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Effective Protest Against Bailouts

By someone else follow someone else   2008 Feb 28, 1:22am 20,797 views   286 comments   watch   nsfw   quote   share    


protest

The NY Times illustrated nicely that most people are against paying their neighbor's mortgage:

But readers aren’t biting. More than 400 vehement reader comments on the Times’ site ran 20-to-1 against any taxpayer rescue - with fairness and basic economics the main objections

But we are not unified or effective in our protests. Just disgruntled savers bleating in the wilderness while our savings are forcibly transferred to those who did not save, and representative democracy keeps electing representatives of the banks. What would really work?

One reader suggestion is an online petition that all the housing blogs could post. It also might be time to actually hit the streets with real signs and pithy slogans. I could do the SF financial district at lunch some day.

Then there are boycotts, but what are we going to boycott? We're already boycotting bad lending and high prices.

Could we create an effective and public way to track politician sell-outs to the REIC?

Is it time for direct democracy, the ability of the people themselves to make the laws?

#housing

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241   SP   ignore (0)   2008 Feb 29, 3:44pm     ↓ dislike (0)   quote   flag        

RaiderJeff Says:
So….Is there an effective way to protest against bailouts????

I think someone posted before, but the biggest missing link is a coordinated effort that pulls together the (allegedly) large number of weak dissenting voices into one strong, consistent and continuous message. We need either an old-fashioned messiah (with a combination of Ron Paul's conviction and MLK's appeal), or some form of viral social-web movement...

Right now, the pro-bailout camp is well-organized, well-connected and has a strong motivation to go out and make it happen. What does the anti-bailout camp have??? A few blog-forums and a lot of bile.

242   HelloKitty   ignore (0)   2008 Feb 29, 10:00pm     ↓ dislike (0)   quote   flag        

There HAS to be come anti tax non profit lobby that is anti bailout.

Like these people maybe.

http://www.ctj.org/html/ctjdesc.htm

243   Peter P   ignore (0)   2008 Mar 1, 1:31am     ↓ dislike (0)   quote   flag        

with a combination of Ron Paul’s conviction and MLK’s appeal

Ron Paul looks plenty appealing to me. My wife thinks I am crazy though.

Right now, the pro-bailout camp is well-organized, well-connected and has a strong motivation to go out and make it happen.

There will be a "bail-out for the homeowners" but there will be no bail-out for the homeowners. Don't worry. The Fed cares mostly about the banks. This is their job.

244   Peter P   ignore (0)   2008 Mar 1, 1:32am     ↓ dislike (0)   quote   flag        

What does the anti-bailout camp have???

The anti-bailout camp can calmly assess the situation and speculate accordingly.

Not investment advice

245   DinOR   ignore (0)   2008 Mar 1, 1:51am     ↓ dislike (0)   quote   flag        

SP,

I disagree. The "Chron" article had several noteworthy organizations (The Center for Tax Policy) for one and the OFHEO Director has been VERY vocal about taking a stand! Note that the builders did *not get their $10,000 buyer CREDIT implemented into the Stimulus Plan?

You're right in the regard that it's definitely uphill... but not insurmountable.

246   Peter P   ignore (0)   2008 Mar 1, 7:06am     ↓ dislike (0)   quote   flag        

We probably knew this already, but wisdom like this should be repeated:

"We’ll see what happens, but over the many years we’ve been in this business, we’ve noticed that, when all is said and done, things rarely end up as bad as they may seem. Even though there may be many valid reasons why a worst case scenario could evolve, it rarely does. Markets survive, economies survive, people make money and they lose money, markets move up and they move down, change is inevitable but that doesn’t have to mean disaster is coming. Most important is to keep an open mind and stay flexible. Allow for surprises and don’t stubbornly hold onto an idea because you think it’s right. The markets will tell us what’s happening and if a market changes, we’ll change with it."

http://www.kitco.com/ind/Nadler/feb292008B.html

247   PermaRenter   ignore (20)   2008 Mar 1, 7:14am     ↓ dislike (0)   quote   flag        

Say good-bye to granite countertops
High-end kitchen and bath renovations just aren't boosting a home's value the way they used to. Sellers who succumbed to home over-improvement syndrome are feeling the pain.

The granite countertop's glory days might be over.

During the housing boom, updating a kitchen with high end materials like cherry wood cabinets and a Viking stove was a sure bet to boost a home's value. Homeowners often recovered about 80% of the cost when the house was later sold.

But with so much more inventory on the market for buyers to choose from, they just aren't as impressed with the bells and whistles. Now most upscale renovations are returning less than 70% of their cost, according to a recent survey from the National Association of Realtors (NAR).

"Pay-back for high-end projects has declined over the past few years," said Kermit Baker, chief economist for the American Institute of Architects (AIA). "People planning to sell shouldn't over-improve," he said. "They won't get the money out if they sell in the next two or three years."
...
"I definitely saw a lot of tract houses built in the 1970s, in developments with three basic floors plans, get expensive renovations," he said. "We did a lot of radical projects, moving walls around, installing granite counters instead of Formica and cherry wood cabinets instead of oak."

The numbers made sense. In 2005, a fancy kitchen renovation on the West Coast returned an average of 93% of its cost. Even if the owner got only a year or two use of it, the close-to-break-even return made it worthwhile. By 2007, the return had declined precipitously to 74%.

248   PermaRenter   ignore (20)   2008 Mar 1, 7:29am     ↓ dislike (0)   quote   flag        

Bill Gates has asked the following question in LinkedIn.com:

How can we do more to encourage young people to pursue careers in science and technology?

There are 2564 answers.

http://www.linkedin.com/answers/technology/information-technology/computers-software/TCH_ITS_CMP/179866-21879399?goback=%2Esrp_1_1204330946472_in

249   Peter P   ignore (0)   2008 Mar 1, 7:30am     ↓ dislike (0)   quote   flag        

But when there are just too many homes on the market, not having a modern kitchen may not receive any interest at all.

With a growing inventory, buyers can afford to be picky.

I know I want a viking range and a sub-zero fridge even though I don't cook. ;)

250   Peter P   ignore (0)   2008 Mar 1, 7:31am     ↓ dislike (0)   quote   flag        

How can we do more to encourage young people to pursue careers in science and technology?

Let the market drive those young people!

Why do we want to encourage young people to pursue careers in science and technology anyway?

251   PermaRenter   ignore (20)   2008 Mar 1, 7:33am     ↓ dislike (0)   quote   flag        

>> I liked the tone of that letter - but this was where the guy lost my vote.

Tim Iacono is a smart man and he is doing far better:

After completing the end-of-the-week model portfolio tally for Iacono Research, the companion investment website that has received far too little promotion lately here at the blog, the following table was clearly in need of an update.

Contrary to what you'll hear from investment advisers or what you'll see in Money Magazine and other personal finance publications, the model portfolio's current asset allocation is only about one-third equities and most of these are mining stocks.

Of course, an all-palladium asset allocation would now be up 56 percent so far in 2008, so there's definitely room for improvement.

To learn more about investing in natural resources using commonly traded ETFs, stocks, and mutual funds, see this description at Iacono Research. Or, sign up for a free trial.

Read More...

Summary only...

252   apostasy   ignore (0)   2008 Mar 1, 8:52am     ↓ dislike (0)   quote   flag        

With respect to the REIC tactic of enticing unsophisticated home buyers to buy because interest rates are going up, what about pointing out that in a asset market of declining prices, the real interest rate is the financing rate plus the percentage decline? All those years during the boom, when Realtors were pointing out that the effective interest rate was negative because the asset price appreciation out-stripped the financing rate, did they not realize that calculation works in reverse as well?

253   HeadSet   ignore (2)   2008 Mar 1, 9:19am     ↓ dislike (0)   quote   flag        

did they not realize that calculation works in reverse as well?

I sure they realized it works both ways, but certainly we should not expect the realtors to point out a detriment to a sale.

Imagine the NY Times Headline and excerpt:

"NAR Says 2008 is a Terrible Time to Buy"
NAR President Richard Gaylord advises home buyers to delay purchases until mid-2009. "House prices may be more in line with earnings by then."

Wouldn't that restore some faith in the realty industry?

254   SP   ignore (0)   2008 Mar 1, 11:19am     ↓ dislike (0)   quote   flag        

PermaRenter Says:
"High-end kitchen and bath renovations just aren’t boosting a home’s value the way they used to."

I doubt they ever actually did - house prices were going up anyway, but the home-improvement industrial-complex needed to convince gullible home-owners to spend money, so the correlation between pergraniteel and "home values".

My modest little tract-home went up in "value" by about $400K in two years during the mania - no granite was added. I probably took about 1000 showers (give or take) in that timeframe. So each time I took a shower, my house's "value" went up by $400? Exactly...

255   SP   ignore (0)   2008 Mar 1, 11:27am     ↓ dislike (0)   quote   flag        

# DinOR Says:
You’re right in the regard that it’s definitely uphill… but not insurmountable.

Of course, I was only pointing out what I perceived to be a shortcoming in the anti-bailout camp. Not insurmountable, but if nothing is done about it, it's effectiveness will be limited.

256   PermaRenter   ignore (20)   2008 Mar 1, 1:28pm     ↓ dislike (0)   quote   flag        

March 2, 2008
Economic View
How a Bubble Stayed Under the Radar
By ROBERT J. SHILLER
ONE great puzzle about the recent housing bubble is why even most experts didn’t recognize the bubble as it was forming.

Alan Greenspan, a very serious student of the markets, didn’t see it, and, moreover, he didn’t see the stock market bubble of the 1990s, either. In his 2007 autobiography, “The Age of Turbulence: Adventures in a New World,” he talks at some length about his suspicions in the 1990s that there was irrational exuberance in the stock market. But in the end, he says, he just couldn’t figure it out: “I’d come to realize that we’d never be able to identify irrational exuberance with certainty, much less act on it, until after the fact.”

With the housing bubble, Mr. Greenspan didn’t seem to have any doubt: “I would tell audiences that we were facing not a bubble but a froth — lots of small local bubbles that never grew to a scale that could threaten the health of the overall economy.”

The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United States and around the world. If people do not see any risk, and see only the prospect of outsized investment returns, they will pursue those returns with disregard for the risks.

Were all these people stupid? It can’t be. We have to consider the possibility that perfectly rational people can get caught up in a bubble. In this connection, it is helpful to refer to an important bit of economic theory about herd behavior.

Three economists, Sushil Bikhchandani, David Hirshleifer and Ivo Welch, in a classic 1992 article, defined what they call “information cascades” that can lead people into serious error. They found that these cascades can affect even perfectly rational people and cause bubblelike phenomena. Why? Ultimately, people sometimes need to rely on the judgment of others, and therein lies the problem. The theory provides a framework for understanding the real estate turbulence we are now observing.

Mr. Bikhchandani and his co-authors present this example: Suppose that a group of individuals must make an important decision, based on useful but incomplete information. Each one of them has received some information relevant to the decision, but the information is incomplete and “noisy” and does not always point to the right conclusion.

Let’s update the example to apply it to the recent bubble: The individuals in the group must each decide whether real estate is a terrific investment and whether to buy some property. Suppose that there is a 60 percent probability that any one person’s information will lead to the right decision.

In other words, that person’s information is useful but not definitive — and not clear enough to make a firm judgment about something as momentous as a market bubble. Perhaps that is how Mr. Greenspan assessed the probability that he could make an accurate judgment about the stock market bubble.

The theory helps explain why he — or anyone trying to verify the existence of a market bubble — may have squelched his own judgment.

The fundamental problem is that the information obtained by any individual — even one as well-placed as the chairman of the Federal Reserve — is bound to be incomplete. If people could somehow hold a national town meeting and share their independent information, they would have the opportunity to see the full weight of the evidence. Any individual errors would be averaged out, and the participants would collectively reach the correct decision.

Of course, such a national town meeting is impossible. Each person makes decisions individually, sequentially, and reveals his decisions through actions — in this case, by entering the housing market and bidding up home prices.

Suppose houses are really of low investment value, but the first person to make a decision reaches the wrong conclusion (which happens, as we have assumed, 40 percent of the time). The first person, A, pays a high price for a home, thus signaling to others that houses are a good investment.

The second person, B, has no problem if his own data seem to confirm the information provided by A’s willingness to pay a high price. But B faces a quandary if his own information seems to contradict A’s judgment. In that case, B would conclude that he has no worthwhile information, and so he must make an arbitrary decision — say, by flipping a coin to decide whether to buy a house.

The result is that even if houses are of low investment value, we may now have two people who make purchasing decisions that reveal their conclusion that houses are a good investment.

As others make purchases at rising prices, more and more people will conclude that these buyers’ information about the market outweighs their own.

Mr. Bikhchandani and his co-authors worked out this rational herding story carefully, and their results show that the probability of the cascade leading to an incorrect assumption is 37 percent. In other words, more than one-third of the time, rational individuals, each given information that is 60 percent accurate, will reach the wrong collective conclusion.

Thus, we should expect to see cascades driving our thinking from time to time, even when everyone is absolutely rational and calculating.

This theory poses a major challenge to the “efficient markets” view of the world, which assumes that investors are like independent-minded voters, relying only on their own information to make decisions. The efficient-markets view holds that the market is wiser than any individual: in aggregate, the market will come to the correct decision. But the theory is flawed because it does not recognize that people must rely on the judgments of others.

NOW, let’s modify the Bikhchandani-Hirshleifer-Welch example again, so that the individuals are no longer purely rational beings. Instead, they are real people, subject to emotional reactions.

Furthermore, these people are being influenced by agencies like the National Association of Realtors, which is conducting a public-relations campaign intended to show that putting money into housing is a reliable way to build wealth. Under these circumstances, it’s easy to understand how even experts could come to believe that housing is a spectacular investment.

It is clear that just such an information cascade helped to create the housing bubble. And it is now possible that a downward cascade will develop — in which rational individuals become excessively pessimistic as they see others bidding down home prices to abnormally low levels.

Robert J. Shiller is professor of economics and finance at Yale and co-founder and chief economist of MacroMarkets LLC.

257   goober   ignore (0)   2008 Mar 1, 2:04pm     ↓ dislike (0)   quote   flag        

On CNN's business website, there's this guy talking about something called M3. He says M3 is the measure of the total money supply in the system. He then goes on to say the Fed stopped reporting M3 in March of 2006. His point is that '70s style inflation is headed our way.

He is full of $hit or not?

http://tinyurl.com/3dvraj

258   DennisN   ignore (1)   2008 Mar 1, 4:09pm     ↓ dislike (0)   quote   flag        

Ultimately, people sometimes need to rely on the judgment of others, and therein lies the problem.
LOL.

259   HeadSet   ignore (2)   2008 Mar 1, 10:48pm     ↓ dislike (0)   quote   flag        

His point is that ’70s style inflation is headed our way.

Mortgage and credit card interest at 20% plus? That should put a damper on Joe HowMuchAMonth and allow saver friendly prices on homes and cars. Plus, savers can get a decent return on bank/credit union accounts.

I would think the lower costs of rent/mortgage and car payments would more than offset the rise in prices for milk/beer/butter. Plus. think how much the schleps will save when they make do with thier pefectly adequate car/TV/furniture rather than hock thier way into unneeded new stuff. We have been threatened with $4/gallon gas for years now. If it does come to play, so what? For a 15mpg SUV that drives 300 miles a week, that is only an extra $20 per week ($10 per week if you drive a Corolla, even less for a Prius). People who are that stretched can start driving less by avoiding or consolidating trips, car pooling, biking, and walking. Most cities have a very underutilized bus service.

Unlike Mister T, I don't pity the fools. The Joes are perfectly capable of making small adjustments and do not need policies that trash the economy just to put a lifeline on their debt financed overconsuming lifestyles.

260   Paul189   ignore (0)   2008 Mar 1, 11:13pm     ↓ dislike (0)   quote   flag        

@ Peter P,

That wisdom you quoted was actually the Aden sisters. They have been spot on with this long term gold bull market. They are very long term oriented and use the 64 week moving average to determine buy points and to verify that the bull is still alive.

I believe historically they did well in the 70's too but lost many folks when after calling the gold top in 1980 they didn't say the long term bull was over and I think still called for gold $2,000 after the sell off from 882 in January '80.

Cheers!
Paul

261   northernvirginiarenter   ignore (0)   2008 Mar 2, 1:09am     ↓ dislike (0)   quote   flag        

I doubt they ever actually did - house prices were going up anyway, but the home-improvement industrial-complex needed to convince gullible home-owners to spend money

Hmm, so home improvement is no more than the equivalent of getting a car detailed prior to sale. The underlying value probably holds within a very short range, with the "improvements" nothing more than some KY jelly to facilitate and expedite the sales insertion process. This is very obvious on the crown molding paint staging non sense side, SP you are probably correct in assertion that it also applies to the significant upgrades also. I've not seen any independent research out there that looks at this data impartially, all that fluff comes from the REIC.

I'm wondering if we will see a conventional wisdom trend change in the home improvement business over coming years, more "do what you like for yourself, its not an investment" than the smart ROI improvement non sense.

262   DennisN   ignore (1)   2008 Mar 2, 1:18am     ↓ dislike (0)   quote   flag        

I doubt they ever actually did - house prices were going up anyway, but the home-improvement industrial-complex needed to convince gullible home-owners to spend money, so the correlation between pergraniteel and “home values”.

When I cleaned up my SJ house for sale I only added cheap things to make it "shine". I put in a new dishwasher because it was the only appliance in the kitchen which wasn't new or nearly-new. I put all new doorknobs on the doors - costing what, $200? I replaced the old tilt-up garage door with a metal roll-up one for around $800. The major costs were replacing all the windows with vinyl double-pane units and a complete tear-out remodel of the master bath. Everything came to about $18K. I won't say that this increased the value of the house, but what it did was entice buyers to bid over-asking in less that week of going on sale.

My modest little tract-home went up in “value” by about $400K in two years during the mania - no granite was added. I probably took about 1000 showers (give or take) in that timeframe. So each time I took a shower, my house’s “value” went up by $400? Exactly…

How often did you flush the toilet during that time? ;)

263   DennisN   ignore (1)   2008 Mar 2, 1:33am     ↓ dislike (0)   quote   flag        

I know I want a viking range and a sub-zero fridge even though I don’t cook.

Those things are over-rated for home use anyway. Viking ranges and their ilk (e.g. Wolf) aren't really configured for home use. They aren't self-cleaning and require lots of upgrades to get permits for their installation. As they were not designed and approved for household use, expect to install giant range hoods with auto-fire-sprinkers to satisfy your local fire marshall. I'm perfectly happy with my upper-end Kenmore/Whirlpool gas range and fridge in the new digs here in Boise. The range has 2 regular sized burners, 1 super-burner for use with a wok, and 1 tiny burner for preparing sauces. Between that and a good gas BBQ (Barbeques Galore classic "Turbo" model) I can cook almost anything.

264   B.A.C.A.H.   ignore (0)   2008 Mar 2, 3:03am     ↓ dislike (0)   quote   flag        

Headset,

I think a lot of people are already paying 20% interest on their credit cards. Has been for a long time.

If that's how much it costs for some others to borrow like the US Treasury in the bond market, or businesses big and small, then we're in trouble.

265   Peter P   ignore (0)   2008 Mar 2, 3:13am     ↓ dislike (0)   quote   flag        

I believe historically they did well in the 70’s too but lost many folks when after calling the gold top in 1980 they didn’t say the long term bull was over and I think still called for gold $2,000 after the sell off from 882 in January ‘80.

Again, one should not be married to a belief. Let the market dictate the course of future.

266   Peter P   ignore (0)   2008 Mar 2, 3:16am     ↓ dislike (0)   quote   flag        

I’m perfectly happy with my upper-end Kenmore/Whirlpool gas range and fridge in the new digs here in Boise.

I am sure that is fine with me too.

I need at least 4 pots to cook a meal:

One to make soup. (e.g. onion soup)
One to boil pasta.
One to cook pasta sauce (e.g. white wine clam broth)
One to braise veggie (e.g. rainbow chards)

267   Peter P   ignore (0)   2008 Mar 2, 3:18am     ↓ dislike (0)   quote   flag        

I won’t say that this increased the value of the house, but what it did was entice buyers to bid over-asking in less that week of going on sale.

So that did increase the "value" of the house. ;)

Renovation works especially well in a seller's market because it can further exploits bidder psychology.

268   HelloKitty   ignore (0)   2008 Mar 2, 3:35am     ↓ dislike (0)   quote   flag        

this year is a great time to shop CL for high end appliances from angry FB's doing a Walkaway-Trashout-Stripjob. (TrashAStrip?)

I really like the new vocabulary the crash is bringing. For some people they are old words they never heard before. My friends dont know what a short sale is, had to explain that on a few times this year.

word of the year for 2008 nomination:trashout (lovely word that)

269   Peter P   ignore (0)   2008 Mar 2, 3:45am     ↓ dislike (0)   quote   flag        

Oops, the gold bubble may be coming soon...

http://www.gata.org/node/4264

The question is, how high will it go before it crashes this time?

270   DennisN   ignore (1)   2008 Mar 2, 3:58am     ↓ dislike (0)   quote   flag        

word of the year for 2008 nomination:trashout

It also has political definitions.

271   B.A.C.A.H.   ignore (0)   2008 Mar 2, 4:04am     ↓ dislike (0)   quote   flag        

About the gold bubble.

Pick some metrics, and then do a regression analysis. When you get past about two-sigmas from the mean on the metrics, sell.

I tried to apply this reasoning with my spouse about selling the house in June 2005 and got shouted down. Damn. We coulda bought it back now for $200K less.

272   PermaRenter   ignore (20)   2008 Mar 2, 4:12am     ↓ dislike (0)   quote   flag        

I can assure you all-time lows for the dollar are quite a big deal to the middle class working folk. Were getting killed out here and the bad news is that we are just getting started. Any predictions on when Bernanke will be forced to choose between a complete dollar crash or sending Fed rates into the stratosphere?

273   PermaRenter   ignore (20)   2008 Mar 2, 4:15am     ↓ dislike (0)   quote   flag        

The United States is facing a toxic economic mix it hasn't seen in three decades: Prices are speeding upward at the fastest pace in a quarter century, even as the economy loses steam. Economists call the blend stagflation, and they're worried it might be coming back.

Paychecks aren't stretching as far and jobs are harder to find, threatening to set off a vicious cycle that could make things worse.

The economy nearly stalled in the final three months of last year and probably is barely growing or even shrinking now. That's the stagnation ingredient. Typically, that slowdown should quiet inflation -- the second key element of the toxin -- but prices are still marching higher.

The latest worrisome news came last week: a government report showing wholesale prices climbed 7.4% in the past year. That was the biggest annual leap since 1981.

Once the twin evils of stagflation take hold, it can be hard to break the grip. People cut back on their spending as they are stung by rising prices and shriveling wages. Businesses, also socked by rising costs and declining demand, clamp down on their hiring and capital investment.

That would be a nightmare scenario for Wall Street investors, businesses, politicians and most everyone else. They're already looking to the Federal Reserve for help, but the Fed's job is complicated by the situation.

The mission of Federal Reserve Chairman Ben Bernanke and his colleagues is to nurture economic growth and keep inflation under control. To brace the teetering economy, the Fed since September has been ratcheting down its key interest rate. Another cut is expected this month. However, to combat inflation, the Fed would be expected to boost rates instead.

"The Fed has its hands full. It is preoccupied with the economic slowdown at the front door, but inflation looks to be sneaking in the back door," said Greg McBride, senior financial analyst at Bankrate.com. "If that trend continues, the Fed would need to show the economy some tough love, meaning higher interest rates to keep inflation from getting out of hand."

On the other hand, Brian Bethune, economist at Global Insight, said Bernanke can fight only one war at a time, and the more pressing issue right now is to shore up the ailing economy.

"The war on inflation will have to come another day," Bethune said.

Bernanke told Congress Thursday that the nation isn't "anywhere near" the dangerous stagflation situation of the 1970s.

"I do expect inflation to come down," he added. "If it doesn't, we will have to react to it."

High energy prices and rising inflation do complicate the Fed's job of trying to keep the economy growing and inflation contained, Bernanke acknowledged.

Some numbers underscore the concerns:

• Prices paid by consumers are up 4.1% over the past year, the biggest increase in 17 years. Those higher prices -- especially for heating homes and filling up gas tanks -- are taking an ever-bigger bite out of paychecks. Workers' weekly earnings are down 1.4% from a year ago when adjusted for that inflation.

• Oil prices galloped past $100 a barrel last week. Those lofty energy prices are a double-edged sword: They can spread inflation through the economy by boosting the prices of other goods and services, and they can leave people with less money to spend on other things, thus slowing overall economic activity. There are signs that high energy prices are causing some damage on both of those fronts.

People are hunkering down. Earlier this month, nervous shoppers handed the nation's retailers their worst January in almost four decades. High gas and food prices, the toll of the housing bust, the credit crunch and a tougher job market all were to blame.

274   DennisN   ignore (1)   2008 Mar 2, 4:18am     ↓ dislike (0)   quote   flag        

I would certainly be in favor of BB sending the fed funds rate to 8% to "flush out" the FBs and set the basis for a true recovery. Plus it would probably trickle down to me as a current cash-saver. ;)

The election is in November and he'll have to do something before that time. The public will see that the Fed lowering their interest rates will have little to do with mortgage interest rates in the next few months and will therefore give political support for BB to start raising his rates again.

My WAG guess....sometime in July.

275   DennisN   ignore (1)   2008 Mar 2, 4:25am     ↓ dislike (0)   quote   flag        

So will President Barak McCain fire BB his first week in office?

276   HelloKitty   ignore (0)   2008 Mar 2, 5:00am     ↓ dislike (0)   quote   flag        

First week in office the new prez will be busy repairing the trashout damage to the WH done by GWB. W will git hammerd and tear up the joint on his last day like defeated german army fleeing paris.

277   OO   ignore (0)   2008 Mar 2, 6:30am     ↓ dislike (0)   quote   flag        

If you cannot see that USD will be conveniently sacrificed at this point, you are a bit too...late.

Fed won't push rates up. Fed has control over short-term, ARM mortgage rates, not the long-term rate. ARM is based on Fed short term rate, plus a margin. The knee-jerk reaction for any government facing the same situation is to delay the blow up as long as possible.

Therefore, the Fed will not raise rate. It will keep rates artificially low for a long time, perhaps years, while trashing the dollar in the meantime. But, dollar alone will not be trashed, other currencies will soon follow.

Strategically, trashing USD is the right thing to do, because that destroys some potential competitors that have been hoarding USD, particularly China. US holds the largest share of central bank's gold reserve in the world(nearly 60% 5 years ago, the % has gone up since US sold NONE of its gold while the stupid European CBs did), is the world's largest food exporter, and has plenty of natural resources that we haven't really explored, and most important of all, US still commands superior military power. As long as you have your guns intact, nobody can come after your ass for the paper money you owe.

Even if the world returns to gold standard briefly, US will again emerge as the richest country.

278   OO   ignore (0)   2008 Mar 2, 6:39am     ↓ dislike (0)   quote   flag        

We are living in a democratic country, which means, you have to side with the majority, even if they are idiots. You need to line up your position with theirs, and of course you can always figure out way to profit from such a stance.

It is a choice between job and the dollar. Job always comes first, because employment is the basis of any stable society. People on this blog may not have a fear for job loss but most Americans are living from hands to mouth. Keeping a strong dollar is in nobody's interest unless you are a saver who only knows how to buy CDs denominated in USD, which is a small and shrinking group, and in a democratic society, such a small group makes a perfect target to be robbed, legally.

Most Americans want their debt inflated away. Most Americans want their jobs intact, even if it means lower standard of living. Lower standard of living is better than no standard of living.

279   Paul189   ignore (0)   2008 Mar 2, 8:45am     ↓ dislike (0)   quote   flag        

@ Peter P,

That GATA article is from July 2006!

280   SP   ignore (0)   2008 Mar 2, 9:19am     ↓ dislike (0)   quote   flag        

OT: Zillow suddenly seems to have re-evaluated all properties in the fortress. I am finding Los Altos properties with estimates dropping by 150K-200K in the last 30 days... Either the comps are coming in _very_ low or else Zillow fiddled with their algorithm and it changed the results...

I found a lot of recent (2007) sales show up underwater by over 100K, so decided to click-around a few other properties. Seems to be across the board.

[I know we don't take Zillow's numbers to be indicative of much, but it sure is fun to look at now...]

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