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  • New Residential Construction Report: September 2009 [View article]
    Housing prices have been declining and their is clearly and excess supply of existing homes.

    Clearly, the smartest thing to do is to STOP building new homes, until demand catches up with supply.

    Unfortunately, this is not happening. The Fed Govt continues to support new housing starts., through the FHA and oddly enough USDA (yes, US Dept of Agriculture), This makes no sense.

    I say the Government recognize that the nation doesn't need to build any more new homes until demand catches up with supply. Remove all Govt subsidies (FHA and USDA cheap loans) to home builders. If someone wants to buy a NEW home, they will have to obtain their own private financing.

    There should be no housing starts that are due to "cheap govt money."

    The Govt should still maintain their subsidies for existing homes.

    This policy will encourage the purchase of existing homes.
    Oct 22 07:28 AM | Likes Like |Link to Comment
  • Gafisa: Think American Housing Market in the 1950s [View article]
    Good article - thanks
    Oct 22 07:27 AM | Likes Like |Link to Comment
  • The U.S.'s Bubble Addiction: Is Housing Bubble #2 About to Take Off? [View article]
    A new housing bubble? Unlikely ! I have long agreed with Shiller: another bubble will form, because America (and the world) is addicted to bubbles. It would be unlikely that the bubble form in housing, given the recent bust.

    I hope that housing prices have stabilized and continue a steady and stable (but slower than bubble speed) upward rise
    Oct 22 07:25 AM | Likes Like |Link to Comment
  • Elizabeth Warren: 'Big Banks Always Get What They Want' [View article]
    I like Elizabeth Warren - she is analytical, fair-minded and honest.

    Thanks to the author for creating a mini Elizabeth Warren blog.
    Oct 22 07:18 AM | Likes Like |Link to Comment
  • Asset Valuation and the Dollar [View article]
    I disagree, Brian

    QE places more liquidity dollars into the system. If velocity remains low then not much effect. You get a little reflation, which is what we are seeing now. When velocity increases and returns to normal, these extra dollars are multiplied. The net effect is inflation.

    Monetizing the debt in large quantities is destructive and leads to inflation. That is why it is outlawed in the USA.

    Too much QE, and you get hyperinflation.

    On Oct 21 09:09 PM Brian McMorris wrote:

    > Get your facts straight. QE does not have any affect on the national
    > balance sheet. There is no borowing (a liability) or spending associated
    > with QE. It takes long term assets and converts them into a different
    > kind of asset, dollars. The action is on the same side of the balance
    > sheet, the asset side. The net effect is zero. But it does create
    > liquidity, freeing up the dollars to do something good in the economy.
    >
    >
    Oct 22 06:58 AM | 1 Like Like |Link to Comment
  • Hands Off Goldman Bonuses [View article]
    Very well put Moon Kil

    It was the repeal of Glass-Stegall that got us into this mess.


    On Oct 22 03:29 AM Moon Kil Woong wrote:

    > It's very simple. Seperate the gambling from the banking function
    > and break them up so that if one of them fails then their failure
    > won't be a systemic risk. That way the public never needs to bail
    > them out again and they can't get access to public and depositors
    > money to gamble with. If they want to gamble, let them use their
    > own money like everyone else.
    >
    > The whole reason for Glass-Stegall was to prevent brokerages risky
    > behavior from being subsidized by banking leading to too much leverage
    > and dragging the whole economy into another great depression. That's
    > exactly the type of problem we have here. It's a failure of the system.
    > The bonuses are a side issue. With or without them the banking sector
    > is rewarding risky behavior and failing to punish people when it
    > turns out badly because that would mean punishing themselves. And
    > they certainly aren't masochists.
    Oct 22 06:50 AM | Likes Like |Link to Comment
  • Niall Ferguson: Dollar Is Doomed, U.S. Empire Over [View article]
    Bob - I may not agree with all your points, but your comment was well-written and well supported point of view

    Niall Ferguson has no crystal ball, but he offers a very plausible version of the future. This "future" is by no means a certainty, the course of events can be changed by taking different actions now.

    Likewise, the pollyannas who say "The US and the US Dollar will be back to its former boom days" Offer a plausible but less likely version of the future.

    No one has a crystal ball. If they did, they'd be the wealthiest person on the planet.

    On Oct 20 05:49 PM bob adamson wrote:

    > As a Canadian observer of the US situation and in anticipation of
    > direr predictions and recriminations concerning current trends in
    > US society as others post comments to this article, I suggest that
    > the analysis by Dr. Ferguson should not be viewed as portending imminent
    > and unavoidable doom for the US. Beyond doubt the US faces serious
    > difficulties and the way forward is not clear or easy. That said,
    > all the mature and emerging economies face uncertainty and challenge
    > and the large majority of them see it to be in their interest that
    > the US succeed in meeting its challenges. While there will be much
    > debate between nations on the details and the best road forward and
    > a certain amount of jockeying about for advantage, most appear prepared
    > to work together at the long and difficult task of economic recovery
    > and see the necessity that the US continue to be a prime player in
    > these efforts.
    >
    > Like the UK before it during the 70 or so years following the Franco-Prussian
    > War, the US will continue to be the first among equals (even though
    > the emphasis in that phrase will be somewhat more on the ‘equals’
    > part) for the foreseeable future. There is no reason why its citizens
    > should not remain economic, cultural and political leaders; only
    > that others will (as they should in a better world) share these roles
    > to a somewhat greater degree. There are many examples (Venice, the
    > Netherlands, France etc) of nations which have continued to flower
    > and whose citizens have continued to prosper and grace the world
    > with their insights and accomplishments after losing unchallenged
    > predominance as a world power.
    >
    > No nation can expect to be far and away the undisputed preeminent
    > economic, social and political world power for all time and the US
    > position during the 30 years following WW II was in large part a
    > reflection of the centuries long eclipse of China and India, on the
    > one hand, and the impact of the two World Wars on Europe and Japan,
    > on the other. It is not a sign of moral decay or a just cause for
    > recrimination or falling into a funk that other nations will increasingly
    > share in some measure the prominence and relative prosperity that
    > the US enjoyed in the immediate post WW II period. History will judge
    > the US (and its people will prosper or decline) on how wisely the
    > US gives and shares leadership in the world and deals with its own
    > internal economic, social and political issues in the future; not
    > on whether it was able to cling to the trappings of some imagined
    > preeminent world status.
    >
    > There will, naturally, be much debate about what the US should do
    > to recover from the current recession and play its optimal role in
    > the immerging new economic order. I’ll conclude with two suggestions.
    > They are not conventional and your not necessarily expected to agree
    > with either the premises of conclusions. The point is simply the
    > there is much to reconsider.
    >
    > First, the US dollar has been the world’s reserve currency since
    > 1946 and, despite its many current problems, it is by no means clear
    > that there is a substitute waiting in the wings to take its place.
    > It remains the currency of account for international trade even though
    > it is increasingly losing its standing as the undisputed measure
    > of value (a trend that has its roots in the 1970s). Other nations
    > accept (even if they will complain about it) that the US cannot resolve
    > its share of the current debt bubble crisis without monetizing some
    > portion of that debt. In short, the US, the UK and some other countries
    > will have to engage in some currency devaluation but, provided this
    > is done in a considered and organized manner over time in concert
    > with all affected countries this need not end the US dollar role
    > as the premier reserve currency or hurt the US economic position
    > (it may in fact help the position). It must, however be seen to be
    > a necessary part of a fair and responsible effort to place the global
    > economy on a sound footing. In short, no one should expect the US
    > to retrace the mistakes of the UK in the 1920s in its misguided defense
    > of pre-war value of the Pound.
    >
    > Secondly, the US employment remuneration model developed in the 1940
    > must be rethought. By this I mean the pattern first developed in
    > the auto manufacturing industry whereby employers became the primary
    > source of health insurance, retirement income and other benefits
    > for US workers. Some might argue (as was done by many during the
    > GM reorganization last winter) that these benefits should be radically
    > reduced or ended. Arguably his would be a mistake and it would be
    > much better economically as well as socially if the national and
    > state governments took on a significantly larger share of this benefits
    > provision load from business, funded these matters through taxes
    > and offered these benefits generally to citizens.
    >
    > This would place small and large companies on a level playing field
    > in the competition for employees, promote greater labour mobility,
    > improve employee and citizen moral, allow management to focus more
    > on their core business plan and remove the advantage that foreign
    > companies from mature economy nations have (their labour costs are
    > lower insofar as the benefits component is concerned). Obviously
    > there is a tax cost for this and the challenge would be to find efficient
    > and effective ways to design and administer these programs (and ensure
    > that an appropriate share of these costs are covered by personal
    > and not business taxes) so that this shift creates a net economic
    > benefit. The difficult political case would have to be made for significant
    > tax increases but, if that could be done to support military spending
    > during the Cold War and beyond, this should not necessarily be seen
    > as impossible provided a sound case can be made.
    >
    > Contrary to conventional thinking on both the left and right in North
    > America health and retirement income need not be simply employment
    > issues to be shaped through employee/employer negotiation with winners
    > and losers. There are sound business reasons for considering the
    > shift described above and the alternative of only increased labour
    > strife and grinding down employment benefits costs is self defeating.
    > North America (Canada as well as the US) risks being left behind
    > as other nations develop better business models concerning remuneration
    > and benefits through employment. We focus now on the off shoring
    > dimension of this issue but, arguably, the cheap labour challenge
    > is a temporary phenomenon.
    >
    > Clearly many will argue against the two suggestions just outlined.
    > So be it. The key is that there be an opening of thought and not
    > a narrowing of the options considered. My fear is that in our impatience
    > and relief now that the immediate crisis has passed we will neglect
    > to ask the deeper questions and make the difficult structural measures,
    > some of which I suggest earlier in my comments. This would be tragic.
    Oct 21 01:30 PM | 2 Likes Like |Link to Comment
  • Niall Ferguson: Dollar Is Doomed, U.S. Empire Over [View article]
    Graham and Dodd Investor - You are also correct, they DID run out of U-boat commanders. This is because many of the U-boat commanders wound up in Davy Jones Locker. :)


    On Oct 20 06:56 PM Graham and Dodd Investor wrote:

    > The Germans didn't lose the U-boat war because they ran out U-boats.
    > They lost the U-boat war because they ran out of experienced U-boat
    > commanders (from World War I).
    >
    Oct 21 01:20 PM | 3 Likes Like |Link to Comment
  • Will Housing Data Show Improvement This Week? [View article]
    "FHA is now underwriting about 90% of all mortgages."

    WOW !!
    Oct 21 10:49 AM | 3 Likes Like |Link to Comment
  • Choosing Between ETFs and ETNs [View article]
    "ETNs are dependent upon the credit of the underlying bank; ETNs are a structured note, created as a senior debt note by a bank. This means if the bank goes under, you’ll have to get in line with the other creditors."

    And, many banks, if valued under mark-to-market rules are close to being insolvent.

    The fact that ETN's rely upon the credit of the banks makes ETNs the investment vehicle to AVOID.
    Oct 21 10:39 AM | Likes Like |Link to Comment
  • Niall Ferguson: Dollar Is Doomed, U.S. Empire Over [View article]
    Graham and Dodd Investor - actually, the Germans lost the U-Boat war because the US invented new techniques and technology for finding and destroying the U-Boats. Spotter planes, sonar and improved convoy techniques spelt the end of "Das Boot"


    On Oct 20 06:56 PM Graham and Dodd Investor wrote:

    > The Germans didn't lose the U-boat war because they ran out U-boats.
    > They lost the U-boat war because they ran out of experienced U-boat
    > commanders (from World War I).
    >
    > 30 U-boat commanders collectively caused 30% of Allied shipping losses.
    > 800 out of 1200 U-boats never sank anything. The remaining 70% of
    > the sinkings were done by the "middle" 370.
    >
    > If they had succeeded in recruiting Captain von Trapp (The Sound
    > of Music was based on a true story), he would have been the 31st
    > skipper, having earned accelerated promotion (to Captain in his 30s)
    > in the Austrian navy.
    Oct 21 10:29 AM | 5 Likes Like |Link to Comment
  • Hands Off Goldman Bonuses [View article]
    Angry Banker wrote "And don't give me this garbage about how we should be prosecuting the executives as criminals because they are being awarded large bonuses. Most of the executives in charge of the firms that are still on TARP are NOT the executives who were in charge when their firms were taking the big risks that got them in trouble."

    I agree wholeheartedly.

    As for the ex-executives who got the company into trouble, most of them got paid big bonuses for taking on huge risks and running their banks into the ground. Only a minority of the executives are being prosecuted for this, by and large, most of the the bad bankers have escaped prosecution.

    That is the real injustice.
    Oct 21 10:19 AM | 3 Likes Like |Link to Comment
  • Hands Off Goldman Bonuses [View article]
    Angry Banker - The US continue to provide implicit support as the lender of last resort (if they get into trouble again, we will loan them another 25B). Therefore, the Govt still has a weak say in pay practices. Since GS is an important pillar of finance and has become too big to fail, the Govt, unfortunately has a big say in how the business is run. No bank should be allowed to put the entire banking system at risk of financial collapse.

    On Oct 21 09:56 AM Angry Banker wrote:

    > Sure Goldman was a beneficiary of the bailout. But they also paid
    > back their funds quickly and according to the terms of TARP.
    Oct 21 10:14 AM | 2 Likes Like |Link to Comment
  • Hands Off Goldman Bonuses [View article]
    If Goldman was truly a private company, then I would say "hands off Goldman bonuses"

    As Paul Krugman said: "There is no financial institution that exists today that is not the direct or indirect beneficiary of trillions of dollars of taxpayer support for the financial system."

    The govt bailed out Goldman, although Goldman paid back TARP, we continue to provide implicit support (if they get into trouble again, we will loan them another 25B)

    Therefore, the Govt has a say in the pay practices.

    I think it is egregious that they pay bonuses in a year after record losses and requiring govt assistance. If I was a shareholder in GS I would be hopping mad.

    I also agree with Graham and Dodd Investor, that Goldman's "profits" are suspect. But, then again, due to loose accounting rules, many companies profits are suspect. The jurisdiction to correct this problem belongs to the SEC (and maybe office of Banking Supervision, Comptroller of Currency), but not to Congress.
    Oct 21 10:09 AM | 2 Likes Like |Link to Comment
  • September Housing Starts and Permits Disappoint [View article]
    Housing prices have been declining and their is clearly and excess supply of existing homes.

    Clearly, the smartest thing to do is to STOP building new homes, until demand catches up with supply.

    Unfortunately, this is not happening. The Fed Govt continues to support new housing starts., through the FHA and oddly enough USDA (yes, US Dept of Agriculture), This makes no sense.

    I say the Government recognize that the nation doesn't need to build any more new homes until demand catches up with supply. Remove all Govt subsidies (FHA and USDA cheap loans) to home builders. If someone wants to buy a NEW home, they will have to obtain their own private financing.

    There should be no housing starts that are due to "cheap govt money."

    The Govt should still maintain their subsidies for existing homes.

    This policy will encourage the purchase of existing homes.


    On Oct 20 10:25 PM Alan Young wrote:

    > Much of the country is blighted with
    > vacant housing, old and new; banks are waiting to put foreclosed
    > houses on the market, even waiting foreclose on delinquent owners,
    > because the market is glutted with overstock that buyers still can't
    > afford.
    >
    Oct 21 09:52 AM | Likes Like |Link to Comment
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