patrick.net

justme Says:
Once you say “low interest rates are bad because they make housing prices rise”, does this create such a big cognitive dissonance that the listener automatically shuts out everything you are saying?

I don't know about cognitive dissonance - it is just that everyone is conditioned (by realtwhores and media) to assume that low interest rates are "good for housing" and help to keep the howmuchamonth lower.

So when someone (i.e. me) popped up in front of them and said the opposite, their reaction was to disagree and then discount everything else I say.

These days, though, that is changing because "everyone knows" (ha!) that housing is going down - so they are open to ideas that are more aligned with ground reality.

it is just that everyone is conditioned (by realtwhores and media) to assume that low interest rates are “good for housing” and help to keep the howmuchamonth lower.

Low interest rate is good for housing. High interest rate is good for housing because inflation is good for housing.

See, it is ALWAYS a good time to buy. :)

LOL!!!

So, how about that Bankrupt of America bailout-redux...

Any ideas on what other banks are good places to park a little cash? I want to close the account there - they surely don't need my measly savings, since their rich uncle Sam is fronting them a few billion more...

Any ideas on what other banks are good places to park a little cash?

Wells and JPM are not too far behind. Banking on TARP to solve all ills, they probably ate more they can chew. I would say FDIC is our bank.

Citibank is splitting itself into two pieces an parking all (?) the bad assets in the "brokerage" portion. Interesting tactic, different than those who are turning brokerages into banks.

"This is a managerial separation and that is where we are starting and we believe there is a lot of value in clarifying focus on these things and having them managed in a way to harness value," he told listeners on a conference call with analysts and investors. (Citigroup CEO Vikram Pandit).

##

I don't know about this ,Vikram. Do you not usually manage your assets to harness value? Are your highly paid managers not able to think straight if they are part of a bank?

Since one and half years ago when I found out that Schwab does everything that a bank does, I closed all my bank accounts. Here are the advantages:

1) brokerages are covered by SPIC which covers up to $500K per account, unlike FDIC which only covers up to $100K. And of course you can do the same thing of splitting your money among several brokerages.

2) Schwab charges NOTHING for check books, BOA, my last bank charged me $20. International wiring is FAR cheaper at brokerages than at commercial banks. Commercial banks are completely fee hungry right now.

3) It is harder to steal money from brokerages electronically because you can only wire to yourself, or an authorized account electronically. No such thing with commercial banks, people can wire away your money very easily once they know your passwords.

4) Poor people don't have brokerage accounts. So when bailout hits the road, the government is far more likely to bailout the rich than the poor.

We let go of the "American Dream" as it relates to housing so very reluctantly.

Even now, as Rome burns, there seems a need to debate how to arrange the chairs. It is so interesting that folks still *believe*. That our media industrial complex has conspired with numerous interests to create this multilayered belief and value system, this religion, of housing and consumption and suburbia. It is an utterly empty dream, of course.

I don't believe folks understand how our economic downside is truly going to impact housing markets. Housing finance will not and cannot ever be the same in the US, it will continue to exist solely as a government owned enterprise. What does that mean for housing valuations? Our overstock and massive household consolidation coming, what does that mean? Persistent war and conflict of increasing intensity and scale will make much of the debate over housing seem so very quaint.

This country desperately needs a new belief system, and quick.

What belief system will ultimately replace the housing wealth myth post bubble deflation? This answer to this question will largely drive the direction of the country forward. Who are we anyway, and what do want out of life? As the country reflects and images of breadlines and misery occupy the glowing screens, what zeitgeists will take hold? And who will create them for what purpose?

Our confidence in the monetary system has been permanently shattered, our trust in currencies blown. Inflation will inevitably render debate over interest rates and valuation mute. Coming soon to a theatre near you.

When US treasury auctions stumble, the printing press begins in earnest.

Hang on tight. Things are going to get very, very scary.

JPM won't go down unless Fed is ready to fall apart. JPM owns the Fed.

If there is only ONE bank I can bank with, it will be JPM Chase. If Fed falls apart, no financial institution is safe, hold on to physical gold and guns.

If Fed falls apart, no financial institution is safe, hold on to physical gold and guns.

Two "central banks" failed before. Some other banks still survived.

Is Fidelity safe? Its logo has what some people call a NWO symbol. :)

Vanguard is safer than Fidelity.

... because Vanguard is used by Dick Cheney :-). Anyway, I tend to agree. Vanguard is hard core. Not banking advice.

Re: Flight 1549

I have not yet seen a video of the emergency landing on the Hudson River. There's got (?) to be someone who has a video of this -- if not a random tourist (in January) then somebody's highrise webcam or even a Port Authority surveillance video?

By the way, there are some obviously faked videos available.

I have to congratulate the pilots for their clam and decisive actions. They are the heroes.

Birds are evil.

JPM won’t go down unless Fed is ready to fall apart. JPM owns the Fed.

OO,

JPM might not fall apart but it's share price could be like citi. BofA/citi hasn't fallen apart. I can easily bank upto 250K in citi or any other bank with FDIC.

RE: SIPC

Tell that to those whose money got made-off.

Okay, I cribbed this story from Socketsite, but is bears repeating. Talk about negative cash flow...
San Francisco’s largest residential landlord, a voracious acquirer of properties during the boom, has deeded 51 of its apartment buildings back to lender UBS.... Lembi said the buildings were losing $3 million a month.

Link to the Lembi story in the Business Times.

WW3 is only a matter of time. It is quite likely that we will see one in our lifetime.

I am of the belief that that most people who lost money to Madoff will be made whole somehow by taxpayer money. Of course this will happen a bit down the road when no media is looking.

They can claim fraud and have the government cover the loss to "restore investor confidence". Our government runs on the premise that the taxpayers always have to bailout the rich guys.

SP,

the problem is, I have to bank $250K of CASH with bank, but I can bank $250K worth of stocks holding companies that I believe won't be printed away.

It comes down to the fundamental belief if USD Cash will be king. I do not believe so, therefore I would rather hold $250K today's worth of stock, which will do fine in an intentional devaluation event.

On a side note, the Fed has eventually moved onto buying Treasury. That's what I said before, quit beating around the bushes, just go straight to the point.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aoz6joAbOPoA&refer=home

Now let me repeat the last step of Uncle Ben's playbook
--"A more direct method, which I personally prefer, would be for the Fed to begin announcing explicit ceilings for yields on longer-maturity Treasury debt (say, bonds maturing within the next two years)"
--Bernanke's 2002 helicopter speech

The above, in laymen's term, means unabated printing with no cap. Whatever the government wants to spend, whatever Fed will buy.

I don't know why people keep calling Bernanke bluff, he has published all his actions more than 4 years ago before he became the chairman. How much clearer do you want him to be? I know these academia types, and I know they will go through with their academic belief once they get to test their thesis on the entire world. Follow Uncle Ben and you will be saved.

I think Ben is a great Fed Chairman, at least he doesn't mince words like Greenspan. The only fault of him is he didn't print fast enough.

It comes down to the fundamental belief if USD Cash will be king.

Well, looks like either you or I will be a distinct winner or loser. I put nearly all my savings into insured CDs, including a one-year bought two days ago at 3.75% I do have my own paid-for residence house along with a paid for rental house, so I have a hyperinfation hedge as well.

If we have some strange inflation that runs up the prices on everything except houses, at least I can use my cash to buy more rental properties.

You are quite the cheerleader for the Guttenburg boy, but HeliBen may not be able to print fast enough to outpace the credit collapse. In that case, your $250k of "today's price" stocks may be like someone's "2006 price" house.

No, I am not betting on hyperinflation or even inflation.

I am betting on the collapse of the USD (or severe weakening) against all real assets, especially oil, gold, agriculture and the like. My house is almost paid for, so I don't really care if it goes up or down, but I am in a locked fixed rate and locked in tax base, so I naturally welcome inflation that reduces my repayment cost and tax to almost nothing.

I keep cash, just not in USD. Ben will print fast enough, they are just trying to save the USD as much as possible while trying to save the economy and our current government (primary goal), but the economic fundamentals will force them to give up on USD, and that is good enough for my bet to pay off.

The fundamental is, our government cannot survive in its current form given our debt load if we allow deflation to persist.

If our government collapses, we get hyperinflation, but that is not the most desirable outcome for me, because I need a stable society to cash out my chips and enjoy life. So the best scenario for me personally is a stagflationary environment, in which stuff I invest in (necessities) goes up, stuff I desire goes down. And the stagflation must be not too severe or we go back to hyperinflation, which usually leads to extremely ugly social outcome.

For a country with military power, hyperinflation is quite unlikely. But we may head into that direction, and before we get there we may already end up in social chaos.

JustMe says:

I have not yet seen a video of the emergency landing on the Hudson River.

One nagging thought. When you have an engine failure/fire in flight, you are supposed to shut down the affected engine. This procedure is practiced during Emergency Procedure Sims and during in-flight simulated engine failures. I remember from my old AF days how sometimes the pilot would reach for the wrong T-handle and/or throttle, effectively shutting down a good engine. Since a bird strike that would kill more than one engine is very rare, this thought occured to me.

The investigation will most likely show that both engines injested birds, so my nagging thought is just that.

OO says:

Ben will print fast enough

That is the crux. If I thought so too, I would do similar to you. Perhaps I am too "Mish Conditioned" to believe in anything but a deflationary future. That includes falling prices for stocks, gold, wages, and even "necessities."

OO,
I'm not necessarily saying "all is well" (given the situation with some of the major banks), but Treasury purchases are a standard part of Fed OMO. Look at the latest H.4.1; there is plenty of cash from member banks for the Fed to make some Treasury purchases.
Black Friday Redux: I went all in with some retirement money on Wells Fargo; will be interesting to see how hard they get hit by Wachovia and Option ARMaggedon.

Headset,

That is indeed a nagging thought. What are the odds that a good engine would not restart? They were gliding for 2-3 minutes, AFAICT.

California withholds tax refunds
Cash-strapped state says those who overpaid in 2008 are out of luck, while other checks will be held for 30 days as it tries to ward off bankruptcy.

SAN FRANCISCO (Reuters) -- California will not pay tax refunds for individuals and business that overpaid 2008 taxes, in order to conserve dwindling cash for priority payments including school spending and debt repayment required by state law, the state's controller office said Friday.

Other state checks to be postponed for 30 days include payments for vendors who provide services and products to the state government and state checks to a million aged, blind and disabled Californians to cover rent and utilities bills, State Controller John Chiang's office said in a statement.

Various state officials have been warning in recent weeks that the most populous U.S. state's coffers would run dry if Gov. Arnold Schwarzenegger and lawmakers fail to balance the state's current budget. The governor in his state of the state speech Thursday said California faces insolvency within weeks if it does not balance its books.

Happy BFF! A trifecta it seems.

http://www.fdic.gov/news/news/press/2009/pr09004.html

http://www.fdic.gov/bank/individual/failed/commerce.html

http://www.fdic.gov/bank/individual/failed/clark.html

@Administrator

I agree about the cockiness out there. I emailed a Realtor about a recent bank owned property he is representing. My husband and I are willing to pay cash, we are not represented by another realtor, and instead of addressing my concerns, all he said was let me know if I can do anything for you.

The house has not had an Open House for the public or for realtors, he did not follow up on my email, and in general seems disinterested.

Very bizarre.

Headset,

on that nagging thought again. It is somewhat peculiar that there is so little communication from the crew since the accident. I'm sure they have a gag order of some sort, but still. It has been pretty much dead silence. It *could* be an indication that there is more to the story than is publicly known at this point in time.

Without doubt, the pilots exhibited incredible skill in landing the plane safely, nothing can diminish that feat.

Without doubt, the pilots exhibited incredible skill in landing the plane safely, nothing can diminish that feat.

Not to put a damper on the national euphoria, but virtualy all pilots qualified for the left seat could competently handle a water landing. Flight manuals and checklists cover ditching procedures, and pilots routinely train and are evaluated on that emergency procedure. A water landing is much like the landings they do every day, just that it is done wheels up and you float in ground effect a little longer. True, he had no power to make adjustments, but it does not matter if he is short or long on his aim point. His goal is to hit the water slow as possible with wings level. Ditching is actually safer than doing a power out landing in a field. Even so, there a been a couple of Airbus emergency landings on terrrain that resulted in no casualties.

I do not think there was anything exceptional about a water landing. Where that pilot shined was during route study. During "mission planning," pilots make note of emergency landing fields for their route. I believe that this guy decided on the ground that should he lose engines soon after takeoff, that he would ditch in the Hudson River if he could not circle back or reach another runway. My perspective is from flying Air Force, I presume much of the same procedures are used in the airlines.

Chip maker Advanced Micro Devices Inc. said it will eliminate 1,100 jobs and cut the pay of management and some other employees.

Sunnyvale-based AMD (NYSE:AMD) said executive chairman Hector Ruiz and CEO Dirk Meyer will take a temporary 20 percent cut in salary.

In U.S. and Canadian operations, AMD will also cut pay 15 percent for vice presidents and higher; other employees will get 10 percent and 5 percent cuts.

Along with many of its colleagues, the company has been seeing reduced demand from customers that use its chips. In December it forecast that fourth quarter revenue would drop 25 percent.

Last year the company also announced a 10 percent staff cut and later a 3 percent cut.

PHNOM PENH, Cambodia
Where Sweatshops Are a Dream

Before Barack Obama and his team act on their talk about “labor standards,” I’d like to offer them a tour of the vast garbage dump here in Phnom Penh.

This is a Dante-like vision of hell. It’s a mountain of festering refuse, a half-hour hike across, emitting clouds of smoke from subterranean fires.

The miasma of toxic stink leaves you gasping, breezes batter you with filth, and even the rats look forlorn. Then the smoke parts and you come across a child ambling barefoot, searching for old plastic cups that recyclers will buy for five cents a pound. Many families actually live in shacks on this smoking garbage.

Mr. Obama and the Democrats who favor labor standards in trade agreements mean well, for they intend to fight back at oppressive sweatshops abroad. But while it shocks Americans to hear it, the central challenge in the poorest countries is not that sweatshops exploit too many people, but that they don’t exploit enough.

Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty, the kind of gauzy if probably unrealistic ambition that parents everywhere often have for their children.

“I’d love to get a job in a factory,” said Pim Srey Rath, a 19-year-old woman scavenging for plastic. “At least that work is in the shade. Here is where it’s hot.”

The fundamental is, our government cannot survive in its current form given our debt load if we allow deflation to persist.

I agree; which is why we will have European-style sales taxes before long to fund it. If prices are too low, raise the sales tax and funnel the income back into local jobs. Best way to fight deflation there is.

Do you really think the government will go out of business before raising taxes first? Especially when Warren Buffet and Bill Gates have said they don't care if their taxes are raised? Buffet has even complained that his secretary is taxed more than he is!

The true fundamental is that American debt-fueled over-consumption cannot survive in its current form if we allow deflation to persist. Which, as far as I'm concerned, is a wonderful thing.

Buffet has even complained that his secretary is taxed more than he is!

I hope he is not spouting this to puff up a phony image, while his accountants are busy combing for loopholes and connected lobbyists are preserving breaks beneficial to him. Buffet, along with anyone else who feels undertaxed, can send a check to the Bureau Of the Public Debt. Last year, the Bureau recieved over $2 million of such voluntary payments.

This reminds me of John Kerry, who clamoured for higher taxes, yet chose to pay Massachussetts lower teir for his own state income tax. This would have been an excellent example for a filthy rich windbag to lead by example.

I am not against raising taxes on the very rich (especially those whose bonuses and executive pay was preserved by the bailout), I just would like to see those "undertaxed" whiners pratice what they preach by openly making a donation to the Bureau, thus showing us they are just as eager for themselves, and not just us, to pay thier "fair share."

PERMA-
FWIW, Google will also be closing the SF and NYC offices in months to come as part of its cost reduction.
As for AMD, their headcound is now close to its 1993 levels worldwide. However they only employ in Sunnyvale 10% today of the the 1991. Back in 1991 they employed some 75% of the 12,000 worldwide in Sunnyvale across several large buildings. Today AMD headcount is some