emails
He thinks he has his smoking gun for the shotgun wedding of BAC/ML from the fed. What he has is the Fed pointing out the obvious.
Gee, Ken Lewis looks like a frigging maroon.
Um, we didn't do a good job on our due diligence, so we want to MAC>Fed correctly responds that it is now too late, KL and BAC look too weak to finish the deal due to their own losses, since the Fed has already put together help for the ML burial with the deal. So essentially, BAC was bust (insolvent) too- that is the smoking gun, not that BAC had to be pushed into the deal against the best interests of shareholders.
Ye gawds, the Fed just made one pile with a chance of propping it up out of two that would include at least one bk, if not two.
The scandal here is the Fed and the Treasury were doing such massive prop jobs behind the scenes- the real question is who else has had such favorable treatment to be allowed to survive.
Someday this war's gonna end...
Citizen AllenM, I agree with most everything you say in your posts. Your tagline just gets on my nerves, but that's just me. Sorry to bring it up. Carry on, sir!
Gorbachev can sing! On NPR today, about 2/3 of the way through the clip:
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