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Effective Protest Against Bailouts


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2008 Feb 28, 1:22am   24,039 views  286 comments

by Patrick   ➕follow (59)   💰tip   ignore  

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

« First        Comments 264 - 286 of 286        Search these comments

264   B.A.C.A.H.   2008 Mar 2, 3:03am  

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   2008 Mar 2, 3:13am  

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   2008 Mar 2, 3:16am  

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   2008 Mar 2, 3:18am  

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   2008 Mar 2, 3:35am  

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   2008 Mar 2, 3:45am  

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   2008 Mar 2, 3:58am  

word of the year for 2008 nomination:trashout

It also has political definitions.

271   B.A.C.A.H.   2008 Mar 2, 4:04am  

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   2008 Mar 2, 4:12am  

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   2008 Mar 2, 4:15am  

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   2008 Mar 2, 4:18am  

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   2008 Mar 2, 4:25am  

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

276   HelloKitty   2008 Mar 2, 5:00am  

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   2008 Mar 2, 6:30am  

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   2008 Mar 2, 6:39am  

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   2008 Mar 2, 8:45am  

@ Peter P,

That GATA article is from July 2006!

280   SP   2008 Mar 2, 9:19am  

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...]

281   SP   2008 Mar 2, 9:23am  

PermaRenter Says:
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. ... 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.

That is way too complicated. Occam's razor suggests that the shills (including The Great Mastro*) failed to see these bubbles because they were paid handsomely to NOT see the bubbles.

*not a typo

282   PermaRenter   2008 Mar 2, 9:41am  

Efficient Frontier Chairman Ellen Siminoff, chairman told CNET that paid search advertising spendi in financial services has typically risen between 30 percent and 50 percent annually.

A look at the average cost-per-click in search by vertical in the U.S. for December 2007 and January 2008. Data and research are provided by Efficient Frontier. "Total finance" includes auto finance, banking, credit, financial information, insurance, lending, and mortgage. Each vertical contains data from multiple advertisers.

Average Search CPC by Category,
December 2007
Category CPC ($)
Total finance 2.76
Credit 3.09
Mortgage 2.61
Auto finance 1.46
Travel 0.64
Automotive 0.59
Retail 0.43
Dating 0.38

Average Search CPC by Category, January 2008
Category CPC
Total finance 2.70
Credit 2.95
Mortgage 2.61
Auto finance 1.68
Travel 0.65
Automotive 0.57
Retail 0.36
Dating 0.40
Source: 2008

283   Peter P   2008 Mar 2, 3:10pm  

But, dollar alone will not be trashed, other currencies will soon follow.

Well said. What are the best food plays?

284   timiacono   2008 Mar 3, 10:13am  

I liked the tone of that letter - but this was where the guy lost my vote. He began to sound like a typical old-fart who can’t get his head wrapped around a new concept, so he gets all snobbish and “proud of not understanding it”. As if his inability to deal with it is somehow a great loss for all mankind.

U/D inheritance is not a complicated thing, just requires a relatively open mind to let go of existing assumptions and see things slightly differently.

Typical old fart? Puh-leeze. Upside down inheritance was a running joke at Teradyne, almost universally despised. I learned how to use maps during the last few months of my career and had quite a good time with them.

285   timiacono   2008 Mar 3, 10:15am  

BTW - I was a hardware engineer (EE major) through most of my career and just kind of faked my way into a software career - apparently it worked.

286   yodaking   2008 Mar 4, 5:36pm  

(sorry; I posted this question in other threads)

Hi, I was hoping somebody here could point me to a good free foreclosure listings site? (if it even exists) All the ones I see, you have to pay to access full listings.

Much appreciated in advance.

Cheers

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