Go, my friends, to KTVZ.com and gaze upon the magnificently seedy mug shots of a guy who managed to total two cars in one day, a group of young losers who burglarized a restaurant and immediately ratted each other out, the two very, very scary dudes who kidnapped and raped a young man, observe the transient who tried to pass 5.00 bills (5.00 bills? Why not a 20.00 at least?) in a gambling joint. (Allegedly, all?)
Then go, my friends, to the front page of the business section of the Bulletin, which tells us in gigantic letters that it's BOOM TIMES! for some businesses, such a pawnshops and repo businesses and foreclosure servers.
A sign of the times, my friends, a sign of the times.
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35 comments:
Duncan,
Here is a question for you in these troubled times. If Obama becomes President, as it appears, with a Reid controlled Senate, and a Pelosi controlled house, what is your forecast for new laws to be passed and would you consider them to be good or bad?
First and foremost, while he still has political capital, get a universal health plan in place.
2nd. Shift focus to the Afghan theater, and -- again, while he has political capital -- take a few risks to hunt down Bin Laden.
3rd. Convene a Bretton Woods style summit to look at realistic regulatory issues.
And RDC, you'll love this, appoint an 'independent' pitbull, with or without lipstick, to look at Wall Street. You know, like fire anybody who accepted a bonus in a company that also received bail-out money. Send a message.
4th. Forget cutting taxes for the moment.
5th. A stimulus plan that consists of infrastructure spending; repairing bridges and roads, etc. with an emphasis on 'green.'
6th. Hopefully have a chance to appoint some center/left Supreme Court justices.
7th. With the political capital he's gotten from the above, really get a real energy plan in place.
8th. With the economy booming, balance the budget and cut taxes.
I can dream, can't I?
This is not a list of what I want, this is a specific list of what I expect will occur:
1. Secret ballots for Union authorization votes will be done away with.
2. Highly likely that the act which enables right to work states to be over turned
3. The Bush tax cuts will expire in 2010. (tax rates will go up)
4. Obama's tax plan will be implemented in part. The portion that provides for tax credits, especially for those that do not pay income taxes today. I would project that no one making over 70k per year will get a credit.
5. Restrictions on oil drilling will be reinstated.
6. Road blocks will be inserted to prevent nuclear plants from being built
7. The Capital gain taxes will be increased along with changes on dividends (see item 3)
8. Efforts will be made to removed tax advantaged status from 401k's and replace them with a government program that all must contribute to in addition to Social Security.
9. The income cap removed on Social Security contributions.
10. Future trade agreements will be blocked, existing trade agreements wll be revisited and potentially done away with. Protectionism will increase.
11. A VA style formulary will be put in place of government pharmaceutical programs.
12. Immigration will be addressed by providing a fast track residency and citizenship route for those that are in the country illegally.
These are pretty specific because they represent positions that have been supported by Reid and Pelosi with the exception of 4. Thatis there because the proposal he has been pushing will not be able to be implemented, but he will put in place a limited version or one where the folks get a credit, but it is more than offset by an increase in the tax rates.
If the Dem's don't get 60 seats in the Senate, the repugs will continue to filibuster anything they don't like.
End of story.
Duncan - There has never been a shortage of morons ( I mean real morons, not just the ones who merely think differently than I do.). This retardation has to be genetic to be so prevalent throughout history. It doesn't help when redneck culture has become a dominant force in American society.
rdc-
I am very concerned if the Democrats get a filibuster proof congress. I see no difference between the Democrats and the Republicans but they had to at least pay lip service and compete for special interest contributions. I foresee a few pro-citizenry laws related to healthcare and social security and then a rash of pro business legislation. I also think once the country takes on the majority of bad debt then you will see some very rigid bankruptcy laws come into being. Look for all debt to be recourse.
Duncan-
You can dream. I just do not believe we have the funds or the time necessary to implement before it all heads south. The Nov 15th DC financial summit will be a good tell for where the world and our economy is heading. Last weekends meeting in Beijing without the US's input could be the worst sign of the times and things to come.
A couple signs that would make me hopeful:
People responsible for this debacle start going to jail or at least indicted.
Bank management replaced when they accept funds.
Level 3 assets are all declared and showed to everyone.
Any company that receives taxpayer money has all dividends canceled until the taxpayer money is repaid.
Bonuses and management compensation set at a ratio of the average yearly income. 240 to 1 with golden parachutes might be a little out of touch. Could just be me though.
I can dream too.
My list was based upon a filibuster proof majority in the Senate.
Michael,
Here is a place where I disagree with you. In order to get the economy moving again you have to draw in public as well as government money. If you eliminate dividends you have just made that stock considerably less attractive to potential investors. That will keep public money away and make the solution almost entirely dependent upon government money, of which there is clearly not enough. The government dollars are to try and kick start the financial system, not to pay for everything involved in bringing it back to life.
The government program has its own charges, the companies are not getting the money for free, with an initial interest rate of 5% with that raising to 9% after a few years. The companies will draw on the government money nutil they can get public funds cheaper. The best way to get public funds is to make their stock price attractive. One of the best ways to make it attractive is to pay dividends.
So preventing them from paying dividends is self defeating when you consider the goal and intent.
Re: If you eliminate dividends you have just made that stock considerably less attractive to potential investors...
That's only true if the investor is buying newly issued stock from the company. Far and away most of the stock bought is in the secondary market, which does nothing to increase the capital base of the company.
The biggest source of bank funds is from deposits. Tight, transparent regulation will do more than anything in restoring trust.
Re: filibuster proof majority
The $64 trillion dollar question. And one that just got closer with Stevens conviction. But to do it the Dems have to take out the Minority Leader Mitch McConnell in Kentucky, a tall order. But it's close. Real close.
Still, my prediction is Dems will be at 58 seats, just a couple short. Although some of the Rep's up in two years msy be more amenable to working with the Dems on some issues.
And if/when Obama has the bully pulpit, that will add more pressure towards breaking a filibuster.
But taking out their leader--not that would be something.
Tough times these days. I just flashed on one of the sorriest stories I've been part of.
Back in about '88 after Alta closed I headed south to bike race in AZ and CA, my usual spring trip to get my ass kicked into full race fitness. Around Price, on the way to Moab, I picked up an Indian kid hitchhiking. He seemed really upset, so I worked why out of him.
Turns out that he had taken the bus from Navajo land to Salt Lake to find work and send some money home. His big break, to find some success, to help his dirt poor family on the res.
Soon after getting off the bus, he had gone into a convenience store to buy some food, and the cashier insisted that he leave his backpack outside. Wouldn't let him bring it in.
And in the five minutes he was inside, somebody ripped off everything he had, except the clothes on his back.
He was stunned, broken, in disbelief. And I was taking him back to face Grandma. He really wasn't looking forward to it.
Sometimes, even people that try to work hard need a safety net.
Especially in times like these.
Bruce,
What exactly do you think the companies have been doing? Most of the major financial companies have been raising money by issuing preferred and common stock, the amount of money they can raise is directly limited by the current price. In the case of preferred it is entirely determined by the dividends paid on it.
Bruce,
We can have a competition for the best example of a hard luck story.
Taking care of the truly indigent is one thing. Paying people more so they can enjoy life more without having to work is quite another.
Define how the example you gave relates to a safety net. After all in the example you listed he had a safety net, the reservation, and his grandmother. I bet the next time he would have a lock for his backpack and would make sure it was secure.
Also since you are so keen on taking others peoples money, why didn't you pony up some of your and replace his backpack and what he lost?
We can debate for hours on exactly where that line should be drawn.
The one thing I am absolutely sure of is that giving people money does not improve productivity and long term improvements in living standards are driven by improvements in productivity.
If you can find a single peer reviewed paper that indicates that giving people money encourages productivity I would be very interested in seeing it.
There are all kinds of examples that says the opposite.
There are very good reasons why those that came through the great depression developed the work ethic that they did and why they learned to be independent and be self sufficient.
Bruce,
While you are going after folks I am surprised that you are so selective in those you name and ignore the culpability of Barney Franks, Chris Dodd and others that supported the management that ran Freddie and Fannie into the ground.
While you are add it why not mention Jefferson and his freezer cash down in Louisiana.
As usual your view of the perpetrators is a bit selective.
rdc, I seem to have hit a soft spot.
No, I have not seen any of the banks issuing stock on the open market. Only to the government. Please give me an example.
Yes, I gave the kid some money. And a meal.
Yes, I agree that some Dem's are culpable, that's obvious. It's just that there is much more pressure on folks like Jefferson to get out on the Dem side, thanks to DKos, etc. There is a no BS line backed up by real money from tens of thousands of small donors.
Which is probably as close to a true democracy as we will get these days.
Re:
There are very good reasons why those that came through the great depression developed the work ethic that they did and why they learned to be independent and be self sufficient.
So you would be opposed to the government funding the action in these pictures during the depression because they obviously don't work hard enough?
You don't have to treat others well, or worry about the community, if you can just get up and go tomorrow.
Bend, Oregon has a 'soft spot'? Are you out of your mind?
*
I still say the NAZI Germany analogy holds.
In a few years California Tribunal Courts will be up here dragging BEND-OR war criminals off, and everyone will be so fucking surprised.
Like our fucking selection of candidates, who in the fuck would run for office in this town? Other than a PUSSY who wants cargo, the only gig in this town is three gigs.
1.) Exempt real estate property tax for sacred land-holders.
2.) Exempt SDC cost for sacred builders.
3.) Open the doors to military production of the worst fucking poisons on earth, cuz the future is bio-weapons and Bend-OR is going to be the epicenter of the action, and everybody is going to get rich.
Eventually this place is going to be a shit-hole of your worst fucking dream. The Rich will pay NO tax of any kind.
Talk about social-security what is military spending? Just community welfare.
The bizarre thing about BEND-OR, is OUR State pol's didn't lobby for the weaponization of Bend, it came through Schwarnegger, who lobbied for Resnick. Why did Resnick pick Bend-OR?? Why here?? Why invest here??
Most likely the WATER, we got lots of WATER and RESNICK loves water, as you all SHOULD KNOW BY NOW, Resnick OWNS the CALIFORNIA-WATER under the ground, I kid you not.
Cali would NEVER allow Resnick to make his poison, and OREGON pol's would never get the OK, so what did BUSH-CHENEY setup??
Homeland Security authorizes $500M by Bush-Cheney, which passes through USDA to Schwarnegger, which passes to Suterra LLC of Resnick.
Huge military production in ORYGUN, and NOBODY is involved, and everyone gets denial. Trouble is from day-one when BUSH-CHENEY won office in 2000, they were working with HOLLERN, no accident that NOBODY pays any SDC at Juniper-Ridge, and that the taxpayer picks up the tab.
My point here folks is who you elect in ORYGUN don't make a fucking bit of SHIT, $500M is a lot of money, and money is politics, and the MAJORITY of the money coming to BEND is outside of the scope of our political influence.
So go ahead and vote for dwiddle-dee, or twiddle-doh, but realize that the $500M power-ball will continue to roll towards HOLLERN&CO.
The MAJORITY of BEND voted for BUSH-CHENEY 2000&2004, and will vote PUG in 2008.
The Majority of Bend approves of the aerial poisoning of Bay Area Californians. For no other reason that they get paid to produce the poison, and the remote idea that the exit of refugees will come to Bend-OR to buy homes.
Bruce,
The Wall Street firm’s public stock offering Wednesday was twice as big as Goldman said it would be just the night before, raising $5 billion instead of the previously announced $2.5 billion. Toss in the $5 billion infusion from Warren E. Buffett, the legendary investor, and Goldman raised $10 billion — or about 20 percent of its market value.
Mitsubishi UFC purchase into Morgan Stanley
Citibank sold a large chunk to a middle eastern sovern equity fund
If I spent the time to look at all of the transactions I could probably put together a pretty lengthy list.
The key point is that if they are not attractive in some way they cannot get private investment. If anything providing a guarentee of dividend rates would be far far better then to cutting or terminating dividend rates. If you look at it the government program is basically a preferred with 5% dividend for the first 5 years and then going to 9% after that. They should do a public offering with the same terms. Then you could get private funds and multiply the value of the government funds. Eliminate the dividends then the government is going to have to pony up far far more.
As far as pressure to get out Jeffersen seems to have gotten considerable initial defense from the Democratic leadership. They certainly did not go out of their way to do anything on the ethics side in the House.
My view is very straight forward. The safety net should provide essential support. It should be aimed at providing those the oppotunity to take care of themselves, not to provide permanent maintenance that have the capability to take care of themselves, but choose not to.
Now there are those that truly cannot take care of themselves. Those should get support to some degree.
For example the government should provide shelter and meals for the homeless. But in return for that support they should submit to drug testing, mental compatency testing, treatment, etc. If they are not willing to do so then the government should not be obligated to provide support.
A family below a given income level should receive government aid, but in return for the government aid the children must meet requirements for school attendence/performance. Failure to do so should result in a lower level of support.
If someone is hungery they should be fed and offered a way for them to feed themselves, if they reject what they are offered then if they are hungry it is their own problem.
Note that all of the people in the great depression would have accepted any job that was offered. The ethic then was that there was it was a last resort for someone to take a handout from the government. Today the response to someone receiving government aid is not a thank you, it is why isn't more.
I do believe that Bilbobend has gone around the bend. There must be a run on aluminum foil in Bend for headware construction.
It's the fluoride in the water.
Either that or the bug hormones....
Oh, my god. He's right!
rdc: "There are very good reasons why those that came through the great depression developed the work ethic that they did and why they learned to be independent and be self sufficient."
RDC, many thousands of those "independent, self-sufficient" people would not have SURVIVED the Depression if it hadn't been for the government safety net FDR created.
You are a classic Republican -- never giving a damn about anything but saving a few precious dollars on your tax bill.
rdc: "Note that all of the people in the great depression would have accepted any job that was offered."
RDC, you seem to think the Great Depression was the Good Old Days. A classic example of false nostalgia. Or maybe you're getting your ideas about it from TV.
My parents lived through the Great Depression. I've heard the stories. "The Waltons" to the contrary notwithstanding, there was nothing romantic or noble about it.
Blackdog,
You seem to:
1. have a problem reading
2. depend upon labels a great deal in your comments.
I have not once made a comment that support programs during the great depression was not necessary.
I have made comments that I do not support the government increasing payments to individuals for which there is not a corresponding requirement for those to do something in return. I have also made comments that such payments do not provide motivation for those individuals to improve their position by their own efforts. That instead they make those individuals even more dependent upon them and less motivated.
Also I never said that there was anything noble or romantic about it. Only that during those times, times which were darker and bleaker than anything we will face they did their best to solve their own problems and only turned to charity and the government as a last resort. In effect saving the government resources for those that truly needed the help.
The times were not noble, but in many cases the people were.
Blackdog,
Exactly how much do you back up your comments? Since you seem to feel that the government makes an efficient use of money how much extra do you send them? Did you reject the economic stimulus check that they sent out?
Or do you just feel that others should foot the bill?
If you are so concerned about your fellow man what kinds of efforts do you participate and support to improve their well being?
You seem that the government should increase the percentage of funds they take from others, how much more of your income are you willing to pay.
rdc,
The system that benefited you and your world view has ended. You still believe this is a recession with America's primacy being maintained on the other side. You are wrong. Take a step back, examine the data objectively and plan accordingly.
Sometimes the greatest courage is to accept the change that is inevitable and change with it.
Good luck.
I would like your opinion on the possibility of the US defaulting and the devaluation of the dollar. Consider the possibility before you rule it out. 2009 will change who we are as a people for a very long time.
Michael,
Keep in mind that as hard as the US is getting hit during this crisis the rest of the world is getting hit harder.
What you are seeing is that in times of crisis money still flows to the dollar.
In the short term the dollar will do well against the other currencies.
The chance of a dollar default is so low as to be almost non-existent. As high as out national debt is compared to GDP it is a lower ratio than the other "developed" countries such as Japan and western Europe.
Times are changing and have been for many years. For example if any expects someone to be unskilled and be able to command an upper middle class income they are mistaken. The day when someone can go in and command 60k plus working a manufacturing assembly line in the US is rapidly coming to an end. Today the infrastructure is sufficient in thrid world countries that workers looking for such jobs have to compete with other workers that are bringing in $2000 per year. The only way to compete with that is to be that much more productive.
Highly paid unskilled that can be relocated will continue to erode. The last bastion of such jobs, the auto industry, is near collapse and will probably be down to 2 and maybe one by the end of 2009.
Long term the dollar will erode as long as the US over consumes and runs extensive trade deficits. That can be negated to some degree by the major corporations continuing to be head quartered in the US. It will also be negated as long as the US maintains the role as the safe haven in times of turmoil.
The dollar will erode compared to some currencies but it will be a gradual long term activity, not a sudden collapse and default.
Let me put it this way if the US dollar were to default, almost evvery other currency would be in default first.
Re: The dollar will erode compared to some currencies but it will be a gradual long term activity, not a sudden collapse and default.
Let me put it this way if the US dollar were to default, almost evvery other currency would be in default first.
rdc, you seem to be taking a beating.
So let me pile on:
Almost every other currency does not include the yuan and the yen. The two countries that hold most of our debt and are currently trying to get rid of it.
If they wanted to, they could crush the dollar by flooding the market with their US debt.
Empire building will be proven once again as the downfall of a great country. It's only a matter of time.
Actually Bruce, I am in pretty good shape at the moment.
I was only setting about 30% in equities at the start of this and just starting an a program of income averaging in over a period of 24 months. The stock I was in have held up pretty well and the averaging in has yieleded some good bargins (though I also must admit I have been doing more trading than normal and lightened up a bit at the end of the day today). Options have also be very profitable lately. In total I am down less than my state income tax bill last year.
I am actually think this is a good time to buy a house -- in New Zealand. Currently looking at property in Queenstown. With the pull back in their market, coupled with the current exchange rate, it is very tempting.
Still expect the dow to hit between 7000-7400 sometime in the next 12 months. With an expectation that it may break through that support down to 6000. If it were to match the Japanese deliveraging event the equivalent would be 2000.
Keep in mind that the Yuan is not free floating it is still heavily linked to the dollar. If the dollar goes their economy goes with it. It is a pain to have a production capability and noone to buy. Chine needs the US and the European market. Atleast for the next 10 years or so.
The yen is strong. It might get to 75. However, their market is tanking and has bounced off a level below their 1994 low. They actually reached a 26 year low. The 1994 low was the bottom after the crash of their real estate market (their 1990 high was around 39000).
So again even while the currencies are keeping pace with the dollar, their economies are taking just as large if not larger hit.
Bruce,
One other comment. Why do you think the t-bill rates have been driven down as far as it has. THe Chinese money has been flowing nicely into T-bills. They also look for safe havens in time of crisis.
The japanese yen strength is greatly influenced by the unwinding of the carry trade. Expect the Japanese governet to step in to try an weaken it. They will probably not be successful but expect them to try.
Bruce,
since you seem to be under a misconception that I have taken a substantial hit this year I thought I would provide a bit more detail on my investment strategy.
First my long equity investments are broken into two categories. The first is core holdings, which are in general index funds. I never have less than 25% of my assets nor more than 50% in core equities (the top level is impacted by the fact that I am over 50, when I was in my 40's the peak level would have been 10% higher). The second is what I call my trading block. That never exceeds 10%.
At the start of this year my core equity postion was at the lower range of 25%, my trading was at about 7.5% with the majority in BRKB. As the market has come down from its peak I have been averaging in to keep the core at 25%. On big updays such as yesterday I take 75% of the gain back out, while continuing to average in.
Now the impact on my long position is down about 33% or an impact of 8.25%. Now as far as the trading block I made out rather well for two reasons, first I managed to catch the bounce in Berkshire Hathaway and sold pretty much at cost. I have been using those funds for trades, options, short positions (now that it has been allowed again). With the options I have been using that for straddle positions. The nice thing about straddles is you don't care if the market goes up or down as long as it moves far enough. The current volatility has created some nice opportunities for straddles. Bottom line is that I have average about 8% in the trading block and have returned a positive 62% in that area. .08 X .62 = 4.965. so overall in equities 4.96% - 8.25% = -3.29%. However the cash and bond area has been not too bad this year. The bank issues have enabled some fairly nice CD rates and some older treasury bonds that I had (which improved in value nicely as new T-bill rates have come down) have enabled me to average about 4.1% on my cash position. .041 X .67 = 2.75% contribution.
so between equities and cash
2.75 - 3.29%= -.54%
Now while a loss of .54% year to date in my portfolio is less than my normally expected average return rate 7.5% and is not the desired out come, it is certainly not a crippling outcome either. The good news is that I have far more shares represented by the 25% than I did at the start.
What we have seen so far is the direct impact of the credit crisis brought to a head by the bankruptcy on Lehman (in hindsite it would have been far cheaper to do a BearSterns type of transaction then letting them go under). The curren volitility is a battle between those that think that stocks are currently undervalued after the drops and those that think that their earnings do not yet represent the true depth of the recession (consider me in the later camp).
In the short term I consider it about equally likely that the stock could trail down to 7000 as it is that they will bounce to 10000. Over the next year I do expect them to drop to the 7000 range at some point.
In the mean time I consider myself well position no matter which way they go. At this point I am totally out of the US stock market, except for one house that I own that my mother lives in. I expect it to remain soft through 2009 and in general am looking for another 10-15% downward movement as the recession starts to add downward pressure to the bubble collapse momentum.
Thank you for your interest. How are your investments doing?
One correction in my last post. I meant to say totally out of the US real estate market except for one house my mother owns.
A correction to my correction
out of the US real estate market except for 1 house that I own, and my mother lives in.
I just ran across this URL, don't know if you've seen it, thought you might enjoy it:
http://www.deschutes.org/mostwanted/
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