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From Bloomberg:
Paulson, Bernanke Push New Proposal to Cleanse Balance Sheets
U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed moving troubled assets from the balance sheets of American financial companies into a new institution.
Congressional leaders who met with Paulson and Bernanke late yesterday in Washington said they aim to pass legislation soon. The initiative, which may also insure money-market funds, is aimed at removing the devalued mortgage-linked assets at the root of the worst credit crisis since the Great Depression.
From the WSJ:
U.S. Drafts Sweeping Plan to Fight Crisis
As Turmoil Worsens in Credit Markets
WASHINGTON — The federal government is working on a sweeping series of programs that would represent perhaps the biggest intervention in financial markets since the 1930s, embracing the need for a comprehensive approach to the financial crisis after a series of ad hoc rescues.
At the center of the potential plan is a mechanism that would take bad assets off the balance sheets of financial companies, said people familiar with the matter, a device that echoes similar moves taken in past financial crises. The size of the entity could reach hundreds of billions of dollars, one person said.
Another proposal would be the creation of federal insurance for investors in money-market mutual funds, coverage akin to the insurance that currently safeguards bank deposits. The move is designed to stem an outflow of funds as consumers start to worry about even the safest of investments, a sign of how the crisis is spreading to Main Street. There is $3.4 trillion in money-market funds outstanding.
In addition, the Securities and Exchange Commission is set to propose a temporary ban on short-selling. It’s not clear how broadly the ban might extend, but it could apply only to financial stocks.
Details of the plan were still being worked out Thursday night and could be delivered to Congress in “hours,” said Senate Majority Leader Harry Reid of Nevada.
The administration had been taking a patchwork approach to the financial crisis, putting out fires as they ignited. The new moves represent an effort to take a more systematic approach, after a spiral of bad debts, credit downgrades and tumbling stocks brought down venerable names from investment bank Lehman Brothers Holdings Inc. to insurance giant American International Group Inc. Banks have grown unwilling to lend to one another, a sign of extreme stress, because financial markets work only when institutions have faith in each other’s ability to meet their obligations.
From Reuters:
Moody’s raises loss projections for subprime RMBS
Moody’s Investors Service revised its expectations on lifetime losses higher for pools of securities backed by subprime residential mortgage loans on Thursday, citing growing delinquencies and elevated default rates.
Moody’s revised its cumulative loss projection for 2006 subprime loan pools up to 22 percent, compared with initial estimates in January of 14 percent to 18 percent, based on pool performance through July 2008 remittance reports and its updated assumptions on future outlook.
The credit ratings agency projected losses will hit an average of 29 percent for subprime pools issued during 2007’s first half, while loans originated during 2005’s second half will lose 11 percent of their original balances.
“Levels of delinquency and loss severity are proving to be much worse than in prior vintages and are demonstrating a persistent deterioration, especially as compared to our last loss projection update in January 2008,” said Jonathan Polansky, a managing director at Moody’s.
Moody’s also said it anticipates elevated default rates on the remaining non-delinquent borrowers for at least the next 18 months.
first!
first
The German state bank’s loss from the mistaken transfer of funds to Lehman is now up to 536M euros. Two board members and one computer have been fired.
From the NY Times:
The Pain of Selling a Home for Less Than the Loan
Many Americans are discovering an unfortunate twist to the housing crisis: even after selling a home and moving away, they might have to keep paying on it for years, even decades.
With home prices tumbling, millions of people owe more on their mortgages than the houses are worth. If a new job or other life change compels them to sell, their choices include bringing a pile of cash to the closing to make the bank whole, going into foreclosure or cutting a deal with the lender to pay off the balance of the loan over time.
How sellers will react when confronted with these unappealing options is one of the biggest questions hanging over Wall Street as it tries to move beyond the carnage overwhelming such venerable firms as Lehman Brothers, American International Group and Merrill Lynch.
A sale for less than the value of the mortgage on a property is known as a “short sale,” because the transaction leaves a homeowner short of the funds needed to settle the debt. Agents and lenders say the number of short sales is rising markedly.
Reluctantly, banks are agreeing to let some short sales go through. But instead of writing off the unpaid portion of the debt, they want homeowners to sign a note promising to pay some or all of the balance due.
…
This was the situation confronting Mike and Linda Kelly, who needed to sell their house in the foreclosure-plagued Central Valley of California when Mr. Kelly got a new job 75 miles away.
The Kellys owe $300,000 on their house, which has a pool in the back, crepe myrtle bushes in front and, because Mr. Kelly is a ham radio buff, a 40-foot antenna above it. But the best offer they could get gave the bank $220,000.
grim (3)-
“Moody’s Investors Service revised its expectations on lifetime losses higher for pools of securities backed by subprime residential mortgage loans on Thursday, citing growing delinquencies and elevated default rates.”
Of course, the gubmint will pay par for this trash and project its maturity at par.
The gubmint of the US is a criminal enterprise.
Period. End of story.
Now looking into offshoring all my assets.
#7
If lenders make borrowers split the loss of a short sale and take out a promissory note, will that make future borrowers more prudent?
bairen (11)-
Of course not. However, you can now rest assured that the lenders will never be prudent again.
No matter what lenders do, they will be subsidized and bailed out. One of the giddy idiot commentators exclaimed last night- after Pelosi’s donkey show- that “now we can get back to securitizing loans!!!”.
Texas may claim hundreds of beach front homes as belonging to the state. If a house is between the average of the lw and high tides, that’s considered to be public property.
I really hate beach front houses. Resent footing the bill so doffueses can buy beachfront houses they can’t afford, or invest in them, while I get stuck bailing them out every time a storm of the century comes through and tears them up.
http://www.cnn.com/2008/US/weather/09/19/ike.beach.houses.ap/index.html
#12 clot,
Total farce. I resent footing the bill for every failed flipper or moron who bought a house they could barely carry with the teaser rate. The fat that my kids will get stuck paying the bill is even more outrageous
#fat = fact
Should LEH stockholders be p*ssed that the government arranged for bailouts and/or assistance of some sort for every financial institution thus far except LEH?
Now looking into offshoring all my assets.
is it that easy? so basically, taxes are going to get jacked through the roof, and we lose. again.
the downfall of this country has been terribly sad.
The bailout’s going to be wonderful. Suzanne says so
http://www.cnn.com/2008/LIVING/personal/09/19/lkl.suze.orman/index.html
#18 comment is sarcastic
#16 Seneca,
No,the bigger issues that they should be p1ssed at, is the profit centers and high value businesses going out the back door at firesale prices. There will be nothing but the toxic sludge left to liquidate and nothing to come out of Chp 11 with.
Good morning party comrades!
I’m fairly surprised that some sort of nebulous bailout bill was rammed through in an emergency session overnight.
Paulson better pray this things gets approval.
If his plan is to string this thing along until Nov. and then let it die in the House or Senate after the election we should just shoot him now.
In any event we should just shoot him now.
laughy (17)-
Offshoring assets becomes much easier when you offshore yourself.
Heck, by the time I can actually leave, the expat tax won’t matter. I won’t have much of anything left.
#23 clot where would you flee to?
tosh (22)-
Somebody should do a drive-by on him and Bergabe. They can do a lot of damage before November.
As if they haven’t done enough already…
bairen (24)-
At this point, it may be a matter of whatever country will take me.
I have family in Canada & France. Could be the first choices.
Did Bunning say before Bergabe was approved that he wasn’t qualified for the post?
It is supposed to be a beautiful country.
http://www.immigration.govt.nz/migrant/
i saw how a bunch of people said they want to call their governors and senators … that really doesn’t do anything. i dont see the point.
i’m so disillusioned by politics and this entire bailout of these jokers. is this US public that stupid? How come the media isn’t running with headlines that say: HEY IDIOT TAXPAYERS, YOU’RE BAILING OUT THESE FOOLS
#29 Yes. The US public is that stupid.
At least the Northeast and California can get back some of the money we send to the red states
#12 clot: “now we can get back to securitizing loans!!!”.
BAck tp loan securization!!! Do you think the IB’s willl start that nnonsense again?
And where does this all leave housing prices going forward, as in declines?
#31 – Do you think the IB’s willl start that nnonsense again?
Do you doubt it?
would “sophisticated” investors be dumb enough to repeat?
oh, yes, they would. it would be different this time they’ll claim
The day is starting off damn good. The SEC has banned short selling just as I predicted. The next step may be to place controls on selling at all. We’ve got to root out the terrorists who are upending these markets. The treasury has moved to guarantee money market funds hence rooting out the doom and gloomers from that area as well.
I call on the SEC is begin reviewing sell transactions over the past week and begin detaining people for questioning about their loyalty to this country. We also should prevent short covering. If these dirtbags were so low down as to short the market, let them suffer unlimited losses. Under no circumstances should they be allowed to cover.
Why not….it will be guaranteed by the US Government.
#34 – I call on the SEC is begin reviewing sell transactions over the past week and begin detaining people for questioning about their loyalty to this country.
I agree. The only problem I see is how to tell people whom we know to be patriotic from potential terrorists… Perhaps a jaunty armband to delineate the two!
Media reporting that you can’t get a mortgage unless you have high FICO and 20% down because of this financial crisis. But don’t worry because Feds are coming and going to let the money start flowing again so that non-creditworthy individuals can once again buy a home. It doesn’t occur to these reporters that this is what got us into the mess in the first place? Am I in a Bill Murray movie? Where is the reporting and analysis?
“Experience is what allows us to repeat our mistakes, only with more finesse”
#36
Now you’re talking. Maybe the shorts could be forced to wear boxer shorts on their heads
3b (31)-
No sane person should buy a house now. At any price.
SEC banned short selling
http://news.yahoo.com/s/ap/20080919/ap_on_go_ot/sec_short_selling
Of course it’s only “temporary”
#40 and it’s limited to financials
What does that do to the SKF?
we’re on pace for a 1,000 comment thread.
tard (34)-
I’m with you all the way, pal. I’m pretty much locked into short positions all over the place, and I have no intention of covering.
The actions of your criminal gubmint have just ensured that the inevitable crash will be 10x worse than it would’ve been.
You are about to find out what happens when normal and legitimate short-selling is removed from markets. It won’t be pretty.
MS and GS went down because THEY COULDN’T GET A BID. NOBODY WANTED TO BUY, BECAUSE PEOPLE FIGURED OUT THEY WERE A SHAM. That’s why LEH failed. That’s why nobody wanted WaMu or AIG. ALL THESE ENTITIES ARE WORTHLESS.
There is now no floor under the un-shortables. The next time investors get spooked, these issues will trade down to 0.
[10] Clot,
If you are serious, get my email from Grim or Kettle. I am working on that in my free time.
We need a new law that only allows one news commentator per news station. All the rest must be retrained for manual labor.
HE (42)-
I have no earthly idea. I think State Street doesn’t either.
I don’t really care. I’m locked into SKF…and I firmly believe this thing will be back in the money faster than any of us can imagine.
If we can’t short the financials, then the financial companies shouldn’t be allowed to short any stocks either.
What does that do to the SKF?
i’d love to know the answer to this, too.
CAN EVERYONE PLEASE IGNORE REINVESTOR101? The guy is a clown, and there’s no point in reading or responding to his posts. He has never made a legit point about ANYTHING.
PLEASE IGNORE HIM
do not feed the trolls
I think the Builders and the REITS are going to get pounded after all the dumb shorts are out today in these sectors.
RE101 always gets a laugh from me. Please keep him around.
grim (8)
If the Kellys agree to pay Citi $166 a month for 20 years after they’ve already sold their house, what’s to stop them from defaulting? They don’t have anything left Citi can take away.
Citi wouldn’t have a right to put a lien on their new house, if they were to buy again, would they?
Wouldn’t it be the same as defaulting on a credit card?
Seneca (37)-
I wonder what the new guidelines will be for somebody who’s had to short sale or who’s been foreclosed within the past six months.
My guess? 5.75% on a pay-option ARM, nothing down, 106% financing…featuring financing of all closing costs, plus cash out at closing. Stated-stated.
These loans will then be securitized and sold directly to the gubmint as AAA-rated instruments. The gubmint will pay par and hold to maturity.
Of course, the rest of the world will regard us as a giant Zimbabwe. But everyone will have granite counters and a Hummer.
[47]
Could not get info on STT yesterday, except for speculation that Reserve breaking the buck may cause massive outflows. Heard today that the selling was due to concerns that STT may have more toxins in their balance sheets than previously thought.
So glad I sold into that last rally. I had shares with really low basis that I bought when I worked there in the 80’s and 90’s, before law school. I have a lot of friends whose pensions and profit sharing took a massive broadside and I feel awful for them (on the other hand, there are some crones there that I absolutely hate, and know that they are invested up to their eyeballs in STT, and I am (somewhat guiltily) enjoying their pain!)
Clod,
I can’t think of anyone more radical than you on this entire damn board. The government has not hurt you but is trying to help you and you resent it. I’ve tried to figure out why you feel this way and have concluded that you’re just a mean contrary little cuss. What the hell is your problem? And no, you shouldn’t be allowed to take your marbles and leave this damn country. You should keep your azz right here with the rest of us and pay your damn taxes.
Besides, GS, AIG and the rest of these great American companies that have been under attack have value. They will not trade to zero. I’m so glad that the shorts are now under attack. Now if they will only go after those who have ruined the real estate markets.
Clotpoll Says:
September 19th, 2008 at 7:54 am
tard (34)-
I’m with you all the way, pal. I’m pretty much locked into short positions all over the place, and I have no intention of covering.
The actions of your criminal gubmint have just ensured that the inevitable crash will be 10x worse than it would’ve been.
You are about to find out what happens when normal and legitimate short-selling is removed from markets. It won’t be pretty.
MS and GS went down because THEY COULDN’T GET A BID. NOBODY WANTED TO BUY, BECAUSE PEOPLE FIGURED OUT THEY WERE A SHAM. That’s why LEH failed. That’s why nobody wanted WaMu or AIG. ALL THESE ENTITIES ARE WORTHLESS.
There is now no floor under the un-shortables. The next time investors get spooked, these issues will trade down to 0.
“$800 billion fund to purchase so-called failed assets” – Is that anywhere near enough?
Following up on last night’d geekfest:
I remember dropping cards off at night to have a program run and then picking up the printout the next morning. By the time we had progresswd to edlin, we thought we were in computing nirvana.
CNN is reporting that the Treasury is going to backstop money market funds.
If the taxpayer is shelling off $800B to cover this junk why doesn’t Wall Street kick in the $120B in bonuses they’ve shelled out the past two years?
[57] shore,
Punch cards? Edlin? You’re dating yourself.
(course, so did I).
I’m pretty sure the ultrashort ETFs will still be allowed to do their things from what I read on the finance boards. I do expect the volume in these to quadruple as it will be the only shorting play available.
I expect there to be a market rally like never before seen today. This could bring the DOW all the way up above 12K. Then the slow realization that all stocks are overvalued as earnings season kicks into high gear will bring us right back down. Then the alt-a crisis will kick into gear and wash, rinse and repeat. If subprime brought the Dow from 13,700K to 10,400, Then I’m assuming we’ll eventually see Dow 8K as so many here predicted.
The market seems to think the toxic waste has been swept under the rug, but eventually that mound under the rug will render the rug useless.
All shorts are going to get hammered over the next few weeks. It will take cajones of steel to weather the storm. I plan on putting a thin coat of oil on mine.
Shore..I have contacted senator’s in the past, received the token “thank you” and nothing else.
even a phone call gets you nothing. I still want to believe that it makes a difference, but I am not deluded. What do you think is the most meaningful action to get your reps and the feds attention? Does a march on the mall even make a difference?
I think getting the masses to move is the key, but it appears that the “majority” is ignorant.
feeling kind of hopeless, hubby said he may never vote again. end of rant.
Tard (55)-
“The government has not hurt you but is trying to help you and you resent it.”
See, there’s the problem: unlike you, I have not- and will not- ask the gubmint to help (read: bail out) me.
Help like theirs I need like a hole in the head.
For a Republican, you sure talk like a member of the Soviet.
hunter (62)-
Add me to that list with your hubby. Voting, IMO, now indicates nothing but complicity with the criminal enterprise called the US gubmint.
look at the “help” that is out there…SS, medicare and medicaid…broke, yeah I want help like that
# 13 bairen
The other day I posted links to photos of beach houses in TX and commented about how they had gotten out-of-control big. There is a reason why beach houses used to be small, cheap, and easy to rebuild. McMansions on the coast are a joke.
Something to break the mood…..
http://www.youtube.com/watch?v=t2A0Ovilm24&feature=related
[61] Stu
The selling opportunity we are all looking for!
[51] Vic,
Yes, RE makes for entertaining, if not occasionally incomprehensible, rants.
Problem is, I can’t figure out whether or not he is eminently qualified or fantastically unqualified for membership in the compound! I just don’t know.
when the malaise sets in, they have you where they have wanted you all along…maybe alittle floride int he water will speed things along. just shut up and we will eventually take 80% of your paycheck.
[61] Stu,
” It will take cajones of steel to weather the storm. I plan on putting a thin coat of oil on mine.”
There’s a joke in there somewhere, I just know it.
Are you calling me a damn commie? Those are fighting words.
Let me tell you something, I love and support free markets but freedom isn’t free. When short sellers and rumor mongers run amok, then a damn line has to be drawn in the damn sand. WE CAN’T LET THEM DESTROY THIS COUNTRY. I support the war on the shorts and we shouldn’t stop until they are completely destroyed once and for all. After we get rid of them, we need to turn our guns on those who’ve been upending the real estate markets.
Clotpoll Says:
September 19th, 2008 at 8:09 am
Tard (55)-
“The government has not hurt you but is trying to help you and you resent it.”
See, there’s the problem: unlike you, I have not- and will not- ask the gubmint to help (read: bail out) me.
Help like theirs I need like a hole in the head.
For a Republican, you sure talk like a member of the Soviet.
How much of last night’s Klink/Pelosi donkey show was just to get the markets through options expiration today?
Gonna be a lot of covering and buying going on today…but what happens Monday?
The unintended consequence of the Governments actions is that the 1930’s Great Depression will be eclipsed by the 2009 Bipartisan Armeggedon they have created.
Short ban list:
REITS aren’t in there (phew).
http://sec.gov/rules/other/2008/34-58592.pdf
tard (71)-
“I love and support free markets but freedom isn’t free.”
Translation: I love and support free markets, except when I make bad decisions. Then I whine to the gubmint to help me avoid the consequences of my stupidity.
When I think about what the ban on shorting and the short squeeze does to people like Peter Schiff, I get almost giddy with glee.
It really makes the heart glad!
“Problem is, I can’t figure out whether or not he is eminently qualified or fantastically unqualified for membership in the compound! I just don’t know.”
Well someone needs to buy the beer and clean out the septic.
I love the smell of communism in the morning
#72 – That was my assumption yesterday. They’re just buying another month hoping for jebus to miracle away all the problems.
tard (71)-
“…we need to turn our guns on those who’ve been upending the real estate markets.”
So, you mean banks, mortgage companies, builders, NAR and unscrupulous borrowers?
I think he meant himself :P
I think Tard is Herschel Walker. He can actually change personalities from sentence to sentence.
69] House
My last two quote from Soc!al!st candidate Norman M. Thomas got moderated. [Grim, feel free to kill them]
Here is a better one, and more apropos of the times:
“”The difference between Dem[s]
and Repub[s] is: Dem[s] have
accepted some ideas of Soc1al!sm
cheerfully, while Repub[s] have
accepted them reluctantly”
Regarding the SKF….I don’t see any reason that it will be affected in terms of its ability to function. I think the costs of allowing it work are going up. I don’t think they are banning shorting as a position relative to the market. They are banning the action of borrowing shares to sell without ownership. They are many ways to reconstitute the equivalent, it will just be more expensive.
I would be more concerned with how well the SKF tracks your index and the cost of carry embedded in the expenses.
#66 Shore Guy,
And we are stuck paying for them through either higher insurance repmiums or government hand outs, or beach replenishment projects.
Note: Sea bright can suck it
Hey 50.5,
I’ll comment more later, I’m buried. Covered every short yesterday as soon as the UK news hit. It’s been a great ride. Probably hit the islands, drink tini’s, let the masters force feed grade 1 cocaine to idiots like yourself and then get shorty again. Hey, my house just got robbed, let’s reward the thief with a bonus.
By the way, have you ever heard of a synthetic short? Selling calls/buying puts. How about futures? Why not ban puts, futures and day trading?
One other thought, BC didn’t offer this course. Maybe I’ll go back to school or just bring a book to the islands;
http://www.amazon.com/Das-Kapital-Gateway-Karl-Marx/dp/089526711X
What a week, the USA is now the USSA. We will need to borrow from the world, probably from China another 800 billion to start. In the end, it will be double that.
I feel sorry for Orwell. He died thinking he was the man. I bet no grass grows over his grave for the next 50 years.
“They are banning the action of borrowing shares to sell without ownership.”
Chi,
As you know, the Goldmorgan’s of the world borrow billions of stock every day for lending purposes to hedgies. What does this respresent, close to 30% of their revenue? Keep the rule enforced and watch the job losses accelerate.
Robert Reich:
“The only way Wall Street’s meltdown doesn’t spill over to Main Street is if policymakers begin to pay adequate attention to the people whose wallets really keep the economy going, and who merit more help than the Wall Street tycoons whose carelessness and negligence have put it in such jeopardy.”
One quick question, gotta run;
Did the dolts include Lehman on the banned list? If yes, I’ll sheet in my pants. Later.
“What does this respresent, close to 30% of their revenue? Keep the rule enforced and watch the job losses accelerate.”
Remove the rule and the markets will implode overnight.
You simply can’t tame the market without serious repercussions.
So RE: should the press be banned from reporting bad news as well?
“Yesterday Hurricane Ike brought much needed rains to South Texas.”
“If the taxpayer is shelling off $800B to cover this junk why doesn’t Wall Street kick in the $120B in bonuses they’ve shelled out the past two years?”
Or how about no bonuses until the $800B is paid back?
Hunter alert.
He walked into the garage, picked up a baseball, looked at me and said “METS”.
My work is done. Although he is now set up for a lifetime of heartbreak.
Here is something interesting:
I wanted to verify some of my quotes (one of which had an incorrect date per Wiki) and I came across this interesting statement on the Dem*cratic Soc!al!sts of America website:
“The government could use regulations and tax incentives to encourage companies to act in the public interest and outlaw destructive activities such as exporting jobs to low-wage countries and polluting our environment. Public
pressure can also have a critical role to play in the struggle to hold corporations accountable. Most of all, soc!al!sts
look to unions make private business more responsible.”
Unless I am mistaken, isn’t this the O economic plan in a nutshell????
Bi:
How about a report on the polls?
I expect there to be a market rally like never before seen today. This could bring the DOW all the way up above 12K. Then the slow realization that all stocks are overvalued as earnings season kicks into high gear will bring us right back down. Then the alt-a crisis will kick into gear and wash, rinse and repeat. If subprime brought the Dow from 13,700K to 10,400, Then I’m assuming we’ll eventually see Dow 8K as so many here predicted.
I dont know your track record here, Stu, but this seems accurate. The idiots running this country just keep postponing the doom. Actually i hope stocks soar in the coming days/weeks … this time, when apple hits 175-200 or the index hits 85, I’m pulling it all out and socking it away.
and that’s when the SKF express will kick in again.
Will we see record bonuses on the street this year now that the government endorses and backs fraud?
Nom,
re:offshore. Can you cc me when you email Clot?
email via grim.
Thanks,
sl
DJ futures up 400.
Clotpoll [39],
What’s your estimation, a year from now?
SKF down 21%+ in pre-market
That dull thud you hear is the sound of moral hazzard hitting the pavement after having been thrown out the window.
“Ron Paul Discusses Financial Turmoil and the Fed 9/18/08″
http://tinyurl.com/449gwg
this govt is crooked and corrupt, I hope you blokes realize what this all means.
just wait till next summer. you better start saving as much as you can now.
SAS
Chi,
you wrote: “Although he is now set up for a lifetime of heartbreak.”
…only if he is a Yankee fan.
sl
SHORT SQUEEZE BARGAINS – The shorts are getting squeezed and good liquid stuff is getting dumped today at par. A whole bunch of 5% coupon A or higher rated NJ/NY munis that are insured hit my screen at par or less just this morning. A 5-15 year 5% muni at par or less is insane with fed funds this low.
We live in the Lehigh Valley in a school district called East Penn. This area’s home prices went up 80% from 2002-2007. Now prices have already dropped 30% and people aren’t buying.
Most of the people who purchased were from NJ & NY, they commuted to work. It’s the same all over for them now, price declines and can’t sell. What a shame!
If the market soars, the NJ Legislature will view it as an opportunity to raise the State Pensions again.
WASHINGTON (MarketWatch) — The Federal Reserve took two steps to boost market liquidity on Friday morning, the central bank said. The Fed will extend loans to banks to finance their purchases of asset-backed commercial paper from money market mutual funds — a move the Fed says will help funds meet investor demands. The Fed will also buy from primary dealers short term debt issued by Fannie Mae (FNM:Fannie MaeFRE 0.32, +0.05, +18.5%) and the Federal Home Loan banks. The moves come after the Fed chairman and other officials met Thursday night to hammer out a broad plan to fight the financial crisis.
How can amoral people rule on moral hazard?
Futures up 570.
#67 Thanks for the video, ChiFi. To me it looked like a metaphor for the market finally taking control. It ain’t gonna be pretty then, either.
Will they put the stops in if the market rallies too quickly?
#78 Major – Yeah, except it doesn’t smell like victory, does it?
Mother of all rallies!
#115 The fever spikes just before the patient dies. I gotta get more coffee and try to cheer up here.
You know I’ve been heavy into skf, but even I’m too nervous at the moment. It’s $88 pre-market, though and wow … what a gift that could be. I’m tempted to buy a few as lotto tickets.
sheep.
I would wait for the markets to rally and the euphoria to die off.
Minimize your risk!
So, let me get this straight. The money markets are in the business of making short-tern loans to businesses . These loans are based on an assessment of risk, and, because of an attention to risk, the Money Markets only had one breaking of the buck before this week. Now, because we have had a second and third break, we are going to “solve the problem” by removing ther need for the money-market managers to manage risk?
Am I missing something here? I know I have not had all my coffee yet this morning but, this seems to be encouraging people to be have in a way that will almost guarantee the need for the Treasury department to step in and insure losses.
http://www.nytimes.com/2008/09/20/business/20moneys.html?ref=business
The Treasury Department said Friday morning that it would guarantee, at least temporarily, money market funds up to an amount of $50 billion in order to ensure their solvency.
“For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund — both retail and institutional — that pays a fee to participate in the program,” the Treasury said in a statement .
“Money market funds play an important role as a savings and investment vehicle for many Americans,” the Treasury said in statement.
Concerns about the value of money market funds falling below $1 have exacerbated global financial market turmoil and caused severe liquidity strains.
Any predictions on the VIX?
We are rapidly becoming Japanese Communists
wamu is $4.50 in premarket, short sellers shorts are around their ankles and they will be screaming WWWWWAAAAAAMMMMMMUUUUU at 9:35 when they get a margin call.
Remember, this requires Congressional approval, a month and a half before the election? One other note, the devil is in the details.
Free cocaine to any buyer of stocks.
here’s that premarket SKF
http://www.nasdaq.com/aspxcontent/ExtendedTradingTrades.aspx?page=afterhours&mkttype=PRE&symbol=skf&selected=skf
down to 88
Wachovia Corp. (WB), which is said to be in possible merger talks with Morgan Stanley, rose another 94% premarket after soaring 59% on Thursday.
While Goldman pared much of its earlier losses Thursday – it tumbled 25% at one point in the session – it still ended in the red, down 5.7%. But the stock more than made up for it in recent premarket trading, as it soared 34% to $143.
American International Group Inc. (AIG), the troubled insurance giant being taken over by the government, ended up 31% on Thursday and added another 59% premarket. New CEO Edward Liddy said he hopes to keep intact as many of the company’s largest insurance operations as possible in a publicly traded company, after selling assets to pay back a federal loan.
Big commercial banks also posted big gains. Citigroup Inc. (C) added to Thursday’s 19% advance with a 28% surge premarket, while JPMorgan Chase & Co. ( JPM) climbed 15%, matching Thursday’s gain, and Bank of America Corp. (BAC), jumped 19%. Merrill Lynch & Co. (MER), which agreed at the start of the week to be acquired by Bank of America, padded Thursday’s 14% advance with another 27% gain.
About calling trhe White House and various elected representatives.
I have spent enough time with folks on the Hill qand in the Executive to know that they only respond to pressure. They may not respond to any given letter or phone call BUT they track which issues people are calling about and on what side of the issue thaey are supporting.
I had th e good fortune to be able to get beyond those gatekeepers and right to senior staff yesterday. BUT, just because someone else can’t do that does not mean that they should not call. Don’t write via the post office. Letters just do not get to anyone after the anthrax issue. But faxes do get through.
Call early and often. Fax if you can. E-mail your representatives via their house.gov Web sites. When you call, call both the DC offices and every district office they have. You want the reports going up to the boss being, “We are getting a lot of angry calls from people who think this is a bad idea.” If you share the official’s party affiliation, let them know that, let them know that you have voted for them in the past and that you will not only not vote for them if they support this bad policy but that you will support primary challengers and even general election challengers of the other policy if they go along with this madness.
The folks we elected take silence for affirmation.
“Will they put the stops in if the market rallies too quickly?”
Hahahahahahahahahhaahahahahahahahahahahahah
Yea, right. Remember profits are good for them, losses are bad for us.
John [122],
If anybody has been short that crap and has not covered, they deserve it. Risk/Reward.
C’mon baby! Daddy needs a 5D MkII!
“And we are stuck paying for them through either higher insurance repmiums or government hand outs, or beach replenishment projects.”
Whilst I agree that there can be good economic reasons for the state and feds to do some beach replenishment, people take chances when they buy property on the coast. If you want the benefit of waking up each morning with the sun peeking over the ocean and having that first cup of coffee whilst walking on the beach, and unwinding inthe evening with a drink in your hand listening to the surf pounding a few yards away, THERE ARE RISKS and the individual who invests in such property must bear them individually.
#129 – :)
Grim,
I could have bought you Jersey Camera with my paper losses from yesterday and today :(
And you could keep it open on Friday night and Saturday.
I am disgusted by the actios of my Republican brothers and sisters. I do not expect much from the Dems in congress, Chuck Schumer, should now be called Red Chuck, as his proposals sound like something from a five-year-plan from the comintern.
Clot #10,
I agree 100% on all counts!!!!! i hear dominica is nice this time of year!
# Clotpoll Says:
September 19th, 2008 at 6:33 am
The gubmint of the US is a criminal enterprise.
Period. End of story.
Now looking into offshoring all my assets.
Ket,
We love Dominica. It is not as nice as Grenada (which is also usually out of the hurricane tracks), but far nicer than Antiga, the ABCs, etc.
#130 Shore Guy,
If people want to enjoy a beachfront house, they should accept the risk, not socialize it onto the rest of us yet be able to pocket all the profits if they can make money on a resell. Some beach replenishment projects do make sense, but not all.
I noticed you didn’t disagree with my Sea Bright comment. :)
Rally away, baby! Yeah!
Actios? Sounds like a breakfast cereal. Actions, that was supposed to be.
Off to call Lautenburg. He is alive right?
For all disillusioned Republican’s, these lyrics (courtesy of the patron saint of NJ)should have a certain resonance:
Once I thought I knew
Everything I needed to know about you
Your sweet whisper, Your tender touch
But I didn’t really know that much
Joke’s on me, It’s gonna be okay
If I can just get through this lonesome day
Hell’s brewin’ dark sun’s on the rise
This storm’ll blow through by and by
House is on fire, Viper’s in the grass
A little revenge and this too shall pass
This too shall pass, I’m gonna pray
Right now all I got’s this lonesome day
It’s allrightŠIt’s allrightŠIt’s allright
Better ask questions before you shoot
Deceit and betrayals bitter fruit
It’s hard to swallow, come time to pay
That taste on your tongue don’t easily slip away
Let kingdom come I’m gonna find my way
Through this lonesome day
For you ex-Boston residents, what areas around Boston are like Summit and Westfield? Train towns with good schools. Seriously thinking about relocating their next year. I’ve read that Arlington, Watertown, Waltham, Wellesley, and Needham are supposed to be nice Don’t think I want my kids going to public schools in Boston so we’re looking at nearby towns.
anyone want to recommend a good brunch spot in downtown Chicago?
ChiFi, we’ll be in your wonderful city for the first time this weekend. Dinner lined up, Cubs game, bars … we’re pumped.
And Ameritrade is down again for me!
So damn frustrating.
114 stater
“#78 Major – Yeah, except it doesn’t smell like victory, does it?”
No. Smells more like Mission Accomplished.
#39 clot: do you see any chance of housing being reinflated,and then its up, up and away agin.
Laughing,
I ate at a place on the river, a few doors to the east of the ABA headquarters (can’t remember the name), the food was decent and it overlooked the boats going up and down the river within the loop. I want ti say it was behind the Westin (not the Westin across the street from John Hancock tower).
in mod. Not sure why. Maybe the name of one of our founding fathers that includes the name of a bird that is not a hen.
I love the smell of foolish policy in the morning, it smells like…. securitization.
John Hanc+ck?
Laughing,
I ate at a place on the river, a few doors to the east of the ABA headquarters (can’t remember the name), the food was decent and it overlooked the boats going up and down the river within the loop. I want to say it was behind the Westin (not the Westin across the street from John Handc0ck tower).
#143 Major – Touche!
Who was it who referenced Hoovervilles the other day:
RENO, Nev. – A few tents cropped up hard by the railroad tracks, pitched by men left with nowhere to go once the emergency winter shelter closed for the summer.
Then others appeared — people who had lost their jobs to the ailing economy, or newcomers who had moved to Reno for work and discovered no one was hiring.
Within weeks, more than 150 people were living in tents big and small, barely a foot apart in a patch of dirt slated to be a parking lot for a campus of shelters Reno is building for its homeless population. Like many other cities, Reno has found itself with a “tent city” — an encampment of people who had nowhere else to go.
From Seattle to Athens, Ga., homeless advocacy groups and city agencies are reporting the most visible rise in homeless encampments in a generation.
Nearly 61 percent of local and state homeless coalitions say they’ve experienced a rise in homelessness since the foreclosure crisis began in 2007, according to a report by the National Coalition for the Homeless. The group says the problem has worsened since the report’s release in April, with foreclosures mounting, gas and food prices rising and the job market tightening.
“It’s clear that poverty and homelessness have increased,” said Michael Stoops, acting executive director of the coalition. “The economy is in chaos, we’re in an unofficial recession and Americans are worried, from the homeless to the middle class, about their future.”
The phenomenon of encampments has caught advocacy groups somewhat by surprise, largely because of how quickly they have sprung up.
“What you’re seeing is encampments that I haven’t seen since the 80s,” said Paul Boden, executive director of the Western Regional Advocacy Project, an umbrella group for homeless advocacy organizations in Los Angeles, San Francisco, Oakland, Calif., Portland, Ore. and Seattle.
The relatively tony city of Santa Barbara has given over a parking lot to people who sleep in cars and vans. The city of Fresno, Calif., is trying to manage several proliferating tent cities, including an encampment where people have made shelters out of scrap wood. In Portland, Ore., and Seattle, homeless advocacy groups have paired with nonprofits or faith-based groups to manage tent cities as outdoor shelters. Other cities where tent cities have either appeared or expanded include include Chattanooga, Tenn., San Diego, and Columbus, Ohio.
The Department of Housing and Urban Development recently reported a 12 percent drop in homelessness nationally in two years, from about 754,000 in January 2005 to 666,000 in January 2007. But the 2007 numbers omitted people who previously had been considered homeless — such as those staying with relatives or friends or living in campgrounds or motel rooms for more than a week.
In addition, the housing and economic crisis began soon after HUD’s most recent data was compiled.
“The data predates the housing crisis,” said Brian Sullivan, a spokesman for HUD. “From the headlines, it might appear that the report is about yesterday. How is the housing situation affecting homelessness? That’s a great question. We’re still trying to get to that.”
In Seattle, which is experiencing a building boom and an influx of affluent professionals in neighborhoods the working class once owned, homeless encampments have been springing up — in remote places to avoid police sweeps.
“What’s happening in Seattle is what’s happening everywhere else — on steroids,” said Tim Harris, executive director of Real Change, an advocacy organization that publishes a weekly newspaper sold by homeless people.
Homeless people and their advocates have organized three tent cities at City Hall in recent months to call attention to the homeless and protest the sweeps — acts of militancy, said Harris, “that we really haven’t seen around homeless activism since the early ’90s.”
In Reno, officials decided to let the tent city be because shelters were already filled.
Officials don’t know how many homeless people are in Reno. “But we do know that the soup kitchens are serving hundreds more meals a day and that we have more people who are homeless than we can remember,” said Jodi Royal-Goodwin, the city’s redevelopment agency director.
Those in the tents have to register and are monitored weekly to see what progress they are making in finding jobs or real housing. They are provided times to take showers in the shelter, and told where to go for food and meals.
Sylvia Flynn, 51, came from northern California but lost a job almost immediately and then her apartment.
Since the cheapest motels here charge upward of $200 a week, Flynn ended up at the Reno women’s shelter, which has only 20 beds and a two-week limit on stays.
Out of a dozen people interviewed in the tent city, six had come to Reno from California or elsewhere over the last year, hoping for casino jobs.
“I figured this would be a great place for a job,” said Max Perez, a 19-year-old from Iowa. He couldn’t find one and ended up taking showers at the men’s shelter and sleeping in a pup tent barely big enough to cover his body.
The casinos are actually starting to lay off employees.
“Sometimes I think we need to put out an ad: ‘No, we don’t have any more jobs than you do,'” Royal-Goodwin said.
The city will shut down the tent city as soon as early October because the tents sit on what will be a parking lot for a complex of shelters and services for homeless people. The complex will include a men’s shelter, a women’s shelter, a family shelter and a resource center.
Reno officials aren’t sure whether the construction will eliminate the need for the tent city. The demand, they say, keeps growing.
http://www.cnbc.com/id/26775940/?for=cnbc
142 – Stu
Same here for me! Ameritrade sucks!!
We have bombed the Taliban, and bombed the Ba’athist, and now we are napalming the middle class.
Unless you call the politicos, don’t bit-ch if this policy gets approved.
Red Tag Sale on SRS going on!
trading on SKF halted?
Anyone up for a game of alliteration? The Bad Bank Bailout Bill? Paulson Plunders People’s Pockets? I’m sure Gary could come up with something much more colorful.
HEHEH,
NO!!!!
Will try to dig up the estimate i saw recently, but it is probably 10+ trillion if the Gov pays the mark-to-Model prices
# HEHEHE Says:
September 19th, 2008 at 8:03 am
“$800 billion fund to purchase so-called failed assets” – Is that anywhere near enough?
And at the end of the day Goldman Sachs remains standing.
It will be interesting to see how a determiantion was made to let Bear go 6 months ago. Than this week let Lehman go, force Merrill to merge, nationalize AIG, and than decide on a massive bailout for everyone else, including Goldman all in less than a week.
The economy is on its way to becoming one large ESOP; hmmmm, a worker’s paradise” perhaps, where we will all be equal, some just more so than others.
Mugabe and Chavez seen entering the NY Fed this morning.
Grim,
Are they the management team hired by Putin and Hu?
… so much for buying gold on a dip.
Showing great personal courage, BO has decided he will not present his economic plan to the public until after Paulson presents his to congress.
I’ve just been informed it is Talk Like A Pirate Day.
Comments past this point must be in pirate-speak or risk being moderated/deleted.
Yar.
do you mean BO as in stinky?
sl
American International Group Inc. (AIG), the troubled insurance giant being taken over by the government, ended up 31% on Thursday and added another 59% premarket. New CEO Edward Liddy said he hopes to keep intact as many of the company’s largest insurance operations as possible in a publicly traded company, after selling assets to pay back a federal loan.
ALL: You can’t have it both ways. We (the taxpayers) are benefitting by the rise in AIG, as we have 80% equity participation. Good for us.
Clotpoll Says:
September 19th, 2008 at 7:47 am
3b (31)-
No sane person should buy a house now. At any price.
I would – as a matter of fact looking at the recent actions ogf the goverment I am going to start putting offers this winter.
Hype-inflation will hit US in a year or two, not just high inflation in 3-4 years as I predicted earlier.
I lived through one hyper-inflation, and I am in a good position to take advantage of this one.
I have to make sure that I like the location and the house and ready to stay in it for 10 years.
I just do not see China propping US dollar much longer. It is not Saudi, not Europe – it is China. They are keeping prices of their goods artificially low. Once they realize that there is no way we are paying them back in similar amounts of goods – good bye dollar.
There is a bit of effect from Saudi but they are not producing anything but oil. So they are as dependant on china as Everyone Else – Imagine the picture:
There is one Factory in Town which produces every consumable good but food.…
Workers there work 10 hours a day and get paid 1/100 of what farmers, Janitors, Plumbers and any other profession in town does. So they raise their prices 100x – what happens next – everyone else of the sudden poorer and start to raise their prices as well.
This is very simplistic but this is what about to happen. Counter argument I heard – when China raises their prices cheap manufacturing will move elsewhere… WHERE??? THERE IS A REASON IT IS IN CHINA.
http://www.cnbc.com/id/24596546
Paulson’s plan press conference
….geez
Ay, matey… do ya mean “BO” as in stinky like me day ole fish in the brig??
sl
Sorry did not see Grims post 164..
Yarrrr
Laughing all the Way Says:
September 19th, 2008 at 9:36 am
anyone want to recommend a good brunch spot in downtown Chicago?
ChiFi, we’ll be in your wonderful city for the first time this weekend. Dinner lined up, Cubs game, bars … we’re pumped.
BOOOOOYA….bring a jacket……
LATW: where are you staying?
Avast. The SS FedCo demands ye allow us to board and rob you blind. Arr.
#164
Matey, the taxpayers are walking the plank while thinking they are strolling on hardwood floors.
Yar
I saw a 401K Capital Preservation Stable Value Fund increase in value today, caused by significant movement from Equity Funds into it. It is the first time since inception that this fund has ever changed it’s value, other then first of the month. Very disturbing.
“ALL: You can’t have it both ways. We (the taxpayers) are benefitting by the rise in AIG, as we have 80% equity participation. Good for us.”
Chi,
How about a deal. I’ll take their dividends and you can have their cds’s. Fair?
“asset relief program” Uh oh. Why do I feel like someone just opened a vein and I’m slowly bleeding out?
Arrr, don’t think of it as shark-infested waters, matey, consider it a large hot tub with living bath toys. Arrrr, now start walking.
Seneca [162],
Are you a day trader?
Bairen,
I agree with your beach house theory. Beach houses used to be small bungalows for a reason. They were temporary especially in flat lands.On the Adriatic or Hawaii where the are highlands it’s a different story. Now they build 10,000 square foot mansions to impress their friends and sociolize the losses.
Confused In NJ Says:
September 19th, 2008 at 10:07 am
I saw a 401K Capital Preservation Stable Value Fund increase in value today, caused by significant movement from Equity Funds into it. It is the first time since inception that this fund has ever changed it’s value, other then first of the month. Very disturbing.
CINJ: I used to run these plans. The recordkeeper loaded bad asset values…..they better have audit review that or else there is a fundamental bias of certain participants over others….call and ask for an explanation. Don’t talk to one of the plebes, go to someone who doesn’t read from a script.
They want to pass this legislation within the week. No good ever came from rushing in to craft complex legislation withoout time to carefully consider, analyze, and modify.
Ahh, Hank says taking over the bad debt will “eliminate it” from the economy.
bairen
Arlington,
Watertown,Waltham,Wellesley,
Needham
Wayland
Sudbury
Waltham and watertown are more mixed middle class towns. all of the other towns are essentially local haughtyville’s. if you want a more upperclass area then put waltham and water town on the bottom of the list.
Also you may have missed one of the biggets ones!!!
Newton.
newton was the #1 safesttown in the US for the last several years. there plenty of private school sin the are , easy access to the train and the public schools are supposed to be pretty good there.
tell me more of what you are looking for and i will rank them for you. I lived in waltham for a while. and you have to pronounce it correctly. waltham (Wall – Thaaaaaam)
# bairen Says:
September 19th, 2008 at 9:35 am
For you ex-Boston residents, what areas around Boston are like Summit and Westfield? Train towns with good schools. Seriously thinking about relocating their next year. I’ve read that Arlington, Watertown, Waltham, Wellesley, and Needham are supposed to be nice Don’t think I want my kids going to public schools in Boston so we’re looking at nearby towns.
Paulson: Hundreds of billions?
Did I hear that correctly?
Ohh, now he is saying ordinary American’s ability to fund college, have jobs, retire, (eat tomorrow, actually I n\made up the last one) depends on bending over and accepting this plan.
When asked if it would cost hundreds of billions or a trillion he said hundreds of billions. Took two questions and split.
This is part of my long-form bio. I would love to be working at this post for the last 2 weeks.
“…He was Head Trader of the largest Non-Financial Corporate Commercial Paper program with outstanding balances exceeding $10B….”
P.S. I be buyin’ em houses with FHA booty (3% downpayment loan), and rest of me money goes to doubloons. that will show them, scurvy dogs!!!
Maybe he meant a thousand billion. Oh wait, matey, that IS a trillion. Doh!
Fenske, 64, said she was sitting alone at Carol’s Restaurant in West Sacramento, California, when a group of elderly women at a nearby table were discussing how much money they had been losing in the financial markets.
She said she heard one woman, whom she didn’t know, complain that she “can’t take any more hits” and told her friends, “I turned everything I had into cash, put it in a lock box and buried it under the shed near the sewer line.”
Bairen: I hate to be blunt about Boston, but it really depends are whether you are white. If you are not white, you have very limited options.
182.chicagofinance
Chi, I tried that, Fidelity says was significant movement of dollars into it from all other funds. Problem is it’s a company custom fund which Fidelity has no direct control of. They are blind to what the fund administrators are in or doing. I will have to rethink it’s safety and possibly create an IRA to control investments directly.
all I can say is that this is like the Iraq war. you can spend all your time and energy assigning blame for past events, or you can recognize that there is a present crisis that must be dealt with. I know it would be very intellectually satisfying for many to see the entire banking system collapse, but that would be small consolation for the very real pain you would feel along with everyone else.
Remember when Ronald Reagan (my political hero, sorry Stu) talked about “welfare queens driving around in Cadillacs?” Hey, it looks like we are going to be paying welfare barrons, kings, and queens to drive around in Rolls’, Bentleys, Jags, Lexuses, etc.
If the congress actually goes along with this, I hope we all at least get a kiss out of it.
#183 kettle1
Thanks ket. We’re looking for a town with a tain line, a downtown, and good schools. My wife wants new construction but think that ain’t going to happen unless she wants a nose bleed price or an awful commute. Maybe a renovated colonial or row house.
Ok, pirate-day over.
#190 chicagofinance
What if spouse is Asian? What options should we focus on the?
I made the mistake of selling the SKF into this mornings free for all, lost 3K. I am NEVER buying the product again.
Ps. it has nothing to do with the product and everything to do with the criminals running the system
Confused In NJ Says:
September 19th, 2008 at 10:17 am
That is not cool. Two issues….I assume since you care, you lost some money out of it. Also, is it a material amount of money?
If yes, then go forth and make trouble. If not, then forget it. If you want to make trouble, go through corporate HR and benefit contacts at your company. The people you will take to at Fidelity have no ability to give you any relief. You have to pressure your internal contacts, so they can take to the people in control at the recordkeeper. If HR blows you off, then go to the guys in finance at your company who can tip off corporate officers…….
Pirate day over? Tell Paulson. He is in full pillage mode.
#192 skeptic: And as such this type of behavior will happen again, and again.
There is absolutely no incentive for people to play by the rules, as they no longer exist.
You can put lipstick (dollar) on MBS, CDO, ARS, CMBS, FN, FRE, etc.
It’s still doo-doo.
Shore Guy Says:
September 19th, 2008 at 10:19 am
Remember when Ronald Reagan (my political hero, sorry Stu) talked about “welfare queens driving around in Cadillacs?” Hey, it looks like we are going to be paying welfare barrons, kings, and queens to drive around in Rolls’, Bentleys, Jags, Lexuses, etc.
If the congress actually goes along with this, I hope we all at least get a kiss out of it.
If you fu*k me at least kiss me?
take to = talk to
“Sept. 19 (Bloomberg) — As it stands, the rest of us will be paying much money over a long time for the greed and bad judgment of those who melted down the economy.
Hundreds of billions of taxpayer dollars are propping up firms that a relative few money lenders and Wall Street wizards ruined.
If that weren’t enough, the crisis is shrinking the money that Americans diligently socked away for retirement, down payments on first homes, college for the kids or this winter’s heating bill. We might as well have opened our windows and tossed out cash.
Beyond crimping living standards around the globe, the crumbling of the U.S. financial system has prompted action radical for a nation devoted to free enterprise. However necessary, it’s nothing short of astounding that the U.S. government essentially nationalized the largest insurance company in the country.”
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_woolner&sid=amhY7f0W2igY
BC [179]
…not a day trader. My mom taught me never to pay retail for anything and my mattress is overstuffed.
http://dealbreaker.com/images/thumbs/sg2008091935979big.php
Al 176,
the manufacturing move is already setup.
it is moving to africa. That is one of the reasons that china has spent so much time and money solidifying its strategic position in africa.
Skep,
The difference is that THIS proposed policy choice is still just a proposal. For the next several days, there is still an opportunity to, through the ordinary give-and-take of the legislative process, to craft legislation that achieves necessary outcomes while protecting the American public AND disincentivizing reckless behavior in the future.
Just because Paulson says “this IS the plan,’ does not meanthat a competent legislative body should accept that plan in toto.
182 shore
Love how these people define “the economy”. They ought to be honest and refer to “my economy”.
When ye go to dinner with these pirates, ye know who be pickin’ up the check, mate.
ahoy matey
LATW: where are you staying?
friend’s place in The Loop, wherever that is.
weather.com says 60-80s which is weather i love.
HEHEHEHEHD – why’d you sell SKF. clot and mike morgan say it is long, you hold it. this dip is just temporary – give it a week or two or a month and it’ll spike up to 125 and beyond
walk the plank
Al,
You got it.
bairen Says:
September 19th, 2008 at 10:21 am
#190 chicagofinance
What if spouse is Asian? What options should we focus on the?
bairen: I’m not an expert on Boston, but I know enough to recommend that you need to be aware of such things. I will say that (1) woman and (2) Asian, probably make the situation as easy as possible under the circumstances.
communist states of america
http://tinyurl.com/42cldt
Maybe a nice dinner too.
(202) “There is absolutely no incentive for people to play by the rules, as they no longer exist.”
Totally agree.
“competent legislative body should accept that plan in toto.”
shore,
Competent and legislative in the same sentence?
They can even say they love us. It would help.
So, all week I worked to diversify my cash, to avoid collapsing money markets, etc.
And now, apparently, money markets are f_cking guaranteed?
In other words, I should now pile into the formerly most risky money market with the highest possible return, since I can only win?
Doesn’t this DESTROY the concept of money markets?
Hearing Paulson speak caused a shiver in me timbers
As long as the government is feeling a little looser with its wallet, how about a guarantee of home values? Like, if you purchase a house, the government will pay you the difference if you sell for less than you bought it. Think of the pressure that would take off everyone.
all the rules have been changed overnight.
do you feel confident investing where the rules change overnight?
Who wants to take a stab at suggesting what Chapter 1 of Damodaran’s Valuation textbook will look like next year?
MJ Says:
September 19th, 2008 at 10:30 am
all the rules have been changed overnight.
do you feel confident investing where the rules change overnight?
MJ: If the rules are baised toward going long?
RichNNJ,
Not sure if you did not see it yesterday but if you have any comps for Hillsdale I would greatly appreciate it. I am looking at this town and want to see if there are any drops in Sold prices from 05/06.
Thanks.
SKF halted?
202; 216
Rules? RULES?!?!!?
The game is Calvinball, maties.
THIS is a perfect example of why I do not want BO as president. At least with a divided government there is a chance to slow and modify bad legislative policy.
I doubt there is any question about whether the Dems will have control over the house and senate after the election. If they hold the WH as well, it would take hours to move something like this from proposal to signed law. At least with divided government it will take about a week, and eventhat is like an ICBM moving through the sky compared to the usual legislative process. It may cause as much damage to the middle class too — we don’t have access to bomb shelters like congress.
#52
“If the Kellys agree to pay Citi $166 a month for 20 years after they’ve already sold their house, what’s to stop them from defaulting? They don’t have anything left Citi can take away.
Citi wouldn’t have a right to put a lien on their new house, if they were to buy again, would they?
Wouldn’t it be the same as defaulting on a credit card?”
Citi could sue them and get a judgment lien on their new house.
Silly prediction:
Market closes lower today once the general public understands what transpired in the last 48 hrs.
C Dawg,
it would obviate the need to do any maintenence, upgrading, landscaping, or anything. It is the husband’s dream. Frees up time for football.
HI Hey Clot – do FHA loans with 3-5% down for people with 760+ FICO (no negatives) still exist, with reasonable rates – lets say 6.5% 30 years fixed??
“Market closes lower today once the general public understands what transpired in the last 48 hrs.”
Where are they going to hear about it? They are busy watching the View, some Ray woman, Wheel of Fortune, reruns of Seinfeld.
MJ Says:
September 19th, 2008 at 10:30 am
all the rules have been changed overnight.
do you feel confident investing where the rules change overnight?
Real Question – will china feel confident??? – who cares about what americans think – we dont have any money – only debt….
#89
Robert Reich:
“The only way Wall Street’s meltdown doesn’t spill over to Main Street is if policymakers begin to pay adequate attention to the people whose wallets really keep the economy going, and who merit more help than the Wall Street tycoons whose carelessness and negligence have put it in such jeopardy.”
I have seen Reich drunkenly dancing and it is highly amusing
“In other words, I should now pile into the formerly most risky money market with the highest possible return, since I can only win?
“Doesn’t this DESTROY the concept of money markets?”
The government is beginning to act like Mother in the Wall.
Risk is king because the ris no risk. Will they start backing games of blackjack now, sure I hit on 19, but the dealer was showing 20 and I had to. Bail me out Paulson. I lost. Make me whole.
10:45 Bush to speak. At least there is still hope the market will regain its senses and decline a bit today.
Orion:
“general public” either has negative net worth and/or invests only via specific mutual funds dictated by their 401k plan.
And they have no idea that ANYTHING happened all week.
LATW: Your friend will know…there are literally tons of converted warehouse restaurants in the Loop/West-Loop that will give you what you need for brunch at $25-$35 per.
Do stop in here for at least a peek if you are an SNL fan from the 1970’s…..
http://www.billygoattavern.com/
I know this sounds bizarre, but you need to go “below the street” to find it.
Barien
here’s my suggest list in descending order. And Chifi does have something of a point on skin color issues
Arlington,
Newton
Wellesley,
Needham
Wayland
Watertown,
Waltham,
Note that arlington does not have its own train stop but you should have a short drive/commute to a train. there is/was a bus route through arlington also.
You feeling on building is correct. Unless you have serious $$$ you are willing to throw around its unlikely to be a realistic option.
commuter rail map
http://www.boston.com/travel/boston/around/MBTA/
I made a bush league mistake. Live and learn. I am more worried about what further they have planned: temporary short ban renewed each month, precious metal confiscation, etc. etc.
“I have seen Reich drunkenly dancing and it is highly amusing”
All I can picture is one of the elfen children from Spinal Tap.
(233) Oprah?
I made a bonehead mistake. Live and learn. I am more worried about what further they have planned: temporary short ban renewed each month, precious metal confiscation, etc. etc.
“And they have no idea that ANYTHING happened all week.”
Wrong. Wrong! WRONG! They know all about A-Rod’s marital problems, which star is sleeping with whom. They know the contents of Brittany’s purse, and whose shoes she wears.
2 minute warning on the Shrub
Old proverb. Better to be thought a fool and be silent than to speak and remove all doubt.
“Larry King: What do you make of this, Suze? Good idea?
Suze Orman: I think it’s a good idea and here’s the real question — what took you so long? Truthfully, why did we have to get to this point for them to create something like a RTC, a resolution trust. This is the solution to come up with months ago when everybody knew that these loans were going to go down. They should have done it. So once again, I’m saying to you why does it take them so long to come up with the solution that they should have come up with a long time ago? I’m grateful they’re coming up with it now.”
Anyone, when was the last time a presdident had to make so many announcements about an economic problem? I have no memory of it in my lifetime.
I’d love to see a news segment tonight where reporters ask the public who Hank Paulson is.
barien,
if i may, i think that an upper/upper middle class married Asian woman wouldnt have a problem unless perhaps you travel in some very elite circles. take with a grain of salt.
i would also say that the issues Chifi and i are mentioning are of a somewhat subtle nature. No one will ask her to leave of other overt actions. Its more of a snobbery attitude. Chifi may have a different experience, i do not know
“2 minute warning on the Shrub”
Time to play prevent defense?
Shore Guy Says:
September 19th, 2008 at 10:45 am
Anyone, when was the last time a presdident had to make so many announcements about an economic problem? I have no memory of it in my lifetime.
Shore: Does this guy even really care? That concern is what bothers me. I don’t think he has any sense of gravity, context or precedence. It is patently insulting to all of us.
laughy (155)-
Oh yeah. Watch it open on Oct. 2 at about $50. Either that, or you can go ahead and sell it now.
Pure insanity. SKF is not even short selling. It is a double-inverse ETF that features CASH SETTLEMENT. It does not close the loop by delivering securities back to a lender.
#209
“there is still an opportunity to, through the ordinary give-and-take of the legislative process, to craft legislation that achieves necessary outcomes while protecting the American public AND disincentivizing reckless behavior in the future.”
agreed, and this should be the goal. my point is that doing nothing is not really an option at this point.
“Like, if you purchase a house, the government will pay you the difference if you sell for less than you bought it.”
[221],
AIG is currently working on a plan to offer gap insurance to anybody buying a house. Everybody wins, AIG will make a fortune, shielding taxpayers and the new homeowner has just bought moral hazard.
I’m from the government and I’m here to help
[142] barien,
Lifelong Bay Stater that I am, let me give my $0.02 (which used to be my LEH stock):
Basically, you picked the top-end “hyphenated” towns (most of them anyway), on what is the Boston main line. Apropos to chi’s comment, except for Waltham, and parts of Watertown and Needham, they have no discernible african-american population.
I take issue with Kettle re: Watertown. It is a very nice town with few sketchy sections, and a small downtown. Also very close to some of the mini-downtowns in Newton. Not on a train line but good bus acess to Cambridge and Boston (via express bus).
There are also good options south and north of the city though not as concentrated or as close-in as the western burbs.
I can give you further guidance in micro detail. Just as with DC, where you work will inform your decision. Get my email from Grim or Kettle and we can talk.
[142]
P.S. Arlington is great. Mom, sis and her family live there and love it.
Maybe I should work on a plan whereby I become too big to fail.
“precarious state of the financial system,” he says. Finally some straight talk from bush.
“Unprecedented challenges….. unprecedented actions” (Da! Tavarsh.)
He is going to grease us. I wonder if we need to squeel like pigs now.
He is going to “persecute” (Apparently prosecution is no longer sufficient. Clot must have gotten his ear) financial evil doers.
“Putting significant amounts of taxpayer dollars on the line.. not without risk…”
“These are risks America cannot afford not to take”
“Taking action to restore confidence in America’s financial markets” (Please, please, please, keep buying treasury notes).
He just listed about 10 major failures that happened on his watch.
No questions allowed.
The three Great lies:
This won’t hurt a bit;
Yes, I will respect youin the morning; and,
I’m from the government and I’m here to help
old news: 50.5 for president! He’s more clueless than Ohdrama! Damn terrorists and commies!
The Securities and Exchange Commission on Friday issued a temporary ban on short sales of 799 financial stocks, a move against traders who have sought to profit from the financial crisis by betting against bank shares.
Jill,
Are you again’ us or for us?
Nom de Geurre
“I take issue with Kettle re: Watertown. It is a very nice town ”
Agree. It also shows up in one of William Billings’s better songs from the revolutionary period (“By the rivers of Watertown we sat down and wept…”).
And bargains abound:
http://www.realtor.com/realestate/little+falls+twp-nj-07424-1092298271/
bairen– on Boston, there is a big variety of towns you could look at, depending on whether you want semi-urban, more rural or close to the water. as others have mentioned, there are also cultural issues: north shore and west of boston, you are going to run into much more old money WASP people; south of Boston you are going to run into more Irish and Italians. Jews are clustered in a few areas. Also, the length of time you are willing to spend commuting is an issue. It is possible to have a very short commute if you are fine with living in more congested areas like Newton, Arlington or Belmont, but if you are willing to go 45 minutes out, you can have a horse in Concord
(256) MJ
Eat fevereshly, become morbidly obese, then, sue somebody.
We’re foe us! Can’t be all doom and gloom since 50.5 and Ohdrama have all the answers.
Nom,
there is nothing wrong with watertown, i like it, but is not in the same league with arlington, newton an welsley….
Trading halted on SKF
Barien, Nom
watertown Mass is to Morristown NJ as Welsley Mass is to mendham NJ
gary: 262
are they kidding? that’s a burn down at that price
On an OT note, is anyone here familiar with Savannah? As in; interesting things to see and do if you’re there? I might be making a trip down in a few weeks.
skep (192)-
The whole banking system is going to collapse, anyway.
The gubmint is now guarnateeing that it will be 10x worse.
on another note, i loved hanging out at walden pond on a nice weekend. And Nom, the foot path from arlington to cambridge was nice also.
max [269],
This is Northern NJ, close to Manhatten. I’ve been told it’s very competitive here and that if one can’t afford to buy here, perhaps one should look out of state. They’re not making anymore land, you know. [sarcasm off]
I’m not very familiar with NJ, but I think Wellesley is in a diff’t category than the other towns Bairen mentioned. It is definitely outside of the orbit of Boston proper, whereas Newton, Arlington and Watertown are to me sort of semi-urban extensions of Boston. If you really like Wellesley, it seems to me you should look at towns like Natick, Weston, Dover, Sherborn
Al (232)-
All day long. Too bad that yesterday, that 6.5% rate was about 5.75%.
Thank Hank for that.
“The whole banking system is going to collapse, anyway.”
ok, but even if this is true, wouldn’t you want there to be an orderly unwind vs. an overnight collapse?
I guess I was lucky to get out of the SKF. I can now invest in some banks as fantasy acounting appears to be the next step in the rescue plan. When are they going to go door to door confiscating precious metals?
Should we practice swallowing condoms full of gold coins?
Dang grim unmoderate 279. What did I do?
As much as i would love to gamble in the current market I am not willing to take such risks as i am not even close to playing on the same field as some of the posters on this blog. I think the risk level has gone to defcon 1. This is the time for kettle to pull in assets and hold on tight. Bets of luck to the gamblers! :)
[270]
Not familiar with Mendham. But I have a hard time comparing Morristown to Wellesley. Guess I don’t know Morristown well enough.
I did live in Watertown for awhile and have family there. It is like Brigadoon in that it is better to be north of Mt. Auburn Avenue, and where I live in Brigadoon (north) looks to me a lot like Watertown. Admittedly, its downtown isn’t as tony or large as Brigadoon (though it could be—been quite a few years since I was there).
Arlington is great, all the comfort of a Summit, closer in and without the attitude. Wellesley, Winchester, and Lexington are comparable but much more ‘tude (especially Winchester).
North, one place to consider is Reading. Good sized downtown, train access, suburban feel, okay schools. But if you move there, I will have to hate you—Reading is our archrival. South, consider Braintree for Red line access, and if you really want tony living and can afford it, the gold coast of Hingham, Scituate or Duxbury (“Deluxe-bury” to locals).
Skeptic,
I think those towns might be too far out for barien, just a guess. but i agree with your overall assessment.
Welsley is similar to mendham while Arlington is similar to summit or westfield
Cohasset is also nice on the South Shore
“But I have a hard time comparing Morristown to Wellesley.”
Nom,
Akin to comparing Hackensack to Alpine.
[276] skep,
If you are gonna send barien to the hyphenated towns, better give him the numbers for the local volvo and land rover dealers.
And the plastic surgeon so your nose can be pointed upward without undue effort.
Vodka (278)-
Up until last night, I was an investor. When I woke up this morning, the gubmint had re-classified me as a terroist, gambler and speculator.
Of course, trading has now been suspended in my #1 vehicle. They are probably putting all its particpants on a watchlist (note to gubmint: don’t bother cross-checking my name; I’m sure you already have an open dossier on me).
So, terrorist, gambler and speculator I will be now.
Matey.
[284] BC
Sorry, lost on me. I’ll have to take your word for it. Never been anywhere in PBC and still don’t know what is 3 miles beyond my back fence.
the thing is, commute times are generally shorter in mass. if you are used to commuting to manhattan from summit and are willing to go a similar distance in mass, you are going to have a ton of options in all directions
Did anyone see the three stooges standing there while the pres. was speaking.
Cox, Hank and Ben should be left to Clot’s mercy.
and we should put Bush in Guantanamo Bay and introduce him to waterboarding and torture USA style.
[283] skep,
true that. Mrs. Deplume has a nice pic of me tumbling across the green, a la Jack Nicholson.
(this was right after they filmed Witches of Eastwick there).
(I was living in Quincy when I met the fair Mrs. Deplume, and I tell folks that the only reason she dated me was because I knew where the Talbots factory outlet was located in Hingham.)
Grim, I’m getting off the Bay State RE Report now. Promise. Back to NJ
“we should put Bush in Guantanamo Bay and introduce him to waterboarding”
Pasing on the recomendation to do this to bush, I suspect that were he ever waterboarded he would instantly conclude IT IS torture.
Clot,285
While the housing was going up and we were in a Bull market I was a RE investor when shit hit the fan and people got stuck holding the bag that I helped pass around then I was classified as a Speculator and a gambler.
Welcome to my world.
nom,
i think you misunderstood me.
I was suggesting watertown is similar to morristown, but summit is probably a better example
and welsley is similar to mendham (rural wealthy).
all personal experience of course and i see your point about the watertown brigadoon example. It all depends on which part of the town you are in.
Sue Them, Jail Them, Make Them Pay for Meltdown: Ann Woolner
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_woolner&sid=amhY7f0W2igY
ProShares Announcement
Friday September 19, 11:25 am ET
BETHESDA, Md.–(BUSINESS WIRE)–Due to the emergency action announced by the Securities and Exchange Commission on September 18, 2008, temporarily prohibiting short sales of shares of certain financial companies, Short Financials ProShares (SEF) and UltraShort Financials ProShares (SKF) are not expected to accept orders from Authorized Participants to create shares until further notice. Unless notified otherwise, shares will be available for redemption by Authorized Participants as normal. The shares of these ProShares are expected to trade in the financial markets today, but may trade at prices that are not in line with their intraday indicative values.
um. I thought we lived in a capitalist society where we could invest in the best place to put our money?
um. no.
sl
time to develop a taste for vegemite.
forget pirate, let’s all talk Aussie, mate.
sl
BTW, I noticed this last night during that press conference, what is the deal with Paulson’s one pinky finger bending the wrong way.
take a look
http://finance.yahoo.com/echarts?s=^GSPC#chart1:symbol=^gspc;range=1d;indicator=volume;charttype=line;crosshair=cross;ohlcvalues=1;logscale=off;source=undefined
Volume goes from trillions to 0 , back and forth in very short spurts. is this normal activity???? or is something going on????
“better give him the numbers for the local volvo and land rover dealers.
And the plastic surgeon so your nose can be pointed upward without undue effort.”
Nom– yes, north and west of boston you need a green audi/volvo/land rover, a lifetime subscription to Organic Gardening and a list of your ancestors who fought at Lexington & Concord.
south of boston, it helps to be surburnt, Irish and fond of smashing pint glasses across the face of “hatas”
another link to same chart
http://tinyurl.com/4ol5qy
“um. I thought we lived in a capitalist society where we could invest in the best place to put our money?”
sl,
http://en.wikipedia.org/wiki/Das_Kapital
233 Shore – Unless the Ds get to 60 Senate seats and can stop filibusters, the R’s can obstruct anything they want. They have been using this tool frequently, and I expect it’s use to be even higher if they are not controlling the WH as well.
Why are all the rich people in favor of bailouts while the middleclass and poor complain through blogs like this. The idea is you should strive to become rich and stay rich forever.
Kettle1 Says:
and welsley is similar to mendham (rural wealthy).
Isn’t Wellesley big with a very large and proper downtown. Many of the Boston area downtown suburbs are similar to Madison. Except the train line ride is about 30 minutes closer in. So all these towns are 30 minutes out as opposed to 60 minutes….yes?
I believe today is the mother of all bailout Fridays. No mas.
And so, gone fishing.
I though only the casinos were rigged. OOPS, forgot.
Wow. DOW 11,300. That’s the best we could do?
Was away giving a tour of our facility to a prospective client.
BC Bob, 309
…so.. how do kangaroo burgers taste anyway?
[tongue planted firmly in cheek]
sl
CHifi,
I dont know the train times very well, didnt use them often.
Welsley does have a large and very nice downtown. But eh rest of the town is fairly spreadout, perhaps more similar to bernardsville.
in toronto for last few days. i like the city, not sure abt loving it though.
well, so much for free markets. qtn: when was RTC created last time? i am guessing bottom in housing may be 2 or 3 years from creation of RTC.
It really is pretty amazing, by the end of the day this may dwindle down to under a 2% pop.
HE (305)-
Isn’t that one of the marks of the Antichrist?
What drives me insane is that the average joe has little to no clue what is going besides some “market turmoil”. We are all about to be sold to america’s creditors as modern day serfs, as paulson and friends transfer the massive banking loses to the backs of the american people.
PEOPLE SHOULD BE STORMING THE CAPITAL BUILDING IN PROTEST!
hehehe:
I was preparing gator for the worst case scenario. I told her SRS at 50. Happy to see we are at 75. Sorry I didn’t buy at 65, but I’m too risk averse. The mother of all bailouts and the market is behaving rationally. Never expected this for one minute. More importantly, I’m sorry I missed pirate-speak hour.
Clot,
It may well be. They must be using pancake makeup on the 666 on his skull.
Quote of the day:
“The complexity of this era of credit liquidation,” as Robert Smitley wrote of the Great Depression in ’30s America , “is far too great for the mob mind to grasp. It is hardly possible for them to see the picture wherein about $700 billion dollars of physical and intangible wealth is attempting to be turned into about $5 billion dollars of money.”
“Sept. 19 (Bloomberg) — John Bogle, who created the $106 billion Vanguard 500 Index Fund in 1976, said the U.S. government is “punch drunk” with proposals to rescue the financial system.”
“We’re playing a game of casino capitalism, interfering with the way the market is working,” Bogle, 79, said in a telephone interview today from Valley Forge, Pennsylvania. “The government seems punch drunk. It doesn’t seem systematic.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahUc_l6j8xPY&refer=home
Quote updated for 2008
“The complexity of this era of credit liquidation,is far too great for the mob mind to grasp. It is hardly possible for them to see the picture wherein about $700 trillion dollars of physical and intangible wealth is attempting to be turned into about $5 trillion dollars of money.”
#321
I am telling you..the average Joe in the the USA are the dumbest people in the whole world. They deserve to be whipped like slaves and be treated like one. All they are concerned are their evening shows, a bag of chips and fishing.
If this happened in other countries (ie India for example), there will be massive protests through out the country.
Pretty soon we will be bailing out the autoindustry and homebuilding industry and after that healthcare.
hehe
Stu 322
ProShares Announcement
Friday September 19, 11:25 am ET
BETHESDA, Md.–(BUSINESS WIRE)–Due to the emergency action announced by the Securities and Exchange Commission on September 18, 2008, temporarily prohibiting short sales of shares of certain financial companies, Short Financials ProShares (SEF) and UltraShort Financials ProShares (SKF) are not expected to accept orders from Authorized Participants to create shares until further notice. Unless notified otherwise, shares will be available for redemption by Authorized Participants as normal. The shares of these ProShares are expected to trade in the financial markets today, but may trade at prices that are not in line with their intraday indicative values.
Zack…
Exactamundo.
Kettle1 Says:
September 19th, 2008 at 11:15 am
As much as i would love to gamble in the current market I am not willing to take such risks as i am not even close to playing on the same field as some of the posters on this blog. I think the risk level has gone to deacon 1. This is the time for kettle to pull in assets and hold on tight. Bets of luck to the gamblers! :)
Disclaimer: I did not play the markets… I had my 401k which I did not touch – it is little anyways. So I am not profiting from this situation in any way, and probably losing a lot long term, but so all of us who are not Bankers and CEO’s
Couple people at work were bragging this Wednesday about their short puts – some retailer options – there were positioned to double their money in a month – I told the guy – If you can double your money – sell now!!! Take you profits, re-invest other half. – my words literally at about 3pm Wednesday.
His answer was quite condescending: –
You do not understand – he said – , this is not how you make money…I am going to wait till Monday morning – afternoon Friday – historically it is when $hit hit the fan, But next week I am out.
I tried not to smile too hard when I met hit in a hallway this morning. His options – 0 value. Expire – next Wednesday.
Will he get his bail-out???
Rumour is Goldman might be Merril which merged with BOA and the new name is
GoldmanLynchedAmerica
Thanks still_looking. I can’t wait to see the ProShares lawsuit.
I think I have a while before commercial real estate reits end up on the fixed market (can’t short) list.
Let’s all pray that Paulson’s shenanigans do not cause China to stop buying our debt. If so, game over.
Al,
I am out of these markets. Been out for three years. I did not play on the downward either.
I certainly don’t play in markets where the rules change overnight, which is what we have since March.
SKF trading again. Time to double down.
333 Stu
Call our lawyer while you’re at it !
If NJ can sue, so can we!
Clot,
You crazy SOB
I googled for paulsons plan in all of this and this is what pops up…
http://tinyurl.com/3e9drf
CNBC –
GE will be on the no short-sale list
Clotpoll Says:
September 19th, 2008 at 11:53 am
HE (305)- Isn’t that one of the marks of the Antichrist?
clot: On the uptown NYC A train in 1991, I was given a leaflet by a Korean gentlement that flatly stated that the appearance of the UPC symbol (Uniform Product Code?) was one of a series of events that would lead up to the appearance of the Anti-Christ.
I was so inspired that I subsequently created a Mathematical Proof that my former co-worker was the Anti-Christ. I distributed it to my co-workers and I think it helped me attain my first professional promotion of my career. The proof still hangs above me to my left on a corkboard.
I listened to Cramer and Sold my 25K shares of AIG at $4 this morning. Walked away with $30K. I love this country. I love Cramerica.
The day the Fed, Treasury, SEC and maybe Congress blew the doors off the USA;
http://www.youtube.com/watch?v=vZszDTZKs_g&feature=related
Ket,
Unless there is something like a “Million Serfs March” where we, the newly-created serfs of America, show up en mass in DC, I doubt the policy makers will take into account the long view for the middle class.
Right now it is, “We need to save the ruling class so they can employ the rest of you. So shut up and take it.”
Shore Guy,
You need to take a refresher course in math (post #193).
It is “10 Hundred billion”. It goes “20 Hundred billion”, “30 Hundred billion” till “90 Hundred billion”.
Next Comes “100 Hundred billion”
No trillions or beyond. Everything only in billions.
I wish “a few dollars” would have been more apt!
Remember, gold just sits there and does nothing;
“US Government to secure mortgage market with gold reserves”
“President Bush approved the use of existing authorities by Treasury secretary Hank Paulson to make available as necessary the assets of the Exchange Stabilisation Fund for up to $50 billion to buy more illiquid mortgage assets.”
“The ESF was created after the Great Depression and uses the US gold reserve as collateral for financial stability.”
http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=173208
Gator,
You are correct. But, I will not be shocked to see your party with 60 votes in the Senate, and I am counting Lieberman as an R.
#343 – Unless there is something like a “Million Serfs March” where we are
Would this even work?
Seriously, we saw Million Person marches against the war in Iraq and we know what that outcome was. The media largely ignored it, Congress completely ignored it and eventually everyone gave up.
The only way people will push back is if the boot is literally on their throats. Even then some will attempt to justify it.
It’s so completely sad.
You can send a zillion dolts to DC or the CEO of each Fortune 100 company. Where do you place your bet?
thats it,
we need McC in office, he has the experience to deal with this mess…
http://static1.firedoglake.com/28/files//2008/09/mccainkeating.pdf
Thanks Nom and Kettle1,
just sent you guys an email.
thats it,
we need McC in office, he has the experience to deal with this mess…
http://tiny.cc/yUcyw
Tosh,
Look, there is a BIG GAME on this weekend and it sure looks good on this 50″ plasma. Besides, do you know how much gas costs to drive to DC? Politics doesn’t matter anyway, I heard so in the grocery store last night.
The average dolts still believes thi sis a free country.
Jim Rogers could have been on to something.
Time to store up ammo.
#351 – You make me want to cry that’s so accurate.
Oh, I dont know, if suddenly masses of middle-class voters, the ones who actually show up to vote, were to descend on the streets of DC just weeks before an election and were not afraid to be a bit unruly it would make an impression.
347 tosh
You just made me weep.
Come join me for a beer
Anyone who votes in favor of this madness should be voted out. Regardless of party, I plan on voting against people who vote for this, and to donate to their challengers next year, should they win this year.
204.chicagofinance Says:
September 19th, 2008 at 10:22 am
Confused In NJ Says:
September 19th, 2008 at 10:17 am
That is not cool. Two issues….I assume since you care, you lost some money out of it. Also, is it a material amount of money?
If yes, then go forth and make trouble. If not, then forget it. If you want to make trouble, go through corporate HR and benefit contacts at your company. The people you will take to at Fidelity have no ability to give you any relief. You have to pressure your internal contacts, so they can take to the people in control at the recordkeeper. If HR blows you off, then go to the guys in finance at your company who can tip off corporate officers…….
Actually I gained money, but the fund is not supposed to operate that way which is disconcerting. Unfortunately the company has created a firewall between retirees and employees. You can only go through contractors like Fidelity. This causes me to think i may have to migrate money out.
#356 – Yes, but it will have to be a figurative one as I don’t drink.
/sniff
Taxpayer’s taking it on the chin!!!!
So far this year, the federal government has put up nearly $30 billion to avert a major financial default by the investment bank Bear Stearns; committed to investing up to as much as $200 billion in preferred stock of the loss-plagued finance giants Fannie Mae and Freddie Mac and at least $5 billion in their mortgage securities; and agreed to provide an emergency loan of $85 billion to American International Group Inc. in return for an ownership stake of as much as 80 percent in the stricken insurance giant.
And god knows how much more with this new plan!!!
WE THE MIDDLE and WORKING CLASS are DOOMED!!!
Tried to cash a NJ property tax rebate at Bank of America (BOA) today. They have a new policy (1 month old) which prevented me from cashing the check. They require both parties present, with four forms of identification which must include a BOA form like a BOA debit card. Doesn’t matter how much money you have with them. Other banks credit or debit cards not acceptable.
“Anyone who votes in favor of this madness should be voted out”
– I think everyone except Ron Paul and Senator Bunning will vote for this.
Shore Guy Says:
September 19th, 2008 at 1:03 pm
Oh, I dont know, if suddenly masses of middle-class voters, the ones who actually show up to vote, were to descend on the streets of DC just weeks before an election and were not afraid to be a bit unruly it would make an impression.
Will not happen Untill they will loose electricity and cable in their houses and bars. We can’t miss next American Idol!!!
Is this what Rome felt like in the days of Theodosius?
The average joe cuased this problem which is why they are not upset. Dolts were cold called by mortgage brokers and took subprime loans and started flipping houses and go on wild vacations, buying hogs and fancy cars and going out to nice dinners in expensive clothes for a eight year ride of their life. Now that they squandered the money they are walking away from their underwater flips going back to their boring broke lives. To them living like a king and a millionaire for eight years was great even if they have to be a peasant again.
“Taxpayer’s taking it on the chin!!!!”
We should be so lucky. Chin, indeed. Think harder and you will realize where you are taking it. Weeee Weeeee Weeee.
We N.J. residents should feel privileged!! Not only do we live in biggest welfare state…but also it turns out biggest welfare country!!!! Hand outs for everyone!!!
The Fan/Fred mtg nationalization scheme was supposed to make mtg. rates decline thereby helping the housing mkt. Than we the government conducts the nationalization of AIG, which will cost billions.
And now we have the mother of all bailouts with premliminary numbers being 1 trillion and north. This of course will dramatically increase our borrowing costs from our creditiors,as they will demand higher borrowing rates.
This of course will send rates higher on mtgs, coupled with much tighter lending standards.
How is this going to help the housing mkt.,which was Klink’s original justification for bailing out Fred/Fan?
IS he throwing the houisng mkt. under the bus in an attempt to save the IB”S?
John,
I think you nailed it.
To 366,
yep..I know…I didn’t want to go there…thought of it causes too much stress!!!
Biggest of the Biggest!!!!!!!!!!
Take THAT creditor countries.
357 shore
I’m on board
Anyone up for a mini GTG on the evening of the 6th? Maybe by Montclair or Edison?
Can we get Ned Beatty to come back and take one for the team (U.S. tax payer)???
Shoreguy: I would love to do a Montclair GTG and would offer my place up, but the family will be taking a cruise to Mexico in early October thanks to our NCL credit card. Depending on economic conditions, we may not return home.
Can someone please put the phrase “Apres moi, le deluge” on GWB’s teleprompter and see if he says it?
Reuters
Citigroup considering bid for WaMu: report
Sounds nice. Enjoy. Sail from? Since youhave children, are you booking in one of the multi-bedroom suites? We love them. The kids get their space, we get ours.
I hear Ron Paul has introduced a bill changing the National Anthem from “The Star Spangled Banner” to “Dueling Banjoes”.
Weeeeee, weeeeeee, weeeeee
284 HeHeHe…”Should we practice swallowing condoms full of gold coins?”
Is that a roll of gold coins in your pocket, or are you just happy to see me?
“Can someone please put the phrase “Apres moi, le deluge” on GWB’s teleprompter and see if he says it?”
GWB: “As a wise man once said, “After me Appricots in the garrage. What I am trying to say is, after I am finished with my hard, hard work, there will be pleanty of rain, and dried fruit for everyone.”
I wonder what he thinks about being, in the interest of cost cutting, the first president to lose secret service protection 10 years after leaving office. Between al Qaeda, and everyone else he has pissed off, it would tend to make one uneasy, one would think.
378 Shore – We are going to Mexico. Just a standard room on this trip. We are saving our cruise dollars to do a nice trip to the Baltics hopefully next year.
If y’all do get together on the 6th, drink a few for Stu. It’s his birthday!
I say we keep the party going….let’s all right in Jeb Bush on the ballot this November!!!
Opps, I meant “write in”..
From the finance neophyte:
WTF is going on? Inflation? Deflation? Mass panic?
Opps, I meant “write in” jeb…
Best reason to vote for M is his use of Ambien.
Wish the rest of the gov’t would just sleep through these crises rather than “fixing” them.
Nah, we earn about $2,000 a year in NCL rewards by charging everything we purchase (besides gas, groceries, drugs) to the card. We get 3% back towards a cruise. The other products we get 5% back in Citi Thankyou points good 1 for 1 for airline tickets. We book the cheapest obstructed view outside room and use free upgrade certificates to unblock the obstruction. We are leaving out of Los Angeles and are doing the typicial Cabo/Vallarta/Ixtapa round trip itinerary. We have cruised about 20 times so we’ve seen everything cruiseable in North America. We only have one kid, Ryan, who is 3-years old. He’ll stay with us in the one room on the pullout. He loves flying and cruising so we all look forward to it.
#376 – Apres moi, le deluge
How fitting.
I think he would just squint at it in a puzzled fashion for about 3 minutes and say “nukular”.
oops, I meant oops.
385 ‘soosh
Yes
That picture cannot be real…
Their house survived Ike, but it’s the only one left
http://www.cnn.com/2008/US/09/18/ike.last.house.standing/index.html
Shore – Regarding Lieberman, if the D’s had a pair they would kick him to the curb the day after the election.
I have long since realized that they don’t, so I expect him to be an annoyance for the next 4 years until the moderates in CT can take action on their buyer’s remorse. Hopefully he’ll be less of one once he’s no longer the 51st vote.
I hope O and the rest of the establishment D’s have learned their lesson for not giving any meaningful help to Ned Lamont after the primaries.
Gator,
We cancelled the baltic this summer, given the health of an older relative. If you go on NCL, look into the suites, the ones with 2 bedrooms, 2 bath rooms, and a combo living/dining area. They come with butler service and the master bedroom has a killer bathroom, with a shower and whirlpool tub that each overlook the sea.
We had a much bigger suite on a Celebrity Ship (something like 1,200 square feet, full-sized living room with every electronic gadget, yards and yards of floor to cieling windows, fullsized dining room, full kitchen, a master bathroom beyond compare, and a huge private balcony with a hot tub, yadda yadda) and actually preferred the smaller one we had on an NCL ship the time before that. The next time we go, it will be in one of those.
State St will not allow anyone to add to an SKF position. I can either hold on to what I have or redeem.
Ain’t life grand?
This bailout will prevent any potential major crash and burn of housing, partic in the northeast.
Because another bailout will follow, and another and another. Paulson and co are in so deep, the govs involvement will just keep spirally. Forget about swallowing the spider to catch the fly, we are already up to swallowing the T Rex to catch the woolly mammoth (yeah yeah diff eras, I know.
Where can I get my “No Banker Left Behind” T-shirt?
Young buck,
I posted that picture and some others from the area a day or two or three ago. One gets to a certain age and…umm, what was I saying. It is amazing the hit they took. If anyone rebuilds anything larger than a 1,200 sqft cottage, they are nuts.
#395 – Clot – I saw the same posted over at CalculatedRisk. Is this from an influx of people expecting to be able to short again Oct 3?
Ray,
THAT is the post of the week.
Clot:
There are other short investment vehicles besides the financials. Quite honestly, I do not think they are a safe place to play. With the precedent set over the last 5 months I would not be short them. SKF is now a bet that the US will fall before our banks do. Add to it the fact that shorting financials is now impossible. Most likely scenario IMO, banks and the country remained deadlocked for the foreseeable future. Plenty of consumer discretionary plays for those who want to bet on doom.
#396 This bailout will prevent any potential major crash and burn of housing, partic in the northeast.
That makes no sense. If rates rise to 7.50/8% that killes the 500K POS Cape.
I heard a metaphor for the sub-prime meltdown that I thought I would share with you guys because it hits so close to home. I don’t know if the guy I heard it from was the originator but here goes:
The sub-prime credit crisis goes a little something like this. The bank gives you money and in return it gets a piece of paper. That paper has some value depending on you, your house, and terms of your mortgage. The bank takes the paper and puts it in a blender with a bunch of other paper and turns it on liquify.
Whenever the bank needs cash they reach into the blender and pull out some of this paper and spend it. Eventually you either have to start putting more paper into the blender or start reaching farther in to get anything out of the blender.
The banks that are failing are reaching deep into their blenders and all they are getting back are mutilated bloody fingers.
The blenders are empty.
“if the D’s had a pair they would kick him to the curb the day after the election.”
Yup.
Nicholas,
I think my bandaid analogy was better.
Meltzer Calls Paulson Plan `Social Democracy at Its Worst’
By Bob Willis
Sept. 19 (Bloomberg) — Federal Reserve historian Allan Meltzer said U.S. government efforts to cleanse financial institutions of troubled loans shouldn’t be financed by taxpayers.
“I certainly don’t think this is the taxpayers’ problem,” said Meltzer, a professor of political economy at Carnegie Mellon University in Pittsburgh. “This is not a place exactly with a great big surplus that can afford to do these things. This is social democracy at its worst.”
The 80-year-old economist spoke in an interview after Treasury Secretary Henry Paulson said in Washington that proposed measures to rid banks of troubled assets and shore up financial institutions would cost “hundreds of billions.”
“If they remove financial losses from the financial institution,” the government should ensure that “the financial company will still owe the money,” he said. “Civilized countries like Chile do that.”
Paulson told a press conference that economic policy makers would meet with congressional leaders over the weekend to prepare a program to remove “illiquid assets” from banks’ books, while “including features that protect the taxpayer to the maximum extent possible.”
The proposal is a recognition that earlier efforts failed to revive financial and housing markets. The government took over American International Group Inc., Fannie Mae and Freddie Mac in the past 12 days, a period when Lehman Brothers Holdings Inc. filed for bankruptcy and Americans pulled a record $89 billion from money-market funds.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aE.gV9UeS4L0&refer=home
I still vote for the Ned Beaty analogy.
Has anyone seen Angelo Mazilo lately?
Gator/Stu
Are you going to spend a few days in LA first? Or even fly into SFo and drive down?
We are flying into LA on Thurs 10/2. We’re going to celebrate Stu’s birthday with his west coast friends. Taking Lil gator to the Peterson Car Museum, the tar pits and maybe out to the Santa Monica pier. Ship leaves on 10/4.
In the Pre-Lil Gator days, Stu and I used to be Celebrity devotees. I still miss the service and the cuisine on that line. NCL’s affinity card offers outstanding value (3% towards cruisefare on all non-NCL purchases 4% back on NCL) and allows us to bank $2,000/year towards travel. The card does not have any annual fee either. We also like NCL’s freestyle for travelling with the short people.
…watching CNBC’s wrapup of the week right now, and this crisis has its own theme song just like when we went into Kuwait, Iraq… only now, we are going into the taxpayer wallet and the overture is more ominous.
Gonna do a few days in LA. I lived there for almost 2 years before marrying the Gator and have a lot of friends to see. Since the economy closed our LA print plant, I don’t get out there much these days.
to #408
yeah…he’s in Paulson’s waiting room……apparently hoping to discuss a FED led WAMU bailout..where he gets to keep his all his stock options.
#411 – this crisis has its own theme song
Was it something by Tom Waits?
I wouldn’t mind if it was at least something tasteful.
#411 – this crisis has its own theme song
Does it sound like a variation on ‘taps’?
Well, for what it is worth, I just got off the phone with a member of the President’s Council of Economic Advisors. He described letting Lehman go under as “an experiment and not a very successful one.”
The White House/treasury percieved that the system was going to collapse unless they did this.
Mmmmm….love the smell of bailout in the morning…
Now, to get back to focus of this blog, how will this bailout affect the housing market in NJ? Does this speed up when we will hit bottom?
lisoosh Says:
September 19th, 2008 at 1:35 pm
From the finance neophyte:
WTF is going on? Inflation? Deflation? Mass panic?
Government is going on… In other words – if you are IN, you WIN, If you are OUT – you lose.
Politicians and their friends win.
What happens when government takes Take a 100$ from 10000 people??? – Banker gets to keep his Yacht
Look at my post 331 – do you think any of thouse two guys will touch options ever again???
I honestly do nto know how anybody going to invest and trust stock market from now on???
You own Stocks – you Fukked, now you just have to own senior debt, – once we buy senior debt – they will come up with the other way to steal your money from you.
Thouse who make rules win.
Imus Says:
September 19th, 2008 at 2:16 pm
Mmmmm….love the smell of bailout in the morning…
Now, to get back to focus of this blog, how will this bailout affect the housing market in NJ? Does this speed up when we will hit bottom?
.
My crystall ball:
I fail to see a short term effect on housing… I think if something it will be a bit harder to get loans untill the dust settles. (0-6month time frame))
But high inflation will kick in and support nominal prices. (1-2 year timeframe)
389 tosh
Lol
Now that Treasury has guaranteed the money market funds why would anyone keep their savings at a Bank where you’re only covered up to $100K.
I can see a massive commercial bank run to flee to MM fund.
Confused In NJ Says:
September 19th, 2008 at 1:06 pm
You can only go through contractors like Fidelity. This causes me to think i may have to migrate money out.
Confused: They are doing you a favor by inadvertently signaling that they don’t want you.
I agree with AL
in the very near term we will see little change in housing as the average joe is only vaguely aware of the situation.
“I can see a massive commercial bank run to flee to MM fund.”
The masses are not that smart. I’m thinking Tempur-pedic or Sealy might be a good long as everyone will need to replace their mattresses more frequently due to the additional weight.
#419 Higher inflation, coupled with higher interest rates, and tighter lending requirements. For arguements sake, i cannot see how the 500k Pos Cape can remain 500k with an 8% interest rate.
Anyone have good info for the estimates of senior unsecured debt recovery for Lehman? On Monday I was hearing 60%-area on Bloomberg, but now I can’t find anything.
#423 kettle:in the very near term we will see little change in housing as the average joe is only vaguely aware of the situation.
And than what? The slow asking price declines that I am finally seeing in my town, will now reverse course?
“watching CNBC’s wrapup of the week right now, and this crisis has its own theme song just like when we went into Kuwait, Iraq… only now, we are going into the taxpayer wallet and the overture is more ominous.”
Is it a requiem?
Imus [417],
You have already witnessed the changes here in North Jersey. As I predicted, prices would remain flat to a slight decline since the peak. It will remain this way for another 18 to 24 months followed by an annual 3% to 4% appreciation for the forseeable future.
#429 gary:will remain this way for another 18 to 24 months followed by an annual 3% to 4% appreciation for the forseeable future.
Based on what? you do know they declined substanially before, I lived through that one. Still cannot believe that this one will be any different.
In fact it will IMO be worse. Away from this bailout the econmic fundamentals are still dismal.
chicagofinance Says:
September 19th, 2008 at 2:30 pm
Anyone have good info for the estimates of senior unsecured debt recovery for Lehman? On Monday I was hearing 60%-area on Bloomberg, but now I can’t find anything.
OK – now I am seeing 50%
Ket/Clot/Grim,
I am beginning to think that until the folks who boutght pre-run-up die, there will be little budging.
It is like the frog in a pan of water story, the temperature keeps getting more and more dangerous to the frog’s life but it fails to perceive the change in its circumstances. As long as people have the ability to pay the bills, they do not care if housing takes up 80% of their after-tax income. If they can’t go on vacation, ok. If they can’t buy a new car, ok. I have my house and cable tv — may not have a pension, or the money to deal with an emergency — but I am ok.
“It will remain this way for another 18 to 24 months followed by an annual 3% to 4% appreciation for the forseeable future.”
Gary – you may be tall, dark and handsome, but you’re horribly wrong.
It will get far worse for another 18 – 36 months, followed by stagnation for the forseeeable future.
One for the wall
http://tinyurl.com/4vrkla
Bailout Day
Figures that Imus shows up for the first time in months.
#4342 shore: I think they will be more concerned about the vacation and the car.
408 gary
Yes.
Maybe Montclair is immune. My bro just did a closing in Montclair today. The buyers paid $70,000 over what the sellers paid in 2005. They also put down over $400,000 on a $600,000+ home. No revovations or upgrades. According to the seller’s closing attorney, Montclair is still going strong. She’s doing 20 closing a month. All single family residential.
Thanks Shore Guy, I would have written back sooner but I was patting myself on the back. I’m gonna put that “award” next to the employee of the month I’m waiting for…
and Major Bloodnok Says: “It will remain this way for another 18 to 24 months followed by an annual 3% to 4% appreciation for the forseeable future.”
I’m with you – because I HAVE to be. Man I hope you are right.
“I can see a massive commercial bank run to flee to MM fund.”
The masses are not that smart. I’m thinking Tempur-pedic or Sealy might be a good long as everyone will need to replace their mattresses more frequently due to the additional weight.
Stu,
People with over $100K in account balance are not part of masses. If you have $100 million in cash sitting at Morgan or BoA would younot get advised thi smorning to move to safety of the treasury and earn decent rates.
Unless inflation hits wages, I don’t see how it will prop up house prices.
I think it is more likely that existing homeowners will get prinicpal writedowns from the Gov. (do you really think they’ll do massive forclosers on voters?). This will cause supply to dry up and kill the market for years.
Shore Guy Says:
September 19th, 2008 at 2:35 pm
Ket/Clot/Grim,
I am beginning to think that until the folks who boutght pre-run-up die, there will be little budging.
It is like the frog in a pan of water story, the temperature keeps getting more and more dangerous to the frog’s life but it fails to perceive the change in its circumstances. As long as people have the ability to pay the bills, they do not care if housing takes up 80% of their after-tax income. If they can’t go on vacation, ok. If they can’t buy a new car, ok. I have my house and cable tv — may not have a pension, or the money to deal with an emergency — but I am ok.
I made an offer on estate sale – Folks who bought in 1970. (pre-run up, they dies – satisfies your criteria).
Their kids who are all living out of state wanted more that their neighbor got fo identical house on a block in 2005.
You theory does not work. Kid’s of dead people will want even more.
agree
RE, as an investment industry, is dead for 10-20 years.
prtraders2000 [438],
Desirable homes in sought after neighborhoods are still drawing those with the means, assets and stellar FICO. POS splits and capes will just sit and wait 2, 3 or 4 years if they must in order to get their price.
Ara Hov. says we need the downpayment assistance back,,,,, even more.
you go Ara ,,, go
“Desirable homes in sought after neighborhoods are still drawing those with the means, assets and stellar FICO.”
Bonuses were good back in March.
The whole world is about to change.
CNN:
“BUSH ADMINISTRATION WANTS TAXPAYERS TO ASSUME BANKS’ BAD DEBT”
yep.
#444 gary Good Bonus money was last years news. You can forget about that for this year.
As far as the desireable houses in the desireable towns, well as per the njmls, there are tons available. Where are the buyers?
As far as the POS’s I really do not think most will keep their POS’s on the market for 3 or 4 years to get their fantasty price.
prtraders 438 – Some inventory may be moving, but lots of stuff is sitting. Check out the most recent Compiled listings I received for Montclair/Glen Ridge at th beginning of this month. Take a look at the DOM for some of the listings. Quite a few homes have been sitting for months. Compare that to 2005 when any dump would sell with multiple offers after the first open house. This listing is for 3+ bedroom homes from 450-800k.
http://newmls.gsmls.com/public/show_public_report_rpt.do?report=clientfull&Id=35930055_6166
#442 Al:You theory does not work. Kid’s of dead people will want even more.
True. That may be becasue the kid’s need to every last dime to help straighten out their own financial mess. But at some point they are going tow ant the money howver much it is,and price accordingly.
Even worse than the kid’s ar many of the old timers they can be absolutely impossible to deal with.
#441 Old Stan:This will cause supply to dry up and kill the market for years.
On the buy side, sell side?
#439 Ray:and Major Bloodnok Says: “It will remain this way for another 18 to 24 months followed by an annual 3% to 4% appreciation for the forseeable future.”
Majorblooknok actually disagrees with theat statement. Perhaps I am reading your post worng.
capital structure of Lehman’s holding company, as of the second quarter of
2008 the general priority of payment for Lehman’s obligations at the
holding company level would be as follows:
• Senior debt
• Subordinated debt
• Trust-preferred securities (junior subordinated debt)
• Hybrid securities
• Preferred securities
Lehman Brothers — Unsecured Debt and
Preferred Stock as of Q2 08 (Dollars in Billions)
Senior unsecured notes 137
Subordinate unsecured notes 13
Junior sub / hybrid unsecured notes 5
Preferred stock 7
This doesn’t affect NJ that much since these are sales positions
NEW YORK (AP) — Schering-Plough Corp. says it will cut 1,000 sales jobs as part of broader cuts in a move to reduce costs and reposition itself in an ever-changing industry.
The company says it will cut 1,000 U.S. sales force jobs, leaving 4,000 positions. The layoffs come on top of a 10% reduction in staff announced in April. In all, the company hopes cost cuts and layoffs since the company bought biotechnology company Organon Biosciences in November will save it $1.5 billion annually.
Shares of Schering-Plough (SGP-B) are up 6 cents to $18.46 in afternoon trading
Nom 454 – Nothing affects NJ. We are too close to NY.
And I thoght everyone that grew up in Jersey City was street smart!
3b,
i think the prices will stgnate/decline slowly until we hit a sudden collapse. such a collapse could be coasued by the increasing jobless rate or any other number of factors. but the collpase will not occur until people are forced to sell at any price they can get.
Its like an avalanche. We see the ridge piling up, we just have to guess which snowflake will release the systemic instability and start the downward rush. It will be fast and furious, followed by a long stagnant period.
3b Says:
September 19th, 2008 at 3:07 pm
On the buy side, sell side?
=======================================
I would think on both sides. The sellers will be able to wait because they will have principal writedowns or interest-free mortgages courtesy of the taxpayers, and the buyers will wait because they won’t be able to afford the asking prices.
It will be like a staring contest between two zombies.
Peter Schiff’s newsletter
Paulson Goes All In
Just three days ago, after looking at the prospect of bailing a string of distressed financial institution in the country, the government seemingly drew a line in the sand, and refused to bail out Lehman Brothers. The authorities clearly saw Lehman’s demise as a trial balloon to see how the markets would react if the government stayed on the sidelines. That trial balloon quickly turned into the Hindenburg. Immediately reversing course, the Government has decided to go “all in” and bail out every institution with financial exposure to U.S. mortgages. Simply put, Americans will not be allowed to visibly suffer losses after the greatest asset bubble in U.S. history. But make no mistake, the losses are real and Americans will pay one way or another.
Moving beyond the guided munitions of selective bailouts, the Government is now trying the financial equivalent of carpet bombing (for AIG, Merrill Lynch, and especially Lehman Brothers, this gives new meaning to being a day late and a dollar short). To continue with the military analogies, Paulson’s bazooka turned out to be a nuclear tipped ballistic missile.
By committing trillions of tax payer dollars (not the “hundreds of billions” that Paulson predicts), the plan will save commercial and investment banks from certain bankruptcy. In his statement today, Paulson made clear that Congress must pass new legislation to allow the Government to acquire even those loans too poorly collateralized to currently qualify for GSE or FHA absorption. The losses baked into these mortgage products, which Wall Street has been reluctant to even estimate, will now be borne wholly by taxpayers.
In his press conference, Paulson assured us that this plan was designed to safeguard our savings. But in typical government fashion, the plan will have the reverse effect as savings is wiped out through inflation. He also claims that the plan will safeguard home equity by keeping real estate prices high. Since when did high home prices become a strategic national priority? If the plan succeeds, the gains for home sellers will simply be matched by losses for homebuyers, who end up paying inflated prices, and taxpayers, who get stuck with the losses when those buyers default.
Paulson’s distress and confusion was clearly evident when he fielded questions from reporters. The first asked Paulson to describe his fears regarding the probable economic consequences of government inaction. Paulson provided no answer and promptly exited stage right.
When the U.S. government owns all mortgages, the real estate market will be completely subject to political, rather than financial, concerns. Will foreclosures be outlawed? Will loan term easements and principal reductions become standard campaign issues?
While it is dizzying to predict how this plan will be implemented, it is fairly simple to foresee the macroeconomic consequences. The U.S. dollar will be shattered beyond repair. The government simply has no means to make good on the trillions of new liabilities. Interestingly, while both Paulson and President Bush acknowledge that the plan will put “significant amounts of taxpayer dollars on the line,” they did not mention any tax increases. Given the politics, no such move is forthcoming. The printing press is their only solution.
The government has also decided to insure all money market funds, adding trillions more in unfunded liabilities to the Federal balance sheet in the blink of an eye. Of course, since bad real estate loans are not the only toxic assets on the balance sheets of financial institution, we will also need to absorb other classes of asset-backed securities, such as those backed by credit card debt and auto loans. So while the move ensures that depositors will not lose money, is does insure that the money itself will lose value. Is the trade-off really worth it? Washington thinks so.
Further, since I assume the plan will apply to all mortgage debt, U.S. taxpayers will also be on the hook to bail out foreign institutions that loaded up on the financial sludge. However, once the government takes them off the hook, do not expect them to re-invest the windfall back into other U.S. dollar denominated assets. This get-out-of-jail free card will likely scare them straight. The global mass exodus from the U.S. dollar and Treasury debt is about to begin: do not get caught in the stampede.
Although gold initially sold off as the apparent need for a financial safe haven ebbed, look for a spectacular rally to commence as its traditional role as an inflation hedge returns with a vengeance.
#455 We are too close to NY.
Even if NY is sheding high paying Wall St jobs, who cares, we are still close.
“BUSH ADMINISTRATION WANTS TAXPAYERS TO ASSUME BANKS’ BAD DEBT”
yep.
Like peter says I didn’t hear him talk about Tax Increases so then it means we will print the money. Say hello to inflation.
excuse the very general question but …
what does it mean when the DOW has triple digit moves for 5 days straight- with 300+/-pts. 4 out of the 5?
The fed, treasury, sec and congress do not have the power to change any business cycle. They can delay it, try to plug up the holes in the dike, hand out pain killers or apply cortisone shots. This does not, in any manner, change the long term fundamentals of any market. The foundation in this market and state of NJ continue to crumble. Real incomes will continue to decline, cost of goods will continue to rise, huge increase in treasury supply will drive up rates and credit will continue to be a major impediment. Unless this package includes a bulldozer, which pulverizes 11 months of inventory, the down cycle will continue.
BC Bob,
And my father was a tavern owner for 30 years. :) I know, what happened to me?
#459 old stan: Could just end up spooking buyers even more.
This secenario would inject an even larger unknown, and more instability, and instead of seeing a bottom at some point, the market could become frozen.
But how long does or could that last?
“And my father was a tavern owner for 30 years”
Gary,
I think I should meet you there right now?
“But how long does or could that last?”
3b,
Japan.
BC Bob,
As long as you leave the 2 X 4 in the car.
#457 kettle:and start the downward rush. It will be fast and furious, followed by a long stagnant period.
And if my memory serves me corectly that is how is happened last time. The peak, the frozen period, and than the rapid decline.
I remember looking at houses that were much bigger and better than what I had bought at the peak, with asking prices 25/30% below what I paid for mine at the peak. Talk about kicking yourself in the azz.
#467 BC Bob: True. But that would not be good for you and I and others who plan to purchase, or purchase again.
Paul Muolo, executive editor of National Mortgage News, recalls in “Chain of Blame” (Wiley) how teenagers started using “subprime” as a verb.
“I’d better not subprime that test,” his 13-year-old daughter Sherry observed one day.
Things could be worse: She might have Greenspaned her final.
Every company has dead weight, even more so in wall street that in good times looks the other way and lets it build up. In an industry where comp and RE are two biggest expenses rightsizing up 500K a year people who sit in expensive corner offices are good things long term. Most people will not get laid off as most layoffs are disguiesd firings.
tosh (399)-
Nope. From what I’ve been told, inverse ETFs are considered to be the same as short-selling by the SEC, even though they are cash settlement in nature and react only to underlying indices.
I’m also now hearing rumors that the SEC clampdown is about to placed on put options activity on the fav799.
#472 John: thousands of layoffs are thousands of layoffs call it what you will. And sadly many times it is many of the people who are performing who get canned. Many of the morons, azz kissers, and incompetents still manage to hang on somehow.
“#467 BC Bob: True. But that would not be good for you and I and others who plan to purchase, or purchase again.”
3b,
The market does not care about you and I, nor others. IMO, without the goofballs in DC getting involved, we could have reached botton in 2010-2012. If this passes, Japan.
Stu (401)-
Oh, I can think of 4-5 scenarios in which SKF is off to the races again. The first two that come to mind are:
1) Post-election, when Klink et al don’t give a damn anymore and slink off with their ill-gotten billions
2) China and Russia walk away from financing our debt when they discover (it’s probably already happened) that there is no actual plan in place…other than screwing them royally.
“Things could be worse: She might have Greenspaned her final.”
Better than being caught giving a Lewinsky.
#475 BC Bob: Well if that is the cae, than you and I may not be buying any time soon. Is that what you are saying?
Let’s not forget our recession, that IMO is here or will be here regardless of what DC does.
BC bob
Wall Street wants the Treasury Secretary and the rest of us to do that.
hey guys– f’ it. house prices still dropping, buy a place next year and pay back the note with inflated dollars.
So who’s going to the last Yankee game? They just announced gated open at 1pm for the 8:15 game and fans will be allowed to walk from Monument Park onto the warning track and behind home plate.
The market does not care about you and I, nor others. IMO, without the goofballs in DC getting involved, we could have reached botton in 2010-2012. If this passes, Japan.
BC,
Hence, If this passes and you have to buy a house in th enext decade might as well put on the boots.
Agree
Things could be worse: She might have Greenspaned her final.”
Better than being caught giving a Lewinsky.
Still better then getting Palinized!
Congratulations, You just bought yourself a country. Of course, like everyone else, you had your hopes and dreams as a kid, but feel free to admit it, you never thought you’d make it this far. Plus, it’s not just any country you bought, either: it gets better all the time: you thought you were buying America, but you got something much much better: you are now the proud owner of Bulgaria-on-the-Hudson.
While you’re enjoying your new riches and dancing stark naked in the streets, and good on you, mate, don’t forget to start drinking. I know it’s early, but trust me here, this is a special occasion. Very special. In fact, I strongly suggest you get as drunk as you possibly can, and as fast as humanly possible. Don’t bother with beer or some girly bubbly, this time around you got to hit the harder stuff. Trust me. And stop worrying about the hangover: your new country doesn’t either. You acquired a faith-based casino.
Greenspan Tells CNBC Ban on Short Sales Is a “Terrible Idea.”
Clot,
Do you have an open spot on your firing squad?
make (485)-
I wouldn’t waste the bullet on him.
Better to let a pack of pit bulls rip him apart.
I am going to get this party started tonight:
I believe that all of this mess,
asset bubbles (whatever they may be)
energy problems
screwed up govt
oversized entitlement programs
etc
is due to the baby-boomers culture of “hooray for me” and greed. These people have been like a swarm of cockroaches for years, moving around and destroying everything they touch, much to the benefit of themselves.
486 Clot
I’d do it. I need the target practice.
485-
AND CNBC actually showed that?
I am pretty optimisic about this situation. I think our big creditors are going to absorb most of the losses. if we are the cr-ckheads and they are the dealers, then they are nothing if they cut us off. we keep the entire charade in business. so they will be sad that it won’t work out as well as they might like, but they really have to keep it going because their own growth depends on it. this will play out over many years while we an every other nation try to become more self sufficient
From Banker trading desk to Corporate Treasury
Sent: Friday, September 19, 2008 4:09 PM
Subject: Just in case you were out this week . . .
. . . you haven’t missed much:
09/12 Close 09/19 Close Change
Dow 11,422 11,390 -0.3%
S&P 1,252 1,255 +0.2%
6m Bills 1.55% 1.53% -2bps
2yr UST 2.21% 2.15% -6bps
10yr UST 3.72% 3.79% +7bps
30yr UST 4.32% 4.39% +7bps
IG10 151/153 151/153 Unchanged
HY10 382/387 380/390 Unchanged
~ Jonny
#489 skeptic: I think you paint too pretty a picture. I guess time will tell.
For the Democrats to approve this bailout, there will have to be mtg write downs, and or new artifical rates created for homeowners so that they might be able to stay in their homes.
1. Who gets these writwe downs, only sub-prime mtgs, alt-A, prime, everyone.
2. What time period all mtg’s originated in the last 5 years, 10 years?
3. How much of a write down?
4. How long will it last, will it apply to prosepctive home buyers?
5. Will it apply to seconf homes,and flippers whoa re sitting with unsold McMansions? The questions could be endless.
Why would any one buy now, at say 500K, with a 400k mtg, when the guy next door with the same 400K mtg, gets his written down to 350K, with a shinly new low rate.
All theoretical of course. But rather than supposedly helping the housing market, this could destroy it.
3b
could destroy it???
So Rudin says not to worry about commercial real estate because we are going to need a lot of new nurses in the future (plenty of job creation blah blah bs)… now I feel better.
I don’t know any lawyers who are financially savvy enough to answer this question: Is a class-action lawsuit possible against the Federal Reserve and Treasury for waiting until now to propose an RTC-like resolution to this mess? Would Lehman and Merrill stockholders have a case?
Skipped $1.90 light rail fare leads to night in jail
It took just the right confluence of bad luck, unfortunate timing and inflexible regulations to cause a hapless German businessman to start his summer with an unpaid $1.90 Light Rail ticket and end it in jail.
But it was that combination — exacerbated, perhaps, by a smidgen of stubbornness on Gerhard Hofer’s part and an equal measure of unhelpfulness from most people he encountered — that caused the 40-year-old who moved to Hoboken from Germany in April to share a cell with three other men, a leaking toilet and a horde of flies.
“Nobody’s done anything dramatically wrong. Technically, I think people followed the rules,” said Hofer, a sales manager at a Jersey City company that imports herbal teas. “But the punishment was just too much in comparison to the actual offense.”
The journey began on June 4 when Hofer lost a dollar to a broken ticket machine at the Ninth Street Hudson-Bergen Light Rail station in Hoboken.
“I didn’t try the second machine. I was still fighting the first one when the train came, and I was already late for work,” he said. “Sure enough, when I got off at Newport (in Jersey City), there were the traffic police.”
Pamela Suchy / Jersey Journal file photo
The Ninth Street Light Rail Station, where Hofer encountered the broken ticket machine on June 4, 2008 in Hoboken.Hofer tried to pay the $74 ticket online, but the site asked for a license plate number and he doesn’t own a car. He next planned to pay in person. “But then I looked at the ticket and realized that in order to do that you have to plead guilty, and I didn’t really feel guilty,” he said.
So Hofer decided he’d throw himself on the mercy of the court, offering as his defense the lost dollar, the broken machine and an otherwise stellar ticket-payment record.
The ticket gave him a court date of June 20, which the court postponed to July 19, and then postponed again to Aug. 4, when he would be on vacation in Germany. He called the court for a postponement, but said he was told: “Just pay the fine and you won’t have to come to court.”
“But I want to go to court and present my case,” Hofer said he told the woman, who then hung up.
Hofer sent a letter to the court asking for a postponement and left for Europe. On Aug. 28, he received a letter informing him of a warrant for his arrest.
“I thought I would go in the next day and sort it out, but then I worried the police would be out looking for me,” he said.
Andrew Miller / Jersey Journal file photo
Hofer was arrested by a Hoboken police officer after asking the officer what he should do about the warrent notice he received.Then as he walked outside to get a beer, the police drove up to answer a false alarm next door, as he later found out. So he asked the officer for advice on how best to deal with the warrant situation, he said, acknowledging, “Maybe I was as a little naive.”
“(The officer) looked at me and said, ‘If you make me aware of the fact that there’s a warrant out for your arrest then I have to arrest you,'” Hofer said.
So, at 6:30 p.m. on Thursday, Aug. 28, Hofer was cuffed and arrested. After a long stop at the Hoboken police station, he was delivered to the Jersey City police, who, he said, found the situation quite funny.
“They said, ‘I can’t believe you got arrested for that,'” he said. “But once the proceedings had started, there was no way to stop it.”
Hofer was asked if he had $250 cash to bail himself out. But he did not, and was not allowed to use a credit card or go to an ATM.
“Just having arrived from Germany, I didn’t have anybody to call,” he said.
He explained his story to several police officers, who were professional and polite, he said, but couldn’t help him.
“We have zero wiggle room there,” confirmed Jersey City Police Tom Comey. “If we release someone we would be in contempt of court.”
Hofer spent 17 hours inside the Hudson County Correctional Facility, photographed here in 2007, just after a new wing was built.Hofer was relieved of his wallet, keys, Blackberry, shoelaces, belt and other property, fingerprinted and photographed, and, after five hours in police custody, driven to the Hudson County jail in Kearny.
There he was offered another phone call and chance to post bail, but he still had no way to get the cash. Then there was more processing and a change into prison clothes.
He was taken to his cell around 2:30 a.m. Friday, Aug. 29, he said.
“I was shocked. As I walked in there, I thought it can’t be,” he said. The cell had a toilet that was leaking, there were flies, and then there were the mattresses with suspicious brown stains.
“I sat down on a mattress and thought ‘I’m not going to move, I’m not going to touch anything,'” he said. “But one of the other inmates looked up at me, and said, ‘It’s terrible, I know, but just try to get some sleep, so you’re in shape to face the judge.'” So he did.
Later that morning, Hofer finally had his day in court – via video conference from the jail. In the end, he pleaded guilty.
“I would have pleaded guilty to anything just to get out of there,” he said, “and put an end to this all.”
The judge sentenced him to time served, waived the $74 and billed him $10 court fees. (And NJ Transit has since given him a $1 credit for the lost fare.)
Uncommon Carrier warehouse in Kearny, where employees gave Hofer bus fare back to Jersey City.After more waiting Hofer was released at 4:30 p.m. to the streets of Kearny, without a belt, shoelaces, or his wallet.
“I asked them how I would get back to Jersey City (to retrieve his belongings), and they said to walk,” he said.
Luckily, the jail was across the street from a warehouse his company used, so he went there, introduced himself, and scored $10.
He arrived at the Jersey City police station at 6:30 p.m. and was told by a woman at the police station that his property, including the keys to his apartment, was locked up until Tuesday morning due to the Labor Day holiday, he said.
He tried to explain that he would have to sleep on the street. “She said, ‘Look, I’m not having this argument here, good-bye,'” he said.
“I just lost it,” he said. “I punched a street sign in frustration, and a police car stopped.”
And at that moment his luck turned.
Sgt. John Reo drove up in his police car and asked him what was wrong. After hearing Hofer’s tale, Reo made some calls and found a retired police officer who still had a key to the East Precinct’s property and evidence room.
The officer, Dennis Carroll, drove to the precinct and gave Hofer back his possessions — and his faith in the kindness of strangers.
http://www.nj.com/hudson/index.ssf/2008/09/hoboken_man_skips_190_light_ra.html
#493 kettle: I stand corrected.
3B,
If this goes through Congress next week and they bail out everyone then it’s time to check out some open houses this week.
Clot,
Besides your SKF getting beat up do you see this foot traffic through the door double next spring.
A sequel to IOUSA, coming soon to a theatre near you.
494 Seneca
I don’t know, but this week a judge overturned a previous ruling and allowed Merck to be sued by investors who are mad as heck that it took VIOXX off the market when it was linked to strokes, and their shares plummeted.
“If this goes through Congress next week and they bail out everyone then it’s time to check out some open houses this week.”
Open houses where? Costa Rica?
Gator,
The guy from the train ended up with more jail time than the whole Wall Street Mess will yield.
Bring the troops back from Iraq, we need them here to fight this regime. It’s time to bring liberty and free markets back to the USA.
“A sequel to IOUSA, coming soon to a theatre near you.”
Yea, it is called “I don’t owe you a fricken thing. Get used to it you losers who actually saved and paid your bills.”
“Purge the rottenness out of the system, values will be adjusted, and enterprising people will pick up the wrecks from less competent people.”
Andrew Mellon, 1930
Shore – I almost felt bad for the guy, until I read that he told the cop that there was an outstanding warrant for his arrest.
Darwin’s theory at work, I suppose.
China’s state media today reports on the real reason behind the Wall Street meltdown and a subject that the mainstream US media dare not mention – the Federal Reserve’s overissuance of currency – which the Chinese say is part of a wider agenda to justify increased control over the global economy.
The Bush administration today announced a plan to use hundreds of billions of dollars of taxpayer money to buy up up bad mortgages and other debts. The process of injecting more fiat money into an already over-inflated system had the desired effect – the Dow Jones shot up 450 points – but the dollar, following a brief jump, began to plummet.
According to numerous Chinese state media news sources today, the Federal Reserve’s continued zeal for propping up the market by injecting illusory liquidity is part of an agenda to gain trust and grease the skids for increased government intervention in financial markets.
China Finance , China News and Chaobao Financial News, all state owned media outlets, slammed the Fed for taking action that will only make long term economic conditions worse and devalue the dollar by “creating money that does not exist which leads to the inflation of liquidity,” a policy contrary to China’s position as a holder of vast reserves of US dollars.
The analyst quoted by Chaobao Financial News highlighted “that when there is market failure, the paramount purpose of government intervention should be saving the market for the benefit of the people: Relief, Recovery and then Reform,” and that “Protecting the rights of people who are suffering in the housing market and as a result of high oil prices should be treated as a priority.”
The analyst added that by concentrating on saving just a few large financial companies, the Fed is creating wider financial chaos while arousing anger and suspicion by “only protecting and encouraging large companies’ wrong doing.”
CEIBS Professor of Economics and Finance Xu Xiaonian told a conference yesterday that “The fundamental source of Wall Street’s meltdown is caused by Federal Reserve overissuing currency.” He cautioned that the US government has already exceeded its scope in terms of intervention compared with their usual policy.
Similar sentiments were echoed by economist Zuo Xiaolie, who said that the amount of money injected into the market will have little real impact, but that such measures are a “Narrow minded way that the Federal Reserve uses to diversify the pressure of currency adjustment to other countries, which leads to the devaluation of the dollar, causing imbalance in the global economy.”
“The amount of money that has been put into the market can not fundamentally save the market,” said Xiaolie, adding that the move was merely part of an agenda to “regain the trust and justify future further intervention in the economy.”
On Wednesday, China’s official People’s Daily newspaper, the voice of the ruling Communist party, said that the US had unleashed economic “weapons of mass destruction” and set off a “financial tsunami” by allowing Wall Street lenders to trade in subprime debts and unstable financial derivatives, according to a Press TV report.
China has previously threatened to liquidate its vast holding of US treasuries, amounting to $1.33 trillion, if Washington imposes trade sanctions to force a yuan revaluation. The Communist power has also repeatedly expressed its anger at the Fed’s indifference to the weakening dollar. If China were to dump the dollar it would likely set in motion a chain of events that would lead to a collapse of the greenback.
We know we are in trouble when the Chinese Communist Party sound like bastions of sound money policy and fiscal conservatism in comparison to the Bush administration and the Federal Reserve, who in creating more money out of thin air continue to bail out their friends on Wall Street while the economic future of hundreds of millions of American citizens is sold down the river.
SOURCES
Chaobao Financial News: http://www.usqiaobao.com/zhuanlan/2008-07/24/content_127956.htm
China Finance: http://www.caijing.com.cn/2008-09-18/110013626.html
China News: http://www.fywj.gov.cn/Article.asp?id=3219
Translations provided by Yihan Dai.
China’s state media today reports on the real reason behind the Wall Street meltdown and a subject that the mainstream US media dare not mention – the Federal Reserve’s overissuance of currency – which the Chinese say is part of a wider agenda to justify increased control over the global economy.
The Bush administration today announced a plan to use hundreds of billions of dollars of taxpayer money to buy up up bad mortgages and other debts. The process of injecting more fiat money into an already over-inflated system had the desired effect – the Dow Jones shot up 450 points – but the dollar, following a brief jump, began to plummet.
According to numerous Chinese state media news sources today, the Federal Reserve’s continued zeal for propping up the market by injecting illusory liquidity is part of an agenda to gain trust and grease the skids for increased government intervention in financial markets.
China Finance , China News and Chaobao Financial News, all state owned media outlets, slammed the Fed for taking action that will only make long term economic conditions worse and devalue the dollar by “creating money that does not exist which leads to the inflation of liquidity,” a policy contrary to China’s position as a holder of vast reserves of US dollars.
The analyst quoted by Chaobao Financial News highlighted “that when there is market failure, the paramount purpose of government intervention should be saving the market for the benefit of the people: Relief, Recovery and then Reform,” and that “Protecting the rights of people who are suffering in the housing market and as a result of high oil prices should be treated as a priority.”
The analyst added that by concentrating on saving just a few large financial companies, the Fed is creating wider financial chaos while arousing anger and suspicion by “only protecting and encouraging large companies’ wrong doing.”
CEIBS Professor of Economics and Finance Xu Xiaonian told a conference yesterday that “The fundamental source of Wall Street’s meltdown is caused by Federal Reserve overissuing currency.” He cautioned that the US government has already exceeded its scope in terms of intervention compared with their usual policy.
Similar sentiments were echoed by economist Zuo Xiaolie, who said that the amount of money injected into the market will have little real impact, but that such measures are a “Narrow minded way that the Federal Reserve uses to diversify the pressure of currency adjustment to other countries, which leads to the devaluation of the dollar, causing imbalance in the global economy.”
“The amount of money that has been put into the market can not fundamentally save the market,” said Xiaolie, adding that the move was merely part of an agenda to “regain the trust and justify future further intervention in the economy.”
On Wednesday, China’s official People’s Daily newspaper, the voice of the ruling Communist party, said that the US had unleashed economic “weapons of mass destruction” and set off a “financial tsunami” by allowing Wall Street lenders to trade in subprime debts and unstable financial derivatives, according to a Press TV report.
China has previously threatened to liquidate its vast holding of US treasuries, amounting to $1.33 trillion, if Washington imposes trade sanctions to force a yuan revaluation. The Communist power has also repeatedly expressed its anger at the Fed’s indifference to the weakening dollar. If China were to dump the dollar it would likely set in motion a chain of events that would lead to a collapse of the greenback.
We know we are in trouble when the Chinese Communist Party sound like bastions of sound money policy and fiscal conservatism in comparison to the Bush administration and the Federal Reserve, who in creating more money out of thin air continue to bail out their friends on Wall Street while the economic future of hundreds of millions of American citizens is sold down the river.
#506
silly Chinese are the ultimate subprime lender.
sas,
Where did you get that from?
I am reposting this from other thread, especially after Chinese press releases.
Here is my dose of paranoia and armegeddon fatalism for the day – along with slightly brighter scenario.
The real behind close doors US plan is to
take equity stakes in return for capital injections in forms of loans or purchase of bad assets
issue debt to pay for those capital injections
issue strong capital/leverage requirements to avoid appearance of moral hazard, with real motivation being more controlled but continued asset deflation
print money to pay for debt, while stimulating offsetting deflation
if needed, due to energy demand or prevent hyperinflation/dollar collapse
repudiate debt owed China and Russia, in a way which perserves or even strengthens its reserve currency status.
reduce global demand for fossil fuels
How do you do these last two, which become increasingly likely given risks of other plan elements?
The answer is simple – war or at least cold war with strategic hot skirmisms (in energy rich areas).
US gains moral justification for repudiating Russia/China debt and retaining confidence of other creditors. Euro, Pound, and Yen all fall vs dollar, given proximity to and balance of military power vs. newly provoked/iscolated Russia/China.
Japan and Europe forced to support currency and buy debt, in order to ensure their protection and access to energy provided by US naval power/nuclear umbrella.
Oil producers forced to do the same, or see their large US holdings frozen and targeted as aggressors. Beyond caspian, Russia and China unable to counter US naval blockage should they chose to ally with them.
Bottom line, US will do anything short of all out nuclear war to maintain is geo-polictical position and the pre-requiste standard of living to retain political power.
Creditors may choose on their own to accept negative returns by buying bad assets or funding RTC, in order to avoid unemployment/civil unrest, and thus prevent the WWIII scenario.
Developing nations consumption of resources would slow, as result of reduced but not eliminated US demand/borrowing.
Likewise balance of trade would shift, as dollar goes to a lower but stablized level and domestic/forign fund flows are directed toward real industries rather than exotic financial instruments. Clean energy may be one of these industries.
China and India may go along with further energy use reduction in name of climate change. Elites would be able to continue 1st world life style, while ensuring their dollar wealth doesn’t collapse or biggest customer doesn’t completely stop spending. They would be able to placate new educated middle classes with climate change explanation.
After talking to the economic folks at the White House today, I am persuaded that they acted aout of stark raving fear, not any cynical motivation. The terror that the world’s economic system was about to crash came through loud and clear. What they did may or may not work, and I hope it gets modified through the legislative process, but it did ate least forestall any crash.
at least, that is. Need to nor do this at traffic lights.
#497 make: Again why??
512-
I think he means that we will see hyperinflation due to the printing presses running at full speed. If you can lock in at a fixed rate, inflation will take of your mortgage for you.
Stolen from a comment on CR-
“Citing “deep concerns” about the Treasury’s program to guarantee money market mutual funds, American Bankers Association president Edward Yingling said that the bailout of money markets “will undermine the role of banks during this current crisis and has the potential to have an extremely negative impact in the future…In a letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Benjamin Bernanke, Yingling posed eight questions about the money market program, the most pointed of which asks “how will you address the perception by the market that money market mutual funds now have a permanent implicit government guaranty – much like Fannie Mae and Freddie Mac did?…“The debt instruments in a money market fund will pay a higher interest rate, and therefore, the fund will pay a higher interest rate than a bank deposit or short-term CD,” said Yingling. “It also appears that there will be no limit on how much an individual or institution can invest in these funds. Therefore, they will be in a significantly superior market position to FDIC-insured bank deposits.” In plain English, this means that the ability of banks to attract and keep deposits may come under pressure as a result of the move to bail out money-markets“
[455] Gator,
Where I’m from, being close to NY isn’t a positive thing.
Heil Hank;
http://www.flickr.com/photos/fintag/2836701573/in/set-72157604060807926/
80: composting toilets. then you don’t have to muck them out. (mucking out the pigs, however…)
anyone else discovered the fascinating world of “urban homesteading”?
have asked for a pressure canner for xmas.
new zealand is pretty, but i’m not sure they get enough rain to sustain much human population…
…and Pat, from two days ago– i agree with Cindy. i got bumped ahead in math, and spent the next four years being terrified of it. if she’s bored, i bet there are extra things they could do for her– math games, binary numbers, something–without actually bumping her.
many more thoughts, but i have 500 more posts to go… someone else has probably already posted my sentiments.
“sas,
Where did you get that from?”
the damn RE bubble blog keeps putting my sources in moderation.
sorry bloke.
SAS
“China paper urges new currency order after “financial tsunami”
http://tinyurl.com/6sx4bx
wait, one more thing. unless someone else thought of it first, can i get credit for coining the phrase, “Option Arm-Ageddon”? (well, it made my husband laugh last night.)
JB,
With 500 posts in 14 hours, might it be time for a second thread?
“All Roads Lead To Hyperinflation”
http://tinyurl.com/3jt5j6
“Impacts of the Financial Crisis: The U.S. Is Becoming an Impoverished Nation”
http://tinyurl.com/3rf5wv
“Gramm-Leach-Bliley Act”
http://tinyurl.com/29u5qb
Friday bank failure!
Although it’s a bit lost in all the news from the past week.
It’s hard to believe Lehman was 7 days ago. It seems like an entire age has passed in the interim.
#144 – Barien-
“For you ex-Boston residents, what areas around Boston are like Summit and Westfield? Train towns with good schools. Seriously thinking about relocating their next year. I’ve read that Arlington, Watertown, Waltham, Wellesley, and Needham are supposed to be nice Don’t think I want my kids going to public schools in Boston so we’re looking at nearby towns.”
Barien – I hope you’re still reading – The best answer is Brookline.
It’s a perfect mix of urban and suburban – great schools – a really great place to raise kids. not cheap, but not more expensive than summit or westfield. it’s also very common for people to live in condos, which makes it more affordable, and there are some decent rentals, although there’s tons of junk too.
it’s also very diverse in the sense that people come from all over the world to either work in the hospitals, teach, or study in the universities – many come for only a few years, but it makes it very interesting. it’s also on the T (which is the trolley into the city)- so you don’t even have to take the commuter train.
i don’t like arlington, waltham or watertown too much for raising kids. needham is ok and wellesley is super expensive.
newton or lexington are also very nice – but i like brookline the best.
I think I am going to write-in Jon Stewart on my ballot.
jafo 509
interesting idea, but the military aspect doesnt hold water (pardon my pun). due to factors such as sunburn missles ( supersonic antiship missles that have no countermeasure)and economic factors such as japan and europe having some similar financial instabilities as the US, i dont see that happening. russia alone could trump the entire concept simply by cutting Europe off from oil and gas.
To buy or not to buy?
Deals are aplenty in my neck of the woods & I mean woods. Do I hold the cash or buy & reap the benefits of hyper inflation.
I hear that is what this blog is about.
Ket 528 To many scenarios & weapons to get into but I agree over all. Doesn’t mean it will not be tried or can’t happen.
sas[522],
Toxic sludge bailed out by a subprime currency.
“The Illuminists, through the nefarious, dirty dealings arranged by their privately owned Fed, their corrupt Treasury and SEC bootlickers, and their Wall Street cohorts, will now pick and choose who goes under and who stays afloat, and will arrange for who will buy out whom, as they fashion their next incarnation of our corporatist, fascist system. You just saw Bank of America eat Merrill Lynch for 50 billion after turning down the offer to buy out Lehman Brothers. This is the same bank that just bought a toxic waste dump known as Countrywide in what can only be a described as a suicidal move. Now, Bank of America goes bonzai for Merrill Lynch, yet another toxic waste dump, as they tie on their red sun bandanas and get ready to go down in a blaze of glory. What are these people thinking?! Are they that clueless that they can’t see that all the assets in these companies are overvalued and are not marked to market, and that there are likely to be huge mortgage noteholder recourse and derivative counterparty liabilities? They should have waited and bought Merrill Lynch for a song, or not bought it at all. Perhaps their arms were twisted by the Illuminists. It is impossible to know all the nefarious machinations that are happening out there as our zombie economy implodes.”
Anyone with MLS access know if this reo has been relisted and have details?
I couldn’t find it looking on NJMLS but I hear they cut the grass and killed the weeds.
mike,
wait until next fall if you really have to buy. you seem to have a strong cash position, so time is squarely in your favor. patience.
jafo, mike
the interesting thing is that i have also heard from other places that the US may decide a major war is a better option then financial collapse. not that ot would stop it, but a major war could be an attractive option if desperate enough
Clotpoll Says:
September 19th, 2008 at 12:17 pm
SKF trading again. Time to double down
________________
Damn right Clot.
Criminals, all of them.
Could we have a ban on blog moderation for a few weeks? I’d like use to about 10,000 f–word combinations to describe our POS government bailing out the POS wall st a-holes who did all this to themselves, the country, the world.
Bring on the moral hazard punchbowl, it’s party time!
Now, word is ML might be “rethinking” BofA; Citi looking to buy WaMu with their free bailout pass, since per CFO
“people are now viewing us, as a part of the solution…”
Are you f—ing kidding me? THE SOLUTION?
Hey, no worries. I’m sure the gov will be happy to take in those CDOs at 80 cents on the dollar or better, so the banks don’t have to report any, you know, uncomfortable-type writedowns (like, oh, maybe, 5/cents or NIL).
Bring it. One way or the other, the contrarian voice will find a way to be heard. And all these SOBs will take their shots. At least I sure hope so.
Clot – re: SKF, you’re hearing they’ll shut it down as well – even though they’re just swaps on the underlying basket? Other an indicator of sentiment, unless I’m missing something, doesn’t seem like it could independently contribute to moving the equities down, w/ the ban in place?
Well whatever. I’m sure as h-ll not redeeming.
If i can get the video on the argentinian collapse of 2001, does anyone want to setup a mini GTG for a viewing? someone with a large plasma preferably?
with all this liquidity,
what are your blokes for gas prices next summer?
SAS
SAS
been looking into the world bank and IMF.
Enlightening.
SAS
gas will be down barring any catastrophic events
I am thinking minimun $6/gallon.
what will that do to food, airlines, and car sales i.e GM??
you see where this is leading to blokes..
but hey… we just bailed out the banks letting you the stupid, dumb public with the bill.
better bend over and take it until you die.
:)
SAS
BC,
Remind me, exactly how many years was Japan dead in the water – 10, 15 years at least?
I just want to start preparing now.
Anyone want to rent out a little offshore island, to set up a nice short selling operation?
3b (492)-
All the solutions you can think of for this mess only leads to five more problems.
That’s because all the solutions interfere with the process of markets clearing themselves. Any attempt at manipulation only exacerbates the core problem.
Ain’t capitalism grand?
ket 534 There will be war. The populace need it to keep them from turning on the gov. Or should I say the gov needs it.
make (497)-
No. You can write off any significant improvement in RE for at least ten years. By next Spring, the all-out crash should be well underway.
Clot landlord wants to talk about my evil deal.
Sorry, all. I’m still a little bitter over the gubmint having classified me as a gambler and criminal, before I’ve even had a chance to commit any crimes against it.
I plan on rectifying that situation soon.
“The populace need it to keep them from turning on the gov. Or should I say the gov needs it”
I am thinking there is going to be a govt sponsered false flag terrorist attack on our own population, to rally the people to support an expanding war against the so called “terrorists”.
I suspect this will happend with once the new president gets sworn in, and the when the DOW starts to stumble below 10k.
Odd… this scenario sounds awfully familiar:)
SAS
steve 541
you do realize that WMD would promptly be found on your little island and the carpet bombing would commence…. dont you. expect a phone call 5 minutes after you start said operation. if you continue after the phone call, expect to hear a strange whistling sound from above about 30 minutes after that.
why would the govt have to write down the principal?
couldn’t they just lower the rates for the teaser loans that are going sky high, and stretch the loan out so that the payment would be the same as a principal write down. (40 years? 50 years?)
this way, the people who bought can still have a more affordable monthly payment, but don’t really get a hand out – they would have no excuse/reason to foreclose, and the rest of us wouldn’t feel so angry about a bailout for the irresponsible.
going forward – they would have to institute stricter lending standards and mandate downpayments.
SAS, 547
probably correct, most pieces are in place. hopefully they wait until after Xmas
“Why of course the people don’t want war. Why should some poor slob on a farm want to risk his life in a war when the best he can get out of it is to come back to his farm in one piece? Naturally the common people don’t want war neither in Russia, nor in England, nor for that matter in Germany. That is understood. But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the peacemakers for lack of patriotism and exposing the country to danger. It works the same in any country.”
-Nazi Hermann Goering
now now clot, not in print! 546
Clot,
Have you seen this article that discusses a problem David Petrovich of the Society for the Preservation of Continued Homeownership (www.spoch.org) in Oakhurst, N.J. was having negotiating a short sale?
Reminded me of one of the stories you shared regarding negotiating a short sale with Chase.
1 reason i disagree with us goiing strait to hyperinflation. hyperinflation would wipeout the debts that the average american has. that debt is the core wealth of a large number of corporations. the US gov is too tightly interconnected with corporate america to wipe out their source of wealth
sas 551 Somethings never change.
K1,
I figured I’d staff the desk w/ ex I-bankers, Fuld, O’Neal & the board of Fannie thrown in for good measure.
Bomb away.
kettle1,
they are building that wall not to keep the mexican out, no.. they are building it to keep you inside.
SAS
And if Barney Frank really wanted in, I might lower the bar a bit more.
SAS
were you an EHM or a Jackal in your last life?
SAS
the wall…. i a well aware. tell me again what all of those empty detention centers haliburton built around the US are for?
Vic (527)-
I think I am going to talk as many people as I can into not voting at all.
Better to take some time off and have a nice drink or take a walk.
Re 551,
You telling me Dick Cheney is really Hermann Goering?
BC (531)-
Ever notice how every thread here contains the word “zombie”?
Even worse, the term zombie is used to describe people and institutions that should be capable of decisive action at this critical moment.
I realize this is a naive question.
Can someone cogently explain the underlying derivatives [swaps options and (?) forwards] that make up UltraShort Financials like SKF?
I just am trying to understand what they are in plain English.
Anyone? Bueller? Bueller??
Thanks in advance.
sl
Tom (532)-
“I couldn’t find it looking on NJMLS but I hear they cut the grass and killed the weeds.”
Cut the grass? Killed the weeds?
Hell, that’s the 2009 version of upgraded!
So what is a better investment GLD or physical gold? And if you buy physical gold where do you hide it when the Fed’s come in ten years to take it away?
Cox and the SEC had best cut out the no-shorting rule in short order unless they want to see some wholely unexpected side effects.
Energy and energy markets are highly reliant on capital markets in order to fund exploration extraction and processing. The effect will be delayed but this new commikazi tactic will quickly begin to show up as energy shortages.
For example: all of that great natural gas that has been found around the US has huge upfront operational costs that energy companies borrow to fund. if they cannot get the loans then they cannot extract gas. same problem with exploration. How much do you think a refinery pays for a tanker full of oil that holds 2 million barrels? thats also borrowed money upfront!
If the money cannot flow freely for even the credit worthy with real tangible assets involved then get ready for some nasty surprise effects.
“were you an EHM or a Jackal in your last life?”
lets put it this way, I was in the military during Operation Hastings, after military went to college at Tuck, taught a few classes until they fired me for dating a student,
in the 80s did military hardware (Nicholas Cage and that movie may ring a bell), 90s worked for telecommunications to basically steal IP in Asia, specifically Korea.
and now I am old and tired, and my only joy is spending time with all my grandkids, and sitting on a dock somewhere and watching the sunset over the water.
SAS
hehe
my 1.5 cents: physical. be creative and not in a bank
Can they take gold teeth?
Steve (535)-
The only options available to SKF holders is:
1. Redeem.
2. Continue to hold. Adding to your position is not allowed.
The only person I got on the line at State Street today says the SEC considers tracking ETFs that are inverse/double inverse to be the equivalent of short selling, so the ban extends to them.
Funny, but inverse ETFs are all cash settlement vehicles. No actual shorting is involved.
Welcome to investor gulag.
SAS
Jackal.
if may be so bold was it patriotism (however misguided), money or boredom that sucked you in?
mike (545)-
Be a mensch. Dispatch him quietly and quickly.
Then, eat his spleen.
tcm (549)-
Good try. Sounds nice, won’t work.
Actually, if you stretch the amortization out to 100 years, you have ReTard’s original plan.
This is what I found.
http://biz.yahoo.com/ms/080919/253823.html?.v=1
[snip]
Why did SKF and SEF stop trading?
As previously discussed, due to the short-selling ban on financial stocks, there are no counterparties willing to buy/write the issuers’ swap agreements, as the wide sweeping ban on shorting financial stocks means that the counterparty would be unable to hedge away its exposure. The shares of these ProShares ETFs did resume trading in the financial markets today, but they seem to be trading at prices that are not in line with their intraday indicative values. This is to be expected, however, based on the simple laws of supply and demand. Viewed as one of the remaining avenues to gain short exposure to the financial sector, the demand for the SKF and SEF were expected to explode. Essentially, all who were covering their existing short positions in response to the ban were expected to attempt to gain short exposure via these inverse financial sector ETFs.
Thus, ProShares contacted the American Stock Exchange this morning to note that it was not planning to create new shares in light of the SEC’s unprecedented ban on shorting 799 financial stocks. The AMEX responded by halting trading on the securities to prevent huge diversions between the indicative benchmark value and market price.
What are the likely effects of this until the end of the short-selling ban on Oct. 2?
As long as investment banks are concerned about capital reserves and the amount of risk on their books, they are unlikely to write swaps that short financials. Thus, existing shares of these inverse financial ETFs should continue trading, but new shares will not be created.
According to its prospectus, ProShares invests in only derivatives (including options, swaps, and forwards), so it does not actually short the stocks itself. An emergency amendment to the prospectus that would allow the issuers to engage in short selling is a possibility, but unlikely in our view.
So long as ProShares is unable to find counterparties to short the index, it will continue to allow only redemptions and not creation of new shares. This will prevent the ETFs from trading at a discount, but it will allow them to trade at a substantial premium (as no authorized participants can arbitrage the premium away by creating new shares and selling them until the premium disappears). We’ve already noticed the SKF trade at a 5%-6% premium over net asset value.
Even if investment banks stabilize and become willing to take risk onto their balance sheets before Oct. 2, the expenses on these funds will increase substantially as counterparties demand much higher interest payments to take on the unhedgeable risk. This cost would be expressed in the fund’s expense ratio.
In our opinion, the only hope of clearing this up before Oct. 2 is either an SEC clarification that broker/dealers can short stocks to hedge derivatives bought by ETF market makers, or a change to the ETF prospectuses that allows the funds themselves to short stocks directly.
What else can I do in the meantime?
Although investors cannot currently short sell individual financial stocks, there is no ban on shorting ETFs that court exposure to the sector, such as the Financial Select Sector SPDR (AMEX:XLF – News) (long financials) or the Ultra Financials ProShares (AMEX:UYG – News) (double-long financials). Individuals could short UYG instead of buying SKF, although we’d note that this leaves open the potential for bigger losses over multiday periods due to the compounding of leveraged daily returns. The Rydex Inverse 2x S&P Select Sector Financial (AMEX:RFN – News) is still trading and creating new shares, although it is also likely to have trouble finding willing counterparties if it faces a wave of new assets flooding in to short financials.
Investors who already own SKF or SEF can sell the funds at any time because trading has recommenced, and since redemptions are still allowed, there is little risk of selling at a discount. In fact, there may be a good chance of selling at a significant premium sometime before this situation resolves itself.
Will any other short ETFs be affected?
There is a chance that other short ETFs such as UltraShort S&P 500 ProShares (AMEX:SDS – News) may have similar trouble if they face a sudden influx of assets necessitating a large number of new swap agreements. However, these funds are not as large as UltraShort Financials (in terms of assets under management), and their underlying indexes have only a 15%-20% stake in the financial shares that cannot be shorted. Thus the risk to a counterparty from entering into those swaps with ProShares is much smaller than on the financial indexes, so broker/dealers are much more likely to continue entering swap agreements on the broad market indexes. The market for these broad index swaps is also much more liquid, so ProShares would be able to find more potential counterparties than with the financial sector index swaps, where the firm represents a much larger portion of the market.
ETF Analyst Bradley Kay contributed to this article.
sl
sorry for the long post..
sl
what is a better investment GLD or physical gold? And if you buy physical gold where do you hide it when the Fed’s come in ten years to take it away?
You want gold in your hot little hands.
whatever percent you decided to allocate, I’d get some silver as well.
Keep a tight lip, and if you do decide to do some midnight gardening, and may want to plant a firearm w/ your coins.
I don’t think it will ever get that bad, but the future is uncertain.
but hey, what do I know, I just fell of the turnip truck :)
SAS
Alia, Option ARM-ageddon WAS pretty good.
Yes, on Wed., I volunteered at school (first time ever…whew, who KNEW die cutting was so stressful?). I asked the teacher to move her back. She said they were leaning that way, anyway. So, don’t you know she comes home today with Test 2 and 20 of 20 correct. But, it’s done. And now, she’s crying that she doesn’t want to leave her math class. I can’t win.
Has anybody else every experienced Volunteer Black Hole? You do one thing and all of a sudden…you’re teaching after school science, planning a fair, reviewing some budget and have possibly agreed to four other things, but can’t remember what?
oh the sweet days… we were talking about comp killers and real-real estate. Now it is only about how to quickly step out the market (ANY market). Who cares about what’s-his-face from Hole in what wall-street?
And we can Elect our solution out of this mess? That is even worse than saying real estate is never going down.
OK, so paper doesn’t count but, real-estate is real, right? I cannot live in stock-paper and I do need a home. Am I the only one? Could I be the last buyer in NJ??
Tom (553)-
Welcome to my life.
I would guess you are right re the physical Gld. They just proved today they’ll destroy anything that is paper.
Paunederland
why buy and take on the financial obligations that entails????? rent! more house for your dollar without the risk!
Bank Failure Friday!!!
[just received from FDIC subscription.]
Press Release
Pioneer Community Bank, Inc., and the Citizens Savings Bank Acquire All Deposits of Ameribank, Inc., Northfork, West Virginia
All Insured and Uninsured Deposits Transferred to Acquiring Banks
FOR IMMEDIATE RELEASE
September 19, 2008 Media Contact:
David Barr
Cell: (703) 622-4790
dbarr@fdic.gov
Ameribank, Inc., was closed today by the Office of the Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC) was named receiver. The FDIC entered into purchase and assumption agreements with Pioneer Community Bank, Inc., Iaeger, West Virginia, and The Citizens Savings Bank, Martins Ferry, Ohio to take over all of the deposits and certain assets of Ameribank, Inc., Northfork, West Virginia.
Ameribank has five branches located in West Virginia and three branches located in Ohio. Pioneer Community Bank, Inc., Iaeger, West Virginia will assume all deposits for the five branches located in West Virginia. The Citizens Savings Bank, Martins Ferry, Ohio will assume all deposits for the three branches located in Ohio.
All depositors, including those with deposits in excess of the FDIC’s insurance limits, will automatically become depositors of the assuming institution where the customer opened the account for the full amount of their deposits. All deposits will continue to be insured with the new institutions. Therefore, there is no need for customers to change their banking relationship to retain deposit insurance. Brokered deposits are included in this transaction.
Branches in West Virginia will reopen on Monday. Ohio branches will reopen on Saturday. Over the weekend, customers of the banks can access their money by writing checks or using ATM or debit cards. Checks drawn on the banks will be processed normally. Loan customers should continue to make loan payments as usual.
Pioneer Community Bank, Inc., and The Citizen’s Saving Banks’ acquisition of all deposits was the “least costly” resolution for the Deposit Insurance Fund compared to all alternatives because the expected losses to uninsured depositors were fully covered by the premium paid for the banks’ franchises.
As of June 30, 2008, Ameribank, Inc. had total assets of $115 million and total deposits of $102 million.
Customers who would like more information on today’s transactions should visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/ameribank.html. They may also call the FDIC toll-free about both institutions at 1-877-894-4710 until 9:00 p.m., this evening; Saturday and Sunday from 8:00 a.m. to 5:00 p.m.; and thereafter from 8:00 a.m. to 6:00 p.m. All time are Eastern Standard Time.
sl
sl (576)-
Thanks for all that. I’m a little too scattered to have done the research.
Seems like the short story is: the gubmint rigged the market and screwed up everybody and everything.
584 moderated! No dirty words…
BANK FAILURE FRIDAY CONTINUES!!!!!
Sep 19, 8:24 PM EDT
Regulators shut down Ameribank in West Virginia
By MARCY GORDON
AP Business Writer
Latest News
Regulators shut down Ameribank in West Virginia
Morgan Stanley, others may get federal lifeline
Fed, ECB pump billions into money markets
Buy AP Photo Reprints
Your Questions Answered
Ask AP: Candidate languages, emergency personnel
WASHINGTON (AP) — Federal regulators have shut down Ameribank Inc., a small bank in West Virginia, saying it overextended loans for the rehabilitation of distressed properties.
It was the 12th failure this year of a federally insured bank.
The Federal Deposit Insurance Corp. has been appointed receiver of the bank, based in Northfork, W.Va. It had $115 million in assets and $102 million in deposits as of June 30.
HE^3 [570]
>> Can they take gold teeth?
The Nazi’s did…
CNBC talking heads mentioned how the gold price has been driven up by flight to safety and “fear buying”. I may live to regret it but I decided to take a wait and see on my metals purchasing until next week. Meant to get in week ago… should coulda woulda… just like I meant to sell off my remaining LEH position two weeks ago…
Part of me feels if things really got that bad, potassium cyanide would be my friend.
“was it patriotism (however misguided), money or boredom that sucked you in?”
It was thrill of the chase.
SAS
Welcome to investor gulag.
________
Clot (571),
LOL
Thanks for the info. I guess we shouldn’t expect Cox to concern himself with such trivial details, when rigging the game-
enjoy!!
To: “All Wachovia Colleagues”
From: “Corporate Communications”
Date: 09/16/2008 07:46PM
Subject: Memo from Robert K. Steel – Update on Current Environment
DATE: Sept. 16, 2008
TO: All Wachovia Colleagues
FROM: Robert K. Steel, CEO
RE: Update on Current Environment
After an eventful few days for our industry, it seems appropriate to share some perspective and provide an update on where Wachovia stands. It is important that we all have a clear understanding of the current environment so that we can characterize our company clearly and accurately.
First, on the internal front, we announced earlier today that Kenneth J. Phelan is joining Wachovia from J.P. Morgan Chase as our Chief Risk Officer. We are delighted that a leader of Ken’s caliber is eager to join the Wachovia team. A rigorous risk culture is key to Wachovia’s future, and Ken is the right leader to continue building on our solid foundation. With him and our new Chief Financial Officer David K. Zwiener on board in the next few weeks, our management team is complete. We look forward to working with them, other leaders and all of you as we work together to address Wachovia’s challenges, build on our strong core businesses and move forward.
From an external perspective, the financial landscape is undergoing unprecedented change. We are watching these events carefully, and we can expect continued volatility in the near term. Keep in mind, though, that Wachovia is strong, stable and well capitalized.
With regard to recent events involving Lehman Brothers and AIG, let me provide a few specific observations related to those firms:
• Following the Lehman Brothers bankruptcy, we have made great efforts in the past two days to unwind certain transactions with Lehman Brothers and replace Lehman with different counterparties. Overall, our direct exposure to Lehman Brothers is modest and consists primarily of support agreements from Wachovia to Evergreen money market funds. Under these agreements, Wachovia will support the value of Lehman credit in the amount of approximately $494 million held in the funds. We’ll continue to monitor developments relating to Lehman Brothers closely.
• Like many financial institutions, Wachovia has relationships with American International Group, or AIG, a significant global provider of financial services. We believe any direct exposures we may have to AIG are manageable, and our team will continue to assess AIG’s restructuring process.
These external events, and others, are redefining the financial services industry. Wachovia’s advantages, however, remain: best-in-class retail banking with top-notch customer service, one of the largest brokerage platforms covering the affluent markets, and expertise to meet the specialized needs of middle market and large corporate customers.
We cannot predict with certainty how events will play out. But let me be clear: For years Wachovia has been a forward-thinking force to help fuel business growth, create and manage personal wealth and build strong communities. We intend to remain focused, continue serving customers like no other competitor and utilize our many skills and talents.
Thank you for continuing to do your part.
“Part of me feels if things really got that bad, potassium cyanide would be my friend.”
its ok bloke, world ain’t going to end.
spend a night in a fox hole out on the Cam Lo. you will change your mind real quick.
SAS
seneca,
I am thinking about buying a few tons of NPK(i).
hey 3b can i borrow 1 of your silo’s? i’ll cut you in on the deal?!?!?
If McCane comes to power, looks like we will have to bail out healthcare..
Here are some pearls of wisdom –
“Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.”
SL (575),
Thanks for the post; interesting, albeit a bit discouraging since I was all ready to up the ante. Makes sense about the counterparties not being able to hedge out their risk – just need go find some of those euphoric bulls to take the other side.
Shorting a long ETF is a bit more risk than I wanted to play with myself….
Oh well. At least I can find solace in principle, in the cell next to Clot. ;)
No time for polls. SKF hit $87 and SRS closed under $69.
Last week, people on this board were so excited on making big bucks on SKF in minutes. I hate to say i told you 3 things a few weeks ago:
1) SKF is 2X of financials (precisely it is -2X);
2) short squeeze can easily make a 10 pts move;
3) before thinking how to take profit at $150, think what to do if it goes to $60 to $80.
> 99# Stu Says:
September 19th, 2008 at 8:41 am
Bi:
How about a report on the polls?
oops
sorry, didnt look at your post SL before duplicating :(
I was just watching “The Soup”. Funniest show.
HC
594 – bi
You cant play a game if you change the rules midway.
Lets review this in 2 months.
-Terrorism is the best political weapon for nothing drives people harder than a fear of sudden death.
-What luck for the rulers that men do not think.
-The great masses of the people … will more easily fall victims to a big lie than to a small one.
*Adolf Hitler
594,
Quite informative. A leveraged ETF is volatile?
Who knew.
#578 Volunteer Black Hole – Yes, I have been there. It creeps up on you incrementally until it takes over way too much of your time. I finally learned to politely decline by saying, “I’m sorry, my schedule has changed and I can’t do that.” It seemed to work.
kettle1,
I do live with alot of guilt and regret, that for sure.
in any case….
SAS
# kettle1 Says:
September 19th, 2008 at 9:38 pm
1 reason i disagree with us goiing strait to hyperinflation. hyperinflation would wipeout the debts that the average american has. that debt is the core wealth of a large number of corporations. the US gov is too tightly interconnected with corporate america to wipe out their source of wealth
Unfortunately Hyperinflation is a positive feed-back phenomenon. As much as big corporations want to believe they can control it and not allow it, while printing/creating large sums of money out of magnetic pieces on the hard-drives, it will happen, many wealthy people will lose their money as result and economy will suffer greatly.
but again – it is USA and staff like this just can not happen here.
#589 I know Wachovia is in the swamp of toxic sludge too, but I gotta admit, I always get great service at my local branch. Maybe I’m just a sucker for the small stuff, but I like it when they take the trouble to call me by name, I like that the manager recognizes me and dumbest of all, I like it when they notice I have my dog in the car with me and I get a dog biscuit back along with my deposit slip. I don’t trust them as far as I can throw a piano, but at least they are nice to me.
surprised that nobody has said this already:
China can “suck it”!
The way these bail-out shenanigans are being played out and sold, frighteningly remind me of the way the Iraq war was sold to the public.
I cannot believe that Paulson and Bernanke did not see this coming till last week. If so, why did they keep insisting that all is well. I understand that they do not want to spread panic, but what prevented them from letting Congress know. And now, they scare the sh!t out of them just before Congress is going to recess.
They want to hack a plan of this magnitude and crank it out over a weekend!!! The taxpayers do not know what they are getting into, no congressional hearings…nothing.
Just the fear of a systemic meltdown will make Congress sign the legislation without proper due diligence.
Why do I think that this has been the plan all along?
Or did i just buy a tin hat?
are you drunk already? it was at noon?
335# Clotpoll Says:
September 19th, 2008 at 12:17 pm
SKF trading again. Time to double down.
I knew I couldn’t go a whole day without being put in moderation.
Al
the coming tsunami cannot be stopped. we agree on that. but i challenge someone to explain how we can deleverage down from 30:1 to 10:1 (10:1 as an example) without experiencing deflation. we are talking about 10’s of trillions of dollars. if bernanke and friends try to print that they will collpase the bond market and kill the US$ in very short order. even if they try and cend up collapsing the bond market you still have net monetary deflation
Everybody has guilt. Only a few know it.
Kettle, I did enjoy the Wachovia information. Friends there will lose their jobs. A lot of hard-working people will go down with no future in banking.
Those aren’t motile, blob-like talking head salespeople who can morph at will as industries expand and contract.
Next bank, same story.
Steve, 593…. [593?!? gawd]
Yep… pass the bread and water… I’ll be in the cell with the rest of you…
I think I’ve used the word “unprecedented” about a hundred times today…
On a happier note… Warren Buffett and I agree on a stock pick!! Wooo hoo.
sl
Vic,
Bingo! give the man a prize!
They want to hack a plan of this magnitude and crank it out over a weekend!!! The taxpayers do not know what they are getting into, no congressional hearings…nothing.
Why do I think that this has been the plan all along?
may i remind you of how the FED was created in the first place???
The Federal Reserve Act (ch. 6, 38 Stat. 251, enacted December 23, 1913, 12 U.S.C. ch.3)
Schiff on cnn- a cooper now
vic…603 [603!!??]
I’m a dime store dolt and one look at the Case-Shiller graph — the one I have been printing on a daily basis — the one that starts at 1890 — was enough info for me to know we weren’t buying in 06.
I still credit grim with that chart and saving my financial ass.
Look at the graph.. NOTHING should rise in price like that.
Nothing.
Why didn’t the idiots who were supposed to be overseeing this housing and credit bubble PUT A HALT to it?
THEY should be footing the bill for this f’in mess.
Sorry. I’m just bitter. I’ll go back to my cell next to Clot and Steve
sl
SAS
wasnt trying to guilt you. i am not one to judge. we all have skeletons in the closet, the only difference is order of magnitude
#574 –
i don’t know about reinvestor’s original plan, or any of his plans…
but why wouldn’t stretching out the amortization and reducing the rates work?
mathematically? politically?
would the mortgages not be saleable?
SL
Look into the world bank and the IMF. things might make more sense to you then
“For just a bit more, one has to realize who the person, next to Ronald Reagan, is most responsible for the economic disaster that has befallen America. And, that person’s name is Phil Gramm. It was Senator Phil Gramm (R-TX) who, along with James Leach (R-IA), authored the “Financial Services Modernization Act” (1999), which repealed significant parts of the Glass-Steagall Act (passed during the Depression to prevent Depression-era conditions from being repeated in the future). This new Act was designed to permit the combining of retail banks and S&Ls with investment (gambling) and insurance companies. Voila, institutions that for a long time made it absolutely safe for Americans to save and borrow, were now a thing of the past, and whatever the combined institutions wanted to do was fair game. Yes, predatory capitalism was made the law of the land.
Next, a year later, Phil Gramm, as chairman of the Senate Finance Committee, introduced legislation that completely deregulated the stock market (allowed “dark markets”, as they say). This legislation was called the “Commodity Futures Modernization Act”, and to get it passed, Senator Gramm added it as a 262-page rider to the 11,000-page omnibus appropriations bill (and get this!) just as Congress was recessing for Christmas break! Obviously, there were no committee reviews, and no one knew what was in the rider. Pretty smooth!!! Its first production was to make the “Enron Loophole” possible! So, the Republicans got what they have dreamed of for years – a deregulated financial market without oversight. Sweet, sweet, sweet. Now, plunderers, under this new predatory capitalism mode, could go about doing their dirty work and, as a “thank you”, contribute over and over again to the Republican Party. It’s a win-win for the plunderers and the Republican Party, except they are now getting exposed destroying the U.S. economically. (As smart people have said, “the U.S. will not be destroyed from without; it will be destroyed from within”.)
Ket,
How? What do you mean?
Sorry… my brain has taken a complete drubbing today and I unfortunately need “See Spot Run” spelled out for me right now.
sl
“wasnt trying to guilt you”
I know bloke, I guess I was just thinking outloud.
SAS
614 [614?!!]
Oh.
Well PHUCK PHIL GRAMM.
sl
SL, 610
I guess we’re SKF POWs, in a Hogan’s Heroes kinda way…
We can get out – but who really wants to do that?
Just give me bread, water, and Level II quotes.
tcm 612
mathematically: yes
politically: probably not
economically : NO!
politically…… what bank will ever loan money when the government can and will alter said mortgage agreement at will? say byw to the loan market!
economically…… Look what happened to japan. a housing bubble artificially inflates the # of home owners. the % of home owners that would not have bought in normal conditions are now tied to a house for life (40+ years) that they will be hard pressed to ever sell. If they werent tied to the house then they would be contributing much more to the economy in the form of spending and investment. but since they are tied to the house their economic contribution is limited
My call is that this is the end of the american empire. we may recover like the UK did after its empire fell, but make no mistake whether it takes months or years we have crested the peak and are on a rapid downward slide.
i rarely have any postions over 2 months. just share same unprecedent market experience as the rest here.
>victorian Says:
September 19th, 2008 at 10:41 pm
594 – bi
You cant play a game if you change the rules midway.
Lets review this in 2 months.
WSJ
Disappointing Birthday
For her 50th birthday, Annette Pucci, a New York retail manager, planned to treat herself to a facelift by cashing in $15,000 in stocks. But after consulting with her husband, a manger with Consolidated Edison Inc., she realized their stock portfolio had taken such a hit that it was out of the question.
“It was a very big disappointment,” Ms. Pucci said. Her consolation: a $1,200 Botox treatment she had this week instead.
thats what happens when credit replaces middle class salaries, and middle class have been going off shore.
remember that next time you goto slave-mart.
SAS
You expected something different? So the upper middle class and what remains of the middle class that have money invested in this fascist state’s financial markets should be doing/saying something now that their money is at risk?
I mean, lying us into a war where upwards of a million people have died wasn’t enough reason to do anything. Watching us become a torture state wasn’t enough reason. The PATRIOT ACT, Military Commissions Act, signing statements, FISA, Telecom immunity, habeas corpus, illegal spying without warrants…. none of that was important enough. No, it’s about the money. Who cares if Iraq if destroyed and Iraqis are slaughtered as long as I can short sell the market.
Americans are pathetic. I hope it all burns. Only then can the few true Americans, kindred souls of the likes of Franklin, Adams, Jackson, rise from the ashes and step forth once again
# toshiro_mifune Says:
September 19th, 2008 at 12:54 pm
#343 – Unless there is something like a “Million Serfs March” where we are
Would this even work?
Seriously, we saw Million Person marches against the war in Iraq and we know what that outcome was. The media largely ignored it, Congress completely ignored it and eventually everyone gave up.
The only way people will push back is if the boot is literally on their throats. Even then some will attempt to justify it.
It’s so completely sad.
in my view, this so-called bail-out stuff will push market up further until the end of the month. VIX will be reduced to 20 something. they may extend financial short-sell ban for another 2 to 4 weeks until S&P goes back to 1400 range, which is about 15% from today’s close. i have been wrong too many times on this board. this could be another over-optimistic shot.
“in my view”, no one really gives a rat’s ass what you and your predictions think.
Get a life little man.
Contrary to popular belief, the government’s resources are NOT unlimited. Brace yourself for the day in the not-too-distant future when the government finds it increasingly difficult to borrow the money it needs to fund its bailouts. This occurred at least once before, in February of 1980, when the U.S. Treasury could not find buyers for its Treasury bonds. And it was forced to dramatically reverse its monetary and fiscal policy in order to restore its borrowing power.
When that happens again, it will signal that the government has reached the limit in its ability to save the financial system and stimulate the economy
I bought and sold SKF in my Ameritrade account today. bought small # of shares around 1pm and sold them a couple of hours later.
does this surprise anyone? I had no existing position of SKF heading into today.
“The Federal Reserve Act (ch. 6, 38 Stat. 251, enacted December 23, 1913, 12 U.S.C. ch.3)”
The beginning of the end. Since 1913, the dollar has lost 96% of its purchasing power.
1971, the 5th inning, the gold standard is abolished
2008, taps.
In 1980 the gold/dow ratio was 1-1. In 2000, the spread blew out to over 40-1, 40 ounces of gold to buy 1 Dow. Since 2000 the spread has narrowed, today it is 14-1. Watch it go to 4-1, after today maybe 2-1.
Steve,
I would love to do some spread trading on that island with you.
A lot of them would lose shirts if no action was taken today.
Bloomberg: Pelosi, Kerry May Share Investor Pain as AIG Stakes Evaporate
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSEtGBXG0C0s&refer=worldwide
Tom (532),
NJMLS shows that the listing expired on 4/1/2008 with the last listing price of $749,900
Tax Records:
Deed $675,000 7/14/2004
EFRxxxx DZExxx & ROSxxx
BYxx YOOxxxx
Mortgage $506,250 7/14/2004
COUNTRYWIDE HM LNS INC
LisPenden $506,250 2/22/2006
MORTGAGE ELECTRONIC REGISTRATI
Mortgage $552,500 4/6/2006
FREMONT MTG
Deed $900,000 9/18/2006
BYxx YOOxxxx
LEx Sxxx K & HEx K
Mortgage $720,000 9/18/2006
COUNTRYWIDE BK
Mortgage $50,000 10/20/2006
M&T BK
LisPenden $720,000 3/5/2007
BANK OF NEW YORK 2006-OC8
Deed $751,619 4/24/2008
SHERIFF OF BERGEN COUNTY
BANK OF NEW YORK
629# bob, i like gold.
but i don’t see the math here. can you elaborate it?
>today it is 14-1. Watch it go to 4-1, after today maybe 2-1.
anyone hear NPR arpound 6:45 this evening? their description of the bailout and how is was really ” a bailout of main street, not a bailout of wallstreet” was downright insulting!!!
The spin machine is in high gear
Kettle
To the best of my knowledge, the SUNBURN has not been tested against the latest Aegis/SM2 iteration.
Also, you need to consider these as components of bigger systems. The missles aren’t any good if information and air superiority never let you get close enough to use it.
Plus as per Mike’s comments, just because we wouldn’t succeed doesn’t mean it wouldn’t be tried.
On Russian gas dependance, the powers that be have two options. Target China alone, or shift Europe to mideast sources after cutting china off.
China is the big credator, and long term threat to both Russa and US – if energy, land, and fuel shortages are in the future.
“Why do I think that this has been the plan all along?
Or did i just buy a tin hat?”
Victorian,
After watching this crew, I think it may well be that they are just friggen stupid.
Thanks Rich… I guess they just decided to cut the grass for no reason then.
Victorian [603]
>> The way these bail-out shenanigans are
>> being played out and sold, frighteningly
>> remind me of the way the Iraq war was
>> sold to the public.
Next thing you know we will see Janeane Garofalo on CNBC swearing to Faber that this RTC Part Deux is the worst possible solution to the crisis and if she is wrong, she will crawl on her hands and knees on cut glass to apologize to the Fed.
I just picture the powers-that-be listening to too much Cramerica and deciding this is what needs to be done.
I am finding some stuff out there on class-actions against Merrill now so I expect the LEH class action can’t be far behind. LEH jobs saved by the Barclays transaction? Thats friggin fantastic, lets declare Chapter -11, add em up and call the whole thing off. What an enormous crock of shiz has been dumped on the American public this week.
Last random thought, did anyone see Ichan interviewed on some show on CNBC that reminds me of a castrated version of NFL on Fox? He hasn’t exactly mastered the art of the soundbite, has he? Good for him though he came off sounding like a bit of a nut, which I guess he is.
Grim,
This week’s report from the hinterlands…
Hunterdon County Comp Killers
GSMLS recorded 18 sales in Hunterdon County this week. Three made this list:
MLS#: 2525327
2 WESTCHESTER TER
Clinton Twp
SLD: 02/14/06 $272,000
OLP: 06/02/08 $269,900
SLD: 09/18/08 $232,000
DOM: 53
MLS#: 2540587
6 ROLLING HILLS WAY
Lebanon Twp
SLD: 01/04/06 $645,000
OLP: 06/23/08 $615,000
SLD: 09/17/08 $525,000
DOM: 43
MLS#: 2549034
17 TALIA ROAD
Raritan Twp
SLD: 11/18/04 $791,000
OLP: 07/14/08 $735,000
SLD: 09/18/08 $663,100
DOM: 63
jafo 634,
and you just described WWIII
Where is John Rocker?
http://www.youtube.com/watch?v=JkMHe0udrjQ&feature=related
Pat – Does your district have a “talented and gifted” program? In our district, beginning at grade 3, as students are identified with year-end second grade testing, we identify those students who require extra challenges.
These students are considered to be “at risk” of failing – just like below-grade level readers – because they will be disinterested and shut down. Once identified, extended activities are made available to these students and the classroom teacher must make modifications.
You might want to check into that. There are positives and negatives to any decision you make – isn’t that always how it is?
Even in Oregon they had GATE. My oldest had to receive extra counceling in high school regarding college plans.
Once identified, it is like an IEP and the classroom teacher has an obligation to challenge them.
FedCo buy anyone overnight?
Day 2 of Fascist States of America. I don’t like it any better.
Will work,
That one on Talia is a pretty big decline.
Clot,
You just need to be reeducated in economics.
tcm (613)-
Start with the fact that any restructuring involves breach of contract. Next, any re-jiggering may cause certain performing MBS to begin faltering.
There are about five other reasons, but it’s too early for me to rev up that kind of brain juice.
Good Morning. So, is this the end of banks? They won’t lend for mortgages if the gov’t can arbitrarily alter the contract, but that’s okay because they won’t have any money to lend anyway because the gov’t will insure money markets which pay a higher rate than banks. Who’s going to deposit money in a bank other than in a checking account? I’m with still_looking – information overload. Somebody explain “See spot run” to me.
Folks – Is it correct to say that the difference this time (versus the crash of the S&Ls) is the derivatives component?
Rather than “too big to fail” it becomes more “too connected to fail?”
So they need to park the toxic waste rather than permit the snowballing credit default swaps? So no markdowns and no firesales….
I am eventually going to need to go buy groceries and wash the dishes in my sink…
Alas – I’m out of coffee…
Oh, yea, more of my money going to a second stimulus check. That said, look at the point about going after Wall Street salaries.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aB_rf1rurtio&refer=home
[snip]
Senator Richard Shelby, an Alabama Republican who has advocated that markets should be allowed to penalize bad bets, warned that bailout could saddle taxpayers with large debts.
“This could be the biggest bailout in the history of the country and could ultimately cost $500 billion to $1 trillion,” Shelby, the ranking Republican on the Senate Banking Committee, said in a Bloomberg Television interview yesterday. “Congress is not going to rubber stamp something.”
Delinquencies Soar
Nearly one-in-10 American mortgages is delinquent or in foreclosure. The government would be buying debt backstopped by the U.S. home values that have been falling in value for eight consecutive quarters, according to the S&P Case-Shiller U.S. Home Price Index.
Senator Christopher Dodd, the Banking Committee chairman, said the plan’s framers should consider the full debt load of U.S. consumers, possibly including credit cards.
“We” have “got some strong concerns about what’s included here,” said Dodd, a Connecticut Democrat. “They haven’t limited this conversation exclusively to residential mortgages. So I know that other securitized debt is also going to be considered.”
Investors are unlikely to tolerate partisan wrangling and brinksmanship. U.S. stocks surged in the biggest two-day global rally in history as talk of the plan began to circulate Sept. 18.
The House will pass legislation to implement the plan by the end of next week, and the Senate will act soon after, Frank said yesterday in an interview on Bloomberg Television’s “Political Capital with Al Hunt.”
Stimulus Spending
The temporary plan is likely to include a “second stimulus” proposal with infrastructure funds, low-income energy aid and Medicaid assistance, Frank said. Congress will begin weighing broad regulation of hedge funds, private-equity firms and investment banks when it reconvenes next year, he said.
Frank, in a separate C-Span interview, said he expects Wall Street executives to give up pay and other perks in exchange for the federal intervention.
Officials devising the plan “need to make sure that they keep that hard-headed approach so that people are not profiting off this,” said Martin Baily, who was chairman of the Council of Economic Advisers under Democratic President Bill Clinton.
“To some extent that’s unavoidable,” said Baily, now a senior fellow at the Brookings Institution in Washington. “Anytime you do something like this you have the problem of bailing people out and creating moral hazard. That’s the reason why you hold your nose. But it’s better than the alternative.”
644 Shore
That one and Rolling Hills = 100K+ haircut.
Still too much delusional pricing, however.
Futures will be out soon – working on them now.
From above, I just reread the following and it made me think about the “estimates” made of the Iraq war costs. Congress did not “rubber stamp” that either, did they?
““This could be the biggest bailout in the history of the country and could ultimately cost $500 billion to $1 trillion,” Shelby, the ranking Republican on the Senate Banking Committee, said in a Bloomberg Television interview yesterday. “Congress is not going to rubber stamp something.” “
Good idea, Cindy. There are so many programs in this county that I can’t follow them. It seems that the involved parents have a better chance of taking advantage, though. I’m going to ask the teacher to keep her in the 2nd, but send home all the other homework for the advanced. I might as well keep busy until I’m working again.
vodka (621)-
My call too. We’ve screwed the pooch. Now, we’re a top-tier Third World country.
Does this mean soccer will get better here?
http://www.bloomberg.com/apps/news?pid=20601109&sid=aIaOyCf.U_bU&refer=home
Sept. 19 (Bloomberg) — As the U.S. government takes stronger measures to stabilize financial markets, some former Federal Reserve officials, lawmakers and Wall Street executives are saying too much has already been done.
“Every time they intervene, they do more harm than good,” said Peter Schiff, president of Euro Pacific Capital in Darien, Connecticut, a brokerage that manages $1 billion.
Critics of the rescues agree that government actions, such as those that prevented the failures of Fannie Mae, Freddie Mac and American International Group Inc., can’t postpone the inevitable worsening of housing and financial markets. They say the bailouts by the Fed and Treasury also encourage future reckless risk-taking by investors.
“If we don’t stop now, there will be no end,” said Gerald O’Driscoll, a former vice president of the Dallas Fed and now a scholar at the Cato Institute in Washington. He joins Vince Reinhart, former director of the Fed’s monetary affairs division, and Marvin Goodfriend, a former official at the Richmond Fed in questioning the market interventions.
They’re getting support from Republican lawmakers, who are stepping up their efforts to put a halt to further rescues. Yesterday a group of 100 lawmakers released a letter asking Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson to “refrain from conducting any additional government-financed bailouts for large financial firms.”
`Let the Markets Work’
“We may just be prolonging the housing slump,” said Congressman Scott Garrett, a New Jersey Republican. “We should let the markets work.”
The Fed or Treasury first stepped in to rescue investment bank Bear Stearns Cos. in March, followed by the takeover of mortgage companies Fannie Mae and Freddie Mac in September. This week the Fed put up $85 billion to keep insurance giant AIG afloat, and Congress is mulling tens of billions of dollars in loans to Detroit automakers.
The ranking Republican on the Senate Banking Committee, Richard Shelby of Alabama, said he wants the Fed to let markets work rather than opt for bailouts, even if the consequences are “brutal.”
“Where do we stop, where do we draw the line?” Shelby said in a Bloomberg Television interview. “I don’t know what road” the Fed “is going down,” he said. “If they don’t watch what they are doing, they are going down a path of no return.”
Minority View
To be sure, only a minority of lawmakers, financial professionals and former government officials have voiced opposition to further rescues. Prominent figures — ranging from former Fed chief Alan Greenspan and his predecessor at the central bank Paul Volcker to presidential candidates Barack Obama and John McCain — have called the Treasury and Fed actions necessary.
And rather than scaling back its involvement, the government is taking even broader steps to ease the crisis. “We’re talking hundreds of billions,” Paulson said in a press conference today. “This needs to be big enough to make a real difference and get to the heart of the problem.”
The Treasury tapped all $50 billion in the country’s Exchange Stabilization Fund to insure money-market mutual fund holdings, and the Fed expanded lending to commercial banks, in moves aimed at preventing the collapse of the credit markets.
Paulson and Bernanke are seeking to help banks remove illiquid mortgage-related assets from their balance sheets. Congressional leaders said they intend to pass legislation within days.
New Realization
“The Federal Reserve and the Treasury are realizing that we need a more comprehensive solution,” Senator Charles Schumer, a Democrat who chairs the congressional Joint Economic Committee, told reporters in Washington last night.
McCain today said that while he opposes the Fed’s playing a role in financial rescues, the government needs to be involved. The Arizona Republican said the central bank “should get out of the business of bailouts” yet also proposed creating a government “trust” to oversee mortgages and financial firms to help restore investor confidence.
[snip]
(652) Pat
Once your child is designated “talented and gifted” it follows them throughout their school years. Go for it..(and she has a better chance while actually in second.)
So next year, ask for the test scores – then promote the h@ll out of having her in that program.
Anyone…
I know I am trying to simplify a complex problem by asking this but:
How is this situation different from the S&L bailout – Why don’t they just let more banks fail? Is it the connectedness of the derivatives market?
Grim,
Please unmoderate, excerpt about bailout and pushback crom the Hill.
Grim,
Hinterlands report part two…
Hunterdon County FUTURE Comp Killers
GSMLS recorded 55 new actives in Hunterdon County this week. Six made this list:
MLS#: 2579117
1321 County Rd 519
Kingwood Twp
SLD: 11/23/05 $430,000
OLP: 09/17/08 $399,900
DOM: 3
MLS#: 2578206
248 SPRUCE CT
Raritan Twp
SLD: 09/26/05 $269,000
OLP: 09/15/08 $249,000
DOM: 5
MLS#: 2578437
6 CLEARBROOK LN
Raritan Twp
SLD: 02/26/07 $360,000
OLP: 09/15/08 $349,999
DOM: 5
MLS#: 2578250
22 VAIL LANE
Raritan Twp
SLD: 05/14/07 $705,000
OLP: 09/15/08 $689,000
DOM: 5
MLS#: 2579686
12 DORSET LN
Readington Twp
SLD: 11/17/06 $575,000
OLP: 09/18/08 $497,505
DOM: 2
MLS#: 2577333
38 Hillside Ct
Union Twp
SLD: 08/18/04 $182,000
OLP: 09/13/08 $165,000
DOM: 7
Michael Shedlock – Seeking Alpha
“How Bernanke Stunned Congress with the Truth”
“It was a room full of people who rarely hold their tongue. But as the Fed chairman, Ben S. Bernanke, laid out the potential devastating ramifications of the financial crisis before congressional leaders Thursday night, there was a stunned silence at first.”
“Congress was stunned because Bernanke finally admitted the truth (or at least came closer to doing so.) Congress ought to be reading blogs rather than listening to clowns like Paulson and Bernanke.”
He refers to him as “Paulson the Parrot.”
“Bernanke did not really admit the truth, he only hinted at it. Congress was too dumb to pick it up. The truth is the U.S. financial system is insolvent.”
Cindy, I’m no finance expert. I just happened to have worked from a distance on the stuff at various points during the last 20 years.
In my humble opinion, the major difference this public point of control relative to the market’s valuation of assets. This is all about what the stuff is worth.
Remember that value and reward (what the assets sell for) will be a function of the perceived risk.
RTC took over assets from dead entities to try to maximize value on sale. The “public good” message was that a transactional entity (S&L) did not have intrinsic value over the assets. Then the scam was to hold and red-tape the goods until they could get the most reward for the claimants.
RTC-2 will be taking assets live to try to keep the entity functioning. The public good policy statement here is that saving the entity for its ability to perform transactions is more important than the value of the asset. The market has already declared that these assets are worthless, in many cases, so obviously, the risk is higher to the taxpayer.
Cindy (665)-
The situation is completely different from RTC. Klink is invoking RTC’s memory in an attempt to put a hopeful face on a bomb of doom, because RTC had some real success (even though it was- in the end- a net money loser).
The difference?
RTC had a lot to do with real, tangible assets. They seized condo complexes, office parks and buildings and then auctioned them off. Many of these assets were Class A, turnkey properties. On the other hand, Klink’s BTC (Bust Trust Corp) will be a shitpile of worthless MBS and, by association, trillions in worthless derivatives that are piled on top of the MBS.
BTC proposes to relieve institutions of illiquid securities. However, no one seems able to address the real underlying problem: that these securities are largely illiquid BY THE OWNERS’ CHOICE. I think we’d shudder to see how much of this toxic paper is still carried on balance sheets at .80 to par. On the few occasions when MBS are offered and priced to market, the values range anywhere from worthless to .60.
So, what does BTC pay for this toxic sludge? Or, do they deem it worthless, take it and extract penalties and fees from their former holders? My guess is that BTC overpays, imposes wrist-slap penalties, and you and I get left holding the bag full of radioactive, gubmint-mismanaged slop.
And don’t even get me started on the derivatives. If the MBS are a black hole of doom, the derivatives are a galaxy (more like a death star) unto themselves. Somebody here mentioned that when one of the CNBC droids brought up the derviatives workout the other day, all the commentators went silent. That silence is probably the same silence that envelops the table Klink and Bergabe are sitting at right now.
I honestly think the whole BTC proposal was a Hail Mary, trotted out Thursday night…just to get everybody through yesterday. Maybe Klink and Bergabe schemed it up weeks ago, but I’d bet it was only with the idea of using it as a last-ditch tool once it became clear disaster was imminent.
These guys have no detailed plan, because there is no way to fix this mess other than letting markets clear. Any attempts to fix the problem make the problem worse.
“Senator Christopher Dodd, the Banking Committee chairman, said the plan’s framers should consider the full debt load of U.S. consumers, possibly including credit cards.”
Hey Chris, I have a better idea. Buy up every single mortgage. This will allow John Q to stay in his house and will solve WS’s problem, holding toxic sludge. In addition to this, allow every homeowner to lever their house 20-1, send out govt cc’s. This will get the ecomomy back on track and turn the lights on in the manufacturing plants in China. Subsequently, if China demands higher interest rates to buy our debt, just default. How many countries have stiffed us over the years? We’ll join Mexico and Canada and create that North American currency. Fcuk the Euro, we have a game plan.
Clot/Pat –
Thank You!
RTC – “real, tangible assets”
RTC2 – “worthless derivatives”
Oh My G-d!
Now that everyone is left glaring at the problem – it sure is getting out there-my fervent hope is that someone will ask the Roubinis of the world – “What can we do now to salvage the mess” – AND that our best and brightest point these clowns in the right direction…
“I think we’d shudder to see how much of this toxic paper is still carried on balance sheets at .80 to par. On the few occasions when MBS are offered and priced to market, the values range anywhere from worthless to .60.”
Clot,
Merrill provides us with the most recent benchmark, .05
Okay – so we need to manufacture something and bring back the service industry. Since we will be a third world country too – maybe we will end up being the most viable country to perform these tasks..
#545
“All the solutions you can think of for this mess only leads to five more problems.
That’s because all the solutions interfere with the process of markets clearing themselves. Any attempt at manipulation only exacerbates the core problem.”
I disagree and think this oversimplifies things. When you are facing a bank run, it is better for everyone to close the bank and create an orderly process for withdrawals. Similarly, when a company is facing a liquidity crisis, it is better for everyone for the company to go into bankruptcy, so that the company’s assets can be liquidated in an orderly manner rather than at fire sale prices.
In effect, our entire financial system has just gone into bankruptcy rather than suffer a massive bank run. since we can’t go back in time and prevent all of the toxic debt from clogging the system, this is the best choice available. yes, there will be money lost, but it will be lost over the long term rather than in a matter of days. by taking this paper out of the system, the government will also be able to realize higher value for it than any of the private entities could. nobody would have been immune if the financial system collapsed.
99# stu, finally, i got some poll numbers for you. basically, Ob lost 21 votes in battleground states last week even he was considered being benefit from this financial crisis.
from CNN:
An update of the CNN Electoral Map Friday suggests a tightening in the race for electoral votes in the crucial battleground states. CNN is moving Missouri, and its 11 electoral votes, from “toss up” to “lean Mc,” and is moving Wisconsin, which has 10 electoral votes at stake, from “lean Ob” to “toss up.”
Stu Says:
September 19th, 2008 at 8:41 am
Bi:
How about a report on the polls?
#570
“Cox and the SEC had best cut out the no-shorting rule in short order unless they want to see some wholely unexpected side effects.
Energy and energy markets are highly reliant on capital markets in order to fund exploration extraction and processing.”
this move frees up capital to be deployed for more productive uses, rather than forcing banks to put up more cash collateral.
http://money.cnn.com/2008/09/20/real_estate/fannie_execs.ap/index.htm
September 20, 2008: 7:39 AM EDT
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WASHINGTON (AP) — Mortgage finance giant Fannie Mae, taken over by the government earlier this month, announced Friday the resignations of four senior executives and said it was restructuring its organization.
The company, the biggest buyer and guarantor of home loans in the country, and its sibling Freddie Mac (FRE, Fortune 500) were taken over on Sept. 7 in a rescue plan that eventually could require the Treasury Department to put up as much as $100 billion for each of them over time if needed to keep them afloat as mortgage losses mount.
The executives and boards of both companies are being replaced. Herbert Allison, the former head of the TIAA-CREF retirement investment fund, was immediately selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp (USB, Fortune 500), was chosen to head Freddie Mac.
The Fannie Mae (FNM, Fortune 500) executives whose resignations were announced Friday are Chief Business Officer Peter Niculescu, Executive Vice President and General Counsel Beth Wilkinson, Executive Vice President and Chief Information Officer Rahul Merchant, and Senior Vice President for Government and Industry Relations Duane Duncan.
In addition, Fannie Mae said its three lines of business – single-family mortgage guaranty, capital markets, and housing and community development – and their top managers will report directly to Allison, who is president and CEO. The technology and operations division will report to Chief Operating Officer Michael Willliams, while the structure of the government and industry relations division is under review, the company said.
[snip]
Skep-tic
I think we may be coming from a similar place –
I concede that it is all f@cked up – but what can be done now…
Can anyone on the face of the earth do the Friday and Saturday crosswords anymore? I feel like a total idiot.
it is real: at least 20% of clinton supporters will vote for MP and another 20% will stay home on Nov. 4th.
Miguel D. Lausell, Former Senior Political Adviser to Hillary Clinton, and Clinton Delegate-at-Large Luchy Secaira today announced their support of the MP ticket.
Both are active Democratic political organizers in the Latino community.
http://www.rightpundits.com/?p=2086
#621
the GLBA had broad bipartisan support. i believe it passed the senate 92-8. obviously pres. clin-ton didn’t veto it. it was a good bill and the banks left standing today were made possible by it
HEHEHE :569
You were asking about holding Gold.
I think you should have some physical gold in your possession (not in a safe deposit box). The better way to avoid confiscation is to buy numismatic coins. The St. Gaudens $20 gold piece is a work of art. Coin collections have been ruled off limits to confiscation in the past. If they were to try and change that rule, they would have a revolt of collectors on their hands.
“pre-1933 gold coins — an area of the gold market previously recognized by presidential executive order and government regulations as historical collectors’ items and thus defined and treated differently than gold bullion.”
#632
“Americans are pathetic. I hope it all burns.”
thanks for letting us know what you really think. nothing is preventing you from leaving the country, you know.
stu ang gator, in case you missed it:
“Top Hillary Clinton fundraiser and member of the Democratic National Committee’s Platform Committee Lynn Forester de Rothschild endorsed Republican presidential nominee JM on Wednesday”
http://blogs.abcnews.com/politicalradar/2008/09/clinton-fundrai.html
#641
“anyone hear NPR arpound 6:45 this evening? their description of the bailout and how is was really ” a bailout of main street, not a bailout of wallstreet” was downright insulting!!!”
it is both
skep,
Yup. The bill is just like New Shimmer, a dessert topping AND floor polish in one.
Inputs please !
I have some cash value in a whole life insurance policy(Everyone has moments of weaknees, when fed(up)-logic overtakes pure-logic).
The company is a private entity. By the virtue of holding a policy, I am also part owner of the company(bag). Being private, I don’t know the true state of the company or how they are invested. My question is if the company goes under, there are provisions, by which a state board will pay out insurance claims. What happens to my cash value. Where to look for that info. If nobody is going to pay me back, I am planning to take out the cash value and put in a FDIC insured MM or CD account(atleast the FDIC is expected to cover it for whatever the dollar is worth then).
Would appreciated any info or pointers.
Thanks in advance
“Bailout could hinge on home prices”
http://www.nj.com/business/ledger/index.ssf?/base/business-10/1221884790179610.xml&coll=1
skep-
I thought you said the markets were not overvalued. Then, why does the government have to interfere at all? I am sure that a lot of people who feel the same way will swoop in case some people dump their assets.
vic– fundamental value goes out the window in a bank run
Buy a home now before the Government buys up all the mortgages and prices shot up another 20%. You will wish you have bought it at today’s prices.
All the market players had a chance to look at Lehman’s balance sheets, AIG’s balance sheets, WAMU etc.
Obviously they did not see any value in there. Where is the fundamental value?
If there is fundamental value, shouldnt these guys open up their balance sheets to the public so that we can know what we are buying?
There should be an open congressional hearing, broadcast live on all the channels which will enable us to hear the debate and make an informed decision if we are to foot the bill.
Closeted weekend meetings smacks of desperation and intrigue.
Clot,
Merrill provides us with the most recent benchmark, .05
_______
BC/Clot,
Exactly. There was a clear mark to market, but no one wants to admit it.
Not sure if anyone recalls my HF anecdote from well over a year ago – when a hedgie went to try to price their CDOs, thinking the traders would say at worst 85cents/dollar, and the top IB came back with .05. OVER A YEAR AGO.
They all knew then, and certainly really know now. That’s one reason of course why the gang was so terrified at at a forced liquidation, showing clear as day that the crap wouldn’t clear – at any price.
The percentage of this sh*t that is completely worthless will be disclosed – long after WE pay full freight.
Hearing today a group of senators are discussing attempting to block the BTC (props to Clot) –
Can you imagine the market panic if that’s even a remote possibility?
OOOPS! Sorry, can’t protect yourself- no 799 shorting, courtesty of COX. Better to just sell everything, ask questions later.
Unintended consequences, straight ahead!
#632 – Guy Fawkes – No, I shouldn’t have expected something different. I’ve read Machiavelli as well, I understood exactly what I was seeing around me for the past 20 – 25 years. The Muslim radicals just sped up a process that was already underway under the rubric of the “war on drugs”.
I, largely, didn’t want to admit to myself what was happening or that the people around me were stupid enough to let it happen. Mostly the latter I think. I’ll lay the blame as squarely at my own feet as with others.
I know how this has to end. I have for a while even if I don’t say it out loud too often.
We are pathetic. The country and culture are diseased and putrescent, it needs to be put down. I keep looking around for someone else, someone other than myself, to stand at the head of the crowd and lead people on. No one shows. I know my own reluctance to take that spot, my own cowardice, is what is used against me to keep the whole thing grinding on.
Where is the new Adams? I’ll gladly fight, I just don’t have what it takes to be him.
Question –
What is the safest way to diversify yourself into a basket of currencies?
Everbank?
Also, which currencies do you think are worth the paper they are printed on?
(692) Victorian
“There should be an open congressional hearing broadcast live…”
Excellent suggestion…
Transparency is needed – the trust is gone.
It is now obvious that many lies have been told. No matter what the intentions – millions now feel they were duped.
Contrary to what many say, folks are talking about this now – around here anyway. This is about their money.
vic 696- [696!]
Also, which currencies do you think are worth [the paper] what they are printed on?
Bullion.
sl
Please take some time to write to your representative letting him/her know about your opinions.
https://forms.house.gov/wyr/welcome.shtml
“There should be an open congressional hearing broadcast live…”
What? and interfere with my Deal or No Deal broadcast??
Huumph!
/scathing, excoriating sarcasm OFF.
sl
#
# still_looking Says: Your comment is awaiting moderation.
September 20th, 2008 at 11:13 am
“There should be an open congressional hearing broadcast live…”
What? and interfere with my Deal or No Deal broadcast??
Huumph!
/off rant.
Wow! Mod’d. go figure.
sl
Here is the figleaf of financial responsibility folks will hide behind:
“The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time”
Of course, when it is not sufficient, who honestly believes this “debt ceiling will not be raised?
http://www.cnbc.com/id/26803766
Draft of the Treasury’s Proposal for Toxic Debt
DRAFT OF THE TREASURY’S PROPOSAL FOR TOXIC DEBT
By CNBC.comCNBC.com
| 20 Sep 2008 | 10:35 AM ET
LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY
TO PURCHASE MORTGAGE-RELATED ASSETS
Section 1. Short Title.
This Act may be cited as ____________________.
Sec. 2. Purchases of Mortgage-Related Assets.
(a) Authority to Purchase.–The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.
(b) Necessary Actions.–The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;
(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;
(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;
(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and
(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.
Sec. 3. Considerations.
In exercising the authorities granted in this Act, the Secretary shall take into consideration means for–
(1) providing stability or preventing disruption to the financial markets or banking system; and
(2) protecting the taxpayer.
Sec. 4. Reports to Congress.
Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.
Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.
(a) Exercise of Rights.–The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.
(b) Management of Mortgage-Related Assets.–The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.
(c) Sale of Mortgage-Related Assets.–The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.
(d) Application of Sunset to Mortgage-Related Assets.–The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.
Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time
Sec. 7. Funding.
For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Sec. 9. Termination of Authority.
The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.
Sec. 10. Increase in Statutory Limit on the Public Debt.
Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.
Sec. 11. Credit Reform.
The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.
Sec. 12. Definitions.
For purposes of this section, the following definitions shall apply:
(1) Mortgage-Related Assets.–The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.
(2) Secretary.–The term “Secretary” means the Secretary of the Treasury.
(3) United States.–The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.
© 2008 CNBC.com
URL: http://www.cnbc.com/id/26803766/
Ahh, and we raise the debt ceiling to, drum-roll please $11,315,000,000,000.. What is pre-recessionary GDP? About $15T?
sysadmin-
what state are you in, what state did you buy the policy in, what is the death benefit of the policy, what is the cash value?
call on monday, phone numbers attached,
see below:
http://www.insure.com/articles/generalinsurance/bankrupt-company.html
For the first time in the 12 years I have worked at my school, fed-up teachers are talking about the economy instead of “Big Brother” or “Dancing with the Stars.”
To you all, this has all been going on for what feels like an eternity. But for us regular folk, many needed the sky to start to fall to pay attention. I know that is bad but it took the “trust” to fly the coop for us to pay attention. It also helps that the blaring headlines each day are all about the economy.
I believe in the American people and what they can accomplish if they put their resources to it but it does require leadership and the truth has to be told.
I am not saying the financials are not being appropriately valued. In fact, I think anyone who claims to know the value of these companies is full of it. Our economy is much bigger than these companies, but they are a huge bottleneck. If they all were to fail, everything would shut down. People who think we should just let them all collapse either do not understand how essential these entities are as a group or they are simply masochists who would take perverse pleasure at watching our country descend into chaos. No one other than the gov’t has the capacity to stop this train wreck at this point. This is the entire point of gov’t– to prevent chaos. People who are screaming about this being the end of the free markets are taking a pedantically narrow view. This is the equivalent of saying the right of freedom of assembly is gone forever when the gov’t declares martial law during a riot or a hurricane. Practical considerations sometimes need to be prioritized over intellectual purity. The fact that your paycheck clears next week and that there will be food in your grocery store should make you grateful that our current leadership had the sense to recognize this, however belatedly.
691# Frank, acctually, there is no inventory left over for next spring. with this mortage bailout, i think you are right.
>Frank Says:
September 20th, 2008 at 10:40 am
Buy a home now before the Government buys up all the mortgages and prices shot up another 20%. You will wish you have bought it at today’s prices.
“(2) protecting the taxpayer.”
Is this their idea of a legislative condom? Doing what they are planning to do to the taxpayers is ok because they are planning on wearing a condom?
# 705
Cindy,
Have them call Boxer et. al and scream for them to not let Wall Street fat cats profit from what they have done over the past ten years. It is one thing to lend the banks $ that they pay back at market interest, it is another to let them skip off into the sunset at their beach and island estates.
You can reach Barbara’s DC office at 202-224-2130
You can reach one of her top aides via cell phone at 202-236-6161.
actually, 202-224-2130 may work better.
“by taking this paper out of the system, the government will also be able to realize higher value for it than any of the private entities could.”
skep,
You are the winner, the most assinine statement on this blog. The govt is more efficient, can extract more value than the private sector? What country do you reside in?
What makes you think that the govt will realize higher value for AIG, when Warren B would not step up to the plate at $4 a share? The market has already spoken, Merrill’s crap was valued at .05. That’s marked to the market. How will the govt mark the toxic sludge that they will de devouring? Up the taxpayer’s #ss. How did they realize a higher value?
If you have a mortgage, you are paying twice, your mortgae payment plus your share to bail out Fannie/Freddie. Some value.
Oh by the way, there wasn’t much talk regarding the latest treasury’s #’s; $8B of net sales,long maturity, US securities, by foreigners in July after purchasing $36B in June. Also, $50B net foreign sales of agency debt, in July, as compared to $30B of net purchases of same in June. I guess foreigners disagree with your assessment.
706 Skep-tic
Would you just speak for me please. You are much more eloquent and I totally agree.
709 Shore
Know that calls are already being made, emails sent, letters written. Folks here have had it.
We have lost half of the value of our homes, the State just now settled on a budget after a record-breaking 81 days and simply pushed the cuts into next year, and now the loss of trust in the banks.
I have written to my 2 senators and let them know how I feel.
Here is the link-
http://www.senate.gov/general/contact_information/senators_cfm.cfm
BC – We can’t let this country fail with out the people actually knowing what is happening. They aren’t being given a fighting chance. They have been lied to.
where has biden’s money gone? he claimed his networth is around $150K. is he the client #10?
“Despite income ranging from $210,432 – $321,379 over the ten-year period, the Bidens have given only $120 – $995 per year to charity, which amounts to 0.06% – 0.31% of their income.”
http://politicalwire.com/archives/2008/09/12/bidens_tax_returns_show_little_charitable_giving.html
“The fact that your paycheck clears next week and that there will be food in your grocery store should make you grateful that our current leadership had the sense to recognize this, however belatedly.”
So, this has what it has come down to????!!!???
How about we take the bonuses of all the executives who have profited from their greed and add them to the bailout fund. I am sure we can collect a cool billion or two.
Where was the regulation when the market was going irrationally higher??? Where was the ban on buying back then?
How about we let the banks fail and use this Trillion dollar fun to help the people who will be affected due to the banks failing – the industries who need this money, who actually produce something?
I am sure that the banks who have intrinsic value will continue to survive. Why has there been no bear raid on Wells Fargo?
“You are the winner, the most assinine statement on this blog. The govt is more efficient, can extract more value than the private sector? What country do you reside in?
What makes you think that the govt will realize higher value for AIG, when Warren B would not step up to the plate at $4 a share?”
BC– the gov’t will realize higher value because it will not be FORCED to sell into the middle of systemic collapse. yes, there will be writedowns because the fundamental value isn’t what everyone pretends, but this is still much better in my opinion than panic selling.
Cindy [705]
Glad the teachers are tuning in but don’t get too excited. As of noon today the “Most Viewed” story on CNN is “Travis Barker injured in a plane crash”
Google News shows a financial related story only after the more highly ranked item on Ryan O’neal and sons drug bust.
At least on Yahoo News its ranked #4, but even there the drummer for a one-hit wonder band ranks more highly. After all, he did used to date Nicole Richie. Now how can we get Richie to dump that Madden fella and turn her attention to Paulson?
#716
“I am sure that the banks who have intrinsic value will continue to survive. Why has there been no bear raid on Wells Fargo?”
what makes you so sure? Another week like this past one and everyone would have been running to every bank, MM fund, mutual fund company, etc to withdraw money. all lending would have stopped. every business depends on access to credit. most households have little savings and credit is there cushion. yes, the situation sucks but we need to recognize it for what it is, not wish it was something diff’t or sit around looking for people to blame while the entire system collapses. You can count on the fact that people will go to jail. You can count on the fact that some people who got rich in all this will be ruined financially. People will demand it. Of course, some people will still get away with what they did (homeowners, CEOs, etc), but that is life. Unless someone has a time machine, we have to deal with the present and it is a mess
# Cindy Says:
September 20th, 2008 at 11:47 am
BC – We can’t let this country fail with out the people actually knowing what is happening. They aren’t being given a fighting chance. They have been lied to.
____________
Cindy, all due respect, the train left this station a long time ago. The system has absolutely failed. And now those same people are crafting the “solution.” What do you think the result will be?
How do you protect yourself from “being lied to?” Only one way I know. Would you trust a doctor who’s saying your kid is fine, when he can’t get out of bed?
Ignorance of the general populace – or politicians – isn’t an excuse the debt collector will deposit in the bank.
And it won’t save us, or our government, either.
“The fact that your paycheck clears next week and that there will be food in your grocery store should make you grateful that our current leadership had the sense to recognize this, however belatedly.”
We, on this site, recognized it for the past two years. Our leaders were sucking the system dry while their heads were up their #sses. Let’s give them a standing ovation. Our leaders, including Cox, should be hung by it. The SEC changed the rules on leverage and sat back while the IB’s levered 30/40/50-1. Now the fat cats ban short covering, allow the markets to rally, give their buddies a chance to unload their stock to the sheeple and walk away scott free. Who do you think was shorting Bear/Lehman? The same players that are now retreating under guise of bailing out Main Street.
So zillionaire’s pass on the crap to taxpayers and we applaud our leaders for recognizing it? How about we send our fire dept to a blazing inferno and cheer them for doing nothing, conserving water, since conditions have been dry lately?
Every elected leader that votes for this should be thrown out. That’s how we should cheer our leadership. A good old fashioned Bronx Cheer.
Chicago’s nice, so far.
Wife and I were thinking about this at the airport: Would anyone here seriously consider a protest of sorts in the middle of Wall Street during a workday in the near future?
Saw a commenter earlier say that if this bailout s*it were to happen in India or some other country, there would be protests and riots … well, just because 80% of the population here is comprised of gimmie-my-American Idol-and-beer-and-chips, that doesn’t mean we all should deal with it.
Im sure we could wrangle a scintilla of media coverage …
would anyone seriously consider something like this?
“BC– the gov’t will realize higher value because it will not be FORCED to sell into the middle of systemic collapse. yes, there will be writedowns because the fundamental value isn’t what everyone pretends, but this is still much better in my opinion than panic selling.”
Take the pain now or later. The bottom line it does not go away. You can’t draw blood out of a stone. The crap is worthless today, will be worthless tomorrow. The only difference, the master on his yacht does not have to worry about it. However, you do.
“Who do you think was shorting Bear/Lehman? The same players that are now retreating under guise of bailing out Main Street. ”
– Exactly. GS and MS were the biggest abusers of naked shorting in case of Bear. Do we hear Cuomo talk about that??
http://www.npr.org/templates/player/mediaPlayer.html?action=1&t=1&islist=false&id=94807831&m=94807818
“Every elected leader that votes for this should be thrown out”
– This is what I wrote to my senators. If they value these assets anywhere upwards of 5c on the dollar, they can forget my vote.
BC– great, we were right. To be honest, right now, I wish we weren’t. the people in charge were stupid and greedy and some were probably criminals. they should be blamed, but blame doesn’t get us out of the mess we are facing right now. it is not worth it to destroy everything just to prove a point.
“Take the pain now or later. The bottom line it does not go away.”
maybe we will have to agree to disagree, but I think the pain would be greatly and senselessly magnified in a panic. that is what we are trying to avoid. maybe it will ultimately be impossible to avoid, but we should at least try
jafo 634,
Not to be a beat a dead horse here, but from what i ahve read i think that the sunburn ( moskit) combined with other non conventional tactics would have a real chance of devastating the US navy. our navy was designed for blue water conventional conflict. not mixed water operations
The NATO designation SS-N-22 ‘Sunburn’ is believed to be designated P270 Moskit, the air-breathing variant of the naval missile 3M80 (the designation 3M80 apparently referring to the Mach 3 speed of 1980 weapons). It may have been designed originally to enhance the effectiveness of Missile Cutter Brigades (that is, units of missile-equipped FACs) and Destroyer Brigades hitherto dependent upon the Malachit or SS-N-9 ‘Siren’. It is used on “Sovremennyy” destroyers (eight missiles on each) and on “Tarantul [Tarantula] III patrol ships (four missiles on each). A high supersonic speed was specified to reduce the target’s time to deploy self-defense weapons, indeed the weapon was designed specifically to strike ships with the Aegis command and weapon control system and the SM-2 surface-to-air missile.
Does anybody else besides me LOVE Marc Faber’s accent?
I just e-mailed my two NJ Senators. I wonder what good it’ll do.
BC (721),
Truer words never spoken.
They should be all thrown out, fired, put in jail. Since our citizens don’t know better, they’ll just replace with more of the same.
Our country continues on the path to its sad demise.
When I think about what so many have sacrificed for us to p-ss it away, a few trillion at a time, it turns my stomach.
Maybe the Congress will send lifetime supplies of Prozac to everyone to help fend off “a Depression.”
sl
#729,
ironically, email is the worst way to contact your representatives. It is silent, convenient and easily invisible/deleted/forgotten. You have to hand write and send letters or clog the phone lines. Gubmint only responds when mass inconvenience is put upon them.
@722
“Would anyone here seriously consider a protest of sorts in the middle of Wall Street during a workday in the near future?”
Impossible. Never. Not in America. In America you don’t protest when you are mad. You shop. W needs to come out and ask America to go their nearest mall and exercise our patriotic duty.
HC
Dear X Representative,
Please do not support the efforts to bail out poorly managed lending institutions with my tax dollars. As a responsible citizen, I do not feel it is right for you to ask me to pay for other peoples’ financial mistakes, especially since a bailout encourages more risky behavior,
with the assumption that taxpayers are on the hook.
I appreciate the goal of helping the economy correct itself, but the proposed bailout will only reward people who acted irresponsibly, and it will punish people who worked hard and diligently manage their finances by not becoming involved in the housing/credit bubble.
The housing market has begun a process of correction. This is necessary in order to keep housing affordable in the long-term. Let the market correct so we can achieve
stability again, and people are able to save and afford the house of their dreams over time. That really is the true American Dream.
Sincerely,
Your Name
City, State
#732
Actually, I think it depends on the Rep./Senator. I have contacted my Rep. by email several times and each time have gotten a timely (surprising actually) reply. Tech savvy is probably the determining factor.
Emailed Rep. and Sen. today.
I have had to reboot and do not know if it is my computer or the long thread??? If you never hear from me again – I crashed.
(720) Steve
“Cindy, all due respect,…”
I’m not due any respect…I have been ignorant – educated by this blog and the books recommended here.
“…the train left the station a long time ago…”
Steve, I know that now. My apologies. I am truly sorry that I have been ignorant and I know I have been. I do not have access to the internet during the day and the story has truly been told on the blogs. I am not the only one in this situation. I have had to spend what spare time I have reading these posts in the AM. It is probably easier to have access throughout the day.
I guess too many of us across the nation have been so consumed with our everyday lives that we allowed this to happen.
Economics is not a particularly interesting subject to most and politics is even less so. It took the lack of trust in banks to get everyone’s attention.
I wonder, back in the 30’s…how many innocent folks got taken down – no blogs then. Maybe we can do some good.
#734
Well written
This is outrageous. They are including commerical mortgages in there!!!!!!!!!
WAKE UP PEOPLE!!
“Sec. 12. Definitions.
For purposes of this section, the following definitions shall apply:
(1) Mortgage-Related Assets.–The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.”
skep 726,
“at least we tried”???
so better luck next time and now the taxpayer is stuck with a 20 trillion $ bill for the attempt? Yes the real bill would be that high!
so are we going to confiscate all real property and assets of the banks and the bankers who worked for them when this attempt doesnt work, in order to pay the trillion $ bill?
I believe that history shows that no government can successfully manage a financial collapse to mitigate harm to citizens. The seduction of graft and greed is to great, and besides it takes significant corruption to even get to this point. SO the people in power are clearly incapable of making the hard selfless choices.
I think we definitely should agree to disagree on this point.
On a similar note, its starting to look like the AMero might actually be the best way out of this mess assuming you want the US government to more or less continue in its current form.
I dont. I think we need a hard crash and new leaders in the halls of power. Only a forced purging will ever accomplish that.
“Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
– So, Paulson is our new master.
In the words of Thomas Jefferson:
The British ministry have so long hired their gazetteers to repeat and model into every form lies about our being in anarchy, that the world has at length believed them, the English nation has believed them, the ministers themselves have come to believe them, & what is more wonderful, we have believed them ourselves. Yet where does this anarchy exist? Where did it ever exist, except in the single instance of Massachusetts? And can history produce an instance of rebellion so honourably conducted? I say nothing of it’s motives. They were founded in ignorance, not wickedness. God forbid we should ever be 20 years without such a rebellion. The people cannot be all, & always well informed. The part which is wrong will be discontented in proportion to the importance of the facts they misconceive. If they remain quiet under such misconceptions it is a lethargy, the forerunner of death to the public liberty……
What country before ever existed a century & a half without a rebellion? & what country can preserve it’s liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance? Let them take arms. The remedy is to set them right as to facts, pardon & pacify them. What signify a few lives lost in a century or two? The tree of liberty must be refreshed from time to time with the blood of patriots & tyrants. It is it’s natural manure.
the full The “Tree of Liberty” letter
From Thomas Jefferson to William Smith
http://www.theatlantic.com/issues/96oct/obrien/blood.htm
skep 726,
“at least we tried”???
so better luck next time and now the taxpayer is stuck with a 20 trillion $ bill for the attempt? Yes the real bill would be that high!
so are we going to confiscate all real property and assets of the banks and the bankers who worked for them when this attempt doesnt work, in order to pay the trillion $ bill?
I believe that history shows that no government can successfully manage a financial collapse to mitigate harm to citizens. The $eduction of graft and greed is to great, and besides it takes significant corruption to even get to this point. SO the people in power are clearly incapable of making the hard selfless choices.
I think we definitely should agree to disagree on this point.
On a similar note, its starting to look like the AMero might actually be the best way out of this mess assuming you want the US government to more or less continue in its current form.
I dont. I think we need a hard crash and new leaders in the halls of power. Only a forced purging will ever accomplish that.
Protest in Wall Street: great idea. Let’s do it. I’ll gladly take a sick/personal day next week. Sign me up.
sybarite!!!!!!
good to see you are still around. hows life?
Who gets the shaft? Well, I know none of us here are getting the gold mine.
Colin Barr, senior writer
Last Updated: September 19, 2008: 5:32 PM EDT
The Merrill chief did the prudent thing accepting a buyout from Bank of America.
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FORTUNE (New York) — Henry Paulson and Ben Bernanke have saved us, for now, from a market meltdown – but at the cost of allowing the folks who caused the current crisis to keep ducking reality.
In the long run, guess who gets to bear that cost?
The Treasury secretary and Federal Reserve chairman have spent September dashing off blank check after blank check in a bid to quell turbulent markets. Since Sept. 5, the feds have pledged $200 billion to shore up mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), $85 billion to prop up insurer AIG (AIG, Fortune 500), and $50 billion to guarantee money-market funds.
Then there are the untold sums the U.S. might spend under the plan Paulson unveiled Friday to set up a bad bank to relieve institutions of their troubled mortgage assets. And let’s not forget the hundreds of billions the Fed has poured into the markets in the name of maintaining liquidity.
Even in a U.S. economy that produces $14 trillion worth of goods and services a year, that’s a lot of cash.
Spending all that money, sooner or later, will intensify long-standing questions about the nation’s fiscal health, possibly at the expense of another drop in the value of the dollar.
“We’re going to be sorting this out for years,” says Howard Simons, a strategist at Bianco Research in Chicago who questions the blitz of taxpayer spending on programs that haven’t even been debated in Congress.
Ultimately, what could prove to be the most expensive aspect of the bailout spree is the message the government is sending to firms in which the market has lost confidence. Prudent management, it seems, will be punished, while the status quo – however unhealthy – must be maintained at all costs.
The strong stock-market rally of the past two days aside, intervention that fails to foster a shakeout of weaker firms will only delay the reckoning that must occur before a sustainable economic recovery can take shape.
“We continue to believe that the financial sector is in need of massive consolidation because the sector simply has too much lending capacity left over from the credit bubble,” Merrill Lynch investment strategist Rich Bernstein writes Friday. “History shows well that consolidation is the primary driver of post-bubble economies.”
The upside to down
Though the free fall in financial shares over recent weeks wasn’t pretty to watch, it had the sanguine effect of forcing businesses with questionable fundamentals to confront an uncertain future. Take the case of Merrill Lynch (MER, Fortune 500) chief John Thain.
Thain took over at the struggling broker last November, promising to “continue to grow Merrill’s global business and add value to our customers and our shareholders.” He then spent 10 months recognizing more than $50 billion in losses, mostly on risky mortgage-related debt gone bad, and raising almost $30 billion in new capital, in a furious fight to keep the 94-year-old firm independent.
But in the meantime, the market was concluding that Merrill and its rivals at Lehman Brothers, Morgan Stanley (MS, Fortune 500) and Goldman Sachs (GS, Fortune 500) were pursuing a business model – the standalone trading firm that borrows heavily in the short-term debt markets – that makes no sense in an era of risk aversion and rising funding costs.
Thain, after a game fight, conceded to the market’s view Monday, when Merrill – facing the prospect of a run on its shares after Lehman imploded – agreed to sell itself to Bank of America (BAC, Fortune 500) for $44 billion in stock.
Thain, of course, had seen his peer Dick Fuld run Lehman Brothers into the ground by refusing to accept the low-ball offers of potential partners, a stand that ended up putting thousands of Lehman workers out of work. Thain chose instead to take a deal that likely saved most of Merrill’s 60,000-plus workers.
And yet now – with the feds organizing a bailout and banning short-selling, the practice of betting against a company in the stock market – Thain’s decisiveness seems misplaced. Rather than acknowledging economic reality and selling his firm, he could have waited for a handout and Merrill could have lived to see another day, it now appears.
Dodging the tough calls
Thain’s rivals seem to be reaping the rewards of expanded federal largesse. Morgan Stanley, after plunging as low as $16 a share in panicked trading Wednesday afternoon, has recovered to the low $30s, possibly forestalling the need for the firm to find a merger partner such as Wachovia (WB, Fortune 500). CEO John Mack, who responded to his firm’s plunge with a memo to employees blaming short-sellers, surely likes the way this week has turned out.
But for the rest of us, the feds’ rush to defend teetering financial firms only defers the tough decisions that will need to be made before this crisis subsides – at the expense, perhaps, of repeating Japan’s so-called lost decade of economic stagnance after its property bubble collapsed around 1990.
History shows that setting up bad banks without forcing financial firms’ managers to confront their problems won’t solve anything.
“This seems to us,” Bernstein writes, “to be a very Japanese approach to solving a credit crisis.”
http://money.cnn.com/2008/09/19/news/paulson.wrong.message.fortune/index.htm?postversion=2008091917
There isn’t a country in all of socialized Europe that intervenes in its economy the manner our free market government is about to force upon us. All in the name of rescuing the incompetent fools who have buggered our banking system and saving what is arguably the most fiscally stupid generation in American history. I may not vote this year since any vote will only validate the political class which thinks this is such a great idea.
# 732 “ironically, email is the worst way to contact your representatives. It is silent, convenient and easily invisible/deleted/forgotten. You have to hand write and send letters or clog the phone lines.”
Barbara,
With all due respect, I do lots of business on the Hill and letters via post are THE WORST way to get things to your representatives. Fax is the best way, telephone is good, e-mail is actually better than telephone.
it is also great to show up. No I know a trip to DC is not in everyone’s cards, but a trip to one or more of the district offices is easy to do. Also, using data from the FEC or NJ by the Numbers can provide one with the home address for a Rep in NJ. Stop at their front door and respectfully and calmny lay out your position and wish them a good weekend.
Mail is a poor method because it does not get delivered quickly, and much of it gets damaged or \destroyed in the process of ensuring that it does not contain anthrax etc.
Dear Senator/Representative,
I fully support government efforts to rescue our banking system and provide aid to distressed homeowners.
I have only one uestion – Where’s my free house?
Sincerely,
A taxpayer who’s not in debt (as long as you don’t count the wazillion dollars you’re about to give Wall Street.)
“Wife and I were thinking about this at the airport: Would anyone here seriously consider a protest of sorts in the middle of Wall Street during a workday in the near future? ”
Laughing,
Like you mean get involved in politics. Like, wow. I dunno, that kinda cuts into ones’ life, no? Politics, like, isn’t, like all that important or interesting anyway, ya know what I like mean.
Seneca,
I am so out of the pop-culture zone that, not only do I have no idea who Travis Barker is, I have no interest in even googling him.
The problem is too many people do, and too many people do not pay attention to the things that make it possible for a republic to sustain itself, let alone flourish, and there are so bloody many of them that the policy makers seem to feel obliged to rush in and save those folks from themselves.
if the gov’t could allow these intitutions to fail without completely destabilizing the broader economy, they would. that is what they tried to do with Lehman, and things thereafter starting spinning completely out of control. this is not simply about bailing out the rich and connected, as much as it may be tempting to think so for the conspiracy minded
bi,
My wife and I never thought of ourselves as being overly generous with respect to our gifts to charity (about $15-20k a year), then we started looking at what many politicos and others whose tax returns have become public give.
I haven’t read through all 750+ comments in this weekend’s open discussion, but, doing some quick math: $750b (bad loan bailout)divided by approx 150m taxpayers = $4666 each. That’s after tax money of course. Pre-tax you probably have to make $7500 or so to pay your fair share of the bailout. Thanks to everyone who played by the rules and lost anyway!
#745,
we aren’t talking about doing business, we are talking about letters of complaint from the constituency. I too know people who work in the gov’s office and who have worked on senate staff. Piles of envelopes get attention. Massive amounts of email get an autorespond. Its just a click, no envelopes have to be addressed back, no staff have to have their time significantly taxed. Letters take longer on both sides, that’s why they are more effective.
skep,
I was talking to one of bush’s top economic advisors yeasterday. They are more frightened than a Jamie Lee Curtis character about an hour into a slasher film. Think a guy surrounded by a group of thugs and just spinning wildly, flailing his arms, holding a knife and hoping to keep everyone at bay until he thinks of something.
I am not inclined to put any deceitful practice past this administration (just look at the lies that went into the Iraq war resolution), and I believe they are capable and probably guilty of engaging in illegal conspiracies. That said, have been persuaded that they were just so d@mned stupid or arrogant in thier behavior that they did not see this coming to a head.
They saw the nation’s economy being swept towards rapids, above which it could not hold its head, and believed the workd’s economy might follow.
I commend them for acting. Nevertheless, it is up to congress to clean up this proposal and protect the taxpayers. They would make me happy if they inserted criminal penalties and seizures of ill-gotten gains, a.k.a. salaries and bonuses for the IBs, brokers, etc. over thee past 10 years.
“this is not simply about bailing out the rich and connected,”
– Then why this section put in there?
““Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.””
world’s, even. Light’s green.
“we aren’t talking about doing business, we are talking about letters of complaint from the constituency.”
Barbara,
If it will make you feel better, send a letter. If you want your complaint to actually get heard, and perhaps acted upon, fax, e-mail, or show up in person. If you mail a letter, it will not get there.
No governor’s office got anthraxed. Multiple Hill offices did. The folks up there remember taking antibiotics to avoid being killed. They do not want your letters or mine.
BILL MOYERS: You say it’s the greatest story never told.
KEVIN PHILLIPS: Well, the greatest story never told in several senses. The first sense and when I do bad money, it’s bad capitalism and bad money in the sense of the dollar and bad money in the sense of bad dog, bad Wall Street. But what’s here that doesn’t get the attention is the United States in the last 20 years undertook an enormous transformation of itself with no attention paid. And what it means is and what makes all this so frightening is the country is at risk because of the size of the financial sector that has never been graded on its competence and behavior in any serious way. They are the economy at this point. And we are now seeing what happens when a 20 to 21 percent of GDP financial sector starts to come unglued.
It’s going to be a painful adjustment across-the-board for next decade or more for America and most Americans.
Victorian,
Nice for the Executive and Legislative branches to try to neuter the judiciary.
#749 – With all due respect, what economy?
Buying stuff made in China with Chinese money?
Buying and selling each other houses?
Buying peoples time/services?
We have no economy to save. Just an empty shell.
756,
nice hyperbole. I’ve written letters since 9-11 and I have had them respond back.
http://graphics8.nytimes.com/images/2008/09/20/world/20islamabad-600.jpg
One of the MOST SECURE places in Pakistan. Err, used to be, anyway.
lisoosh,
actually we do. we ar the #1 arms dealer in the world!
we just need a WWIII that the US stays neutral in while selling weapons to everyone else. viola! problem solved
Hey Ket,
Since the blog has been added to the blocked list at work, I’ve been hampered in my ability to keep current, and posting in the evening just isn’t the same.
Little update though, might be switching employers quite soon, due to a pretty attractive job offer. I was shocked that I was able to get an offer given the hiring climate, but I got it. Funny thing is, I wasn’t even looking to leave, the job practically fell in my lap!
760
You win, Barbara. I stand chastened and corrected. Clearly, you spend more time in the House and Senate Office Buildings than I do. I will need to correct the various staff next time I am on the Hill and tell them that they do in fact prefer snail-mail to e-mail, despite what they say.
Bye the way, what kind of messenger service do you propose people use to get the messages to the offices faster than fax?
barbara, shore guy
mial/e-mail/call/stop in.
DO what ever works best for each of you!
and thank you both for your input :)
Oh, and I’m serious about the protest in Wall St. thing. Where the F is the accountability! This is a f-ing outrage.
syb,
sweet! best of luck, keep me updated!
Ket – well that makes it OK then.
“With all due respect, what economy?”
The ownership society, of course.
i wonder what % of the regular posters on this blog are on watch lists???
shore 763
is that a picture of waLL STREET?
Ket,
Thanks, and I’m proud to say that the company which made the offer is an American company, with global HQ in Bergen County, and looks like it’ll stay that way for the foreseeable future.
#770 – The one where we all own each others debt?
“Oh, and I’m serious about the protest in Wall St. thing”
One would need to hank in effigy various people to get attention. Lots of children chanting, don’t mortgage my future to pay for today’s fat cats (well a catchy version, anyway), etc. would be necessary to get attention. Make sure a concurrent march occurs outside CNN CENTER and up at Columbus Circle, and outside the WH.
Grim,
Do you have the ability to section off part of your server to host a call-to-action website? What are those gatherings called where people link-up online and agree to meet someplace at a specific time for a specific purpose? Older than dirt here, and the term escapes me.
Anyone close enough to City Hall in NY to get the permit set?
I know some producers at a number of the national networks, the BBC, Australian Broadcasting, and at NBC locally in NY.
“The one where we all own each others debt”
Silly, owning debt is something only the little people do.
No, the ownership society I am thinking about is where the fat cats own the rest of us.
hang, even. need more coffee.
ket,
I am.
756,
wow, you’ve completely missed the point. Of COURSE they prefer email. Now go back and read my post.
P*ssing contest over and I remain, unimpressed.
I guess too many of us across the nation have been so consumed with our everyday lives that we allowed this to happen.
_____
Cindy (736),
This is true of most of America- many of whom are good, honest, hard-working people who trust that their leaders will have at least a modicum of foresight and wisdom in these things.
Wall St. makes its living, a very well paid one, by obfuscating the most basic principles with financial wizardry, greed and jargon, with ultimate aim of befuddling all but the most initiated. They then pay off our corrupt government to allow them to continue the scam.
I don’t know the answer. Middle class america shouldn’t need to know terms like credit default swaps or CDOs.
But they should know that their leaders failed miserably to protect them, our system is corrupt to its very core, and our country’s debt is so overwhelming it may well destroy our way of life for generations.
Then they should all take a good, hard look in the mirror – and ask if their own finances mirror that of their government.
Ultimately, we do get the government we deserve.
http://www.nytimes.com/2008/09/21/world/asia/21islamabad.html?ref=world
Islamabad. An attemt, it seems, for a Pakistani version of Guy Fawkes plot.
ISLAMABAD, Pakistan — A huge truck bomb exploded at the gateway of the five-star Marriott Hotel in Islamabad on Saturday evening, just a few hundred yards from the prime minister’s house, where all the leaders of government were dining after the president’s address to Parliament.
At least 40 people were killed and 100 were wounded, according to The Associated Press. The toll was expected to grow because of reports that many people were still trapped inside the six-story hotel, which was engulfed in flames.
A vast crater, some 40 feet wide and 5 feet deep, lay at the security barrier to the hotel. Witnesses said security guards and their gate posts were buried under a mound of rubble. A line of cars across the street from the hotel were mangled and trees on the street were charred. Windows in buildings hundreds of yards away were shattered.
Witnesses said they dragged out dozens of bodies from the lobby of the hotel and an adjacent parking lot, including those of a number of foreigners.
One wounded American who works at the embassy here in the capital said he had just opened his car door in the parking lot when the explosion erupted. The American, who gave only his first name, Chris, said he had received injuries to his face, neck and shoulder, and was holding a bloody T-shirt to his face.
He said American Embassy personnel were at the scene, trying to help American citizens they said were trapped in the hotel.
Amjad Ali Khan, a guard on duty at a side entrance to the hotel, said he saw four to five bodies in the hotel parking lot and that he helped carry out 40 bodies from inside the hotel. He said they were “in the lobby and in the restaurant and everywhere.”
“There were very few people injured,” he said. “They were all dead.” He said he saw three Western women who had died from head wounds.
“They are terrorists,” he said when asked who he thought was responsible for the blast. “They threatened a few days ago. We heard there were four to five suicide bombers on the loose.”
The Marriott, a favorite place for foreigners to stay and gather, has been attacked by militants at least twice in the past, including a suicide attack in January 2007 that killed a policeman.
There was no immediate claim of responsibility for the blast, and its exact cause was unclear.
But Pakistan, an ally of the United States in the fight against terrorism, has faced a wave of militant violence in recent weeks following army-led offensives against militants in its border regions, though the capital has avoided most of the bloodshed.
shore 780,
i doubt we need to debate my status either
Shore Guy-
Is this what you’re looking for: http://www.meetup.com/
Barbara,
I trust you can p!ss further than I.
Now, I need to get back to faxing the people who seem ready to grant the administration another blank check that gets partially paid out of my accounts, to try to persuade them to do otherwise. When your letters get there a week or two, or three after the bill is law, and then when you get your response, feel free to come back here and remind me what an illinformed dolt I am.
I’ve just been moderated twice in less than 24hrs…. and I have no idea what for?? Grim any guidance on this last one? Many thanks
Steve
Yea, meetup; that is it. I am not so senile that I don’t remember the name when I hear it. Thanks!
One of the keys to any gathering is that it be permitted, orderly (but loud), well attended, and that the media have images and sounds they can run with.
We don’t have draft cards to burn but one can get a copy of their voter registration card, or just photocopy it for prop purposes, and burn them for the cameras. Republicans doing so on camera, whilst filling out new party decleration forms or declaring themselves independent is a nice visual.
783,
drama
steve, did you use the M word or the O word? Or the name of a founding father who put a HUGE signatuer on the Decleration of Independence?
Sys (687)-
You could’ve stopped at “whole life insurance”.
It could be the most solvent company in the world…doesn’t matter. You’ve already been ripped off.
Shore,
None of the above! I have a guess….a few letters contained within a word that by itself, would be a different (offensive) item. Huh. Guess I’ll have to dial it back on the syllables.
renty (688)-
“Bailout could hinge on home prices”
In that case, the door will be coming off the hinge- pronto.
insert some dashes or stars
Well,
The fax and then the lawn call. If anyone is serious about organizing some legal protests, I will be happy to do my part to help.
tosh (695)-
“Where is the new Adams? I’ll gladly fight, I just don’t have what it takes to be him.”
I have the will to fight but don’t have enough armaments or knowledge of military operations.
skep (706)-
Are you really this out of it?
Your thought process reeks of rearranging the deck chairs on the Titanic.
Kettle
I agree in a mixed water environment, leveraging cover of shore, the SUNBURN speed and low altitude would make it enormously dangerous.
The question is, can the launch points/platforms be detected and eliminated by air power or special forces beforehand.
My scenario would also be all about blue water operations.
Back to the systemic issues, how many missiles and launch platforms do China/Russia/Iran have, how trained are the crews?
Ironically they could now be on reverse side of quality/quantity divide, like US airforce was with F15 in 70’s. Hence, the addition of the F16 and high/low mix model.
vic (716)-
Precisely. Don’t see the FDIC walking into Hudson City, either.
Clot,
Clearly, under the new paradigm, the well-run and healthy banks will need to be taxed to pay to prop up the poorly-run banks.
Paradigm shift is no dream
12:39 AM CDT on Saturday, September 20, 2008
Old paradigm for the American dream: Work hard, live frugally, save, make wise financial choices, save for a big down payment on a house you can afford. Live the American dream.
New paradigm: Don’t work so hard, don’t save, make unwise financial choices, buy a house you can’t afford with no money down. When you no longer can afford your house, let the old paradigm person bail you out. On the way, wipe out the savings of the old paradigm person by wrecking the stock market and inflating the currency.
Politician’s role in new paradigm: Facilitate above transactions to the maximum degree possible.
Alan Parks, San Marcos
http://www.dallasnews.com/sharedcontent/dws/dn/opinion/letters/stories/DN-satletters_0920edi.State.Edition1.3d879c.html
Interesting responses as well.
I caught Barney Frank, the chairman of the house financial services committee, this morning.
He said they don’t expect any of the measures their taking to keep house prices from falling, just to slow it down. His analogy was something like “I’d like to lose 20lbs but not by Sunday”.
It seems like the aim is to cushion the fall and give companies some time to make changes so they don’t die on impact and that people’s savings and investments won’t be affected as much. Just one big expensive parachute.
Saw McC giving a speach on the financial crisis. I really don’t understand how he can say what he does with a straight face. He basically is calling to undue all the work his economic advisor, Paul Gramm has done in the past few years. Seems like all talk since he won’t vote for the bill that will close the Enron Loophole Gramm created.
He kept talking about “transparency” in regulation neglecting the fact that his economic advisor is the one that didn’t just remove the transparency but the regulations all together.
BO’s economic advisors don’t seem like much to write home about either from what I hear.
The worst part of this proposed bailout is the lack of transparency. The treasury secretary wants unlimited powers to do as he sees fit.
Isnt this the primary reason why we are in this sh1thole?
Havent we gone thru the Iraq war recently to know what this means?
Victorian
As Midnight Oil sang: Short memory, short memory my fellow.
Anyway, the lawnmower calls. Somebody get cracking on a website — Stopthebailouts.com, or nobailouts.com, or some such thing — and we can see what a small group of committed people can do over a single weekend.
Shore Guy,
Karl Denninger came out with a video to try and stop the foreclosure prevention act. Didn’t seem to help much.
Stu and Gator, this is for you.
Hudson City, Wells Fargo and all of the prudent actors would be SOL if the gov’t did not step in. It is so far beyond sorting out who is prudent and who isn’t at this point. All of these entities depend on a functioning MARKET. This is what systemic risk means. Where would Hudson City be if interbank lending stopped? For that matter, where would your local grocery store be in 2 days if their payroll checks stopped clearing? Remember the pictures of the bread lines in the 30s? THAT CAN HAPPEN HERE TODAY AND THIS LAST WEEK WE WERE HRS AWAY FROM IT HAPPENING AGAIN.
http://www.backwardsbush.com/code.php
“LAST WEEK WE WERE HRS AWAY FROM IT HAPPENING AGAIN.”
Actually, given my conversations in DC, I believe you are correct. And yet the public is still unaware.
iframe height=”235″ width=”340″ frameborder=”0″ marginheight=”0″ marginwidth=”0″ scrolling=”no” src=”http://www.backwardsbush.com/includes/publicClock.php”/></iframe
Clot
your problems already have solutions. the Hard part is finding a capable dedicated leader or group of leaders.
# Clotpoll Says:
September 20th, 2008 at 2:30 pm
tosh (695)-
“Where is the new Adams? I’ll gladly fight, I just don’t have what it takes to be him.”
I have the will to fight but don’t have enough armaments or knowledge of military operations.
skep
THAT CAN HAPPEN HERE TODAY AND THIS LAST WEEK WE WERE HRS AWAY FROM IT HAPPENING AGAIN.
want to bet? look at argentina, it can happen. and happen quickly
skep miss read your post,
ignore 812
To all the njrereport readers,
Since all of you have been extremely good, and not adding to the country’s deficit the government has decided that all of you will be provided with a house of your choice, free of charge. The only catch is that you will need to pay taxes, and maintain the property. If the government can bail out all the corrupt institutions, we can surly reward the njrereport readers who have been helping the economy by seriously saving for a downpayment.
bp
I think we’re gonna bust the 1,000 mark on this blog. Is this like Y2K?
Just can’t help it. I am so furious. I think that the people who save are the losers and the people who borrow are absolutely smarter. I for one am one of the losers too.
All the individuals involved in this reckless lending should be thrown in jail. If not, then I guess they would have to release all the petty thieves from jail. Free for all. If the people who participated in bringing the financial markets to its knees are allowed to roam free, then why should the petty thieves be put in jail.
bp
vic [800],
Bingo.
http://www.flickr.com/photos/fintag/2363700043/in/set-72157604060807926/
skep – you are in a minority here so i wanted to post to share same views. its not about bailouts anymore. with bear, lehman etc.. who cares outside those who lost jobs and shareholders?
last week we were on the brink of a wholesale failure in the banking system. the costs of this would have been far greater than proposed mortgage bailouts to the whole economy, not just wall street. it’s a mess that cannot clear our by itself without dragging down healthy parts of the system. and once banking system fails its near impossible to bring it back up quickly. in a way we are lucky to have someone as decisive as paulson in his position now. who was there before him, snow?
Do we really want MS, GS, Wachovia, Citi + others to fail in addition to the firms already gone? Some here would say yes. I disagree. Foreign banks with their govt support would pick their best assets for cents on the dollar and dominate global finance for years to come.
With this RTC2 fedco wants to do, i think it should be like one of those save the impoverished kid things. Every month we get a picture of the house we are supporting, how the FBs who own it are doing, pictures of the Investment Bankers heading to the Hamptons in the Benzs, updates on what plastic surgery the IBs trophy wives have had done, etc.
Guest13 – the rest of the world already owns us.
At the end of the day the US Government is more concerned about a few Billionaires becoming Multimillionaires than they are about preserving what is left of the Middle Class in this country. When they say “systemic risk” they are saying the above.
I can understand wanting to prevent a systemic breakdown, and I agree on those points. However, there HAS to be some accountability; someone must be held responsible. I don’t have an answer or panacea solution either, but at the end I want to see some tycoons in orange suits.
In my business, the Executives are responsible for following FDA rules; if anyone in the organization breaks the rules egregiously enough, the Executives are responsible and risk fines and imprisonment.
Perhaps I’m over-simplifying things, but this seems like an Enron-type of fiasco, but instead of former employees getting the shaft, the taxpayers are.
Repost, perhaps, but worth it:
http://www.stopthehousingbailout.com/
Finally, some folks are getting together and marching on Wall Street in a good old-fashioned protest on October 24, 2008! Please click over to our friends at FED UP USA — and if you live in the tri-state area: SHOW UP!
http://www.fedupusa.com/
lisoosh [818],
Exactly. We are twisting in the wind, bent over in every direction. Markets will always find equalibrium on their own. Unfortunately, govt intervention only delays the inevitable. Is it a better option to utilize creative destruction, blow out the weak or let them limp along for years, suck the system dry, before they reach their ultimate destination. AKA, dead man walking.
Where do we draw the line, Wall Street, toxic loans, cc’s, cmbs, student loans, FDIC, SPIC, Pension Guaranty, etc..? Everybody that agrees with this, please prepare to tell your children/grandchildren why they’ll be working until Sept, each year, just to pay taxes. Not only was this reckless, it is also immoral.
In moderation; sorry for essentially duplicate posts.
They are planning to buy these assets holding reverse auctions. The FED will allocate an amount, and the firm which pledges the most number of securities for that amount will be able to exchange them for the $$.
Now, can anyone please tell me why wont the big financial firms collude to get the maximum value for their securities?
I still cant believe that they are trying to design AND present a plan of this sort of magnitude over a weekend.
Here are my thoughts on the bail-out w/ respect to NJ:
I’m undecided about as to whether or not NJ/NY metro area home prices will keep falling. The best thought that I have right now, are that it will. Here are my thoughts:
1) The general economy is still headed downwards in our area.
2) A large part of the reason why this area has become so expensive is b/c of all the people with jobs in the financial sector. I have a feeling a heck of a lot of them are still going to loose their jobs, and if not, it seems pretty likely that their big fat bonuses are going to get significantly reduced.
3) Foreclosures have no been a huge part of the reason why prices have in this area. While their are a lot of foreclosures in NJ, the majority of them are concentrated around the cities like Dover, Newark, Union, etc.
4) From this point forward, it seems pretty likely that banks/brokers are not going to be giving loans to people w / less than 10% down and a decent FICO score. I do not think we are going back to the days of credit for anyone and everyone.
My prediction — Expect NJ home prices to fall another 5-10% from where they are now over the next 12 months. Expect homeowners who want to sell to begin the price their houses correctly. I believe that might element more have more of an impact of the pricing that you see, then the remainder of the depreciation that is going to occur.
Oh and expect your federal incomes taxes to go up significantly next year.
#820
“However, there HAS to be some accountability; someone must be held responsible. I don’t have an answer or panacea solution either, but at the end I want to see some tycoons in orange suits.
In my business, the Executives are responsible for following FDA rules; if anyone in the organization breaks the rules egregiously enough, the Executives are responsible and risk fines and imprisonment.”
The executives in this case are equally responsible/accountable. This is the point of SarbOx. Many lawyers in the DOJ are going to build their entire careers on prosecuting the people involved in this mess.
Skep –
I understand that there is a need for some sort of action.
Do you support the bail-out in its present form?
vic– I have a bit of a problem with the way the bill is written if what is printed above is the entire thing. First of all, Congress cannot eliminate judicial review, so even if they pass the bill as is, portions of it will be unenforceable. second, it is troubling that the Sec. of Treasury is given basically unlimited authority. This is also problematic on a constitutional level, I believe, because Congress is supposed to be in charge of spending. There are plenty of executive agencies that spend huge budgets w/o the close scrutiny of congress, but this amount is so huge that is seems to strain the boundary of what is acceptable under administrative law. I am not a constitutional lawyer, so others may have a more nuanced view than me. But it seems to me just based on general knowledge that this bill has serious constitutional flaws and that congress would really be abdicating its responsibilities if they passed this in its current form.
Please take some time to sign your name to this petition to stop bail-outs. This will send faxes to your senators, Bush, Paulson, McCane and O.
http://www.financialpetition.org/petition-nobail.shtml
Thanks Sybarite!
saybarite101,
October is too late. If anyone is going to march, it needs to be In the early part of this week. It would also be appropriate for some truckers to dump a few loads of manure throughout the financial district, inasmuch as that is what Wall Street has done to the nation, not that I am advocating such an action but just observing that it would have a degree of poetic justice, if you will, were folks to do so.
Consider this with respect to the Administration’s request for an initial $.7T to bail out the bankers. This estimate of what it will take comes from the same people who estimated that the Iraq War would cost about $50B and that the costs would be paid for by Iraqi oil revenue. How spot on was that financial estimate?
Check out this analysis by Krugman of the leaked version of the plan.
“Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.
The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.
And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.
http://krugman.blogs.nytimes.com/2008/09/20/no-deal/
skep-tic,
What are you talking about? Have you been reading what’s been going on with regards to interbank lending?
Another report says “One trader said interbank lending was at a standstill, while others said only the most high-quality issuers could raise money in the commercial paper markets.”
Everything I’ve read sounds to me like when there is interbank lending, it’s one prudent bank that is well capitalized lending to another prudent bank. Makes sense. People on here don’t think it’s a good idea to give another mortgage to someone that has had a foreclosure, why would banks want to lend money to another bank that pissed away billions?
Clearly you’re not suggesting that the non-prudent banks that are struggling to meet their reserve requirements are loaning out billions of dollars to the banks that aren’t having problems?
The Lehman bankruptcy filings revealed billions of dollars worth of repurchase agreements from the Fed that failed to help them out. It just kept them a live a little longer.
BofA got out of direct subprime lending in 2001. They still dealt with subprime backed securities though. I wouldn’t call them prudent but they did a lot better than many other firms and are now in a position to buy up more of the market. In a speach yesterday their CEO said that americans are going to have to consume less and save more. Thank God for DVR because I had to rewind that a few times to make sure my ears weren’t playing tricks on me.
The bailouts are only a temporary fix, the companies affected will still need to perform miracles or otherwise instead of crashing, they’ll just have a slow glide to the bottom.
Think of them like the many homeowners that got themselves in trouble with a larger mortgage than they could afford. While the market is still doing well they’re able to refinance to give them some breathing room, but if they can’t improve their situation, all they did was buy themselves some more time.
A few days ago you were complaing about the indivuduals that won’t have to pay income taxes on their forgiven debt. What about the lost taxes on the hundreds of billions of dollars that has been and will be spent to buy these bad mortgages from lenders?
It’s important to lay blame and not paint the industry with a wide brush so that we can have the good actors continue to do good to help fix the problem and get the bad actors out of the equation.
It’s going to hurt, even with the bailouts. They’re just slowing things down at great expense.
We should be letting these institutions go into receivership, fire the top execs and replace their gold parachutes with lead. Then allow the institutions that know how to run successful banks bid for their remaining assets.
Right now we’re just shifting the problems around. I’m wondering if by next year we’ll be talking about FHA and Ginnie Mae.
“A few days ago you were complaing about the indivuduals that won’t have to pay income taxes on their forgiven debt.”
Tom– a lot has changed in the last few days. I still have a huge problem with all of the wasted taxpayer money, I just think doing nothing would have been far, far worse given recent developments. Credit is not simply about making loans to purchase assets– it is the essential grease that makes possible all transfers of funds between banks the world over and between merchants, customers, etc. Nobody can afford to have this system shut down as it appeared to be doing a couple of days ago
skeptic,
it seems that the point of contention here is that some of use feel that we cannot left BAU be interupted, for both business and joe sixpack.
the other group of us seem to feel that we should allow BAU to be disrupted and the system to correct itself.
The way i see it, an interruption in BAU including breadlines is essential as it is feed back to the public as to how healthy their nation is. If you never feel pain how do you know burned your hand? you cant and it will become infected and gangrenous, all because you did not get that critical feedback of pain. No one likes pain ( well most dont) but it is a critical feedback mechanism for both people and nations. If the public does not feel pain they have no way to readily determine have severe a situation may or may not be.
If you are against the bailout then protest. This guy is organizing a march on Wall Steet on Oct. 24.
http://www.stopthehousingbailout.com/
skep-tic,
Nothing has changed in the last few days other than some people to get their heads out of their asses and realize what a giant mess this housing bubble really is. Other people new this for years, decades even. That’s why part of the Federal Reserve’s responsibilities is to prevent these types of asset bubbles in the first place and to penalize those that create them.
Instead they allowed the bubble to continue for years and are now bailing out the companies that caused it.
The fed and tax payers cannot fund the credit market so that it continues to operate at bubble pace. It’s going to have to come down to a sustainable level. When it does a lot of industries are going to have to change the way the do business or die.
The point of credit in business is to provide the means to fund activities that will grow earnings greater than the cost of borrowing. With the economy as a whole slowing, there are less opportunities and therefor less need for a credit. That’s why a lot of commercial projects lost funding. The projects are no longer considered to be profitable.
The reality is, the housing market is just part of the bubble, but it’s big enough that it’s bursting will make it harder for the other credit bubbles to continue.
Our economy is screwed and we screwed up the global economy as well. We need to stop trying to keep the bubble going and instead pop it and start working on fixing the problems it has caused.
We’re going to have to deal with the problems sooner or later.
when you guys go to protest, please hold a sign saying “I own SKF”
Bystander,
That is too late. By then the train will have left the station, visited four or five others, gone in for an overhaul and been assigned to a different route.
Another example you cannot trust media.
title:
“Poll: Racial misgivings of whites an Ob issue”
content:
“Race is not the biggest factor driving Democrats and independents away from Ob. Doubts about his competency loom even larger, the poll indicates. More than a quarter of all Democrats expressed doubt that Ob can bring about the change they want, and they are likely to vote against him because of that.
Three in 10 of those Democrats who don’t trust Ob’s change-making credentials say they plan to vote for Mc. ”
http://www.breitbart.com/article.php?id=D93AIV882&show_article=1
Some interesting comments on an ABC feedback page:
http://abcnews.go.com/Business/comments?type=story&id=5845583
bi,
Those are the wise Dems.
victorian Says:
September 20th, 2008 at 12:25 pm
– Exactly. GS and MS were the biggest abusers of naked shorting in case of Bear.
Please provide evidence for this accusation.
The link you attached led nowhere.
Even lead (Pb) is up this week:
LEAD FUTURE (USD/MT) 1894.500 96.500 5.37
Gotta love a commodity priced in Metric Tonnes.
But Seiberg added that the bailout won’t completely end the recent turmoil on Wall Street, a crisis that began with the Treasury’s seizure of mortgage finance giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) earlier this month and escalated this week with the bankruptcy of Lehman Brothers (LEH, Fortune 500) and the $85 billion loan to American International Group (AIG, Fortune 500), the world’s largest insurer, by the Federal Reserve.
“What the government is doing now is not suddenly going to make institutions profitable,” he said. “What we’re talking about is trying to make them stable. That means removing the risk from their balance sheet and putting it on the taxpayer. The government has a much better ability to hold onto that risk for an extended period of time.”
Still, Seiberg is optimistic that the bailout will help home prices finally start to recover since it should lead to lower mortgage rates and improve consumer confidence.
But others say that there are still enough fundamental problems in housing, including a huge glut of homes for sale and the likelihood of more foreclosures in the pipeline.
“It should help housing prices find a bottom but I still think it will be about a year from now — and after prices decline another 10%,” said Stuart Hoffman, chief economist for PNC Financial Services Group.
Nonetheless, even if home prices don’t stabilize soon, one expert said the bailout could be a success if it allows bank to stop hoarding cash and once again begin lending to each other, consumers and businesses.
“The one thing you don’t want is to have the economy grind to a halt because people can’t get credit,” said Dean Baker, co-director of the Center for Economic and Policy Research.
Baker predicts home prices will fall another 20% even with the bailout but said the decline could become even more severe without passage of the rescue plan.
“Housing prices were a bubble and you can’t stop them from deflating,” Baker said. “But [the bailout] might stop an uncontrolled plunge.”
I don’t know if this was posted 500-600 posts ago. If not, and even if so, here goes:
SEC Considers Revising Shorting Ban in Options Market (Update2)
By Edgar Ortega and Michael Tsang
Sept. 19 (Bloomberg) — The U.S. Securities and Exchange Commission may revise its ban on short sales to add financial companies and carve out an exemption for brokerages that pair off brokers in the $1.6 trillion U.S. options market.
The commission may add companies after firms such as M&T Bank Corp. were left off a list of 799 insurers, banks and securities institutions barred from short sales. The staff also will recommend that options market-makers be exempt from the ban, easing concern the rule would raise investor costs, the agency said in a statement today.
“If they don’t fix it, there just won’t be an options market on Monday,” Steve Claussen, chief investment strategist at OptionsHouse LLC, the Chicago-based online brokerage unit of options trading firm PEAK6 Investments LP. “If they have an exemption for market-makers that they’re allowed to sell stock short, then they can provide a market in the options.”
[snip]
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJ0LXWUmmLBg&refer=worldwide
Shore Guy,
I agree. How about all against the bailout start posting signs in their yard? That is the only quick method of defiance that could send a message.
Bystander,
Fax your representative, call your local paper’s editorial board, call the network news operations, call your representative’s DC and local offices, show up in person at the local office (especially sending a child in saying that they find it unfair to mortgage their future and take away their opportunities to protect bankers and their country estates), march in the streets — after announcing to tv, radio, and print media that the event will occur. Even 30 people protesting in, say, Westfield, can give an editor a nice alternative when it comes to what to print/air.
kudlow is dead on. Cox is incompetent and should be fired according M.
http://www.cnbc.com/id/26791654
724: I could come, either early enough that I could leave by 1:30 (must pick up kid from school) or late enough that I could bring him along-after 3:30. (#1 son hasn’t been to a protest for over a year, his media-attracting powers are getting rusty).
So many disgruntled posters throwing in the towel on their housing crash calls.
Maybe you guys need to learn to play the system better.
yo 858,
what?
no matter what bailout is pushed through, housing is still going to drop and mortgages will not go back to NINJA 0 down.
what we have witnessed is a classic ponzi scheme and all of the fools are used up.
i do not know if the talking heads have started to drink their own coolaide or they are just talking a good game, but no matter how extensive a bailout get passed, all it will do is delay the pain
The status of America as a functioning democracy becomes ever more questionable. Yesterdays anouncement by the government, and the gigantic new rescue plan -the next in a by now long list- that will be unveiled within the next 72 hours, made some European leaders cast doubt on US claims of propagating a free market.
The way in which this process is undertaken can perhaps best be illustrated by the founding of the Federal Reserve in 1913. The Constitution explicitly and expressly reserves the control over the nation’s money supply to Congress. 95 years ago, an interpretation of this was accepted that stated that this meant Congress could hand over the control to whomever it pleased. And it decided, in a weird session, to cede its Constitutional power to the Federal Reserve, which was and is made up of a select group of private bankers.
But let’s seek an analogy here. Say that I have, with the consent of both teams, been named the referee in a football match. Does that imply that I have the right to, at any point during the game, hand over the whistle to the local drunk, to the coach of one of the teams, or to the town bookmaker who has vested interest in a favorable outcome? It may be a hard question to answer, but I would venture to say no such right is implied.
Ben Bernanke was not elected by the people. Yet, he will be handed (even more of) the power of the nation’s money. And power over the economy is power over the nation itself. No matter what grand plans Congress comes up with, if you refuse to fund them, they ain’t happening.
Hank Paulson was not elected by the people. If you think there’s no connection between Paulson being Goldman’s CEO for 8 years, and the fact the Goldman will now be able to bury an insane amount of toilet paper in the contaminated RTC composter that is being set up in the capital’s backrooms, at the same time that shorting Goldman is banned, then I want some of the drugs you’re taking.
Shore guy,
Already being done. Congressman Mike Ferguson’s voicemail is full already..unbelievable. Unforunately time is of the essence and we need media attention. This thing might be wrapped up by Monday.
Idea
Wear bags with “anti-bailout/pro- Giants” over your head to the Cincy game tomorrow. The media would eat it up. Bring extras!
Kettle 1 – why NJ real estate outperforming US real estate?
I spent my youth under the communist leadership and I must say this: The central planning doesn’t work and it was one of main things that made their ideology dead.
If US economy has 2 years of live for example, it will be halved if they will go into central planning really. It makes the the death of financial system much faster.
Sybarite: OT
My parents’ refrigerator was finally fixed today- after 4 attempts. The motherboard went and blew out other controls. The repairperson told my father that GE is getting out of making appliances. Good. I told him he should be writing a long letter to GE. Not that they’ll do anything for him but at least he can vent.
Sometimes I think about the opinions expressed by people such as Martin Weiss, Peter Schiff, Marc Faber, Mike Shedlock, Doug Noland, Yves Smith and many that escape me now, and perhaps I may humbly include myself, and then I honestly start to wonder how anyone at all can still hold and express beliefs that would maintain that this market will -make that can- recuperate anytime soon.
All I see points to things getting much worse, and not a little at that. The US government is only working up plans to shore up the interests of themselves and their buddies. And that will inevitably come at the cost of Joe Six-pack. What Joe will do once he finds that he can no longer afford that six-pack?
yo,
I don’t know about all of NJ but the Bergen County real estate market is down over 20% from the peak.
SAS et al
interesting timing eh, with the current mess and all????
Brigade homeland tours start Oct. 1
3rd Infantry’s 1st BCT trains for a new dwell-time mission. Helping ‘people at home’ may become a permanent part of the active Army
By Gina Cavallaro – Staff writer
Posted : Monday Sep 8, 2008 6:15:06 EDT
The 3rd Infantry Division’s 1st Brigade Combat Team has spent 35 of the last 60 months in Iraq patrolling in full battle rattle, helping restore essential services and escorting supply convoys.
Now they’re training for the same mission — with a twist — at home.
Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.
It is not the first time an active-duty unit has been tapped to help at home. In August 2005, for example, when Hurricane Katrina unleashed hell in Mississippi and Louisiana, several active-duty units were pulled from various posts and mobilized to those areas.
But this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.
After 1st BCT finishes its dwell-time mission, expectations are that another, as yet unnamed, active-duty brigade will take over and that the mission will be a permanent one.
“Right now, the response force requirement will be an enduring mission. How the [Defense Department] chooses to source that and whether or not they continue to assign them to NorthCom, that could change in the future,” said Army Col. Louis Vogler, chief of NorthCom future operations. “Now, the plan is to assign a force every year.”
The command is at Peterson Air Force Base in Colorado Springs, Colo., but the soldiers with 1st BCT, who returned in April after 15 months in Iraq, will operate out of their home post at Fort Stewart, Ga., where they’ll be able to go to school, spend time with their families and train for their new homeland mission as well as the counterinsurgency mission in the war zones.
Stop-loss will not be in effect, so soldiers will be able to leave the Army or move to new assignments during the mission, and the operational tempo will be variable.
Don’t look for any extra time off, though. The at-home mission does not take the place of scheduled combat-zone deployments and will take place during the so-called dwell time a unit gets to reset and regenerate after a deployment.
The 1st of the 3rd is still scheduled to deploy to either Iraq or Afghanistan in early 2010, which means the soldiers will have been home a minimum of 20 months by the time they ship out.
In the meantime, they’ll learn new skills, use some of the ones they acquired in the war zone and more than likely will not be shot at while doing any of it.
They may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack.
Training for homeland scenarios has already begun at Fort Stewart and includes specialty tasks such as knowing how to use the “jaws of life” to extract a person from a mangled vehicle; extra medical training for a CBRNE incident; and working with U.S. Forestry Service experts on how to go in with chainsaws and cut and clear trees to clear a road or area.
The 1st BCT’s soldiers also will learn how to use “the first ever nonlethal package that the Army has fielded,” 1st BCT commander Col. Roger Cloutier said, referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals without killing them.
“It’s a new modular package of nonlethal capabilities that they’re fielding. They’ve been using pieces of it in Iraq, but this is the first time that these modules were consolidated and this package fielded, and because of this mission we’re undertaking we were the first to get it.”
The package includes equipment to stand up a hasty road block; spike strips for slowing, stopping or controlling traffic; shields and batons; and, beanbag bullets.
“I was the first guy in the brigade to get Tasered,” said Cloutier, describing the experience as “your worst muscle cramp ever — times 10 throughout your whole body.
“I’m not a small guy, I weigh 230 pounds … it put me on my knees in seconds.”
The brigade will not change its name, but the force will be known for the next year as a CBRNE Consequence Management Response Force, or CCMRF (pronounced “sea-smurf”).
“I can’t think of a more noble mission than this,” said Cloutier, who took command in July. “We’ve been all over the world during this time of conflict, but now our mission is to take care of citizens at home … and depending on where an event occurred, you’re going home to take care of your home town, your loved ones.”
While soldiers’ combat training is applicable, he said, some nuances don’t apply.
“If we go in, we’re going in to help American citizens on American soil, to save lives, provide critical life support, help clear debris, restore normalcy and support whatever local agencies need us to do, so it’s kind of a different role,” said Cloutier, who, as the division operations officer on the last rotation, learned of the homeland mission a few months ago while they were still in Iraq.
Some brigade elements will be on call around the clock, during which time they’ll do their regular marksmanship, gunnery and other deployment training. That’s because the unit will continue to train and reset for the next deployment, even as it serves in its CCMRF mission.
Should personnel be needed at an earthquake in California, for example, all or part of the brigade could be scrambled there, depending on the extent of the need and the specialties involved.
skep – my problem with this “fix” is quite simple: The current crisis was caused by “fixes”. They tried to soften a recession by owering interest rates, added liquidity (to “keep the economy going” and inflated housing. Tried to create a “soft landing” and managed to generate a late spending orgy. Now they try to “fix” this and just allow the bad actors one last gasp.
In trying to avoid a regular cyclical recession and make themselves look good, they’ve taken the country to the brink. I have absolutely no faith in their ability to “soften” or “fix” this. They’ll make it worse.
once again for impact
Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.
does everyone/anyone here understand the significance of this???? The Posse Comitatus Act has prevented such activities for the last 200 years! not any more. this is going to get far messier then 99.9% would have guessed
http://www.armytimes.com/news/2008/09/army_homeland_090708w/
Tom – sales volume is down 20% from the peak level. How does lower sales volume help me buy a house from 20% of peak prices?
Key price quote from link you posted – “in 2007 while the median price was exactly the same as it was in 2005”
http://tax1.co.monmouth.nj.us/cgi-bin/m4.cgi?&district=0911&block=34.03&lot=4.19&qual=C0879
poz comp
does everyone also realize that this bailout plan gives defacto control of the USA to an unelect group of bankers??? “he who controls the money controls the nation”
Sec. 2. Purchases of Mortgage-Related Assets.
(a) Authority to Purchase.–The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.
(b) Necessary Actions.–The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;
(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;
(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;
(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and
(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.
and dont forget:
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
lets recap:
1. The USA is insolvent
2. secretary of the treasury will have defacto control over the US economy for the next 2 years ( as he has the money and power to bailout who he chooses when he chooses) without any oversight from the legislative or executive branch.
3. The US military will be on standby for operations within the continental US “The 3rd Infantry Division’s 1st Brigade Combat Team has spent 35 of the last 60 months in Iraq patrolling in full battle rattle, helping restore essential services and escorting supply convoys.
Now they’re training for the same mission — with a twist — at home.”
4. we are F’ed
866#, you guys are so funny. the number is based on some cherry-picked sales from this blog.
“So I decided to take another look at the data provided by Rich that was displayed at NJREReport.com. This time with a more broad view. What I found was the market was down almost 22% in 2007 versus the peak in 2005.”
http://www.bergenjerseyforeclosures.com/blog/info/entry/another_look_at_bergen_county
Was listening to a lot of financial on the sirius today. CNN your money, cnbc etc. The shift in spin has been interesting and convinces me more than ever that the media is neither left nor right, its corporate.
The new spin repeated over and over is that this is the American people’s fault, they need to “take responsibility” and “live within their means” and “save their money.” Etc, blah blah.
Of course, there is truth in this, but it doesn’t let off the hook the people who are walking away, cash heavy, from this mess. Yet, they were never mentioned in the commentary.
The buttons that American’s respond to like Pavlov’s dog when pushed are God, patriotism and “personal responsibility.” Even if they are p*ss poor at seeing it through, it does divert their attention and they respond to it with nodding heads.
We’re being played at all levels.
yo,
Did you read the whole post? It seems that part of the reason for median home price not falling as much is that some of the lower income municipalities have seen a disproportionate fall in sales. As much as 70%. Those lower priced homes aren’t included in median calculations causing the median to be higher.
If you want to 20% lower prices.. take a look at how cheap banks are letting properties go at theBergen County Sheriff’s foreclosure auctions. I forget the exact number but they’re going for as much as 50% off peak in many cases and on average the last couple dozen that were successfully sold went for 36% below the judgment.
Someone else had a chart that showed that actual sale prices versus listing prices had diverged significantly. There may be some cases where houses are going for more than peak but I think that’s pretty rare.
Too many people that need to sell and not enough people that can qualify or afford to buy.
The way I see it, from my limited perspective, there are three main types of sellers.
1. People that need to sell because they can’t afford to stay in their home anymore. Or for some other reason and they bought the home during the bubble. With the falling values and the limited time paying down principle, if they can’t get an authorization for a short sale from the bank (ask Clot how hard that is) they may not have money to make up the difference if they sell.
2. People who have owned their home before the bubble and want to try and catch any suckers left in the market before they see their values fall further. They probably don’t need to sell but if they can find someone to overpay for their house they will. If not they have no problem staying.
3. People that need to sell their homes for other reasons but don’t have issues with their mortgage and could sell cheaper and still come out ahead, but why should they when everyone else is selling higher. Or so it seems.
The reality is the median prices are skewed. The first and biggest casualty was the lower priced homes from what I can tell. Don’t go by median.
Think about it. Why would a bank, that has a court awarded judgment that entitles them to a certain amount of money allow a property to go at auction for so much less than that judgment? I’m not talking about the market value I’m talking about what the court decided they are owed on their lien and they’re not even trying to get that much.
Banks don’t want to hold real estate anymore because they know they can’t turn around and sell it quickly like they used to. Way too much inventory, not enough qualified buyers at these prices. Simple supply demand that was claimed to cause prices to rise will eventually make prices fall. And they have been.
grim,
new thread? getting a little longin the tooth here…..
“866#, you guys are so funny. the number is based on some cherry-picked sales from this blog.”
bi,
The data as I understand it comes from MLS. The last time there was a discrepency between the numbers posted on here and the numbers put out by NAR for NJ, it was NAR that was off and The Otteau Group said they thought the numbers didn’t make sense but didn’t look into it further.
If you want to present other data showing sfh/condo/coop/townhouse prices for bergen county feel free. But be rpepared to back it up.
And just to make my day complete, there is a gasoline shortage, at least in my corner of metro Atlanta. Tried five stations today and none had gas. Sigh.
DL (748)-
The very act of voting, to me, seems to be an act of complicity with a corrupt and criminal gubmint.
Besides, the US is now run by a handful of bankers, Klink and Bergabe. Voting is a sham process.
Well, I am officially taking my idea public. I posted on all NFL message boards and blogs. Feel free to assist by sending this message on. I can’t think of anything better right now that would capture attention on a large scale.
To all attending NFL games tomorrow:
“Wear a bag for the middle class” campaign and bring extras!!
Please wear a plastic bag in protest with “anti-bailout/pro ” written on it.
As many are aware, we are in financial crisis. The government is proposing a $700 billion bailout that will destroy the middle class for generations to come.
This may be our only chance to voice our displeasure against the bailout with millions around the world watching.
Congress may have this wrapped up by Monday. Please pass this on to all friends/family, bloggers & blog admins.
Post this on your site ASAP. Get the word out.
Thank you.
Oh my god, I meant a paper bag. Thankfully, I only posted that here. bi and 50.5 can wear the plastic bag though.
Kettle – You know I feel something needed to be done but this is just a mess.
It is as though Congress didn’t want to be bothered with the details so they appointed King Henry to make all of the decisions.
The Secretary this and the Secretary that..
with no judicial review….how about even the semblance of congressional involvement.
Or did they leave town..
The computer will work – very s-l-o-w-l-y
but won’t refresh (gets sort of frozen.) I went to Best Buy but I think I’m just going to order another from Dell.
I tried ccleaner today after almost getting ripped off by RegCure. It doesn’t seem to be doing any better. I hope it doesn’t crash…it’s just very OLD.
bystander: before i forward… pro what?
skep (832)-
Do you really believe this? My bet is that absolutely NO ONE will be prosecuted over this mess.
Alia,
anti-bailout/pro “insert your favorite team”
vic (838)-
When will GS and MS open their books for public review?
When will all the sausage factories begin securitization of debt again?
Bwahahahahaha!!!!
RGE Monitor – Roubini is providing full access for a limited time..
Roubini says a HOLC similar to that of 1933-1951 would be more effective in resolving “this severe financial and economic crisis” than an RTC or RFC.
vodka (869)-
All state National Guards are also no longer under the supervision of their respective states’ governors.
The prez controls them all.
talk about strange, a senator I think he is on ways and means committee or something like that is coming to my office next week to brief a few of us on what is going on. wonder if I can at least steal his wallet or watch while he is visitng as it is my best bet to make back some of the taxpayer money they are about to spend
What will this latest Crises’s do to NJ home prices’s? Any opinions?
My lord….WTF happened today? I have to go back and read all this crap?
Re the purchase of physical gold. Is there a particular entity/website you use for purchasing?
Well this country is going to hell, but at least the Gators beat the Vols.
Was anyone wearing plastic bags?
RE: NYtoNJ09 (230)
September 19th, 2008 at 10:31 am
Not sure if you did not see it yesterday but if you have any comps for Hillsdale I would greatly appreciate it. I am looking at this town and want to see if there are any drops in Sold prices from 05/06.
Rich In NNJ Says:
September 18th, 2008 at 1:23 pm
NYtoNJ09 (225),
Jan 1 to Sep 17:
Year AvgList$ AvgSold$ Med$ #Sold #U/C
2004 $501,036 $495,080 $467,450 108 109
2005 $576,213 $572,341 $539,900 77 85
2006 $663,984 $635,697 $595,000 76 75
2007 $593,925 $559,721 $556,250 52 64
2008 $573,945 $535,579 $510,000 59 74
———-
I would need more information to pull detailed comps. Neighborhood or street, number of bedrooms and baths, property size, etc.
Bi:
Your hero McCane doesn’t even have a clue as to what the president can or cannot do. Bush can not fire Cox. At best he can ask him to resign. So much for experience. McCane is completely reckless. You can see it in his lack of vetting of SP and in his drilling initiative as well. The people will decide and O is going to win in November. Ultimately, it does not make much of a difference as the country is screwed for a while either way.
Skep:
I am beginning to agree that the lack of intervention would have been worse than letting the markets play out themselves, but find this RTC 2 to be the worst of the possible solutions due to the precedent that was set.
1) Absolutely no punishment for those responsible.
2) Absolutely no mention of the need for future regulation.
3) Absolutely no break for those who played by the rules.
I liken it to a child who will not share a toy with his/her friend. The parents of this child decide that rather than teach their child to take turns, they buy their child’s friend a toy as well. Unfortunately, they send the bill for the toy to the parent’s of the other child.
What does this teach the child who won’t share. The parents are to blame, but they are not made aware of it. The child’s friend is better off now than had the parent’s not intervened, but the second child’s parents are pissed beyond belief. And just as in the current scenario with the financial crisis, the underlying issue is not even addressed.
There is a huge possibility that the taxpayer is going to be on the hook for a larger part of the trillion and this is prior to the Option-Armageddon. All the meanwhile, your house value is collapsing, energy is increasing, your wage is declining and joblessness is rising.
But don’t worry. There’s no short selling of the financials. That was to blame for this mess.
Oh and Bi… It’s 50 O to 44 M now in the gallup (the poll you chose to cite the most frequently only when McCane was ahead). Maybe the Reps should hold another convention and invite Bush this time. Or maybe M’s 2nd wife should just fund the bailout?
And one last example of the lies and deception of the McCane campaign:
It’s really not a big deal, but SP claimed she went to Iraq. Instead, she visited Kuwait, oh and Canada too.
Good night folks. I look forward to some more financial BS tomorrow night.
Are there CliffNotes available for this thread?
Clotpoll Says:
September 20th, 2008 at 10:13 pm
vic (838)-
When will GS and MS open their books for public review?
MS released addenda to the earnings statement detailing its exposures. I would be very interested in Chi and Stu’s take on the documents.
http://www.morganstanley.com/about/ir/index.html
NJcoast 898
Klink has more power than anyone in the US no checks & balances.
We should all call congress & protest.
US troops being moved back to US to keep sheeple in line in case they wake up.
Re in the toilet for the foreseeable future.
Oh & yes, summation: we are all F**ken along with the country as a whole for generations!
Today lets all agree to focus on real news. According to most leading news websites, that means today’s topic is “David Blaine’s Latest Stunt [hanging upside down in Central Park] could leave him blind.”
Personally, I think RTCII is a stunt by the PTB to give the CNBC talking heads the weekend off. They are exhausted.
You liberals make me sick to my damn stomach. Sarah is the best thing that’s ever happened to this country. She’s a maverick and will be a good president if she has to step in for Mac.
I’m getting tired of your constant cheerleading for Omama. There’s a strong correlation between your love for Omama and your hate for this country. That reveals much about Omama himself and you.
Stu Says:
September 20th, 2008 at 11:58 pm
And one last example of the lies and deception of the McCane campaign:
It’s really not a big deal, but SP claimed she went to Iraq. Instead, she visited Kuwait, oh and Canada too.
Good night folks. I look forward to some more financial BS tomorrow night.
John 889,
Here’s a link that might help you at your meeting. Practice it a few times to make sure you get it smooth.
http://www.youtube.com/watch?v=RolwtTefyyg
I know that there must be some dissension in your household. Being that you’re another women, you must be enamoured by Sarah and it must be tough to be married to someone who loves Omama and hates our country.
I call on you to bring your husband to heel by forcing him to be more loyal to this country. Please don’t let him post until his attitude changes.
NJGator Says:
September 20th, 2008 at 11:22 pm
Well this country is going to hell, but at least the Gators beat the Vols.
reinvestor – Can you see Russia from your house?
Zing!
Chelsea v. Man U at 9 AM. I’ll scan the crowd for bags.
Retard:
Thanks and no thanks.
Lady,
I just asked you to rein in your husband because he won’t listen to amyone. My thought is that you might be able to talk some sense into him. Rather than respond to that, you try to get cute with me.
Again, I request that you talk to him about his radical support of Omama and his hate for this country. You should convince him to take a break from posting.
This should be easy for you as I feel you really support Sarah and if you support her, you can’t be happy with your husband’s support of Omama, particularly since he didn’t pick Hilliary.
NJGator Says:
September 21st, 2008 at 7:49 am
reinvestor – Can you see Russia from your house?
You know I like Roubini, and here is what he has to say…
Roubini @ RGE Monitor: The only real solution to the problem of over indebtedness is to reduce the value of the outstanding debt.
We need more Depression-era Home Owners’ Loan Corporation (HOLC)-type of institutions that buy illiquid mortgage assets at a discount from banks rather than an RTC that restructures assets from already defaulted banks. Let’s call this new “bad bank” HOME (Home Owners’ Mortgage Enterprise.) Moreover, buying up mortgages assets at a discount may push some banks into insolvency as they would have to book the lower value and take the writedown against capital that might not be there at this point. This is why a HOME solution may need to be combined with a Residential Finance Corp. (RFC)-like institution for the recapitalization of undercapitalized financial institutions.
In order to avoid the government overpaying for the bad assets, an auction process should be adopted. Also, only the debt of first-time homebuyers whose income does not exceed a certain limit (means-tested) should benefit from debt reduction. OVERLY DETRESSED MORTGAGES SHOULD BE FORECLOSED.
Strict rules must also govern the decision about which institutions should be recapitalized and which should be allowed to fail.
The plan is called a “Draft Proposal.”
Hopefully, experts such as Roubini will be called upon to help.
The other modification programs (Hope Now/FHA) were on a voluntary basis and didn’t force the issue of pricing the homes to market.
Banks will still close. People will still lose homes…but at a more managed rate – at least in theory.
In moderation Purgatory for nearly 12 hours. How many Hail Marys to get out?
If Mccain wins god help us all. Another 8 years of Republican administration will drive this country straight into the ground
here is Rush Holt’s e-mail update to me:
Dear XXXX,
The financial crisis may be hitting Wall Street this week, but it is affecting and will continue to affect families throughout New Jersey and the country. The dramatic meltdown – leading to the government’s take over of Fannie Mae and Freddie Mac, the $85 million loan to American International Group, the bankruptcy of Lehman Brothers, Bank of America’s acquisition of Merrill Lynch, and a turbulent stock market – has families anxiously watching their life savings, just as they watched their homes, lose value. This is being described by many as the most momentous financial crisis in almost 80 years.
Appropriately, this crisis has its roots in the irresponsible and misguided deregulation and lack of oversight that has been the hallmark of this Administration. This governing philosophy has played a key role in the housing implosion and securities backed by subprime mortgages that started the crisis. As Steve Thel, a Business Law Professor at Fordham said in the Star Ledger on Tuesday, “This is a consequence of a deregulatory scheme that was adopted in part as a matter of ideology rather than expertise…it’s the role of the regulators and the Federal Reserve to make sure people don’t get too exuberant particularly if the private sector gets to take the upside and the public sector takes the downside.” The job now is to understand how this happened – not just to assign blame – but to put in place corrective and preventive measures – as quickly as our understanding and prudence allow.
“when you guys go to protest, please hold a sign saying “I own SKF”
bi,
Actually, my sign will read; I subscribed to Bi’s blackbox. I’m short crude futures at $60. I’m down 40K per contract. Will the Resolution Bust Corp, accept my hideous trade?
I am cooking up my response back…seems this mess could have an origin all the way back to the 90’s
“NJCoast Says:
September 21st, 2008 at 12:32 am
Are there CliffNotes available for this thread?”
Bailout bad. Economy in trouble. Bailout scre-ws the prudent and the nation’s posterity. COngress being rushed to approve a plan with no hearings under assurances — from the same people who assured us that the Iraq war would 1) pay for itself and 2) would not cost more than about $40B — that the bailout costs will not be higher than $700B. Should’a bought gold last week. Bush is a putz. M and B both suck, depending on whom you ask.
Film at 11.
hh[913],
Actually 1913, when the fed was created. Since then the dollar has lost 96% of its value. If the dolts pass this, burn your dollars for heat this winter, it may be the cheaper alternative.
Ok shore…I sent my Rush Holt e-mail in…
I am furious at this blame game…just furious. Scared on the other hand that this is being done so quickly and giving authority to basically one person.
shore,
The same liars, that got us into this mess are now responsible for reconstruction. Comforting, no?
hh[917],
One person and one firm, GS.
BC Bob, exactly, which makes it all the more disgusting
Is this law really going to be called the Leave No Investment Banker Behind Act?
let’s get back to basic principles here. who was to blame for the tulip bubble? the south seas bubble? the internet bubble? was it just the tulip merchants, etc? the reality is that this bubble was a massive social phenomenon. if it was just a simple criminal act, we wouldn’t have had so much to talk about during the past couple of years. I am not saying we shouldn’t prosecute the criminals; I am just saying it is simplistic to pretend that there are a couple of old white guys in a room who robbed everybody. The truth is that tens of millions of people had a hand in bringing us to this point. The list of people who were not involved is probably shorter than the list who were. Some of these people were greedy, criminal, stupid, etc, but some were just trying to make a living and dealing with reality as it presented itself at the time. Who among us here, knowing what we know now, would not go back and back a house with a zero percent down mortgage in 2002? You can pretend that this is just powerful politicians bailing out their powerful financial patrons, but this is really about recognizing that we made a wrong turn as a society and that the only way left to right the ship is for the society as a whole to absorb the pain. We do not know what would have happened had their not been a housing bubble. Maybe you would’ve lost your job years ago if the economy had not kept growing artificially.
“but this is really about recognizing that we made a wrong turn as a society and that the only way left to right the ship is for the society as a whole to absorb the pain”
– I am ready to do this. But not with the way the plan is structured currently. This plan gives unlimited power and a blank check to one man.
Also, if I am going to be participating in the pain, I want to see what I am getting into. Lay all the cards on the table, total transparency, and then I will willingly fork my money out.
The “plan” as it is currently structured – there is no upside to the taxpayer.
agree that the plan has big flaws. I think a better structure would be like what was done for AIG: new secured debt combined with warrants to purchase majority stake in equity. If gov’t ultimately acquires institutions, it could flip them like a PE firm in few years. I also think Congress should be forced to vote on each spending move above a certain threshhold (say $10B). That way, there will be a public record each step of the way and opportunities to say no if the situation proves not to be so dire.
On ‘This Week’ George Will calls the candidate of his party ‘scary’ after his performance this past week in response to the financial crisis.
Amazing.
http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aVPBaUbYV_qQ
Democratic Congress May Adjourn, Leave Crisis to Fed, Treasury
By Kristin Jensen
Sept. 18 (Bloomberg) — The Democratic-controlled Congress, acknowledging that it isn’t equipped to lead the way to a solution for the financial crisis and can’t agree on a path to follow, is likely to just get out of the way.
Lawmakers say they are unlikely to take action before, or to delay, their planned adjournments — Sept. 26 for the House of Representatives, a week later for the Senate. While they haven’t ruled out returning after the Nov. 4 elections, they would rather wait until next year unless Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke, who are leading efforts to contain the crisis, call for help.
One reason, Senate Majority Leader Harry Reid said yesterday, is that “no one knows what to do” at the moment.
912#, bob, you missed my point. my point is not about who has better investment (speculation) ideas. my point is most whiners here who are against bail-out is purely for their own intersts. their SKF, gold and oil did not go to roof as they expected. the housing market in this area did no collape as they hoped. that is nothing to do with the concerns of main street.
Re – your poor comprehension of the English language continues to astound me. I have probably posted more anti VPCLF posts on here than anyone else.
O all the way, or I may have to decamp for Belize.
Now back to Sesame Place. Me, Stu and Lil Gator have a date with Dan Zanes at high noon.
896#, stu, as i said here before, mc are facing a very steep unhill battle in this economic environment. but he is still winnable when you look at individual polls from battleground states. 3 most critical states are MI, OH and PA. he needs at least one of them to win the general election. if he can win two of them, O will lose definately.
to: bi, stu, gator, reinvestor
i think we could cut down on the number of posts here if in the beginning of the thread everyday, bi, re, stu and gator just stated their blind loyalty to the candidate of their choice instead of cherry picking articles they choose to believe, posting it, and then arguing about it.
we know who you support – stop campaigning.
bi[927],
I get the point. You are clueless regarding your statements pertaining to gold;
http://online.wsj.com/public/article/hotornot.html
re #922 skeptic:
good big-picture observation.
however, i’ll add that as a person who couldn’t afford to buy a house at the prices being asked, because i was unwilling to take on risks that i’d been taught (perhaps by a more frugal generation of society) not to take, i’ve BEEN absorbing the pain and insecurity of renting for several years, all the while being made to feel as some kind of pariah in an “ownership society”.
now, with regard to “righting the ship”, this usually involves flooding compartments opposite the damage to bring balance, leaving the ship lower in the water.
i believe, as a prudent person, im in one of those compartments getting flooded to save the ship, and worse, i feel its to balance damage caused to the hull by the crew and passengers of the ship from the inside, as if they were vandals who thought the hull was made with copper and they were stripping it to sell for scrap, racing to get it out before the sea broke thru.
so i don’t see this as a bail-out at all – its an emergency damage control, a flooding of compartments. but that treasonous group of crew and passengers are still on board, some with their hands still full of loot, and they’ll resume the stripping the moment they can get back below decks.
and if I’m being really cynical, i think: that treasonous group is the one in charge of damage control too, and they’ll flood this ship in a manner that allows them to loot anything of value left before it goes to the bottom. That pattern of running into the ground on the bailouts of others marks George Bush’s life, and those in this nation who routinely live at others expense, taking their flat screens and escalades across the border with a chapter 11 in their file.
THAT is what I object to, and what I hope many people feel: i want to see this ship saved, but want to make sure that the looters, deadbeats, and other grifters who have profited in this disgusting enterprise are sent to the plank. otherwise, let it sink.
skep (924)-
“If gov’t ultimately acquires institutions, it could flip them like a PE firm in few years.”
Keep pushing this fantasy to yourself, skep. However, last time I checked, the shops that the gubmint might acquire are worth about 0.
MS is worth 0.
GS is worth 0.
WM is worth 0.
Probably 10-15 other institutions are worth 0.
AIG will be back to Klink this week, begging for more. The 85 mil will be gone.
Hard to flip worthless.
I have been surprised that I have not been able to find any organized bailout protest to join that was sponsored by a credible group. I love the Wall Street protest idea, is anyone seriously organizing this? It’s time to get serious.
clot– not sure how one can be so confident in the worth or lack thereof of these institutions when they are at present so opaque. but even if you are right, values change in a restructuring. there are plenty of companies that have gone into bankruptcy and emerged with new owners who have then gone on to make money. it does not always work out this way, but it can happen, and I think the gov’t should seize whatever opportunity it can to capture any potential upside given the risk they are absorbing.
#932 by Pain participant gets my vote for post of the weekend!
Jay Says:
September 21st, 2008 at 12:29 pm
I have been surprised that I have not been able to find any organized bailout protest to join that was sponsored by a credible group. I love the Wall Street protest idea, is anyone seriously organizing this? It’s time to get serious.
Jay: my guess is first apathy then second self-preservation….we live in NYC not Oshkosh. You don’t want to bite the hand that feeds you…..the bulk of the people showing up will be European beatniks, sons/daughters of the summer of love living in the Northwest, and independently wealthy slackers in their 30’s who are basically protesting their parents that ignored them growing up.
BTW: Monitor how much bile is being garnered for the IB’s in the government. They might truly crush these guys. If so, maybe shorting NYC real estate might be in order.
Also, the fountains at Hovnanian’s headquarters are still on…..
Will you stop jabbering for just a minute? It’s very simple. I thought a one pager would be simple enough but perhaps I’ve overestimated median attention spans. Let me boil it down even further.
Give me 700 billion dollars right now. And keep the cops out of it.
Do you get it now?
“BTW: Monitor how much bile is being garnered for the IB’s in the government. They might truly crush these guys.”
Chi,
On the other hand, they could have just let shorts accomplish the same.
By the way, I may stop by the WS protest. Then again, what do I know. I’m just the idiot that laid out 5-1 odds on AIG, back in August.
Remeber,
no bank is safe in this mess
“Presently, ‘there is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 Billion in FDIC insurance to cover $6.84 Trillion in bank deposits. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion.’ (Mish’s Global Economic Trend Analysis)
Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion.’
Banks only have 1/25th of the cash on hand to cover deposits!!! Who is still confident at getting their money out of the bank once this cascades????
what happens when some mortgage holders
just decide not to pay any longer. Reason:
Because they are upside down. Millions are upside down,,,and its getting worse
cnns news today:
Latest News
* South African President Mbeki formally resigns
* CNNMoney: Paulson urges quick work on bailout
* Video shows suicide truck at Pakistan hotel
* Doctor expects full recovery for 2 in fiery crash
* Federal, state agents raid evangelist compound
* Ticker: SNL skewers McCain’s TV ads
* Will candidates’ financial plans work?
* Hong Kong girl sick from tainted milk
* WISN: Copter crashes into house; 2 die
* Jude Law most proud of this film Video
* Israeli PM Olmert hands in resignation 28 min
* KIRO: Forest officer slain; suspect killed
* Can Red Cross, others handle big disaster? Video
* Speeding drag boat disintegrates Video T-shirt
* iReport.com: Memories of Yankee Stadium
* Blaine’s next stunt could leave him blind
* Golf.com: U.S. leads Ryder Cup | Gallery
* Dachshunds dash in wiener suits Video T-shirt
* CNN Wire: South African president…
http://financialpetition.org/petition-nobail.shtml
http://market-ticker.denninger.net/archives/587-The-Mother-Of-All-Frauds.html
At a 900k open house today, a mortgage broker from Wachovia was present to offer 5% deals, packaged as 20% fixed and 15% as a heloc. I thought there is credit crises? Doesn’t sound right to me that banks should get any tax payer money if they still offer 5% down-payment deals.
Bergen County didn’t go as nuts as some other parts of the country during the boom but it was a little worse than the national average.
From 2001 through the middle of 2008 there were just over 73k transactions of SFH/Condo/Coop/Thse out of over 300 something thousand total housing units. So we’re talking a bit over 20% of the market. Add in a bit for those that took out excessive helocs and refis and I doubt we’re even approaching 40%. So I don’t buy this notion that we’re all responsible.
Though I have to admit I’m wondering if my latest rant on the bailouts crossed me over into the lunatic fringe.
It occurs to me that these bailouts, taken in total, represent a back-door way of privatizing (ie looting) social security, the only liquid asset it seems the Federal Government really has (after years of growing the debt etc.)
Is it inappropriate to begin to discuss tax revolt for April ’09? Would the failure of millions to file their returns also result in a bail-out?
dblko 950,
We just anounced another 700 billion to buy bad mortgages. Why would anyone write good mortgages?
Market telling us that New Jersey real estate is fine. Most of CLI’s portfolio is in the Garden State, with a large concentration in Jersey City.
If New Jersey real estate was crashing, then this stock wouldn’t be going up.
http://tinyurl.com/46kkp6
Finally someone (Rep.Barney Frank) wants some executive pay controls and some others monitoring this bailout. He’s proposing it today.
http://www.newsdaily.com/stories/n21508444-financial-bailout-frank/
yo,
Looking at the YTD chart for one commercial REIT is not a good indicator of how the residential housing market is doing. Look at 1yr and 2yr performance to see it’s still down off it’s peak.
You’re either dealing with your own confirmation bias or looking to reassure others who want to believe.
I really wonder if people that do what you do and say things like that are either drowning in kool-aid or are paid shills.
This has been asked before… regarding the disparity between listing prices and sale prices and why people still think they can get bubble prices… google “endowment effect”
Here’s a bit from wikipedia.
The endowment effect (also known as divestiture aversion) is a hypothesis that people value a good or service more once their property right to it has been established. In other words, people place a higher value on objects they own than objects that they do not. In one experiment, people demanded a higher price for a coffee mug that had been given to them but put a lower price on one they did not yet own. The endowment effect was described as inconsistent with standard economic theory which asserts that a person’s willingness to pay (WTP) for a good should be equal to their willingness to accept (WTA) compensation to be deprived of the good. This hypothesis underlies consumer theory and indifference curves.
“The implications are twofold.
1) Paulson and Bernanke are liars
2) Paulson and Bernanke are incompetent
There are no other choices except “both of the above”
Shouldn’t Paulson and Bernanke have the obligation to explain how that happened, and most important what the Fed’s role and Congress’s roll in that was?
Yet somehow Congress is supposed to rush through a package that is arguably unconstitutional, because two known liars and/or incompetents say there is an urgent need to do so.
Sadly, Congress is more concerned about getting something done quickly than getting something done right. In the corporate world one would expect to see overtime hours. Here we are in a global financial emergency and Congress is concerned about getting something done before recess.
Everyone Wants A Bailout
Mortgage lenders, banks, the auto industry, home builders, broker-dealers all are asking for handouts. Today I see Paulson saying Foreign banks may get help.”
http://globaleconomicanalysis.blogspot.com/
just returned from my son’s football game. It was well know that the opposing team had a starting player that had been “benched” for two games. It appears, with evidence, that he intentionally broke a kid’s arm a few games back, and was not supposed to play today. sounds off topic but not really. If I knew my kid did anything intentional like that, no “league” would tell me what to do, I would ban him myself. greed on all levels can take over.
BI:
I have never owned SKF. So I have no vested interest in watching the financial firms collapse. I work for a financial printer, so I lose my job if financials implode.
Shorting is not illegal or immoral in any way. Were you against Enron shorts or Worldcom shorts? Shorts keep the market in check.
So when I’m protesting the bailout, keep in mind the only three reasons why I am against it.
We are not punishing those responsible.
We are not adding any more regulation than currently exists today.
We are punishing those who played by the rules.
And don’t forget BI: SRS hit 99 just prior to the anti-shorting announcement even though it did not impact commercial RE. This means that the underlying fundamentals for commercial RE have not changed. We’ll be back their before you know it or when the temporary anti-shorting ban ends. Without hedges, no one will invest. Shorting will still exist through options trading.
Remember, by limiting shorting, you are really stifling the free market. It is like having a criminal trial where the defense is not allowed to speak.
But shorts need not worry. The bailout has not done a single thing to treat the cause. The disease remains and soon enough, the aspirin will wear off.
Robert Reich on the bailout:
What Wall Street Should Do To Get Its Blank Check
By Robert Reich – September 21, 2008, 1:48PM
The frame has been set, the dye cast. Treasury Secretary Hank Paulson, presumably representing the Bush administration but indirectly representing Wall Street, and Fed Chief Ben Bernanke, want a blank check from Congress for $700 billion or possibly a trillion dollars or more to take bad debt off Wall Street’s balance sheets. Never before in the history of American capitalism has so much been asked of so many for (at least in the first instance) so few.
Put yourself in the shoes of a member of Congress, including our two presidential candidates. The Treasury Secretary and Fed Chair have told you this is necessary to save the economy. If you don’t agree, you risk a meltdown of the entire global financial system. Your own constituents’ savings could go down with it. An election is six weeks away. Besides, in the last two days of trading, since rumors spread that the Treasury and the Fed were planning something of this sort, stock prices revived.
Now – quick — what do you do? You have no choice but to say yes.
But you might also set some conditions on Wall Street.
The public doesn’t like a blank check. They think this whole bailout idea is nuts. They see fat cats on Wall Street who have raked in zillions for years, now extorting in effect $2,000 to $5,000 from every American family to make up for their own nonfeasance, malfeasance, greed, and just plain stupidity. Wall Street’s request for a blank check comes at the same time most of the public is worried about their jobs and declining wages, and having enough money to pay for gas and food and health insurance, meet their car payments and mortgage payments, and save for their retirement and childrens’ college education. And so the public is asking: Why should Wall Street get bailed out by me when I’m getting screwed?
So if you are a member of Congress, you just might be in a position to demand from Wall Street certain conditions in return for the blank check.
My five nominees:
1. The government (i.e. taxpayers) gets an equity stake in every Wall Street financial company proportional to the amount of bad debt that company shoves onto the public. So when and if Wall Street shares rise, taxpayers are rewarded for accepting so much risk.
2. Wall Street executives and directors of Wall Street firms relinquish their current stock options and this year’s other forms of compensation, and agree to future compensation linked to a rolling five-year average of firm profitability. Why should taxpayers feather their already amply-feathered nests?
3. All Wall Street executives immediately cease making campaign contributions to any candidate for public office in this election cycle or next, all Wall Street PACs be closed, and Wall Street lobbyists curtail their activities unless specifically asked for information by policymakers. Why should taxpayers finance Wall Street’s outsized political power – especially when that power is being exercised to get favorable terms from taxpayers?
4. Wall Street firms agree to comply with new regulations over disclosure, capital requirements, conflicts of interest, and market manipulation. The regulations will emerge in ninety days from a bi-partisan working group, to be convened immediately. After all, inadequate regulation and lack of oversight got us into this mess.
5. Wall Street agrees to give bankruptcy judges the authority to modify the terms of primary mortgages, so homeowners have a fighting chance to keep their homes. Why should distressed homeowners lose their homes when Wall Streeters receive taxpayer money that helps them keep their fancy ones?
Wall Streeters may not like these conditions. Well, you should tell them that the public doesn’t like the idea of bailing out Wall Street. So if Wall Street doesn’t accept these conditions, it doesn’t get the blank check.
http://tpmcafe.talkingpointsmemo.com/2008/09/21/what_wall_street_should_do_to/index.php
Is there any precedent for this happening anywhere else in the world, in modern history? If so, how did that turn out?
Syb,
I discuss this with folks at work… earlier I posted that I had used the word “unprecedented” probably dozens and dozens of times.
For a reason.
sl
From a tech ticker article.
“I have never woken up to bigger gains in my portfolio and they have never been less deserved,” writes blogger and private equity investor Howard Lindzon.
Like many, myself included, Lindzon is concerned about the long-term implications of government interference in the financial markets on such a massive scale.
Finally, noting the Dow is on track for its biggest 2-day rally since 1929, Barry Ritholtz asks: “And how’d that work out for ya?”
Anyone watching CNBC it would seem the flaws in the plan are starting to dawn on the market. In addition the lack of shorting is rearing its ugly head already. Pelosi, no 700 Bil blank check. Franks, CEO pay caps or guide lines whatever. It just keeps getting better & better so to speak. What a mess.
“I hate the fact that we have to do it, but it’s better than the alternative,” Mr. Paulson said on “Fox News Sunday.” “This is a humbling, humbling time for the United States of America.”
http://www.nytimes.com/2008/09/22/business/22talkshow.html?_r=1&hp&oref=slogin
Paulson has big brass ones. He’s one of the a**holes that setup us up for this “humbling time”.
New Monmouth University poll is out. Only 23% surveyed think Corzine should be reelected in 2009. Anyone else surprised that the number is that high?
http://www.monmouth.edu/polling/admin/polls/MUP18_3.pdf
BC Bob Says:
September 21st, 2008 at 1:39 pm
Then again, what do I know. I’m just the idiot that laid out 5-1 odds on AIG, back in August.
Bost: It wouldn’t pay off…they didn’t go poof…form over substance….
NJGator Says:
September 21st, 2008 at 9:00 pm
New Monmouth University poll is out. Only 23% surveyed think Corzine should be reelected in 2009. Anyone else surprised that the number is that high?
Gates: You need to furnish the alternative before you can answer….
Slipping down into a time of diminished expectations and a lower standard of living. What a legacy for our children. Okay, how long will it last and how do we get out of it?
969- Right now just grateful that I have a couple of other passports I can make use of .
doh!
WSJ
Manhattan Won’t Avoid Property Crunch
By LIAM DENNING
When it comes to property prices, that strip of rock just south of the Bronx is often perceived as invincible.
Across the U.S., house prices have fallen 19% from their peak, according to the S&P/Case-Shiller Home Price index. New York City, as a whole, is down 10%.
Meanwhile, on planet Manhattan, the median price of an apartment rose above $1 million for the first time in the second quarter of 2008, according to Miller Samuel, a real-estate appraiser.
Even in Gotham, reality bites eventually. Three big problems are likely to hit in 2009.
First up: Job losses on Wall Street. In 2006, the most recent full year of New York State Department of Labor data, finance and insurance companies employed 15.7% of Manhattan’s workers. They earned an average of $269,000, more than 2.5 times the average private-sector wage. Property prices will suffer from slashed bonuses and submarine stock options, not to mention the pink slips.
Wall Street’s woes also mean tighter credit. The Federal Reserve’s latest “beige book” survey of financial conditions says this of a softening Manhattan condominium and co-op market: “A growing number of deals are said to be falling through, due to difficulty in getting financing — largely at the middle of the market.”
The third headwind is a stronger dollar. Jonathan Miller, Miller Samuel’s president, estimates one in three new apartments are sold to foreigners, primarily Western Europeans.
I’m a Dell Vista girl now. Love the keyboard – but the print in even smaller than before…Yikes!
965,
Amen Jay. Maybe Skeletor will be humbled into giving back his Goldman bonuses from the 1998-2006.
This just in:
Fed Board Approves Goldman, Morgan Stanley Bid to Become Banks
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXxh6ZNwLUV4&refer=home
966 “Paulson has big brass ones. He’s one of the a**holes that setup us up for this “humbling time”.”
But, I suspect, not so humbling that any of the folks at the banks being rescued by this feel like they shoule forfeit any salaries or bonuses or accept limitations on earnings for some period going forward, as a condition of being allowed to dump their toxic junk.
971: getting that sorted out for my kids monday. (when I added the book _The Urban Homestead_ to my Amazon shopping list, it suggested i would also be interested in a book on how to flee the country. tin hats, represent! ;)
“We are not punishing those responsible.
We are not adding any more regulation than currently exists today.
We are punishing those who played by the rules.”
And this pi$$es-off to no end those of us who have been prudent and played by the rules.
I for one do not want to see people in this nation go hungry, or homeless, or without medical care, and expect the government to step in and protect the less fortunate from being crushed by capitalism, which can be rather uncaring. Nevertheless, I am sick and tired of people reaching into my pockets to help people maintain upper or middle income lives after making mistakes that should have deprived them of such lifestyles.
pain participant (936)-
If you’re new here (and not just one of us old farts posting under a fake handle), welcome.
Well said!
“Yet somehow Congress is supposed to rush through a package that is arguably unconstitutional, because two known liars and/or incompetents say there is an urgent need to do so.”
BC,
And they make speak with contempt when members of the legislative branch state that there may be need for modifications to the bill and that the legislative branch may have a role in crafting the legislation.
Heck, with as off base as the administration was in estimating the costs of the Iraq war, congress has good reason to be wary of this misguided farce of proposed legislation.
I get the sense that members of congress have alerady been getting an earful. More calls and faxes can’t hurt.
skep (939)-
You describe a situation in which legitimate companies use bankruptcy protection to reorganize, pay off their debts and emerge stronger at some later date.
However, we’re talking about a fully-collapsed, sham of a shadow banking system here. It’s done. Over. Forever. Worthless. Bye-bye.
Tom (954)-
The crazy thing is, the banks can’t wait until they’re securitizing debt again.
They’re like junkies, jonesing for the fix.
Seen anything this weekend that looks like a gubmint prohibition of creation of future SIVs, CDOs or MBS?
Yeah, but would pain simply go away if required jail sentences were added to the bail-out bill for proof of any wrong-doing? I’m feeling the vibes of unrelenting bitterness that usually come from somebody like me.
Cindy, if it’s the backlit keyboard, check every couple of days for keyboard pressure on the screen. When you open to a black screen, have a window behind you and watch for verticle “white” marks on the screen around the I, O and 9 pressure points. Call the 800 number if you see them.
If we are about to bail out the banks, should we not just consider the US Governmant a big Sovereign Wealth Fund, and take an equity position in each and every firm helped?
In one of the most sweeping changes on Wall Street in decades, Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies, the Federal Reserve said Sunday night.
The move fundamentally changes one of the mainstay models of modern Wall Street, the independent investment bank, soon after the federal government unveiled the biggest market rescue since the Great Depression. It heralds new regulations and supervisions of previously lightly regulated investment banks. It is also the latest signal by the Federal Reserve that it will not let Goldman or Morgan fail.
The move comes after the bankruptcy of Lehman Brothers and the near-collapses of Bear Stearns and Merrill Lynch.
Announced without fanfare on Sunday night, the move signals the final end to the Glass-Steagall Act, the epochal legislation of 1933 that signaled a split between investment banks and retail banks. A law passed in 1999 repealed the earlier regulation, though Goldman and Morgan remained independent investment banks.
Now, Goldman and Morgan Stanley, which have been the subject of merger speculation in recent weeks, can become direct competitors to larger firms like Citigroup, JPMorgan Chase and Bank of America. Those firms combine investment-banking operations with the larger capital cushions that come with retail deposits, giving them a stability that pure investment banks lack.
JPMorgan acquired Bear Stearns this spring in a fire sale brokered by the federal government, while Bank of America has agreed to buy Merrill Lynch for $50 billion. Barclays of Britain agreed to buy the core capital-markets business of Lehman Brothers out of bankruptcy late last week.
Morgan Stanley had sought other ways to bolster its capital, and had been in advanced talks with China’s sovereign wealth fund and others about raising as much as $30 billion, people briefed on the matter said Sunday night.
By becoming bank holding companies, Goldman Sachs and Morgan Stanley gained some breathing room in the immediate term. But it likely lays the groundwork for additional deal making. Given the expected bank failures this year, it is possible Goldman and Morgan Stanley could seek to buy them cheaply in a “roll-up” strategy.
Prior to the move, federal regulations prohibited the two investment banks from pursuing such deals. Indeed, Morgan Stanley’s recent talks with Wachovia revolved around Wachovia buying Morgan Stanley.
Being a bank holding company would also give the two access to the discount window of the Federal Reserve. While they have had access to Fed lending facilities in recent months, regulators had planned to take away discount window access in January.
The regulation by the Federal Reserve brings a host of accounting rule changes that should benefit the two banks in the current environment.
In return, they will submit themselves to greater regulation, including limits on the amount of debt they can take on. When it collapsed, Lehman had about a 30:1 debt-to-equity ratio, meaning it had borrowed $30 for every dollar in capital it held. Morgan Stanley currently has a debt-to-equity ratio of 30:1, while Goldman Sachs has one of about 22:1.
Bank of America, on the other hand, currently has about an 11:1 leverage ratio, while JPMorgan has about 13:1 and Citigroup about 15:1. Because they can borrow less, bank holding companies typically have lower earnings multiples.
http://dealbook.blogs.nytimes.com/2008/09/21/goldman-morgan-to-become-bank-holding-companies/?hp
HE (975)-
The shadow bankers now try to go legit. And, the gubmint allows it.
We are so f*cked.
“Yeah, but would pain simply go away if required jail sentences were added to the bail-out bill for proof of any wrong-doing? ”
Works for me.
So, it looks like ther will be no pure IBs left in NY. No?
“The truth is that tens of millions of people had a hand in bringing us to this point.”
Skep,
You are correct. And yet all of these people who are to blame seem to be getting help from the governemt — read the pockets of those of us who did the right thing and generations to come. Scr-ew up, here is debt forgiveness, no need to pay tax on the forgiven debt, a stimulus check and you therer in the Bently, here is $700B for you too.
John,
Regarding Post #890.
I watched a skit sometime back. It goes like this, a robber points a knife to a well-dressed man and says “Give me all your money or else…”.
The well-dressed man say “Do you know who I am? I am an elected representative…” To that the robber responds “Well then, give me back all my money”.
“The same liars, that got us into this mess are now responsible for reconstruction. Comforting, no?”
It leaves me feeling all warm and fuzzy.
ce is gonna be pi$$ed. In his own backyard to boot.
COLTS NECK — President Bush will be in Monmouth County on Monday, attending a fundraiser for two Republican congressional candidates at a private home.
The event, which is closed to the media, will benefit state Sen. Leonard Lance (R-7th), and Chris Myers, the mayor of Medford who is running for Congress in the 3rd district.
Myers is running against Democratic state Sen. John Adler for the seat being vacated by Republican Jim Saxton in the 3rd District. Lance faces Assemblywoman Linda Stender from Middlesex County for the 7th District seat being vacated by
Republican Mike Ferguson.
The $1,000 to $5,000 per ticket afternoon event will be at the home of Juan and Marta Gutierrez, Republican donors who have an equestrian business.
Republicans have been low-key about the visit in a state where the president remains deeply unpopular. In a Fairleigh Dickinson-Public Mind poll released earlier this month, only 22 percent of those surveyed in New Jersey approve of the job Bush is doing, while 71 percent disapprove.
http://www.app.com/apps/pbcs.dll/article?AID=/20080921/NEWS/80921003
Bruce, that is. Not sure what happened in cyberspace
Hide your wallets and prepare for property tax increases for King John is on the job:
http://www.app.com/apps/pbcs.dll/article?AID=/20080921/NEWS/80921004
BISMARCK, N.D. (AP) — Oh-no , who has deployed more than 50 staffers in North Dakota in an attempt to become the first Democratic presidential candidate to carry the state since 1964, is pulling out.
An Oh-no spokeswoman, Amy Brundage, confirmed Sunday that the campaign’s North Dakota staffers were being sent to Minnesota and Wisconsin, where recent polls have shown a tight race between Oh-no and Republican John M.
She declined to say how many campaign workers were being shifted, but other Democratic activists put the number at more than 50. Oh-no has opened 11 North Dakota campaign offices and run television advertising in the state, which is unusual for a Democratic presidential candidate.
[snip]
http://www.usatoday.com/news/politics/election2008/2008-09-21-obamanorthdakota_N.htm
Come
too
far
to
Hey, pilot the plane. See that monkey pilot comment?
stop
PHILADELPHIA (Reuters) – Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz) said on Sunday it would become the fourth largest bank holding company and would be regulated by the Federal Reserve.
Goldman said it would move assets from a number of strategic businesses, including its lending businesses, into an entity called GS Bank USA that would have more than $150 billion in assets.
more good news… (hah!)
GS Bank USA would be one of the ten largest banks in the United States, with assets that are fully funded for term and available to funded by the Federal Reserve.
Goldman said it intends to grow our deposit base through acquisitions and organically.
(Reporting by Jessica Hall; Editing by Louise Heavens)
sl
BISMARCK, N.D. (AP) — Oh-no , who has deployed more than 50 staffers in North Dakota in an attempt to become the first Democratic presidential candidate to carry the state since 1964, is pulling out.
An Oh-no spokeswoman, Amy Brundage, confirmed Sunday that the campaign’s North Dakota staffers were being sent to Minnesota and Wisconsin, where recent polls have shown a tight race between Oh-no and Republican John M.
She declined to say how many campaign workers were being shifted, but other Democratic activists put the number at more than 50. Oh-no has opened 11 North Dakota campaign offices and run television advertising in the state, which is unusual for a Democratic presidential candidate.
[snip]
Pat – you ruined my momentum. 1000 though – woo hoo, childish I know but tough.
What monkey pilot comment?
“Goldman said it intends to grow our deposit base through acquisitions and organically”
Organically, is that when the bankers spew bull$hit and congress throws them money?
I know, lisoosh, I was tabbing and missed your descent.
Monkey pilot was suggested for Corzine’s desire to pilot New Jersey through the crisis.
from MIT
How to Stage a Revolution
Course Description
21H.001, a HASS-D, CI course, explores fundamental questions about the causes and nature of revolutions. How do people overthrow their rulers? How do they establish new governments? Do radical upheavals require bloodshed, violence, or even terror? How have revolutionaries attempted to establish their ideals and realize their goals? We will look at a set of major political transformations throughout the world and across centuries to understand the meaning of revolution and evaluate its impact. By the end of the course, students will be able to offer reasons why some revolutions succeed and others fail. Materials for the course include the writings of revolutionaries, declarations and constitutions, music, films, art, memoirs, and newspapers.
http://ocw.mit.edu/OcwWeb/History/21H-001Fall-2007/CourseHome/index.htm
I have been surprised that I have not been able to find any organized bailout protest to join that was sponsored by a credible group. I love the Wall Street protest idea, is anyone seriously organizing this? It’s time to get serious.
action seems necessary, doesn’t it? there are some incredibly smart people on this board, and i think it could be a success.
My Letter to my senator
Dear Senator Obama-
Chances are most if not all of the major commercial and investment banks are insolvent. Not one of them is opting out of the do-not-short list, and they don’t seem to have the confidence in their survival to opt out of the L3 asset swap program Secretary Paulson is proposing.
It is also very likely that acutely dangerous systemic risk already exists, not merely from direct lines of credit among the banks, but especially from credit default swaps, which if activated by more than one large bank default would probably bring down many others. Remember, though, that this systemic risk is highly concentrated in the top 25 or so banks in the world, and does not jeopardize the 6,000 other community banks in the U.S.
Third, it is also highly probable that as this recession worsens, and as housing values continue to sink, forcing more foreclosures, the large banks will be even closer to collapse.
Having worked for many years in the banking industry and been closely involved with risk management and derivatives, I can tell you that it looks like catastrophe is already here.
What Sec. Paulson wants you to believe is that catastrophe is approaching, but it can be averted if only Congress acts urgently to give him the extraordinary authority he is requesting. The implication is if you don’t give him $700 billion in borrowing authority within a week, markets will collapse and it will be all your fault.
We’ve seen this drill before, with the Patriot Act and with the Iraq War authorization. The scare tactics, the urgency, the implied threat of blame for any failure – this is what the Bush administration does. Some of you in the Senate were able to stand up to this pressure, and that type of strength is desperately needed now.
If insolvency is here now for the big banks, the last thing you want to do is throw $700 billion of money that is not yours at bailing out the banks who created this disaster. You’ll need every bit of that money to protect the taxpayers and their deposits in these banks when these financial companies are thrown into the bankruptcy courts. You’ll need that money to make sure consumer deposits are protected with insurance, and you’ll need it to keep the healthy parts of these banks that deal with consumers and businesses functioning until they come out of bankruptcy.
And forget about comparing Paulson’s plan to the RTC. These L3 assets aren’t homes, condos, or commercial real estate that can be easily sold at the right price. They are bits of paper giving the bond holder the right to some small portion of thousands of mortgages, a right that is shared with all the other investors, who are required to agree on what is done with foreclosed properties in the pool. This is one of the reasons no one wants to buy this stuff, and no one will for many years until it is crystal clear what the final losses will be.
Once you give Paulson the authority he seeks, he will buy these securities at 65 cents/dollar, then quietly auction them off at a nickel each. It will be “unfortunate but necessary” to revitalize the banking industry, even though you will discover the banks won’t be lending after this is all over to any but the finest credits. You will have rewarded the banks for their calamitous decisions, stuffed the taxpayers with huge losses, squandered your remaining ability to shore up the FDIC, not prevented the big banks from collapsing anyway, done nothing to help the community banks that will constitute the new banking system in this country when these problems are solved, and in the end made the situation much worse.
If you want to do something practical, require the SEC to go into these banks, open up their L3 holdings to public scrutiny, auction off a sampling of these securities, and apply those prices to the L3 portfolios of all the banks. In this way we will know which banks are insolvent. You won’t need to go through this charade of having the Treasury take ownership of these assets, because the core of the problem is not that these assets are clogging up bank balances sheets, as Paulson says (which is tantamount to saying, by the way, that no one will buy them). The core of the problem is that there is no transparency about these portfolios and their real worth. Congress doesn’t need $700 billion of our money to create that transparency, and if it shows as I suspect that many of these banks are insolvent, that’s why we have bankruptcy courts. You can certainly protect the banks from bank runs while they are in bankruptcy.
Paulson is basically rolling you and the rest of Congress into giving him unprecedented power to protect his friends on Wall Street. This decision you are making is probably as momentous as the Iraq War resolution. Don’t fall for this bailout disguised as the only way to prevent Armageddon. Armageddon is already here – at least for the big banks – and it needs an entirely different solution. Spend our money protecting us, by ensuring the FDIC is properly funded, by throwing these too-big-to-fail banks into bankruptcy if they truly are insolvent, by preserving the healthy parts of these banks while in bankruptcy, and bringing them back out again so they function under much better safety and soundness regulations. We’ve had airlines functioning properly and safely for years while in bankruptcy, and there is no reason we can’t do the same with banks.
Please, please, do not fall for some useless compromise or bipartisan agreement that gives the administration what it wants in the end. Kill this proposal here and now, protect us from this bailout, and deal with the real problem – the insolvency of the major banks, not the paper that is supposedly blocking their lending capabilities.
My Letter to my senator
Dear Senator O
Chances are most if not all of the major commercial and investment banks are insolvent. Not one of them is opting out of the do-not-short list, and they don’t seem to have the confidence in their survival to opt out of the L3 asset swap program Secretary Paulson is proposing.
It is also very likely that acutely dangerous systemic risk already exists, not merely from direct lines of credit among the banks, but especially from credit default swaps, which if activated by more than one large bank default would probably bring down many others. Remember, though, that this systemic risk is highly concentrated in the top 25 or so banks in the world, and does not jeopardize the 6,000 other community banks in the U.S.
Third, it is also highly probable that as this recession worsens, and as housing values continue to sink, forcing more foreclosures, the large banks will be even closer to collapse.
Having worked for many years in the banking industry and been closely involved with risk management and derivatives, I can tell you that it looks like catastrophe is already here.
What Sec. Paulson wants you to believe is that catastrophe is approaching, but it can be averted if only Congress acts urgently to give him the extraordinary authority he is requesting. The implication is if you don’t give him $700 billion in borrowing authority within a week, markets will collapse and it will be all your fault.
We’ve seen this drill before, with the Patriot Act and with the Iraq War authorization. The scare tactics, the urgency, the implied threat of blame for any failure – this is what the Bush administration does. Some of you in the Senate were able to stand up to this pressure, and that type of strength is desperately needed now.
If insolvency is here now for the big banks, the last thing you want to do is throw $700 billion of money that is not yours at bailing out the banks who created this disaster. You’ll need every bit of that money to protect the taxpayers and their deposits in these banks when these financial companies are thrown into the bankruptcy courts. You’ll need that money to make sure consumer deposits are protected with insurance, and you’ll need it to keep the healthy parts of these banks that deal with consumers and businesses functioning until they come out of bankruptcy.
And forget about comparing Paulson’s plan to the RTC. These L3 assets aren’t homes, condos, or commercial real estate that can be easily sold at the right price. They are bits of paper giving the bond holder the right to some small portion of thousands of mortgages, a right that is shared with all the other investors, who are required to agree on what is done with foreclosed properties in the pool. This is one of the reasons no one wants to buy this stuff, and no one will for many years until it is crystal clear what the final losses will be.
Once you give Paulson the authority he seeks, he will buy these securities at 65 cents/dollar, then quietly auction them off at a nickel each. It will be “unfortunate but necessary” to revitalize the banking industry, even though you will discover the banks won’t be lending after this is all over to any but the finest credits. You will have rewarded the banks for their calamitous decisions, stuffed the taxpayers with huge losses, squandered your remaining ability to shore up the FDIC, not prevented the big banks from collapsing anyway, done nothing to help the community banks that will constitute the new banking system in this country when these problems are solved, and in the end made the situation much worse.
If you want to do something practical, require the SEC to go into these banks, open up their L3 holdings to public scrutiny, auction off a sampling of these securities, and apply those prices to the L3 portfolios of all the banks. In this way we will know which banks are insolvent. You won’t need to go through this charade of having the Treasury take ownership of these assets, because the core of the problem is not that these assets are clogging up bank balances sheets, as Paulson says (which is tantamount to saying, by the way, that no one will buy them). The core of the problem is that there is no transparency about these portfolios and their real worth. Congress doesn’t need $700 billion of our money to create that transparency, and if it shows as I suspect that many of these banks are insolvent, that’s why we have bankruptcy courts. You can certainly protect the banks from bank runs while they are in bankruptcy.
Paulson is basically rolling you and the rest of Congress into giving him unprecedented power to protect his friends on Wall Street. This decision you are making is probably as momentous as the Iraq War resolution. Don’t fall for this bailout disguised as the only way to prevent Armageddon. Armageddon is already here – at least for the big banks – and it needs an entirely different solution. Spend our money protecting us, by ensuring the FDIC is properly funded, by throwing these too-big-to-fail banks into bankruptcy if they truly are insolvent, by preserving the healthy parts of these banks while in bankruptcy, and bringing them back out again so they function under much better safety and soundness regulations. We’ve had airlines functioning properly and safely for years while in bankruptcy, and there is no reason we can’t do the same with banks.
Please, please, do not fall for some useless compromise or bipartisan agreement that gives the administration what it wants in the end. Kill this proposal here and now, protect us from this bailout, and deal with the real problem – the insolvency of the major banks, not the paper that is supposedly blocking their lending capabilities.
Pat (1005)-
Monkey pilot better wear his seat belt. Guvnor Jon’s been a little shaky since he forgot to wear his.
vodka (1006)-
Oughta rename that “How to Get an MIT Class Onto a Watchlist”.
Any chance I can audit that class on the intertubes?
we’re going to need an eloquent, well-read, smart speaker to lead us (in the protest)
A few nominees:
Shore Guy, Clot, BC Bob, and Grim
Laughy (1007)-
“…action seems necessary, doesn’t it? there are some incredibly smart people on this board, and i think it could be a success.”
Funny. I consider myself as smart as the average bear, and all I could figure to do was short RE and financials.
Fat Cat (1008)-
“Once you give Paulson the authority he seeks, he will buy these securities at 65 cents/dollar, then quietly auction them off at a nickel each.”
Bingo.
Funny how the worse things get, the more smart people start showing up at this blog.
Clott
all class material for that MIT class is free and available at the link
Download Course Materials
21H-001Fall-2007.zip (ZIP – 29.87 MB)
http://ocw.mit.edu/ans15436/ZipForEndUsers/21H/21H-001Fall-2007/21H-001Fall-2007.zip
Click the link above to start downloading this course.
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Fat Cat (1008)-
Would disagree with you on one point: a bank that is bankrupt is no longer a bank, and it cannot be redeemed under any circumstance.
vodka (1014)-
Thanks. This is exciting.
I wonder if I will cause an FBI raid of the classroom at the moment I download the course materials.
I also wonder if it will cause an FBI raid of my house.
Lehman’s New York staff to collect $250k average bonuses for 2008 efforts.
http://www.independent.co.uk/news/business/news/fury-at-25bn-bonus-for-lehmans-new-york-staff-937560.html
I think there ought to be an amendment to the bailout bill that any upper management of a failed IB be BANNED from any financial position. And their bonuses for the past 5 yrs be revoked (and returned to the taxpayers) with interest.
sl
I have a radical idea.
Start Virtual Net Goverment. Where members are citizens and every individual gets vote on same Bills that Congress votes on. This would show how similar or divergent the Net audience is to the people voted into Congress.
How i may contact admin this site? I have a question.
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