patrick.net

Patrick,

forget NZ, they have an even larger trouble than us, too small of an economy and the housing price to pay ratio is more out of whack.

NZ is a beautiful country on a postcard, but the weather is just horrible, especially if you are from California. Worst of all, their pay scale is about half of the Californian counterpart but their cost of living is exactly at par (much worse in electronics), except for Kiwi fruit and lamb. I always wonder how NZlanders get by.

NZlanders are the biggest source of immigration to Australia. Every year more than 60K NZlanders move to Australia permanently, that says a lot about the country, which only has several million population! Most immigrants to NZ are using it as a backdoor into Australia because it is much harder to get into the latter while the NZ immigration policy is much more lenient. But once they obtain their NZ passport, off to Australia they go.

I just checked their website and realized their version of the FDIC is the CDIC. Depositis covered up to 100k. I wonder how much exposure eith of thise two banks has to the RE market. I hear the Canadian market has been as out of hand as the US market but about a year or so behind...

Wow does global crisis ring a bell? This sucks! LOL

OO says :
"In a world that the reserve currency (USD) is getting debased, the commodity rich countries are going to do very well"

I second that.

If there is worldwide depression, nobody would want to buy a plasma TV or try to get remote personal assistant. Basic needs and real demands will surface back again. Countries which rely on non-basic goods and services will be screwed ( germany, japan, china, india..etc)
countries which have abuntant natural resources will be able to weather the storm well(like S.America). US should not be that bad either if you compare to places like japan. China is already struggling to provide basic goods to its citizens although its making money selling crap to US. Imagine what would happen when US stops buying that crap during depression.

I hear the Canadian market has been as out of hand as the US market but about a year or so behind…

I am actually a Canadian citizen, so opening a bank accounts shouldn't be a problem. The Canadian RE market went up but nothing like the US, it's already cooling. The banks don't have as much exposure because they didn't have ARM's, I think the worst mortgage was a 40 year mortgage but it has since been discontinued. My friends used to envy me because US has 30 or 15 year fixed rate mortgages which you can't get in Canada, but most of us don't even take advantage of it.

CD’s mature in 3 months. Might pay the fee to get them out…
Evacute, in your moment of triumph? Seriously, I think folks here are getting a bit hysterical. Now is the time to be doing a victory lap with Headset; we're going to have some serious deflation for a while. Start scanning Craigslist for items you might want as people begin dumping the cargo overboard. I would probably wait a year to take stock of the housing market to see what effect the Option/IO ARM resets are having.

Paul Kanjorski D of PA

Joe Knollenberg R Of MI

(There should be one D and one R so even super partisan people will participate)

should be the incumbents who voted for the bailout that are targeted. Both are vulnerable according to numerous sources.

All that is needed is a simple web site that explains the situation and links should be given to the donation pages of the major competitors of each incumbent.

I can probably put together a very simple web site with links. Maybe use a wordpress blog. I can buy an easy to remember URL. I would just need help on the wording of what is on the page. I can also handle a lot of the marketing but it would be great if people could spread the word (of the URL) all over the major blogs and craigslist. If it actually gets some press we could add other incumbents to target.

What do all of you think?

I'd say right now we are not seeing deflation, but a shortage of USD. They are not the same thing.

If oil goes back to $80, where we were last year, then I'd say we are flat, still not deflation. But as far as I know the fertilizer price has gone up 40-60%, although POT has crashed. See, there is a disconnect between the financial asset and real life cost of living. Financial assets are going through deflation, but what we need as a necessity of life are still ramping through inflation.

For all those who have some money to spare and are looking for ways to diversify outside of the US, the $700B bill is not necessarily a bad thing for us in the short term. It delays the timing of a very severe financial crisis.

But do not count on the deflationary force to be here for long. With the passage of 0 reserve banking system that got stuffed into this bill, we are getting into the era of wild wild inflation. TPTB are determined to reflate both monetarily and fiscally (the second stimulus check coming).

OO said

"For those who may not be informed, please remember there is a very important doc stuffed into this bill, and I am not going to spill the beans here because the implication is just too huge, google
“Emergency Economic Stabilization Act of 2008″ yourself. If you are not shocked, I don’t know what else to say."

From what you said later, I assume you were referring to "passage of 0 reserve banking system". Where do you see that? Can you help out the idiot?
Thanks!

Baltimore, go for it. lets get started first and polish it as we go. i am at a dinner party right now so excuse formatting, but am serious.

yes the 0 reserve caught my eyye too. agree that bailout bought a little time to get out of usd

BAI

http://www.dailypaul.com/node/66109

it is quite long and tedious, but it is definitely worth a read.

Essentially what it says is, a piece of code in financial services act 2006 that relaxes banking reserve to be ZERO by 2011 got moved up to be effective on the past Monday.

Now let's connect the dots.

1) We know from Fed's H3 report that banks are on life support with hugely negative borrowed reserve since a few months ago
2) We also know that the banks are OUT OF USD which artificially raised the Exchange rate of USD because of debt destruction
3) We also know that the Fed are providing billions of currency swaps (read: USD injection) through other CBs to banks outside of the US that are facing the same fate of USD debt destruction

A huge effort of reflation is coming over. But, the interesting part is, someone back in 2006 already foresaw this coming (which is a proof that Fed is full of smart guys), and decided to implement 0 reserve in 2011 as a way to solve the problem. They moved up the timeline because they probably didn't see how fast things are unwinding.

OO Thanks!

Ordinarily this would distress me tremendously. However, these are not ordinary times so I'll just try to laugh it off. Besides, we are about to elect Obama. I have it on good authority that he is able to turn water into wine. Maybe he will turn my dollars into something other than toilet paper.

Thanks also for the "how to safeguard your assets" pointers. I'm trying to be less of an idiot and translate some of your advice into actions.

Are you sure NObama will be next president??

Permarenter
Obama will be the next Prez. Pray his unbelievable luck transfers to the rest of us!

Baltimore,

I think we may have the best chance against some of the turncoats that switched from No to Yes. They should be in trouble with everyone back home.

I posted that list on last thread:

http://patrick.net/wp/?p=634#comment-638285

Also might target a few that voted Yes who traditionally profess a belief in limited government. The way they voted on this should get them in trouble with their constituents.

Rep. Kay Granger
Rep. Adam Putnam
Rep. John Campbell
Rep. Greg Walden
Rep. Joe Wilson
Rep. Pete Sessions

Bush has already signed the bill in an oval office ceremony.

Is anyone here going to vote for him again?

Dennis, Dennis, Dennis, dude put the purple haze down dude, the only person that can be president more than twice is Lord Clinton.

Bush has already signed the bill in an oval office ceremony.

Is anyone here going to vote for him again?

I'm voting for him again! I can write in whoever I want. The Best Damn President Evah!

Well I've been thru the desert on a horse with no name,
Cuz there ain't no one there for to give you no pain.

And if you can't love the one you want,
Baby, love the one you're with

Boomer Uber Alles, Boomer Uber Alles. Booooomber Uber Alles.

I no longer like Bush.

I should remove this following thread: http://patrick.net/wp/?p=603

Ah Peter, but do you still like fresh Uni served on the creamy young thighs of Chinese virgins?

I like my uni unadulterated.

I'd love to be doing a victory lap - but feel I am better of staying vigilant. These guys keep changing the rules of the game and I want to be sure I do not end up on the wrong side all of a sudden.

Thanks for the ideas! Keep 'em coming! =)

The Juice is "NOT" loose. I repeat The Juice is "NOT" loose.

Now back to your regularly scheduled housing blog.

I like my Uni (Ventura Uni) in my belly, with babies, the other other white meat.

SP says: Stretch002 Says:
Sounds to me that I need to watch what Japan & China do with their US$ reserves. If they start to sell off I need to buy something quick!

Seriously, are you a realtor?

Damn, missed the early call on that one. Does the writing style sound suspiciously familiar? Well, you folks just have a fabulous day here in the sunny Bay Area. I'm off to play some cards with my pals. Enjoy the beautiful weather!

For any fence-sitters who might be inclined to heed the disingenous argument from Marina Prime, et al. If there is hyperinflation, there will be massive unemployment. And if you lock up all your equity in a house and lose your job, you are effectively hosed and will lose that entire chunk of your net worth.

@OO: Yes, I saw the zero reserve too and momentarily had a little arrythmia - but then realized that it may not be an issue in the immediate future, because the bigger question is: Will the banks lend? And who will they lend to?

Even if the reserve requirement is zero, my guess (or rather, hope?) is banks will be unwilling to finance a loan on a dud asset to a borrower who may never pay it back.

Later on, once confidence is stronger, if the reserve is still zero, I agree with your theory that this is a time-bomb. But who know what the "rules" will be by next weekend?

http://www.thestar.com/business/article/511760

The Canadian banking sector is conspicuously sound, having for the most part resisted the packages of U.S. subprime loans offered to them at the top of the U.S. housing market, and have resulted in more than $40 billion in writeoffs at Swiss banking giant UBS AG alone. Canada has stricter rules on capital ratios that banks must maintain and a higher level of regulatory scrutiny of banking than the United States.

Last year, as a credit crunch first became apparent in the United States, Canadian banking regulators asked two major Canadian banks to shore up their balance sheets, which they did.

DennisN Says:
Bush has already signed the bill in an oval office ceremony. Is anyone here going to vote for him again?

Depends on what the vote is about.

For instance, if it is "pretzel vs. chinese milk product for the Presi-duh-nt's snack", you may be able to get me to vote one way or another.

Even if the reserve requirement is zero, my guess (or rather, hope?) is banks will be unwilling to finance a loan on a dud asset to a borrower who may never pay it back.

So what you are really saying is “can we unring the bell”? I thought the last 16 years of profound (boomer(tm)) growth was founded on just this "economic miracle". Loaning borrowed money to someone who will never pay it back, pocket the fees, slice the shit sandwich into infinitesimally small pieces and bang some ho's in Sardinia with a statue that pee's vodka.

Dennis, isn't this the way you boomers roll?

SP,

the banks may be hesitant to lend to each other, but the major dealer banks are completely crowding out at the Fed's XXXXF window for more money while trying to repair their balance sheet.

Now, if the reserve requirement is suddenly taken away, these "fresh" capital will find a place to go, most likely to another bubble, because speculation in another bubble with all these free money is the best way to "earn back" the loss from other derivatives.

Right now, banks need quick recycle of their money. They are reluctant to hold on to CP or other kind of financial instruments that may require them to hold to maturity. That type is earning is too SLOW for them. They need the quickest turnaround of return on capital, not yet on capital.

That is why the 0 reserve system is scary. It provides the banks with new capital to play with, and we all know these meth addicts are not going to quit it just overnight. The $700B may have a short-term effect to lubricate the market for a short while, and if all banks can suddenly deploy this new found capital that is freed from reserve requirement, we will soon see another round of speculation. And as we all know, these speculation won't go back to the deflating asset, housing, they will look for new venues of profitability.

Another issue is public trust. Now that banks don't need to keep cash reserve, they won't. Let's you go to BOA asking for your deposit, they happen to not have it, but since they are not under FDIC conservatorship, FDIC won't repay you either, what do you do? Fiat is completely built on trust, and if the trust is gone, the fiat value is gone.

Now that banks don’t need to keep cash reserve, they won’t. Let’s you go to BOA asking for your deposit, they happen to not have it, but since they are not under FDIC conservatorship, FDIC won’t repay you either

How much (if any) will the zero reserve apply to Credit Unions? For those who concerned about the banks, and do not want to tranfer your scratch abroad, the CU may be a good option. Besides, you may want to consider two items before exchanging money overseas - many on this blog have made good points predicting GBP-USD parity and Euro-USD parity, and the shear volume of credit/money created by the banks during the runup is now being destroyed faster than it can be replaced by bailouts. Some may be thinking that printing press style hyperinflation is in the cards, but as RandyH has said, no country with a credible military has ever faced hyperinflation.

HeadSet Says:
Some may be thinking that printing press style hyperinflation is in the cards, but as RandyH has said, no country with a credible military has ever faced hyperinflation.

Honestly, I have no idea - since the rules are being made up as we go along, it is impossible to make even a rational (let alone expert) prediction of what will happen. So I am reverting to the tribal instinct that I seem to have inherited from my family - merely trying to preserve as much of my stuff as I can, with whatever limited tools/resources that are available to a 'retail' schmuck like myself.

Today morning I heard the following conversation between an old caucasian lady and indian in my apartment in Cupertino:

The old white lady was telling the indian how she cashed out two years ago and now the price has crashed quite a lot all around silicon valley. Many of her acquintances are either underwater or bankrupt. The indian was repeatedly asking when would be a good time to buy again. The old white lady was pretty noncommital -- said maybe three to four years from now.

This made my day -- I had to come back and write this blog post immediately. Now I am overhearing discussion on housing crash ... thank god for sweet justice.

On my irrigation rounds this morning I saw a large sandwitch sign for an open house with only 4 words displayed:

OPEN
HOUSE
FREE
FOOD

:)

At least the realtors around here are blunt.

Loaning borrowed money to someone who will never pay it back, pocket the fees, slice the shit sandwich into infinitesimally small pieces and bang some ho’s in Sardinia with a statue that pee’s vodka.
Dennis, isn’t this the way you boomers roll?

Actually I sold my place fair and square to someone who never paid it back (it's in foreclosure now) and pocketed the sales price. I'm not really into shit sandwitches and vodka, being more along the BBQ tri tip and red wine kind of guy. Both of the latter can be purchased cheaply if you are willing to look and bargain.

The Original Bankster Says:
SP = MOT?

What is MOT? Motorola? If so, no, I had nothing to do with them.

Ohh...Paul's markets' special this week is USDA choice tri-tip roasts for $3.58 a pound. Also 18 count AA large eggs $1.67. Last month Fred Meyer had all wine 25% off. Is deflation cool or what?

MOT = limey Ministry Of Tranport?

The banks may be hesitant to lend to each other, but the major dealer banks are completely crowding out at the Fed’s XXXXF window for more money while trying to repair their balance sheet.

The Fed has always had the ability (12 USC 461) to set the required reserve threshold (as low as zero). What's new in the bill is, according to Reuters, the ability to pay interest on the reserves (the accelerated timeline that OO talked about):
Tucked into the 451-page bill is a provision that lets the Fed pay interest on the reserves banks are required to hold at the central bank. The Fed is expected to provide details of the facility next week.

That ability could help unstick clogged credit markets, where interbank lending has been practically at a standstill.

This American Life currently running a show on the "credit crisis" (88.5FM noon).

I do not buy the "there is no credit or lending" BS that was used to get the house to vote for it. I propose giving the same power as they gave Paulson to FDIC, and have FDIC use the banks it tookover lend directly. Small businesses can get loan from IndyMac for example. F*k the homebuyers who are underwater. They made a bad bet and lost - its as simple as that. Once the prices are normal (another 30% drop in the bay area), the homes will be bought by people who can really afford them and the greedy f*cks will go back to where they belong.

Hi all!
I propose "The Birk Plan" It is worth the read, though I believe it is an $850 B plan--not $85Billion
Enjoy---

Hi Pals,

I'm against the $85,000,000,000.00 bailout of AIG.

Instead, I'm in favor of giving $85,000,000,000 to America in a We
Deserve It Dividend.

To make the math simple, let's assume there are 200,000,000 bonafide
U.S. Citizens 18+.

Our population is about 301,000,000 +/- counting every man, woman and
child So 200,000,000 might be a fair stab at adults 18 and up..

So divide 200 million adults 18+ into $85 billion that equals $425,000.00.

My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend

Of course, it would NOT be tax free.

So let's assume a tax rate of 30%.

Every individual 18+ has to pay $127,500.00 in taxes.

That sends $25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their pocket.

A husband and wife has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?

Pay off your mortgage - housing crisis solved.

Repay college loans - what a great boost to new grads

Put away money for college - it'll be there

Save in a bank - create money to loan to entrepreneurs.

Buy a new car - create jobs

Invest in the market - capital drives growth

Pay for your parent's medical insurance - health care improves

Enable Deadbeat Dads to come clean - or else

Remember this is for every adult U S Citizen 18+ including the folks
who lost their jobs at Lehman Brothers and every other company that is
cutting back. And of course, for those serving in our Armed Forces.

If we're going to re-distribute wealth let's really do it...instead of
trickling out a puny $1000.00 ( 'vote buy' ) economic incentive that
is being proposed
By one of our candidates for President.

If we're going to do an $85 billion bailout, let's bail out every
adult U S Citizen 18+!

As for AIG - liquidate it.

Sell off its parts.

Let American General go back to being American General.

Sell off the real estate.

Let the private sector bargain hunters cut it up and clean it up.

Here's my rationale. We deserve it and AIG doesn't.

Sure it's a crazy idea that can 'never work.'

But can you imagine the Coast-To-Coast Block Party!

How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion

We Deserve It Dividend more than I do the geniuses at AIG or in Washington
DC

And remember, The Birk plan only really costs $59.5 Billion because
$25.5 Billion is returned instantly in taxes to Uncle Sam.

Ahhh...I feel so much better getting that off my chest.

Kindest personal regards,

Birk