The markets sure have been sucking lately.
"Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee — which could be staggering — would be paid by taxpayers"
_NICE lesson and legacy to leave to the future generations 
Well Ed, The US Goverment has been fucking with the markets for years and the results of that manipulation is coming back to haunt them.
There was a day when you needed 10% or 20% to put down on a home. Banks could only loan out about 6 times their assets so they were picky about who they lent to and they paid better interest on deposits to attract more capital. (Bear Sterns was leveraged to 34 times assets in mortagages!)
Then some liberals decided that the US Government should start messing in the mortgage market and increase homeownership.
Like most government programs, it grew, and grew and grew to the point where it has $15 TRILLION in debts!
Now it's too big to let fail and saving it will tank our currency for years.
Now if people had just read that Constitution and stayed out of the capital markets, we'd all be better off.
This makes the S&L mess look like nothing.
Markets, Ed? No, this is possibly the downfall of the government's attempt to circumvent markets.
Think about it; how may mortgages would never have been written if the bank knew that Fannie Mae and Freddie Mac wouldn't be holding the bag if they went bad? Along with the 1977 Community Reinvestment Act and artificially low interest rates from the Fed, this is one of the BIG things driving the subprime mortgage crisis. The ordinary factors that would deter banks from issuing bad loans have all been circumvented by the government.
That, my friend, is not a problem with markets. It is a problem with government.
Wow, who knew liberals had so much power? I guess the fact that Repubtards have been basically setting fiscal policy in this country for the past 30 years has slipped your pea brains.
And now, some of these same retards want to ban or limit speculation in the oil markets. Genius.
Oil is currently at 145/barrel and Toyota will start building Prius's in the US. Both good things as Americans finally start to get it about energy.
If the US or Israel fucks with Iran, the sky will be the limit on oil prices. But we all knew Bush would probably attack Iran before he left office. It was just a matter of time.
Al, perhaps you'd like to look up who was running DC when Fannnie Mae and the Fed were created, and perhaps you'd do well to look up who was President when the 1977 Community Reinvestment Act was passed. I'll give you a hint; there weren't any elephants in their campaign literature, at least not portrayed in a positive light.
Yes, the GOP has not rolled back ALL of the asinine things that the Democrats have done, and there are certainly enough moderate/liberal Republicans to prevent that being done for the foreseeable future. That doesn't change the fact that the institutions that created this problem are the work of Democrats.
And the Democrats controlled Congress until 1994. Good revisionist history, Al. Now tuck your bias back in.
1977???
I think that was Jimmy the DEMOCRAT Carter.
Carter's 4 year reign of incompetance is the #1 reason to vote aginst Barak Obama.
If you look a bit deeper, the Financial problem is even worse. Freddie and Fannie fueled the increase in home prices for a very, very long time. If they go under and the housing market freezes up and continues to drop, we're looking possibly at wiping out $10 trillion in equity, most if which is the entire net worth of the middle class.
Unwinding 40 years of inflationary pressure is very dangerous.
Anybody looking for a school bus system manager willing to work for food?
If you can get mechanics to replace worn piston rings, District 112 might have a place for you! :^)
Proof Al, that you have no idea how the U.S. works:
"Oil is currently at 145/barrel and Toyota will start building Prius's in the US. Both good things as Americans finally start to get it about energy."
American are driving less and they are driving more fuel efficient vehicles, which in turn is hurting government coffers -- specific, the Department of Transportation.
"Americans drove 400 million fewer miles in March than in the same month last year, and 1.4 billion miles less in April, according to figures released last week by the Transportation Department.
That means less revenue from the federal highway taxes of 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel, prompting Transportation Secretary Peters to call for a different method of financing highway and transit programs.
"We're burning less fuel as energy costs change driving patterns, steer people toward more fuel efficient vehicles and encourage more to use transit. Which is exactly why we need a more effective funding source than the gas tax," Secretary Peters said."
http://www.nationaljournal.com/
c...080624_3262.php
The same thing happend in California a few years back. Less fuel consumption = less taxes collected = less money for roads and heaven forbid, trains. But guess what, rather then cutting spending in those areas (like a company would do) the government wants to raise the taxes even more.
So please STFU.
Jeremy -- clearly a case for increasing the federal gas tax significantly.
Kermie, you fancy yourself an historian, lets look at history shall we?
Lets first identify the recessions in the US economy going back to the beginning of the 20th Century. Most economists agree that recessions occurred during the following historical periods:
1929-1939; 1953-1954; 1957-1958; 1973-1975; 1990-1991; 2001-2003; 2008(?)
Here is how it breaks down:
1929-1939: Republicans held the White House from 1921-1933 (Harding, Coolidge and Hoover)
Republicans had an uninterrupted majority in the House from 1917-1933 and in the Senate from 1919 - 1933.
1953-1954: Democrats held the White House from 1945-1953 (Truman).
Democrats also held the majorities in both the House and Senate for the same period.
1957-1958: Republicans held the White House from 1953-1961 (Eisenhower).
Republicans held majorities in both the House and Senate from 1953-1955 until Democrats won both Houses back in 1955.
1973-1975: Republicans held the White House from 1969-1977 (Nixon; Ford).
Democrats were solidly in the majority of both houses from 1969-1977.
1990-1991: Republicans held the White House from 1981-1989 (Reagan; George HW Bush)
Congress was a mixed bag leading up to this recession. In the House, Democrats were in the majority from 1977-1995. In the Senate however, Republicans held a majority from 1981-1987 and the Democrats led from 1987 on.
2001-2003: Democrats held the White House from 1993-2001 (Clinton).
The House and the Senate were controlled by Republicans from 1995 to 2007.
2008(?): Republicans have held the White House from 2001 to present (GW Bush).
Republicans held both Houses in Congress from 1995-2007.
So Republicans have been in the White House and in control of Congress for a large number of US recessions. Tax cuts stimulate the economy short term but the resulting deficits rapidly eat up any gains.
Now I know Dr Phil Gramm says we're a bunch of whiners and the US economy is fine. Technically, we're probably not in a recession but for a lot of folks it feels like one.
So be honest and quit blaming dems and liberals for everything. Republicans have just as much culpability in downturns in our economy
Ssounds like it's time to invade Iran.
BS spotter, you do realize that Iran is seriously asking for it, I'm guessing your one of the retards on the left that would give up Israel in the cause of global peace. Because we all know its Israel that's the problem and not their neighbors who are more often than not brutal dictators. Iran will be attacked, and frankly can I ask you, what is wrong with that? This little retard and the mullahs need to be taken out. And coming full circle, Jimmy Carter IS TO BLAME FOR THE CURRENT SITUATION WITH IRAN! Sure the Shah of Iran was bad but he was the lesser of two evils, I'd rather have the shah's oppressive regime than Aytollah Komanei's. Not to mention that helped spread radical Islam throughout the world. Carter is the one that should be brought up on war crimes, the man has indirectly killed millions of people, he's an anti-semetic Neville Chamberlin!
Ben -- please take your meds. Blaming Carter for all this is showing the enormity of your stupidity.
Iran needs to be dealt with. But seriously, Do you think the US should seriously risk a global economic meltdown if the oil shipments thru the Gulf are halted? We need to tell the Israelis to back down unless they are actually attacked. And we should take a wait and see with Iran unless we have concrete evidence they have nuclear strike capability.
This administration wont worry about the facts this time either. More reason to defeat McSame
The Clinton strategy for dealing with Carter's legacy - wait until they kil some more jews before we do anything!
You do know that Israel has nukes and will retaliate in kind of Iran launches a missle?
I only hope that we follow up and nuke Iran, assuming that the Israelis leave us anything worth nuking (like Mecca!)
Great strategy. And the Arab countries will rally around whats left of Iran and even you will be riding a bike at that point.
Oil shipments through the Gulf will not be halted for long. There may be some incidents of attacks at first, but the U.S. Navy carrier fleet will be used to defend passage.
The Arab countris will not rally around Iran Al, you need to learn more about the region. The Sunni Arab states are concerned that Iran's radical clergy will forment Shia insurrection against the established order. They are also afraid of an Iranian bomb that could be used to threaten them. If Iran is not stopped the entire Gulf will rush into a nuclear arms race to maintain the balance of power.
The Arab states will not publicly applaud an Israeli attack, but they WILL be privately celebrating. And there is NO chance they will rally around Iran, except perhaps for some toothless political statements, done only to assuage the Arab street.
Al, the fact of the matter is that a large portion of the perverse incentives that are now biting us on the butt do happen to be the work of Democrats, specifically the "progressive" or "liberal" wing. Specifically, the programs/federal corporations that gave artificially low interest rates, artificially low perceived risk of loans, and mandated risky loans to "help" minorities--minorities who are now being bitten even harder due to misplaced "help."
No list of recessions changes that fact.
Ok Al, show me my stupidity? Defend your boy Jimmy, tell me how am I wrong? Give me facts and stats about how Jimmy Carter was good for this country. Instead of attacking me ad hominem without any backup try and debate like a rational human being, I know you have it in your retarded Ivy League mind somewhere, dig deep.
Al, you silly fool. Nixon was more of a Democrat than Clinton. Ford was Nixon lite. And by your own admission Congress had a Democrat majority for forty years.
All this will (eventualy) pass If the govmint keeps it hands off. If the do-gooders see a need to bail out Freddie or Fanny kiss your 401 K and real estate holdings bye.
Markets always have down turns and it's good because it flushes out over priced stuff. This one would be a dozzie. But if you could get capital, it'd be time to buy. Thats a big IF.
Time to buy? Tell me about it in the last day 2 houses that I wanted to bid on sold. (One was only on the market 9 days!) There is one left and I bet it goes soon too.
The first one would have been a great flip, the second a good rental, the third is an OK rental and still about $20K higher than I'd like to pay.
I am going begging for more capital next week.
So you guys think we're near the bottom of this?
Ed,
Excellent question. I am seeing some great activity in some areas, but the Fannie/Freddie mess could put us in another down-turn real fast.
Each market is different and the sad reality is some of the far exurbs are not going to recover anytime soon with $4 gas.
My target Market, SW Minneapolis is looking good right now and should have a normal fall and possiby a strong spring.
Energy prices and the credit markets will be the factors. If we don't keep the money flowing, we're all fucked.
Ed I feel that real estate will skud along for the next year or so. I don't think we will see a giant up spike for a long time. but should see some steady growth.
When we lose the over built condo/town house inventory things will start up again. That will take awhile, up here they are going for 50 cents on the dollar and still are moving slowly. Single family stuff doing not all that bad if priced right.
"Jeremy -- clearly a case for increasing the federal gas tax significantly."
As he price goes up(raise the fed gas tax), the use of gas goes down. The less that is used, the less tax is collected.
Prices go down (keeping gas tax flat or reducing it a few cents), the more use there is. The more use, the more collection of tax. Get it?
You know we could save a fortune if we told every elected Democrat to stay home.
We should just send a parrot to St. Paul or Washington DC and everytime a question came up the parrot could squalk "Raise Taxes!"
Exact same input as the Democrats and no per diems!
And the people running these programs are who we are expected to entrust our healthcare to?
Ed and Il Duce, I went almost completely to cash in my investments about three months ago. I don't regret it for one minute. I am genuinely concerned that we may be on the threshold of a major economic contraction, the likes of which the country has not seen since the 1930s. I am not a serial pessimist, I have been an economic optimist for most of my life, so this is entirely new territory for me.
I believe we are in for future hard times for four reasons:
1.) The accumulation of national debt and future obligations via unfunded government entitlements beyond any reasonable standard of paying for them.
2.) The prospect the nation is about to elect a Democratic Party sweep of the national government, that will increase taxes, punish job creators, kill any hope of economic growth through carbon emission restrictions, and further exacerbate the entitlement mess, with things like nationalized health care and susidizing illegal immmigration.
3.) The fact we are in a global economy with competitors that have far lower costs than we have and they will do nothing like we are about to do to burden their economies.
4.) The lack of Conservative leaders that can reverse the above trends by winning the public's attention. It took years of economic malaise and national decline before the American electorate finally embraced Ronald Reagan and the road to national recovery. I fear we may need another period of stagflation and economic decline like the 1970's before a failed liberalism is once again rejected by a majority of Americans.
I hope I am wrong, for that would mean real pain all across the board. But I am secure in that I know I will not lose my house. I have gone to cash and diversified where it is located to avoid the catastrophe of losing everything to a single institutional failure. Yes, I have adopted some of the lessons from the survivors of the Great Depression. Is it justified? There is no way to tell except to let events unfold. I hope things never get that bad, but I am ready if they do. That is how I will sleep well tonight.
My final insurance policy is my effort to secure an EU passport(dual citizenship) that I am elegible for due to familial history. Not that I believe Europe will fare any better in the near future, I think they will fare even worse. I just want options, even though I may never exercise them.
Some more points:
I believe the recent fall of the dollar is due the the falling prospects of the US economy for all the reasons I listed above.
Yes I have gone to cash, but I am not staying put only in US dollars.
If an economic contraction occurs, it will likely be followed by a credit crisis that will be caused by foreign investors dumping their dollar-donominated bonds. The only way to halt this kind of sell-off will be to jack up the rate of return to match the level of increased risk of default. If this in unmatched by an increase of economic efficiency, which is the converse of what Democrats bring, we may see a cycle of inflation begin. Not just simple inflation, but the kind of inflation that will make it possible to pay off national obligations. Hyper-inflation.
An illustration of what I mean: When you are a country that owes a million dollars and are experiencing economic decline, and the lenders lose faith in your ability to pay, your credit goes to hell. If you need to borrow another million dollars to keep going, you are going to pay through the nose by a much higher interest rate to convince a skeptical lender to take the risk. So to pay this, you decide to print more of your paper money.
Your printing of paper money has not been matched by any increase in the ability to repay via trade value, so now your money is worth less per unit of exchange. This is the classic beginning of destructive hyper-inflation. I fear the only way the US government will be able to meet its astronomical obligations with a crippled economy will be to inflate its way out of it. This could be like Weimar Germany of the late 1920's, when the punitive obligations of the 1918 Armistice drove that country into economic chaos.
I recognize that I am painting a worst-case scenario that I hope does not materialize, but if it does... I will be prepared.
The housing bubble is bursting. The Government solution is bail the big Co.'s out, (Corporate Welfare)and keep doing the same thing until the problem gets bigger.
AJ; I went all gold (paper) a year ago. Fiat money is fine if it is done with reason.
I only hope that we follow up and nuke Iran, assuming that the Israelis leave us anything worth nuking (like Mecca!)
Mecca is not in Iran.
Yur dum.
I am totally opposed to nuking Mecca. Or Medina. Or anyplace else, for that matter.
Obliterating cities is a bad thing to do.
Good on you Kermit, glad to hear it.
I know where Mecca and Medina are.
I also know where the 9-11 hijackers were from, what their relgion was and who they prayed to.
Some cancers have to be dealt with agressively or they kill the host.
I'm glad you're not my doctor.
Sounds like you would cut my head off if I complained about a stuffy nose.
The Hyppocratic Oath states "First, do no harm".
That's another gem Kermit!
You are my favorite.
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