badger - on the pigged thread, most consumer credit laws, including Regulation Z, define credit to include allowing payments in four or more installments - just the compliance costs have to be high.
Oh, and now I have an ad on quitting weed. This is getting interesting.
EDIT: the first post mentions smoking, and I have ads for quitting smoking and quitting weed. We need to have the first posters put in some interesting stuff and see what ads come up.
I asked in the other thread, what if we had a car bubble*, in lieu of a housing bubble, and it was imperative that we keep prices up on a like-asset that needed constant care and attention, typically the 2nd most expensive thing most of us ever buy.
What could justify keeping a 2003 Suburban with 100k on the odometer worth $95k, just because every other one of them was overvalued in such a fashion?
*The Ferrari car bubble of the late 1980's was amazing, prices shot to the moon for a few years, after Enzo Ferrari died in 1988.
I'm having difficulty seeing evidence that prices are staying up or being pushed up. Certainly there are plenty of theoretical constructs making the claim. The analyses seem to me to be attempting to claim that since mean and median are down, no one has money. There is still money out there though, plenty of knife catchers.
So I expect prices in the low end areas to decline again (even if the bottom is in). - CR
Jeez, CR. How many times do I have to welcome you to the dark side?
It's merely a matter of degree whether we retest the lows or exceed them. It was always inevitable due to extend and pretend interfering with market clearing mechanisms. So, instead we get multiple correction events. And let's face it. 30-50 bids in this market is every bit a sign of irrational behavior as it was at the peak.
"I'm having difficulty seeing evidence that prices are staying up or being pushed up."
C4C did it for used cars - when I was going to dump the damn Jeep my wife bought, the prices I could get for it in February were the same as when I did dump it in August.
There is still money out there though, plenty of knife catchers.
You rang?
Seriously, it's hard to argue that someone buying now (ahem) isn't much better off than someone who bought 3 years ago. How much of the damage has been done? Noone can say, unless you can predict with absolute certainty the outcome of the 'flation debate. A rush to hard assets due to a collapsing currency and all bets are off.
"Goldman converted to a bank holding company when they recieved TARP money, but they unconverted from that real fast and are now, as of August 14, a financial holding company, according to a conversation I had with Goldman spokesman Lucas Van Praag."
Certainly there is nothing wrong with making your housing expense certain for the next dozen years. In my area at least, the difference between renting and buying is a wash. Nothing wrong with being your own landlord.
I'm in a high end suburb of Chicago. The number of foreclosure seems about 4x higher than it was winter/spring/summer. The other interesting thing I've noticed is that the flippers of 2008 are getting burned. I know of a few properties that are now below their '08 sale prices, despite the installation of granite, landscaping, paint, etc.
If it's possible for flippers to get burned in other markets, perhaps the multiple bid situation will dry up.
In my "it's different here" desirable California coastal area, REO homes are still selling for about the inflation-adjusted 2000-2001 price. And they are selling, at that price point and no higher. It's not inconceivable that another round of inventory, and collapse in sales due to looting pentup demand now, might bring prices down to nominal 2000. Or worse.
An earlier commenter (Rob Dawg?) said that there would be continuing support for home prices at the low end but not for the high end.
Why might that be?
Most commenters here have concluded that the increasing economic inequality in the US is not a good thing, yet in my neck of the woods (Oakland, CA), home prices in adjacent ZIP codes differ by a factor of 10.
I would like to see a free market sort things out, but can't abide a society of haves and have nots. I can understand why there is an effort to bring some semblence of economic balance, as the divergence in wealth makes the sense of community that leads to a strong society impossible.
I am also struck by a comment made here a couple of days ago: "Everybody wants a strong middle class, but nobody wants to be in it."
It is always possible prices will go down. It is also possible rents will go up. California has always been an expensive place to live. Despite its myriad of problems, it is blessed with some of the agricultural land and research facilities in the world. I wouldn't take the state government right now, but California is far from the worst place in the country to live.
When sort of clod would be cool with buying a hood-adjacent home in Tijuana-adjacent for 8x annual earnings?
Not sure where originally found this story, but it gives some insight into why people would buy homes that are still horrendously priced. It's the "I can finally afford it, better buy now before prices go up again" mentality. Didn't do the knifecatchers in Japan much good:
So, just as car dealers were able to foist off inventory for C4C's, local cities were also able to use the sales-tax revenue to stay afloat, but heavens to murgitroid, September sales sucked.
Let the foreclosures roll, socal home prices are far above reality, time for the pain. Oh, CR,re: quitweed ad, California has a new initiative to legalize and tax weed, pay the bills you know.
Any analysis of housing has to incorporate the massive government intrusion and the banks' extend and pretend operations. One has to analyze the impact of the subsidies and perhaps more importantly, how long will they last.
I wouldn't take the state government right now, but California is far from the worst place in the country to live.
Anytime someone threatens to bail, I look out the window. I'm staying. Anytime a doomer talks about civilization going down, I look at the fertile fields at the edge of town, the bay full of fish, the concentration of technical knowledge and resources. I grew up living a modest life in California. And I still live one. For me, all the riches are right outside the door.
California has a new initiative to legalize and tax weed, pay the bills you know.
I just signed one to decriminalize, not legalize. Growing and using at home ok, public use and sale not okay. No gov't taxation there. However the guy with the clipboard told me there was a competing measure out there, too. That might be the one you're thinking of.
Ivy Zelman on Housing Submitted by CalculatedRisk on Sun, 10/11/2009 - 10:07am 33 comments Nemo (homepage, profile) wrote on Sun, 10/11/2009 - 10:08 am reply ignore user Did she ever figure out what Bob Toll was smoking?
California has a new initiative to legalize and tax weed, pay the bills you know.
1934 and the 21st Amendment all over again. I feel like it's inevitable. Anyone else find the number of online questions about legalizing marijuana and Obama's actually bringing it up (during that early "town hall" ) a little suspicious? Considering the questions were open to the whole country and the other urgent issues occurring at the time, the proportion seemed markedly off. And the fact that a head of state would even acknowledge the topic while addressing a group of typical, law-abiding Americans was even more eyebrow raising. Felt like manipulation and gears turning to me.
Anytime a doomer talks about civilization going down
I thought those of us in CA were just waiting for it to slide into the sea, like the trailer for 2012
The upsides for me still outweigh the downsides from living in this state.
~splat
Take interest rate support and tax rebates out of the mix and you can rest assured we're in for another substantial leg down in prices & volume. Add another wave of defaults and the cycle looks pretty bleak.
The govi is basically propping up the entire housing market.
When FHA, Fannie/Freddie (and who know what others) become the landlords-de-facto for those who don't pay off their mortgage, what do you want to bet that Glodman will be the property manager? That will chill your wick.
The scary reality is that ALL of the govi prop jobs are achieving some basic economic stability. All those trillions and unemployment is at 10% (or 17+%) and home prices have stabilized. More trouble is on the way with the foreclosure pipeline and CRE blowing up.
Kalllyforniya, Velcome to the 700 Klub, pssssst PTL
der Governator, out.
+++++++++++++++++
“High-pressure negotiations on a massive water reform package ended in stalemate again Saturday night with Gov. Schwarzenegger and Democratic leaders saying they will re-start talks Sunday morning.
Hanging in the balance: 704 bills affecting everything from schools to highways to hospitals, the product of the entire year’s California legislative session. Schwarzenegger has said he will veto nearly all of them if he doesn’t get a water deal that includes billions of dollars for new dams. The deadline for him to act on the bills is midnight Sunday.
The rationale behind price support is:
1 - Deflating assets will damage bank balance sheets to the point of TARP II.
2 - Citizens aren't educated to the point where [strategic default + bad credit + renting for lower cost of living = better idea] makes sense to them. "Do the right thing" sometimes isn't the right thing.
Why we shouldn't support price manipulation: Free up resources.
1 - Lower cost of living (house prices/rent) creates more disposable personal income. CR, is not price support in complete contradiction to increased consumer spending?
2 - Decreased debt burdens allows long term decision making in place of short term, debt overhang influenced survival tactics.
Conclusion:
Those who are in preferable financial condition and have secure employment (those who stand to lose if things "change") are choosing to take temporary personal gain and stability over long term national economic health.
I suspect without the housing subsidies, home prices would drop to '90s valuations. Price controls are rarely if ever successful so after the Great Experiment fails, we are left with devaluation.
Most companies that applied for BHC status last year were seeking to get status of Financial Holding Companies, GS included. GS status as an FHC was approved in August. There is not much difference between a BHC and an FHC in terms of regulatory oversight (or Fed support if needed), but FHCs are allowed to engage in a broader range of activities.
Here is the FFIEC definition: **Financial Holding Company **
A financial entity engaged in a broad range of banking-related activities, created by the Gramm-Leach-Bliley Act of 1999. These activities include: insurance underwriting, securities dealing and underwriting, financial and investment advisory services, merchant banking, issuing or selling securitized interests in bank-eligible assets, and generally engaging in any non-banking activity authorized by the Bank Holding Company Act. The Federal Reserve Board is responsible for supervising the financial condition and activities of financial holding companies. Similarly, any non-bank commercial company that is predominantly engaged in financial activities, earning 85% or more of its gross revenues from financial services, may choose to become a financial holding company. These companies are required to sell any non-financial (commercial) businesses within ten years.
"Banks make more money by NOT foreclosing on homes. Banks are dragging out the foreclosure process for their own selfish reasons. Until the day they foreclose, the amount of money owed to them is an asset…sure, it’s an asset that isn’t paying interest payments…but it is still an asset. The day they foreclose, a $400,000 asset could become a $150,000 asset and a $250,000 loss.
Multiply that loss by 10, 20, or even 30 times leverage and there are several million dollars worth of new loans that the bank can’t make."
The time: 1976, the location: an art theater in Tampa ...
One weekend they were showing Refer Madness. Some acidhead in the group I was with, just had to light up.. just had to light up in the most obvious place in town ... we all got evicted !
An interesting question: What, if any, is the obligation of a federally chartered bank to make loans?
If there is an obligation, who measures fulfillment, and where is the measurement reported?
Would it make sense for the federal government to create and operate Federal banks that accept individual deposits (with guarantees) and only invest in loans to individual homebuyers (not speculators, REITS, private equity firms, or other banks)?
Don't forget they get to apply special charges for delinquent loans, for which they stand to recover if the mortgage is guaranteed or is the recipient of modification moneys. Normally they aren't allowed to string on delinquent loans forever because the guarantor is allowed to buy them back and then proceed to foreclose -- however mortgage guarantors have very 'thin' capital at this point in time to keep the system functioning as intended.
(at least that's my current understanding of it, I'm not an expert, I just read what they write on here)
"MarketWatch has a story on Stimpack III - it will be "jobs, jobs, jobs." WPA v2.0???"
Has to be. We were talking about it this morning. But in the 30s there were a lot more people familiar with the use of the pick and shovel. We do need people to work with the handicapped and elderly, act as teachers' aids, etc.
Thanks. I'm not saying that obtaining bin Laden's head in a bucket is a good idea. I'm saying that, if you want it, here's one way to get it.
@YLSP
I'm aware of the $25 million reward for bin Laden but, in today's world $25 million won't even make a down payment on a Falcon 7X, let alone a nice yacht.
But, $30 billion, in cash, delivered anywhere, in any currency, will get you his head in a bucket.
Has to be. We were talking about it this morning. But in the 30s there were a lot more people familiar with the use of the pick and shovel. We do need people to work with the handicapped and elderly, act as teachers' aids, etc.
True, but a lot of the workers -- especially CCC kids -- came right out of the big city nabes and knew little or nothing even then. Education was a big part of some of these programs, and would be again. The best kind of education -- learning while you're doing a real job. Learning skills you need right now.
You don't really have the entire doom package down pat
Where is the full doom pack outlined? How do I know what I'm missing? Can you buy a replenishment pack if you lack something crucial or the supply of a component is running low?
in the 30s there were a lot more people familiar with the use of the pick and shovel. We do need people to work with the handicapped and elderly, act as teachers' aids, etc.
Pavel,
I am deeply disturbed of the suggestion that we need people familiar with the use of pick and shovel to work with the handicapped and elderly.
(sarcasm was used in the writing of this post)
OK, let's discuss the word "free" in the phrase "free market."
Is basing life insurance premiums on gender a free market policy?
Is raising CC interest rates from 9.9% to 23.6% once there is a substantial balance due a free market policy?
Is mugging the guy who just made an ATM withdrawal a free market policy?
"True, but a lot of the workers -- especially CCC kids -- came right out of the big city nabes and knew little or nothing even then."
You're right, Bob. I agree too about the best kind of learning. A 21st century WPA might be the best thing that could happen. We saw some kids working in Rock Creek Park this summer on trail improvement, using stimulus money. The Park Service guy in charge of them was grateful for the funds, and said the work had needed to be done - we knew that because we're dedicated trail walkers. The trails are in better shape now, but because of use, storm damage and erosion they need to be kept up.
A good many of the first CCC workers, had participated in the Bonus Army festivities of less than a year prior to it's inception, and in a way, it was imperative that FDR get them off the streets~
I guess that means we won't get to see Goldman show up in the OCC's regular reports anymore?
EHP - Most large BHCs are FHCs. Here is the complete list FRB: Financial Holding Companies
So I would not expect any changes in reporting
It is important to clarify: FHCs are a subset of BHCs, from the link above: Under the Bank Holding Company Act, bank holding companies may elect to be financial holding companies.
bin Laden needs to be taken just out for threatening Jihad. He's probably dead however. Not even 'wanted' by the FBI for 911. Sheik Mohammad was the 'mastermind' of 911. He admitted to it after numerous waterboardings.
pavel - a 21st century WPA might be about beautifying & fixing public housing instead of public trails.
Just daydreaming -- what about a gov't Habitat for Humanity program. Fix up enough houses, you get a shot at one of them. Or a condo in an abandoned complex seized converted to low-cost housing (only done where there was an actual economy nearby, or hope of one).
Actually, we talk about WPA as if our country actually had the funds to support a section of the population like that. Maybe the answer isn't just in putting tools in idle young hands, but in using those hands to support business needs, thru subsidized pay rates.
But then who would win but the big bankers again, scraping off the top of every transaction.
I'm at a dead end here thinking about a public works program.
MrM
I looked through that list, and near as I can tell FHC is just one way to segment off business that is not permitted as a regular BHC (eg owning a non-financial commercial venture. necessary to do private equity deals).
I guess Goldman Sachs must maintain deposits to keep the BHC status in any event then? I'm hoping that they can't move trading into the FHC branch away from OCC oversight.
We have a wonderful riverfront park, part of which is a large bowl-shaped grassy area - large enough to hold the 70,000 Oregonians last summer to hear/see Obama. Unfortunately about 200 geese permanently live in the bowl, dropping nasty geese poop that makes sunbathing or walking somewhat twisted. We need about 5 CCC workers to keep the bowl poop free. Pls send them quickly. They can eat all the geese they can stuff in a bag.
mp - you've thought about the sheer physical volume of that much cash, right?
Well, sure.
I submit to you, however, that it's cheaper than moving armies halfway around the world and making sure they don't run out of ammunition and cheeseburgers.
MrM
A standard stack is 100 bills. You can fit about 100 in a briefcase. At $100 denominations, that's $1mn per briefcase. It's fun playing with so much cash the first time, but after that it would be much more convenient to use the higher denomination euro bills if at all
Finally, reading the post and commenting appropriately...
in my county October Notices of Trustee Sale and Trustees Deeds (completed foreclosures) are both up 20% over September (7 business days in each period).
We could use 250,000 fit young adults trained to fight an enemy in the midst of harsh conditions like say Afghanistan or Iraq, to instead fight fires, by clearing out much of the duff that causes big fires that take down entire forests & watersheds here in our country, but no.
MrM
The US navy's aircraft carriers are pegged at $4.5bn per, or $11bn for the newest design commissioned.
Try thinking of the $180bn to AIG as military aid to a random country
nasty geese poop that makes sunbathing or walking somewhat twisted. We need about 5 CCC workers to keep the bowl poop free. Pls send them quickly. They can eat all the geese they can stuff in a bag
No, you need about 3 working border collies & one human to keep an eye on them so they don't herd the humans as well as the geese, to make sure they have water, etc, and to pick up the BC poop.
EHP - As I said, FHC is a subset of BHC, or in other words, it is a BHC which has been allowed to engage in a broader range of comemrcial activities than a typical BHC would be. Remember, that in either case it is a holding company we are talking about, not a legal entity in a corporate hierarchy (in other words, the Fed regulates everything within a BHC, whereas the FDIC regulates only deposit taking subs)
Why do you think that a company needs to have any deposits to qualify as a BHC or an FHC?
MrM
I'm pretty sure you need deposits to retain BHC status, because a BHC must own a bank and there is no bank regulator that allows a zero-deposit institution http://www.fdic.gov/regulations/laws/rules/6000-300.html#fdic6000sec.2a
I'm just hoping that the granting of FHC status wouldn't allow GS to structure its business such that they exclude juicy info from the OCC reporting
Bio startup CEO with money in the bank -- all systems go.
Manger at joint-venture semicon company -- laid off, options worthless, underwater on house, 401K in ruin.
Semiconductor designer -- laid off, new career as home health care small businessman (fortunately, wife still working)
Marketing guy, 29 -- got laid off, found a job with the Chamber of Commerce -- gee, everything's so cheap now.
Hotel general manager -- still working, still hanging in there; 401K a wreck, refuses to open statements -- will have to work "until three years after I die."
Pawnbroker. Business is great; much more upscale sellers than before. Any gold items that aren't reclaimed twe send straight to the smelter at $1K an once. Yee hah. Got money to loan!
SW Engineer: probably never get another job; 59, and they're sending them overseas. Ok for now, but it's all outgo, no incoming.
Well, you have to admit, the plot is just as thick and exciting as any other movie he's been in. Tell me again when to put the popcorn on. I hope it has a happy ending.
EHP - You are linking to FDIC regulations, which obviously apply to deposit taking institutions.
It is true that in order to qualify for a BHC status, a company must own a bank (BHC does stand for a bank holding company, after all). However, there are banks, which only lend but do not take deposits, such as some ILCs or FSBs.
(E) No company is a bank holding company by virtue of its ownership or control of any State-chartered bank or trust company which--
(i) is wholly owned by 1 or more thrift institutions or savings banks; and
(ii) is restricted to accepting--
(I) deposits from thrift institutions or savings banks;
(II) deposits arising out of the corporate business of the thrift institutions or savings banks that own the bank or trust company; or
(III) deposits of public moneys.
If they don't take deposits, the bank won't meet the qualification for BHC
There's more on the scope of bank @ http://www.fdic.gov/regulations/laws/rules/6000-300.html#fdic6000sec.2c
It may be hosted on the FDIC site, but those are the legal definitions for BHC and everything else which are set by Congress I believe.
Preparing for the coming global meltdown with 'international standards':
International Basel II rules will deal with systemic risk, pension risk, liquidity risk, legal risk, etc. Basel II advocates believe that an international stahdard can help protect the system should a series of banks collapse. The more risks banks are exposed to, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability.(Wilipedia)
Are U.S. banks building reserves to meet these new 'international' standards? Progress is being made on international implementation of Basil II.
EHP - Let's check the USC, which is referred to in FRB regulations about BHCs US CODE: Title 12,1841. Definitions (c) Bank Defined.— For purposes of this chapter—
(1) In general.— Except as provided in paragraph (2), the term “bank” means any of the following:
(A) An insured bank as defined in section 3h of the Federal Deposit Insurance Act [12 U.S.C. 1813 (h)].
(B) An institution organized under the laws of the United States, any State of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands which both—
(i) accepts demand deposits or deposits that the depositor may withdraw by check or similar means for payment to third parties or others; and
(ii) is engaged in the business of making commercial loans.
My interpretation of B (ii) is that a charter bank issuing commercial loans (e.g., an ILC) would qualify its owner for a BHC status even if it does not take deposits
MrM
Yes, you can be a bank that doesn't take deposits. But those types of banks don't qualify for BHC status. We're citing the same definitions.
eg US CODE: Title 12,1841. Definitions
is also the same definition I referenced via the FDIC website
Goldman Sachs and Morgan Stanley did not adopt FHC status to jettison their token banks with the token deposits. They did it to ensure continuity in their line of business for private equity, probably among others. Regulations state they would have had to divest of any non-commercial ownership with 10 years, and would have hit roadblocks for new deals within 2-5 years. I think this is a nothingburger
O yes, I very much agree with this! While I believe that technically it is possible to be a BHC without owning a deposit taking institution (this is where you and I disagree), in reality most, if not all, BHCs do own deposit taking banks. That includes GS.
The fact that GS became a FHC (which is a subset of BHC) is nothing special, all it means is that GS will be allowed to continue with its activities, which owuld have been problematic under the BHC umbrella.
The thing I don't understand is why the Obama Team (at least) isn't all over this before it blows up. With the recent adverse court decisions, the bigger ones they know are coming, the unabated rise in unemployment and the hoocoodanode drop in nearly all revenue the Feds need to be very worried.
Coordinated central banking action- Macroeconomy(G20 progress report, Sept. 2009):
Most major economy central banks have reduced policy interest rates to close to the zero interest floor...liquidity provided by central bankers remains very high...'
The QE Quantitative easing monetary policy appears to be a popular strategy internationally so international banking standards 'action plan' would seem to follow from this. How will the Global Too Big To Fail strategy play out on Main St.?
Absolute failure of the state government due to political stalemate is necessary to further degrade the independence of state governments.
This failure is currently manifested in Arizona and California, and essentially the first to collapse will dictate the outcome of the other.
Arizona is poised to fail, with a doom laden midyear budget bloodbath being planned by the Governor if the legislature does not fund the current level of expenditures. Right now, the plan is lay off about 50% of the state employees.
That is about 16,000 employees- and only absolutely essential state services will continue to limp along.
Implementing just that much will require raiding funds that the Feds consider sacrosanct, and invite federalization of environmental and welfare functions.
The thing I don't understand is why the Obama Team (at least) isn't all over this before it blows up.
Obama Team - anyone in particular?
Rahm and Axelrod are confident that CA will stay Democrat.
Summers is more concerned about Wall Street than about states.
Who on the Obama Team should be concerned in your view?
The proposal involves the conversion of an existing, wholly owned
industrial loan company subsidiary of Goldman into a bank with no resulting
change in the ownership of Goldman Bank or Goldman. In addition, Goldman
does not propose to acquire an additional bank as part of this proposal. Based on
all the facts of record, the Board concludes that consummation of the proposal
would not result in any significantly adverse effects on competition or on the
concentration of banking resources in any relevant banking market and that the
competitive factors under section 3 of the BHC Act are consistent with approval of
the proposal.
...
Goldman expects promptly to file an election to become a financial
holding company pursuant to sections 4(k) and (l) of the BHC Act and
section 225.82 of the Board’s Regulation Y. Section 4 of the BHC Act by its terms
provides any company that becomes a bank holding company two years to
conform its nonbanking investments and activities to the requirements of section 4
of the BHC Act, with the possibility of three one-year extensions.13 Goldman must
conform to the BHC Act any impermissible nonfinancial activities it may conduct
within the time requirements of the Act.
A company that I am investor in and advisor to is thinking of another round of financing in order to further expansion. As they had only just secured their 2 most recent markets, I suggested they digest those markets and work on getting deals from regional media buyers as to show managerial competence before thinking of a second round. As an MBA he's looking for the exit before the foundation is finished.
Then you drop a midnight bill in congress with say $2 billion for Arizona, and $10 billion for California in response to massive layoffs. The bill has hooks that force the respective legislatures to make changes according to the dictates of a new "state governance" czar.
This will be very interesting.
The howls of the far right here will be deafening.
Better to intervene when you are seen as having no choice, than to intervene beforehand and handle political attacks using logic?
No doubt Rahm intends to exploit this crisis but they need to be seriously pre-positioned with lots of resources because there are going to be fires breaking out everywhere at once. They definitely need a public excuse. There are still substantial vestiges of States rights out there to trip them up without clear justification. No, the thing is I'm not hearing any about the administration being engaged at any level.
I haven't found an example yet of a BHC that is both wholly owned and does not take deposits.
EHP - Not any company can become a BHC, obviously - it needs to own a chartered bank (B in BHC). I agreed it right away that most or all BHCs own deposit taking institutions. I was saying that technical it is possible to become a BHC without owning a deposit taking institution, specifically if a company owns a chartered bank that issues commercial loans.
Comrade Alexei Mikhailovich,
What would the financing be used to pay for? Is there a chance of being able to buy at a lower price in the near future, and if so what is the break even change in interest rate? What is the nature of the media, what market are you dealing with?
If he's an MBA, just buy him How the Mighty Fall by Jim Collins and circle this one line in red
Stage 1: Hubris Born of Success Stage 2: Undisciplined Pursuit of More
Stage 3: Denial of Risk and Peril
Stage 4: Grasping for Salvation
Stage 5: Capitulation to Irrelevance or Death
Rob D- they don't need much beyond money- a state TARP plan- but the dirty deeds will be in the fine print.
Arizona is more likely to go first- they have no means to sell bonds- and we have been tapping Highway Funding already- so we are literally keeping the lights on with special purpose funds already.
The justification is a bankrupt state- with attendant disruptions. Not much more is needed that recognition of the busted states.
Quite literally, Arizona has entered a death spiral of finance- which is finally becoming apparent to the politicians, to their horror- the can can't be kicked any more.
are we really any closer to the bottom when continued looting by GS and friends means that the ultimate U6 just gets higher and higher (30,35,40%....)?
Timmay and Larry should be worried for the bank, pension, dollar and deficit reasons.
Most people (especially those who know him personally) think of Summers as a smart and experienced technocrat. If he is not showing signs of concern, there must be a good reason why, such as a political calculation focused on the mid-term elections.
I obviously don't know what this calculation is, but I got to believe it is not an oversight.
Back on topic: hate to keep banging the drum, but house prices in upper end boston are coming down big time. This is partly seasonal, but you just can't get around that the market is dead. dead. worst october since the 1980s at least.
Citizen AllenM,
Lagging tax collections are making the AZ budget deficit worse. True in many other states too I would say. Does it really matter which state is the first domino to fall? Same for national economies?
anybody trading on CS is not truly aware of the on-the-ground facts here in metroboston. My colleagues are telling me that it's the same around the NE. Not sure about CA, NV, etc.
Often the best course of action is to do nothing. Let the flood pass and then direct the clean up and rebuilding. Everyone is filling sandbags and reinforcing levees as the waters continue to rise. All this effort to protect the financial system, after they blew up the flood control dams. Futile.
MrM
I'm saying that I'm pretty sure that there are no BHCs that don't have banks taking deposits. I'm not limiting it to retail banking. That's why American Express and all the other companies weren't already BHCs, they had to pick up deposits before they could apply. Well the matter of deposits, and the restrictions on leverage to be forthright.
Because Case-Shiller uses a repeat sales methodology, it is affected by self-selection. Houses with rising prices record sales; houses with falling prices don't record sales. The sales mix is skewed and the index reports a rise even though most house prices are falling.
To be eligible for inclusion in the indices, a house must be a single-family dwelling.
Condominiums and co-ops are specifically excluded. Houses included in the indices
must also have two or more recorded arms-length sale transactions. As a result, new
construction is excluded.
...
These sales pairs are further examined to eliminate outliers that might distort the
calculations. Outliers include non-arms-length transactions (e.g., property transfers
between family members); transactions immediately preceding or subsequent to
substantial physical changes to a property; transactions where the property type
designation is changed (e.g., properties originally recorded as single-family homes are
subsequently recorded as condominiums); and suspected data errors where the order of
magnitude in values appears unrealistic.
...
High turnover frequency. Data related to homes that sell more than once within six
months are excluded from the calculation of any indices. Historical and statistical data
indicate that sales made within a short interval often indicate that one of the
transactions 1) is not arms-length, 2) precedes or follows the redevelopment of a
property, or 3) is a fraudulent transaction.
I'm pretty sure that there are no BHCs that don't have banks taking deposits.
EHP - I agree with that. Btw, most companies that became BHCs last fall already had deposit taking businesses. A few exceptions were some insurance companies, which had to buy small banks to qualify.
Financing would be for expenses(travel, publishing) to bid for new contracts. They have enough money to cover a hire or pursue bid work, but not both. That's part of why I suggested what I did. The biz is mass transit advertising. Buys are moving up the foodchain qualitywise, have presence in 4 Midwest markets with a 5th in the pipeline, 1 market is top 50, potential market is top 5. Have to get foot in the door now as ad budgets are being developed now, but company size is small enough to be expirimental.
Next market up in size that they're looking at would possibly require capex for a psuedo GPS system below ground, but I doubt it.
Did she ever figure out what Bob Toll was smoking?
Maybe I won't lose as many fingers as I thought....
Definitely more foreclosures hitting the market in this town
Heh. Guess I should read the post first.
badger - on the pigged thread, most consumer credit laws, including Regulation Z, define credit to include allowing payments in four or more installments - just the compliance costs have to be high.
Oh, and now I have an ad on quitting weed. This is getting interesting.
EDIT: the first post mentions smoking, and I have ads for quitting smoking and quitting weed. We need to have the first posters put in some interesting stuff and see what ads come up.
Between CR's excerpts and her bio Zelman & Associates - Team she comes across as a no nonsense cut to the chase operator.
I asked in the other thread, what if we had a car bubble*, in lieu of a housing bubble, and it was imperative that we keep prices up on a like-asset that needed constant care and attention, typically the 2nd most expensive thing most of us ever buy.
What could justify keeping a 2003 Suburban with 100k on the odometer worth $95k, just because every other one of them was overvalued in such a fashion?
*The Ferrari car bubble of the late 1980's was amazing, prices shot to the moon for a few years, after Enzo Ferrari died in 1988.
I would assume banks would be desperate to get their foreclosures to market before the government subsidies (or their "frenzy" effects) expire.
Nemo, Bob Toll was smoking some Hydroponic
at the time.
I'm having difficulty seeing evidence that prices are staying up or being pushed up. Certainly there are plenty of theoretical constructs making the claim. The analyses seem to me to be attempting to claim that since mean and median are down, no one has money. There is still money out there though, plenty of knife catchers.
So I expect prices in the low end areas to decline again (even if the bottom is in). - CR
Jeez, CR. How many times do I have to welcome you to the dark side?
It's merely a matter of degree whether we retest the lows or exceed them. It was always inevitable due to extend and pretend interfering with market clearing mechanisms. So, instead we get multiple correction events. And let's face it. 30-50 bids in this market is every bit a sign of irrational behavior as it was at the peak.
Edit: Hey Ken. Can we have a ;darkhelmet: icon?
Bob Toll is still smoking
and 
"I'm having difficulty seeing evidence that prices are staying up or being pushed up."
C4C did it for used cars - when I was going to dump the damn Jeep my wife bought, the prices I could get for it in February were the same as when I did dump it in August.
badger wrote:
You rang?
Seriously, it's hard to argue that someone buying now (ahem) isn't much better off than someone who bought 3 years ago. How much of the damage has been done? Noone can say, unless you can predict with absolute certainty the outcome of the 'flation debate. A rush to hard assets due to a collapsing currency and all bets are off.
When sort of clod would be cool with buying a hood-adjacent home in Tijuana-adjacent for 8x annual earnings?
Sounds like a lose-lose situation, but Jim the Realtor has dozens biting @ the bait...
From the pigged thread...
Goldman Sachs No Longer a Bank Holding Company
I believe this was mentioned several days ago.
"Goldman converted to a bank holding company when they recieved TARP money, but they unconverted from that real fast and are now, as of August 14, a financial holding company, according to a conversation I had with Goldman spokesman Lucas Van Praag."
Certainly there is nothing wrong with making your housing expense certain for the next dozen years. In my area at least, the difference between renting and buying is a wash. Nothing wrong with being your own landlord.
I'm in a high end suburb of Chicago. The number of foreclosure seems about 4x higher than it was winter/spring/summer. The other interesting thing I've noticed is that the flippers of 2008 are getting burned. I know of a few properties that are now below their '08 sale prices, despite the installation of granite, landscaping, paint, etc.
If it's possible for flippers to get burned in other markets, perhaps the multiple bid situation will dry up.
In my "it's different here" desirable California coastal area, REO homes are still selling for about the inflation-adjusted 2000-2001 price. And they are selling, at that price point and no higher. It's not inconceivable that another round of inventory, and collapse in sales due to looting pentup demand now, might bring prices down to nominal 2000. Or worse.
An earlier commenter (Rob Dawg?) said that there would be continuing support for home prices at the low end but not for the high end.
Why might that be?
Most commenters here have concluded that the increasing economic inequality in the US is not a good thing, yet in my neck of the woods (Oakland, CA), home prices in adjacent ZIP codes differ by a factor of 10.
I would like to see a free market sort things out, but can't abide a society of haves and have nots. I can understand why there is an effort to bring some semblence of economic balance, as the divergence in wealth makes the sense of community that leads to a strong society impossible.
I am also struck by a comment made here a couple of days ago: "Everybody wants a strong middle class, but nobody wants to be in it."
It is always possible prices will go down. It is also possible rents will go up. California has always been an expensive place to live. Despite its myriad of problems, it is blessed with some of the agricultural land and research facilities in the world. I wouldn't take the state government right now, but California is far from the worst place in the country to live.
Juvenal Delinquent wrote:
Not sure where originally found this story, but it gives some insight into why people would buy homes that are still horrendously priced. It's the "I can finally afford it, better buy now before prices go up again" mentality. Didn't do the knifecatchers in Japan much good:
A Cautionary Housing Tale from Japan
picosec wrote:
Then you don't want an unrestrained free market. Or you do, but the gov't must be staffed by angels.
So, just as car dealers were able to foist off inventory for C4C's, local cities were also able to use the sales-tax revenue to stay afloat, but heavens to murgitroid, September sales sucked.
What now?
Let the foreclosures roll, socal home prices are far above reality, time for the pain. Oh, CR,re: quitweed ad, California has a new initiative to legalize and tax weed, pay the bills you know.
Any analysis of housing has to incorporate the massive government intrusion and the banks' extend and pretend operations. One has to analyze the impact of the subsidies and perhaps more importantly, how long will they last.
The admavens have targeted me to stop smoking the kind and win removal of my hairs using a laser.
badger wrote:
Anytime someone threatens to bail, I look out the window. I'm staying. Anytime a doomer talks about civilization going down, I look at the fertile fields at the edge of town, the bay full of fish, the concentration of technical knowledge and resources. I grew up living a modest life in California. And I still live one. For me, all the riches are right outside the door.
digalert wrote:
I just signed one to decriminalize, not legalize. Growing and using at home ok, public use and sale not okay. No gov't taxation there. However the guy with the clipboard told me there was a competing measure out there, too. That might be the one you're thinking of.
"but not for the high end."
Without the Fed propping up the MBS market, jumbo rates would be significantly higher.
*California has a new initiative to legalize and tax weed, pay the bills you know. *
Woohoo! I'm first in line for an export license.
What's with the marijuana ad? Is some algo drawing some conclusions?
Refer Madness?
Allen - the Google ad server uses behavioral ad delivery tools - the first post mentioned smoking, and there you have it . . .
First few dozen words for this thread:
The googlbot keys off familiar words.
Edit: pwned by Terry.
digalert wrote:
1934 and the 21st Amendment all over again. I feel like it's inevitable. Anyone else find the number of online questions about legalizing marijuana and Obama's actually bringing it up (during that early "town hall" ) a little suspicious? Considering the questions were open to the whole country and the other urgent issues occurring at the time, the proportion seemed markedly off. And the fact that a head of state would even acknowledge the topic while addressing a group of typical, law-abiding Americans was even more eyebrow raising. Felt like manipulation and gears turning to me.
Referrer madness?
(Sounds awesome in a Scottish accent)
Do You Want To Quit Dollars?
Quit Dollars now with this 100% guaranteed Dollar quitting program
Juvenal Delinquent wrote:
Let me guess-- it's a patch.
Well, obviously hot, model, and style are good,...but we need to avoid fat, smoking, and Bernanke in the first post.
If it ain't Skunkish, it's crap.
In fairness to mary jane: Marijuana Law Reform - NORML
Marihuana Tax Act of 1937 - Wikipedia, the free encyclopedia
sorry i got my "internet expl" ads
Googlebot baiting sounds like a fun game. Let's get together and dream up some clever "first posts" to see what interesting products we can drum up.
I think an interesting one would be to coax one out for that "Virginity Renewal Kit" being marketed in Egypt that I saw in today's paper.
I thought those of us in CA were just waiting for it to slide into the sea, like the trailer for 2012
The upsides for me still outweigh the downsides from living in this state.
~splat
I though you just had to pray to Hera ?
~splat
im going to "evacuate in place" too. the gnats will just have to live with it
*"Virginity Renewal Kit" being marketed in Egypt that I saw in today's paper. *
Didn't we already beat them to it with our "First-time buyer" Program?
I'm in envy of Ivy Zelman. She allowed us not to seem as nutty as we once thought we were, with her Chart 'o Doom, way back when.
Why is it only women are trying to figure out what's what?
Brooksley, Ivy, Elizabeth & Janet are the only ones that were doing anything before and since the crisis began.
"uses behavioral ad delivery tools "
I am aware of that. It was my attempt to provide some humor.
bacon dreamz used to sometimes state "Can we all get a bong?"
$8K buyers credit financed over 30 years@6% is $9,267.06 in interest. Smart?
Take interest rate support and tax rebates out of the mix and you can rest assured we're in for another substantial leg down in prices & volume. Add another wave of defaults and the cycle looks pretty bleak.
OOoooh, and my friend's BIL has had two marriages annulled after having kids. Someday I hope to ask Mitt Romney what that makes the kids.
jd
the men set their sights on what they thought would be a"good thing" to do, and thats it they will follow it forever.
MarketWatch has a story on Stimpack III - it will be "jobs, jobs, jobs." WPA v2.0???
sdtfs wrote:
Post-Facto bastards?
Excellent pro California tourism commercial: YouTube - California - Find yourself here
Interesting that Rob Lowe is pictured in a natural setting given his fight to put in a massive development in Santa Barbara.
Don't forget FHA writing uneconomical loans. The govi is basically propping up the entire housing market.
Old Potemkin Village: The houses were merely house-fronts
New Potemkin Village: The houses were merely loan-fronts
Allen C wrote:
When FHA, Fannie/Freddie (and who know what others) become the landlords-de-facto for those who don't pay off their mortgage, what do you want to bet that Glodman will be the property manager? That will chill your wick.
In case you though I was making it up:
Virginity kits spark uproar in Egypt
The scary reality is that ALL of the govi prop jobs are achieving some basic economic stability. All those trillions and unemployment is at 10% (or 17+%) and home prices have stabilized. More trouble is on the way with the foreclosure pipeline and CRE blowing up.
crazy, crazy, CRAZY !
~splat
Kalllyforniya, Velcome to the 700 Klub, pssssst PTL
der Governator, out.
+++++++++++++++++
“High-pressure negotiations on a massive water reform package ended in stalemate again Saturday night with Gov. Schwarzenegger and Democratic leaders saying they will re-start talks Sunday morning.
Hanging in the balance: 704 bills affecting everything from schools to highways to hospitals, the product of the entire year’s California legislative session. Schwarzenegger has said he will veto nearly all of them if he doesn’t get a water deal that includes billions of dollars for new dams. The deadline for him to act on the bills is midnight Sunday.
http://www.mercurynews.com/breaking-news/ci_13536098?nclick_check=1
Badger,
CA has not always been an expensive place to live. In 1970, median home prices were the same as for the rest of the US.
Regulation and development policies were responsible for the divergence, and the bubbles.
Juvenal Delinquent wrote:
Schwarzenegger has said he will veto nearly all of them if he doesn’t get a water deal that includes billions of dollars for developer subsidies.
There. Fixed it for ya. .
Why do we support house price manipulation?
The rationale behind price support is:
1 - Deflating assets will damage bank balance sheets to the point of TARP II.
2 - Citizens aren't educated to the point where [strategic default + bad credit + renting for lower cost of living = better idea] makes sense to them. "Do the right thing" sometimes isn't the right thing.
Why we shouldn't support price manipulation: Free up resources.
1 - Lower cost of living (house prices/rent) creates more disposable personal income. CR, is not price support in complete contradiction to increased consumer spending?
2 - Decreased debt burdens allows long term decision making in place of short term, debt overhang influenced survival tactics.
Conclusion:
Those who are in preferable financial condition and have secure employment (those who stand to lose if things "change") are choosing to take temporary personal gain and stability over long term national economic health.
You'd have to say that Arnold has drawn his line in the sand...
The gridirony of it all...
Currencies are like sports teams, and the Greenback Dollar most closely resembles the Oakland Raiders, as there is no there, there.
I suspect without the housing subsidies, home prices would drop to '90s valuations. Price controls are rarely if ever successful so after the Great Experiment fails, we are left with devaluation.
evelyn woods graduate wrote:
Most companies that applied for BHC status last year were seeking to get status of Financial Holding Companies, GS included. GS status as an FHC was approved in August. There is not much difference between a BHC and an FHC in terms of regulatory oversight (or Fed support if needed), but FHCs are allowed to engage in a broader range of activities.
Here is the FFIEC definition:
**Financial Holding Company **
A financial entity engaged in a broad range of banking-related activities, created by the Gramm-Leach-Bliley Act of 1999. These activities include: insurance underwriting, securities dealing and underwriting, financial and investment advisory services, merchant banking, issuing or selling securitized interests in bank-eligible assets, and generally engaging in any non-banking activity authorized by the Bank Holding Company Act. The Federal Reserve Board is responsible for supervising the financial condition and activities of financial holding companies. Similarly, any non-bank commercial company that is predominantly engaged in financial activities, earning 85% or more of its gross revenues from financial services, may choose to become a financial holding company. These companies are required to sell any non-financial (commercial) businesses within ten years.
What’s the real reason that banks aren’t foreclosing?
"Banks make more money by NOT foreclosing on homes. Banks are dragging out the foreclosure process for their own selfish reasons. Until the day they foreclose, the amount of money owed to them is an asset…sure, it’s an asset that isn’t paying interest payments…but it is still an asset. The day they foreclose, a $400,000 asset could become a $150,000 asset and a $250,000 loss.
Multiply that loss by 10, 20, or even 30 times leverage and there are several million dollars worth of new loans that the bank can’t make."
Don't forget about the neg-am interest booked as income. That has to come off too.
Refer Madness?
The time: 1976, the location: an art theater in Tampa ...
One weekend they were showing Refer Madness. Some acidhead in the group I was with, just had to light up.. just had to light up in the most obvious place in town ... we all got evicted !
An interesting question: What, if any, is the obligation of a federally chartered bank to make loans?
If there is an obligation, who measures fulfillment, and where is the measurement reported?
Would it make sense for the federal government to create and operate Federal banks that accept individual deposits (with guarantees) and only invest in loans to individual homebuyers (not speculators, REITS, private equity firms, or other banks)?
"I would like to see a free market sort things out, but can't abide a society of haves and have nots."
It's possible, but you have to live in the woods and hunt nuts and berries.
JimPortlandOR wrote:
I think the only obligations top lend are those defined in the Community Reinvestment Act
Don't forget they get to apply special charges for delinquent loans, for which they stand to recover if the mortgage is guaranteed or is the recipient of modification moneys. Normally they aren't allowed to string on delinquent loans forever because the guarantor is allowed to buy them back and then proceed to foreclose -- however mortgage guarantors have very 'thin' capital at this point in time to keep the system functioning as intended.
(at least that's my current understanding of it, I'm not an expert, I just read what they write on here)
Why do I have banner ads asking me if I want to "Quit Weed"?
"Quit Marijuana Now with this 100% Guaranteed Pot Quitting Program"
I think you all are bad company for me. You're dinging my reputation.
Normally they aren't allowed to string on delinquent loans forever
Aren't there limits on the number of times an account can be re-aged?
MrM
Thanks for that GS -> FHC info. I guess that means we won't get to see Goldman show up in the OCC's regular reports anymore? (@ OCC: RELATED SITES
Somebody asked me to co-sign on a delinquent loan, misery loves company I guess.
In regard to GS from the prior thread, they are ,since August 14th, a financial holding company rather than a bank holding company.
Goldman Sachs's CFO: We're A Financial Holding Company! (GS)
Jim
"MarketWatch has a story on Stimpack III - it will be "jobs, jobs, jobs." WPA v2.0???"
Has to be. We were talking about it this morning. But in the 30s there were a lot more people familiar with the use of the pick and shovel. We do need people to work with the handicapped and elderly, act as teachers' aids, etc.
'aides'
,rads,
You don't really have the entire doom package down pat unless you are a Bills or Cubs fan, only then you can claim you've got it all.
OT Previous thread re bin Laden
@Cardinal
Thanks. I'm not saying that obtaining bin Laden's head in a bucket is a good idea. I'm saying that, if you want it, here's one way to get it.
@YLSP
I'm aware of the $25 million reward for bin Laden but, in today's world $25 million won't even make a down payment on a Falcon 7X, let alone a nice yacht.
But, $30 billion, in cash, delivered anywhere, in any currency, will get you his head in a bucket.
If you want it.
pavel.chichikov wrote:
True, but a lot of the workers -- especially CCC kids -- came right out of the big city nabes and knew little or nothing even then. Education was a big part of some of these programs, and would be again. The best kind of education -- learning while you're doing a real job. Learning skills you need right now.
Juvenal Delinquent wrote:
Where is the full doom pack outlined? How do I know what I'm missing? Can you buy a replenishment pack if you lack something crucial or the supply of a component is running low?
I want the full monty, not some intro-package.
pavel.chichikov wrote:
Pavel,
I am deeply disturbed of the suggestion that we need people familiar with the use of pick and shovel to work with the handicapped and elderly.
(sarcasm was used in the writing of this post)
OK, let's discuss the word "free" in the phrase "free market."
Is basing life insurance premiums on gender a free market policy?
Is raising CC interest rates from 9.9% to 23.6% once there is a substantial balance due a free market policy?
Is mugging the guy who just made an ATM withdrawal a free market policy?
Where do you think the line should be drawn?
You need some affiliation with professional sporting futility, the Clippers would even suffice, if one was truly desperate.
Juvenal Delinquent wrote:
Check: i've got that one. I vote Democratic.
"True, but a lot of the workers -- especially CCC kids -- came right out of the big city nabes and knew little or nothing even then."
You're right, Bob. I agree too about the best kind of learning. A 21st century WPA might be the best thing that could happen. We saw some kids working in Rock Creek Park this summer on trail improvement, using stimulus money. The Park Service guy in charge of them was grateful for the funds, and said the work had needed to be done - we knew that because we're dedicated trail walkers. The trails are in better shape now, but because of use, storm damage and erosion they need to be kept up.
"I am deeply disturbed of the suggestion that we need people familiar with the use of pick and shovel to work with the handicapped and elderly."
You mean we might train grandma as a grave digger?
Maybe the quit weed ad is a sting directed at OBL.
A good many of the first CCC workers, had participated in the Bonus Army festivities of less than a year prior to it's inception, and in a way, it was imperative that FDR get them off the streets~
pavel - a 21st century WPA might be about beautifying & fixing public housing instead of public trails.
EvilHenryPaulson wrote:
EHP - Most large BHCs are FHCs. Here is the complete list FRB: Financial Holding Companies
So I would not expect any changes in reporting
It is important to clarify: FHCs are a subset of BHCs, from the link above:
Under the Bank Holding Company Act, bank holding companies may elect to be financial holding companies.
pavel.chichikov wrote:
grave diggers with hand tools are like buggy whip mgfrs. you need backhoe training now.
when we get to the mass grave stage, the repurposed coal digging monster shovels and road graders will be fully utilized.
"pavel - a 21st century WPA might be about beautifying & fixing public housing instead of public trails."
Outsider, why not both?
"grave diggers with hand tools are like buggy whip mgfrs. you need backhoe training now."
Yah, I knew that.
bin Laden needs to be taken just out for threatening Jihad. He's probably dead however. Not even 'wanted' by the FBI for 911. Sheik Mohammad was the 'mastermind' of 911. He admitted to it after numerous waterboardings.
mp wrote:
mp - you've thought about the sheer physical volume of that much cash, right?
$87,000,000,000.00
Outsider wrote:
Just daydreaming -- what about a gov't Habitat for Humanity program. Fix up enough houses, you get a shot at one of them. Or a condo in an abandoned complex seized converted to low-cost housing (only done where there was an actual economy nearby, or hope of one).
Actually, we talk about WPA as if our country actually had the funds to support a section of the population like that. Maybe the answer isn't just in putting tools in idle young hands, but in using those hands to support business needs, thru subsidized pay rates.
But then who would win but the big bankers again, scraping off the top of every transaction.
I'm at a dead end here thinking about a public works program.
MrM
I looked through that list, and near as I can tell FHC is just one way to segment off business that is not permitted as a regular BHC (eg owning a non-financial commercial venture. necessary to do private equity deals).
I guess Goldman Sachs must maintain deposits to keep the BHC status in any event then? I'm hoping that they can't move trading into the FHC branch away from OCC oversight.
pavel.chichikov wrote:
We have a wonderful riverfront park, part of which is a large bowl-shaped grassy area - large enough to hold the 70,000 Oregonians last summer to hear/see Obama. Unfortunately about 200 geese permanently live in the bowl, dropping nasty geese poop that makes sunbathing or walking somewhat twisted. We need about 5 CCC workers to keep the bowl poop free. Pls send them quickly. They can eat all the geese they can stuff in a bag.
Well, sure.
I submit to you, however, that it's cheaper than moving armies halfway around the world and making sure they don't run out of ammunition and cheeseburgers.
MrM
A standard stack is 100 bills. You can fit about 100 in a briefcase. At $100 denominations, that's $1mn per briefcase. It's fun playing with so much cash the first time, but after that it would be much more convenient to use the higher denomination euro bills if at all
Finally, reading the post and commenting appropriately...
in my county October Notices of Trustee Sale and Trustees Deeds (completed foreclosures) are both up 20% over September (7 business days in each period).
EvilHenryPaulson wrote:
just contemplate how many electrons you can fit into a briefcase....
that's what will be needed to repay the national debt.
We could use 250,000 fit young adults trained to fight an enemy in the midst of harsh conditions like say Afghanistan or Iraq, to instead fight fires, by clearing out much of the duff that causes big fires that take down entire forests & watersheds here in our country, but no.
LOL
Then again, we can pay with jets, tanks and submarines, right?
I just started a refi process since rates dropped to 4.875. Now it will be interesting to find out what the appraisal is.
"It's different here." Until the appraisal occurs. We'll see. If it's wild, I'll post.
EHP - http://izismile.com/2009/01/20/how_looks_one_billion_dollars_in_cash_4_pics.html
I am not saying it is impossible, I am just making fun of the physical challenges with handling so much cash
MrM
The US navy's aircraft carriers are pegged at $4.5bn per, or $11bn for the newest design commissioned.
Try thinking of the $180bn to AIG as military aid to a random country
nasty geese poop that makes sunbathing or walking somewhat twisted. We need about 5 CCC workers to keep the bowl poop free. Pls send them quickly. They can eat all the geese they can stuff in a bag
No, you need about 3 working border collies & one human to keep an eye on them so they don't herd the humans as well as the geese, to make sure they have water, etc, and to pick up the BC poop.
EHP - As I said, FHC is a subset of BHC, or in other words, it is a BHC which has been allowed to engage in a broader range of comemrcial activities than a typical BHC would be. Remember, that in either case it is a holding company we are talking about, not a legal entity in a corporate hierarchy (in other words, the Fed regulates everything within a BHC, whereas the FDIC regulates only deposit taking subs)
Why do you think that a company needs to have any deposits to qualify as a BHC or an FHC?
Another hot tip from the CR commentary:
Note to self. Manufacture goose diapers. Sell to govt. WPA at enormous profit.
MrM
I'm pretty sure you need deposits to retain BHC status, because a BHC must own a bank and there is no bank regulator that allows a zero-deposit institution http://www.fdic.gov/regulations/laws/rules/6000-300.html#fdic6000sec.2a
I'm just hoping that the granting of FHC status wouldn't allow GS to structure its business such that they exclude juicy info from the OCC reporting
Could we be near Dawgma's July 15th proclamation for California?
Arnold has run plum out of suspension of disbelief, and push>meets<shove tonight, girly-man.
OT: what it looks like on the ground in Silicon Valley right now:
One year after market crash, valley residents still recovering - San Jose Mercury News
Bio startup CEO with money in the bank -- all systems go.
Manger at joint-venture semicon company -- laid off, options worthless, underwater on house, 401K in ruin.
Semiconductor designer -- laid off, new career as home health care small businessman (fortunately, wife still working)
Marketing guy, 29 -- got laid off, found a job with the Chamber of Commerce -- gee, everything's so cheap now.
Hotel general manager -- still working, still hanging in there; 401K a wreck, refuses to open statements -- will have to work "until three years after I die."
Pawnbroker. Business is great; much more upscale sellers than before. Any gold items that aren't reclaimed twe send straight to the smelter at $1K an once. Yee hah. Got money to loan!
SW Engineer: probably never get another job; 59, and they're sending them overseas. Ok for now, but it's all outgo, no incoming.
1930, or what?
Well, you have to admit, the plot is just as thick and exciting as any other movie he's been in. Tell me again when to put the popcorn on. I hope it has a happy ending.
EHP - You are linking to FDIC regulations, which obviously apply to deposit taking institutions.
It is true that in order to qualify for a BHC status, a company must own a bank (BHC does stand for a bank holding company, after all). However, there are banks, which only lend but do not take deposits, such as some ILCs or FSBs.
If they don't take deposits, the bank won't meet the qualification for BHC
There's more on the scope of bank @ http://www.fdic.gov/regulations/laws/rules/6000-300.html#fdic6000sec.2c
It may be hosted on the FDIC site, but those are the legal definitions for BHC and everything else which are set by Congress I believe.
Preparing for the coming global meltdown with 'international standards':
International Basel II rules will deal with systemic risk, pension risk, liquidity risk, legal risk, etc. Basel II advocates believe that an international stahdard can help protect the system should a series of banks collapse. The more risks banks are exposed to, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability.(Wilipedia)
Are U.S. banks building reserves to meet these new 'international' standards? Progress is being made on international implementation of Basil II.
Arnold has a slingshot and he's up against a bunch of democratradoes armed to the teeth, let's see him pull the fat out of the F.I.R.E. on this one?
EHP - Let's check the USC, which is referred to in FRB regulations about BHCs
US CODE: Title 12,1841. Definitions
(c) Bank Defined.— For purposes of this chapter—
(1) In general.— Except as provided in paragraph (2), the term “bank” means any of the following:
(A) An insured bank as defined in section 3h of the Federal Deposit Insurance Act [12 U.S.C. 1813 (h)].
(B) An institution organized under the laws of the United States, any State of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands which both—
(i) accepts demand deposits or deposits that the depositor may withdraw by check or similar means for payment to third parties or others; and
(ii) is engaged in the business of making commercial loans.
My interpretation of B (ii) is that a charter bank issuing commercial loans (e.g., an ILC) would qualify its owner for a BHC status even if it does not take deposits
MrM
Yes, you can be a bank that doesn't take deposits. But those types of banks don't qualify for BHC status. We're citing the same definitions.
eg US CODE: Title 12,1841. Definitions
is also the same definition I referenced via the FDIC website
Goldman Sachs and Morgan Stanley did not adopt FHC status to jettison their token banks with the token deposits. They did it to ensure continuity in their line of business for private equity, probably among others. Regulations state they would have had to divest of any non-commercial ownership with 10 years, and would have hit roadblocks for new deals within 2-5 years. I think this is a nothingburger
EvilHenryPaulson wrote:
O yes, I very much agree with this! While I believe that technically it is possible to be a BHC without owning a deposit taking institution (this is where you and I disagree), in reality most, if not all, BHCs do own deposit taking banks. That includes GS.
The fact that GS became a FHC (which is a subset of BHC) is nothing special, all it means is that GS will be allowed to continue with its activities, which owuld have been problematic under the BHC umbrella.
Update- Coordination of 'Globalization' central banking action & governance(garden variety conspiracy theory)
http://www.g20.org/Documants/20090905_G20_progress_update_London_Fin_Mins_final.pdf
(doesn't link)
Report is titled 'Progress Report on the Actions of the Washington G20 Summits 5 September 2009'
http://www.g20.org/Documents/20090905_G20_progress_update_London_Fin_Mins_final.pdf
Link fixed-spell check
Anyway, despite hearing not much goes on at these G20 meetings...seems like a lot of activity...
Juvenal Delinquent wrote:
If we don't see agreement tonight I'll restart my "California Crisis Watch."
Basel II sets the 'standard' for an international or global Too Big To Fail banking framework.
Lol, fire it up RD. The Sacromento Clown Congress is still waiting to see if this was one time drop in revenue.
Yet another bitter harvest @ Orchard Park for the home team....
The thing I don't understand is why the Obama Team (at least) isn't all over this before it blows up. With the recent adverse court decisions, the bigger ones they know are coming, the unabated rise in unemployment and the hoocoodanode drop in nearly all revenue the Feds need to be very worried.
Coordinated central banking action- Macroeconomy(G20 progress report, Sept. 2009):
Most major economy central banks have reduced policy interest rates to close to the zero interest floor...liquidity provided by central bankers remains very high...'
The QE Quantitative easing monetary policy appears to be a popular strategy internationally so international banking standards 'action plan' would seem to follow from this. How will the Global Too Big To Fail strategy play out on Main St.?
Absolute failure of the state government due to political stalemate is necessary to further degrade the independence of state governments.
This failure is currently manifested in Arizona and California, and essentially the first to collapse will dictate the outcome of the other.
Arizona is poised to fail, with a doom laden midyear budget bloodbath being planned by the Governor if the legislature does not fund the current level of expenditures. Right now, the plan is lay off about 50% of the state employees.
That is about 16,000 employees- and only absolutely essential state services will continue to limp along.
Implementing just that much will require raiding funds that the Feds consider sacrosanct, and invite federalization of environmental and welfare functions.
Now, how about that for some good home cooking?
Someday this war's gonna end...
The thing I don't understand is why the Obama Team (at least) isn't all over this before it blows up.
Obama Team - anyone in particular?
Rahm and Axelrod are confident that CA will stay Democrat.
Summers is more concerned about Wall Street than about states.
Who on the Obama Team should be concerned in your view?
MrM,
The whole story was back in the original Sept 22 2008 BHC approval. FRB: Press Release--Board announces that Goldman Sachs and Morgan Stanley transactions may be consummated immediately--September 22, 2008
I haven't found an example yet of a BHC that is both wholly owned and does not take deposits. If they didn't need deposits, then any company could convert to a BHC and get access to the Fed's discount window.
Timmay and Larry should be worried for the bank, pension, dollar and deficit reasons.
OT
A company that I am investor in and advisor to is thinking of another round of financing in order to further expansion. As they had only just secured their 2 most recent markets, I suggested they digest those markets and work on getting deals from regional media buyers as to show managerial competence before thinking of a second round. As an MBA he's looking for the exit before the foundation is finished.
Any opinion without me providing detail?
Rob Dawg,
Better to intervene when you are seen as having no choice, than to intervene beforehand and handle political attacks using logic?
You go up against the wall.
Then you drop a midnight bill in congress with say $2 billion for Arizona, and $10 billion for California in response to massive layoffs. The bill has hooks that force the respective legislatures to make changes according to the dictates of a new "state governance" czar.
This will be very interesting.
The howls of the far right here will be deafening.
Someday this war's gonna end...
EvilHenryPaulson wrote:
No doubt Rahm intends to exploit this crisis but they need to be seriously pre-positioned with lots of resources because there are going to be fires breaking out everywhere at once. They definitely need a public excuse. There are still substantial vestiges of States rights out there to trip them up without clear justification. No, the thing is I'm not hearing any about the administration being engaged at any level.
I haven't found an example yet of a BHC that is both wholly owned and does not take deposits.
EHP - Not any company can become a BHC, obviously - it needs to own a chartered bank (B in BHC). I agreed it right away that most or all BHCs own deposit taking institutions. I was saying that technical it is possible to become a BHC without owning a deposit taking institution, specifically if a company owns a chartered bank that issues commercial loans.
Comrade Alexei Mikhailovich,
What would the financing be used to pay for? Is there a chance of being able to buy at a lower price in the near future, and if so what is the break even change in interest rate? What is the nature of the media, what market are you dealing with?
If he's an MBA, just buy him How the Mighty Fall by Jim Collins and circle this one line in red
Stage 1: Hubris Born of Success
Stage 2: Undisciplined Pursuit of More
Stage 3: Denial of Risk and Peril
Stage 4: Grasping for Salvation
Stage 5: Capitulation to Irrelevance or Death
Rob D- they don't need much beyond money- a state TARP plan- but the dirty deeds will be in the fine print.
Arizona is more likely to go first- they have no means to sell bonds- and we have been tapping Highway Funding already- so we are literally keeping the lights on with special purpose funds already.
The justification is a bankrupt state- with attendant disruptions. Not much more is needed that recognition of the busted states.
Quite literally, Arizona has entered a death spiral of finance- which is finally becoming apparent to the politicians, to their horror- the can can't be kicked any more.
Someday this war's gonna end...
"Note to self. Manufacture goose diapers. Sell to govt. WPA at enormous profit."
If you can diaper a goose you can go into show business - the circus can use you.
Then you can get a health care bill passed.
are we really any closer to the bottom when continued looting by GS and friends means that the ultimate U6 just gets higher and higher (30,35,40%....)?
"....there are going to be fires breaking out everywhere at once. "
I've been away and missed the context. Are we talking about state and local budgets?
Timmay and Larry should be worried for the bank, pension, dollar and deficit reasons.
Most people (especially those who know him personally) think of Summers as a smart and experienced technocrat. If he is not showing signs of concern, there must be a good reason why, such as a political calculation focused on the mid-term elections.
I obviously don't know what this calculation is, but I got to believe it is not an oversight.
Back on topic: hate to keep banging the drum, but house prices in upper end boston are coming down big time. This is partly seasonal, but you just can't get around that the market is dead. dead. worst october since the 1980s at least.
Citizen AllenM,
Lagging tax collections are making the AZ budget deficit worse. True in many other states too I would say. Does it really matter which state is the first domino to fall? Same for national economies?
anybody trading on CS is not truly aware of the on-the-ground facts here in metroboston. My colleagues are telling me that it's the same around the NE. Not sure about CA, NV, etc.
Often the best course of action is to do nothing. Let the flood pass and then direct the clean up and rebuilding. Everyone is filling sandbags and reinforcing levees as the waters continue to rise. All this effort to protect the financial system, after they blew up the flood control dams. Futile.
anybody trading on CS is not truly aware of the on-the-ground facts here in metroboston.
Care to share those facts?
MrM
I'm saying that I'm pretty sure that there are no BHCs that don't have banks taking deposits. I'm not limiting it to retail banking. That's why American Express and all the other companies weren't already BHCs, they had to pick up deposits before they could apply. Well the matter of deposits, and the restrictions on leverage to be forthright.
Because Case-Shiller uses a repeat sales methodology, it is affected by self-selection. Houses with rising prices record sales; houses with falling prices don't record sales. The sales mix is skewed and the index reports a rise even though most house prices are falling.
token bull,
Case-Shiller does not include distressed sales, new homes, condominiums, co-ops, flips, renovated homes. http://www2.standardandpoors.com/spf/pdf/index/SPCS_MetroArea_HomePrices_Methodology.pdf
People trading C-S without taking 5min to read the criteria deserve what they get
Makes me feel all warm and cuddly about Florida.
Hurricane season is almost over and the state is still mostly one contiguous land mass. You should be overjoyed.
Yep, Raj.
lawyerliz wrote:
Yeah? Wait until we move in with my mom in Venice and go on the dole. We'll be bringing 3 million of our closest California friends.
Is the Arizona deficit really at 3B? A couple of weeks ago I heard it was in the 1-1.5B range. If it is that puts us at $1200 of debt per tax payer.
AZ budget deficit marked at $4 billion before budget adoption for FY2010
Recession Continues to Batter State Budgets; State Responses Could Slow Recovery — Center on Budget and Policy Priorities
good article about reality for the non-pundit classes:
Life after the bubble: From American dream to American nightmare | Oregon Business News - OregonLive.com
I'm pretty sure that there are no BHCs that don't have banks taking deposits.
EHP - I agree with that. Btw, most companies that became BHCs last fall already had deposit taking businesses. A few exceptions were some insurance companies, which had to buy small banks to qualify.
Financing would be for expenses(travel, publishing) to bid for new contracts. They have enough money to cover a hire or pursue bid work, but not both. That's part of why I suggested what I did. The biz is mass transit advertising. Buys are moving up the foodchain qualitywise, have presence in 4 Midwest markets with a 5th in the pipeline, 1 market is top 50, potential market is top 5. Have to get foot in the door now as ad budgets are being developed now, but company size is small enough to be expirimental.
Next market up in size that they're looking at would possibly require capex for a psuedo GPS system below ground, but I doubt it.