patrick.net

So why not compromise, make all medical treatments deductible, have a market driven system for the 80% low cost stuff, and catastrophic coverage for everyone (debatable who pays what)? In other words MSAs with universal catastrophic coverage.

That is better. You are right.

Here's a fun concept. I believe that RP still uses the full power of government but he transfers the regulation to the judicial branch instead of the legislative branch. He does this by really raising property rights and then using easy access to courts for society to have a social check on business. This applies to pollution and environmental issues. It is the most cost effective way of regulation. I've always resented the current environmental policies of businesses proving compliance. I believe government should set standards but allow the public the power to monitor and then bring action against a business shown to not be in compliance.

The flaw becomes that industry will pollute lower income areas because they would lack knowledge or motive to hurt a local employer, but then again we already have that problem so one can only hope the change would shuffle things around a little.

RE: environmental laws

The government can set an exchange-tradable pollution quota. This way, the environment can be protected by Free Market as well.

Do you favor market traded pollution credits or did I misunderstand the posts I read where you were not in favor of carbon credits? Obviously credits would have to be issued in groups like specific chemicals but I think you might have been debating someone on the global warming issue and not specifically on industry emissions. PC for pollution.

Do you favor market traded pollution credits or did I misunderstand the posts I read where you were not in favor of carbon credits?

I basically said that IF "global warming" is real then carbon credit is the only solution.

I consider CO2 as a pollutant. I just do not agree with the linkage between it and the alleged "global warming" theory.

I am not against carbon credit trading. I am just against forming policies based on the assumptions proposed by "global warming" theorists.

I love the environment as much as anyone else.

Of course. I actually resent people who try to say someone doesn't like children or the environment merely because they have a different solution. Thanks for clarifying.

Bap, why do you hate the environment?

if you trade pretend credits, the net sum remains even. the gain is zero. the act is silly. In my opressed opinion.

What about fiat money and financial derivatives? Are they pretend credits or are they real? ;)

Ron Paul will lose the nomination, run as an independent, choose Admiral James Stockdale (dead or alive) as his running mate, and ensure that we get Obama'08. Nice.
Maybe I should have sent him some (Fiat) money yesterday? Thanks RP, now RiP.

On a more serious note, Ron Paul will never ever ever ever fly with the Republican establishment. He is much too principled for them, There is nothing they fear more than a real, principled conservatist (not in most dictionaries, but you get the idea:)). That's worse than a democrat, in their book.

Ron Paul doesn't have much of a chance stealing votes from real progressives. He does have certain sensible positions, but he's too much of a kook for them.

RP represents an idealism of the past, when America was first founded while much of the land and resources were unaccounted for. Unfortunately we are living in a much more crowded environment with land ownership well carved out and population growth slowing down, his kind of isolated "conservatism" will never work in this much more entangled world.

The true disappointment of RP is he cannot even come up with a practical Medicare policy while being an obgyn himself. Somebody from his team should at least come up with a PLAN. Just leaving everything to the free market is not going to fix medicare, because a truly free and market-driven competition will naturally dictates that weak and poor genes be completely wiped out. There is no market-driven reasons why poor and sick people should get medical attention at all! Is that acceptable for our civilization?

If you leave issues like medicare, education and national defense to the free market, you might as well abolish the notion of government altogether, and since there will be no government, what is he running for?

OO raises part of the 20% that I can't quite reconcile with him. I think with RP we have a chance to take a necessary step back and reevaluate the social model.

If you leave issues like medicare, education and national defense to the free market, you might as well abolish the notion of government altogether, and since there will be no government, what is he running for?

Wasn't that the Republican platform in 2006 - the Contract With America?

Vote for us and we'll relieve you of governmental intereference?

Contract with America was in 1994.

>> Ron Paul will save us all.

Yes, I am voting for this honest and wise main in 2008….

yes, you and the other 8 people on the internet.

now this is just shocking

tinyurl.com/28fo4o

"Now I look like a woman with normal breasts,"

No actually you look just like a boomer with big fake tits.

Oh man you want to talk about boomers, let me tell you about my weekend.

I went to Mexico on a bus trip (5 hours each way, w an extra 2 hour border wait on the way back) to look at some land on the Sea of Cortez. Let me tell you, you want to fill a bus full of obnoxious boomers just tell them they can buy a parcel of land with no qualifying and they can use a credit card for the 10% down. I didn't see any value proposition whatsoever so I just enjoyed a $100 weekend in San Felipe, but these boomers actually bought. They paid $70,000 for 1/4 acre lots 3 miles from a pretty nice beach. They were the usual big talking, nothing in the bank ugly people from Phoenix.

Those b*st*rds, changing the rules on the US Savings Bonds.

I just read in this week's Economist a short article comparing/contrasting what's the same, what's different, between the Japanese banking problems in the early 1990's, and what's going on in the USA now.

One thing the article mentioned, was that when the Japanese banks were looking shakey, small depositors moved their savings from commercial banks to the Postal Savings Accounts.

We don't have Postal Savings Accounts. Instead, we have US Savings Bonds. As you probably know, the treasury has changed the rules effective Jan 1: the limit has been lowered from 60K per year per buyer to 5K per year per buyer.

Those b@stards. They're doing an endaround on us to takeaway an alternative to the banks for us small depositors.

That's what it's all about, or certainly looks that way. Next thing, they'll start putting stricter currency controls like Mitterand tried in France in the early 90's. The ETF's like GLD and physical bullion will be next. Then we'll have no alternatives to bank deposits or stocks.

B@stards.

Bap, actually some laws were supposidly changed in the early 90s which allow foreigners to own on the coasts as well as having always been able to own in the interior. Now you even get American title insurance but it is one of those deals where people 'buy' but don't get the deed til it is all paid for, many of them won't end up paying for it, the developer will just 'sell' it again to the next guy and that is really how they keep the cash flow coming in on these giant subdivided parcels.

http://www.youtube.com/watch?v=EFTi96HZP1g

This is the actual presentation dinner we attended before going down there. He details the supposed facts and myths. It is pretty down there but in the end you pay $300K to be 7 miles from the Sea of Cortez. I own my house which I paid 180K in 2000, and I am about that far from Oceanside beaches, I just don't have the sliver view of the water that they would but then again I have a sewer and won't be buying water from a water truck or waiting 2 hours to cross the border. There also isn't a carpet of trash everywhere where I live.

Why do we even need US Savings Bond? Can't people just buy T-Bill/Note/Bond?

Then we’ll have no alternatives to bank deposits or stocks.

Or SIVs, CDOs, etc. :)

HARM said:
HeliBen will probably *try* to inflate much of our debt (foreign, domestic, consumer & government) away, and he may even succeed at it to a large extent.

The estimated notional value of derivatives is about 400 Trillion dollars. Bank Credit accounts for what, about 50 Trillion dollars? Both of these markets are contracting/imploding.

The US monetary base is less than 1 Trillion dollars.

How will Bernanke inflate fast enough to compensate for the credit contraction? Will it amount to just a fart in a thunderstorm?

eburbed Says:
what inspired [Bernanke] to take the job given the fact that he -must’ve- known that all hell was about to break loose.

Unless he didn’t. Then that would be pretty awful.

It may be worse than you think. Maybe he knew it, and his nomination was influenced by people who had already secured his "co-operation". I am pretty convinced that this was the case with Hanky Paulson. Why not Heliben too?

OO said:
Japan is unique because [...] Portion of the money pumped into the system was “leaked” to Yen carry trades, so their reflationary policy cannot possibly be effective.

Why would American banks behave any differently? If the F'ed forces liquidity on them or gives them ZIRP, they would probably take the money and lend it somewhere else too. Somehow, I don't think they will use the ZIRP money to re-inflate specuvesting in the Inland Empire.

Politically and economically, Japan is quite a bit less significant than the US, to say the least. Therefore, other fiats don't particularly care about the interest rate differentials with Yen when Japan headed into recession. Not the case with USD. CAD and Sterling already started rate cutting following suit of USD. Euro's interest rate is low to begin with. AUD and NZD won't stick out like a sore thumb, particularly after Ozzie homeowners tossed out Howard recently for continued interest rate hikes.

If USD cuts to bare bone 1%, major currencies will follow, leaving little space for USD carry trade with other currencies. That's why I predict that USD carry trade will happen with other classes of assets, not bonds, not equities, not housing.

On another note:

I'm starting to see more and more people advocating just walking away from your house. Now! Immediately!

Amazing societal capitulation of any responsibility for one's actions.

We are officially, ancient-Rome-style corrupt. From top to bottom. And this is just the financial arena. And, like ancient Rome, we're letting the barbarians just walk across the border into this country. But that's another story...

Bush, and almost every other political panderer, wants to bail out the irresponsible, get-rich-quick fraudsters who took out huge liar loans and, for a time, made a lot of money. All at the expense of the honest taxpayer who used common sense and honesty to wait out the orgy of quick-buck housing mania.

Now, Alan Greenspan has walked away, Wall Street is walking away, banks want to walk away, and the common, greedy house flipper is being told to walk away. Something is drastically wrong with this picture, folks.

This is the equivalent of an economic abortion. However, like an infant abortion, ultimately, the innocent pay the price for the guilty.

Wow! This is bad.

And I thought the flood of poisonous Chinese food and toxic goods was bad.

Like the Bible says, "Man cannot live by bread alone." In otherwords, a purely materialistic civilizatoin (they call us "consumers), is a dead-souled society doomed to collapse.

And it's usually by a superiorly-motivated outside catalyst, like radical Islam, which does have a motive force (their flawed religious belief system) that exceeds the selfish, self-interested consumerist mentality of no personal sacrifice, and is willing to die for the cause, and have babies by the zillions, for that matter.

Malcom,

Thanks for sharing that whole experience. It's hard to believe (in 2007) these guys are still leaning hard on the "boomer demographic pitch". Give it up already. I have to admit, I've gotten to the point where I really couldn't care less about primary homes and major metro markets. They're FUBAR (f@cked up beyond all recognition).

Regardless of age many of us would be better served by abandoning the radioactive waste, rent close in and focus on where we want to retire. I don't happen to view it as a negative at all!

Good to hear they've finally served notice on the lending side of the REIC Cartel and are actually implementing many of the common sense changes we've advocated for years! Too bad they weren't put in place in 2002?

I am not an economist or financial wiz, but, I hear alot about Ron Paul but how effective can he be in a Dem controlled Congress? He still has to work with them. Most people I talk to view libertarianism as "survival of the fittest" and that is an immediate turn off. Again its just who I talk to were I am. I like many of the libertarian ideas but think the libertarians will have the most impact through think tanks/research institutions rather than politics.

At least where I am (Chicago/Indiana) most people view the government as having a role "taking care" of them, whether its disaster recovery or cushioning the current mortgage problem. Heard an ad on the radio imploring people to come in and apply for a fixed rate mortgage if they have an ARM. Its safe they were assured. "It's backed by the government."

This "being taken care of" mindset seems to be firmly entrenched and doesn't appear even close to changing out here.

DinOR,
Throughout the whole thing I thought there is no financially compelling reason to do this BUT the scenario of someone who is locked out of CA coastal areas who wants to retire soon and has the means to comfortably afford the hard costs of acquiring the house might have some merit. For $400K you can right now get waterfront condos in Kehei on Maui, I would choose that option personally though they are coming down in price so it is good to time them.
It is the same disconnect from fundamentals, why buy in San Felipe for what would be $2500 per month when you can rent something for under $1,000 and be actually on the beach or within walking distance?

DQ numbers out for SoCal - they speak for themselves...

http://www.dqnews.com/RRSCA1207.shtm

This WSJ article from yesterday is a must read:

http://online.wsj.com/article/SB119785633408932917.html

Mortgage-Relief Plan Divides Neighbors

Protection Is Spotty In Southern California; The Oropezas Pack Up

By JONATHAN KARP

I swear Mr. Karp wrote this article fully with tongue-in-cheek. The "Oropezas" should become the new poster family for the mortgage mess. It's frankly disgusting.

@skibum,

Oh, and you gotta love the new boilerplate from DQ:

Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages and with multiple mortgages has generally declined this year. Down payment sizes and flipping rates are stable, while non-owner occupied buying activity has edged higher, DataQuick reported.

Ummm... "different directions"? From where I'm sitting (munching popcorn), all the healthy market indicators seem to be converging in one direction: down, down, down, while all the unhealthy ones are moving up, up, up. Oh, but "down payment sizes" (already next-to-zilch) and "flipping rates" (close to half the market) are "stable" --my bad.

Gotta read this gem. I think we may have a new HB poster boy (to add to Casey Serin & David Crisp):

http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=alNDZa.Hm6O0

Dec. 18 (Bloomberg) -- One week in 2002, Daniel Sadek was $6,000 short of covering the payroll for his new subprime mortgage company, Quick Loan Funding Corp. So he flew to Las Vegas and put a $5,000 chip on the blackjack table.

``If we had a prime borrower on the line, we hung up on them,'' Buksoontorn says. ``We were geared toward subprime because they were easier to close. We were giving them money no other bank would dare to give them.''

But... easy-money Fed policies and insane ignore-all-risk lending standards had nothing to do with this mess, Easy-Al told me.

@HARM,

Seriously though, what's even more disturbing about the DQ numbers, is that the gain in sales volume from last month was entirely from new home sales. Reading between the lines, my guess is that builders are seriously slashing prices, luring some fence-sitters to buy. This only means bad things for comps and old-home sales prices. Could this be the start of the downward price acceleration in SoCal?

Here's another really odd story, how so many people can't even aford to pay the heating bill except on credit cards.

http://finance.yahoo.com/banking-budgeting/article/104038/One-in-Five-Expect-to-Borrow-to-Heat-Homes-This-Winter

"For perhaps as many as 27 million American adults, keeping warm this winter will mean borrowing money and 20 million will use credit cards to be able to afford their heating bills, according to a CreditCards.com poll.

Nearly 12 percent of Americans say they will need to borrow money to pay winter heating bills; 9 percent will need to use credit cards to be able to afford their heating bills. "

So I guess using a NINJA to get into a 4K square foot house is dumb for more than one reason.

OO said:
If USD cuts to bare bone 1%, major currencies will follow, leaving little space for USD carry trade with other currencies. That’s why I predict that USD carry trade will happen with other classes of assets, not bonds, not equities, not housing.

That's what I said - there was a reason I said "take the ZIRP money and lend it elsewhere", and didn't call it 'carry trade'. The end result is that it is the same effect where excess liquidity will simply end up in places where it generates bank profit, not where the government wanted it to go.

I previously posted:
The estimated notional value of derivatives is about 400 Trillion dollars. Bank Credit accounts for what, about 50 Trillion dollars? Both of these markets are contracting/imploding. The US monetary base is less than 1 Trillion dollars. How will Bernanke inflate fast enough to compensate for the credit contraction? Will it amount to just a fart in a thunderstorm?

Did a little more research this morning, and it actually looks even more spectacular than that (although I was wrong about the monetary base)...

Notional value of derivatives = 470 Trillion
Interest Swaps and Currency Swaps = 350 Trillion
Credit Default Swaps = 45 Trillion
Equity Derivatives = 11 Trillion

All told, it is getting close to 1 Quadrillion in pretend money.

There is about 1.5 Trillion in M1, and overall about 15 Trillion in the monetary base. A 1.5% contraction in derivatives market will wipe out 100% of the base. How much _can_ the Fed inflate?

I am no expert on this, just learning about this new viewpoint actually, but this stuff is making me feel like a skier watching an avalanche build up overhead...

HARM Says:
Indicators of market distress continue to move in different directions.

Every time I see that in the DQ report, I think to myself - "Moving in different directions - that is usually what happens when shit hits the fan".

Looks like the Realtors in SF have some free time with the slow sales:

http://thefrontsteps.com/2007/12/18/and-the-nominees-for-sexiest-realtor-in-san-francisco-are/