1992 Redux: Will "it's the economy, stupid", Be The Big Campaign Issue? - Page 4 - Tilted Forum Project Discussion Community

host · 01-31-2008, 12:57 AM

ace, read the bottom third of my last post again, starting with the graphic of the chart of the bond insurers, MBIA, et al.... and then read this one, and tell me you still think that you know best....

Quote:

http://www.bloomberg.com/apps/news?p...aB0&refer=home
MBIA Posts Biggest Loss; Considers New Capital Plans (Update1)

By Christine Richard
Enlarge Image/Details

Jan. 31 (Bloomberg) -- MBIA Inc., the world's largest bond insurer, posted its biggest-ever quarterly loss and said it is considering new ways to raise capital after a slump in the value of subprime-mortgage securities the company guaranteed.

The fourth-quarter net loss was $2.3 billion, or $18.61 a share, raising concern the Armonk, New York-based company will lose its Aaa rating at Moody's Investors Service. The loss came a day after FGIC Corp.'s insurance unit became the third company to be stripped of its AAA credit rating.

MBIA is seeking to convince Moody's to retain the Aaa on its insurance unit as Chief Executive Officer Gary Dunton tries to shore up capital through stock and bond sales. Without the Aaa stamp, MBIA would be unable to lend a top rating to new securities, crippling its business and throwing ratings on $652 billion of debt into doubt. The threat of losses prompted the New York State Insurance Department to call a meeting of banks last week to discuss a rescue.

``In the absence of a credible bailout plan, I think investors and issuers need to assume that MBIA, along with all of the other companies, will face continuing, worsening downgrade pressure all year,'' said Matt Fabian, a managing director at Concord, Massachusetts-based consulting firm Municipal Market Advisors....

Last Updated: January 31, 2008 00:56 EST

http://online.wsj.com/article/SB1201...googlenews_wsj
Derivatives Write-Downs Hit MBIA
By LAVONNE KUYKENDALL
January 31, 2008 2:57 a.m.

.....MBIA's fourth quarter derivatives write-down is more than 10 times as large as the $352.4 million write-down it reported in the third quarter, an indication of the rapidly worsening U.S. housing market and its effect on securities backed by loans made to credit-challenged customers.

Of the $3.5 billion charge, MBIA estimated it would realize $200 million of credit impairment or actual claims payments on the portfolio. In addition to the credit impairment on its derivatives portfolio, MBIA also set aside $713.5 million of pretax loss and loss-adjustment expense due to an expected loss of $613.5 million on its guarantees, and a special addition of $100 million to the unallocated loss reserve for MBIA's prime, second-lien mortgage exposure.

Second lien, or home-equity loans, have shown rising losses as home values plunge in some parts of the country.......

Quote:

http://www.marketwatch.com/news/stor...D8CB2982458%7D
MBIA, Ambac slump on Ackman loss estimates
Bond insurers face much bigger losses, hedge fund manager and critic says
By Alistair Barr, MarketWatch
Last update: 7:01 p.m. EST Jan. 30, 2008
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SAN FRANCISCO (MarketWatch) -- Ambac Financial and MBIA Inc. will lose more money than they're currently predicting from guarantees they sold on complex mortgage-related securities, according to Bill Ackman, a longtime critic of the bond insurance industry who is betting against the companies.
Ambac and MBIA shares fell almost 20% at one point in afternoon trading on Wednesday. The stock market also gave up earlier gains.
Ambac (ABK:
AMBAC Inc
News, chart, profile, more
Last: 10.85-2.08-16.09%
4:03pm 01/30/2008

ABK 10.85, -2.08, -16.1%) will incur losses of roughly $11.61 billion from exposure to residential mortgage-backed securities and collateralized debt obligations (CDOs), Ackman, head of hedge fund firm Pershing Square Capital Management, said in a letter to regulators on Wednesday.
MBIA (MBI:

MBI 13.96, -2.02, -12.6%) will lose about $11.63 billion from similar exposures, he added. MBIA could lose another $928 million if reinsurance the company bought to cover certain CDO exposures from 2007 doesn't pay out, Ackman said.
"Losses to MBIA and Ambac from these exposures are materially higher than suggested by the rating agencies or the bond insurers themselves," Ackman said in the letter, a copy of which was obtained by MarketWatch.
MBIA slumped 13% to close at $13.96 on Wednesday, while Ambac shares fell 16% to $10.85. The stocks fell by almost 20% earlier...

Let's bail these "Mo Foes", out, so we can keep the window dressing on the crap assets that MBIA and Ambac "Insurance" cover up as AAA rated assets, after all there are only $2.4 trillion in assets tied up in this toxic crap to prop up:
<h3>Now, they're actually going to examine the credit quality of the insured assets, it could have been dog shit, and their shinola scheme would still have rated it all AAA. The holders of it will puke it all up at once, and get pennies on the dollar for it all, when the bond insurers who "protect the rating", but have no effect on the actual quality of the assets, are too big to fail, do fail....</h3>

Quote:

http://www.bloomberg.com/apps/news?p...T7U&refer=home
MBIA, Ambac May Each Lose $11.6 Billion, Ackman Says (Update4)

By Christine Richard and Mark Pittman

Jan. 30 (Bloomberg) -- MBIA Inc. and Ambac Financial Group Inc., the two largest bond insurers, may each lose $11.6 billion on guarantees of mortgage-linked debt and other securities, according to hedge fund manager William Ackman.

``Up until this point in time, the market and the regulators have had to rely on the bond insurers and the rating agencies to calculate their own losses in what we deem a self-graded exam,'' Ackman said in a statement preceding release of the letter. ``Now the market will have the opportunity to do its own analysis.''

MBIA closed down $2.02, or 13 percent, at $13.96 in New York Stock Exchange trading. Ambac dropped $2.08, or 16 percent, to $10.85. Both companies have lost more than 80 percent of their market value in the past year.

Peter Poillon, a spokesman for New York-based Ambac, and Michael Sitrick, a spokesman for Armonk, New York-based MBIA, didn't immediately return telephone messages seeking comment.

Other Estimates

Bond insurer credit ratings are being reassessed on concern by Fitch Ratings, Moody's Investors Service and Standard & Poor's that the companies don't have enough capital to cover losses stemming from downgrades on securities they guarantee. The extent of those losses hasn't been determined partly because of the difficulty in valuing the complex debt instruments involved.

<h2>To determine whether the companies will retain their top AAA rankings, stamped on $2.4 trillion of securities they guarantee, analysts have tried to estimate likely losses on bonds and CDOs.</h2>

In a report last week, New York-based JPMorgan Chase & Co. analysts forecast pretax losses related to residential mortgage securities of $11.4 billion for Ambac and $8 billion for MBIA. S&P said earlier this month that Ambac could lose $1.9 billion after taxes, and MBIA $3.2 billion.

``If we had the same level of data on every deal, we wouldn't have a problem,'' said Christopher Whalen, managing director of Institutional Risk Analytics, which makes software for banks. ``The data would be ground up, the losses would be known and we'd have a functioning market again.''

Downgrades and Bailout

Ambac said Jan. 22 it expects to pay claims on CDOs of $1.1 billion. MBIA said Jan. 9 it will likely report a $737 million expense for the fourth quarter to cover losses related to deteriorating subprime-mortgage securities it guarantees. MBIA is scheduled today to report its fourth-quarter results after the close of regular U.S. equity trading.

Fitch today downgraded Financial Guaranty Insurance Co., the world's fourth-largest bond insurer, two levels to AA from AAA, after the company failed to raise capital. Earlier this month, Fitch also cut Ambac Assurance Corp. to AA from AAA, and Hamilton, Bermuda-based Security Capital Assurance Ltd.'s XL Capital Assurance and XL Financial Assurance five steps to A.

Industrywide downgrades may force sales by investors who are required to hold only the highest-rated securities and cut profit for banks that have already posted $133 billion of writedowns and credit losses tied to the falling value of mortgage securities.

2002 Report

<h3>New York State insurance regulators met Jan. 23 with U.S. banks to discuss raising new capital for bond insurers. Talks in New York with the unnamed banks are part of Dinallo's effort to stabilize the bond guarantors and bolster the market's finances.
</h3>
The New York State Insurance Department wouldn't comment on Ackman's letter, David Neustadt, a spokesman for the agency said.

Bond insurers are paying a price for expanding beyond their traditional business of backing municipal bonds to guaranteeing debt linked to riskier subprime mortgages as well as CDOs, which repackage assets such as mortgage bonds and buyout loans into new securities.

Ackman, who co-founded Gotham Partners LP in 1993, has been critical of MBIA's AAA ratings since 2002, when he wrote a report ``Is MBIA Triple-A?'' New York-based Pershing Square stands to profit if MBIA's and Ambac's holding companies go bankrupt.

In a Jan. 18 letter addressed to the top executives of each ratings company, Ackman said they are underestimating potential losses at MBIA and Ambac by relying on after-tax results, failing to update ratings on reinsurers of bond insurance and ignoring the slide in the commercial mortgage-backed securities market.

In addition to MBIA, Ambac and Security Capital, the other AAA bond insurers are those owned or operated by Assured Guaranty Ltd., CIFG Assurance North America, FGIC Corp. and Financial Security Assurance Inc....

<h3>So the "rubber" is finally starting to meet "the road". Here is how it worked. Credit rating agencies sold out their fiduciary obligations, as regulator looked the other way. Crap bond assets backed by highly dubious mortgage loans and other "instruments" were "packaged in" with higher quality loan tranches, into bonds that could be shined up as AAA rated. What was there to worry about when this crap could be insured by bond insureres MBIA and Ambac. If these two whores go under, even the pretense of AAA rating on the formerly insured bonds is removed, and the pension, hedge and who knows who FUNDS holding this crap are required in many cases, to sell it if it drops to a lower credit rating or is no longer insured. The solution is for government to prop up the cadavers of busted out bond insurers Ambac and MBIA, to continue to make it appear, on paper anyway...that the $2.4 trillion valuation of these assets, is still $2.4 trillion. Of course, it is all a house of mirrors presented to hold up a house of cards, for a li'l while longer...say...till after the elections???? </h3>

This is how the housing bubble was fueled. All loans made to all borrowers, regardless of their ability to afford their purchases or to repay their loans were shined up as AAA. The money poured in, year after year, and housing and other asset prices were chased up, up, and up. Now it's over, and it will be your granfather's 1932 era depression, redux.

Still skeptical? The Fed just cut it's short term discount rate from 4.25 percent to 3.0 percent, in less than 5 business days, with the 12 month CPI inflation rate at 3.8 percent. The Fed and the president's caninet are shit scared, and the cut the only rate they control, by more than 25 percent in less than a week. If economic activity does not fall off too quickly, watch the price of oil....gold is already back above $925. Who will the Treasury sell $700 billion in this year's federal borrowing requirements to, with these low interest rates, below the offical inflation rate now.

The thread is a nearly a year old, read the posts on the first page, and compare the opinions then, vs. what we observe begining to implode now.

Stock up on canned tuna, beans, and bottled juices, and shop for a home shotgun and a few hundred rounds of shells, down at your WSalmart, just to play it safe !

aceventura3 · 01-31-2008, 11:18 AM

Host,

I do no claim to be an expert and I do not have an advance degree in economics. I just follow major economic trends and I try to study and understand historical business cycles.

I do not support tax payer subsidized bail-outs of any industry or company.

Just for the record on a national level housing prices have not dropped that much.

Quote:

The national median existing-home price2 for all housing types was $210,200 in November, down 3.3 percent from November 2006 when the median was $217,300, but there remains a downward drag on the national median as the mix of closed sales has shifted away from expensive markets.

http://online.wsj.com/public/resourc...s/bbexhome.htm

host · 03-12-2008, 02:22 AM

I don't think Citicorp will be permitted to file BK before the election, but it probably is insolvent now:
http://market-ticker.denninger.net/2...lls-again.html

How many of these on the Fed's list of primary dealers do you think are already at "death's door", and would have already failed if not for the Fed's "socialtistic" interference and manipulation of "free markets"?

http://www.newyorkfed.org/markets/pr...s_current.html

How do you think things are going to progress when the unemployment effect from the decline fo the economy actually influences the ability of home mortgage debtors to make monthly mortgage payments?

I see a progressing "snowball effect", people who have the ability to pay, will cease making payments and walk away when their home valuations drop too far below the outstanding balances of their home mortgage loans.

I am certain there are still a slew of doubters that it will ever "get that bad", but, consider the precarious position, already, of the "primary dealers" and Fannie and Freddie. Who will the mortgage lenders be in the future, and at what interest rate? Who will qualify for mortgage loans?

This bubble was fed by lending conditions whereby anyone who could fog a mirror got approved for a loan. Home prices could only go higher and higher, so tight appraisal standards were unneeded and unheeded. The outstanding mortgage loans are contaminated with over appraised collateral and borrowers of exaggerated credit quality, as are the mortgage bonds they were lumped into. The bond insurers artificially....by insuring the mortgage bonds, raised the credit quality of the mortgage bonds.

The bond insurers will not survive the claims against their assets. The implosion is accelerating, as described at the page first linked in this post.

All the fed and Bushist manipulation in the world will not prevent things economic from looking very ugly this october. The only sure thing is that gasoline prices will drop, with the US economy.

host · 03-14-2008, 10:26 AM

LOL, our president....the "free marketeer"....or is it "mousekateer", or is it huckster for the wealthiest one percent of our population....?

To the indoctrinated kool-ade drinkin' "capitalists" on this board....don't wanna say I told you so, but...... I think I have....over and over and over and.....

Quote:

http://biz.yahoo.com/ap/080314/fed_credit_crisis.html
AP
Fed Pledges to Supply Cash
Friday March 14, 1:53 pm ET
By Martin Crutsinger, AP Economics Writer
Fed Endorses Rescue Effort for Bear Stearns and Pledges to Supply Cash to Financial System

WASHINGTON (AP) -- The Federal Reserve invoked <h3>a rarely used Depression-era procedure</h3> Friday to bolster troubled Bear Stearns Cos. and said it will provide even more help to combat a serious credit crisis.

The action won praise from the administration, <h2>with President Bush saying that Fed Chairman Ben Bernanke was "doing a good job under tough circumstances.".......</h2>

Substitute your own name in the headline, for "Bear Stearns"......fat fucking chance of that, huh?....... are they gonna give "Bear" a "Do Over", too?

Quote:

http://finance.yahoo.com/
Bear Stearns Slammed on JP Morgan, Fed Bailout- AP

The federal government and JPMorgan Chase & Co. teamed up on a bailout of Bear Stearns Cos. on Friday, a last-ditch move to save the investment bank, which acknowledged its dire financial straits <h2>after a week of firm denials.....</h2>

...and they deserve a bailout, and a "Do Over"?....honest and forthright criminal thugs...denying anything until they collapsed.

President Bush will do and say, and authorize and endorse anything to attempt to prop this mess up until he gives up on any possibility of installing McCain in the White House....

ottopilot · 03-14-2008, 10:57 AM

Quote:

Originally Posted by host

LOL, our president....the "free marketeer"....or is it "mousekateer", or is it huckster for the wealthiest one percent of our population....?

To the indoctrinated kool-ade drinkin' "capitalists" on this board....don't wanna say I told you so, but...... I think I have....over and over and over and.....

Substitute your own name in the headline, for "Bear Stearns"......fat fucking chance of that, huh?....... are they gonna give "Bear" a "Do Over", too?

...and they deserve a bailout, and a "Do Over"?....honest and forthright criminal thugs...denying anything until they collapsed.

President Bush will do and say, and authorize and endorse anything to attempt to prop this mess up until he gives up on any possibility of installing McCain in the White House....

host · 03-14-2008, 11:17 AM

ottopilot, thank you for your informed response....

Do you think it is at all ironic that Bear Strearns was one of the top two "packagers" and issuers of mortgage backed securities, <h3>and the consequence for them is a bailout, a "do over"?</h3>

Do you grasp that the intent of packaging "tranches" of thousands of individual mortgages together and then selling them as "mortgage backed" bonds and other securities was to make it impossible to assess the actual credit quality, the risk of owning these instruments?

Doesn't it follow, that with the risk cloaked, and "credit quality" enhanced by bond insurance "coverage" that will end up being insufficient to cover investor loss claims, the supply of mortgage loan money, lent out at low interest rates to the last group of non-homeowners.....the ones who were not of a high enough credit quality to lend money to.....became qualified, was a criminal conspiracy, with the participation of the Fed, the OCC, and the "primary dealers, and of course, the congress and the president ?

Everyone loved the scheme, because "new money".....the last ones in.....was all that was required to keep home valuations appreciating, and the response from all Amercia was serial, "cash out" refis...... MEW...mortgage equity extraction was the "name of the game".....roll over your credit card balances and your car loan balance, into your new, larger, 30 year mortgage....

The "miracle" effect of the "Bush tax cuts".....or Ottopilot, do you think, other than posting a comical pic....meant to make me look "silly", this is all about something else than I have described.....why would your reaction be to try to make me look "silly".....is your uhhhh "belief system" feeling a little angst, over this "news".....or something???

aceventura3 · 03-14-2008, 11:21 AM

Host,

If our market economy was truly a free capitalist economy, Bear Stern and a few other financial institutions would have failed. Currently we have people in Washington trying to manage our economy. The more bureaucrats try to manage our economy the longer the pain will be. I have no problem with companies that have taken too much risk and fail, it seems that you don't either - welcome to the "free market" club.

ottopilot · 03-14-2008, 11:47 AM

The long line of AMTRAK bailouts.

Chrysler

1994/1995 Mexican peso crisis bailout leading to Nafta.

1995 - Clinton administration gets billions for the International Monetary Fund (IMF), plus the Federal Reserve arranged for a $3.65 billion bailout of its friends in an investment group running a ""hedge fund'' in Connecticut.

Ethanol and farm subsidies.

and on and on and on ...

Just like the Bush administration, I'm sure we can step through just about any past administration and find bailouts. I'm not assigning judgement, but pointing out it's biz-as-usual in politics. Just adding levity to ease the theatrics.

Cynthetiq · 03-14-2008, 11:49 AM

Quote:

Originally Posted by ottopilot

The long line of AMTRAK bailouts.

Chrysler

1994/1995 Mexican peso crisis bailout leading to Nafta.

1995 - Clinton administration gets billions for the International Monetary Fund (IMF), plus the Federal Reserve arranged for a $3.65 billion bailout of its friends in an investment group running a ""hedge fund'' in Connecticut.

Ethanol and farm subsidies.

and on and on and on ...

Just like the Bush administration, I'm sure we can step through just about any past administration and find bailouts. I'm not assigning judgement, but pointing out it's biz-as-usual in politics. Just adding levity to ease the theatrics.

right, so far in my lifetime, I've seen plenty of bailouts which saved companies and whole industries. It goes back as far as I can read in American history.

It's not anything new at all.

host · 03-14-2008, 11:52 AM

"currently", ace? I am so far from wet dreams about a "free market" economy, I cannot find the words to describe the distance.

My point is that we have been in a "rigged scheme" designed and controlled by the wealthiest, for the benefit of the wealthiest. We have one antidote, our sheer numbers....but the brainwashing "Op" and campaign of flattery successfully carried out against a sufficient number of us to deflate the will to use our sheer numbers to shut these thugs down, results in this "systemic hiccup".

If the president and the congress represented the interests of "the people", instead of the interests primarily of the top one percent wealthiest, and the next nine percent who flatter themselves into thinking that they are "in the club", too.... the wealthiest one percent would not own one third of all US assets, ace.

Once in a while, we get to see what they are actually doing every day, because the president and the Fed have to openly admit that they support the financial criminals, as their highest priority, and today is one of those days.

Instead of "too big to fail", as a demonstrated Fed and presidential/congressional policy, ace....do you think it would cost anymore than the current "policy" it is costing the rest of us, to have the highest priority be a <h2>"too small to fail"</h2>, priority?

These thugs have encouraged our outsized consumption and dependence on oil, they've intentionally inflated the currency, stocks, and housing prices, and now....we're witnessing the early stages of the economic life we knew, being over. There will be no wealth in public hands to bail out anyone, but especially the least of us.....

aceventura3 · 03-14-2008, 12:16 PM

Quote:

Originally Posted by host

"currently", ace? I am so far from wet dreams about a "free market" economy, I cannot find the words to describe the distance.

My question would be where do you want to go from here? Do you want more centralized government control of our economy, or less?

Quote:

My point is that we have been in a "rigged scheme" designed and controlled by the wealthiest, for the benefit of the wealthiest.

That is like saying water is wet. Of course the system is "rigged". Every system is "rigged". Those who have power, will do what they think is in their best interest, including you. We live in a dog eat dog world, like it or not. The weak and the poor will never have lasting power and control. And you can bet when the selected few from the poor ascend to power and wealth they will be the same. Our best hope is through having the freedom of choice in free markets.

host · 03-19-2008, 06:11 AM

All aboard!!! The Fed, the treasury secretary, former GS chairman Hank Paulson, the congress and the rest of the Bush administration are revealing their hand.... We are fucked....but the dollar is intended to be reduced to "midget" size. They are actually mortally afriad of deflationary depression, and it will come as the next stage, after this disasterous attempt to inflate:

Quote:

http://boards.prudentbear.com/bbs_re...snsa=A#M650189
It is now logical to assume Weimarization will be the way chosen to fight the credit collapse, with the announcement that the capital requirements of Fannie and Freddie will be lowered.

So, Fed isn't the only entity being enlisted to fight the fires of deflation. Fannie and Freddie will be increasing both their portfolios and their MBS guarantees, as their capitalization requirements will be lowered by OFHEO.

It is notable that hese two entities already own or guarantee $4.5 trillion in mortgages/MBS, and do so on tiny slivers of capital.

Also not to be forgotten is the "Other GSE", the FHLB banks, which guarantees another $1 trillion or so in mortgage debt, and is expected to grow this year as well.

The Fed, of course, (along with other central banks) will be buying the MBS paper that Freddie, Fannie and FHLB create.

Therefore, the only logical conclusion to which one can arrive is Weimarization.

Quote:

http://www.freddiemac.com/news/archi...nitiative.html
For Immediate Release

March 19, 2008
Contact: corprel@freddiemac.com
or (703) 903-3933

OFHEO, FANNIE MAE AND FREDDIE MAC ANNOUNCE INITIATIVE TO INCREASE MORTGAGE MARKET LIQUIDITY

McLean, VA – OFHEO, Fannie Mae and Freddie Mac today announced a major initiative to increase liquidity in support of the U.S. mortgage market. The initiative is expected to provide up to $200 billion of immediate liquidity to the mortgage-backed securities market.

OFHEO estimates that Fannie Mae's and Freddie Mac's existing capabilities, combined with this new initiative and the release of the portfolio caps announced in February, should allow the GSEs to purchase or guarantee about $2 trillion in mortgages this year. This capacity will permit them to do more in the jumbo temporary conforming market, subprime refinancing and loan modifications areas.

To support growth and further restore market liquidity, OFHEO announced that it would begin to permit a significant portion of the GSEs' 30 percent OFHEO-directed capital surplus to be invested in mortgages and MBS. As a key part of this initiative, both companies announced that they will begin the process to raise significant capital. Both companies also said they would maintain overall capital levels well in excess of requirements while the mortgage market recovers in order to ensure market confidence and fulfill their public mission.

OFHEO announced that Fannie Mae is in full compliance with its Consent Order and that Freddie Mac has one remaining requirement relating to the separation of the Chairman and CEO positions. OFHEO expects to lift these Consent Orders in the near term. In view of this progress, the public purpose of the two companies, and ongoing market conditions, OFHEO concludes that it is appropriate to reduce immediately the existing 30 percent OFHEO-directed capital requirement to a 20 percent level, and will consider further reductions in the future....

This is not a "liquidity" problem, it is a credit worthiness and a price problem.
<h3>Until the average person, the one with average income and average outstanding debt and net worth can afford to pay the price asked for an average priced home</h3>, putting a down payment of 20 percent into the purchase and obtaining a mortgage with total monthly payments, including taxes and insurance (MTI), or no more than 36 percent of monthly income, home prices must continue to fall.

If "the government" absorbs most of the mortgages already outstanding, it will take the hit for the defaults of the mortgagees, as home prices decline to the level of affordability I just described. It is this simple, and obvious.

The tax payer will owe the addtional debt that is the consequence of millions of people not able or refusing to make their mortgage payments on the mortgage loans already made, and now "absorbed" by the government.

The government will print new money, out of thin air, to monetize this new borrowing, as these "purchased" mortgage loans held by Fannnie and Freddie become worthless. By extension, the dollar will (it's already on that road) <h3>become worthless!</h3>

Quote:

http://www.pbs.org/wgbh/commandinghe...inflation.html
The German Hyperinflation, 1923

Excerpt from Paper Money by "Adam Smith," (George J.W. Goodman), pp. 57-62.

......More than inflation, the Germans feared unemployment. In 1919 Communists had tried to take over, and severe unemployment might give the Communists another chance. The great German industrial combines -- Krupp, Thyssen, Farben, Stinnes -- condoned the inflation and survived it well. A cheaper Mark, they reasoned, would make German goods cheap and easy to export, and they needed the export earnings to buy raw materials abroad. Inflation kept everyone working.

So the printing presses ran, and once they began to run, they were hard to stop. The price increases began to be dizzying. Menus in cafes could not be revised quickly enough. A student at Freiburg University ordered a cup of coffee at a cafe. The price on the menu was 5,000 Marks. He had two cups. When the bill came, it was for 14,000 Marks. "If you want to save money," he was told, "and you want two cups of coffee, you should order them both at the same time."

The presses of the Reichsbank could not keep up though they ran through the night. Individual cities and states began to issue their own money. Dr. Havenstein, the president of the Reichsbank, did not get his new suit. A factory worker described payday, which was every day at 11:00 a.m.: "At 11:00 in the morning a siren sounded, and everybody gathered in the factory forecourt, where a five-ton lorry was drawn up loaded brimful with paper money. The chief cashier and his assistants climbed up on top. They read out names and just threw out bundles of notes. As soon as you had caught one you made a dash for the nearest shop and bought just anything that was going." Teachers, paid at 10:00 a.m., brought their money to the playground, where relatives took the bundles and hurried off with them. Banks closed at 11:00 a.m.; the harried clerks went on strike.

The flight from currency that had begun with the buying of diamonds, gold, country houses, and antiques now extended to minor and almost useless items -- bric-a-brac, soap, hairpins. The law-abiding country crumbled into petty thievery. Copper pipes and brass armatures weren't safe. Gasoline was siphoned from cars. People bought things they didn't need and used them to barter -- a pair of shoes for a shirt, some crockery for coffee. Berlin had a "witches' Sabbath" atmosphere. Prostitutes of both sexes roamed the streets. Cocaine was the fashionable drug. In the cabarets the newly rich and their foreign friends could dance and spend money. Other reports noted that not all the young people had a bad time. Their parents had taught them to work and save, and that was clearly wrong, so they could spend money, enjoy themselves, and flout the old.

The publisher Leopold Ullstein wrote: "People just didn't understand what was happening. All the economic theory they had been taught didn't provide for the phenomenon. There was a feeling of utter dependence on anonymous powers -- almost as a primitive people believed in magic -- that somebody must be in the know, and that this small group of 'somebodies' must be a conspiracy."

<h3>When the 1,000-billion Mark note came out, few bothered to collect the change when they spent it.</h3> By November 1923, with one dollar equal to one trillion Marks, the breakdown was complete. The currency had lost meaning........

host · 03-31-2008, 10:39 PM

Quote:

Originally Posted by The_Jazz

Host, I find this very interesting from a professional perspective since residential construction currently accounts for about 45% of my income. While it's certainly true that the housing bubble has burst in certain places, what's true about politics - that it's all local - is true about real estate. There are current housing booms in 5 major cities that I deal with on a daily basis that aren't showing any signs of slowing down appreciably. Las Vegas is the most obvious one, especially for condos on the Strip.

That said, I think that you've drawn too narrow a window for a look at the fiscal health of the country. While I agree that the economy could be heading for a downturn, I disagree that the lending standards and housing boom are the cause. If we do see a recession, I think that it would be a minor one at best but the timing would be absolutely crucial for the 2008 election season. We've already seen how foreign regulations can affect our stock market, but the trends that I see in the industrial manufacturing arena don't really lend themselves towards a major recession around the corner. Sales on big-ticket consumer products are going up, and that's my most accurate assessment of national economic health. People are buying more RV's than they did last year, and that's been an excellent barometer for me for the past 10 years.

It's a big country, and only in three markets have realty sales held their own, but with price reductions:

Quote:

http://www.cnbc.com/id/23705117
There Are Pockets of Strength in The Housing Slump
By Reuters | 19 Mar 2008 | 09:39 AM ET

.....While Ross and surrounding Marin County may be a special case, a report last month by S&P/Case-Shiller showed that three metropolitan areas posted modest gains in home prices last year -- Seattle; Portland, Oregon; and Charlotte, North Carolina.

Both Charlotte, a major financial center, and Seattle, a high-tech hub, have low unemployment rates and all three are seen as desirable places to live.

But even in those three markets, average home prices declined in December from November, leading home owners and real estate agents to hope declines will be small.

Seattle's home prices may give up some gains -- but not much, because "they weren't as far out of kilter as in other places," said Glenn Crellin, director of the Washington Center for Real Estate. .....

Even in 1930, at the beginning of the Great Depression, the Empire State Building still got built....not this time:

Quote:

http://news.rgj.com/apps/pbcs.dll/ar...80329024/0/ENT
Wall Street Journal: Vegas tower project in trouble
Staff Report • March 29, 2008

One of the biggest projects planned for the Las Vegas Strip appears to be falling apart, the Wall Street Journal is reporting today.

"The site of what was supposed to be the tallest tower in Las Vegas, and among the tallest in the U.S. at 1,064 feet, is now for sale," the Journal reports. "Las Vegas developers and Wall Street securities analysts assume the proposed $5 billion project, which was scheduled to open in 2011, is dead."

Last year, Australian gambling company Crown Ltd. and Texas developer Christopher Milam teamed with private-equity firm York Capital Management LLC to build a casino complex and 5,000-room hotel on the Strip, according to the Journal.

<h3>Overall in Las Vegas, 23,000 hotel or hotel-condo-rooms planned have been canceled or suspended recently, the Journal reports,</h3> citing information from Deutsche Bank AG casino anaylst Bill Lerner.

The economic slowdown and credit crunch are blamed.

The author of this article is talking up the job market in Denver, not in Las Vegas....it sucks there:

Quote:

http://www.forbes.com/realestate/200...ealestate.html
Housing Trends
America's Riskiest Real Estate Markets
Matt Woolsey, 03.31.08, 10:30 AM ET

In Pictures: America's Riskiest Real Estate Markets

There's roulette and there's skydiving. Then there's investing in Detroit and Cleveland real estate.

That's especially risky because those markets are in freefall. Lenders have fled, foreclosures are on the rise, homes aren't selling and local economies have stalled.

Given the state of the country's housing market, it wasn't hard to find others like them. To do so, Forbes.com looked at the country's 40 largest metros and combined data on foreclosures, from RealtyTrac, a foreclosure listing service; job growth from the Bureau of Labor Statistics; transaction volume data from Radar Logic, a New York real estate research firm; and vacancy and current inventory rates from the U.S. Census Bureau and ZipRealty, an aggregator of multiple listing service data. .....

.....Not as fortunate are hard-hit foreclosure markets such as Denver, which saw 50,000 foreclosure filings last year, according to RealtyTrac, which comes out to a 2.6% foreclosure rate, ninth in the nation behind the likes of Las Vegas and Detroit. Here, GSE loan limits won't change to boost liquidity, though at the beginning of this year the local economy had added jobs at a rate of 2%, which is triple the national average, according to the Bureau of Labor Statistics. ......

http://www.forbes.com/2008/03/31/hom...hisSpeed=20000
In Pictures: America's Riskiest Real Estate Markets
Read the full story Matt Woolsey

6. Las Vegas, Nev.
In 2004 and 2005, Vegas lead the nation in jobs added. But after the housing bubble popped, the job growth--driven largely by construction--stopped, and has been flat since March 2006. The true danger here, besides the foreclosures and unsold homes is that the economy won't grow enough to burn off the excess inventory and that as rates reset there are going to be a lot of people with mortgages, not jobs....

...and current RV sales environment:

Quote:

http://www.forbes.com/feeds/ap/2008/...ap4808851.html

Associated Press
Analyst Cuts Rating on Winnebago
Associated Press 03.24.08, 7:20 PM ET

NEW YORK -
Shares of Winnebago Industries Inc. climbed Monday along with the broader market even as an analyst downgraded the recreational vehicle maker, citing its disappointing second-quarter results.

Late last week Winnebago reported its earnings tumbled 67 percent on weak RV sales. The Forest City, Iowa-based company also said it cut about 300 jobs, or 9 percent, of its work force.

BB&T Capital Markets analyst John Diffendal said in a client note that Winnebago's quarter was one to forget, with "simply not much good to report.".....

Quote:

http://www.hometownannapolis.com/cgi...8/03_27-29/BUS
As economy fizzles, business picks up for RV rental company

KATIE ARCIERI Staff Writer
Published March 27, 2008

....As the economy slows, RV sales typically follow suit. According to the Recreation Vehicle Industry Association in Virginia, RV shipments to dealers declined 9.5 percent last year after five consecutive years of record growth. Kevin Broom, association spokesman, said the industry is typically a "bellwether" for economic downturns.

"When shipments go down, it usually precedes a recession," he said.

Meanwhile the RV rental industry is growing, he said.....

Quote:

http://www.bloomberg.com/apps/news?p...Q_g&refer=home
U.S. Auto Sales Likely Fell in March Amid Luxury Drop (Update2)

By Greg Bensinger

March 31 (Bloomberg) -- Automobile sales in the U.S. probably fell for a fifth straight month in March amid a drop in demand for luxury vehicles such as Honda Motor Co.'s Acura and General Motors Corp.'s Saab.

Orders for premium brands declined by at least 10 percent, estimated Jesse Toprak, an Edmunds.com analyst in Santa Monica, California. Overall sales for GM, Ford Motor Co. and Chrysler LLC probably slid by at least 5.5 percent from a year earlier, according to the average estimate of nine analysts in a Bloomberg survey.

Sales by automakers' luxury divisions -- broadly defined by analysts as those selling autos for $40,000 aimed at the most- affluent consumers -- were down 12 percent in February from a year earlier as the impact of the credit crunch and declining home prices spread.

``It's largely a myth that the luxury market holds up better throughout the economic cycle than the rest of the market,'' said George Pipas, chief sales analyst at Dearborn, Michigan-based Ford. ``Ask the guys on Wall Street if their bonuses are as big as they were in years past.''

Ford's Lincoln, Volvo, Jaguar and Land Rover brands are among 13 luxury marques that recorded sales shortfalls in the first two months of the year.

The analysts' estimates for the month account for two fewer selling days than in March 2007. Bloomberg and some automakers use unadjusted percentage comparisons, which would be about 8 percentage points lower than the analysts'.

Lowest Since 2005

The industry's annualized sales rate probably fell to 15.1 million cars and light trucks in March, which would be the lowest since October 2005, based on a survey of 19 analysts and economists. That compares with 16.3 million a year earlier.

Automakers release March results tomorrow.

U.S. auto sales fell 5.4 percent in January and February, and may drop to their lowest total since 1998 this year after a 2.5 percent tumble in 2007.

The average estimate among the analysts surveyed by Bloomberg is for a 12 percent decline this month at Chrysler, 9.7 percent at Ford and 5.5 percent at GM.

Among the biggest Japanese automakers, Toyota Motor Corp.'s sales may have dropped 5 percent and Nissan Motor Co.'s 2 percent, while Honda's may have risen 4 percent, New York-based Deutsche Bank analyst Rod Lache said

Luxury brands account for about one in 10 auto sales in the U.S. Of 18 luxury brands, only five -- GM's Cadillac, Nissan's Infiniti, Fiat SpA's Maserati, Daimler AG's Mercedes-Benz and Bayerische Motoren Werke AG's Rolls Royce -- posted higher sales in January and February. ....

Unemployment has not had any impact yet.....two predictions, five years from now, all of this year will be considered part of an era of economic depression in the US. There will be agreement on this board, much more than there is now....that we are in a depression, no later than one calendar year from now. Signs will be unemployment between six and severn percent, gasoline at the pump selling at less than $2.25 per gallon in areas where it is $3.15/gal now...

China's principle stock exchange action is predictive of less petroleum consumption from China until China finds export markets to soak up merchandise intended for shipment to the US.....

I doubt the Shanghai exchange would be down half as much if they were not as concerned as they are there about the prospects for US demand for the goods that they export:

<img src="http://chart.finance.yahoo.com/c/1y/0/000001.ss">

There has been a lot of whining in the US lately about short sellers and put options traders pushing down US stock prices because of their "artificial" selling of stocks....China does not permit short selling of stocks, and does not have stock futures options traded on their exchanges, so....the decline in the US has nothing to do with manipulation, if China's chart is an indicator of what a market without "shorts" and "put buyers" looks like.

..two more major investment banks will end up like Bear Stearns , or worse...filing BK, and one of the four major commercial banks, probably Citi Corp or Wells Fargo, will have a stock price under $5.00. Fannie or Freddie or both will also see their stock selling under $5.00.

Quote:

http://globaleconomicanalysis.blogsp...ow-motion.html
Slow Motion Train Wreck
Bennet Sedacca is asking Who Will Be Next Bear Stearns?

Without naming names quite yet, what would you think of a company that accomplished the following in 2007?.....

The Dow 30 (DJIA) average will be below 9000, sometime during April, 2009, and the S&P 500 index will fall below 1000, before April 30, 2009.

There will be talk that the Fed is becoming more concerned about fighting deflation, than inflation....not that it has ever been concerned about inflation, it lowered the key short term interest rate 2 full pts. in the past month.

The_Jazz · 04-01-2008, 05:12 AM

The way my job works typically gives me an idea of what the overall economy is doing - at least I like to think it does. Since I deal solely in commercial casualty insurance, a company's sales is generally one of the primary bases for insurance premium (there are lots of exceptions). That's relevant to the discussion because of what I'm seeing.

Back in 2000 and 2001 we saw projected sales for RV's and travel trailers (classes of business that generally flow my way) drop steadily and steeply. It for every single one that we wrote. Right now, about half are projecting increases in sales and the other half are projecting decreases. I honestly can't tell what's going on.

Speaking personally, I'm glad that I'm young and able to take advantage of the lower prices. They'll be down in the short term, but in the long term, that will hopefully help my position.

aceventura3 · 04-01-2008, 10:47 AM

I really enjoy this thread, because all the predictions we document here will prove to be correct or incorrect. I am impressed by the resiliency of our economy. After the "sub-prime meltdown", "real estate market bubble bursting", currently anticipated recession, dollar devaluation, $100+ oil, historic national debt levels measured in dollars, billions in banking write-downs, the war, and the general credit and regulatory crisis - the general economy continues to chug-chug-chug along.

host · 04-01-2008, 11:13 AM

Quote:

Originally Posted by aceventura3

I really enjoy this thread, because all the predictions we document here will prove to be correct or incorrect. I am impressed by the resiliency of our economy. After the "sub-prime meltdown", "real estate market bubble bursting", currently anticipated recession, dollar devaluation, $100+ oil, historic national debt levels measured in dollars, billions in banking write-downs, the war, and the general credit and regulatory crisis - the general economy continues to chug-chug-chug along.

The reason it seems to still "chug-chug along", IMO, anyway, and the reason the_jazz is getting mixed signals from the RV business, is denial and "dislocation":

This POS homebuilder is on the hook for many of the mortgages it wrote, it has it's own mortgage division, and it's website says it provides mortgages to 80 percetn of buyers of Centex built homes:

Quote:

Centex Land Deal: And I Thought Worst Was Almost Over
Posted By

iana Olick
Topics:Housing | Real Estate
Sectors:Financial Services | Construction and Materials
Companies:Centex Corp

CNBC.com
--------------------------------------------------------------------------------

Every time I want to say that the bleeding is over, I'm proven wrong. Centex Centex CorpCTX

[CTX 24.93 0.72 (+2.97%) ] just announced that they sold about 10 percent of their land holdings to a joint venture for what analysts compute is about 18 cents on the dollar.

The joint venture that is led by Dallas-based RSF partners paid $161 million for 8,500 lots in 11 states. The book value, according to Centex, was $528 million at the time of sale, but analysts say that was already after significant write-downs. They say the land was worth $900 million originally.

Centex will receive the $161million plus $294 million worth of tax refunds, so the total cash receipt is $455 million. “This transaction is consistent with our near-term goals of reducing our land supply and generating cash,” says Centex CEO Timothy Eller. “This land sale accelerates our move to a more asset-light operating model, sharpens our focus on strategic markets and consumer segments, reduces future land development cash obligations and monetizes a meaningful portion of our deferred tax asset.”

The majority of the land is in California and Nevada, obviously the heart of the housing bust. Pali Research analyst Stephen East notes, “Given the well-known weakness in the markets, we are surprised that CTX had not been more realistic in its mark down of land in its impairment process the prior quarter. Did they really think three months ago this land was worth more than 3X what it was sold for?”

Hope springs eternal, I suppose.

Questions? Comments? RealtyCheck@cnbc.com

They announce today that they sold 8,500 building lots for 18 cents on the dollar....they do two things, build homes on the lots and lend money to the people who buy the homes.

They lost 82 cents on every dollar that they paid for the land, they lost the opportunity to build homes...for profit....on the lots they sold. Chances are that they sold to raise cash to meet another margin call on the sinking value of the mortgage portfolio they lent out to customers, but couldn't sell. They announced last fall that they had a credit facility for almost $500 million from JP Morgan to issue mortgages from....

....and this minute, my Level II quote display foe their stock, CTX, shows it is trading at $25.27 per share, up a full $1.00 vs. yesterday's closing price.

They will go BK, they cannot borrow money to meet new margin calls on their junk mortgage portfolio, and they can't make money selling new homes, but the stock is trading at the same price as it was last fall.

I predict this is all gonna get REAL ugly when reality sets in,and we don't just flirt with it and forget it, like the market did when Bear Strearns collapsed on March 14. That was only 17 days ago, and on CNBC, the talking a-holes are proclaiming a "bottom is in", on stock prices..... whew!!! That is enough for now, but it is alarming, and it shows the ignorance and disconnect that was required to get us in this crisis that most are not yet ready to even face.

Ustwo · 04-01-2008, 11:13 AM

Quote:

Originally Posted by aceventura3

I really enjoy this thread, because all the predictions we document here will prove to be correct or incorrect. I am impressed by the resiliency of our economy. After the "sub-prime meltdown", "real estate market bubble bursting", currently anticipated recession, dollar devaluation, $100+ oil, historic national debt levels measured in dollars, billions in banking write-downs, the war, and the general credit and regulatory crisis - the general economy continues to chug-chug-chug along.

Lies and spin.

Its a brutally stratified economy and an unmitigated failure.

There is no way to get ahead except for government programs and intervention.

The same fuckers have been screwing us for 80 years.

Ummm did I miss anything?

Rule of thumb, never trust unsuccessful people to give you economic advice.

host · 04-01-2008, 11:24 AM

Quote:

Originally Posted by Ustwo

Lies and spin.

Its a brutally stratified economy and an unmitigated failure.

There is no way to get ahead except for government programs and intervention.

The same fuckers have been screwing us for 80 years.

Ummm did I miss anything?

Rule of thumb, never trust unsuccessful people to give you economic advice.

I joined this site described at this link, last night:

http://www.cnbc.com/id/23845865

The most successful investors who are members at the site, they give you $1 million virtual dollars to fund a stock portfolio....win monthly cash awards based on performance and posting analysis of individual stocks. The site seems to have an outsized membership of college students.

It is a chance to put the site's virtual money, where our mouths are. This AM, I performed $990K in stock trades. I will post here how my stock picking fares.

My membership ID there, is the same as it is, here. I hope you decide to join, Ustwo, I withdrew my ugly initial reaction to your last post, and I am proposing this contest, in the spirit of a more constructive engagement.

Ustwo, will you extend us the courtesy to notify us, in a series of future post here, on the progress of your virtual investment portfolio?

aceventura3 · 04-01-2008, 12:38 PM

Quote:

Originally Posted by host

The reason it seems to still "chug-chug along", IMO, anyway, and the reason the_jazz is getting mixed signals from the RV business, is denial and "dislocation":

Or...perhaps things are not as bad as they seem, but I have been in denial in the past and I am generally an optimistic person.

Quote:

They announce today that they sold 8,500 building lots for 18 cents on the dollar....they do two things, build homes on the lots and lend money to the people who buy the homes.

I find this fact to be interesting and worthy of thought.

* If they received 18% of what they paid, why?
*Did they pay to much?
*Did the original seller receive a windfall profit 78% over true market value. *What did the original seller do with that excess profit?
*Is the reason for receiving 18% on the dollar due to them using financial leverage?
*Did that leverage include options to purchase the land that was going to expire worthless, hence making the 18% significantly better than 0%?
*Should this management team pay a price for being incompetent?
*Is this the way free markets should reward or punish managers of capital?
*Does the buyer of this land at $.18 on the dollar have a built in equity position of $.72?
*What is the buyer going to do with the land?
*What is the buyer going to do with the potential windfall profit?

In the market it is not a zero sum game, there are winners and losers.

I don't expect answers to the questions, just food for thought.

Quote:

Originally Posted by Ustwo

Lies and spin.

How about opinion?

Quote:

Its a brutally stratified economy and an unmitigated failure.

By what standard do you measure "unmitigated failure". Some people are doing well, have you seen the tax filings of those running for President?

Quote:

There is no way to get ahead except for government programs and intervention.

What about: Education? Hard Work? Perseverance? Luck? Inheritance? American Idol?

Quote:

The same fuckers have been screwing us for 80 years.

I am only 47, and I don't even know you.

Quote:

Ummm did I miss anything?

No.

aceventura3 · 05-16-2008, 06:29 AM

Host,

Housing starts are up 8.2% in April, month over month to a seasonally adjusted 1.03 million annual rate. Like I posted previously, people have to live somewhere and the number of US households continues to grow. The housing slump will be temporary and we may be near or at the bottom of this housing slump.

Quote:

WASHINGTON -- Home construction turned up unexpectedly in April and showed surprising vigor, making the biggest increase in two years. However, the increase was driven by a surge in multi-family housing, while single-family starts dropped.
REAL TIME ECONOMICS

[Go to blog]
• Read the latest news and analysis on the economy at WSJ.com's Real Time Economics blog.

Housing starts increased 8.2% to a seasonally adjusted 1.032 million annual rate, driven higher by a surge in apartment building construction, the Commerce Department said Friday. Starts plunged 13.8% in March to 954,000, the data showed; Commerce initially estimated March starts down 11.9% to 947,000.

Economists surveyed by Dow Jones Newswires expected April starts to drop by 1.4% to a 934,000-unit annual rate. The 8.2% increase was the largest monthly climb since a 14.0% jump in January 2006.

But year over year, housing starts were 30.6% below the level of construction in April 2007.

"The headline increase in starts means nothing; it is all due to a rebound in the hugely volatile, but essentially trendless, multi-family sector," said Ian Shepherdson of High Frequency Economics.

April single-family housing starts decreased 1.7% to 692,000. Construction of housing with two or more units soared 36.0% to 340,000; within that category, groundbreakings of homes with five or more units -- or multi-family -- were 40.5% higher.

Builders have been reluctant to build because demand for new homes has plunged and the supply of unsold property remained high. The latest data show new-home sales, for March, were down 36.6% from a year earlier. On Thursday, the National Association of Home Builders reported its index for sales of new, single-family homes slipped to 19 in May from 20. The gauge is based on a survey of builders asked about prospects for sales.

"The magnitude of the housing bubble was unprecedented, and the corrective process promises to be a long and painful one," MFR Inc. Joshua Shapiro said of the NAHB data. "Hence, it is hardly surprising that builder sentiment is still languishing very near its all-time low."

Earlier this week, luxury-home builder Toll Brothers Inc. released preliminary results of its fiscal second quarter and reported a 30% drop in home-building revenue. Its chief, Robert I. Toll, said current customer traffic is "the worst we've ever seen" and characterized would-be buyers as "scared."

Lehman Brothers analyst Michelle Meyer on Thursday said, "We think home sales won't bottom until the end of the third quarter, leaving builders gloomy and cutting construction through the end of the year."

Yet Friday's data showed building permits rose in April by 4.9% to a 978,000 annual rate in April. Analysts expected a drop of 1.8% to 910,000. March permits decreased by 5.0% to 932,000. Permits are a precursor to actual building.

Regionally, housing starts increased 24.4% in the Midwest, 3.6% in the South, and 18.5% in the West. Starts in the Northeast fell 12.7%.

Nationwide, an estimated 92,400 houses were actually started in April, based on figures not seasonally adjusted. An estimated 89,000 building permits were issued last month, also based on unadjusted figures

http://online.wsj.com/article/SB1210...?mod=wsjcrmain

Cynthetiq · 05-16-2008, 06:50 AM

that may be the case, I was just in Las Vegas shopping for properties.... it's amazing just how many homes are 50% of the value the bank originally sold it before they took possession of the asset.

it's a good season to buy something... and there are plenty of renters.

host · 05-16-2008, 09:54 AM

yes, ace....you did post in the past your opinion that population growth would dictate continued housing unit construction. Youlve presented evidence today that thete is a one month incresse in housing starts concentrated in multi unit construction and that single family home sales numbers, along with interest exhibited by potential buyers, plummeting into, for the single family home market, modern day depression levels. Now the decline proceeds in a way that destroys the core of middle class equity concentration, unlike the wealthy, the middle held the bulk of their personal wealth in their homes. A boom if one develops, in multi unit home building will do little to offset the decline in the willingness of consumers who felt 'house rich' when their principle asset was rising in value, year after year....to spur demand in the general economy. In addition, there is the ongoing process of former consumers losing first their credit ratings and then their homes. Add to this the reaction of tighter mortgage lending standards. We will see who the remaining robust creditworthy and enthusiastic consumers are who will do the buying in the volume needed to hold up the overall economy. I don't understand your emphasis, ace on the impact of multi unit construction. Itvwon't provide income for millions of realtors or for those who make and sell all of the materials, goods, and furnishings which robust sales of new and existing homes was providing. It will spur sales of some building materials and furnishings and appliances....keep a small portion of the building trades workforce employed. The big picture has not changed since i started the thread and we're probably in the spring, using a year of economic downturn, of the entire period of things getting worse before they get better in the single family home sector. In the broader economy, we may still only be in early march compared to where this downturn reverses.....

aceventura3 · 05-16-2008, 12:27 PM

Stay tuned.

Remember that movie Fatal Attraction, when the character played by Glenn Close says: "I will not be ignored". Well we can consider the fundamentals driving the housing market like Glenn Close's character. If the economy needs 1 million plus new housing units each year, at some point that demand will drive market prices and can not be ignored. They can not create new land, that can not be ignored. They can not stop life cycles of children growing up and wanting to move out, that can not be ignored. They can not stop a woman's desire to nest (oops kind a sexist, but true, are you married yet? Just wait.). Oh, you get the point, its Friday.

host · 05-16-2008, 08:58 PM

Quote:

Originally Posted by aceventura3

Stay tuned.

Remember that movie Fatal Attraction, when the character played by Glenn Close says: "I will not be ignored". Well we can consider the fundamentals driving the housing market like Glenn Close's character. If the economy needs 1 million plus new housing units each year, at some point that demand will drive market prices and can not be ignored. They can not create new land, that can not be ignored. They can not stop life cycles of children growing up and wanting to move out, that can not be ignored. They can not stop a woman's desire to nest (oops kind a sexist, but true, are you married yet? Just wait.). Oh, you get the point, its Friday.

ace, because you are posting about your take on housing driven demand influenced by population increases, and because I have the information below....I'm having difficulty understanding why you are posting such opinions.

There is evidence of an extreme glut of single family homes available, record numbers of them vacant. Prices plummet because of these market conditions, causing prices to drop further. Hundreds of thousands are displaced, driven out of homes, or abandoning them voluntarily, as prices drop below the amounts these folks owe agaist these diminishing assets. Credit ratings destroyed, these folks cannot borrow a dime, conventionally, but they still have to live somewhere, so speculators build some apartment units, anticipating demand from former homeowners who cannot pass a credit check.

Meanwhile, the malinvestment in the now vacant new, previously owned and partially built housing units is money that was not spent or invested on endeavors that reaped any benefit for those involved, and the builders who made money building and selling homes for ten years have mostly lost all of their accumulated corporate equity. The economy, the country, former homeowners, existing homeowners, lenders, builders, realtors, home improvement stores, have all been set back, trapped in illiquid residential assets, taken out of the market, or worse, bankrupted and sold off at distressed price levels.

You, however, see some sort of healthy and growing demand. The millions of vacant homes, meanwhile, are targets of vandals, squatters, lack of maintenance, fires...they ain't improving in value as they sit, month after month. They are vacant because of a lack of demand at current prices.

There are less qualified buyers to purchase these vacant homes. even at today's dramatically reduced prices, than there were two years ago, at much higher price levels.

As home prices continue to drop, more mortgagees are marginalized, and people who only owed 60 or 70 percent of the market value of their homes in 2006, may now or soon own negative ten percent of the loan to value ratio of their homes, as prices drop more.

I don't see your point, ace. It will take ten years to work off the present inventory of vacant homes, helped by some being torn down because they were never completed or suffer, in the coming years, from the pitfalls facing vacant homes, that I described above.

....and all of the sales of these homes will be at prices dramatically lower than what they fetched in sales of comparable homes in 2006. All I see is wealth destruction, ace, and the economy will feel and exhibit the effects from it.

If the automobile market experienced a valuation of new and used cars collapse, as housing is...would you tout the increased demand for bicycles as a sign of a healthy or recovering transport market?

Quote:

http://www.marketwatch.com/news/stor...%7D&dist=msr_3
Record number of homes sitting vacant, U.S. says
By Rex Nutting
Last update: 10:19 a.m. EDT April 28, 2008

WASHINGTON (MarketWatch) -- The glut of homes on the U.S. housing market worsened in the first quarter, according to government data released Monday. The number of vacant homes in the United States rose by 1 million in the past year to a record 18.6 million, the Commerce Department said. Of those 18.6 million vacant homes, a record 2.3 million were for sale at the end of the first quarter, pushing the vacancy rate for owner-occupied units to a record 2.9%. Meanwhile, a record 4.1 million vacant homes are for rent, with the rental vacancy rate rising to 10.1%. The percentage of homes occupied by owners was steady at 67.8% in the first quarter, matching the lowest percentage in five years.

Quote:

http://www.bloomberg.com/apps/news?p...d=au67GKPyS_Dg

.....Almost 200,000 newly constructed single-family homes are sitting empty in the U.S., the most since Commerce Department statistics began in 1973. Partially completed developments reduce revenue for cities and towns and hurt businesses, said Nicolas Retsinas, the director of Harvard University's Joint Center for Housing Studies. Rising foreclosures and falling property values may cut tax revenue by more than $6.6 billion for 10 states, including New York, California and Florida, the U.S. Conference of Mayors said in a November report.

``Half-filled developments are an advertisement for a failing housing market,'' said Retsinas, a former assistant secretary for housing at the U.S. Department of Housing and Urban Development. ``It also has a spillover effect on the surrounding community.''

Falling Prices

About 370,000 new homes are for sale because people who initially contracted to buy them backed out, according to estimates in a Feb. 15 report from analysts at New York-based CreditSights Inc. An additional 216,000 homes are under construction, according to Commerce Department data.

In January 1973, the number of finished new homes for sale was 97,000, when the U.S. population was about 212 million, according to the U.S. Census Bureau. In December 2007, 197,000 completed homes were on the market and in January 2008 there were 195,000. The current population is 303.5 million. .....

....The five largest U.S. builders had almost 8,900 completed homes for sale at the end of their most recent quarters, according to data compiled by Bloomberg.

D.R. Horton Inc., the second-biggest U.S. builder, held an ``UnAuction'' on Feb. 16 and Feb. 23 with prices cut as much as 50 percent at 23 developments in Southern California.

Pacific West Cos., a Reno, Nevada-based builder, said this month that it's offering a ``risk free'' price guarantee to buyers in its California communities, including El Dorado Hills. If a similar property in the same development sells for less than a homeowner paid, the company will refund the difference.

`Element of Fear'

``We're taking the element of fear away,'' said Taylor Cohee, Pacific West's vice president of sales.

Builders such as Los Angeles-based KB Home and D.R. Horton of Fort Worth, Texas, are seeking out real estate agents to bring buyers to developments, said Joellen Chappell, sales manager at Century 21 M&M and Associates in Stockton, California. Century 21 realtors are now getting commissions of as much as 4 percent for a sale.

``They're bribing us with bonuses,'' Chappell said.

Stockton's metropolitan area had the second highest foreclosure rate in the U.S. last year and again in January. Almost 5 percent of households in that community were in some stage of foreclosure in 2007, according to RealtyTrac Inc., an Irvine, California-based seller of foreclosure data.

At least 14 new-home auctions are scheduled through April in California, Florida, Illinois, Arizona and Nevada, said Brigitte Boudress, a Beverly Hills, California-based spokeswoman for Kennedy Wilson Inc.

Moving Inventory

``The builders are looking for ways to accelerate sales and get inventory moving,'' said Marty Clouser, senior vice president at Kennedy Wilson. The company auctioned 450 properties last year for $170 million at prices 85 percent to 90 percent less than the homes' listings, Clouser said. ....

aceventura3 · 05-17-2008, 10:55 AM

There are common themes that drive the fundamental economics of real estate, they have often been boiled down to cliches. One of them is that real estate markets are local. Certain markets were over built and I agree that it may take years or decades before the glut is eliminated. However, that will not be true in all markets, and on a macro level major demographic trends can not be ignored.

If you recall Silicon Valley was hit pretty hard after the Dot Com bubble burst, then one top of that they got caught in the real estate market bust. I looked recently at their inventory trends, here is a graphic:

Quote:

Our days of inventory indicator for single-family homes continued downward on the increase in sales, shedding 7 days, sending the indicator to 298 days. The indicator for condos fell ten days to 291.

http://rereport.com/scc/csper/

I am not saying everything every where is going to be roses but if you look at many markets you will see positive signs and I just want to know when there has been a general market reversal. I think evidence is going to start showing that on a macro level, although year over year results will continue to look bad.

In the past it was rare to have a "national builder", in the past builders were local now "national builders" dominate. I think we are seeing a major weakness in the "national builder" business model. I think that weakness has lead to significant over building. The question is - will these "national builders" adapt or will they go out of business. I personally don't care either way, the point is - real estate markets are local.

aceventura3 · 05-21-2008, 12:28 PM

New foreclosures, it seems California and Florida dominate the list. Is the level of foreclosures in these states going to spread to other states. Probably not.

http://www.realtytrac.com/states/index.html

http://www.realtytrac.com/states/index.html?ChartPage=4

Vermont had 2.

P.S. - FYI, California has about 13 million households.

host · 09-06-2008, 01:50 AM

ON MY KNEES.....BEGGING ANYONE WHO WILL LISTEN TO....Wake the Fuck Up !!!!

Most people are much too fucking stoopid to be trusted with a vote. There is one property party in the US, with two right wings, named democratic and republican. The bottom 50 percent of US households own 2-1/2 percent of total assets and are responsible for 46 percent of all credit card and installment loan debt.

What is happening here is endorsed by "both parties", presided over by Paulsen the former chairman of GS, a corporation that made big bucks packaging and promoting the selling of MBS, mortgage backed securities. His pals front ran this "bailout" planning today, and the charts and prices of thieves Merrill and Goldman, displayed below, show the immediate transfer of wealth from the rest of us, to the investor class, the top ten percent of households.

All of this rapes the future valuation of the dollar, of it's purchasing power and it fucks the bottom 50 percent off US households in their asses.....as it's designed to.....

Here it is.....I've been sharing it with you as it's gone down..... and you post about your candidates and you "keep the faith", even though all of it is a fucking charade...killing the country, and increasing the concentration of wealth.....and sending you (YOUR GRANDCHILDREN) the fucking bill.....meanwhile....in France....model national healthcare, strong currency, near balanced trade....half the US poverty rate....35 hours mandatory workweek, most productive labor forces in the world, divided by total hours worked... 5 weeks paid vacation for entry level workers..... 6.1 percent US unemployment, 7.0 percent French unemployment.....blah....blah....blah.....you "know what you know"......you deserve what you get......

Quote:

Fannie, Freddie Cleared To Buy More Mortgages

Fannie, Freddie Cleared To Buy More Mortgages

By David S. Hilzenrath
Washington Post Staff Writer
Thursday, March 20, 2008; D01

The federal government yesterday gave Fannie Mae and Freddie Mac permission to operate with a reduced safety net in order to increase their aid to the troubled mortgage market.

The step could allow the two federally chartered finance companies to immediately increase their investment in mortgages by a combined $200 billion, potentially compensating for weak demand from other investors. That could improve the availability and affordability of home loans, leaders of the two companies said.

Together, the two companies already hold more than $1.4 trillion of mortgages and securities backed by mortgages.

Yesterday's decision by the Office of Federal Housing Enterprise Oversight reduces the amount of capital that Fannie Mae and Freddie Mac are required to hold as a cushion against losses.

OFHEO Director James B. Lockhart III dismissed as "nonsense" speculation that one or both of the companies could require a bailout. Both companies are financially safe and sound, he said at a news conference. In a statement, he pledged to supervise them with vigilance and "act quickly to address any deficiencies that may arise."

As the market has deteriorated, the companies have lost billions of dollars, and they are predicting their losses from defaults and foreclosures will continue. Freddie Mac temporarily fell below its capital requirement in November. Yesterday's announcement "should help restore confidence in the market," Lockhart said in an interview.

The action represented a shift in regulators' posture toward Fannie Mae and Freddie Mac, underscoring the severity of the mortgage crisis and the pressure on government officials to do something about it.

In the seemingly healthy market before the housing bubble burst, regulators were warning that Fannie Mae and Freddie Mac were taking on so much risk that they posed a potential hazard to the financial system.

As recently as last month, Lockhart said that any easing of the capital requirements should be coupled with passage of long-stalled legislation that would overhaul regulation of the companies, both of which spent years recovering from multibillion-dollar accounting scandals.

Sen. Charles E. Schumer (D-N.Y.), a major ally of the companies, called for other conditions.

"Any capital relief has to come with a substantial new commitment [by Fannie Mae and Freddie Mac] to purchase loans for struggling subprime borrowers," Schumer said at a February hearing. "If Fannie and Freddie won't enter this agreement voluntarily, we should consider imposing it as part of the agreement to lift the capital surcharge."

In the aftermath of the accounting scandals, OFHEO made use of its limited oversight powers to extract agreements from Fannie Mae and Freddie Mac that they would maintain 30 percent more capital than normally required. Yesterday, OFHEO said it is reducing that 30 percent surplus requirement to 20 percent and will consider further reductions.

The capital requirement is meant to ensure that each company has sufficient resources to meet its obligations. Fannie Mae's capital requirement was reduced to $38.3 billion from $41.5 billion, and Freddie Mac's was reduced to $31.8 billion from $34.4 billion.

Quote:

http://www.dnsp.co.uk/files/Economic%20Fascism.pdf
.....Mercantilism and protectionism. Whenever politicians start talking about "collaboration" with business,
it is time to hold on to your wallet. Despite the fascist rhetoric about "national collaboration" and
working for the national, rather than private, interests, the truth is that mercantilist and protectionist
practices riddled the system. Italian social critic Gaetano Salvemini wrote in 1936 that under
corporatism, "it is the state, i.e., the taxpayer, who has become responsible to private enterprise. In
Fascist Italy the state pays for the blunders of private enterprise." As long as business was good,
Salvemini wrote, "Profit remained to private initiative." But when the depression came, "the
government added the loss to the taxpayer's burden. Profit is private and individual. Loss is public and
social." The Italian corporative state, The Economist editorialized on July 27, 1935, "only amounts to
the establishment of a new and costly bureaucracy from which those industrialists who can spend the
necessary amount, can obtain almost anything they want, and put into practice the worst kind of
monopolistic practices at the expense of the little fellow who is squeezed out in the process."
Corporatism, in other words, was a massive system of corporate welfare. "Three-quarters of the Italian
economic system," Mussolini boasted in 1934, "had been subsidized by government.".....

Quote:

The peril of valuing celebrity over history - The Boston Globe

....A minimal acquaintance with history, including dissections of American culture already performed by both Sinclairs, would undermine our national complacency. Upton Sinclair, for example, showed the rapaciousness of capitalism, the vampire-like appetite with which it feeds on the blood of human beings. Even with "reforms" ("The Jungle" led to the establishment of the Food and Drug Administration), the profit-worshipping economy to this day eludes controls that would protect majorities of citizens in this country and across the world. Sinclair Lewis, for his part, showed how the simultaneously banalizing methods of capitalist enterprise (false advertising, consumerism, pieties of affluence, amoral bureaucracy) are exactly what that enterprise created to keep from being criticized.....

ML CO CMN STK
(NYSE: MER)

After Hours: 27.34 Up 0.61 (2.28%)7:57PM ET
MER: Summary for ML CO CMN STK - Yahoo! Finance

GOLDMAN SACHS GRP
(NYSE: GS)

After Hours: 165.55 Up 2.31 (1.42%)7:58PM ET
GS: Summary for GOLDMAN SACHS GRP - Yahoo! Finance

Quote:

U.S. Near Deal on Fannie, Freddie - WSJ.com
U.S. Near Deal on Fannie, Freddie
Plan Could Amount to Government Takeover;
Management Shakeup Is Expected
By DEBORAH SOLOMON and DAMIAN PALETTA
September 6, 2008; Page A1

.......Treasury's likely plan is supported by Federal Reserve Chairman Ben Bernanke and James Lockhart, chief of the Federal Housing Finance Agency, according to people familiar with the matter. On Friday afternoon, Messrs. Syron and Mudd were summoned to a meeting at the offices of the agency. Also attending were Mr. Bernanke and Treasury Secretary Henry Paulson.

The meetings Friday were in part aimed at getting Messrs. Mudd and Syron to agree to the plan, though their approval was not necessary, these people said.

Mr. Mudd arrived for the meeting at 2:50 p.m., flanked by the company's general counsel, Beth Wilkinson, and Rodgin Cohen of Sullivan & Cromwell, one of the country's top banking lawyers. A few minutes later, Mr. Bernanke followed.
[Treasury Secretary Henry Paulson addresses a morning gathering at the the main branch of the New York Public Library, Tuesday July 22, 2008. Paulson said Congress needs to quickly approve a support package for Fannie Mae and Freddie Mac to make sure the two mortgage giants maintain their critically important role in housing finance.]
Associated Press
Treasury Secretary Henry Paulson

"We are making progress on our work," said Treasury spokeswoman Jennifer Zuccarelli, who declined to comment further. Spokesmen for Fannie and Freddie declined to comment on the expected Treasury moves.

In July, Treasury won authority to intervene in the two companies, but it didn't say how or when it would act. Since then, federal officials have been working with bankers at Morgan Stanley to figure out how to prop up the mortgage giants.

Freddie and Fannie own or guarantee more than $5 trillion of mortgages. They have suffered combined losses of about $14 billion over the past four quarters as they make provisions for a wave of defaults. Investors worried that a government bailout would wipe out the value of existing stock, and those fears have sent the shares down about 90% from a year ago. Many U.S. banks as well as foreign governments own stock or debt in the two giants, meaning their financial woes could cause broad problems beyond the housing market.

Mr. Paulson's push to win authority was meant to reassure investors that the government wouldn't allow Fannie Mae and Freddie Mac to fail. But some believe it ultimately forced Treasury's hand. The federal government's involvement complicated the companies' already-difficult task of raising capital through the sale of common or preferred shares. Investors were leery of buying either while the government's intentions were unknown, because they feared the newly issued shares might become worthless as the result of federal action.

Bill Gross, chief investment officer of Pacific Investment Management Co., the large Newport Beach, Calif., bond manager, said in an interview Friday he believes private investors would buy new shares in Fannie and Freddie only if the Treasury acts first to bolster their capital. "Investors are saying, 'We want to see [the Treasury] in there with us,'" Mr. Gross said. The Treasury will have to "swim in the pool, not just be a lifeguard," he added

Among the issues with which Treasury has been wrestling is whether to make an investment at such a low price that shareholders are effectively wiped out. Mr. Paulson is cautious about any plan that appears to benefit shareholders because he doesn't want the government to be seen as bailing out investors who for years profited from the companies' success.

The two companies were chartered by Congress to support the housing market, and therefore were seen as having the backing of the government. That allowed them to borrow funds at favorable rates close to those of U.S. Treasurys, even though they are both profit-making entities answerable to shareholders.........

Prediction....taxpayers will be $2 trillion deeper in debt, propping up the stock prices of Goldman, Merrill, Citi, B of A, Chase, Wachovia, and the "investor class" who own the majority of the shares of those companies and other financial industry businesses.....

ottopilot · 09-06-2008, 04:01 AM

Propose a solution. Let's talk about it.

host · 09-06-2008, 10:49 AM

Quote:

Originally Posted by ottopilot

Propose a solution. Let's talk about it.

Quote:

The Market Ticker - Entries from Saturday, September 6. 2008
CALL TO ACTION: Government Fraud And You

Ok folks, it appears that indeed Fannie and Freddie (which I will hereafter refer to as "Phoney and Fraudie") will indeed be "bailed out" in some fashion, as will their debt.

Let's first start with what these firms are. The political types like to claim that these firms are "necessary" or "vital" to the functioning of the housing market in America.

This is a lie.

The Truth is that Phoney and Fraudie are the reason we had a housing bubble.

The Truth is also that these firms have engaged in systematic and intentional compounding of risk at unsustainable, inappropriate and even fraudulent levels, and that we the people have refused to demand that our government put a stop to it.

Yet that is the purpose of government - to stop the "big and powerful" from screwing the "less big and less powerful."

Right?......

ottopilot, what happens in reaction to what is coming......devaluation of housing , common stock, and other assets that are the concentrated holdings of those below the top ten percent of wealth holders in the US, due to higher interest rates that will be triggered by "the solution" to Fannie and Freddie insolvency....is, what always happens.

In Venezuela, Hugo Chavez, with the support of the mass of "have nots", to do what government is supposed to do;

Quote:

to stop the "big and powerful" from screwing the "less big and less powerful."

Many would say that the political movement led by Chavez has "gone overboard". In the German Weimar republic, the backlash to economic dislocation came from the extreme right....the emergence of Hitler. In Louisiana in 1928, as in Venezuela more recently, the reaction was popular support for Huey Long.

Quote:

http://www.ssa.gov/history/hueychapt4.html

Excerpts From Huey Long's "Second Autobiography"

Chapter 4-
Wherein The New President Encounters The Masters Of Finance And Destiny

ONE morning shortly after the inauguration my secretary handed me a letter which had been delivered to the White House by special messenger. It was from J. Pierpont Morgan, the New York capitalist and international banker. The letter read

: click to show

In Cuba, the change came through violent revolution, due to the wealth inequity and repression of the US backed, Batista regime.

The point is, it's too late to control the reaction in the US. Half the country believes that the press is "too liberal", so there is a disconnect in even seeking and digesting information:

Quote:

Freddie/Fannie Plans In Motion; Why Are They Being Underplayed? - Seeking Alpha

....Underplayed?

Is the Freddie/Fannie bailout plan being underplayed? News late today that Treasury plans are likely to be announced imminently strikes many people, myself included, as one of the biggest financial events in modern memory, and yet it feels underplayed.

Why do I say that? Well, until recently, it was the second story on the front page of the WSJ this afternoon, and it hadn't even made the front page of the NY Times site last I looked. Marketplace on NPR, which I listen to most afternoons, shrugged it off in a 15-second drive-by comment as some late-breaking news that the market may have noticed.

Remarkable stuff. Here is the Federal Government backstopping a massive financial services organization; okay, two of them; okay, the whole frickin' financial services industry plus the stock market, with China and the rest of the world watching nervously, and it's being treated as just another day in those nutty ol' markets.

But it isn't just another day in the markets. This is set to be epochal, a true "Where were you when..." moment, a before/after sort of of thing. You can't make these kinds of massive financial commitments -- more than a trillion dollars, at least in notional terms -- with so many contingencies, without imagining the kinds of consequences, financial and political, that come with it. After all, the current U.S. administration desperately wanted to punt this past November elections, and it now seems clear that it can't.

The underlined point in the prior paragraph is important to understand. As much as the Treasury and the Bush Administration didn't want to get saddled with this bailout baggage at all, put that to the umpteenth power and you'll get how desperate they were to move this past election day in November. Bush, Paulson, et al., wanted it to be the next Administration's problem, not theirs; and they didn't want it to be fodder in the current electoral cycle. They failed on both counts, which tells you fast and out-of-control this apple cart is.......

RNC / DNC: Crisis? What Crisis? - Seeking Alpha
RNC / DNC: Crisis? What Crisis?
by: Paul Kedrosky posted on: September 06, 2008

Now they're planning the crime of the century
Well what will it be?
Read all about their schemes and adventuring
It's well worth a fee

-- "Crime of the Century", Supertramp (1974)

What continues to amaze me is the not-so-benign neglect being accorded by politicians to the current financial crisis in the U.S. Granted, it's usually better being ignored by such people; and granted, the current debacle is more complicated than saying "Ken Lay is a bad man". But if you had watched the just-completed Democratic and Republican National Conventions, you wouldn't have known the U.S. is stumbling through the worst financial crisis since the Great Depression. Nor would you have known, of course, that we're queuing up for a bill that could exceed total Iraq War expenditures.

To prove the point to my own satisfaction, I combined the Palin/McCain acceptance speeches in one block of text, and the Obama/Biden speeches in another. I then set up some keywords to compare across the text blocks. The following summary table shows keywords in the left column, and then respective keywords counts for each party' slate in the appropriate DNC or RNC column. This isn't the usual exercise in cute tag clouds, but an attempt to understand whether important language concerning the current financial crisis penetrated the political radar over the last few weeks.

And it hasn't -- unless, of course, the repeated utterance of the word "God" came in a context more like "Oh God, we're screwed!" than I think it did.

Ottopilot, there is nothing but denial driven indifference to all of this, including in this forum. Consider my track record....look at the date this thread was started, and the title. Almost no one is even reading this thread....yours is the only response.

I have no solutions to offer, because it is too late for that.....there isn't even a reaction, yet. When it comes, it will take the form of an emotional wave, demanding quick solutions, or a series of them. If we're lucky, it will look more like Louisiana, circa 1928, or Venezuela, in this new century. If not, our government will foment war until the ability to finance it with fiat script is exhausted.

Almost no one even agrees there is a wealth and power imbalance in the US, or that it is a bad thing....or that there is only one political party, the property party, with two right wings.... so, lights out!

dksuddeth · 09-06-2008, 11:51 AM

unfortunately, this is what happens when groups of people feel that they need/want the government to actually control nearly all aspects of an economy so that people can 'feel' they have opportunities to prosper. Human Nature (yes will, greed is part of human nature) dictates that when it comes to money and power, the group of people in power will do what they can to concentrate that power. Congratulations to all in their support of wealthy people being elected to positions of power allowing them to adopt and place in to position those who agree with their ideology of people with money to control others. It's all in place now and there is not much else anyone is going to be able to do about it.
-----Added 6/9/2008 at 03 : 53 : 35-----

Quote:

Originally Posted by host

Almost no one even agrees there is a wealth and power imbalance in the US, or that it is a bad thing....or that there is only one political party, the property party, with two right wings.... so, lights out!

Host, you invariably place yourself in the position that you so despise by claiming that it's a 'right wing' issue. Do you not realize that this is being done by people with money, right or left, to people with little or no money right or left?

You are unknowingly being part of the problem.

host · 09-06-2008, 12:18 PM

Quote:

Originally Posted by dksuddeth

....Host, you invariably place yourself in the position that you so despise by claiming that it's a 'right wing' issue. Do you not realize that this is being done by people with money, right or left, to people with little or no money right or left?

You are unknowingly being part of the problem.

dksuddeth, we agree that power and wealth are overwhelming the wealthless and powerless. Here is what I suspect....and I agree we could debate which side of the political spectrum "the problem" in the US is coming from, but I am persuaded that there is no "left" in the US. It was "purged"....excised from the US political landscape, by the 1950's....

Quote:

The peril of valuing celebrity over history - The Boston Globe

....Yet, speaking of history, this conjuring of the appearance of opposition where none actually exists has been mandated by the American political system since the onset of the Cold War. The quadrennial political puppet show, highlighting not opposition but its appearance, is essential to keeping the captive-taking war machine running and to inoculating the American people from the viral knowledge that they themselves were first to be captured.

A minimal acquaintance with history, including dissections of American culture already performed by both Sinclairs, would undermine our national complacency. Upton Sinclair, for example, showed the rapaciousness of capitalism, the vampire-like appetite with which it feeds on the blood of human beings. Even with "reforms" ("The Jungle" led to the establishment of the Food and Drug Administration), the profit-worshipping economy to this day eludes controls that would protect majorities of citizens in this country and across the world. Sinclair Lewis, for his part, showed how the simultaneously banalizing methods of capitalist enterprise (false advertising, consumerism, pieties of affluence, amoral bureaucracy) are exactly what that enterprise created to keep from being criticized....

I know Jonah Goldberg's view is very flawed:
Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Meaning

Amazon.com: Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Meaning: Jonah Goldberg: Books

I know Amity Shlaes' view is very flawed:
The Forgotten Man: A New History of the Great Depression

Amazon.com: The Forgotten Man: A New History of the Great Depression: Amity Shlaes: Books

So....who are these "leftist", powerful, rich, you speak of, in the US? What power do they hold in the political or financial scheme of things, and how are their politics opposite the politics of the Obiden ticket..... one half of which lobbied tirelessly to pass bankruptcy "reform" that benefited MBNA and stabbed the voters of Delaware, and across the USA, in the back. How is Obama, "left of center", with his "choice" of Biden, his vote for telecomm amnesty, legalizing electronic surveillance of Americans with no requirement of evidence of links to terrorism?

At most, Obama is right of center, less to the left than republican president Eisenhower in his tax policy, justification of first use of force, and in his "an enemy of yours, is an enemy or ours...." support for "defending" Israel.

I see no left.....so where is your "both sides" argument coming from, dksuddeth? Wouldn't "left", have to at least be "left of center", to be considered "left"? I am old enough to remember where the center line was. Eisenhower was closer to straddling the center line than Clinton was.

Does the centerline "move", in relation to how well the "Might Wurlitzer", financed by the Richard Mellon Scaife/CIA/Salem Communications-Council for National Policy, disinformation campaign, performs it's magic....i.e. does the line move with the effect of the brainwashing of the electorate....or is the public opinion simply swept further to the right of a centerline that is more in keeping with a western world view of what is right and what is left?

dksuddeth · 09-06-2008, 02:00 PM

Host, the error you're making is in holding fast to what USED to be left has been excised, when in fact it hasn't been excised, but co-opted. Those that are left, or left of center, are now part of the problem as well. So it isn't that the old left has moved right, but that wealth and power have supplied both left and right with the emotion and power of greed.

I needed to add to this...

It started before the 1950s as well. Todays political power grabs and upper class vs. lower class is a direct result of FDR's administration. So much power was consolidated in to a government entity at that time, that this is what we have left of it.

dc_dux · 09-06-2008, 03:04 PM

Quote:

Originally Posted by dksuddeth

It started before the 1950s as well. Todays political power grabs and upper class vs. lower class is a direct result of FDR's administration. So much power was consolidated in to a government entity at that time, that this is what we have left of it.

Wow...and I always thought it was FDR's programs that were largely responsible for the explosive growth of the middle class.

But of course, that would not sit well with the libertarian arguments about the New Deal, labor reform, etc. Fortunately, the facts are a stubborn thing to ignore.

dksuddeth · 09-06-2008, 03:28 PM

Quote:

Originally Posted by dc_dux

Wow...and I always thought it was FDR's programs that were largely responsible for the explosive growth of the middle class.

But of course, that would not sit well with the libertarian arguments about the New Deal, labor reform, etc. Fortunately, the facts are a stubborn thing to ignore.

It has nothing to do with 'IMMEDIATE' effects. Take a look at the bigger picture for once.

Yes, FDR's admin and the dem majority AT THAT TIME made the middle class swell, but at what cost? What did the government attain for doing that? Quite a damn bit of power they did. The deal with that was the parties looked at things as short term as you appear to be doing. They made things great for a short term, but they seemed to care damn little what happened to people in the long term. The only thing that the government looked out for was what their long term power grab could accomplish.

Now, does this mean that i'm denigrating ONLY the democratic party for it? hell no. BOTH parties, and please understand this, BOTH PARTIES screwed the american people over for POWER and CONTROL.

It isn't about dem, repub, or libertarian at this point. It's about a government entity using you as a pawn in a power grab over the economy of a nation and the world.

What part of that don't you get?

host · 09-06-2008, 03:46 PM

Uhhhh..... guys.... could it be that this 1940 description, by John Flynn is as strong an indictment of the flaws of the capitalist "system", as the root causes of today's "credit crisis", as it is about the flaws of our "one party" political system....that all of it is an intertwined "disease", rather than it is a "system"?

Capitalists who cap abundant output to hold up prices and concentrate wealth and prosperity, into a dramatically limited number of hands, instead of attempting to foster the utopia we in America could potentially have enjoyed. Ironically, the system in Alaska of distributing petroleum royalties to all residents is lauded by the same elite thugs who decry any discussion of alternatives to the capitalist model and our "one party" political system.....

Quote:

http://mises.org/books/countrysquire.pdf

THE NEW DEAL—SECOND EDITION 73
laws and rules and regulations governing the behavior of
individuals could be set up, with controls on prices, production,
the organization of industry. What they overlooked
was that the planning authority could not compel
individuals to invest their money, could not enforce investment
which is the dynamic function in the capitalist
system.

Into Washington on the wave of the crisis there swarmed
a large group of earnest men, apostles of this school of
the planned society. A few of them were men who had
thought about this seriously for a long time. Most of them
were new converts, half baked, many fresh from Wall
Street law and brokerage offices, thrust from their old
careers by the disaster, new and almost fanatical followers
of the planners.

The other movement was akin to this, yet wholly
different. As the planning movement stemmed from the
Left, this movement had its origin on the Right. For many
years businessmen were afflicted by what they called overproduction.
In almost every industry enterprisers were
producing more goods than they could sell. This has
always been true in our present economic system, but it
became more serious as our resources increased and the
physical machinery and financial credit for utilizing them
were perfected. As far back as 1870 in the oil regions of
Pennsylvania the producers found that they could pump
more oil than they could sell. This brought prices down.
They therefore decided that the remedy was to produce
less oil and keep prices up. It is entirely possible that this
conviction has been the most potent single principle of
action in American economic society during the last
seventy years. It is a very natural thing for a man in
business to feel that he would be more prosperous if there
were not so many in competition with him. It is easy to
74 COUNTRY SQUIRE IN THE WHITE HOUSE
understand that the average manufacturer will think that
he can get a better price and hence make a larger profit if
he can introduce a little scarcity into his production.
The first means of attaining this objective was through
trade associations. They were organized to bring together
producers in the same industry to reduce production and
to keep up prices and to make it more difficult for others
to come into the industry and hence to compete with
them. The idea spread to every trade—even to labor unions
that sought to limit apprenticeships so as to check the
flow of new recruits into their trades.

The next phase of this was through industrial combinations
and corporate monopolies. Rockefeller tried the trade
association but found that it did not work efficiently to
limit production. He then formed a combination between
himself and his competitors in a corporation, twelve or
fourteen competitors uniting in a single industrial unit.
Later the holding company was invented to facilitate this
same process. Always it was the effort of producers to control
production, to limit it in order to keep up prices, to
produce scarcity in the interest of higher prices and profits.
It is useless to quarrel with this. Apparently it is in the
very order of human nature that men moved by selfinterest
will act this way.

The Sherman anti-trust law was adopted in 1890 to
check this very thing. Later, under Woodrow Wilson, the
Clayton Act and the Federal Trade Commission law were
passed to strengthen the government in checking this
movement. Men like Woodrow Wilson—who, unlike
Roosevelt, was widely read in the history of civilization—
realized that this movement, however natural amongst
businessmen, was based upon the theory that scarcity in
production was essential to high prices and profits.
After the World War this movement, which up to then
THE NEW DEAL—SECOND EDITION 75
had been looked upon as lawless, began to put on the
vestments of respectability. The Chamber of Commerce
of the United States and various trade associations began
a movement for what they called "self-rule in industry."
The objective was to weaken the enforcement of the antitrust
laws, to change those laws, to modify them, to suspend
them in order to enable business groups to get together
to adopt codes of ethics, as they said, to outlaw
unfair trade practices. Unfair trade practices would include
many things that every decent businessman would
condemn, such as commercial bribery and false advertising.
But they were also made to include such things as the
enterpriser's right to produce and to price his goods as
he saw fit; to include, indeed, a man's right to expand his
business or go into a new business. In other words, under
the guise of regulating fairness in competition, powerful
business groups wished to get rid of the Sherman and
other anti-trust laws in order to confer upon their
organized groups the right to make laws for their industries.

The conviction had taken root that the economic
system must be governed, that the people to govern it
were the producers themselves, which meant the employers;
that they should govern it through trade associations,
that the laws of the United States should be changed
to permit this and that the government should authorize
it with a kind of general supervision by the government
itself.

The central thesis of these men was that we produced
too much and that this abundance ruined prices, and their
central objective was to keep production down.
To a mind unaccustomed to thinking about these things
it was easy to confuse the objectives of the planners with
the objectives of the self-rule-in-industry groups. And one
of the most amazing spectacles in our history is the manner
j6
in which, in those first days o£ the New Deal, the apostles
of planning for abundance and the protagonists of planning
for scarcity united under Roosevelt to produce the
NRA. The NRA was called planning. The planners of all
sorts hailed it—the Chamber of Commerce and the Left
Wingers, the champions of abundance and the champions
of scarcity.

It was possible only because Franklin D. Roosevelt himself
had never thought about these things. It is almost
beyond belief that a man so completely oblivious of the
powerful and hostile forces at work in his administration
and so unaware of what he was doing in a field of
economic activity wholly new to him should be hailed by
the populace as one of the great leaders of our time.
2
The actual business of putting together the NRA began
in March 1933. As it emerged it appeared before the
people as a great liberal revolution, the dawn of a new
day, under the auspices of liberals, for the people and for
labor—and as part of the great forward surge toward
abundance. But one must look beyond the throb and
pother of those feverish days to understand the swift
succession of moves and the cast of characters behind
them.

In 1925 the Trade Relations Committee of the Chamber
of Commerce of the United States was formed to foster
trade practice conferences. Under its sponsorship trade
associations adopted codes of practice (President Roosevelt
imagined in 1933 that he had originated codes). Price
fixing and limiting production were banned in these codes.
When President Hoover was elected he promptly put an
end to these codes—there were over forty of them. Hoover
said that while the codes seemed innocent enough, the
THE NEW DEAL—SECOND EDITION 77
officers of the codes, under protection o£ the codes, sanctioned
price and production agreements.

Then came the crash of 1929. In February 1931 the
Chamber named a Committee on Continuity of Business
and Employment with H. I. Harriman as chairman. That
committee reported that "A freedom of action which
might have been justified in the relatively simple life of
the last century cannot be tolerated today, . . . We have
left the period of extreme individualism." In other words,
the Chamber was all for introducing a little regimentation
into our diet. It proposed: (1) Control of production.
(2) Modification of the Sherman anti-trust law to permit
business units to enter production agreements under government
control. (3) A National Economic Council. (4)
Unemployment insurance, old-age pensions, government
unemployment exchanges. (5) Shorter hours in industry.
That was the Chamber of Commerce talking.
About the same time the Committee on Work Periods
in Industry, Mr W. P. Litchfield (Goodyear Rubber Company),
chairman, reported in the summer of 1932 on its
Share-the-Work movement. This committee reported that
employers ought to be permitted to unite to agree on
shorter hours and minimum wages.

Thus the movement to suspend the Sherman anti-trust
law to permit business to organize into units under codes
to control production, fix prices, limit competition, govern
wage and hour standards, originated with the Chamber
of Commerce and business itself. The public imagined
that this was a product of the Brain Trust. The Brain Trust
was supposed to be a group of young professors, equipped
with oversized brainpans—experts in economics, law and
government—symbolizing, above all, a break with the
Coolidgian and Hooverian past and its bookless, nescient
businessmen. But the idea was an idea of certain businessyS
COUNTRY SQUIRE IN THE WHITE HOUSE
men. And the thing they wanted to do was to cut down
production to keep up prices—to produce scarcity in the
interest of higher prices and profits.

Senator Wagner had a bill for RFC loans for selfliquidating
projects. Roosevelt suggested that he have a
conference of persons interested. The conference was held
in Wagner's office. It included an odd assortment—Meyer
Jacobstein; Virgil Jordan, then with the McGraw-Hill
business papers; Congressman Clyde Kelly; Harold Moulton
(Brookings Institute); Fred I. Kent, vice-president of
the Guaranty Trust Company; David Podell, New York
trade-association lawyer; Simon Rifkind, Wagner's secretary,
Colonel Rorty; Jett Lauck, of the railroad brotherhoods;
and James Rand (Remington-Rand Company)—a
motley group but not red. This group was full of plans.
Kent wanted guarantee of profits; Moulton and Jacobstein
were for credits to business; Wagner wanted public works;
Podell was for modification of the anti-trust laws. A committee,
however, was named to draw a tentative bill. It
did. I have seen that bill, and it contains the germ of
everything, save the licensing clause, that appeared in the
final NRA Act.

All this time another group was at work. Jerome Frank
and others were interested in national planning along the
George Soule idea—planning for abundance. John Dickinson,
Wall Street lawyer, then assistant secretary of commerce
and attorney for the Sugar Trust, had a series of
proposals closely paralleling the Chamber of Commerce
plans. Dickinson and Frank somehow got together, and
thereafter the preparation of an acceptable bill was carried
on by them along with Podell and Rifkind.
At the same time General Hugh Johnson was at work in
Moley's office on a plan to organize business. He wrote
a short bill containing an outright grant of power to the
THE NEW DEAL—SECOND EDITION 79
President to organize industry to give trade associations
authority to regulate competition, prices, production,
wages, hours. A day or two later he joined the Wagner
group. Donald Richberg came in a little later. After that,
little by little, Johnson and Richberg, supported by the
President, took over the final drafting of a bill.
What they produced was a plan for self-rule in industry
by trade associations under supervision of a government
bureau called the National Recovery Administration—the
NRA. It specifically suspended the anti-trust laws, thus
successfully completing a war that business had waged for
fifty years. It was the one thing that appealed most
strongly to Roosevelt's imagination. He imagined he had
been the instrument of creating a revolution in American
industry. This was his idea of a planned economy. It was
a plan for organizing each industry under a code. The
code was to be drawn by the industry and submitted to
the NRA, of which General Johnson became the head.
Labor and consumers had nothing to do with drawing the
codes. They could appear before the administrator and
object to any part of a code before it was approved, but
the codes were drawn by the employer associations.
Donald Richberg later said that the trade associations were
asked to Washington and told to write their own tickets.
They most certainly did.

For instance, the Steel Code was drawn by the representatives
of the American Iron and Steel Institute, and
it set up the Institute as the code authority. Thus it went
throughout the field of industry—some seven hundred
codes drawn up by the employers with a code authority
representing them, usually their trade association, making
thousands of rules and regulations with the force of law,
binding upon them and the people of the United States.
This was one of the most amazing spectacles of our
80 COUNTRY SQUIRE IN THE WHITE HOUSE
times, and represented probably the gravest attack upon
the whole principle of the democratic society in our
political history. The theory of our government is that
laws are to be enacted only by the representatives of the
people chosen by them. When a group of men, however
chosen, sit down to make rules fixing prices, controlling
production, setting out the conditions of competition,
defining the conditions upon which a man may enter a
business, fixing the amount of floor space or machinery
he will have, they are enacting laws, by whatever name
they are called, particularly when they are enforceable by
the public authorities and in many cases with jail sentences.
These laws were being enacted not by Congress or
a legislature or a board of aldermen or a public official of
any kind, but by a group of men called a code authority,
elected in most cases by the employers in their respective
industries. Under this plan a group of employers, elected
by other employers, could sit around a table—like a legislature—
and enact laws binding on the community. Anyone
who violated them could be put in jail. Not only did they
enact the laws, but they united in themselves the executive
power to enforce compliance, vested with police power.
Perhaps this is a good plan. Perhaps this is the way
society ought to be managed. But it is not the democratic
way. The country was divided into provinces—economic
provinces as distinguished from geographical provinces.
The geographical provinces—the states and counties—continued
to be run on the democratic plan by popularly
elected legislators and executives. The economic provinces
—the province of steel, of textiles, of millinery, etc.—were
run by legislators and police (compliance officers) elected
not by the people in the industries on the democratic
principle but by a handful of employers. And if this
system had continued in force and our development had
THE NEW DEAL—SECOND EDITION 8l
progressed along that line, we would have continued to
move further and further from the democratic plan and
in the direction of the corporate state of Mr Mussolini.
For this was the beginning of the corporate state, only
we called the corporatives codes.

This whole plan was declared unconstitutional by the
Supreme Court of the United States—not by a five-to-four
decision, but unanimously. Men like Justice Cardozo,
Brandcis and Stone joined vigorously in the decision. The
reason given was that the NRA was an abdication by
Congress of its constitutional powers to mae laws governing
our economic society.

The strangest feature of this episode was that this
serious blow to our democracy was carried on to the
cheers of many of the so-called liberals who flocked to
Washington to support the New Deal. Around the country
generally many sincere liberals and progressives were completely
confused by the whole performance. Everything
that was done was done in an atmosphere of hectic excitement
and with speeches and declarations and proclamations
couched in the language of liberalisrk. The
planning for scarcity was carried on with the language of
the planning for abundance.

At the same time the whole project was given the
appearance of being a great charter of liberty for labor.
Labor had nothing to do with making the codes—had
merely the power of protest that any citizen had. But the
law recognized in labor the right of collective bargaining.
As a matter of fact, as it turned out this was a delusion
because it merely gave to labor what it already had,
namely, the right of collective bargaining provided it
could force it on the employers. And what actually happened
was that a few powerful unions under strong
leadership, like the coal, Ladies' Garment Workers,
82 COUNTRY SQUIRE IN THE WHITE HOUSE
Amalgamated Clothing Workers under Lewis, Hillman
and Dubinsky, did get a great deal because of their
numerical and financial strength and their vigorous leadership
and their militant tactics. The great victories of the
CIO in the steel, automobile and other industries were
won after the NRA had passed out of existence.
But while the NRA was formally killed by the Supreme
Court, it was riding swiftly to its doom through the sheer
confusion and folly of its organization. General Johnson,
the first administrator, had resigned, and after a brief
interval in which Donald Richberg headed it, the NRA
was led by Mr S. Clay Williams. Mr Williams was and is
the head of the Reynolds Tobacco Company. He went to
Washington when the NRA was formed to protect the
great tobacco companies, fought labor in the NRA, declared
vehemently that he would fight the NRA to the

Supreme Court if necessary on any effort to give labor
any rights, and ended by being appointed by President
Roosevelt the administrator of the NRA,
As for Mr Richberg, who became then a sort of assistant
president, he presently left the administration to
become one of the most excessively employed lawyers in
Washington—representing oil companies, motor companies,
Latin-American dictators, the Transamerica Corporation,
while at the same time maintaining the most
intimate relations with the White House.

Incidentally many of the administrators of the NRA,
the AAA, the SEC and other government bodies are now
busily engaged as attorneys for the big business interests
with which they were in contact while they served the
government.
The NRA as a chapter in political government becomes
plain only when you understand the man who made it
possible—President Roosevelt. The man who had deTHE
NEW DEAL—SECOND EDITION 83
nounced Hoover for regimentation, who attacked the
Republicans for not enforcing the anti-trust laws, who
had proclaimed his devotion to freedom of enterprise and
to the traditions of democracy, without retracting any of
these bold declarations or making any explanation
proceeded to put into effect a policy that was the negative
of all these things. While at the same time proclaiming
his devotion to democracy, he adopted a plan borrowed
from the corporative state of Italy and sold it to all the
liberals as a great liberal revolutionary triumph. And,
curiously, every American liberal who had fought
monopoly, who had demanded the enforcement of the
anti-trust laws, who had denied the right of organized
business groups, combinations and trade associations to
rule our economic life, was branded as a tory and a reactionary
if he continued to believe these things.

Indeed it is very difficult to explain the strange complacence
of the various liberal groups in the presence of
the President's surrender to some of the worst elements
in that so-called Big Business that they had so mercilessly
attacked. The Treasury Department was headed by a Wall
Street industrialist while his undersecretary was a member
of the most active Washington lobbyist law firm, his
assistant secretary a vice-president of the American
Bankers Association. The secretary of commerce was a
reactionary politician who had been practicing law in
Washington as an income-tax lawyer ever since he left
the Internal Revenue Bureau at the time of Woodrow
Wilson, while his assistant secretary was an ally of one
of the most powerful law firms in Wall Street and at the
time represented the Sugar Trust in an attack on the
Sherman anti-trust law. One of the first acts of the administration
was to organize in the Department of Commerce
what was called the Business Advisory Council. It
84 COUNTRY SQUIRE IN THE WHITE HOUSE
contained the names of some of the biggest businessmen
in America. Its objective was, as the secretary of commerce
stated publicly, to "weave the pattern for the future
economic life of the nation." At a later date when Mr
Roosevelt brought his friend, Mr Henry Morgenthau, Jr, a
shockingly inexperienced person, in as secretary of the
treasury, he named as the Treasury's fiscal adviser Earle
Bailie, dominating partner in the firm of J. & W. Seligman
& Company, whose then most recent claim to public notice
was Senator Hiram Johnson's merciless exposure of his
methods in South American financing.

The President was incessantly busy conferring appointments,
authority, honors on leading reactionary and conservative
figures one week and then passing out appointments,
orders and endorsing measures for the Left
Wingers the next week. If he approved an act to regulate
the stock exchanges (the SEC) to please the liberal and
progressive groups, he appointed a Wall Street speculator,
Mr Joseph Kennedy, as the head of the commission and
literally paralyzed its functions to please the conservative
groups. As it happened the conservative groups were more
sapient, more experienced apparently and more realistic
than the liberal groups. They were quick to see that the
President was kidding them a little. But whatever the
liberals and conservatives thought about it, the final result
was that the President literally got nothing important
done.....

Quote:

Book Review -- Forgotten Lessons: Selected Essays of John T. Flynn

....But Franklin Roosevelt's New Deal was something on a scale and with a purpose far different than the minor and marginal regulations that Flynn viewed as useful or required to improve the "rules of the game" so that the private enterprise system could "do its job" of securing both liberty and prosperity.The National Recovery Act of 1933 threatened the very existence of free enterprise in America. Industry was to be straightjacketed into government-mandated cartels given the authority to set prices, determine production levels, and regulate the workplace. But rather than see this as an "antibusiness" policy, Flynn argued that the NRA was FDR's collaboration with segments of the "big business" community that wished to control and limit market competition for their own monopolistic purposes. Indeed, in 1937, Flynn wrote an article for The Yale Review entitled "Mr. Hopkins and Mr. Roosevelt" in which he argued that FDR's appointing of his confidant, Harry Hopkins, to the post of secretary of commerce was part of the policy of cementing a network of government-business relationships and partnerships; as a result, Roosevelt tried to have Flynn blacklisted from being published in a wide circle of popular magazines and journals.

Flynn argued that there were few things exceptionally "new" in Roosevelt's New Deal. Since the time of the ancient Greeks and Romans, government had attempted to win popular favor and prevent social unrest by running budget deficits, creating money, and producing the illusion of prosperity on the rising price curve of inflation. What was new with the New Deal was the grand scale with which FDR ran up the federal debt — tens upon tens of billions of dollars, figures unique in the entire fiscal history of the United States.

But even with massive deficit spending, by the late 1930s, unemployment in the U.S. economy was still in the double-digit range. So Roosevelt turned to that other great historical device to which governments have resorted to "create jobs": defense spending. The wars in Europe and Asia gave FDR the rationale for bipartisan support for even greater deficits in the name of military preparedness. But once nations begin down the path of big spending for war preparedness, actual wars often are not far behind. With war comes militarism and the grand expansion of state power, with the freedoms of the people taken away or suspended in the name of the national emergency. This is exactly the road down which FDR took America, a road that finally led to the Japanese attack on Pearl Harbor.

In the postwar period, John Flynn was a die-hard anticommunist. But he believed that America's Cold War strategy of big military spending and numerous military commitments around the world were mainly Keynesian-type pump-priming tools to keep government deficit spending going to maintain an inflationary prosperity. In a manuscript rejected by National Review in 1956, and now included in Forgotten Lessons , Flynn declared:

"The gaudiest of these job-making boondoggles is militarism. The American taxpayer perhaps doesn't realize that this evil institution was used in Germany, France, Italy, and other countries not primarily for purposes of defense, war or conquest, but to bolster the economic system with jobs for soldiers and jobs and profits in the munitions plants. When the war in Europe roared up out of the muck, disorder and bankruptcy of that unhappy continent, Roosevelt spotted the thing he loved best [big government spending]. He turned eagerly to it and showed what a boom could really be with the soldiers and military industry."

This "racket," for political power and control, Flynn argued, was what most of America's cold war military spending was all about. ...

dksuddeth · 09-06-2008, 03:51 PM

Yes, capitalism unchecked could allow a handful of corporate enterprises to hold any country by its balls. Case in point, Oil as it was back then and as it is today. Is then the answer to completely remove any capitalist incentive and deposit total power and control of global assets in government hands for total and complete regulation?

Charlatan · 09-06-2008, 04:13 PM

Quote:

Originally Posted by dksuddeth

Yes, capitalism unchecked could allow a handful of corporate enterprises to hold any country by its balls. Case in point, Oil as it was back then and as it is today. Is then the answer to completely remove any capitalist incentive and deposit total power and control of global assets in government hands for total and complete regulation?

The short answer is no. The longer answer has to do with taking a hard look at what the kind of privatization you are calling for looks like. Take a look at what the IMF, the World Bank and their acolytes from the Chicago School of Economics have done around the world in an attempt to privatize much of the world.

Take a look at how those economies have benefited the few at the expense of the many.

So I would say that no, it isn't about full government control of the economy but it should be about an increased public control through regulation and redistribution (and that doesn't mean robbing Peter to pay Paul... it means using your tax base so that it benefits all). There needs to be more balance to the system and currently the scale has shifted way to far in favour of private organizations and the wealthy.

host · 09-06-2008, 04:26 PM

Quote:

Originally Posted by Charlatan

The short answer is no. The longer answer has to do with taking a hard look at what the kind of privatization you are calling for looks like. Take a look at what the IMF, the World Bank and their acolytes from the Chicago School of Economics have done around the world in an attempt to privatize much of the world.

Take a look at how those economies have benefited the few at the expense of the many.

So I would say that no, it isn't about full government control of the economy but it should be about an increased public control through regulation and redistribution (and that doesn't mean robbing Peter to pay Paul... it means using your tax base so that it benefits all). There needs to be more balance to the system and currently the scale has shifted way to far in favour of private organizations and the wealthy.

Charlatan, if John Flynn is accurate in his 1940 description of what overtook the FDR admin., from 1933 to 1940, when was there a "shift away" from "favour of private organiztions and the wealthy"? The economic/political system in the US seems to control POV into avoiding an examination of what it causes....cycles of boom and bust, sequestering of abundance that deprives fully one third of the country of what they could easily enjoy from abundant production, concentrates political power/economic infuence in the hands of a very few who have the enormous wealth to purchase it, subverting representative government, and constant cycles of war stimulus and profiteering, and most defend it as "the American way of life", without even thinking what alternatives exist. It's broken...this is the mother of all economic busts, and the bailouts of Fannie and Freddie, on top of $4.25 trillion in new national debt since 2001, are just the opening salvos.....

host · 09-07-2008, 11:00 AM

Treasury Secretary (he's former chairman of Goldman Sachs...) excerpted speech on taxpayer bailout of Fannie and Freddie, with accompanying translation:

Jesse's Café Américain: Paulson's Statement on Freddie and Fannie with a Nearly Simultaneous Translation

The biggest fleecing of the US taxpayer in the history of the US was put together in secrecy over this weekend, (after government officials tipped off their pals on Wall Street who "front run" all such tips by buying stock and options on the cheap during the early part of the day, as they did friday, to position themselves before the public can trade the news on monday......) and there has been no comment posted about it at TFP Politics.

The "plan" will cost US taxpayers at least $500 billion, favors PIMCO, Wall Street and foreign central banks like China's, which bought up trillions of dollars worth of MBS with questionably underwritten mortgage loans, and could cost US taxpayers as much as $1-1/2 to $2 trillion, plus whatever influence this scheme has in further weakening the US dollar.

Some US banks held too much Freddie and Fannie, high dividend yielding, preferred stock. With the dividend now cancelled, and the government stepping in front in the line of debt holders (holders of existing Freddie and Fannie common and preferred shares....) by infusing taxpayer's money, in exchange for 79.9 percent of Fannie and Freddie "equity", the common stock is worthlessm and the preferred is worth much less than it's friday closing price of above $17.00. The Treasury announcement encouraged those banks to "call in", to talk about their losses. This is gov speak for, you lost, but let's not make it public for as long as possible. This is an indicator, along with the weekend, secret deal, as the one held in March, to "save" Bear Stearns, that the US Treasury and the Fed have no intention of conducting the taxpayer's business with any transparency, or frankness.

The "plan" favors the US "property party" constituents, the party with two right wings, called the democratic and republican party. The folks who saw big gains, selling unneeded housing units to each other at ever rising prices, collecting windfall profits, sales commissions, and on Wall Street, hefty fees for packaging the mortgage loans generated by this speculative activity, into multi million dollar MBS tranches.

Now, the grandchildren of the bottom 50 percent of American households who owe 46 percent of outstanding credit card and installment loan debt, but who own only 2-1/2 percent of US assets, will be responsible for part of the increase to national debt this mess causes, but these households did not benefit from the run up in housing prices.

The coming depression will force many of these households into bankruptcy, or at least into an inability to make payments on the nearly half of all US consumer debt hanging around their necks.

My advice is to at least look at the Fannie and Freddie bailout, and the way debt and assets are distributed among US households. You might even want to consider that you've been distracted by "the show", the "puppet show" that convinces you that their are two major, OPPOSING political parties in the US.....and, ask yourselves -- does the Fannie and Freddie bailout....with no mention of criminal investigation of those who gutted these two GSE's, the housing market, and the economy, to make them accountable and to seize fraudulantly gained profit, reinforce the idea that the two parties oppose each other, politically, or not?

Quote:

http://www.haloscan.com/comments/cal...034534/#563076

The rich who 've made a fortune will be saved by the masses and this will ultimately lead to extreme resentment and revolution...

Doubt it. Marx knew what happens: the screwed just get more religious. That's why you need revolutionary elites to make the screwed understand where their interests lie. We don't, and probably never will, have such a group.

Does an elite that has no particular allegiance to either party, to any principle higher than their own consolidation or wealth and power, control US politics and finance, or not?

View Poll Results: Will "the Economy" be the most Prominent 2008 Campaign Issue
No, The US Economy Seems Too Strong to Become the #1 Issue in 2008	12	37.50%
Yes, There is a Significant Chance That the US Economy will Be the #1 2008 Issue	20	62.50%
Voters: 32. You may not vote on this poll

03-14-2008, 11:17 AM	#126 (permalink)
host Banned	ottopilot, thank you for your informed response.... Do you think it is at all ironic that Bear Strearns was one of the top two "packagers" and issuers of mortgage backed securities, <h3>and the consequence for them is a bailout, a "do over"?</h3> Do you grasp that the intent of packaging "tranches" of thousands of individual mortgages together and then selling them as "mortgage backed" bonds and other securities was to make it impossible to assess the actual credit quality, the risk of owning these instruments? Doesn't it follow, that with the risk cloaked, and "credit quality" enhanced by bond insurance "coverage" that will end up being insufficient to cover investor loss claims, the supply of mortgage loan money, lent out at low interest rates to the last group of non-homeowners.....the ones who were not of a high enough credit quality to lend money to.....became qualified, was a criminal conspiracy, with the participation of the Fed, the OCC, and the "primary dealers, and of course, the congress and the president ? Everyone loved the scheme, because "new money".....the last ones in.....was all that was required to keep home valuations appreciating, and the response from all Amercia was serial, "cash out" refis...... MEW...mortgage equity extraction was the "name of the game".....roll over your credit card balances and your car loan balance, into your new, larger, 30 year mortgage.... The "miracle" effect of the "Bush tax cuts".....or Ottopilot, do you think, other than posting a comical pic....meant to make me look "silly", this is all about something else than I have described.....why would your reaction be to try to make me look "silly".....is your uhhhh "belief system" feeling a little angst, over this "news".....or something??? Last edited by host; 03-14-2008 at 11:20 AM..

03-14-2008, 11:21 AM	#127 (permalink)
aceventura3 Junkie Location: Ventura County	Host, If our market economy was truly a free capitalist economy, Bear Stern and a few other financial institutions would have failed. Currently we have people in Washington trying to manage our economy. The more bureaucrats try to manage our economy the longer the pain will be. I have no problem with companies that have taken too much risk and fail, it seems that you don't either - welcome to the "free market" club. __________________ "Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

03-14-2008, 11:47 AM	#128 (permalink)
ottopilot let me be clear Location: Waddy Peytona	The long line of AMTRAK bailouts. Chrysler 1994/1995 Mexican peso crisis bailout leading to Nafta. 1995 - Clinton administration gets billions for the International Monetary Fund (IMF), plus the Federal Reserve arranged for a $3.65 billion bailout of its friends in an investment group running a ""hedge fund'' in Connecticut. Ethanol and farm subsidies. and on and on and on ... Just like the Bush administration, I'm sure we can step through just about any past administration and find bailouts. I'm not assigning judgement, but pointing out it's biz-as-usual in politics. Just adding levity to ease the theatrics. __________________ "It rubs the lotion on Buffy, Jodi and Mr. French's skin" - Uncle Bill from Buffalo

04-01-2008, 05:12 AM	#134 (permalink)
The_Jazz Asshole Administrator Location: Chicago	The way my job works typically gives me an idea of what the overall economy is doing - at least I like to think it does. Since I deal solely in commercial casualty insurance, a company's sales is generally one of the primary bases for insurance premium (there are lots of exceptions). That's relevant to the discussion because of what I'm seeing. Back in 2000 and 2001 we saw projected sales for RV's and travel trailers (classes of business that generally flow my way) drop steadily and steeply. It for every single one that we wrote. Right now, about half are projecting increases in sales and the other half are projecting decreases. I honestly can't tell what's going on. Speaking personally, I'm glad that I'm young and able to take advantage of the lower prices. They'll be down in the short term, but in the long term, that will hopefully help my position. __________________ "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin "There ought to be limits to freedom." - George W. Bush "We have met the enemy and he is us." - Pogo

03-12-2008, 02:22 AM	#123 (permalink)
host Banned	I don't think Citicorp will be permitted to file BK before the election, but it probably is insolvent now: http://market-ticker.denninger.net/2...lls-again.html How many of these on the Fed's list of primary dealers do you think are already at "death's door", and would have already failed if not for the Fed's "socialtistic" interference and manipulation of "free markets"? http://www.newyorkfed.org/markets/pr...s_current.html How do you think things are going to progress when the unemployment effect from the decline fo the economy actually influences the ability of home mortgage debtors to make monthly mortgage payments? I see a progressing "snowball effect", people who have the ability to pay, will cease making payments and walk away when their home valuations drop too far below the outstanding balances of their home mortgage loans. I am certain there are still a slew of doubters that it will ever "get that bad", but, consider the precarious position, already, of the "primary dealers" and Fannie and Freddie. Who will the mortgage lenders be in the future, and at what interest rate? Who will qualify for mortgage loans? This bubble was fed by lending conditions whereby anyone who could fog a mirror got approved for a loan. Home prices could only go higher and higher, so tight appraisal standards were unneeded and unheeded. The outstanding mortgage loans are contaminated with over appraised collateral and borrowers of exaggerated credit quality, as are the mortgage bonds they were lumped into. The bond insurers artificially....by insuring the mortgage bonds, raised the credit quality of the mortgage bonds. The bond insurers will not survive the claims against their assets. The implosion is accelerating, as described at the page first linked in this post. All the fed and Bushist manipulation in the world will not prevent things economic from looking very ugly this october. The only sure thing is that gasoline prices will drop, with the US economy.

03-14-2008, 11:52 AM	#130 (permalink)
host Banned	"currently", ace? I am so far from wet dreams about a "free market" economy, I cannot find the words to describe the distance. My point is that we have been in a "rigged scheme" designed and controlled by the wealthiest, for the benefit of the wealthiest. We have one antidote, our sheer numbers....but the brainwashing "Op" and campaign of flattery successfully carried out against a sufficient number of us to deflate the will to use our sheer numbers to shut these thugs down, results in this "systemic hiccup". If the president and the congress represented the interests of "the people", instead of the interests primarily of the top one percent wealthiest, and the next nine percent who flatter themselves into thinking that they are "in the club", too.... the wealthiest one percent would not own one third of all US assets, ace. Once in a while, we get to see what they are actually doing every day, because the president and the Fed have to openly admit that they support the financial criminals, as their highest priority, and today is one of those days. Instead of "too big to fail", as a demonstrated Fed and presidential/congressional policy, ace....do you think it would cost anymore than the current "policy" it is costing the rest of us, to have the highest priority be a <h2>"too small to fail"</h2>, priority? These thugs have encouraged our outsized consumption and dependence on oil, they've intentionally inflated the currency, stocks, and housing prices, and now....we're witnessing the early stages of the economic life we knew, being over. There will be no wealth in public hands to bail out anyone, but especially the least of us.....

04-01-2008, 10:47 AM	#135 (permalink)
aceventura3 Junkie Location: Ventura County	I really enjoy this thread, because all the predictions we document here will prove to be correct or incorrect. I am impressed by the resiliency of our economy. After the "sub-prime meltdown", "real estate market bubble bursting", currently anticipated recession, dollar devaluation, $100+ oil, historic national debt levels measured in dollars, billions in banking write-downs, the war, and the general credit and regulatory crisis - the general economy continues to chug-chug-chug along. __________________ "Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

05-16-2008, 06:50 AM	#141 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	that may be the case, I was just in Las Vegas shopping for properties.... it's amazing just how many homes are 50% of the value the bank originally sold it before they took possession of the asset. it's a good season to buy something... and there are plenty of renters. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

05-16-2008, 09:54 AM	#142 (permalink)
host Banned	yes, ace....you did post in the past your opinion that population growth would dictate continued housing unit construction. Youlve presented evidence today that thete is a one month incresse in housing starts concentrated in multi unit construction and that single family home sales numbers, along with interest exhibited by potential buyers, plummeting into, for the single family home market, modern day depression levels. Now the decline proceeds in a way that destroys the core of middle class equity concentration, unlike the wealthy, the middle held the bulk of their personal wealth in their homes. A boom if one develops, in multi unit home building will do little to offset the decline in the willingness of consumers who felt 'house rich' when their principle asset was rising in value, year after year....to spur demand in the general economy. In addition, there is the ongoing process of former consumers losing first their credit ratings and then their homes. Add to this the reaction of tighter mortgage lending standards. We will see who the remaining robust creditworthy and enthusiastic consumers are who will do the buying in the volume needed to hold up the overall economy. I don't understand your emphasis, ace on the impact of multi unit construction. Itvwon't provide income for millions of realtors or for those who make and sell all of the materials, goods, and furnishings which robust sales of new and existing homes was providing. It will spur sales of some building materials and furnishings and appliances....keep a small portion of the building trades workforce employed. The big picture has not changed since i started the thread and we're probably in the spring, using a year of economic downturn, of the entire period of things getting worse before they get better in the single family home sector. In the broader economy, we may still only be in early march compared to where this downturn reverses.....

05-16-2008, 12:27 PM	#143 (permalink)
aceventura3 Junkie Location: Ventura County	Stay tuned. Remember that movie Fatal Attraction, when the character played by Glenn Close says: "I will not be ignored". Well we can consider the fundamentals driving the housing market like Glenn Close's character. If the economy needs 1 million plus new housing units each year, at some point that demand will drive market prices and can not be ignored. They can not create new land, that can not be ignored. They can not stop life cycles of children growing up and wanting to move out, that can not be ignored. They can not stop a woman's desire to nest (oops kind a sexist, but true, are you married yet? Just wait.). Oh, you get the point, its Friday. __________________ "Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

05-21-2008, 12:28 PM	#146 (permalink)
aceventura3 Junkie Location: Ventura County	New foreclosures, it seems California and Florida dominate the list. Is the level of foreclosures in these states going to spread to other states. Probably not. http://www.realtytrac.com/states/index.html http://www.realtytrac.com/states/index.html?ChartPage=4 Vermont had 2. P.S. - FYI, California has about 13 million households. __________________ "Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers." Last edited by aceventura3; 05-21-2008 at 12:41 PM..

09-06-2008, 04:01 AM	#148 (permalink)
ottopilot let me be clear Location: Waddy Peytona	Propose a solution. Let's talk about it. __________________ "It rubs the lotion on Buffy, Jodi and Mr. French's skin" - Uncle Bill from Buffalo

09-06-2008, 02:00 PM	#152 (permalink)
dksuddeth Junkie Location: bedford, tx	Host, the error you're making is in holding fast to what USED to be left has been excised, when in fact it hasn't been excised, but co-opted. Those that are left, or left of center, are now part of the problem as well. So it isn't that the old left has moved right, but that wealth and power have supplied both left and right with the emotion and power of greed. I needed to add to this... It started before the 1950s as well. Todays political power grabs and upper class vs. lower class is a direct result of FDR's administration. So much power was consolidated in to a government entity at that time, that this is what we have left of it. __________________ "no amount of force can control a free man, a man whose mind is free. No, not the rack, not fission bombs, not anything. You cannot conquer a free man; the most you can do is kill him." Last edited by dksuddeth; 09-06-2008 at 02:03 PM..

09-06-2008, 03:51 PM	#156 (permalink)
dksuddeth Junkie Location: bedford, tx	Yes, capitalism unchecked could allow a handful of corporate enterprises to hold any country by its balls. Case in point, Oil as it was back then and as it is today. Is then the answer to completely remove any capitalist incentive and deposit total power and control of global assets in government hands for total and complete regulation? __________________ "no amount of force can control a free man, a man whose mind is free. No, not the rack, not fission bombs, not anything. You cannot conquer a free man; the most you can do is kill him."