vanyali

Footrace to Zero: Heelys vs. Crocs

Crocs aren't going to get all that far on comfort. People bought them for kids because the kids could put charms in the holes in the shoes. Then someone decided the charms were a choking hazard. Now all of those kids have grown out of the things and you don't see them around anymore. So I think "fad" is a pretty good assessment.

The Fundamental Value of Real Estate

If all anyone wanted was a place to live, they would rent. It's a lot more flexible. Buying a house is a money decision, and pretending otherwise is unrealistic.

The Great Experiment

So, in response to a perceived risk of deflation in 2001 the government drastically increased the money supply (lowered interest rates), leading to a gigantic asset bubble, which eventually popped.

Now, the popping of the bubble has lead to a perceived risk of deflation which the government should respond to by drastically increasing the money supply . . . . . . and then spending all the new money?

Was the problem in 2001 really that the government didn't spend all the new money it created itself? Something about that doesn't really click with me.

The Free Lunch Approach to Finance

What makes you think THEY want these houses?


On Nov 05 10:28 PM WhynoT? wrote:

> Idea: Use remaining TARP monies to directly purchase foreclosed and
> soon to be foreclosed homes. Give these homes to Iraq war veterans...
>
>
> Immediately solve 2 problems...

The Free Lunch Approach to Finance

Goldman didn't fail. Citibank didn't fail either. They're laying people off because business is slow, but the banks have always done that, and always will -- that's how the industry works.

And on banker bonus pools -- in the financial sector, a major part of your compensation is paid as an end of year bonus. Even little nothings, like law-firm associates, get huge chunks of their compensation in the form of an end-of-year-bonus, which you give up if you quit or lose your job before the bonus hits your bank account. t's true that some people in banks in good times get really big bonuses, and that's what you hear about, but for most of the grunts, the bonus isn't an extra reward that you just get in a good year -- it's not a "bonus" -- it's your due.




On Nov 06 08:45 AM User 52095 wrote:

> You hear so much about irresponsible buyers and the absolute disgust
> for them getting any sort of help. Why shouldn't they get help? Look
> at Goldman and Citi - talk about irresponsible (criminal)!
>
> Goldman and Citi are failed banks without taxpayer support. They
> have announced the termination of 12,000 employees together and in
> the same breath they talk of their bonuses being reduced to a mere
> $20 million.
>
> Why am I the only one that is outraged at any bonuses being taken
> by anyone on the Street as long as they are still owing the FED.
>
>
> I don't think we can talk about individual capacity being the force
> behind the bonuses because anyone from Manpower could have achieved
> their results.
>
> Why is this subject taboo? If anyone is to believe that governmental
> oversight has any teeth the bunuses have to be zero until the FED
> money is restored.
>
> Talk about disgusting - this should have people marching in the street.

The Free Lunch Approach to Finance

Yes, it's a slippery slope that's threatening to move into other kinds of debt (credit cards, like you mentioned). Yes, it's unfair. But those are not the only problems with these massive debt-forgiveness schemes.

The bigger question is what the ultimate results will be. Ask yourself who is going to lend money going forward if they don't think it's going to get paid back? That is the real problem. This isn't theoretical -- in the 1930's, the government created a debt-forgiveness scheme to help farmers. The result was that it became harder and more expensive for farmers to borrow, and without credit, a lot of them lost their ability to operate.

Credit is useful. You don't realize just HOW useful until it's gone.

Financial Crisis: This Is the Real Deal

Unfortunately, Obama doesn't seem any better on economic policy. Different, but no better. We have no good options in this election, and it seems that we increasingly have no good options in this economy.

America's Ad Hoc Fiscal and Monetary Policy

I don't know who the rich and well connected people are who are benefiting from all of this. It looks to me like the investor class in the country is losing its shirt. Hank Greenberg said yesterday that he just lost most of his wealth because he had it in AIG stock.

The $1.7 Billion Payday: How Bill Gross Made a Killing on the Bailout

I don't really see how swooping in to wipe out shareholders is supposed to calm markets, but what do I know?

Fannie Mae: 'Business As Usual'

Fannie & Freddie weren't broke. Citi, Merrill & Goldman all said so in August, and Paulson and Barney Frank both said so during the takeover. Paulson said thought that there was some danger that they *might* go broke in the future *if* market conditions continued to worsen *and* market participants decided to stop lending to them. This isn't a bankruptcy reorganization, it's a power grab by the feds.

Fannie and Freddie: We All Support You!

Common shareholders are always last in line in a bankruptcy, or even in normal operations. You don't get to pay a big dividend to your shareholders right before defaulting on all of your debt, for example. So Paulson didn't change anything there. What he changed for shareholders was suspending the dividend and getting rid of all shareholder governance rights. So the shares are still out there, can still trade (until they become worthless and are delisted), but they carry none of the ordinary rights of shareholders. They're zombie shares.

Fannie and Freddie: We All Support You!

The shareholders of the GSEs aren't being wiped out because of business risks gone bad, they're being wiped out because of political risk gone bad. We weren't supposed to have to worry about political risk when we invested in the United States. The Treasury has just shown us that we now do. I would expect that reality to have major long-term negative implications for investment in the United States going forward.

Fannie and Freddie: We All Support You!

The reason the GSE's owned any subprime paper was because the government was leaning on them to do more to support "affordable housing", and they figured that buying some of the more insulated traunches of offerings backed by subprime mortgages was the cheapest and safest way to do that. So, in summary, they own subprime because the government told them to buy it.