johnny g

Sleepwalking to Economic Oblivion

excellent analogy


On Feb 06 07:29 PM mr freddo wrote:

> We used to battle forest fires as if they were a demon that must
> be stopped before all those beautiful trees were burned. Then we
> realized that forest fires are a part of the natural process and
> useful in clearing out the dead wood. When we don't allow fires,
> the dead wood builds to a level whereby when a fire does break out,
> it is a huge catastrophic fire that takes out hundreds of houses
> along with the trees.
>
> So the Keynesians are like the forest fire fighters of last generation,
> trying to prevent the fire that destroys all of the dead wood, the
> fuel for the catastrophic fire down the road.

Return to Aggbank

Your suggestions doesn't incorporate a stick (Federal penalty/tax) to mandate that banks loan against these new auction sales. The final auction value will reflect a profitable rental only if an investor with 20-25% can get financing to complete the transaction.

With a 12 month supply of homes available in the US, the origination of notes to these new values is no small thing.

Summers vs. Volcker

Your 100% correct.

Volker was the last man with a real set balls to carry that Fed torch. I dont have much confidence that these other Fed/Treasury leaders have the spine and moral character to be the last man off the sinking ship .


On Feb 05 11:44 AM D. McHattie wrote:

> Unfortunately, I think that Volcker's position is ceremonial. And
> nobody told him.
>
> From what I can see, Volcker was brought in to make some believe
> that the administration cares about inflation and excessive money
> growth when in fact inflation is the precise goal.
>
> It's a pity because Tim Geithner, Larry Summers and Ben Bernanke
> couldn't carry Volcker's jockstrap.

Nationalizing Bank Losses

I'm the guy your calling a dumb ass.

I think your the sort of nut case who runs up and down the street yelling to everyone in the neighborhood when the sun is up and when the sun is down, in other words your the neighborhood retard.

I dont believe you have the brain power to compreheand that when you tax banks for under deploying their capital base, it's a direct to the benifit to John Q Public, it's the proberibal stick that smacks the backs and heads of banks that don't want to origionate loans.

Or are you now in favor of transferring your tax dollars to these banking shenanigans without getting anything back for your investment.... Dumb ass


n Feb 02 02:43 AM overtaxed42long wrote:

> You know, after reading through most of the comments here, it becomes
> clear that many have no clue to what a nationalization of the banks
> really means. Not only do the current shareholders lose most if
> not all their equity remaining. But with a national bank system
> that essentially is just shifting control from one entity that screwed
> up to an even bigger entity that screwed up, we the people find ourselves
> yet again the ones taking it in the rear with no possibility of any
> future gain. Can anyone at all say that these bailouts do anything
> but bankrupt the people? All the FED is doing is ruining the once
> mighty dollar. And they have no right to even be in control of the
> money. Our Constitution requires that only Congress be in charge
> of the making and printing of money. Not some privately held institution(The
> FED) whose sole reason for existing is to manipulate the money supply
> through unrealistic financial games with interest rates and under
> the table deals with other central banks and lesser store front banks
> in order to increase the direct beneficiaries wealth and their legacies.
> Understand that there are only a select few families tied to those
> central banks and their illegal unconstitutional control of our money.
> Want to know what will happen when that money being printed hits
> circulation? The only reason the banks aren't lending is because
> when they do release that money, if they do, the value of all those
> dollars will wipe out the value of all the dollars then in the system.
> This is why the rest of the world is doing what we are by lowering
> interest rates and talking about nationalizing banks. Plus they
> are not converting their dollars to their own currency because they
> hold too many dollars and it will cause the same devaluation to happen
> to the rest of what they hold before they can get rid of it. It is
> why Iran converted all transactions once done in dollars to euros.
> Too bad for them that the same is happening to the euro. They will
> do this and declare a force majure that will mean the debts can not
> be repaid due to the currency being worthless. Then comes the next
> step of their plan. To offer a buy out rate on the then declared
> worthless dollar for pennies on the dollar. We the people need to
> remove from office all the politicians who are named BArny Frank,
> Chris Dodd, Charlie Rangle, Nancy Pelosi, and every other one of
> those spineless boobs who voted to give our money to crooks and thieves.
>
> To give control of our banks to the idiots that forced them to make
> these bad loans through their socializing programs is like throwing
> gas onto a fire. Then you got idiots that I quote below who think
> taxing is the cure. Dumb ass, the taxing of companies does not ever
> occur. Those costs always get passed down the line to the only thing
> that can ultimately pay those taxes. Us. The people who work and
> create a paycheck to buy things with. Companies are just fronts.
> They do not pay taxes. Only people do. Behind that company is a
> group of investors(people) who know how to earn money to pay those
> taxes, not only for the ones they pay through income but also half
> of each and every employees. So the people creating jobs and making
> the money that gets spent and moves the world economically get taxed
> way too much as it is. We all are taxed beyond what is fair. Not
> to mention way beyond what receive in return for that money. I
> am sick of it. They need to be tarred and feathered and ran out
> of town. Let the banks fail. I could care less if every single
> one failed. It won't make a hill of beans of difference to any of
> ours futures. The writing is on the wall. It is so widespread and
> visible and some want to spend more(Obama) and give away even more(Obama)
> and thankfully he got one thing right, to cut taxes. He just needs
> to stop all spending and cut taxes to zero for all business. Imagine
> the economic stimulus that will result from that. Every business
> on the planet will want ot open its manufacturing here. With all
> those people employed to manufacture stuff for the world creates
> an unprecedented amount of income tax. Which is really wrong also.
> The IRS should be dissolved and replaced with a consumption tax.(FairTax)
> It is the only way regular people will ever get above the resistance
> line that the Fed and the lawmakers hold all of us down with. Tax
> tax tax tax tax. Stupid people say we need taxes so government can
> run. Baloney. We don't need so much government. Every one is a
> halfwit who could not succeed in any form of real business due to
> their inabilities as a good person with ethics and values that create
> wealth. Instead they focus on deceptive ways to strain more and
> more money from the people. Usually those ways are unethical, unfair
> and involve corrupt schemes. Call me a liar and I'll call you stupid.
> Open your eyes and see it all around you from local through state
> and all the way up to federal. Our government is so corrupt and
> rife with dirty deeds at such an enormous scale, they think that
> they are the untouchables. That they have found their golden seat
> of power and they shall be able to impose their will and their vision
> for themselves to gain, leaving the people in ruin and wanting and
> dependant upon them for all. I do not want them in charge of anything
> anymore. They are all failures. They have all failed. They should
> all be removed and replaced with competent, justworthy, ethically
> driven people that know how to do the job correctly that they failed
> at. Can you tell I too need the blood pressure meds? god they piss
> me off just throwing out numbers in the billions and now the trillions.
> You people don't even get it do you? There is no way out except
> for the banks to fail. It is just a matter of today or a week from
> today or a month. Most likely not more than a few. Days, weeks,
> or months? Hmmmm? That depends on what the emotions in the street
> are and if they are acted upon.
> "The basic tool and in this solution is taxation. A new piece of
> legislation is to be formed in which banks are taxed when not meeting
> the required leveraging minimums, and somehow rewarded when they
> demonstrate full leveraging deployment."
> That guy who wrote that is an idiot.

Humility of Realism II: Seven Thoughts about Our Whole System

Politically this tax enters into the weird science realm, This is a grearter public good stance, similar to health care in Japan. This is force capital disrtibution....nothin... will affirm asset valuations more quickly than this.


On Feb 01 01:46 AM 1RuleNoRules wrote:

> Excellent idea, use taxes to punish or discourage bad or undesirable
> behavior. Democrats fight this idea because it goes their philosophy
> of taxation, maximize revenue. If you can use taxation to get beneficial
> results you won't need government to fix all problems. Smaller government
> is not the goal of Liberals. Unfortunately it was not the goal of
> the Republican congress under Bush.
>

Nationalizing Bank Losses

PublicLiterature,

I completely agree with you, that the underlying problem is that there are a lot of notes on assets (homes) which are underwater.

If history tells us anything at all. Given a period of time and inflation home prices increase, as real assets are a safe guard against inflation.

So how does one simultaneously bolster balance sheets under this cycle of diminishing values and put in place a new psychology and assurance that it is not an unsafe deflationary enviorment for home prices, without effectively having the government come in and remove foreclosed available inventory stock of homes on the market? (This is what this new capital injection into our banking system effectively does)

The only way I see this happening, and quite frankly the way it will happen is when we resurface out of this malaise, and the buyer in the market place see and act upon a market bottom.

Once the bottom is in place, greed and fear of non participation (Adam Smith hand) will do all it can to eliminate this negative cycle of pessimism and positively home price valuation. At that exact nexus, the dynamic of balance sheet affermation (banking self sustainablity) and tentative optimism can return.

Can you really call a bank a bank when it doesn't lend money and remains a zombie?? It's an capital sucking entity, non productive and a non contributor. How can there be no failures in our banking sector??? Capitalism requires failures as it rewards the successful survivors.

Bottom line.... asset values need to be affirmed. Until this happens we (everyone's balance sheets) remain in an Alice in Wonderland semi solid dream state. My suggestion does cost the tax payer any money and promotes and forces asset valuations...what more can you ask for??


Feb 01 01:54 PM PublicLiterature.org wrote:

> I think there is a basic assumption that is wrong. Banks simply DO
> NOT have additional capital to lend. Any excess will easily go to
> loan losses as a result of the home price decline. Yes, this does
> further exacerbate the problem because they are now hurting the private
> sector for leveraged companies. But, telling a bank to lend more
> is like telling someone to eat all the rations on a raft lost at
> sea!
>
> So, the domino has fallen from the house price bubble, to the banks
> residential real estate portfolio, to the private sector businesses.
> If we don't stop it, it will domino into hitting the commercial loans
> then back the banks balance sheets and certainly cripple the banks
> in a Depression style insolvency.
>
> I think the core issue needs to be addressed, but this is actually
> a bit hard to identify (esp. for the government). The core issue
> is that our financial system is flawed and that our model allows,
> perhaps encourages, executives to take on excessive risk for excessive
> short term return and compensation. Trusting a banker to act for
> the greater good, is a little naive on Greenspan's part.
>
> I think the best idea I've finally heard suggested is increasing
> capital requirements on a sliding scale based on profits. A variation
> of this was suggested at Davos. This stifles excessive growth and
> could well prevent bubbles. Bubbles are the banks worst enemies and
> the regulation needs to be put in place to prevent it in the real
> estate sector at least.
>
> Now, the only way to fix the system is to capitalize the banks, stop
> the job losses, and smooth the home prices at the same time. Easier
> said than done, especially while not inflating one's currency like
> Argentina.
>
> On Jan 31 01:08 PM johnny g wrote:

Nationalizing Bank Losses

Sleepless_

You have misread my proposal. It is just the opposite of your response. The concept is to tax or penalize non deployed capital.

It would Federally mandate full capital deployment from bank deposits. It is forced capital distribution under penalty of tax. What more can we do that could add capital hydration to business and public??


On Jan 31 10:24 PM sleepless_on_wall_stre... wrote:

> johnny g,
>
> The problem with your proposal is that it incentivizes the banks
> not to lend, but hold onto as much money as they can to get the tax
> break. The bank that males more loans will be penalized by paying
> more taxes.
>
> In general, I think tax incentives are a good way to help businesses
> develop, but, in this case, it would work against the public interest.

Humility of Realism II: Seven Thoughts about Our Whole System

I have an idea that can help resolve the problems facing both our economy and financial industry. Front lines reports from academia, government, and the media explain in good measure that banking industries uncertainties and fears regarding asset viability on their own and others balance sheets have created immovable road blocks to reasonable distribution and capital access.

The idea seeks to collapse the period of time to which a more predictable and reliable flow of capital through our system can be arrive at; it cannot in and of itself resolve all systemic problems. The limited and uncertain access to capital has in large measure hobbled our collective economic system; interested parties to productive assets have been beset by a vicious cycle of pessimism and diminishing valuations, many times leading to a complete loss to owners and counter parties. The recommendation is designed to impose upon the banking system requirements to fully deploy their capital, with the aim of arresting this downward cycle and arriving at the nexus where collateral valuations are affirmed and once again become a measure of strength and not weakness.

The basic tool and in this solution is taxation. A new piece of legislation is to be formed in which banks are taxed when not meeting the required leveraging minimums, and somehow rewarded when they demonstrate full leveraging deployment. Despite the cajoling of the Feds and Treasury after massive capital injections and asset swaps, the banking industries collective uncertainties are preventing their raison d'être, banks continue to under deploy and hoard capital, this is where we are collectively bogging down.

As commercial banks comply with new leveraging requirements, they deploy capital to the most favorable credit risk. A new competitive lending environment will spring forth; banks will compete with other banks to actively seek out the best risk reward borrowers for their offerings, or be subject to this new Federal tax or penalty. This new velocity of money will energize our economy, restore asset predictability and grow balance sheet valuations without further deficit spending.

This novel catalyst along with other primers will reduce the distance and time that the wheels of Capitalism need to travel before growth and optimism is restored; preventing unneeded failures, losses, and human hardship due to degrading asset valuations and capital deprivation.

Let the chip fall where they may there after, a force new beginning will have started.

Nationalizing Bank Losses

I have an idea that can help resolve the problems facing both our economy and financial industry. Front lines reports from academia, government, and the media explain in good measure that banking industries uncertainties and fears regarding asset viability on their own and others balance sheets have created immovable road blocks to reasonable distribution and capital access.

The idea seeks to collapse the period of time to which a more predictable and reliable flow of capital through our system can be arrive at; it cannot in and of itself resolve all systemic problems. The limited and uncertain access to capital has in large measure hobbled our collective economic system; interested parties to productive assets have been beset by a vicious cycle of pessimism and diminishing valuations, many times leading to a complete loss to owners and counter parties. The recommendation is designed to impose upon the banking system requirements to fully deploy their capital, with the aim of arresting this downward cycle and arriving at the nexus where collateral valuations are affirmed and once again become a measure of strength and not weakness.

The basic tool and in this solution is taxation. A new piece of legislation is to be formed in which banks are taxed when not meeting the required leveraging minimums, and somehow rewarded when they demonstrate full leveraging deployment. Despite the cajoling of the Feds and Treasury after massive capital injections and asset swaps, the banking industries collective uncertainties are preventing their raison d'être, banks continue to under deploy and hoard capital, this is where we are collectively bogging down.

As commercial banks comply with new leveraging requirements, they deploy capital to the most favorable credit risk. A new competitive lending environment will spring forth; banks will compete with other banks to actively seek out the best risk reward borrowers for their offerings, or be subject to this new Federal tax or penalty. This new velocity of money will energize our economy, restore asset predictability and grow balance sheet valuations without further deficit spending.

This novel catalyst along with other primers will reduce the distance and time that the wheels of Capitalism need to travel before growth and optimism is restored; preventing unneeded failures, losses, and human hardship due to degrading asset valuations and capital deprivation.

Let the chip fall where they may there after. A forced renew will have begun.

Neither Easing, Printing, Nor Borrowing Will Work

As you said in your article, the deployment of the Feds actions and capital support to banking has not done much, and it won’t!

Why would a lender want to expose themselves to any type of collateral when assets of all types (particularly real estate) are best with a cycle of continuing pessimism and diminishing valuations, and buyers would naturally behave the same, I think this is deflation.

When collateral assets have predictability and sufficient stability, greed will take care of the rest. How do we get to greed? Well that’s the big question isn’t it?

All our enthusiastic self delusional entrepreneur/capitalis... which we elected to political office should stay out of the job making business and focus on what they do best, taxation.

The taxation I’m referring to in this instance is not the usual taxation we all fall under. It would be a new form of tax, a tax which arrests asset uncertainty. Legislate and mandate leveraging requirements banks to deposits. When banks under deploy their depostis tax them. Asset predictability will quickly be reestablished without these unbelievable government follies.

The Fed's Bubble Trouble

This smells of fire in this, our shared global financial house. Your reasoning of people playing with volatile combustibles creating a uncontrollable conflagration paints a dismal picture to say the least.

Is "Regulation of Hedge Funds" a Contradictory Term?

two words - MORAL HAZARD

Foreclosures Still On the Rise in California

a

Foreclosures Still On the Rise in California

I agree with easyrider. The SF peninsula never really had a radical increase in prices like many other areas. If author of the artical above is correct that inventory absorption of foreclosures in Sac is about another 6-9 months out, the SF peninsula might not see 10% price roll backs.

In other words, habitation is the real determinate in stable real estate market values. Market made from and through the acts of profligate people (buyers, facilitators, primary and secondary financial market participants all included) are those that are having and are going to continue have a heck of a time.

Why the Housing Bill Won't Help the Housing Market

Bill's got it 100% right, it's all about inventory reduction.

The normal supply of inventory, based on customary developers risk reward pursuits is the proverbial light which is now non-existant.
When we begin to see that light again, we'll be on the way back up.

Other ways to speed the process along would be to increase the American doors to controlled immigration (let's go back to getting the world best and brightest).

Another would be to not abate the current dollar deflation, after sufficient devaluation, pull a Paul Volker and hit the interest brakes real hard for about 6-12 months (squeeze out the inflation psychology) .

I'm sure we will see some strong Federal and select State tax benefits/incentives offered to accelerate that inventory reduction.