Living4Dividends

Debunking the 'Too Big to Fail' Myth Once and for All

Breaking up the mega banks is the right thing to do. The problem is that breaking them up will require enormous political willpower. The political will to break up the big banks is not there yet in sufficient quantity.

Too Big to Fail: Greenspan Adds His Voice to the Break-Up Chorus

Breaking up is hard to do !

Breaking up the too big to fail banks is the right thing to do. While it is the right thing to do, it requires enormous political willpower to do so.
The political will to break up the big banks is not there yet in sufficient quantity.

Government's Economic Strategy: Cover Up How Bad Things Are

Great article - very comprehensive

U.S. Housing Market Has Likely Bottomed

The other wildcard in the housing market debate is the Fed Govt. Over the last five decades the US Govt has provided enormous support to the housing market, in terms of low cost Govt loans and backing for GSEs (Fannie and Freddie and others) making those loans. They achieved etheir intended effect: they propped up home ownership. When Fannie and Freddie ran into trouble, no problem, "Uncle Fed" took them over and bought up their book.

Not dismayed by their failure with Fannie and Freddie, Uncle Sam has tasked other Federal Agencies to keep the mortgage money coming. In 2005, the Federal Housing Administration (FHA) guaranteed about 2% of all new US mortgages. In 2009, FHA guaranteed 25% of new mortgages.

If the Govt wants housing prices to rise, it can achieve that goal with rebates and lower interest rates. Govt policy is the big wildcard.

U.S. Housing Market Has Likely Bottomed

Prof. Lok Sang Ho may indeed be correct, but he has no crystal ball.

Other commenters cite "fundmentals" as a driving force for housing prices. Fundamentals such as excess foreclosures, and low employment point to continued housing weakness. Others cite that the "fundamentals" show that housing is not back in correct price/affordability ratio.

Who was obeying the "fundamentals" when the housing market was booming? Experts were saying housing prices were not supported by the fundamentals, yet people kept buying.

Fundamentals only partially drive the housing market - speculative forces also play a big role. When housing rises 10% YOY, then the great rush will come, and everyone and his brother will want to buy houses (even those they can ill afford)

Bernie 'The Bruiser' Madoff gets into a prison-yard tussle with a fellow inmate over - of all things - the stock market, and comes out the winner.

Bernie is 71. It says he won the fight.

Was his attacker an feeble 90lb asthmatic?

too bad Bernie was fighting a big bruiser.

Asset Allocation Doesn't Do the Job

Good point. Technically, even a "100% in cash" position is an asset allocation. It is the worst asset allocation, but it is still an asset allocation.

I agree, we all are asset allocators

The article, on the the other hand was referring to an asset allocation MODEL. That is a diversified mix of asset classes.


On Oct 09 07:53 PM E.D. Hart wrote:

> I agree with the comment that we all are asset allocators, its just
> a question of if you have the right mix. If you own a house, stocks,
> cash, and are near social security then you have stock, bond, real
> estate, and currency exposure. Commodities would round out the mix.

The 'Own Your Own Home' Policy: A Relatively New Thing

Moon Kil,
Fannie and Freddie were part of the great experiment to prop up home ownership. When Fannie and Freddie ran into trouble, no problem, "Uncle Fed" took them over and bought up their book.

The collapse of two GSE, Fannie and Freddie show that massive government intervention on the markets has disastrous consequences.

Not dismayed by their failure with Fannie and Freddie, Uncle Sam has tasked other Federal Agencies to keep the mortgage money coming. In 2005, the Federal Housing Administration (FHA) guaranteed about 2% of all new US mortgages. In 2009, FHA guaranteed 25% of new mortgages.

Heck, even the US Dept of Agriculture (USDA) is guaranteeing loans for new construction.

On Oct 13 10:26 AM Moon Kil Woong wrote:

> I will put it more succinctly, without the government FMA or their
> misbegotten spawn the Mae's no bank on god's green earth would finance
> 30 year home loans at 5.xx anything.
>
> That is not to say 30 year home loans are bad. But when you couple
> it with targeted rates by the Fed and the government you get a deadly
> coctail not unlike heroin where when you wake up (if in fact you
> do) you may find yourself in very sorry shape indeed.
>
> In fact the nightmare has gotten so bad that the Mae's themselves,
> even though they continue to grow, can't contain the demand for these
> loans even in a recession, nor can they contain the losses. Not only
> has the government outright bailed them out and continue to do so,
> they have gotten the Treasury and Fed to buy off their book just
> so they can keep on making failed low interest loan after another.
> If in fact, the housing market is dragged further down we won't come
> out of our stupor until we are found underneath an economic train
> wreck.

Why Exxon Should Significantly Increase its Dividend

Yellowhoard - I prefer my GOLD to be the color BLACK

I do agree with you that the Foreign Majors are your best bet for owning black gold, for the following two reasons:

1.) US Oil Majors pay skimpy dividends (the point of this article)
2.) The coming Obama Taxes on big oil will mostly affect domestic producers. PBR STO BP, etc are out of the long reach of the taxman (your point)


On Oct 10 10:04 AM yellowhoard wrote:

> When the big inflation arrives, and it will, and gasoline shoots
> up to $10 per gallon, or more, Congress and the Obama administration
> will villi
fy the oil companies and farmers.
> They will whip the mainstream media into a frenzy over the "windfall"
> profits being made by natural resource producers and it will work
> because people will be confused and hungry.
> For this reason, I own no US resource companies. PBR and STO are
> my best bets for the next ten years.

Jim Rogers on the Next 10 Years

Heather - that was a beautiful opening line "I’m moving to China … possibly to live in a bunker. "

At the the turn of the century, Britain was the world's leading economic power. Beginning in the 1930's - 1940's - America took up the mantel. China is clearly vying for the new title.

While I think China will come to global economics, English is still the international language of business and the language of the internet.

Saying "we all need to learn Mandarin" is silly.

Good article

Recent Rally Has Destroyed PPIP's Allure

PPIP's allure was destroyed long ago.

Pension Apprehension

Good article.Many companies face overwhelming pension obligations because of their severely underfunded DB Plans that could depress their profits for years.

Most traditional pensions (DB plans) have been eliminated to increase the profits of American corporations at the expense of the workers. The great shift from DB Plans to DC Plans has shifted the risk of investing for retirement squarely on the shoulders of the worker. The 401K plan was intended to be a superior replacement, but has a myriad of problems. Great in theory, bad in implementation.

The 'Own Your Own Home' Policy: A Relatively New Thing

Thanks for the article

The 'Own Your Own Home' Policy has been around for approximately 5 decades in the USA. Private home ownership has long been encouraged by govt policy.

I do agree with you that it represents govt tinkering on a grand scale. Govt intervention - tinkering with the economy leads to big problems. The subprime collapse and resultant recession are examples of the problems that occur.

The Marginalization of Risk

The pawn shops and payday lenders charge very high interest rates, increasing the indebtedness of lower income groups.

America Does Not Produce Nothing

Steve - Because of your good reporting, I read any article you publish. I have to admit I was also drawn to read this article because of the title's double negative.

Good article - keep em coming