patrick.net

None of this stuff is going away any time soon, as long as real estate prices refuse to go down the bowl.

You will see real estate prices drop when your peers start losing their jobs left and right.

They were playing violins on the Titanic when it was sinking, right? I want my deck chair!

One of the things I find humurous about the TARP and the Financial system bailout was that part of it was predicated on 'the jobs it would save'. There was a lt of hoo-haa about 'do you know just how many people are IN that industry?' and 'do you want them all out on the street?'

Well.

Those banks TOOK the tarp money and they are laying off all of those people like crazy ANYWAY! That just sickens me.

Headset,

>>Didn’t F&F’s willingness to take so many loans off originators hands contribute to easy credit for lower quality borrowers and thus the housing bubble?

The reasonable thing to do here is to put the cart before the horse, and not vice versa.

F&F did _NOT_ CAUSE the subprime meltdown. They were collateral damage of the subprime meltdown, because they were to weak to resist the rising default levels

Why were they too weak? In big part because Bush and the Republicans pressured them into making more "affordable" loans than they should have.

Read the Barney Frank letter again, note that it was the Bush White House and the Republicans that wanted more "easy credit". I quite from Frank's letter:

For example, on February 18, 2002, at a hearing on the budget I said "I am in favor of trying to help lower-income people get the advantages of homeownership...but almost by definition, the large majority of poor people are going to need rental housing." On March 6, 2004, the National Journal reported that "When the FHA's plan to insure subprime loans was included in a Senate-passed appropriations bill, Frank...a staunch supporter of low-income housing, wrote a highly critical letter urging that the measure not be included ... Not only had the House committee not examined ...the proposal he said then, but the measure also offered no protection against lenders inappropriately steering people towards these high-cost loans. Nor did it offer safeguards to ensure that participants 'were fully suitable for homeownership.'"

That same year, when the Bush administration insisted that Fannie Mae and Freddie Mac raise the percentage of below-median income homeowner mortgages they bought, I was correctly quoted in a Bloomberg article on June 17th as saying that this would "do some harm," and the writer noted that "Frank's comments echo concerns...that the new goals will undermine profits and put new homeowners into dwellings they can't afford."

In other words, Frank worked for exactly the OPPOSITE of what the right-wingers are trying to blame him for. Surprosed? Not me.

Re: Auto Bailout.

Bush strangely enough is not going to trash what little is left of his legacy by being the president that killed the auto industry. He will give in and take the money from TARP if need be.

It amazes me how Republicans can spend 600B (or is it higher now?) on war and blodshed but get their panties all in a big-time principled twist if Detroit needs 14B to save itself. They have no sense of scale or proportion OR consequence.

By the way, if GM and Chrysler fail, I think we can fully expect martial law coming to at least one midwestern state, and not very long from now.

All this because the Republicans are all so hor*y to break the union, they cannot think straight anymore.

Uh, I did mean of course. "put the horse, before the cart".

Headset, you must have gotten a good laugh out of that one. :-)

I have a question for those in the search biz:

What does it really mean for Microsoft to "buy Yahoo's search business", as is being pushed by some shareholders?

I have to say, I cannot quite figure it out. Does it mean Yahoo does not have a search box on their home page anymore? Or that the search box will lead you to a Microsoft-operated server? Or that Microsoft will handle the business of selling the search advertising? Or what?

I'm just quite sure it is not quite what it sounds like. And that usually there is some ugly detail that is being left out.

Someone please enlighten me!

...usually MEANS...

If Adam was man enough to kill the snake…

Let the hero born of woman crush the serpent with his heel!

Bush is a LIBERAL. I cannot image a true Republican being capable of calling for such a bailout.

That's a nice strategy.

If a Republican President does something wrong, one can just re-define him as being Liberal and keep going. No blame for the party as a whole for choosing him as their candidate, or anything like that.

Should have thought of that earlier....wait...uh.... why didn't the war make him a Liberal, too?

why didn’t the war make him a Liberal, too?

The president who got us into the last world war was also a liberal.

Besides, who started the Vietnam War again? Liberal or conservative?

Sorry for being late. Now I really despise GWB.

I am extremely disappointed with Thad McCotter. He made a beautiful speech against the Wall Street bailout but now he is on the side of the automakers.

I would rather agree to helping the financial system instead of the defunct auto industry.

Of course, given a choice, I would never bailout anything.

Of course, Ron Paul is always Ron Paul. He is the Gold Standard of political integrity.

TOB,

There must be a little more to it than transferring queries and user information entered at Yahoo website to Microsoft?

Btw, I have no illusions about what google is up to.

Good one.

http://www.fdic.gov/bank/individual/failed/banklist.html

Bank Failure Friday.

>> As predicted, good Republicans are mounting a stand against the automaker bailout. Taxpayers should not have to subsidize artificially high labor costs.

I fully agree ...

By the way, I voted independent this time .....

http://www.nakedcapitalism.com/2008/12/deflation-has-become-inevitable.html

Thanks frank! Great article!

The issue is what we do about a form on coerced savings - 401ks. If your employer matches, then any investment not doomed to loss half of its value is still advantageous. Too bad cash is not an option in 401ks (and money markets are NOT cash - I think many/most will break the buck to 75% with the pending business failures).
If your employer halts matching the decision is easy. Stop contributing!

This article is as well written and accurate as any written in the last 2 years.

I was just tallying up the annual performance of Peter Schiff's recommended investment products over at Euro Pacific Capital:

RICI -50.00%
GLD -20.00%
HTE -65.00%
PWE -70.00%
PVX -65.00%
ERF -60.00%
MEAFX -20.00%
MERKX -12.00%

Why anyone still listens to this clown is beyond me.

GLD is actually down 20% from it's high this year. This is not a YTD return.

Yes, best to invest in Treasury MMFs if available.

One strategy might be to take a loan out against your 401k. Not sure what the rules are regarding this. It's something I plan to look into soon.

Bernhard Madoff: I'm wondering how much capital he had under management. All the news stories say 50B losses, but out of how much capital? He cannot possibly have lost or spent it all...

Schiff is correct in his thesis - he is just very wrong (so far) about what to do in the world he predicts. His gld may well pay off in the long run. His foreign investment - never. It is very clear there is no de-coupling.

As for buying short term treasuries and holding them to maturity. Yes. But, most do not have that as an option to their 401k. AND you would have to pick the time at which you stop that. Which I guess is pretty easy. When the DOW hits 4,500 it is a good time to buy. Bonds seem good, but who on earth can do their due diligence on which companies will survive the massive and underway contraction?

"His gld may well pay off in the long run."

Eventually, but he's been calling this for years. He has been grossly wrong in his prediction of inflation vs. deflation, among other things like decoupling as you mention. Based on his recent performance and predictions of the near future, I wouldn't bet a dime with him.

Not treasuries outright but money market funds consisting of only UST.

You can take out a loan against your 401k and pay yourself the interest (without any penalties). This can move a significant amount of your savings out of harms way while the market searches for a bottom (at least 50% more downward movement within the next 2 years, imo).

Census shows Cupertino, Milpitas have Asian-majority populations
By Mike Swift
Mercury News
Posted: 12/09/2008 04:46:08 PM PST

Cupertino has joined Milpitas as the second city in the South Bay where a majority of residents is now Asian, a rare cultural phenomenon that sets the two communities apart — even in one of the most diverse counties in the country.

Its Chinese population was already well established, but Cupertino's rapidly growing Indian community has pushed its overall Asian population to 56 percent of residents, according new census data released today — making it one of just 18 cities of 20,000 or more people in the country where Asians are more than half of all residents. All of those cities are in California or Hawaii.

Asians already were a narrow majority in Milpitas in 2000, but with a growing population of Chinese, Indians, Filipinos and Vietnamese, Asians now make up nearly 60 percent of Milpitas' population.

What is happening this decade in cities like Milpitas and Cupertino, demographers say, is partly the culmination of years of immigration, as growing immigrant communities act as a powerful magnet, drawing relatives and others lured by cultural comforts and good schools. The economic downturn after 2007 may well put the brakes on that growth, however.

.......
.......

For Patricia Rod, a 17-year Cupertino resident who is white, most of the changes that have come from having "lovely neighbors" who are Chinese, Indian and Vietnamese have been positive — including her property values.

Rod, a cardiac sonographer, also feels her kids are "so much more worldly" because of Cupertino's diversity. But while two of her daughters flourished in the increasingly competitive schools, Rod had to enroll another of her children in private school.

TOB,

Michael Moore is f*cking brilliant.

I am of the comlete opposite opnion. I think Moore is the biggest buffoon ever. I scannd the article and I would most lilely agree with his position, but from him it is bound to be cartoonish, overblown, distorted. . .

Bleh

Hope no one is still buying the commodity bull market hype.

http://www.cnbc.com/id/15840232?video=960474937&play=1

@ Frank,

That oil call of 10 - 30 bucks a barrel reminds me of the 200 - 300 calls when we were at the top. So, I would say the bottom is in. Also, to see $10 that means a continued bull run for the USD and I can't buy into that.

Yet I’m quite certain this guy was told by Wells Fargo that the conforming limit was not raised above $417K.

There are banks that are willing to lend at the higher conforming limits. Patelco Credit Union is one of them.

Oil is a tough one. I know that there is a magic number where it no longer is profitable to pull oil out of the ground. As oil gets cheaper fewer will be in the business. I believe its around 20-30 dollars a barrel in some places so I would say that would be an absolute bottom where there was no profit.

The price of oil can easily go below $10 per barrel before production costs would interfere.

Finding oil and establishing the well is the big cost these days. Once the well is operational the cost of pulling the oil from the ground is only $4 to $8 per barrel. The Saudis can make money at $6 per barrel.

The recent oil price bubble stimulated the development of new wells when people thought oil would stay above $100. Next year many new wells will come on line - and they will pump it.

In addition, the Saudis and many other sovereign producers (ie Venezuela) need the cash for their government operations. As the oil price declines they will need to sell MORE oil.

Demand is fading and supply is growing. A massive surplus is developing. The price must fall.

Of course, at $10 or $20 per barrel nobody would invest in new supply. Thus setting the stage for the next price runup, after demand recovers sufficiently to exceed the new level of the supply capacity. That will take many years.

I doubt that we will ever see $10 or even $20 per barrel prices in nominal terms again. However, adjusted for inflation I think a low of around $20 is very likely.

That story is pretty funny Permarenter. Parents in Cupertino are putting their kids in private school because the public schools are too good!

I was just tallying up the annual performance of Peter Schiff’s recommended investment products over at Euro Pacific Capital:

Why anyone still listens to this clown is beyond me.

I still like the guy.

If anything, he proves my rule that when two people are arguing, its most likely that they both are wrong.

>> That story is pretty funny Permarenter.

Yeah ... shows that Crapertino is a Chindian mecca ...

I just watched 60 minutes and saw an interesting story about the asset bubble that is now correcting itself. One of the guests on the show is saying that we are only about 1/3 through the correction. We still have CC, commercial RE, Alt-A, Auto, and Option ARMS to get through.

Zephyr,
Yeah, I have heard the $6 a barrel number before. I doubt it would ever go that low. I have a family member in oil and he says some people say $8 a barrel others say around $30. So it really depends on who and where you are talking about. We can take somewhere in between to be a absolute low where it no longer would be profitable.