ccerenz2

The Economic Benefits of Climate Legislation

What happens to all these investments when everyone figures out global warming is a scam?

What Recovery? Unemployment at 25-Year High

Ok, one more time. Unemployment is a lagging indicator. If you want to know where the economy is, or where it is heading, you are better served to study the leading indicators. According to ECRI, the growth index stands at the highest level since they started tabulating it...back in 1968. Clearly we are in somewhat of a unique situation, but let's at least talk about things relevant to accurate predicting where we are headed...and unemployment doesn't fit in that category.

Cramer's Mad Money - When Obama Stumbles, Stocks Soar (9/20/09)

Nice try to the two posters before me, but they clearly haven't been paying attention to the market. In early 08, the market rallied and fell depending on how Hillary was doing in the primaries as it was assumed a Dem would win the presidency. When the AP announced that Hillary lost to Obama in the primaries, the market fell over 100 points within 10 minutes. It didn't stop until July 7th, almost a month later. Then it began to recoup a bit as the real campaign began and McCain looked like he had a chance. As that began to fade and Obama's popularity began to increase, the market faltered badly. It didn't stop until two weeks before the election when McCain started to rally. The market then rallied for two weeks in hopes of a late inning comeback by McCain as he pulled ever closer to Obama. When Obama won, that night the markets started another two week route where it fell 20%! It wasn't until he started announcing well known business types to his organization that the market began to recover.
That went on until early January when Obama took the mike and told us that unions "were the solution, not the problem." The market fell until early March when Obama took the mike again and said he would buy stocks, signalling that he was going to support business at least somewhat.
I appreciate Cramer for being honest and right so much more than he gets credit. While Obama's henchmen clearly went after him last March, the reality is that he was right about what he was saying at the time. And he is right today by stating what is obvious to anyone willing to connect the dots, except the diehard Obama supporters above.

The Absurdities of 'Buy American'

Give me a break!!! Every country has protectionist policies. One of the worst offenders being China. Until the playing fields are leveled for our products, we will continue to lose jobs. Write an article on how China has set up it's solar program where only Chinese products can be used. Address how the currency is kept artificially low so Chinese products have an overwhelming cost advantage over our own.

SoCal Homeowners Did This to Themselves

This professor is on to something. In my neighborhood 8% of the properties are in the foreclosure process. These are homes at $900K and above. Having access to the tax records, which includes mortgage data, it is clear that those in trouble ran up the mortgages through refi, and second mortgages.
Some of these people thought they could live on a deficit because the house price was always going to rise, but others took trips, boughtexpensive cars, houses full of furniture etc. The interesting thing to me is this. Yes, they lost their homes, but they drove away in the cars, moved out the furniture, and are still wearing the expensive clothing.

Cramer's New Report Card: He Passed

I saw the show where Cramer supposedly recommended Bear Stearns prior to it's failure...but he didn't do that. A caller called in to ask if her money was safe at Bear Stearns...as in her account. Jim said her money was safe at Bear Stearns. And as it turns out, it was. Had she asked about an investment in Bear Stearns, I'm sure his answer would have been different.
In addition, he was very correct in September/October when he predicted a significant drop, and has been correct again during this rally since March. Were you?
People seem to want to dump on him for their own gain, but the reality is, what this guy does is come out night after night with valuable advice that is usually more accurate than anyone else.

Accounting Rule Changes Creating False Rally in Financials

This author clearly doesn't understand the negative downward pressure that Mark to market has on assets in a declining market.

'Uniquely American' Is Code for Killing Healthcare Reform

Why is it that every person in America "deserves" healthcare? Shouldn't they have to earn something? It's one thing if a person has a job and a family...they could be accorded some help. But the fat and lazy bums watching Jerry Springer should not be subsidized by the earnest and hardworking.

Toxic Assets: The Challenge

Mark to Market is not a constant. It was implemented a few short years ago. If it had been implemented in the last century, our banks probably would have gone bust at least 10 times. It is an idealistic approach and what we are seeing idealism crash into reality.
In and of itself, the idea sound good on the surface, but it doesn't work during difficult/depressed markets because it causes artificial downward pressure on asset prices.
It's time we get realistic and realize that until this ideal is abolished, the system will continue to need life support.


On Feb 13 01:37 PM Aristophanes wrote:

> M2M is a constant. Deriding it is blaming the messenger. It only
> accelerates bad news by revealing that a deflationary spiral in value
> can, well, accelerate. Patrick's analysis is a stopped time rendition:
> it accounts for no further devaluation as the market deteriorates.
> He's brought cake to a party that ended a week ago.
>
> If the assets are not worthless, then YOU buy them. The spread between
> bid/ask on these items disproves Patrick. Others have crunched the
> same numbers and seen hidden risk because of the way they are structured.
> The ridiculous assumptions of mortgage holder income viability threatens
> the long term valuation. Future risk assessment says that a great
> deal more people will default. The massive recession says so. Do
> you want to guess how many and where? These bundled assets are geographically
> everywhere.
>
> As these assets are, wrapped in bundles so tight that even Geithner
> says they are "complex contracts" (and Paulson before said that stated
> "contracts will not be broken"), then they are inscrutable black
> boxes. That is by design, not accident.
>
> To break these black boxes open you will have to break contracts.
> Period. Someone will have to pick winners and losers. At this point,
> M2M is not the issue, nor is any market mechanism, because what you
> have is now the negative value of a broken contract and all the repercussions
> and further legal liabilities. therein. This is precisely why the
> real estate and financial industries are lobbying so hard against
> bankruptcy cramdowns. A bankruptcy judge would be a M2M analyst of
> precisely the kind that properly values the real worth of the asset,
> on a local scale, fixated on the timeline of the purchaser and their
> relationship with the lender. It would be a real world, real value,
> real time analysis with legal precedent. It would destroy the interest
> first prerogative of the mortgage industry for a decade as bankruptcy-derived
> valuations spread through the real property sector in the absence
> of market valuations.
>
> So unless the financial wizards are willing to pry apart their contract
> items, the assets are essentially worthless. Only a massive taxpayer
> subsidy can value them when the markets refuse to. Hence the "stress
> test". And even then there is no indication that Geithner's clean-up
> crew have the tools necessary to analyse these assets in a proper
> balance sheet accounting. Again, by design. The industry is taking
> a "buy them all at our price levels or we'll hold the system hostage"
> approach. This is far beyond M2M accounting specs.
>
> If assets remain in the black box, all sanctity of these ridiculous
> contracts preserved, then all the malfeasance that went into liar
> loans, Alt-A, ARM, Jumbos, etc. will stay hidden as well, because
> there is no ral appeal process in a foreclosure unlike the courts.
> Exposure might well lead to further civil legal proceedings by bond
> holders, and likely a few criminal ones as well if state regulators
> get their information. This is a further deterrent to the banks seeking
> market measures in their current form. This is a private equity form
> of "executive privilege". There are criminal policies that will be
> uncovered.
>
> These assets are everything to the credit jam. They need to be banned.
> Black box securitization and the legal sanctuary of contract law
> are being used to smother the market valuation. Not M2M accounting
> standards. Blaming the latter is a diversion and not worth the energy
> complaining about.
>
> If I was a local lender in a thrift mortgage business, I would consider
> buying some of the local assets; all broken into bits I could reasonably
> evaluate and price tem, including a face-to-face with the mortgage
> holder to see how we can square things. But this contractual sanctity
> and Wall St.'s hostage mentality prevent any market valuation all
> the way from Geithner's office down to Main St. Again, by design.

Has Solar Demand Finally Hit Bottom?

On Feb 11 09:58 AM rdasher wrote:

> As I recall he ROI on solar is something like 25 years... so it takes
> 25 years to get back the cost of electricity saved on your investment
> in solar... just in time to have to replace your solar, since it
> just died.

For the first 464 Kwh of electricity used in my home, I pay 13.3 cents per kwh. For anything above that, the rate jumps to 30 cents per kwh for the next 250 and 32 cents for anything above that. In addition I pay 2 cents in taxes per kwh. I'm taking these rates right off my bill. My expectation is, these rates will increase over time.

I keep hearing that solar hasn't reached grid parity. That may be true at the utility level but at the consumer level it has. In addition, some of the cities are developing financing packages for the homeowner/business to buy a solar install and pay it off through the property tax bill. Berkeley, Solana Beach, San Diego, Encinitas are some. Once they prove a successful model, my opinion is that the other cities will adopt it.
So now, what does a person have in my region?...A way to 'FIX' energy costs for the next 25 years, available funding, a convenient payment method, the thought of knowing the electricity is being produced without pollution, increased energy independence for the home as well as the country, and a system with minimal maintenance.

The payoff period you note is reducing quickly with the increased rates being charged by the utilities. Now that the price of solar panels is falling again, it will again go lower. As our economy recovers, it seems that solar may be poised for an excellent rebound.

It Might Be Impossible to Stop the Decline of Housing Prices

"You simply cannot make an economic argument today that anyone should purchase a house when renting is cheaper." This is the crux of the entire problem. When owning a home has a preferable cash flow scenario to renting, then pricing will stablize. I'm a broker in Southern California, and for the most part buying residential properties is still not cash flow positive...therefore it seems logical that we have further to fall.
The author's comments are right on about the real inventory number versus what is listed in the statistics. From my anecdotal observations, the real inventory number is probably twice as high as what shows for sale in the MLS.

Bank Default Risk Decreases from Apocalyptic to Merely Catastrophic

The chart speaks for itself...The writer is letting us make our own decision. Not a bad idea or would you like to be told what to think?
Thanks Paul

Nixing 'Mark to Market' Won't Solve the Problem

Why are they revising mark to market accounting?
While mark to market works fine in a market that is stable, it works terribly in a market that is unstable. It forces banks to value and sell assets at the lowest sales prices conducted by their weakest competitors. Given they too are then forced to sell, it puts artificial downward pressure on the asset. The potential buyers also know this, so they sit back and wait for an even lower price before they agree to a deal. This continues and before you know it, mortgage backed securities are selling for .22 on the dollar. It's an artificial situation being caused by the rule. It doesn't relieve the problems, but does relieve the critical nature of this crisis.
Our banks have faced crisis before, but never with the mark to market rule. They survived previously, but won't if we continue with current law.

Is the $700 Billion Really for Bailing Out the Fed?

It's all about mandating "marked to market accounting". This is causing the crisis, and is nothing more than a pipe dream of an accounting standard that only serves it's purpose when things are good. It is a complete failure and causing the downward spiral in asset valuation that sooner or later may sink every financial institution in the country.

'Seasonality' Not a Factor in June Case-Shiller Improvement

In the first three months of this year in San Diego, we saw a significant decrease in price, somewhere between 10 and 15% depending on how you calculate it. Then, as typically happens every year, the spring buying season started in April. We saw a surge in hoimes going into escrow which many thought as the turnaround. Strangely, these homes normally would have closed starting in early May and ending in the beginning of July. But this year, the escrows took a little longer to close, thus a majority of them 'sold' in June and July'. The market usually stays strong here through August, however this year it has slowed down beginning in June. The number of homes going into escrow is much less than the number closing. So, while it's nice to
try to stay positive, what we experienced was without a doubt a spring bump, and nothing more.
Labor Day is the beginning of the slow period for San Diego. This year is going to be very interesting as activity usually stalls out during the back to school season and slowly starts to improve as Thanksgiving and Christmas approach. This, of course, is argued by many who don't bother to look at the numbers, but in any case it's pretty fair to say the market is in for a significant test on price over the next few months.