[Golden Ears]

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Talked with Greenspan last night. The other videos... something I made..which for those of you preparing for armageddon.... - good thing to know....lol.... Actually I just got sick of TSA always confiscating my $125 camping stoves when traveling abroad. So this is made out of two beer can bottoms- runs off of HEET gas additive to prevent frozen gas lines..

IMHO the things that mattered relative to our financial predictament...:

Banks bought and sold mortgages at an accelerated rate little care was taken to risk since these were transfered quickly. "Hot potato" . And because of this a mortgage that has been transfered say... 4 times or more... who really is at fault? Who is to be yelled at..or fired when the lein holder defaults??? Someone 4 companies removed who approved it??... I think not. He already got his money- and likely got a new job already.

As the energy crunch loomed and outsourcing became popular.... we transfered some of our energy production needs to foreign nations...
we import more than we export....our education level is falling... we are already a third world country with 2nd or 3rd class currency and a crumbling infrastructure that we can not afford to fix.

If you think our banks are an issue... what happens when the Far East who was written so much paper...calls it in?? China (holds 800 Billion in USA debt) could crush us financially if we continue at this rate for a few more years without firing a single shot. Wal-mart alone imports more from China than the entire USA exports to China (single handedly the do enough business with China to create a trade deficit) ... and that's not counting Lowes, Home Depot, Costco and other big boxers- they aren't far off either.. And Japan... They hold tons of USA paper (700 Billion) too. Japan is screwed.... when the USA gets a cold Japan gets the Flu and when we get the Flu... they get the Bubonic Plague- they may never recover from this hit to our economy- and combine this with their negative birth rate and aging top heavy population of retirees... and having to import almost all their energy.... I don't think they will make it despite their innovation... want to make a ton of dough without having a conscious... go sell short on Japan now... (Hell I was right when I told people to buy Oil futures in 2006). Now Heavy oil will be come the hot ticket as China wants Bitumen for its roads and thermal cracking of heavy oil has made it more in demand.

The far East can't feel good about first watching the 3rd largest US bank failure of Indymac and now this.... it's not Americans selling their homes at risk... hey everyone will need to live somewhere..... it is the other countries that back the USA pulling out that will be the real trouble. A few years ago the city of Boston had its bond rating in trouble (it was being downgraded) - which meant Japan wasn't going to back Boston's Bonds. ... that was scary (we jsut made it through that one) ... what if this happens all over?

The Arab countries hold a lot of USA dollars. OPEC rules meant every barrel of oil sold by OPEC had to be bought with US dollars. (Petrodollars helped support the US dollar recently- bizzare that high gas prices meant our currency was supported) Well, the Arab countries realized they were heavily invested in US dollars which was Ok when every currency hung on the dollar. Back then... If we printed more money all the other countries took the currency hit along with us. The Arabs could not dump all their US dollars because if they did before they dumped even 1/2 of them the US dollar would be worthless. But now..as the US dollar struggles- Arabs likely are divesting more and more of Dollars in to other Currencies like the Euro- propping up the Euro further and devalueing the dollar as we struggle to keep our heads above water.. this will be one of the worst recessions/quasi-depressions ever- mostly because we don't have a rope out of the well.

-We can't lower interest rates anymore. To spur production since we don't produce much here as we import more than export.... it won't have the effect it once did.
-War won't jack up the Dow Jones like it once did (we outsource a lot of the war effort... even army duffles are made by The Northface which produces them in...uh...China)
-We can't print more currency without really taking a hit
-lowering taxes won't help much because Americans are not making enough as our wage has fallen
-creating large scale public works projects won't help much either as Americans have moved from a manufacturing and construction economy to a service and data/infomatics along with a logistics-distribution economy (the latter doesn't work well with expensive fuel) .... a new WPA might do more to help illegal immigrants than Americans.... ever look at a job site recently?

Its like trying to recover a airplane from a stall.. and normally you can do it... but this time its as if all the controls wires are slack and vague and squishy... we will ahve real difficulty in getting out of it..and likely we may over compensate and end up with very high double digit inflation.

I live in Aspen. Normally Brazilians are the dishwashers, the Aussies run the lifts, but this past winter they have been staying for two weeks at The Little Nell- our famous top notch hotel...and spending huge. I was in Lithuania and Latvia...former failed Soviet Republics 3 months ago... where a few years ago women couldn't afford to buy USA made Nail polish or stockings... well... guess what? A burger over there costs $19. Their currency is worth more than twice that of the USA now. Where can I go on vacation for my US dollar? Good question... many of the Local Aspenites had "Staycations" this year - fricken cheaper to stay in Aspen than go Abroad?? You Bet.. You can still go to Thailand.. but it isn't the bargain it once was...and Cuba... that is a possibility..whooopdedoo a vacation to slumland commieville riddled with underage prostitutes..

Aspen Rent is expensive... I'm looking at a $3000 a month 2 bedroom.. and that is pretty normal. It's wacked....

I moved here partly because I could see this coming and I viewed Aspen as recession resistant. Apparently so.. as I made $850 yesterday networking 2 computers (time about 30 minutes) and fixing a stuck disc drive tray, and another $375 today teaching people how to use Itunes, Signal, and hook up an appleTV. So perhaps I'll be insulated from this...

A favorite recession indicator for me is supermarket baggers (typically highschoolers- or handicapped people- or part timer semi retirees)... but in a extended recession watch the education level of those Baggers soar.. you'll see PHD and professional degree people bagging at a market near you.

As for greed in our markets...


IMHO.. Greed is only good if people are held accountable directly for their actions.-> Accountability is something that has been conspicuously absent during this administration.

Also- eliminate the parasitic practices of Hedgefunders they have got to go.

This year A snowboard pal o' mine Risley Sams VP Bear Sterns, childhood friend Richard Aldrich VP Lehman Bros., and another friend who was VP of Merrill.... all are likely out of jobs... they busted their butts for decades to get where they are..

I'm just happy I had fun instead playing with audio and snowboard companies....they ain't getting those years back.... talk about my friends squandering their youth... tsk tsk..

The American economy is predicated on inexpensive energy. I strongly believe in this. I also believe that getting Americans to conserve is harder than getting Germans to relax. Americans just don't have the mindset for it...

So I asked Allan Greenspan.... " Do you think the American Economy can grow if Electricity production remains flat?" Allan said "Yes I think so, if we conserve in another area (I suppose he means our consumer markets) to make energy available for our commercial needs." I do not believe we will be able to do this.

Of course I am designing a renewable energy source so I have my biases- but if the failure of the C.A.F.E. rules are any indication (we had some of the worst mileage per mile driven in our history this past decade) then I feel without cheap energy we are doomed to have our economy continue to implode and as population still increases -the standard of living will fall per person --->directly relative to the total watts consumed per person.

There is a reason Americans had a high standard of living as 4% of the population consuming 25% of the fossil fuel. It is a ratio of harnessing energy to reduce our work load per person.

So buy that bigger amp..lol... you will feel as though your standard of living has risen....Just like a house...you can buy it on credit... but can you afford to pay for it?

 

[Audio-Omega]

I'm not sure if it's a good time to invest in gold and silver.

 

[Superpredator]

Commentary: Bailouts will lead to rough economic ride - CNN.com

 

[frozenice]

Quote:

Originally Posted by Superpredator /img/forum/go_quote.gif Commentary: Bailouts will lead to rough economic ride - CNN.com

From the CNN article:
In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically.

We have a solution. Start the bulldozers.

 

[amphead]

Run chick-little the sky is falling down.

 

[frozenice]

Quote:

Originally Posted by amphead /img/forum/go_quote.gif Run chick-little the sky is falling down.

and it will continue to fall until there is a balance in the economy and then will continue to fall for a while because that is the nature of markets.

Henry Ford has a similar problem back when he started to ramp up production of his Model T. Unless he paid his workers more they couldn't afford to buy his product and if he couldn't get people to buy his car he would have to shut down his factory. So he paid his workers $5/day and the American economy took off for the sky.

The other industrialists and capitalists were furious at him for raising wages because that would force them to do the same (which was good for Henry because they could then afford to buy one of the cars he was building).

At the end of the day you either have a balance between supply and demand and also the cost of housing and what people earn or what we have unfolding before our very eyes.

 

[Audio-Omega]

Things will get worse before they get better.

 

[Seaside]

Home owners lower the listing price all the time if they feel it's necessary.
But builders? Can they drastically reduce their sale price? Well...

I alway see this single house site while I am driving by.
About 3 years ago, they started building houses, so I went to the model house to see what they can offer. Those houses are about 3000sqft 3 story buildings that have every luxury you can imagine. Price tag back then was 80 to 1.3M, and it still is the same. Builder offers incentives and coupons, but never lowered the price. What's happening is sort of strange. Half the houses on that site has small "sell" sign at the door for about an year, and builder is still building another house right next to them. So, what's going on?

**
Burnanke today urges the congress to pass that 700B bill. Congress still argues that the bill is not very responsive or effective. "I believe it would be irresponsible to not act, but we must act responsibly," Congressman Brownback said. So, what's the burnanke's explanation of the reason of this crisis? See this article.

This article made me think what's going on in his mind?
What he said is the reason or just a fact that happened?

for example,

"Bernanke explained how the credit crisis is rippling out through the economy. He said it has gotten harder for businesses to get the loans they need to create jobs, and for consumers to get loans to buy new vehicles - hurting both automakers and auto workers."

That's absoluetly right.
However, the question is...
Why loan? Why bought something they can not afford at the first place? Why cry now?

Think about those people who bought above house. They will need more than $8000 a month only for the house. Mortgaes, taxes, maintanances, utilities etc... Are they rich enough to do that? Well... appearently, 1/2 of them are, 1/2 are... not.

IMO, the root of all problem is "loan now, think later" kind of mindset. They did that because they could, and it looked like a nice investment. But in fact, any loan for that investment actually is a debt. Practically, we build our wealth with debt not with the money in our hands. That's what happened accross all sectors in our society.

Now, that backfires. People got scared, Fed needs a solution. But Fed's solution still sounds like covering debt with debt. Who is going to bleed?

I agree with what Brownback said, the question is how?
I will leave that to those scholars and experts in Fed. I really hope things turn out to be nice. But I do think we're in trouble unless we ditch "loan now, think later" mindset for good.

 

[ameyer17]

I don't like the idea of the buyout, but I agree with Bush that the consequences of not doing anything are far greater than the harm done by the bailout.

 

[davidhunternyc]

I work literally across the street from the New York Stock Exchange. I work in a restaurant and I constantly overhear conversations about the Bush administration and the forthcoming bailout. I do not believe that this bailout will protect working class taxpayers. Now the banking elite are coming in again, ordering their ribeyes and expensive bottles of wine, and are anticipating the bailout with excitement. The fat cats are singing. All I can say is, this is the behavior I've observed.

 

[nsx_23]

I'll be honest, anybody could've seen this coming from a mile away.

With the way the tax payer bailout money is going to be spent, I really don't see it having the effect that it should on the economy.

Than again, I'm not that familiar with US economics. I don't study commerce, but do have a big interest in stuff like this.

I guess this would be a good time for me to get into the game with the lowered prices. Just got to make sure I pick the right stocks to buy.

 

[DrBenway]

Quote:

Originally Posted by nsx_23 /img/forum/go_quote.gif I'll be honest, anybody could've seen this coming from a mile away.

About 3 1/2 years ago, no less than a Manhattan realtor sat on the bar stool next to mine and shook his head in disbelief at the kind of mortgages he was seeing written. He talked about people who could just about afford the studio apartments they were living in, who were buying two or three additional apartments, absolutely sure that they could flip them for a huge profit in six to twelve months.

These are the people we are rewarding.

 

[Edwood]

Quote:

Originally Posted by DrBenway /img/forum/go_quote.gif About 3 1/2 years ago, no less than a Manhattan realtor sat on the bar stool next to mine and shook his head in disbelief at the kind of mortgages he was seeing written. He talked about people who could just about afford the studio apartments they were living in, who were buying two or three additional apartments, absolutely sure that they could flip them for a huge profit in six to twelve months. These are the people we are rewarding.

Very true, but it's more people that got in way over their head out of pure stupidity/ignorance. It's the same as bailing out people that have run up hundreds of thousands of dollars in credit card debt buying plasma TV's, luxury cars, etc, all on money they don't have.

I was shocked at how much money banks were willing to loan me, even though, I could clearly not afford it. I ended up with a cramped one bedroom one bath condo, and have a 30 year fixed mortgage that everyone said I was crazy for getting.

I feel no pity for people crying about losing their million dollar homes (which is really not a big home at all) here in Southern California because they can't afford the increase in their interest.

I've stood in loooooong lines at Washington Mutual to deposit a check to have to listen to a bunch of people complaining about losing money since they had over $200K in several accounts, so they were panicking and withdrawing their money. I'm like the majority of americans who don't have to worry about the FDIC limits since they don't have that much in cash in a bank, let alone several banks.

So the stupid and the stupid rich are all crying now. And guess who's going to pay for it?

-Ed

 

[DrBenway]

Quote:

Originally Posted by Edwood /img/forum/go_quote.gif Very true, but it's more people that got in way over their head out of pure stupidity/ignorance. It's the same as bailing out people that have run up hundreds of thousands of dollars in credit card debt buying plasma TV's, luxury cars, etc, all on money they don't have.

The concept of personal responsibility is MIA in all of this.


Quote:

Originally Posted by Edwood /img/forum/go_quote.gif So the stupid and the stupid rich are all crying now. And guess who's going to pay for it?

Hmmm. Would that be US?!!

P.S. I can well imagine what $1 million gets you in SoCal, since it's traditionally one of the priciest markets. Same with Manhattan; you might get a 1BR for that, but not necessarily one you would want to live in.

 

[Seaside]

Ed, you're not the only one feels that way.

$700B = $2,333 for each person in US.
If we had to pay that for the mess they made, then we need a right to know how it will be used for whom and what. Anyone ever heard of any specifics?

I'd say, kill fat cats, save people.