patrick.net

salk,

I'm going to guess that you didn't wonder much about history while in college. Your claims about Americans dying to make Hawaii safe for rich Asians and USSR expansion is particularly prepostrous.

1. Wouldn't Hawaii be even more welcoming if the Japanese were in control and spoke Japanese (and everyone in East Asia spoke Japanese because they're members of Imperial Japan's Co-Prosperity Sphere)?

2. Most successful Communist movements, especially in Asia and Latin America, was nationalistic in nature. USSR's "empire" was sufficiently unwieldy to distract it from America for a good chunk of the cold war and ultimately brought its downfall in the Afghan war.

Actually, the core of both WWI and WWII was largely about empire - between the first wave empires of Great Britain/France/Benelux and the second wave empire wannabes Germany/Japan. The heavy tolls on both sides created a power vacuum that was filled by the US and USSR. US and USSR, barred from direct confrontation due to the insanity of MAD, fought limited wars in Korea, Vietnam and Afganistan...and suffered mightily for it.

There is an important takeaway from this: modern empires should avoid armed conflicts, even regional conflicts, as much as possible. Any such conflict is likely to weaken its position domestically and internationally, conveniently creating a power vacuum for...if we're lucky then the EU/Japan/Korea; if we're unlucky then Russia/China/India.

Most people on this blog are interested in the Fortress and nearby areas. I like to play a lot more attention to the Fringe, as I consider it a sneak preview - to a certain extent.

So this morning's bit on KCBS about Mountain House caught my attention. For those not in BA, this is a completely new town built near Tracy. Seems like it is becoming a foreclosure city. The reporter pointed out the irony of the street names like "Prosperity". Vacant houses and brown lawns and all that stuff. One guy commented that the foreclosures and short sales are not really selling. The reason ? Builders are still building and offering discounts of 100K.

A person I know first hand had booked a house there. About 2 years ago. A brand new, huge house less than 600K. Suddenly he got cold feet and surrendered his deposit. I was quite surprised, as the conventional wisdom even then was "BA and everything around it is special". I don't know what research he did. Maybe he discovered a blog or two. But I commented to my wife that he paid a small price and saved himself from making a huge mistake. She didn't believe me then. I am sure the guy is feeling much better now.

600K in Mountain House didn't seem that bad then, because similar houses even in Los Banos had similar range, Tracy was 700K and Dublin was 800K. Now all these prices seem ridiculous. A lot changed in last few months. But this is also how the wave retreats. Since you can get a house for 400K in Mountain House, you won't pay 700K in Tracy and 800K in Dublin. And so on.

There is an important takeaway from this: modern empires should avoid armed conflicts, even regional conflicts, as much as possible.

I thought modern empires should facilitate other people's conflicts as much as possible. ;)

Peter P,

Possibly the case in theory, but likely to yield unpredictable blowback in real life. See also modern histories of Russia, Iran, Iraq and Afghanistan.

"It is arguable that the war on the Russian front actually reduced the number of allied (US/UK) casualties in the west."

The Red Army kept 190 German divisions occupied that would have been free to fight elsewhere. The Red Army also took casualties in the range of 100,000 dead per week for about 4 years, while killing about 7 million or so Germans (and it wasn't the "winter" that defeated the Germans, as the Germans were at the outskirts of Moscow for three years. German defeat came from the 360 Red Army divisions that the Soviets were able to put together after retreating, scorching the earth, and regrouping after the surprise German invasion). Yes, I'd say the Soviet efforts in their Great Patriotic War saved a few Anglo/American lives.

Astrid,I essentially agree with most of what you have written. However, I abhor the term "Cold War". War involves bullets, bombs, and mass casualties. Hundreds of millions of christian europeans were enslaved by Communist Russia (our ally!). 550k US casualties so that we would have to spend trillions to counter Communist China and Russia? Only Japanese militancy and its threat keep Asia peaceful currently. Only the threat of Germanic militancy kept Russia from conquering Europe the last 60 years. It is only the blood of Japanese and Germans that have prevented global Communism (and with it the death of western civilization). Asia is in many ways a big winner. By my point is pursuing oil (which the free world needs) at the expense of 3000 casualties is more easily defensible than 550k US casualties and the expansion of Communism.

Our allies, China and Russia, could teach us something about death camps.

"Only the threat of Germanic militancy kept Russia from conquering Europe the last 60 years."

Both Germany and Japan have been rather pacifist these last 60 years. Something other that fear of the Bonn government kept the Soviets out. Maybe NATO and US nukes.

Headset, there is no debating that our ally,Communist Russia ,did most of the dying and fighting. And it was very late in the day when our Generals said "Hey, without the Germans, Russian is gonna steam roll Europe and us real soon. " Well Communist Russia eventually did conquer most of christian europe anyway. And we spent trillions in the succeeding decades fighting communism and building atomic weapons. My point is that we are very susceptible to propaganda and that our government will sacrifice trillions$ and hundreds of thousands of US lives to achieve nebulous goals.

Wow, half point cut federal funds and discount rates.

Party on. Meh.

Headset, atomic weapons would not be part of any military scenario in Europe. Not one US soldier fired a single bullet against the Communists. Stalin was aware of our poor performance against the Wehrmacht despite outnumbering them 10:1. We also sufferred casualties in 10:1 ratio despite having the most well equipped military. The Communists realized that despite its numbers, it could not defeat Germany unilaterally. This saddened Stalin because he had overt plans for world domination. And with a military of its preWW2 size, it could have been realized.

Market loves this half point rate cut, it's rallying.

"Wow, half point cut federal funds and discount rates."

Damn, now we can't see if the selloff Justme predicted will come true if we had less than a .5 rate cut.

Ben is bending over. He is cutting rate when we should have much higher interest rate.

wow. 1/2 point afterall.

http://www.npr.org/templates/story/story.php?storyId=14502179

Let's go into inflation mode strategies.

It is sad that a fine businessman like Kennith Lay was prosecuted to death while our currency is allowed to be destroyed. Which is a greater crime?

salk,

You really need to re-read some history books, man. Or look up some post-war maps. Most of the post-war "christian Europe" was either under NATO influence or neutral.

Thanks, HeadSet :)

Here is something interesting: After the initial "Bernanke pop" 15min ago, CFC has now retraced back to its pre-pop value. Several other stocks are taking a similar turn, although less dramatically so.

Is it a good time to buy home Builder stocks? They started going up.

"Is it a good time to buy home Builder stocks? They started going up."

Yes, you do that. We'll be right behind you.

Headset,

LOL! Yeah the NAHB sentiment is at 22 year low. Even Cheerleader in Chief David Seiders doesn't see "a gradual recovery" until the 3rd. qtr. of NEXT year (but I'd sure hate to get left at the station).

Justme,

Your welcome! But let's see if the converse is true. I predict the Dow will fall back in a few days to just under 13,500.

Headset,

OT (and not nearly as depressing) but had you heard about the Russian's new "suck bomb"? I'm told it's as potent as a nuke but is completely conventional.

I’m told it’s as potent as a nuke but is completely conventional.

So if it is use a nuclear response should be justified.

What's your prediction of the FED rate by the end of this year? I think it will be around 3.75-4.00%.

I'd heard there was a "show of force" right around the time a "Bear" flirted with Swedish air space. Some of the footage was pretty impressive. It looks like an internal fuel tank (fitted on C-130's) for extended range and dropped with a parachute. So it falls to earth quite gently and then creates a fireball the size of Manhattan.

My question is, if you're simply using "para-drop" weapons deployment how accurate can it be? Wind direction, ground track, air speed? A lot of variables there. I mean, a loadmaster with a safety line shoves the damn thing out' the back?

DinOR,

No I haven't. Are you setting me up as the straight man for a joke?

I got out of the Air Force in '95, so that was the last of any intel briefings for me. I can tell you this though, anyone who thinks we would not have responded to a Warsaw Pact invasion of Western Europe with nukes is mistaken. The Soviet conventional forces held too much of a numerical advantage for us to take on otherwise. We even had systems in place, such as F-16s and artillery with tactical nuke capability.

Yes, rate will be at 3.75%, no one will go into foreclosure, bank runs will end, CountryWide will be at 40 and my mom will be there with a beer in each hand.

DiNor,

It's not new. Thermobaric weapons have been around since 60s. Russia claims it developed the most powerful one, but it is still far cry from the nukes - its yield is only 44T of TNT (0.3% of Hiroshima's bomb).

Headset,

I wish I were. They're calling it "The Father of all Bombs".

ARRRGHHH. They cut the interest rate by .5%

Stock market soars.

AARRGHHH.

I spent most of yesterday and this morning selling off my positions in expectation of the .25% cut and resulting plummet.

ARRRRGHHH.

I can't believe they cut 50 bp's! Look at the dollar go!

Bork,

From what I understand, that's true. It's an old technology that's been dusted off and re-worked but the Reuters article said it is "a conventional bomb with a strength similar to a nuclear blast".

The one we "dusted off" in 2003 was nick-named "The Mother of all Bombs". From the footage I've seen it doesn't appear to have any kind of tracking or guidance device whatsoever? Just gravity... and wherever it happens to land. If the blast effect is what they're saying it is, I guess, how "accurate" does it need to be?

So how much lower will online banks pay that are now paying 5% APY? Any guesses??

For any on this web site that actually ARE an FB or know an FB - tell them to refinance as soon as ANY downward motion occurs in the 30 year fixed. I know they have been diverging (the Fed funds rate and 30 year fixed rates) but this is just too big a move for lending institutions to miss. There was already a lot of liquidity and getting mortgages and holding (not just being mortgage servicers) will be the new order of the day. This will be a brief window in wich people can refi or (possibly) sell. Starting next year, plan for crazy inflation followed by a stern Fed.
How about some prognosticating?
End of 2007: Rate wiil be 4.5% (doing .5% early obviates the need for .75% total)
End of 2008: Rate will be 6%, recession will be declared and will be a huge plank in any candidates presidential election bid. Just by sheer number of people affected the housing crisis will drop out of the media in favor of the stagnant wages, high cost of goods (especially energy), and job loss old saws.
End of 2009 Rate will be 8% and world recession will be firmly announced.
End of 2010 Rate will be 11% Peple will begin to clamor for war against Iran due to high energy costs.
End of 2011 Rate will be 13% By now the Countrywides and other banks that were able to put off bankruptcy earlier will start failing like mad. The magnitude of the "it was just like the S&L cirsis" will be shocking. Talk of socializing medicine will get killed as the years-now-gone argument of "we are too rich a nation to not insure everyone's health" will be replaced by people clamoring for work.
End of 2012 Housing will trough. Expect discount of 35-50% off peak value taking peak to be Summer of '06. By now, with any luck, the US will have moved away from the auto industry as the backbone for our labor force (and advertising dollar), and trains and buses will carry far, far more people as gas has risen to over $5 a gallon. Gas costs and alternative energy should allow for a net export trade balance for the first time in how long?
End of 2013 By now, things may have become so bad that congress may even have the political will to tackle the entitlement problems. Medicare and social security benefits will change: retirement age will be raised, payout rates will be cut, taxes will be raised.

Phew - hows that spin based on Mr Bernanke's rate cut?

DinOR,

A Tu-95 "Bear" can carry at most a 30 ton payload. Even a small atomic weapon has a yield of at least a THOUSAND tons of TNT. I wonder what explosive they use that could so much more powerful than TNT.

About that Tu-95. We could feel the vibration from those contaprops if we flew within 2 miles of that thing. It must have been hell on the crew. Also. that plane carried defensive missiles operated by a dedicated crewmember that could outrange anything carried by an F-16. That is, an F-16 sent to intercept would be detected and fired upon before the F-16 was in range to fire its own missiles.

"my mom will be there with a beer in each hand."

San Miguel's, no doubt.

Headset, even your great Conservative icon Pat Buchanon has stated that the US LOST WW2 and that Europe was lost to the Communists. Look at an up-to-date map today. Count all those countries that were under Communist dictatorships. After Germany carved up 25 million of the Red Army, I think Russia said "Enough with our global domination plans". The great General Patton realized this earlier than most.

"San Miguel's, no doubt"

From your mouth to God's ears!

I just think it's silly to not have posted in weeks and then suddenly appear within minutes of the "announced" rate cut. Was anyone really that surprised? What under water Real Estate Partiers don't understand is this is the Fed saying; "We GAVE you your much awaited rate cut, and it didn't help. Will you please crawl back under your rock".