patrick.net

I am mostly anti-PC, but blaming anyone is not going to help us.

"Cain't we all just get along?"

Sorry, I've been waiting to use that line for ten years.

I'll.......stfu now. :)

Wow, Peter P claimed this thread.

As if I didn't have enough to pester me today, it's now snowing heavily in Boise. This is the earliest snowfall in Boise since records were kept starting in 1940. :(

Dennis, it is global warming. :)

Speaking of trains, here are the results for the Capitol Corridor (September 2008). Inexpensive Bay Area housing is just a train ride away.

144,747 passengers +24.7% vs. 2007
This is a new September record, and keeps the Capitol Corridor third
busiest route in the country, by a wide margin
Passengers for 12 months of FY 2007-08: 1,693,580, just 6,420 passengers
shy of 1.7 million riders. (12 months of FY 2007-08: +16.6%)
Just for comparison, 10 years ago, FY 1997-98, ridership was only 463,000
for the year!

$1,953,836 September revenue +27.9% vs. 2007 (FY 2007-08: $23,634,341 for +22.0% growth)

TOB, why should you care what mike thinks? All I care is that you often have good points.

Heck I have ancestors in the Blackfoot nation.

Are you guys all ready for Bill Ayres as Secretary of Education? :( Kids will be trained to turn their parents into the authorities for conservative actions.

The average Joe has no business "investing" in Wall Street. Mutual Funds, puts, calls, stock picking, and commodities should be done for fun with money you can afford to lose. Fun money, like at the horse track. Basically, any "investment" that requires paying a commission should be avoided. The only time Joe should see a "finance professional" is his insurance agent for a term life policy.

Joe should pay off credit card bill in full every month. This beats leaving a balance because Joe sent the payoff money to his "broker" for this months "dollar cost averaging."

Joe should buy a car he can pay off in 3 years yet drive for 6. Make the payments to the bank for three years, then make that payment to himself for 3 years. You could buy the next car for cash.

Joe should buy a house he could afford to have paid off by the time he is 45.

By not paying interest on Credit Cards, and by reducing interest on house and car loan, Joe will have some bread to save.

Put the extra into insured accounts (IRA, self directed 401k, other savings). FDIC is like "privatize profits, socialize risks" for the common man. Play "investor" by shopping for the highest insured rate.

Having no house or car payments at age 45 allows one to really pack away the savings. Some for retirement, some for trips, some to lose in Wall Street.

Good luck convincing Joe. Realtors and bankers want Joe in the biggest house with the biggest loan, finance types want Joe to "invest" rather than get out of debt, and there is the peer pressure to out-bling the neighbors.

The average Joe should not be bailed out either. The best way to educate is to live and let fail.

We learn best from failures and their associated pain.

The average Joe should not be bailed out either

Right. What got me started on that rant was that a "Republican" running for president wants to use tax money pay off the "excess" of one's mortgage over the current house value.

Obama wants to buy votes with a $1,000 stimulus check, McCain wants to buy votes with mortgage redux. McCain may have miscalculated. There may be far more renters and responsible mortagage payers to be angered by this, than slackster overextenders who will benefit.

How about this simple regulation:

Loans cannot be sold. All loans must be serviced by the banks who made the original loan.

That would eliminate third party fees and insure banker diligence in qualifying borrowers. It would also straighten out the appraisal industry. No Fannie/Freddie. No MBS debacles. Banks would prefer lower risk 20 year instead of 30 year mortgages, or charge a premium for the longer term loan. Housing would be affordable, as upward price pressure from speculaters and Joe HowMuchAMonth would be reduced by banks wanting down payments.

damenace,

very happy that you are on this blog, please share more about the industry knowledge with us, it is very comforting to know that our food supply chain is still intact.

What are the major regions from which the frozen food companies source from? China?

Actually I am now less worried about the actual disruption of the food chain (at least the frozen part) than the broken trust in the society.

Since we don't grow our own food, sew our own clothes and build our own house any more, our society is almost entirely trust-based. I trust when I drive on the street someone will not try to run me over for no reason, I trust that at the end of the pay period my employer will put in his direct deposit in my account.

But somehow in the last couple of months, the trust that we have for our government and the trust we have for the system is greatly shaken. Every country and society has corruption, inefficiency, glitches here and there and we all accept it as a part of life. But if such corruption and glitches are getting too big to be swept under the rug, we start to lose trust.

Bank runs are now initiated just through rumors and perceptions, people are getting nervous about their job prospect and their retirement money, our very heightened and sensitive collective nerves are not going to be very forgiving at the moment. I don't believe in Mad Max situation, but I won't be surprised that there will be many irrational herd behaviors when we feel our survival condition may be compromised.

It is of utmost importance that our government restores more confidence in our system and our society asap. This administration's lack of foresight is just astounding.

Another way to recapitalize the bank, now the bank gets to collect your mortgage but not pass it on to the MBS holders. Oh wait, who holds the MBS papers? Congrats, remember that $700B? You proud renters and homeowners.

So, homeowners now get to pay mortgage twice, once to the bank, and once through holding the stinking MBS papers at an unrealistic price. Hey, don't be so happy renters, you get to hold these papers too, and you still need to pay your rent. Hey come on, show some brotherly love to Wall Street.

SAN FRANCISCO (MarketWatch) -- Fannie Mae (FNM 1.08, +0.07, +6.9%) said Friday it will begin to allow all institutions servicing its mortgage-backed securities (MBS) to continue to hold the principal and interest payments from loans in their MBS in their depository institutions and in the process, free up additional liquidity for these institutions. The move comes after the Federal Deposit Insurance Corporation adopted an interim rule, effective immediately, to simplify the deposit insurance rules for accounts held at FDIC-insured institutions by mortgage servicers. (Updates with details on FDIC's interim rule.)

two weeks ago you might get some coupon payments from the mortgages, now you are getting nothing, period.

I think China also holds a load of MBS papers, I want to see how our biggest debtor likes this new program. Perhaps we can convince them to park the coupon payments in Fed's custody.

Mike-Orange,

I gave up long ago on the idea that the banksters will get the lessons about the down side of capitalism. You should make the rules work for you rather than try and challenge it. You may be right, but you will get killed and it won’t matter that you were right.

I got smart and took action. 5 weeks ago I shorted myself by taking the most I could out of a 401k in the form of a loan. As long as I stayed employed (I am a power plant operator and have no fear of being out of a job), I will pay it back with depreciated dollars without paying any fees/IRS crap. I can pay it off now if I like and get all my stocks back plus more :)

I still have the money in my bank and it raised my cash position by 33%. I am now planning on buying about 7.5 acres that is a few miles from my work. It is a bit more than what I need, but 1 acre lots and this 7.5 acre lot cost about the same amount of money. I will be getting this property in an all cash transaction later this week. I will then probably get a construction loan to build what I want rather than trying to find a 100 year old home that is not complete shit.

Get what you can now while you can. It is going to get interesting when the roller coaster ride of deflation and inflation on the different asset classes takes hold.

The best part about this land is the small development of 250k to 300k homes right beside it. They have a home owners association that I will probably piss off. If you have ever heard the crack of an AR-15 or SKS, you will know why these people will love me :) I love how people build residential neighborhoods in unincorporated areas.

On another note,

I just saw 20/20 and the kids in my generation. I am so ashamed about how stupid these kids were. Most could not state how many states there are, the number of Senators we have, or what Roe vs. Wade is.

These people are stupid! It is shit like this that get convinced to sign the dotted line for a shitbox home.

oops, I meant China as the creditor. I must have been too accustomed to a debtor mode.

Regarding the thread topic of survival...

I was talking to a coin/precious metals dealer in Stockton on Wednesday. He said he is completely sold out of gold and silver eagles and maple leaves. That is the first time in the 8 years I have known him he has been sold out. No shipment expected in the near future. He appeared genuinely shaken up about it. I felt more than a little unsettled by this.

On the bright side, I bought a handgun last week and asked if there had been an increase in gun sales the past month. They told me no, their sales have been down about 25%. At least there's not a run on guns. Perhaps it's a local anomaly - we're already armed to the teeth so maybe the market is saturated. Stockton - where every night sounds like the 4th of July.

OK, for all the gun experts out there, if I want to pick one up for self defense, which one is most nimble and gets the job done? I don't want something that requires precision aiming, something that you think an idiot like me can handle when I am under threat. Where do you go to get trained?

Get a shot gun. There is nothing better than that for upclose self defense. I also would buy an axe handle or baseball bat.

Buy a box of #2 buckshot and you are good to go.

Ohh for training.... Go out and have fun with it at the range :)

http://www.cabelas.com/cabelas/en/templates/links/link.jsp?id=0016697216572a&type=product&cmCat=SEARCH_all&returnPage=search-results1.jsp&Ntt=2+buckshot&Ntk=Products&sort=all&_D%3AhasJS=+&N=0&_D%3Asort=+&Nty=1&hasJS=true&_DARGS=%2Fcabelas%2Fen%2Fcommon%2Fsearch%2Fsearch-box.jsp.form1&_dyncharset=ISO-8859-1

This is even better, but fewer pellets per a load. This stuff is cheap enough to be worth it.

I don't think Schwab belongs to the above category, I am not aware of any wrongdoing by him. In fact, I think he did something useful by pioneering cheap online trading (as opposed to calling up your idiot broker and paying him a full 1% commission). Trichet didn't do anything criminal either.

There are some banking corporations in which certain influence is not obvious just by looking at the last names of CEO or the board. But based on personal dealing with them, I can tell ya BOA is such a corporation, there is a group of key decision maker with the common last names and if you get in their circle, you can pull the strings within BOA very easily.

OO, the nicest pistol I have fired was my old Browning 9mm. You will have to practice with it since pistols by nature are hard to aim, but man after you go through a few clips you won't have to worry about missing a home intruder.

From Kitco:

"Gold and silver plummeted Friday after Wall Street posted another big loss and forced investors to dump holdings in precious metals to raise badly needed cash."

Cash is king, I'm telling you guys.

OO,

You asked...
"What are the major regions from which the frozen food companies source from? China?"

By far the largest frozen veggie and fruit trading partner is Mexico. Mexico supplies more frozen broccoli than this country produces by a long shot.

Pretty much all of S. America and C. America are also exporters of frozen fruits and veggies like Guatemala, Hondurjas, Costa Rica, Ecuador, Peru, Chile and Argentina. That is off the top of my head and due in large part to the Andea Trade pact that allows duty free importing.

Believe it or not, Europe has a large frozen veggie export business to the US. Brussels Sprouts, green beans and some really specialty items. Obviously, the euro has been killing this business, though the dollar strength is looking promising for us importers.

China has a large amount of frozen veggie business too. Between the rise of the Yuan and the safety issues (that don't have anything to do with the frozen food manufacturers) you are seeing less reliance on Chinese imports. Still China is the only viable significant source of some frozen items like water chestnuts and edamame. They have years of experience and some companies there do an outstanding job.

Finally, you are starting to see Africa step-up into the frozen arena in the most developed countries like Egypt and S. Africa. India is also coming on strong too. Those areas are failry un-developed and in most cases significant investments still need to take place to make them viable.

Hey Mike,

California is the world's fifth largest supplier of food and agriculture commodities.
Source : Wikipedia

People should not be afraid of their governments. Governments should be afraid of their people.

VOTE ANIT-INCUMBENT AND INDEPENDENT.

DO NOT VOTE DEMOCRATIC OR REPUBLICAN.

I will mail my ballot this Sunday.

Here's a tale of two homeowners, the Smiths and the Joneses. The Smiths are savers.

They have no revolving debt; 50 percent equity in their home; an emergency fund with six months' living expenses; a retirement plan to which they regularly contribute; and 529 college plans for their children's education.

The Joneses are spenders. They bought their home with no money down and have a subprime mortgage. They live from paycheck to paycheck; carry a balance of $10,000 on their credit cards; lease their cars; have no emergency fund; and have nothing saved for college or retirement.

A Tale of Two Lifestyles

The second household enjoys more material comforts, but the first household enjoys more security. Why should they care if their neighbors save -- or default on that mortgage and eventually go bust?

"We would all be better off if the neighbors had saved," says Ron Wilcox, professor at the Darden School of Business at the University of Virginia, and author of "Whatever Happened to Thrift?: Why Americans Don't Save and What to Do about It." He argues that the failure to save by many American families led to the mortgage meltdown and subsequent economic crisis -- and may be sowing the seeds for another disaster.

"The U.S. attracts a disproportionate amount of foreign capital because our government is stable, so interest rates remain low," Wilcox explains. "On the domestic side, way too many people have very little in the way of savings. These things worked together to produce the housing crisis. People were able to borrow cheap, and because they had no savings, often did not put a down payment on the home. When the price of the home goes down, it's much easier to walk away."

On the Hook

The savers are now financing the $700 billion bailout along with those who spent -- and may be forced to foot an even bigger bill as the baby boomers retire, says Wilcox, a former economist for the Securities and Exchange Commission who blogs here.

"If lots of people don't save and end up upon retirement being poorer than they would like to be, there will certainly be pressure to impose taxes on working people to more richly fund the retirements of individuals who have not saved," he says. "You'll see political pressure for wealth transfer -- and if you have saved responsibly, you'll be paying for people who have not."

Wilcox argues that savers who are dutifully contributing to their 401(k) plans face a real risk, because they won't pay taxes on the money until they retire. "It's easy for me to imagine 10 years from now a political candidate saying, ‘We have all these people with $3 million in their 401(k) plans and we need to impose taxes on those people and shore up Social Security for people who didn't have access to these 401(k)s,'" he says. "It's a big fat target for politicians." (And another disincentive to saving.)

Defining Savings

But let's back up a minute: Is it true that Americans aren't saving enough? Some economists argue that the official government measures of savings -- the National Income and Product Accounts (NIPA) and Flow of Fund (FOF) -- are flawed. Their definition of "savings" does not include home equity, capital gains, or the benefits from private pension plans such as 401(k)s, since some part of those benefits are paid for by capital gains. As the population ages and more people rely on pensions for income, critics suggest, the savings rate naturally declines.

"Those are valid criticisms," says Wilcox. "But there have been a number of attempts to scrub that data and reintroduce the things we think of as saving. If you put that data back in, you do find higher savings than NIPA suggests -- but it's not sufficient for most people to suffer a major loss like a medical bill, or to take care of themselves in retirement."

So what's at the heart of the U.S. savings problem? Wilcox dismisses the usual suspects -- such as advertising and easy access to consumer credit -- as too simplistic, arguing that the influence of advertising has been decried since Victorian times, and credit was invented more than a millennium earlier. (The Greeks and Romans used credit extensively to finance far-flung commercial ventures and personal consumption -- with decidedly harsher consequences: Debtors who defaulted were sold into slavery.)

Wealth Disparity and he Decline of Saving

Instead, Wilcox points to the widening gap between rich and poor. The concentration of income among the wealthiest 1 percent of Americans has roughly doubled in the last 30 years. In 2004, for example, the wealthiest 1 percent of Americans enjoyed a 12.5 percent increase in income, while the bottom 99 percent gained only 1.5 percent. (The gap is likely wider, since capital gains are excluded.)

As a result of social and geographic mobility, most individuals have a consumption reference group that comprises people with varying amounts of income. Those at the top shift our frames of reference (something Robert Frank also argues in his book "Falling Behind."

"As income disparities accelerate, I observe some people in my reference group who seem to be able to afford nice things that I do not currently have," Wilcox writes. "Because this observation is a one-sided event, and individuals may exaggerate their own consumption when speaking with others, disparities in remembered consumption accelerate even more quickly than actual disparities."

The Extravagance of Memory

Combine the bragging of increasingly wealthy neighbors with the psychology of memory, and you have people not just competing with the Joneses, but competing with their embellished memories of the luxuries the Joneses enjoy.

"The psychological trick people play on themselves is that when they view consumption, they tend to concentrate on idealized consumption," says Wilcox, adding that the psychology of arousal comes into play (in a mental, not sexual context). Research has found that brain activity increases when we see something novel or unexpected.

"When we are aroused mentally, we deal with information differently," Wilcox explains. "People's memories are stronger. We take as anchor points what people around us consume -- we remember things we like and don't like, and then construct an idea of what is appropriate to consume. What the memory constructs is more extravagant."

Consumerism Beyond Capability

In his book, Wilcox proposes a number of private and public initiatives to boost savings rates. But given that no one expects either income disparity or human psychology to radically change in the future, is there any moral appeal that might convince spenders to save?

"Spending more money than you have -- consumerism beyond capability to buy -- it seems to me that's a moral vice," Wilcox asserts. "There are reasonable uses of debt, but lifestyle debt is not one of them. Who ends up paying the bills? Either you pay the bills down the road, or if you seriously mismanage, someone ends up paying the bills for you -- you need someone to bail you out. I'm hard pressed to think that's a virtuous way to live life."

So are the savers footing the $700 billion bailout tab.

"Spending more money than you have -- consumerism beyond capability to buy -- it seems to me that's a moral vice. There are reasonable uses of debt, but lifestyle debt is not one of them.

- Ron Wilcox, professor at the Darden School of Business at the University of Virginia, October 2008

I just filled out my ballot. Billbray gets to keep his job.

Right. What got me started on that rant was that a “Republican” running for president wants to use tax money pay off the “excess” of one’s mortgage over the current house value.

I do not like McCain anymore.

Obama wants to buy votes with a $1,000 stimulus check, McCain wants to buy votes with mortgage redux. McCain may have miscalculated. There may be far more renters and responsible mortagage payers to be angered by this, than slackster overextenders who will benefit.

I hope that both candidates fail.

We may just as well have a President Palin. God help us.

From Kitco:

Cash is king, I’m telling you guys.

Malcolm, you do not believe in that, do you? If gold had gone up, they would have said:

“Gold and silver soared Friday after Wall Street posted another big loss and forced investors to seek precious metals as a safe haven.” :)

damenace & mike_orange,

thanks for the info. It sounds like we are scaling back more to regional sourcing than global sourcing which will be disadvantageous even without peak oil, because of future geopolitical tensions which may disrupt the supply line.

Thanks to a few blogmates here, I signed on with local CSAs (community-supported agriculture) for my food supply. My motivation was primarily because they are offering organic at a much better price than Whole Foods, and my secondary motivation is to secure local food supply, so to speak. But no matter which CSA you go to, there is almost a waiting list for sure. I waited for 5 months to get on my first choice and am still on the waiting list for another one (8 months). If the Bay Area residents all decide that they want to rely on locally produced organic food, these farms will have to be armed.

But if you go down to Salinas, or inland to the east, there seems to be plenty of industrially managed farms and I don't feel it will be a problem for all of us to rely on these farms alone. If you are talking about beef supply, if you ever drive down I-5 to LA, you will know we have more than enough cows to go around, the only thing you worry about is if these cows are injected with too much antibiotics and growth hormones, they sure don't look like happy cows.

I tried my local CSA. It was pretty lousy. Poor quality fruits and vegetables in small amounts with an outrageous price. I guess it all depends.

putting a restriction on deriving securities from mortgages will make the market more sticky, possibly limiting people’s access to housing.

I do not think undue burden would be placed on access to housing, just a rational burden on loose credit. You would still will have banks, credit unions, building societies, and even builder financing. The inability to "securitizing" mortgages will result in diligence on to whom money is loaned. That diligence will not limit home access to savers wanting reasonable loans, just to speculators and overextenders.

Cash is king, I’m telling you guys

Yep. Houses, PM, gasoline, land, stocks, wages - all falling.

Interest rates - rising.

@danville,

I highly recommend two small farms, excellent quality, large quantity, I am very happy with them. They are the supplier to some top-notch restaurants in the area. I waited for 5 months to get on, and it is really worth the wait.

Another one that EBGuy recommended is Full Belly Farm, I used them for a while and found them to be rather erratic in quality, some very good (excellent baby potatoes), some lousy (corns), perhaps they were not having a good season when I was on the trial program.

I guess you just need to try different CSAs to see which one you like the most.

Headset,

I give you that, right now cash is king. USD cash also only accounts for 3% of all USD money in circulation.

Here are the two possibilities of this crisis. We get through it, then the system is pumped with billions or even trillions of USD, and we will need to deal with the impact of such pumps later.

Scenario 2 is the worst, we don't survive. Then it doesn't matter either way, we are all hosed.