Weekend Open Thread (2010-08-20)

Here is your open thread for the weekend beginning Friday August 20th, 2010. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.

Be sure to also check out the forums, and get your word in the user-driven discussions there!


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

163 comments:

  1. 1

    And Don’t Look to America to Bail the Worlds’ Economies Out

    Today’s article in part:

    “…World markets dropped further Friday as concerns about the U.S. economy continued to dominate sentiment after yet another batch of disappointing data…”

    http://finance.yahoo.com/news/World-stocks-down-as-US-apf-1166499081.html?x=0&sec=topStories&pos=1&asset=&ccode=

    IMO, globalism has been a complete failure. It’s not just because under it’s rules America is played as the sucker, the very fact that it took more and more debt to be the world’s sucker, doomed it from the get-go.

    Even Airbus and Boeing found outsourcing a good way to destroy business, when nothing gets delivered on time or comes decrepit for assembling. Toyota got so big they limited their hopes on namebrand, instead of part quality. BP threw oil platforms together with no way to stop leaks.

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  2. 2

    The Demise of the McMansion in Seattle

    Say good-bye to those over-sized cubes with light brown paint on 5000 SF lots…it’s history. Article in part:

    “…Luckily, people are starting to get creative: A film collective in Seattle has taken over a 10,000-square foot McMansion there, using it for both living and work space. They turned a wine closet into an editing room and tossed a green screen in the garage. And in a suburb of San Diego, one couple turned a former McMansion into a home for autistic adults.

    The demise of the McMansion has stirred a growing chorus of murmurs in the real-estate community about the possibility that it may force a dramatic redesign of the suburban McMansion tracts into mini-towns of their own, turning these icons of excess into more practical spaces like offices, banks, grocery stores and movie theaters.

    Though, given some of the poor quality of materials and craftsmanship, it begs the question, would it be better to just tear them all down and start from scratch?…”

    http://finance.yahoo.com/news/Death-of-the-McMansion-Era-of-cnbc-1051033821.html?x=0

    I dated a single mom about a year ago, living in debt in one of them in Renton. She lived all by herself and made like $70K working as an engineer for Boeing and was noosed with a $380K mortgage….of course she was looking for a co-mortgage payment husband….LOL

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  3. 3

    RE: softwarengineer @ 2 – I hate the term McMansion because it means different things to different people, and the definitions you see don’t help.

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  4. 4
    redmondjp says:

    Last resident of the (soon to be demolished) McGuire Apartment building in Seattle moves out:

    http://www.komonews.com/news/local/101124304.html

    A gentle reminder: don’t forget to properly seal those cable openings along the ends of the post-tensioned concrete slabs, or you may be tearing down the building much sooner than required . . .

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  5. 5
    Snigliastic says:

    Can someone explain to me how/why there is so much alleged fraud in real estate?
    This comes up partially with regard to Dino Rossi, who (on the left at least) is assumed to have been involved in numerous shady real estate deals. Does anyone know about that as well?

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  6. 6
    David S says:

    Because I used to be a die hard NASCAR fan I have the answer.

    It is only called cheating or fraud if you get caught.

    RE: Snigliastic @ 5

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  7. 7
    Dirty_Renter says:

    Looking like Sterling will survive:

    http://finance.yahoo.com/news/Sterling-Financial-raises-apf-4112786521.html?x=0&.v=1

    We’ll see.

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  8. 8
    pfft says:

    austerity doesn’t work.

    Expansionary Austerity?
    http://krugman.blogs.nytimes.com/2010/08/20/expansionary-austerity/

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  9. 9

    RE: Snigliastic @ 5

    There’s Plenty of Fraud to Spread Around to Both Parties IMO

    When the corporist-bent Supreme Court gave thumbs up to corporate campaign contributions to Dem/Reps, a lot of it foreign money, the noose was tightened on We the People.

    Real estate exagerations/lies are just an indirect outcome to globalist control of our domestic spending IMO. Both parties should hang their heads in shame.

    Borrowing more and more money for more uncontrolled growth We the People didn’t want is not only off the Richtor Scale, it’s a totally ludicrous debt noose on our grandkids.

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  10. 10
    Trigger says:

    We need to quickly come up with a new tech revolution that will help boost productivity and boost the GDP. It needs to happen here so that jobs do not get outsourced.

    Otherwise we need to immediately start a new bubble. We need to get money moving.

    If we don’t we risk the economy going from a sizzle to fizzle. Scotsman – what revolution can get started ASAP?

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  11. 11
    deejayoh says:

    RE: pfft @ 8 – I think maybe you should change your user name to “Krugman Fanboy”. KFB for short.

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  12. 12

    But Who Did Bush Inherit the Mess From?

    http://www.seattlepi.com/horsey/viewbydate.asp?id=2089

    LOL

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  13. 13

    To Do That

    You first need inventors of new/significant inventions in America. We haven’t done that since the 60s and 70s, my dad’s generation. And don’t point at miniaturization of existing inventions or other “book-worm” reverse engineered examples, I’m talking something really new, like a real use for nano technology [to date there is no real use for it, and it’s been decades waiting].

    A caveat, and don’t expect the world’s techforce to do it for us, their invention track record is even more dismal than our’s. Besides, it’s hopeless anyway under current low wage dense population globalization plans….all the potential jobs would be outsourced anyway.

    IMO, the answer is a populist 3rd party, with no corporate financing….but I don’t want to seem negative, but it would probably go bad on us too…LOL

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  14. 14
    Trigger says:

    RE: softwarengineer @ 13 – What about AI? Artificail Intelligence? Or Bio Tech?

    Rate this comment: Thumb up 0

  15. 15
    The Tim says:

    By Snigliastic @ 5:

    Can someone explain to me how/why there is so much alleged fraud in real estate?

    This comes up partially with regard to Dino Rossi, who (on the left at least) is assumed to have been involved in numerous shady real estate deals. Does anyone know about that as well?

    FWIW, this letter (pdf) from James Rigby (attorney handling the Mastro mess) seems to be saying that the Rossi “shady real estate deals” implication is an empty guilt by association political smear tactic with zero evidence to back it up.

    Seems to me if Rossi’s opponent wants to go after his real estate associations the “profit from foreclosure” seminars that he actually spoke at would be a better way to get traction than imaginary “shady deals.”

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  16. 16
    pfft says:

    By Trigger @ 10:

    We need to quickly come up with a new tech revolution that will help boost productivity and boost the GDP. It needs to happen here so that jobs do not get outsourced.

    Otherwise we need to immediately start a new bubble. We need to get money moving.

    If we don’t we risk the economy going from a sizzle to fizzle. Scotsman – what revolution can get started ASAP?

    we need to get the green economy going.

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  17. 17
    pfft says:

    By deejayoh @ 11:

    RE: pfft @ 8 – I think maybe you should change your user name to “Krugman Fanboy”. KFB for short.

    if people on here didn’t post every economic meme out there that krugman debunked a day before I wouldn’t be such a fanboy.

    I wasn’t going to post today’s but since I’ve been outed as a krugman fanboy here we go.

    great column today.

    krugman points out that the bears out there are like the bears in here. no matter what the data says it’s bearish. if weekly claims drop for months and months it’s not a sign of anything, let a lone a recovery. if weekly claims “spike” it’s a sign of an economy that isn’t recovering.

    same with interest rates according to krugman. if interests rates go up we must worry about the bond vigilantes and cut spending. if interest rates go down it’s not really a sign of anything and we should still cut spending. does anyone else think it would be a disaster if we cut $1.5 trillion from the budget right now? less spending equals less revenue which means more debt. nothing would be accomplished.

    Appeasing the Bond Gods
    By PAUL KRUGMAN
    Published: August 19, 2010

    As I look at what passes for responsible economic policy these days, there’s an analogy that keeps passing through my mind. I know it’s over the top, but here it is anyway: the policy elite — central bankers, finance ministers, politicians who pose as defenders of fiscal virtue — are acting like the priests of some ancient cult, demanding that we engage in human sacrifices to appease the anger of invisible gods.

    http://www.nytimes.com/2010/08/20/opinion/20krugman.html?_r=1&hp

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  18. 18
    One Eyed Man says:

    By The Tim @ 15:

    By Snigliastic @ 5:
    Can someone explain to me how/why there is so much alleged fraud in real estate?

    . . . . Seems to me if Rossi’s opponent wants to go after his real estate associations the “profit from foreclosure” seminars that he actually spoke at would be a better way to get traction than imaginary “shady deals.”

    According to Jim Brunner at The Times, the Democrats already are.

    “His income included $16,000 in speaking fees for a series of real-estate seminars attacked by Democrats because they included advice on how to profit from buying foreclosed homes.”

    http://seattletimes.nwsource.com/html/localnews/2012378713_rossimoney17m.html

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  19. 19

    RE: Trigger @ 14

    Funding and Living Space Limitations

    The amount of money effectively being put into R & D fruit [inventions created] is a joke IMO, article in part:

    “…”Federal R&D funding as compared to gross domestic product (GDP) continues its decline,” with R&D support from the federal government falling to its lowest point as a percentage of GDP in over 25 years, now exceeded by a number of countries….”Private sector R&D investments do not sufficiently replace shrinking federal support.” ”

    http://findarticles.com/p/articles/mi_qa5348/is_200210/ai_n21319035/

    The decline of R & D funding to GDP since 1976 to 2007 doesn’t appear real significant [1.4% to 1.2%], but I’d add a caveat….the fruit inventions of our R & D expenditures have been a joke for the last few decades.

    http://www.aaas.org/spp/rd/guihist.htm

    I think we need to go back to good ole “Yankee Ingenuity”, what worked for my dad’s generation….this means using less just college degreed “bookworms” and more domestic technical college degreed teaming with domestic community college educated technicals. It’s very likely good inventions and American domestic job security at home, go hand in hand, at least the actuals prove me out. Perhaps having more space to live in and dream helped in the 60s and 70s too, ask Edison….LOL

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  20. 20
    Cheap South says:

    The neighbors at this place can not be happy with this price; considering it went for $154K in 2004.

    http://www.redfin.com/WA/Lynnwood/4217-164th-St-SW-98087/unit-B102/home/2899851?utm_source=myredfin&utm_medium=email&utm_campaign=listings_update&utm_nooverride=1

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  21. 21
    Daniel says:

    By pfft @ 17:

    Appeasing the Bond Gods
    By PAUL KRUGMAN
    Published: August 19, 2010

    As I look at what passes for responsible economic policy these days, there’s an analogy that keeps passing through my mind. I know it’s over the top, but here it is anyway: the policy elite — central bankers, finance ministers, politicians who pose as defenders of fiscal virtue — are acting like the priests of some ancient cult, demanding that we engage in human sacrifices to appease the anger of invisible gods.

    Sounds like a clear case of projection to me. Its like those militant atheists becoming their own form of religion. Has anyone seen the southpark episodes with the otters? I love that one.

    But oh well: The empty can rattles the most.

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  22. 22

    RE: The Tim @ 15 – I was also heavily involved in the Heide bankruptcy case, and I don’t recall Dino Rossi’s name coming up at all with respect to any wrongdoing. My understanding is that he was merely an agent at the Capretto & Clark firm. He certainly was not a major player.

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  23. 23
    Ben says:

    RE: pfft @ 17

    If you are quoting Krugman, your econ IQ is suspect.

    He has been debunked countless times. His “solution” for any and all economic problems is to spend more money we don’t have. Google is your friend.

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  24. 24
    pfft says:

    By Ben @ 23:

    RE: pfft @ 17

    If you are quoting Krugman, your econ IQ is suspect.

    He has been debunked countless times. His “solution” for any and all economic problems is to spend more money we don’t have. Google is your friend.

    no it isn’t. you’re wrong. his solution for this mess we are in is to spend money to make up for the shortfall in demand. we obviously do have the money and people have no problem lending it to us at very low rates. deficit spending at this time is economics 101.

    How do stimulus size and economic growth compare internationally?
    http://voices.washingtonpost.com/ezra-klein/2010/06/research_desk_responds_how_do.html

    in asia they are bragging about their stimulus.

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  25. 25
    Ben says:

    RE: pfft @ 24

    I suggest you go buy that million dollar house and max out your credit cards while you are at it.

    Rates are low and Fannie has no problem lending.

    One cannot argue with a brick wall. Grow up and good luck to you.

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  26. 26
    pfft says:

    By Ben @ 25:

    RE: pfft @ 24

    I suggest you go buy that million dollar house and max out your credit cards while you are at it.

    why the heck would I do that?

    ” Isuggest you go buy that million dollar house and max out your credit cards while you are at it. Grow up and good luck to you.”

    that’s a lot more informative when I put those two sentences together.

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  27. 27
    Ben says:

    RE: pfft @ 26

    Because you are so easily manipulated by faulty logic. It’s the Krugman disease.

    I really think you should Google more about Krugman. If you want to really learn something of value about economics, I suggest you Google Nassim Taleb.

    Last reply – good luck to you.

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  28. 28
    Willy Nilly says:

    RE: softwarengineer @ 1

    Why is globalism is a failure? because this country does not get to maintain a huge disparity in consumption and standard of living relative to most of the rest of the world? I would speculate that all empires throughout human history (or any dominate groups) have held their position due to a couple of key factors – technological advantage and a policy that promotes the exploitation of the advantage. Of course other components are necessary but these two things have been the real differentiators.

    Exploitation and domination as it has happened historically is going to be much harder to pull off in the future, especially for the good old U S of A. Global banking, interconnected economies, knowledge accumulation with its storage and dissemination delivered by instantaneous communication have created a world where time and distance are no longer barriers between the haves and have-nots. The disparity between the economic advantaged, educated elite and the impoverished illiterate can now be remedied in a single generation.

    We are a consumer society with a huge appetite that built a massive economy. The wealth gained has allowed us to create advantage on many fronts; now the rest of the world want a taste of the good life -or to merely have their basic needs met. When there is a huge disparity in the standard of living between us and them, and when there is a whole lot more of them, it is quite obvious how this will play out – our standard of living will decrease while the rest of the worlds standard of living increases. Sorry, but this is inevitable.

    Yankee ingenuity is a myth. The creative process is hardly influenced by boarder, race, or time. It is naive, ignorant and delusional to think that a green revolution, technological achievement , or another bubble is going to “rescue” the US economy – allowing us to maintain the standard of living inequity we have enjoyed. I actually believe the recent economic bubble is akin to partying excessively on the Titanic while we plow headlong into an iceberg; too much champagne, too few lifeboats on our economic ship so to speak. We have put ourselves in a highly compromised position at the same time other more populous nations are getting up to speed. We cannot innovate our way into maintaining a dominate economic position, especially in a knowledge based society. Yankee ingenuity is a myth. Globalism is not a failure, you happen to just not like the outcome. Travel, have humility, suspend prejudice and you will see – or perhaps not.

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  29. 29
    pfft says:

    By Ben @ 27:

    RE: pfft @ 26

    Because you are so easily manipulated by faulty logic. It’s the Krugman disease.

    I really think you should Google more about Krugman. If you want to really learn something of value about economics, I suggest you Google Nassim Taleb.

    Last reply – good luck to you.

    I read both of taleb’s books before a lot of people knew who he was. I hate to see him in the prediction business now.
    I’ve read all the austerian economics books- economics in one lesson, rothbard’s the great depression and I’ve read mises.org for years. I know the other side. if austrian economics had been applied to this crisis it would have been an absolute disaster.

    what exactly is the faulty logic I am persuaded by?

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  30. 30

    By Ben @ 23:

    RE: pfft @ 17

    If you are quoting Krugman, your econ IQ is suspect.

    He has been debunked countless times. His “solution” for any and all economic problems is to spend more money we don’t have. Google is your friend.

    LOL. That’s pretty funny. Do you really believe that? If so, your econ IQ is deficient, not just suspect.

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  31. 31
    BondsOfSteel says:

    pfft, you’re not alone. While, I’m more of a Yves Smith fan, I follow nobel prize winning Krugman pretty closely too. (How could the US run out of ‘money’ when we have a fiat currency?)

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  32. 32
    Cheap South says:

    RE: Willy Nilly @ 28

    Amen to that. Sure, it stinks because our generation (and our kids) happens to be at the losing end of the deal. Our level of consumption is not sustainable. If China and India, (combined population equals to 1 out of 3 humans in the world) have a middle class like ours (consumption based), the planet breaks in half. The thought that every generation of Americans will be “better off” than the previous is naive (and laughable).

    Some empires last longer than others; but at the end none is defeated by power, they simply implode under ignorance and arrogance.

    Here is a funny view of the system; the story of stuff.

    http://www.youtube.com/watch?v=gLBE5QAYXp8

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  33. 33
    David Losh says:

    RE: Willy Nilly @ 28RE: pfft @ 24

    Shanghai, Mambai, Dubai, Barcelona, Lima, Puerto Vallarta, San Diego, anywhere in the world; you have high rises, commercial space, and housing units all mortgaged to the hilt.

    Those mortgages were converted to securities, and those securities showed more, and more profits. The global economy was building, the price of everything was going up. More interest payments meant more money coming in, more financing, more profits.

    The problem is those $2 Million Dollars condos in down town Hong Kong are only worth $1.2 Million. The problem is that there are thousands of those units, and just so many people who can afford them.

    It’s the same all over the world.

    It must add up to trillions of dollars of false equity. Now that we are all aware that housing, and commercial space is plentiful, and that it needs to be affordable, the housing bubble, the lending bubble, credit bubble is deflating.

    So yes you should grab all of the cash you can. That’s exactly what is going on today. Entities are squirreling away as much cash as they can.

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  34. 34
    Ben says:

    RE: Kary L. Krismer @ 30

    Just keep repeating to yourself: “there IS such thing as a free lunch”, “we CAN spend ourselves into prosperity”, “Krugman is Santa Claus”, “pink ponies for everyone”.

    Don’t stop believing in the magic.

    Denial works great until the credit card bill comes due.

    Good luck to you too!

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  35. 35
    pfft says:

    By Cheap South @ 32:

    RE: Willy Nilly @ 28

    Amen to that. Sure, it stinks because our generation (and our kids) happens to be at the losing end of the deal. Our level of consumption is not sustainable. If China and India, (combined population equals to 1 out of 3 humans in the world) have a middle class like ours (consumption based), the planet breaks in half.

    it can’t happen therefore it’s nothing to worry about. it’s kind of like saying if the US, china and India occupy the same space the plant will break. well the thing is two people, let a lone three people can’t occupy the same space so there is nothing to worry about.

    it just means that our standard of living needs to come down a bit. I wouldn’t even say our standard of living must come down, it just has to be right-sized. we don’t need huge homes and big SUVs to be happy.

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  36. 36
    pfft says:

    By Ben @ 34:

    RE: Kary L. Krismer @ 30

    Just keep repeating to yourself: “there IS such thing as a free lunch”, “we CAN spend ourselves into prosperity”, “Krugman is Santa Claus”, “pink ponies for everyone”.

    Don’t stop believing in the magic.

    Denial works great until the credit card bill comes due.

    Good luck to you too!

    show me austerity works. it doesn’t. just ask greece and ireland.

    here is why keynes works. consumers aren’t spending. instead of spending they are pouring money into savings and keeping interest rates low. they are buying bonds like crazy. the government then takes the money from the bond buyers and spends in on roads and bridges and other things. this raises GDP through the multiplier effect. the government pays pavers to pave and they in turn save some of the money and spend some of the money. when the pavers spend the money on beer the beer guy saves some of the money and spends some of the money and the cycle repeats. the multiplier effect for government spending like this is considered to be 1.5.

    you are correct there is no free lunch. nobody has argued that there is. we know that in the future we will have to cut some spending, maybe raise taxes and GDP growth will be a little lower. compared to now for a lot of people that is a luxury.

    the final judge, the market, is not worried about deficits. the yield on the two year is 0.49%. that is not a typo. the US is borrowing for 2 years at less than 1%.

    we need to worry about people having jobs right now and not the deficit. that is what the market is saying.

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  37. 37

    RE: Ben @ 34 – Just keep thinking that you can learn about economics over the Internet, and that the government spent billions of dollars based on the opinion of one economist, and that no other economists supported the decision.

    I can understand people thinking that the stimulus is incorrect for this situation, but to not understand it at all and to claim that anyone who believes that it is correct doesn’t understand economics, that’s pretty pompous, and very ignorant.

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  38. 38
    One Eyed Man says:

    RE: Willy Nilly @ 28

    I agree with almost everything you say Willy Nilly. But I’m not entirely sure that “Yankee Ingenuity” is entirely a myth. Not to say that I think its a fact, either. But I’m not entirely sure that there isn’t a cultural component to America that fosters free thinkers, inventors, entrepreneurs and of course the desire to capitalize on competitive advantage, to a greater degree than many other cultures.

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  39. 39
    Hugh Dominic says:

    By Cheap South @ 32:

    Sure, it stinks because our generation (and our kids) happens to be at the losing end of the deal. Our level of consumption is not sustainable.

    Here’s what we are headed for: a global upper class, a global lower class, and a global middle class. National borders will not matter as economic forces gradually equalize what it means to be poor or rich in every country. It will take many years. The poor and middle class Americans have the farthest to fall to reach equilibrium – the rich will stay about the same.

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  40. 40
    Willy Nilly says:

    RE: Hugh Dominic @ 39

    Eloquently portrayed.

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  41. 41
    One Eyed Man says:

    RE: Kary L. Krismer @ 37

    I’ve got to go with Kary and Pfft on that one Ben.

    But there’s something that Pfft doesn’t talk about that’s extremely important to Krugman (if you read his papers on Japan and liquidity traps that is.) That’s economic and market psychology. The effect of stimulus isn’t just measured (or multiplied) by some static “Keynesian multiplier.” There is a critical mass that must be reached concerning a change in psychology he calls an expectation of inflation (as opposed to the fear of deflation we currently seem to have). For Krugmans stimulus theory to work, you probably have to pump enough stimulus to hit at least 5% GDP growth and some significant employment growth before psychology changes and the self re-inforcing psychology of the economy becomes one of inflation and growth rather than deflation and contraction.

    In an environment of inflation, money becomes a depreciating asset and people look to take risk and invest as a means of both wealth preservation and getting a higher rate of return. Changing the psychological state of the populace is the key to Krugmans stimulus theory. If you don’t put in enough stimulus to get at least 5% GDP growth and the corresponding demand for workers and wage increases you probably can’t get the change in psychology that Krugman’s theory requires.

    To those who disagree with Krugman, I’m not saying that you are wrong. But I am saying that this is all social science theory on both sides of the issue and neither side can “prove” they are right. Krugmans theory isn’t the idiotic tripe many would suggest.

    And anybody who is dumb enough to say “you can’t borrow your way out of debt,” doesn’t have any understanding of business capitalization and cash flow. If you can borrow at a rate sufficiently below your rate of return, you sure as hell can “borrow your way out of debt.” Read up on the loan guarantees to Chrysler in the late 1970’s if you need some pedogogical assistance. And in addition to providing stimulus, why do you think the FED has the Fed Funds rate and the discount rate near zero? I’ll give you a hint. Its so the banks can borrow their way out of debt. That’s the government cure to the financial crisis. It’s not just extend and pretend. Its extend and pretend until the banks earn enough on the cheap money to wipe out all the bubble loan losses.

    Our economy needs a finacial system to survive. The government had two choices. They could nationalize the entire financial sector based upon mark to market insolvency. Or, they could leave the finacial system in private hands and run a rigged game until a sufficient portion of the finacial sector has made enough profits to cover their losses. If the last bastion of free market capitalism had to nationalize its financial sector, the great capitalist experiment would have had to acknowledge its own inability to create a self sustaining economy. That’s a lot of crow to eat and no government official would want to go down in history as the ass who let that happen. Sheila Bair would have been running most of the banks. Rigging the game and letting the financial sector borrow their way out of debt was the only real choice available to all of us self righteous capitalists that inhabit the USA.

    So challenge and criticize Pfft and Krugman all you want. They have no claim to the holy grail of economic knowledge. But don’t be so naive as to treat them with disrespect and disdain. They might just be right.

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  42. 42
    David Losh says:

    How many times does this get worked over?

    The government is powerless at this point to stop deflation of Real Property. It’s every where. Look for property anywhere in the world, and it is a play thing for the rich. It’s an exclusive club.

    When we start talking about interest rates to make property affordable, or to get it to cash flow, the games over. It’s time to cash in.

    OK, yes we can borrow, but the risk is high. You never know when Greece will default, but you know they will. You know Dubai can’t borrow into a cash position, or a profit, but we talk about other things. What will be the next shoe to drop?

    No government can fix all places, or economic situation. Default is the only logical solution, and it will need to start somewhere. government should get out of the way and let private enterprise finish what it started.

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  43. 43
    Jonness says:

    By pfft @ 8:

    austerity doesn’t work.

    Judging from the current state of the U.S. and Japanese economies, neither does stimulus.

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  44. 44
    Cheap South says:

    RE: Hugh Dominic @ 39

    Correct. After all, the wealthy are the ones that closed factories in this country, to then open them in low wage areas. The fat cat kept the difference in manufacturing costs, and the middle class American factory worker got screwed. And with the new data showing the US dropping to 12th in college grads, things are not looking any better. Like Thomas Friedman (The World is Flat) said once, “my mother used to tell me to eat my veggies because there are kids in Africa starving. I today tell my kids to study hard because there are kids in Asia that will take their jobs.”

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  45. 45
    karl says:

    Is it true that after a trustee sale fails and the property gets returned to the bank. Any and all lien holders beyond the primary loan get wiped out?

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  46. 46
    chico says:

    Very well said, pfft, Kary, and One Eyed Man.

    Seems the only thing that Ben knows about economics are a few political slogans.

    Suck $1.5 trillion out of the U.S. economy by raising taxes or cutting spending to balance the budget and we’d have an instant depression!

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  47. 47
    One Eyed Man says:

    RE: chico @ 46

    Don’t be too hard on Ben, Chico. Just as Ben probably shouldn’t be so hard on Pfft. There are a lot of smart people and Phd’s that agree with Ben’s general take on the issues. There’s room for a lot of disagreement out there. And I’m pretty sure that there would be a lot more commentary backing him up on this thread if it weren’t a summer weekend.

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  48. 48
    Haybaler says:

    RE: karl @ 45

    Yes, True.

    Assuming the bank Trustee doing the sale was the First position/ lien holder then, Each and every subordinate position (who had the opportunity to bid at the sale to purchase the property in order to protect their own position, or in the alternative to Cure the default prior to the sale to protect their positions) is wiped off the title of the property.

    Sometimes a Second or Third lien holder Forecloses and takes the property at a Trustee sale subject to the superior liens but wiping out subordinate positions such as mechanics liens or other claims.

    The lien-holders that get wiped out may or may not find some other way to get payment from the original creditor by suing for money. More likely they get completely wiped out when the creditor files BK.

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  49. 49
    One Eyed Man says:

    RE: karl @ 45

    I agree with Haybaler. But occassionally a bidder other than the foreclosing lender will bid more than the foreclosing lender and get the property. The liens that are junior (which generally means that they were recorded after the foreclosing lien was recorded or that they agreed to subordinate their lien to that of the foreclosing lender) lose their lien and become unsecured debts if the trustee gave the proper notices and followed the statutory procedure to conduct the foreclosure. Property taxes and liens that were recorded before the foreclosing lien are normally senior to the foreclosing lien and aren’t eliminated by a foreclosure of a junior encumbrance. There are special rules that apply to past due condo assessments and federal tax liens. If I recall correctly, unless a special notice is sent to to the IRS District Director about a month before the sale, the IRS has a right to redeem the property by paying off the foreclosed lien for a period of time after the foreclosure sale. And I think something like 6 months of pre-foreclosure condo dues might get priority over the foreclosing banks loan but I don’t recall if I’ve got that right for sure without looking it up.

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  50. 50
    Blurtman says:

    RE: One Eyed Man @ 41 – A nicely stated analysis of the financial sector bailouts, but the world is not fooled by what is happening.

    So your statement ” If the last bastion of free market capitalism had to nationalize its financial sector, the great capitalist experiment would have had to acknowledge its own inability to create a self sustaining economy. ” is a canard. It is obvious that US capitalism is a faliure whether tha banks were nationalized or supported by sanctioned fradulent accounting. There is no escaping that reality. And many folks have posited that while nationalization would have been very painful in the short run, we would be seeing daylight by now, and not sentenced to a Japan style zombie economy. Finally, fraud and lack of accountability has unintended consequences – the demorilization of Americans, destruction of the rule of law, and the growing belief that if the big guys can do it, so can I.

    So I appreciate your analysis, but your conclusion I believe is erroneous.

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  51. 51
    karl says:

    Thank you for the info.

    Interesting…. I had assumed the property sold as an REO was being offered by the 1st lien holder. Sort of explains why the asking price is often much higher then the original note…and often they are unwilling to take lower offers. I guess I need to do more research and find out how far down the food chain the finanicial insitution is that is selling the property.

    thanks again !

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  52. 52
    David Losh says:

    RE: Cheap South @ 44

    Education is a relative thing. I went to the Linkedin meet up posted by sniglet this week. It was hands down the best networking I’ve been to this year.

    Anyway, I was talking with a young man from India who is here to get his MBA. He’ll have been in school until he’s 30 before he graduates.

    In the United States any one with an MBA can walk around looking for a job, anywhere. It helps if you are connected to a social class, but every one has an opportunity. Even an African American can become the President in the United States. We also elected Bill Clinton, who by all practical purposes was, and is, a nobody. Ronald Reagan was an actor.

    Those things don’t happen in Japan, China, or India. They almost don’t happen in South America, until Evo Morales. In most other countries you really have to be of a certain class of people for success.

    Education is a means to have the status to get a job. There are billions of working class, but in order to have the few million management positions you need to be over qualified.

    As Americans we can go most places, and do business. We can have the most bogus of degrees, and we are Americans, so we have a certain status.

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  53. 53

    By One Eyed Man @ 47:

    Don’t be too hard on Ben, Chico. Just as Ben probably shouldn’t be so hard on Pfft. There are a lot of smart people and Phd’s that agree with Ben’s general take on the issues. There’s room for a lot of disagreement out there. And I’m pretty sure that there would be a lot more commentary backing him up on this thread if it weren’t a summer weekend.

    Exactly. Economics is not a hard science, and you can get a lot of disagreement between economists. It’s sort of like the disagreements between Democrats and Republicans, with the difference being the economists actually believe that their positions are correct.

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  54. 54

    RE: Haybaler @ 48 – There’s at least one exception to that. The IRS has some redemption rights that other creditors typically don’t have. I think that those rights are very seldom exercised. (Edit: I see OEM already answered, in more detail.)

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  55. 55

    By karl @ 51:

    Interesting…. I had assumed the property sold as an REO was being offered by the 1st lien holder. Sort of explains why the asking price is often much higher then the original note…and often they are unwilling to take lower offers. I guess I need to do more research and find out how far down the food chain the finanicial insitution is that is selling the property.

    In most cases in this market it would be the first lien holder because the seconds are unlikely to foreclose due to declining property values. For example, if you had a house worth $400,000 in 2006 with a $320,000 first and a $80,000 second, the second most likely wouldn’t foreclose even if the house was now worth $350,000.

    As to the value of the original note, the amount owing on the first in my hypothetical at the time of foreclosure might be $360,000. You can get some idea of that by going to the county recorder’s website and looking at the Notice of Trustee’s Sale document.

    Finally, if a bank is smart (I know–silly assumption), then the amount they list the property for should have nothing at all to do with what they were owed at the time of foreclosure. Just like any other seller, the buyer doesn’t really care about that when they are making their offer.

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  56. 56
    ARDELL says:

    RE: karl @ 51

    They most always price the property based on an appraisal, and not based on what is owed to them. The price they accept…eventually…may be based on what’s owed to them. But asking price is almost always a function of a recent appraisal.

    That is why sometimes you get the same bad answer…until they do a new appraisal.

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  57. 57
    corncob says:

    By Kary L. Krismer @ 53:

    It’s sort of like the disagreements between Democrats and Republicans, with the difference being the economists actually believe that their positions are correct.

    And everyone is still a whore to the corporate oligarchy.

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  58. 58
    One Eyed Man says:

    RE: Blurtman @ 50

    You may well be right. But I just couldn’t see W nationalizing the financial sector in a Friday night massacre. He would sooner have shot himself and Cheney so Pelosi would have to do it. And if they didn’t do it all at once it could have drug out for months as the FDIC concluded that each big bank was finally underwater. If you did drag it out over a number of months you might have seen a much bigger economic contraction than we had as everybody ran further for cover after each of the big banks fell. And Tarp and the other programs were hard enough to sell to congress and the public as it was.

    I generally agree that nationalization probably would have allowed them to start from a more or less debt free ledger, a true bankruptcy fresh start so to speak. But it might have been rebuilding from a lower base if the contraction had gone deeper. We’ll never know for sure and the guys making the decisions had to draw up a plan quickly and just go with it. I don’t think many of the politicians had the guts to back nationalization even if they thought it would have a better result. When you say “nationalization” there’s a good sized portion of the american public that immediately responds “them’s fight’n words.” And not all of them are speaking figuratively.

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  59. 59

    RE: One Eyed Man @ 58 – I wouldn’t agree with his comment that capitalism is a failure. It’s unreasonable to expect capitalistic economies to not have boom and bust cycles. We like to pretend that we can control those things, but we only have limited control. That doesn’t mean the system is a failure, any more than democracy is a failure because many/most the voters don’t understand what they are voting for. It just means the system isn’t prefect.

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  60. 60
    Blurtman says:

    RE: One Eyed Man @ 58 – Many folks that were pro-nationalization seemed to believe that a true Depression would have resulted had TBF been allowed to F, but also that the debt would be purged from the system, and we would be on our way to a real recovery at this point. Painful, and not politically palatable. So this is what we get.

    I think it may be in the realm of possibilities, based upon the actions of Hank Paulson, a slimey fraudster who should be in jail, and who had presented a sketchy three page TARP plan, while also requiring immunity, that the “deciders” were likely compromised, and incompetent.

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  61. 61
    Jonness says:

    By pfft @ 36:

    here is why keynes works. consumers aren’t spending. instead of spending they are pouring money into savings and keeping interest rates low. they are buying bonds like crazy. the government then takes the money from the bond buyers and spends in on roads and bridges and other things. this raises GDP through the multiplier effect. the government pays pavers to pave and they in turn save some of the money and spend some of the money. when the pavers spend the money on beer the beer guy saves some of the money and spends some of the money and the cycle repeats. the multiplier effect for government spending like this is considered to be 1.5.

    We just spent over a trillion dollars performing this experiment, and the Fed pumped trillions of dollars more into the financial mix. According to the administration who wanted to spend the money, this would keep unemployment below 8% and lead to a V-shaped economic recovery. However, the result of this unprecedented level of government borrowing and spending has been initial unemployment claims at 500,000 and rising.

    I think you are missing something very important in your analysis, which is the inefficient manner in which government targets stimulus into the economy. If you go out and build a new electrical grid, each new high-paying job has a > 1:1 job creation ratio. However, the way the stimulus was spent lead to a way lower than 1:1 job creation ratio. This will always be the case with government borrow and spend strategies because the politicians dole the money out to their friends instead of targeting it where it is necessary.

    Your strategy won’t work. There is a lesson all good physicians eventually understand; yet, most physicians never fully understand, Prevention is the best cure. Now that your borrow-and-spend policies have given you economic cancer, you search for a magical non-existent wonder-cure. You run to Dr. Krugman and beg him to cure you of your cancer. He tells you everything you want to hear, and this gives you hope. Unfortunately, the cancer cells continue to ravage your body. Had you simply practiced preventive medicine at the outset, there would be no need for a magical non-existent cure.

    Corporate politics do not allow preventive maintenance of an economy. Thus, there is an endless supply of Nobel Prize winning fools who can get away with propagating the meme that monetary and fiscal manipulation in one form or the other is the key to maintaining the health of the patient. Yet, no matter what method the fools attempt, cancer continues to ravage the patient. Apparently all of the doctors have overlooked the important concept of homeostasis.

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  62. 62

    RE: Jonness @ 61 – I’m not sure the administration ever said we’d have a V shaped recovery, but their attempt to predict where unemployment would go was very stupid. Obama is a bit like Bush in that he really hasn’t filled his administration with very competent people.

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  63. 63
    Rob C says:

    RE: softwarengineer @ 2 – I thought that they were already homes for autistic adults?

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  64. 64
    Pegasus says:

    RE: Jonness @ 61 – It will take decades to unwind the massive debt crisis for government, corporations and individuals. They are all tapped out. Corporate and government debt is higher than when this crisis began several long years ago. Mortgage debt is down ever so slightly. Consumer debt has declined a modest percentage. The housing ATM heloc’s have imploded. There was massive(trillions upon trillions) global equity destruction in 2008 that will take several decades to rebuild. Get used to it. When history looks back from the 2020’s they won’t talking about recovery in 2010. Everyone will realize they were in the midst of a growing depression. Even idiots like pfft will have to admit how wrong they were blindly chanting and channeling their man god hero’s mad predictions(Krugman).

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  65. 65
    Jonness says:

    RE: Kary L. Krismer @ 62 – I get the idea presidents tend to fill their administration with whomever will supply the easy money. As long as an endless supply of money exists, politicians never have to face tough decisions. Yet, even Bernanke is warning politicians that the current level of deficit spending is unsustainable.

    “the federal budget appears to be on an unsustainable path”…Ben Bernanke

    http://www.nytimes.com/2010/06/10/business/economy/10fed.html

    Benanke’s statement lends credence to something many Krugman advocates tend to overlook. Spending is only helpful in the short-term and only if the money is targeted in an intelligent manner. The key to fiscal stimulus is, eventually, the budget has to be balanced in order to avert Armageddon as increased debt:GDP ratios and maturing entitlement programs limit economic expansion. There is no magic bullet cure, no free ride, and no painless solution.

    The question remains, can the government target spending in a manner that helps the economy more than it hurts it? So far, it has an extremely poor track record. What’s worse is, government borrows at record levels whether it be boom times or times of hardship. This is not what was meant by Keynes.

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  66. 66
    karl says:

    By Kary L. Krismer @ 55:

    By karl @ 51:
    Interesting…. I had assumed the property sold as an REO was being offered by the 1st lien holder. Sort of explains why the asking price is often much higher then the original note…and often they are unwilling to take lower offers. I guess I need to do more research and find out how far down the food chain the finanicial insitution is that is selling the property.

    In most cases in this market it would be the first lien holder because the seconds are unlikely to foreclose due to declining property values. For example, if you had a house worth $400,000 in 2006 with a $320,000 first and a $80,000 second, the second most likely wouldn’t foreclose even if the house was now worth $350,000.

    As to the value of the original note, the amount owing on the first in my hypothetical at the time of foreclosure might be $360,000. You can get some idea of that by going to the county recorder’s website and looking at the Notice of Trustee’s Sale document.

    Finally, if a bank is smart (I know–silly assumption), then the amount they list the property for should have nothing at all to do with what they were owed at the time of foreclosure. Just like any other seller, the buyer doesn’t really care about that when they are making their offer.

    Thanks,

    I have had pretty good luck putting a dollar amount on the original mortgage. Was trying to figure out the mis-match in the asking price. I had assumed that the 2nd and or 3rd lien holders had some sort of a claim. If the selling bank were trying to make a profit then they would (or you would think they would) invest in a yard service and somebody to stop by and air the place out now and then. The last 6 or 7 properties we have looked at have lawns that are waist high and mildew growing on the windows.

    One of those homes had never been lived in.

    I suppose Ardell May be right in that they are using out of date appaisal data…. but you would think the listing agent would bring that to their attention.

    Bankers are a shifty sort and it will come to light eventually why they are dealing with these homes this way. Easy to call them foolish, but there must be something else cooking.

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  67. 67

    RE: karl @ 66 – I don’t do REO listings, or work for a bank, but I find it hard to believe that they use real appraisals, as opposed to agent opinions. It might not be the listing agent’s opinion, but appraisals are really bad at taking condition of property into account. They really wouldn’t be a good source of information for a typical REO listing.

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  68. 68
    pfft says:

    By Jonness @ 61:

    By pfft @ 36:
    here is why keynes works. consumers aren’t spending. instead of spending they are pouring money into savings and keeping interest rates low. they are buying bonds like crazy. the government then takes the money from the bond buyers and spends in on roads and bridges and other things. this raises GDP through the multiplier effect. the government pays pavers to pave and they in turn save some of the money and spend some of the money. when the pavers spend the money on beer the beer guy saves some of the money and spends some of the money and the cycle repeats. the multiplier effect for government spending like this is considered to be 1.5.

    We just spent over a trillion dollars performing this experiment, and the Fed pumped trillions of dollars more into the financial mix. According to the administration who wanted to spend the money, this would keep unemployment below 8% and lead to a V-shaped economic recovery. However, the result of this unprecedented level of government borrowing and spending has been initial unemployment claims at 500,000 and rising.

    I think you are missing something very important in your analysis, which is the inefficient manner in which government targets stimulus into the economy. If you go out and build a new electrical grid, each new high-paying job has a > 1:1 job creation ratio. However, the way the stimulus was spent lead to a way lower than 1:1 job creation ratio. This will always be the case with government borrow and spend strategies because the politicians dole the money out to their friends instead of targeting it where it is necessary.

    Your strategy won’t work. There is a lesson all good physicians eventually understand; yet, most physicians never fully understand, Prevention is the best cure. Now that your borrow-and-spend policies have given you economic cancer, you search for a magical non-existent wonder-cure. You run to Dr. Krugman and beg him to cure you of your cancer. He tells you everything you want to hear, and this gives you hope. Unfortunately, the cancer cells continue to ravage your body. Had you simply practiced preventive medicine at the outset, there would be no need for a magical non-existent cure.

    Corporate politics do not allow preventive maintenance of an economy. Thus, there is an endless supply of Nobel Prize winning fools who can get away with propagating the meme that monetary and fiscal manipulation in one form or the other is the key to maintaining the health of the patient. Yet, no matter what method the fools attempt, cancer continues to ravage the patient. Apparently all of the doctors have overlooked the important concept of homeostasis.

    that is a really bad analogy. first of all the stimulus was too small. everyone who said the meager stimulus would spark higher inflation rates and sky-rocketing bond yields was wrong. deficit spending is not an experiment. it’s the result of almost 70s years of economic research and learning. the fact that you don’t know that is important.

    ” think you are missing something very important in your analysis, which is the inefficient manner in which government targets stimulus into the economy. If you go out and build a new electrical grid, each new high-paying job has a > 1:1 job creation ratio. However, the way the stimulus was spent lead to a way lower than 1:1 job creation ratio. This will always be the case with government borrow and spend strategies because the politicians dole the money out to their friends instead of targeting it where it is necessary. ”

    plus cite some study or some mainstream economist that shares this view. I don’t know what you’re talking about about 1:1. this is not typical times. I think what you’re trying to say is the government is crowding out private investment. right now they aren’t and during the downturn they weren’t beacuse people were and are still spending their money on US government bonds and not as many cars.

    “I could borrow $2 billion tomorrow for 3 1/2 percent. But what am I going to do with it?”</blockquote.

    CEO: No need to invest right now
    http://www.calculatedriskblog.com/2010/08/ceo-no-need-to-invest-right-now.html

    the stimulus has worked. studies show that.

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  69. 69
    Dirty_Renter says:

    Fascinating to read the thoughts of the bank ‘nationalizers’. I’ve always thought they fell into 3 categories:
    1) Hedgies/ PEers/ – which have a ton of cash and want to buy real estate for 5¢ on the dollar, like they did in 88-92 from the RTC.
    2) The FAZ & short folks.
    3) Bitter comrades.

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  70. 70
    David Losh says:

    RE: pfft @ 68

    Welcome to the club. I’m very pleased you have seen the light, and are ready to admit you have been wrong about more stimulus. The Calculated Risk link is confirming the assertions I make repeated.

    Business need to fix it’s own mess. The wealthy need to let go of some money to stimulate more spending. The 1% to 5% who have all the money need to spend, rather than invest.

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  71. 71
    pfft says:

    By David Losh @ 70:

    RE: pfft @ 68

    Welcome to the club. I’m very pleased you have seen the light, and are ready to admit you have been wrong about more stimulus. The Calculated Risk link is confirming the assertions I make repeated.

    Business need to fix it’s own mess. The wealthy need to let go of some money to stimulate more spending. The 1% to 5% who have all the money need to spend, rather than invest.

    how was I wrong? I wasn’t. please elaborate. that quote shows WHY we need more stimulus. jobs won’t be added because business sees no demand. if that CEO got a big government contract he would invest and create jobs.

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  72. 72
    pfft says:

    By Pegasus @ 64:

    RE: Jonness @ 61 – It will take decades to unwind the massive debt crisis for government, corporations and individuals.

    the economy is growing so I guess you’re wrong. corporations have a record amount of cash so you’re wrong on that count. the US government is borrowing for 2 years at 0.50% so you’re wrong there too!

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  73. 73
    Blurtman says:

    RE: Kary L. Krismer @ 59 – Kary, Do you think you can list the Pets.com stock that you own at the $120 per share price you paid for it as an asset ro secure a huge loan, rather than the true zero value it actually has? Of course not, but banks can with the worthless RE securities they are holding.

    If you were a builder and you built homes with faulty electrical wiring that would cause house fires, could you take out multiple insurance policies on these defective houses that you sold at great profit, and when the houses go up in flames, and the insurance company is bankrupt and can no longer pay you billions in claims, could you ask the government to make taxpayers pay off the insurance policies? Of course not. But that is what investment banks are doing.

    US capitalism is a fraud. Open your eyes.

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  74. 74
    pfft says:

    Jonness – show me where austerity has been the cure. it’s not in greece or ireland.

    in Asia stimulus has worked at they are bragging about. it’s worked internationally.

    Keynes In Asia
    http://krugman.blogs.nytimes.com/2010/07/24/keynes-in-asia/

    Asia had austerity in the lat 90s and they want no part of it now. they want stimulus.

    However much Asians trumpet the value of parsimony, their governments have been as bold as any in opening the fiscal sluices. One reason is the bitter memory of the 1997 Asian financial crisis when the International Monetary Fund imposed fiscal austerity on several Asian countries. Those measures are now almost universally seen as a blunder that unnecessarily exacerbated economic misery.

    Unlike in the west, there is little debate in Asia about how well the stimulus worked. It has been spectacular.

    http://www.ft.com/cms/s/0/7ec7882c-94f3-11df-af3b-00144feab49a.html

    here are more results internationally.

    How do stimulus size and economic growth compare internationally?
    http://voices.washingtonpost.com/ezra-klein/2010/06/research_desk_responds_how_do.html

    on the stimulus:

    with the exception of Spain, which lost economic ground, the correlation is solidly positive here.

    what would doing nothing have looked like? the deficits would be worse!

    With no special government intervention, the 2010 deficit would have passed $2 trillion, according to their model. It would have reached $2.6 trillion in fiscal 2011 and $2.25 trillion in 2012.

    Washington Saved Our Economic Hide
    http://www.creators.com/liberal/froma-harrop.html

    those numbers are from mark zandi who was one of mccain’s economic advisors. even he said that the stimulus was too small.

    FEBRUARY 3, 2009, 12:17 PM ET
    Stimulus Expert Zandi: Package Falls Short
    http://blogs.wsj.com/economics/2009/02/03/stimulus-expert-zandi-package-falls-short/

    republicans know it works. they pose with stimulus checks back home and rail against the stimulus in washington.

    Republican hypocrites on the stimulus
    http://crooksandliars.com/john-amato/republican-hypocrites-stimulus

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  75. 75
    David Losh says:

    RE: pfft @ 71

    War in Iraq. Billions of dollars given directly to durable goods orders. End result?

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  76. 76
    David Losh says:

    RE: pfft @ 72

    Welcome to the club, this is exactly what we have been talking about. BTW the .05% money is for only two years, according to you. How could that possibly help?

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  77. 77
    pfft says:

    By David Losh @ 74:

    RE: pfft @ 71

    War in Iraq. Billions of dollars given directly to durable goods orders. End result?

    I still don’t see what you’re talking about and how this reply relates to your earlier reply.

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  78. 78
    pfft says:

    By David Losh @ 75:

    RE: pfft @ 72

    Welcome to the club, this is exactly what we have been talking about. BTW the .05% money is for only two years, according to you. How could that possibly help?

    it’s not according to me, it’s according to bloomberg.

    http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

    the 10-year is 2.61% and the 30-year is 3.66%. no cries for austerity from the bond vigilantes btw.

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  79. 79
    Pegasus says:

    RE: pfft @ 76 – A boy who claimed to know nothing about the bond market recently now knows everything….congrats on the brain transplant. Was it from Uranus?

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  80. 80
    softwarengineer says:

    RE: Willy Nilly @ 28

    What Have They Really Invented Overseas With This Wonderful Globalism and Giganic Tech Force?

    You come up nada don’t you. Its clearly a globalism failure to educate a tech force that doesn’t invent.

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  81. 81
    softwarengineer says:

    RE: One Eyed Man @ 38

    Exactly

    I have a Program Manager from MSFT who lives across from me and he tells me they’re coming to America in hopes of innovation and inventing; because their motherlands don’t allow it and even though their current standard of living would be much higher, not moving to America.

    I told him, I believed it.

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  82. 82
    softwarengineer says:

    RE: Rob C @ 63

    Special Needs Homes Are Scarce

    I make this joke all the time [but its true], caregiving is a job Mexicans won’t do either…LOL

    Ya got a kid that can’t find a job and they can pass a background check? Become a caregiver, there’s jobs galore.

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  83. 83
    pfft says:

    By Pegasus @ 78:

    RE: pfft @ 76 – A boy who claimed to know nothing about the bond market recently now knows everything….congrats on the brain transplant. Was it from Uranus?

    I have to explain this again? I already explained it once? I thought that interest rates would go up and etc. they haven’t so if you are wrong you should listen to the market and those who have been right. that’s what I do, listen to the market. it said my logic was wrong and I changed.

    if the stock market goes up and you’re short you are wrong. you must admit that adopt the opinions of the bulls(who have been right) and buy stocks. the same is true if you are a bull and stocks tank. admit your mistake and sell or go short.

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  84. 84
    pfft says:

    When I am long of stocks it is because my reading of conditions has made me bullish. But
    you find many people, reputed to be intelligent, who are bullish because they have stocks. I
    do not allow my possessions – or my prepossessions either – to do any thinking for me. That
    is why I repeat that I never argue with the tape.”

    -Jesse Livermore

    don’t argue with the tape.

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  85. 85
    softwarengineer says:

    RE: pfft @ 81

    I believe Scotsman and I Made the Same Bad Prediction Too

    A whole bunch of economists predicted higher interest rates by now, but perhaps that’s before they [us too] digested the recent unemployment news worsening.

    Its sort of a moot point, we’re at “zombie zero” on federal treasuries anyway [no more lowering is possible]….we’ve been there about 2 yrs now.

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  86. 86
    Willy Nilly says:

    RE: softwarengineer @ 78

    You claim globalism is a failure. How is “invention” a prominent component?
    http://en.wiktionary.org/wiki/globalism

    Colonial McGyverism?
    http://en.wikipedia.org/wiki/Yankee_ingenuity

    Have you ever visited another country before?
    http://hsudarren.wordpress.com/2009/11/14/most-inventive-nations-of-the-world/

    Oh look, your xenophobia is showing again.

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  87. 87
    David Losh says:

    RE: pfft @ 75

    I realized you wouldn’t get it, while I was out. It’s just to simple an idea for you to grasp.

    War is good for business. War expenditure, especially at the beginning, is all directed at tanks, weapons, Haliburton, roads, bridges, infrastructure, and all manner of durable goods. It makes the GDP, stock market, and financials, that finance war, fat with cash, stimulus, as you like to call it.

    When the war stops, the money is still owed. Where’s the return?

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  88. 88
    pfft says:

    By softwarengineer @ 80:

    RE: One Eyed Man @ 38

    Exactly

    I have a Program Manager from MSFT who lives across from me and he tells me they’re coming to America in hopes of innovation and inventing; because their motherlands don’t allow it

    so I guess globalization does work? wouldn’t it be worse if workers couldn’t move from where they are undervalued to where they are valued.

    you just prove globalization works and you don’t even know it.

    outsourcing has caused the living standards in china and other poor areas to sky-rocket. their wages have also sky-rocketed. that is a good thing. our wages have stagnated but their are hundreds of millions of people around the world who aren’t desperately poor anymore. relatively speaking our stagnating is a small price to pay for dragging people out of deep poverty. here a family my have to have both parents working while over there a family may not starve anymore.

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  89. 89
    pfft says:

    By David Losh @ 87:

    RE: pfft @ 75

    I realized you wouldn’t get it, while I was out. It’s just to simple an idea for you to grasp.

    War is good for business. War expenditure, especially at the beginning, is all directed at tanks, weapons, Haliburton, roads, bridges, infrastructure, and all manner of durable goods. It makes the GDP, stock market, and financials, that finance war, fat with cash, stimulus, as you like to call it.

    When the war stops, the money is still owed. Where’s the return?

    I still don’t get your point. I never said anything about spending money on wars because it would boost the economy. the wars were on before the economy tanked and in case you didn’t know the last combat troops left Iraq last week.

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  90. 90
    pfft says:

    the end of the we’re borrowing money from china and other foreigners myth. we’re borrowing it from ourselves.

    For a Change, U.S. Debt Is Staying in the U.S.
    http://www.nytimes.com/2010/08/21/business/21charts.html?_r=2&src=me&ref=business

    in the first 6 months of this year we bought more than 60% of debt issued. the china meme won’t die though I can predict that.

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  91. 91
    Pegasus says:

    RE: pfft @ 88 – So if America gives away all of its wealth and dominance to more corrupt and brutal regimes that is OK in your book? There was a time where America was selective in what crooks and villians with whom we did business with. Now….not so much. Do you want your children to grow up in poverty while a select few elites in other countries get extremely wealthy? Does Comrade Loshnikov agree? Should everyone in the world have the same thing? Poverty? There is not enough to go around. When you give something to someone you are taking it from someone else. If you truly believe this liberal fantasy then give away your entire paycheck and eat dirt. Practice your fantasy…..loon.

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  92. 92
    One Eyed Man says:

    RE: Blurtman @ 73

    I could be wrong, but I don’t think the regulators let banks use historic cost Blurtman. The banks don’t have to mark to market but I think they have to “mark to model” and use a valuation model with some rational basis, although that doesn’t necessarily mean the model gives an accurate valuation.

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  93. 93
    Pegasus says:

    RE: pfft @ 90 – The thoughts that foreign ownership is down only slightly and the FED is forced to begin the second round of “quantitative easing,” known as QE2 never entered that new feeble mind? The buyer(FED) of our debt is the last resort to manipulate pricing and buyers?

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  94. 94
    Pegasus says:

    RE: One Eyed Man @ 92 – It’s called mark to fantasy now. All rules that disclose the banking system is bankrupt have been modified to allow bankrupt banks to continue to operate pretending to be solvent. The FDIC has about a thousand banks on their watch list that they can not afford to close all at once. Wake up and smell the burning banking corpses.

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  95. 95
    Blurtman says:

    RE: One Eyed Man @ 92 – I do not think we are in real disagreement, but the latest Denninger discusses fradulent bank accounting, whether at mark to historical or to model (whatever that means).

    http://market-ticker.org/archives/2599-Must-Be-Nice-More-PCA-Abuse;-ShoreBank.html

    This is a recurrent story on Denninger and other blogs. Seemingly solvent banks are exposed to be insolvent by quite a bit after the FDIC takeover.

    The point is, US capitalism is a fraud.

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  96. 96
    David Losh says:

    RE: pfft @ 68RE: pfft @ 89

    I’m well aware. Your claim about stimulus spending is best illustrated by war.

    You took issue with Jonness, and I’m trying to explain it to you.

    The government can spend directly to durable goods during a time of war. The economy looks great. It stimulates investment in factories.

    We are past that time. There is no more war on the horizon, unless we invade Iran, so the war stimulus has run it’s course. What do you suggest next?

    Here’s what’s going to happen. Defaults, global, and in country, California more specifically.

    You brought up the bond yields. Did you look at any other countries? You brought up the two year yield. Did you look at the ten year yield?

    We are at par with Peru, which by the way is one of the most rapidly expanding markets in the world, today. It’s one of those emerging markets that is propping up your stock market. It was at par with Brazil, whose yield is closer to 11% not that long ago.

    Did you look at how stable Germany was, with it’s austerity programs?

    You can’t be this obtuse. Everything you point out, points to disaster. In Real Estate all this good news is bad news.

    All that’s happening now is interference. The United States, Europe, and China could dump in a trillion dollars each, and the situation wouldn’t change. Wealth is still concentrated with a very few, and unless they spend, there is only debt.

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  97. 97
    pfft says:

    By Pegasus @ 91:

    RE: pfft @ 88 – So if America gives away all of its wealth and dominance to more corrupt and brutal regimes that is OK in your book? There was a time where America was selective in what crooks and villians with whom we did business with. Now….not so much. Do you want your children to grow up in poverty while a select few elites in other countries get extremely wealthy? Does Comrade Loshnikov agree? Should everyone in the world have the same thing? Poverty? There is not enough to go around. When you give something to someone you are taking it from someone else. If you truly believe this liberal fantasy then give away your entire paycheck and eat dirt. Practice your fantasy…..loon.

    we are not giving anything away. we are competing. what is your solution to chinese poverty if not them using their resource of cheap labor to build things? you make a couple good points but you go off on tangents.

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  98. 98
    David Losh says:

    RE: Pegasus @ 91

    Now I get it, you are obviously confused about my point. There is no end to wealth. There is no redistribution, that’s just a myth. That’s robbery. The wealthy don’t have to lose anything. More to the point, do you think Bill Gates will be better with 50 billion dollars or only 35 billion? Buddy Bill could open source, today, keep his money, invest elsewhere, and still have enough. Along the way a half dozen other companies may expand, Bill, if he played a good game, could even make more by having a broader base of like companies.

    Oil is my favorite. It’s a stupid commodity that our government spends billions, if not trillions protecting. There are a million other things. Our government’s energy policy is, seems to me, to protect oil interests globally. Would oil really suffer if it were open market? Maybe something else would come along, we just don’t know, but the people who own oil will continue to be wealthy.

    This whole idea that some one has to lose is a throw back to the Dark Ages. As much as we try, the world is not at war, and even in war, we are at a point where there are no winners.

    There’s always more. There is more wine, more violent love, more drugs, more food. What more do you want?

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  99. 99

    By Blurtman @ 73:

    RE: Kary L. Krismer @ 59 – Kary, Do you think you can list the Pets.com stock that you own at the $120 per share price you paid for it as an asset ro secure a huge loan, rather than the true zero value it actually has? Of course not, but banks can with the worthless RE securities they are holding..

    Actually, I doubt that’s what they’re doing at all. Just because there is not a functioning market for something doesn’t mean that something is worthless. If you think that, and happen to own some auction rate securities, I’d probably be interested in buying them from you for $10 per $1,000,000 of face value.

    To truly determine that a RE security was worthless you would need to know the value of the underlying property and the solvency of every entity on the hook for the debt.

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  100. 100

    RE: David Losh @ 87 – On your war spending topic I don’t think the return is necessarily as bad as you think. It’s not as good as if the government had spent the money on something more productive (e.g. machinery or infrastructure), but the spending would still have the immediate multiplier effect from the spending by people employed in the process of producing whatever it was that the government bought (except perhaps to the extent the spending is by soldiers in Iraq).

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  101. 101
    Cheap South says:

    By David Losh @ 52:

    RE: Cheap South @ 44

    Education is a relative thing. I went to the Linkedin meet up posted by sniglet this week. It was hands down the best networking I’ve been to this year.

    Anyway, I was talking with a young man from India who is here to get his MBA. He’ll have been in school until he’s 30 before he graduates.

    In the United States any one with an MBA can walk around looking for a job, anywhere. It helps if you are connected to a social class, but every one has an opportunity. Even an African American can become the President in the United States. We also elected Bill Clinton, who by all practical purposes was, and is, a nobody. Ronald Reagan was an actor.

    Those things don’t happen in Japan, China, or India. They almost don’t happen in South America, until Evo Morales. In most other countries you really have to be of a certain class of people for success.

    Education is a means to have the status to get a job. There are billions of working class, but in order to have the few million management positions you need to be over qualified.

    As Americans we can go most places, and do business. We can have the most bogus of degrees, and we are Americans, so we have a certain status.

    It concerns me when people say education is a “relative thing”. Anyway, on that Indian fellow; his chances at employment back home are better than here (and for young educated Indians, it’s been the case since the dot com implosion).

    But let me tackle the other comments you made about presidents. Clinton and Obama have no pedigree; but both were educated in world renowned Universities. Reagan was an actor; but he had been the governor of the most populated state in the country. Hardly “nobodies”.

    I understand that the election of an African American was historic; absolutely. But in many other countries, milestones have been crossed a generation ago. Do you want to hear about real nobodies from overseas? Names that just come up without even researching: Juan Domingo Perón (president of Argentina) some 60 years ago. Today, Evo (as you mentioned), Lula (Brazil – just the largest country in Latin America), Chavez (Venezuela). Minorities? How about Women leaders? In many cases, in countries that Americans consider “macho societies”: Isabel Perón, Cristina Fernandez (Arg.), Bachelet (Chile), Gandhi (India), Meir (Israel), Bhutto (Pakistan), Thatcher (UK), Corazón (can’t have too many shoes) Aquino (Philippines); and I am sure there are a ton more in Scandinavia.
    Disclosure: I did look up the spelling of some of these names.

    “As Americans we can go most places, and do business. We can have the most bogus of degrees, and we are Americans, so we have a certain status.”
    You obviously have not been overseas much, have you?

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  102. 102
    Pegasus says:

    RE: pfft @ 97 – The truth is America can not afford to end “chinese poverty” at the expense of American workers. The Chinese can’t afford to do it why should we? Why are we selling secret technologies to a corrupt and inhumane country? Why are we giving away American jobs? That is NOT competing. Could it be that a select few elites are making money by destroying America as we knew it? You bet! What do you think NAFTA was all about? The liberal dream of a global economy comes at the expense of American citizens. Lower wages , less wealth, less everything except the net worth of our Congress members and elites. Power and wealth have become more concentrated into fewer hands in the past 10-15 years while the middle class has almost disappeared. We are rapidly becoming a third world country. Will your children have the opportunity to become slumdogs?

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  103. 103
    Blurtman says:

    RE: Kary L. Krismer @ 99 – Kary, Thanks for brining up auction rate securities. You may recall that brokers who misrepresented the risk of these securities were successfully prosecuted, unlike those who sold fraudulently rated mortgage backed securities, like those who work at the investment bank headed up by a recent former Treasury Secretary of the USA.

    ARS became illiquid because the auctions that set interest rates for ARS ceased. That is quite different from what is occurring now with mortgages and mortgage backed securities held at incorrect valuations by banks. The market is there and it is much broader that that of ARS, but because of the commercial and residential RE crash, these mortgages and mortgage backed securities have lost real value. That is, the cash flows associated with these have have declined as RE owners default. That was not the case with ARS.

    Another large difference between the ARS situation and debt backed securities like MBS is that the USG forced sellers of ARS to take them back from buyers at par. Is the USG forcing Goldman Sachs and Morgan Stanley to take back fraudulently rated MBS at par?

    BTW, there is a secondary market for ARS, and I don’t believe it is the pennies on the dollar scenario you represent.

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  104. 104

    By Blurtman @ 103:

    RE: Kary L. Krismer @ 99 – Kary, Thanks for brining up auction rate securities. You may recall that brokers who misrepresented the risk of these securities were successfully prosecuted, unlike those who sold fraudulently rated mortgage backed securities, like those who work at the investment bank headed up by a recent former Treasury Secretary of the USA.

    Actually, I don’t recall any prosecutions over that at all, if you using the term in a criminal sense. There was a lot of pressure put on for the brokers to buy the things back (as you mention later), and undoubtedly some civil suits (which happen no matter what the merits). But I don’t recall any prosecutions. Cite please.

    ARS became illiquid because the auctions that set interest rates for ARS ceased. That is quite different from what is occurring now with mortgages and mortgage backed securities held at incorrect valuations by banks. The market is there and it is much broader that that of ARS, but because of the commercial and residential RE crash, these mortgages and mortgage backed securities have lost real value. That is, the cash flows associated with these have have declined as RE owners default. That was not the case with ARS.

    Are you trying to claim that there have been no defaults on ARS instruments? I find that extremely unlikely. But you’re missing the point entirely. Let’s say that in your response above after your saying “Thank you for bringing up ARS” you had said “I own $10T of them, and I’d like to sell them to you, but: (1) I want $20 per million of face value; (2) To take any of them you have to buy them all; and (3) You have to close the deal in 6 hours.” Well obviously in that time frame I couldn’t investigate all the entities that issued the ARS you own, and so although $20 per million seems like a screaming deal, I’d probably be reluctant to make that investment . (BTW, I’m using a really low price purposefully.) That’s the situations banks face when taking over other banks. They don’t have the time to investigate all of the insolvent bank’s assets, but they do know that the insolvent bank didn’t do a good job with its loans/investments (which is why I used the low price, because that would give the same impression as to the quality of your hypothetical ARS instruments). Also, they probably lose a good portion of the deposits fairly quickly, which creates a cash flow drain, which would be a minor PITA for them, although that technically wouldn’t affect value.

    Another large difference between the ARS situation and debt backed securities like MBS is that the USG forced sellers of ARS to take them back from buyers at par. Is the USG forcing Goldman Sachs and Morgan Stanley to take back fraudulently rated MBS at par?

    I’m glad you brought that up, because I was going to. Somehow I’ve totally missed the news reports of massive losses that these entities have taken after having taken these things back. I haven’t researched it, but I suspect that’s because they’ve probably actually been making a profit on the items, even with their having bought them at par. Connecting that back up with the takeover banks, or even the government buying RE securities, its entirely possible that in the long run they too will make a profit on the RE securities they buy at a discount. But as to the banks, when taking over another bank they’re going to want to have some significant possibility of a profit on those assets, because other than the assets the only thing they’re buying is the locations (and again note that they probably lose many customers at each location, so what they’re buying there is also uncertain).

    BTW, there is a secondary market for ARS, and I don’t believe it is the pennies on the dollar scenario you represent.

    I didn’t made any such representation. I just made a facetious offer to buy your probably non-existent ARS for a very low price. It doesn’t surprise me that there is such a market because some of those things have clear value (very solvent issuers), and I suspect they pay a very high return.

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  105. 105

    RE: Pegasus @ 102 – The thing about NAFTA and other trade agreements is that over the short to medium term, they will cause a lot of pain for the larger countries (e.g. the U.S.) and many of those in those countries. The idea is to get a smaller share of a larger pie, but it’s not really disclosed that it will take a long time for the size of the pie to increase to the point where the portion isn’t smaller.

    Over the longer term, there’s a lot of benefits to reduced trade barriers. That’s why most of the 50 states of the United States have done a lot better over the last 50 years than most of the countries of Europe, and why Europe created the Euro and all that entails. Unfortunately the “longer term” is probably longer than the remainder of my life, so for many people and companies NAFTA will clearly not have been a good thing.

    But what’s the alternative? Over the longer term I don’t think it’s really viable to have a world where you have a relatively impoverished Mexico right next to a very successful U.S. That leads to immigration issues, crime and even terrorism. To end those problems you don’t need to equalize the per capita output of each country, you just need to change the rules such that the people in the smaller countries see the chance for opportunity.

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  106. 106
    David Losh says:

    RE: Cheap South @ 101

    I’ve been over seas a lot, and you should look at some of the people, and countries, you are pointing out.

    We are crazy Americans. The gentleman from India, as I pointed out to him, did the right thing by coming here to get his MBA, it will give him more status. Having a doctorate from the United States opens a lot of doors “back home” almost anywhere.

    Even though our education system is a joke in many other countries, the degrees you get here have meaning.

    In my opinion, it’s the connections you make here, rather than the degree.

    We are crazy Americans who can go into a well run company in Japan, come up with some cockamamie ideas, turn the company around, and make it profitable. Profit is what it is all about.

    BTW, I was going to give you some examples of leaders in other countries, but then thought about it. Can we really compare a Jimmy Carter, Bill Clinton, even a George W. to Golda Meir, Margaret Thatcher, or Isabella Peron? Come on, seriously.

    We are a country of buffoons, anyway you want to portray us, the world sees us as uncouth, loud, risky, and unsettled.

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  107. 107

    RE: Kary L. Krismer @ 105
    I agree.There’s almost an inevitability to trade agreements, but very little attention was paid to insisting on labor and environmental standards.
    I think the first thoughts were given to the potential for profits of multinational corporations. They were just frothing at the mouth at the prospect of not only lowering their labor costs by 90%?, but also the ability to not have to fuss with making sure that the workers were safe or not exposed to cancer causing substances.
    On the plus side, apparently the Chinese government has agreed to allow the remnimbi( or is it the yuan?) to float, which “experts” predict will mean higher wages for Chinese workers, which means they will have more discretionary income, which means more profits for American companies that sell to Chinese workers. So if you own shares in Yum Brands, the parent company of Kentucky Fried Chicken, Pizza Hut, and Taco Bell, the future looks pretty good.

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  108. 108
    David Losh says:

    RE: Kary L. Krismer @ 105RE: Pegasus @ 102

    Long story short is that Canada, the United States, and Mexico can all prosper. You’d have to show me how we would lose anything by having a strong, and financially secure Mexico. They produce enough food to feed everybody, so where is the down side?

    It’s just a stupid game that people play about how employment is related to consumption, so that drives the economy. It’s a simple matter of distribution of perishable goods. Every one could be employed, it’s just not good business to do so.

    There is much more profit in creating worthless paper instruments that are promises to pay.

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  109. 109
    Cheap South says:

    RE: Ira Sacharoff @ 107 – Renminbi is the currency; yuan is the unit.

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  110. 110
    Blurtman says:

    RE: Kary L. Krismer @ 104 – Kary, There are an unlimited number of stories on the internet regarding charges of fraud and successful proecutions of fraud of brokers who misrepresented the risk of ARS. When the ARS market was seizing up, brokers were urged by their superiors to pump and dump these on unsuspecting dupes. There would be more successful prosecutions, but many brokerage chose to settle rather that be convicted of fraud. Note in the below “..those firms violated the Federal securities laws, including the broker-dealer antifraud provisions.” Is that clear enough for you?

    Here is one excerpt from SEC testimony to Congress:”Our actions were necessary because broker-dealer firms that underwrote, marketed and sold auction rate securities (ARS) misled their customers. Through their sales forces, marketing materials, and account statements, firms misrepresented to their customers that ARS were safe, highly liquid investments that were equivalent to cash or money market funds. As a result, numerous customers invested in ARS their savings and other funds they needed to have available on a short-term basis. These firms failed to disclose the increasing risks associated with ARS, including their reduced ability to support the auctions. By engaging in this conduct, those firms violated the Federal securities laws, including the broker-dealer antifraud provisions.”
    http://www.sec.gov/news/testimony/2008/ts091808lct.htm

    I never claimed that brokerages that were forced to buy back ARS at par lost money on these so I am not sure where you are getting that from. What I am making is an analogy between one type of instrument that brokerages fraudulently misrepresented and were forced to take back at par, and another type of security that brokerages fraudulently misrepresented and are not being forced to take back. But since you asked, there is also no shortage of links describing writedowns by holders of ARS, including companies that purchased these from brokerages as well as the brokerages themselves. see: http://www.stockbrokerfraudblog.com/2008/08/survey_finds_auctionrate_secur.html

    With regards to the USG making money in the long run on RE securities it bought in this latest instance of massive financial fraud, I think you should research how much money taxpayers lost in the last big one, the S&L bailout – losses estimated to be between $100-300 billion. It is estimated that the current baliouts will lose over $2 trillion. Add to that the money savers are losing on interest rates held low to bail out the fraudsters, and the loss in 401k’s caused by this financial fraud, and the losses are likely higher.
    see: http://www.zimbio.com/mortgage+industry/articles/2312/Fed+Bailouts+Cost+Taxpayers+2+5+Trillion

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  111. 111
    David Losh says:

    RE: Ira Sacharoff @ 107

    That was one of the things I noticed this week about the rise in Chinese wages. It’s a new group of consumers. You can walk around in a lot of Third World countries to find a Pizza Hut, or KFC. Of course McDonalds is in the plaza, but there is plenty of room for the TCBY Yogurt franchise in some back alley.

    On my Face Book page there are some pictures of a family in a Super Market, and a Buffet Line. That Super Market sits on what was an empty lot outside of a town in Peru. Six years ago all the shopping was done in open air markets, today we have multi national corporations, mostly based in Chile, building shopping Centers.

    The drain of the profits will weaken the economy without reinvestment back into the community.

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  112. 112

    By David Losh @ 108:

    RE: Kary L. Krismer @ 105RE: Pegasus @ 102 – Long story short is that Canada, the United States, and Mexico can all prosper. You’d have to show me how we would lose anything by having a strong, and financially secure Mexico. They produce enough food to feed everybody, so where is the down side?

    The downside is that in the short/medium term people in the U.S. will become unemployed and some U.S. companies will go under.

    It’s sort of like technology. It puts people out of work, but in the long run everyone benefits because those people eventually get new jobs and overall society is more productive.

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  113. 113

    By Blurtman @ 110:

    RE: Kary L. Krismer @ 104 – Kary, There are an unlimited number of stories on the internet regarding charges of fraud and successful proecutions of fraud of brokers who misrepresented the risk of ARS. When the ARS market was seizing up, brokers were urged by their superiors to pump and dump these on unsuspecting dupes. There would be more successful prosecutions, but many brokerage chose to settle rather that be convicted of fraud. Note in the below “..those firms violated the Federal securities laws, including the broker-dealer antifraud provisions.” Is that clear enough for you?

    Actually, now. Claims of “stories on the internet” isn’t at all satisfying for my inquiry to you. There are lots of stories on the Internet that Obama is Muslim, not born in the U.S., etc.

    ,

    Here is one excerpt from SEC testimony to Congress:”Our actions were necessary because broker-dealer firms that underwrote, marketed and sold auction rate securities (ARS) misled their customers. Through their sales forces, marketing materials, and account statements, firms misrepresented to their customers that ARS were safe, highly liquid investments that were equivalent to cash or money market funds. As a result, numerous customers invested in ARS their savings and other funds they needed to have available on a short-term basis. These firms failed to disclose the increasing risks associated with ARS, including their reduced ability to support the auctions. By engaging in this conduct, those firms violated the Federal securities laws, including the broker-dealer antifraud provisions.”
    http://www.sec.gov/news/testimony/2008/ts091808lct.htm

    Thanks for providing a link. If you read through it, one of the specific examples of fraud was where they misrepresented the investment (backed by student loans rather than mortgage backed securities). The problem there wasn’t necessarily the problem with the auction market as much as the actual security, because that would have lost value even if the auction market had continued to function.

    I never claimed that brokerages that were forced to buy back ARS at par lost money on these so I am not sure where you are getting that from.

    I wasn’t trying to make that claim. I was only pointing out that the market value of something isn’t necessarily the value that will ultimately be obtained. It goes back to my point that to determine the value of a bank’s holdings of RE securities you can’t just look at the market value of those items. You would need to appraise the land and determine the solvency of the maker, etc. It gets to the heart of your claim that more banks should be going under–which is based on a false premise. It’s not quite as bad as the link someone had recently comparing the government’s exposure to mortgages without looking at the value of the assets, but it’s close.

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  114. 114

    RE: David Losh @ 111 – Do you have more than one FB page? I’m not seeing the pictures you reference.

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  115. 115
    David Losh says:

    RE: Kary L. Krismer @ 112

    Complete fear mongering.

    When the Teamsters first went after NAFTA it seemed an odd misstep. More drivers mean more members. The bottom line was that Teamsters were afraid to organize in Mexico, it was dangerous.

    They have the same fight today, as do all labor organizations. God forbid we would pay a living wage to Mexicans, or force American coporations to follow EPA standards no matter where they do business.

    The facts of life are that we can all win. We can allow Mexican drivers into the United States, we can allow American factories to pay living wages in Mexico, and we can be swept up in a continental pride that Europe will never acheive.

    If we had a strong economy all the way to Panama we would be a part of the greatest nation on earth. I just don’t see a prosperous Mexico as a threat.

    As another fact, we could increase the velocity of our dollar by including both Canada, and Mexico in free trade.

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  116. 116
    David Losh says:

    RE: Kary L. Krismer @ 114

    You’re right, those pictures are long gone. It’s under a search for: Las brujitas

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  117. 117
    pfft says:

    By David Losh @ 96:

    RE: pfft @ 68RE: pfft @ 89

    I’m well aware. Your claim about stimulus spending is best illustrated by war.

    You took issue with Jonness, and I’m trying to explain it to you.

    The government can spend directly to durable goods during a time of war. The economy looks great. It stimulates investment in factories.

    We are past that time. There is no more war on the horizon, unless we invade Iran, so the war stimulus has run it’s course. What do you suggest next?

    Here’s what’s going to happen. Defaults, global, and in country, California more specifically.

    You brought up the bond yields. Did you look at any other countries? You brought up the two year yield. Did you look at the ten year yield?

    We are at par with Peru, which by the way is one of the most rapidly expanding markets in the world, today. It’s one of those emerging markets that is propping up your stock market. It was at par with Brazil, whose yield is closer to 11% not that long ago.

    Did you look at how stable Germany was, with it’s austerity programs?

    You can’t be this obtuse. Everything you point out, points to disaster. In Real Estate all this good news is bad news.

    All that’s happening now is interference. The United States, Europe, and China could dump in a trillion dollars each, and the situation wouldn’t change. Wealth is still concentrated with a very few, and unless they spend, there is only debt.

    war is the worst illustration of stimulus. it’s the destruciton or resources and people not to mention young people’ time. that is no comparison to building bridges, roads and etc that will help the economy. teacher, firefighters and cops all keep us safe, learning and working.

    “Did you look at how stable Germany was, with it’s austerity programs?”

    germany’s stimulus was 3.4% of GDP. check out the table.

    http://voices.washingtonpost.com/ezra-klein/2010/06/research_desk_responds_how_do.html

    “The United States, Europe, and China could dump in a trillion dollars each, and the situation wouldn’t change. Wealth is still concentrated with a very few, and unless they spend, there is only debt.”

    yes it would. people would be back to work and keep their homes and cars instead of sending them back to the bank(the rich).

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  118. 118
    Jonness says:

    By pfft @ 68:

    I think what you’re trying to say is the government is crowding out private investment. right now they aren’t and during the downturn they weren’t beacuse people were and are still spending their money on US government bonds and not as many cars.

    No. What I’m saying is we just witnessed a massive borrow and spend policy. Unfortunately, government mismanaged the money and we lost 8 million jobs. How does temporarily providing $8000 for an overpriced home or $4500 for a new car create long-term employment? According to the experiment we just performed, it doesn’t because when the stimulus runs out, so does the consumption pool.

    It would have been much better to have put the money into long-term infrastructure that could support the growth of the economy for the next century, such as a modern electrical grid. Each new job in such a project would create greater than one additional job elsewhere in the economy. But really, not even that would have worked because the government would have simply doled the money out to their friends instead of targeting it in a manner that could add to long-term economic growth.

    So even if Keyne’s was right about his borrow and spend philosophy, the U.S. stands a 0% chance of having it work since it’s actions in no way represent Keyne’s recommendations. We are simply spending for the sake of spending. All this does is leads to additional debt and a greater problem down the road.

    CEO: No need to invest right now

    Once you get to zero interest and you don’t solve the problem, what do you do next? Japan lowered rates to zero and still suffered a lost decade.

    But this is monetary policy, and we are discussing fiscal policy.

    the stimulus has worked.

    If the stimulus worked, where are the 8 million jobs?

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  119. 119

    RE: David Losh @ 115 – I would (and did) agree with you over the long term. But you can’t deny the fact that if a company moves its supplier from one US company to another located in Mexico, that’s bad in the short/medium term for the employees of that company and the company itself.

    Some people don’t like change, even if the change is better. But when things get worse at first, many more people don’t like change, even if over the long term it will provide benefit.

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  120. 120

    RE: Jonness @ 118 – I would agree with a lot of that, although I don’t think it’s all that clear about stealing demand.

    But my point in responding is more to point out that to the extent they concentrated the spending too much in one area (e.g. the electrical grid), the costs would rise dramatically, reducing any benefit. Thus it was probably better to spread the spending widely and to try to hit areas that were otherwise depressed. For example, in the road construction area they apparently were still getting pretty good pricing because the industry was so depressed.

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  121. 121
    pfft says:

    By Pegasus @ 102:

    RE: pfft @ 97 – The truth is America can not afford to end “chinese poverty” at the expense of American workers. The Chinese can’t afford to do it why should we? Why are we selling secret technologies to a corrupt and inhumane country? Why are we giving away American jobs? That is NOT competing. Could it be that a select few elites are making money by destroying America as we knew it? You bet! What do you think NAFTA was all about? The liberal dream of a global economy comes at the expense of American citizens. Lower wages , less wealth, less everything except the net worth of our Congress members and elites. Power and wealth have become more concentrated into fewer hands in the past 10-15 years while the middle class has almost disappeared. We are rapidly becoming a third world country. Will your children have the opportunity to become slumdogs?

    I don’t think you know what compete means. it means that some jobs won’t be in the US. the lower wage companies will have an advantage. the jobs will go there. that is competition.

    “We are rapidly becoming a third world country.”

    no we aren’t. I know that is so fashionable to say because I read it everywhere. wages have only stagnated. our economy is still the largest in the world. we export a lot. once the dollar goes down wages will rise. the yuan also has to be revalued. things change. the last few decades returns to capital(stocks and etc) have been good. this makes the rich richer. pretty soon when the dollar goes down and wages rise we’ll export more and our wages will go up. this is returns to labor. this all moves in cycles. wealth disparity was big before the depression and flattened out until the 80s or maybe late 70s.

    a lot of the inequality is due to politics. lack of healthcare in response to sky-rocketing health costs but we’ve dealt with that. there was also big tax cuts for the rich. if you want to be rich(basically an owner of a business) just buy stocks. you don’t have start your own business. you just buy a share of an already existing one.

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  122. 122
    pfft says:

    By Kary L. Krismer @ 105:

    RE: Pegasus @ 102
    But what’s the alternative? Over the longer term I don’t think it’s really viable to have a world where you have a relatively impoverished Mexico right next to a very successful U.S. That leads to immigration issues, crime and even terrorism. To end those problems you don’t need to equalize the per capita output of each country, you just need to change the rules such that the people in the smaller countries see the chance for opportunity.

    this is a very good point. the drug war is out of control down there. the peso is weak so those that have dollars like the drug lords have that much more power.

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  123. 123
    Jonness says:

    By pfft @ 68:

    deficit spending is not an experiment. it’s the result of almost 70s years of economic research and learning. the fact that you don’t know that is important.

    Please show me conclusive evidence that Keyne’s recommendations actually work. The fact that you can’t do this is important. :)

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  124. 124
    Blurtman says:

    RE: Kary L. Krismer @ 113 – You are being silly. Read the numerous links from credible media sources regarding charges of fraud by AG Cuomo and federal prosecutors.

    Again you are being disingenuous. You focus on a specific reference in the SEC testimony that describes misrepresetation fraud that might not be typical of the ARS market. So? You attempt a strawman argument when in the same document, the entire SEC testimony describes ARS fraud as occuring beyond these two convicted UBS brokers and beyond UBS itself.

    You then state that “market value of something isn’t necessarily the value that will ultimately be obtained..” I assume you mean that the market value is not what the market will pay for it. That is, or course, illogical.

    The price the market will pay is the market value of an asset at that point iin time. The asset can have sentimental value, it can in one firm’s view have more value than what the market will pay at that point in time, but the market determines the price at a given point in time. And please don’t try to equate appraisals with real value. I think we’ve seen where that leads.

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  125. 125
    pfft says:

    By Jonness @ 118:

    By pfft @ 68

    It would have been much better to have put the money into long-term infrastructure that could support the growth of the economy for the next century, such as a modern electrical grid. Each new job in such a project would create greater than one additional job elsewhere in the economy. But really, not even that would have worked because the government would have simply doled the money out to their friends instead of targeting it in a manner that could add to long-term economic growth.

    So even if Keyne’s was right about his borrow and spend philosophy, the U.S. stands a 0% chance of having it work since it’s actions in no way represent Keyne’s recommendations. We are simply spending for the sake of spending. All this does is leads to additional debt and a greater problem down the road.

    CEO: No need to invest right now

    Once you get to zero interest and you don’t solve the problem, what do you do next? Japan lowered rates to zero and still suffered a lost decade.

    But this is monetary policy, and we are discussing fiscal policy.

    the stimulus has worked.

    If the stimulus worked, where are the 8 million jobs?we did spend the money on long-term stuff. infrastructure, firefighters, cops teachers and etc.

    DOT Announces Stimulus Light Rail Projects
    http://www.propublica.org/article/dot-announces-stimulus-light-rail-projects

    Stimulus Dollars Energize Efforts To Smarten Up the Electric Power Grid
    http://www.washingtonpost.com/wp-dyn/content/article/2009/03/09/AR2009030902712.html

    Stimulus for Homes: Obama’s $5 Billion Weatherization Plan
    http://www.popularmechanics.com/home/improvement/energy-efficient/4306631

    remember the stimulus had a lot of tax cuts.

    Your share of stimulus tax breaks
    http://money.cnn.com/2009/02/21/news/economy/tax_savings_stimulus/index.htm

    1. the stimulus was too small. that was known from the beginning. you can’t fault it for losing jobs when it wasn’t the right dose.

    2. the stimlus did save jobs.

    One year after the stimulus, several independent macroeconomic firms including Moody’s and IHS Global Insight estimated that the stimulus saved or created 1.6 to 1.8 million jobs and forecasted a total impact of 2.5 million jobs saved by the time the stimulus is completed.[73] The Congressional Budget Office considered these estimates conservative.[74] The CBO estimated 2.1 million jobs saved in the last quarter of 2009, boosting the economy by up to 3.5 percent and lowering the unemployment rate by up to 2.1 percent.[75] The CBO projected that the package would have an even greater impact in 2010.

    http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009#Developments_under_the_Act

    “Japan lowered rates to zero and still suffered a lost decade.”

    they waited years too late for zirp and stimulus. we acted right away and prevented a depression.

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  126. 126
    pfft says:

    By Jonness @ 123:

    By pfft @ 68:
    deficit spending is not an experiment. it’s the result of almost 70s years of economic research and learning. the fact that you don’t know that is important.

    Please show me conclusive evidence that Keyne’s recommendations actually work. The fact that you can’t do this is important. :)

    I’ve done it many times.

    How do stimulus size and economic growth compare internationally?
    http://voices.washingtonpost.com/ezra-klein/2010/06/research_desk_responds_how_do.html

    Asia went through austerity in the late 90s and they want no part of it.

    Keynes In Asia
    http://krugman.blogs.nytimes.com/2010/07/24/keynes-in-asia/

    for all you republicans mark zandi was Mccain’s economic advisor and he is for stimulus and the bailouts.

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  127. 127
    David Losh says:

    RE: pfft @ 117

    You should really look at the charts you put up.

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  128. 128
    pfft says:

    By David Losh @ 127:

    RE: pfft @ 117

    You should really look at the charts you put up.

    what’s the matter? the only place where stimulus hasn’t worked is Spain. all the others show a postivie correlation.

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  129. 129
    David Losh says:

    RE: pfft @ 125

    You should really read the links you provide.

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  130. 130
    David Losh says:

    RE: pfft @ 127

    Look at the numbers.

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  131. 131
    Cheap South says:

    By pfft @ 125:

    for all you republicans mark zandi was Mccain’s economic advisor and he is for stimulus and the bailouts.

    Of course; there can’t be any doubt that a McCain administration (or anyone’s administration) would have done the same (Bailout and Stimulus). For crying out loud, this country subsidizes the oil industry and mega farming!!!. What do we think? That he was going to sit back, watch everything collapse and say “the market will take care of this”? Of course not; and Fox News, Beck, Limbaugh and the rest of the party leaders would’ve been backing him up; after all, what kind of American would oppose job creation (and under McCain they would’ve come up with daily proof the Stimulus was working and that things were getting peachier by the hour).

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  132. 132
    pfft says:

    obama gets a lot of flak for the stimulus(as well as TARP we he didn’t do). however 65% of the deficit is bush’s spending. without bush’s spending the deficit for most the next 10 years would be near $300 billion per year. the wars and tax cuts that weren’t paid for make up most of the deficit. recovery measure and tarp/fannie freddie aren’t much. it’s tax cuts and wars that weren’t paid for.

    the Bush tax cuts and the wars in Iraq and Afghanistan will account for nearly $7 trillion in deficits in 2009-2019.

    Whose Deficit Is It, Anyway?
    http://www.offthechartsblog.org/whose-deficit-is-it-anyway/

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  133. 133
    pfft says:

    By Cheap South @ 131:

    By pfft @ 125:

    for all you republicans mark zandi was Mccain’s economic advisor and he is for stimulus and the bailouts.

    Of course; there can’t be any doubt that a McCain administration (or anyone’s administration) would have done the same (Bailout and Stimulus). For crying out loud, this country subsidizes the oil industry and mega farming!!!. What do we think? That he was going to sit back, watch everything collapse and say “the market will take care of this”? Of course not; and Fox News, Beck, Limbaugh and the rest of the party leaders would’ve been backing him up; after all, what kind of American would oppose job creation (and under McCain they would’ve come up with daily proof the Stimulus was working and that things were getting peachier by the hour).

    most republicans in congress voted against tarp and that was when bush was in office. I am not sure what would have happened with mccain in.

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  134. 134

    RE: Blurtman @ 124 – As I assume you know, charges and proof are entirely separate things. And in any case, the link you provided wasn’t clear whether they were talking civil fraud or criminal fraud. What started this debate between us was your reference to “prosecution.”

    As to the “illogical” reference being disingenuous, I think you need to look in the mirror there. I’ve been very clear what I mean by how market value doesn’t necessarily mean value in some instances, specifically ARS and mortgage backed securities. If you want to treat a $300,000 mortgage as being worth nothing during a period of time that few people want to buy such assets, that’s fine. But to suggest the feds should seize a bank because they should value that asset at zero is crazy if the value of the underlying property is still $500,000 and the person making the note has a net worth of over $2M.

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  135. 135

    RE: David Losh @ 129 – You should really be more specific. ;-)

    Rate this comment: Thumb up 0

  136. 136

    RE: pfft @ 132 – I wouldn’t really look at the number of Rs and Ds voting for things. They play games between themselves as to who votes for what to get a certain final result.

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  137. 137
    pfft says:

    By Kary L. Krismer @ 136:

    RE: pfft @ 132 – I wouldn’t really look at the number of Rs and Ds voting for things. They play games between themselves as to who votes for what to get a certain final result.

    congressional republicans voted against everything having to do with the bailouts no matter who was president. they voted against TARP while bush was in office. remember the first time it failed and the market plunged?

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  138. 138

    RE: pfft @ 137 – But what I’m saying is that in the end they come around, and they sometimes literally pick who will vote for something that needs to pass.

    If a large asteroid was headed directly toward earth, and the possible fix to avoid the destruction of all life on earth was going to cost $10T, the Rs would all vote against it at first wanting the cost to be funded. Then, before it was too late, exactly enough would change their vote so that it passed. ;-)

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  139. 139
    pfft says:

    By Kary L. Krismer @ 138:

    RE: pfft @ 137 – But what I’m saying is that in the end they come around, and they sometimes literally pick who will vote for something that needs to pass.

    If a large asteroid was headed directly toward earth, and the possible fix to avoid the destruction of all life on earth was going to cost $10T, the Rs would all vote against it at first wanting the cost to be funded. Then, before it was too late, exactly enough would change their vote so that it passed. ;-)

    ok, I see what you mean.

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  140. 140

    RE: pfft @ 139 – Remember, I think the Ds and the Rs are part of the same organization, and that most of their posturing is just a game to gain support and campaign contributions. If they were baseball, one would be the NL and one the AL.

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  141. 141
    David Losh says:

    RE: pfft @ 132

    Now you’re getting my war reference. Stimulus is a meanless term unless it’s beneficial. Bush dumped billions of dollars into stimulus, now that it’s over, it’s over.

    There’s more. Once Afganistan starts winding down, and the troops come back, there will be more people in the work force with even fewer jobs available.

    In your Krugman link he talks about how the Bush years should have been a time to pay down the deficit. He says something like they should have used those “good” economic times to pay down the deficit, or something like that.

    The idiot never made the correlation that those “good” economic times were a direct result of unfunded stimulus.

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  142. 142
    David Losh says:

    RE: Kary L. Krismer @ 134RE: Blurtman @ 124

    This was a fascinating exchange that goes to the very heart of the economic melt down.

    Here’s a good example, I think. There was an earthquake off the coast of Greece today. There is a hillside outside of Athens that has had sheep grazing on it since the beginning of time. It is now covered with condo projects. What every one know is that the hillside is unstable, the stupid Europeans however came in a bought, sold, and traded those units like they were assets. One earthquake away is a pile of rubble with mortgage Notes attached.

    Of course there is the insurance, or not, as the case may be, and the law suits, if they are allowed there, and the personal injuries, but bottom line the Notes are based on a pile of rubble.

    So, will there be a pile of rubble? Will this earthquake change the value of the properties? Are, or were, the properties there over priced to begin with?

    There may be a moral dilemma about selling properties built on unstable soil, or maybe an engineer came up with a way to make construction viable. Still, that’s a lot of unknowns to buy in a packet of Mortgage Backed Securities.

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  143. 143
    pfft says:

    By David Losh @ 141:

    RE: pfft @ 132

    Now you’re getting my war reference. Stimulus is a meanless term unless it’s beneficial. Bush dumped billions of dollars into stimulus, now that it’s over, it’s over.

    There’s more. Once Afganistan starts winding down, and the troops come back, there will be more people in the work force with even fewer jobs available.

    In your Krugman link he talks about how the Bush years should have been a time to pay down the deficit. He says something like they should have used those “good” economic times to pay down the deficit, or something like that.

    The idiot never made the correlation that those “good” economic times were a direct result of unfunded stimulus.

    not all of the economic growth was from the wars. a lot of it was because we were coming out of a recession.

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  144. 144
    Blurtman says:

    More examples of the corrput players in the fradulent US financial system. This former Federal Reserve governor authors a bogus paper on the outstanding Icelandic economy, which was, of course, flat out erroneous. Worse, this fellow does not disclose that he was paid by the Icelandic chamber of commerce to write this crap. Even worse he changes the title of th paper on his CV to cover up his crime. Can’t wait for the movie.

    Of course it was an honest mistake. He is incompetent see, not corrupt.

    http://www.wcvarones.com/2010/08/incompetent-paid-shill-frederic-mishkin.html

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  145. 145
    Blurtman says:

    RE: Kary L. Krismer @ 134 – Kary, the recent flash crash was an example of a malfunctioning market, not the market that is pricing RE today. Please provide a link where a $300,000 mortgage held by a bank was valued at $0.00.

    And I am telling you that this $630,000 house is worth $361,900. That is what the market transacted. whether you think it is the “true value” or not.
    http://www.doctorhousingbubble.com/burbank-real-estate-still-in-housing-bubble-after-40-percent-price-decline/

    And if banks are claiming such assets at $630,000, but if they valued such assets at $361,900 their liabilites would exceed their assets, yes, the bank should be seized by the FDIC.

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  146. 146
    David Losh says:

    RE: Blurtman @ 145

    How could they seize without transaction data. That’s the problem. It will be another month, or two before the Real Estate market settles to after stimulus pricing.

    It’s like my example about condo development in Greece. Those are viable housing units until, or if something happens.

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  147. 147

    RE: Blurtman @ 145 – Where do you think that they are going to get the data to value all properties that are security for the loans that banks hold? Zillow?

    Where do you think they are going to get the data to determine the solvency of the makers of the notes? Are they going to subpoena the financial records of the XX% of Americans that owe mortgages?

    Where there is no functioning market, there is no realistic way of valuing the loans. Shutting banks down based on such valuations would be foolhardy because it would be based on information that you know is bad, where no better information is available.

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  148. 148
    pfft says:

    By Blurtman @ 144:

    More examples of the corrput players in the fradulent US financial system. This former Federal Reserve governor authors a bogus paper on the outstanding Icelandic economy, which was, of course, flat out erroneous. Worse, this fellow does not disclose that he was paid by the Icelandic chamber of commerce to write this crap. Even worse he changes the title of th paper on his CV to cover up his crime. Can’t wait for the movie.

    Of course it was an honest mistake. He is incompetent see, not corrupt.

    http://www.wcvarones.com/2010/08/incompetent-paid-shill-frederic-mishkin.html

    it’s possible that he was just wrong. lots of people were wrong. I wouldn’t rush to call incompetence corruption.

    what is probably the root cause it that people are not sketical and they are too ideological(free market lovers). especially right-wing types who often become economists or pundits like larry kudlow.

    this isn’t really a big deal. it’s only a paper. no need to make a movie.

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  149. 149
    Pegasus says:

    RE: pfft @ 148 – A leading economist who rubs elbows with Krugman takes 140,000 dollars to write a bogus paper on how safe the Icelandic economy and banking system was without any proof and does not disclose the money taken to perpetrate a fraud on investors and you think its not a big deal. What a maroon! Its called payola! The guy should be in prison singing in a falsetto voice for his new friends.

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  150. 150
    Blurtman says:

    RE: Kary L. Krismer @ 147 – Why do you continue to state that there is not a functioning market? And are you going to post a link to back up the $300,000 mortgage that is valued at zero dollars, or are you making up unsupportable stories to prove a point?

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  151. 151
    Blurtman says:

    RE: Pegasus @ 149 – And that is the Columbia U. business school. And the Dean of the Columbia Business School, the freaking Dean, is also a posturing fraudster. This is exactly what is wrong with the US economy. Business students are being trained to dismiss the consequences of fraud.

    IWhen the internet bubble was in full swing an analyst at a now dissolved San Francisco investment bank (Lauren Cooks Levitan, Robertson Stephens) was shamelessly pumping grossly overvalued internet stocks, even when it was clear the bubble was imploding. She was a Stanford MBA, and featured glowingly on the cover of their alumni publication. Message – fraud is good, accountability is for suckers.

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  152. 152
    pfft says:

    By Pegasus @ 149:

    RE: pfft @ 148 – A leading economist who rubs elbows with Krugman takes 140,000 dollars to write a bogus paper on how safe the Icelandic economy and banking system was without any proof and does not disclose the money taken to perpetrate a fraud on investors and you think its not a big deal. What a maroon! Its called payola! The guy should be in prison singing in a falsetto voice for his new friends.

    yeah because we all know how unstable the banking system was at the time, right? everyone was short Iceland. weren’t you?

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  153. 153
    David Losh says:

    RE: Blurtman @ 150

    Because we are in a dead market. This is completely without a history, there is no data, or statistics to compare with what is going on right now.

    It’s just bizarre that housing unit prices are all over the board.

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  154. 154
    Pegasus says:

    RE: pfft @ 152 – Try and defend the facts…false statements based on…..nothing….non-disclosure of taking money to write puff piece….Federal Reserve governor…..cush job as a professor at Columbia after writing con….Columbia refuses to fire crook…. no crook goes to jail….investors in Iceland f*c*ed in the a**….pfft sees no problems here….

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  155. 155
    pfft says:

    By Pegasus @ 154:

    RE: pfft @ 152 – Try and defend the facts…false statements based on…..nothing….non-disclosure of taking money to write puff piece….Federal Reserve governor…..cush job as a professor at Columbia after writing con….Columbia refuses to fire crook…. no crook goes to jail….investors in Iceland f*c*ed in the a**….pfft sees no problems here….

    it’s a non-story. he would have written the story that way anyways. heck, the banking system might have been good then. it’s a bubble. people get euphoric and believe crazy things, even very smart people.

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  156. 156
    David Losh says:

    RE: Pegasus @ 154

    OK, I believe you are right, there is a lot of fraud in the banking system, financial markets, and the selling of Mortgage Backed Securities. There is fraud in the insurance of these high risk instruments. Fannie Mae, and Freddie Mac were involved as well as several government officials, politicians, in my opinion, including the Presidents, both Bush, and Obama.

    Now prove it.

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  157. 157
    Pegasus says:

    I will now take my own sage advice often proffered that even I forget occasionally….Never argue with a fool or a lunatic. It will only attract other crazies. Bye now. Good luck loon.

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  158. 158
    Dave S says:

    Cheap South@101 wrote: “Corazón (can’t have too many shoes) Aquino (Philippines)”.

    No. The one with all the shoes was Imelda Marcos, whose dictator husband had Corazon Aquino’s husband murdered before she was elected President after leading a popular uprising that overthrew Marcos. The discovery of Imelda’s shoe collection followed the revolution.

    (And Obama did not make the decision to invade Iraq, and Martin Luther King did not assassinate Abraham Lincoln.)

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  159. 159
    Dave S says:

    RE: Dave S @ 158 – That is, Marcos had her husband killed, after which she led the revolution and was elected.

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  160. 160

    By Kary L. Krismer @ 140:

    RE: pfft @ 139 – Remember, I think the Ds and the Rs are part of the same organization, and that most of their posturing is just a game to gain support and campaign contributions. If they were baseball, one would be the NL and one the AL.

    Which party has the designated hitter?

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  161. 161

    By Blurtman @ 150:

    RE: Kary L. Krismer @ 147 – Why do you continue to state that there is not a functioning market? And are you going to post a link to back up the $300,000 mortgage that is valued at zero dollars, or are you making up unsupportable stories to prove a point?

    It doesn’t have to be valued at zero to not be a functioning market. But why do you think the government proposed the original version of TARP (buying such assets directly)if you think there is a functioning market for such instruments? Do you think Freddie and Fannie have been functioning normally the past two years, just processing the mortgages and then selling them off? Why do you think they call them “toxic assets?”

    Buy in any case, you’re the one that thinks the banks are all largely insolvent based on what you think the value of these assets are. You’re saying we should destroy the entire economy because you think these assets are not worth much and fairly valued. Why should we take such an action (shutting down all the banks and thereby forcing millions into unemployment) without actually knowing that the assets are in fact worth as little as you think they are?

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  162. 162

    RE: Blurtman @ 151 – You’re well beyond the point of overusing the term “fraud.”

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  163. 163
    Blurtman says:

    RE: Kary L. Krismer @ 161 – Kary, you have a great talent in ascribing statements and positions to people that they did not make. You are a master of the ad hominem attack, and of fabricating and exaggerating to prove a point. Again I ask you to support the statement you have made in a recent ad hominen attack that I support a market that values a $300,000 mortgage at zero dollars. Where is the link supporting this $300,000 mortgage that is valued at zero dolalrs? Just another irrelevant exaggeration, eh?

    I have posted countless links to support my statements. You – zero. I have posted a link where a home formerly valued at $630,000 sold in the $300’s. Not zero, mind you. While I do not support bubbles, I do support the market clearing prices, whether you like it or not. And the market will work if everone gets out of the way and lets it work. Not, as the Great War Criminal said: “I’ve abandoned free-market principles to save the free-market system,”

    And the reason for the TARP bailout proposed by criminal fraduster Hank Paulson was to enable the privatization of profits and the socilaization of losses. That is, to have the folks engaged in a great non-productive Ponzi scheme keep the gains, but pass the losses on to the taxpayer. Couldn’t work if someone was not left holding the bag.

    Sweden is doing quite well today, after having engaged in nationalizing its banks, firing the incompetent managers, and forcing shareholders to eat the losses. We passed on that course of action. Instead, we are on our way to becoming Japan.

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