So, government will forgive your government-sponsored student loans if you work for the government. Classic example of how government power expands, slowly, incrementally, then totally.
http://www.ibrinfo.org/
Tuesday, June 30, 2009
Wednesday, June 17, 2009
Economic Misinformation about Falling Real Estate and Walking Away
Just read this blurb concerning housing: "If tens of thousands of these property owners who are 'underwater' decide to bail, South Florida would be hit with an economic crisis that will accelerate the decline in property values, cost thousands more jobs and could put hundreds of companies in jeopardy, economists, brokers and government officials warn. The scenario could re-accelerate the downward spiral in a real estate market that many hope may finally be reaching bottom and drag the broader economy down further. " [article here]
Balderdash and hogwash, all of it. This is the problem of a media that is controled by certain economic interests (the parasites): the news reflects only their worldview and perspective.
If you happen to be an economic parasite, yes, falling real estate is a big problem. For the vast majority of citizens, and for the economy as a whole, falling real estate prices is the best thing that could possibly happen.
Low house payments means more disposable income, which means more consumer spending. Low commercial rents means more profitable small businesses, and lower start-up barriers. All of which means greater productivity and more jobs.
Overall, the idea that low land prices somehow would hurt the economy is a total and complete lie. The only ones who benefit from high land prices are the parasite classes, and honest articles about real estate should declare this fact.
If we had a "HomeOwners Union", right now would be the perfect time to go on a mass mortgage payment strike, and sweep the feet out from under these economic parasites once and for all.
If you are currently underwater on your mortgage, you should be doing everything in your power to get out from under it, forthwith and posthaste. Unless there are some overriding personal reasons, perpare for evacuation. But not before extracting every last dollar out of your investment. Forget jingle mail: don't leave until the sherrif forcibly evicts you, and fight it every step of the way to maximize your returns. Forget your sunk costs, that is a psychological fallacy: the fact you have lost money in the past does not mean you should continue to throw good money after bad. Analyze your credit score rationally: your credit score is only worth a few thousand dollars, most likely. If you can save $50K by walking away, the hit to your credit will be worth it.
The banks are more than happy to milk you like a cow until you are dry as a bone. Don't fall for their propaganda and misinformation that would keep you in their cattle pen, also known as perpetual debt enslavement.
Balderdash and hogwash, all of it. This is the problem of a media that is controled by certain economic interests (the parasites): the news reflects only their worldview and perspective.
If you happen to be an economic parasite, yes, falling real estate is a big problem. For the vast majority of citizens, and for the economy as a whole, falling real estate prices is the best thing that could possibly happen.
Low house payments means more disposable income, which means more consumer spending. Low commercial rents means more profitable small businesses, and lower start-up barriers. All of which means greater productivity and more jobs.
Overall, the idea that low land prices somehow would hurt the economy is a total and complete lie. The only ones who benefit from high land prices are the parasite classes, and honest articles about real estate should declare this fact.
If we had a "HomeOwners Union", right now would be the perfect time to go on a mass mortgage payment strike, and sweep the feet out from under these economic parasites once and for all.
If you are currently underwater on your mortgage, you should be doing everything in your power to get out from under it, forthwith and posthaste. Unless there are some overriding personal reasons, perpare for evacuation. But not before extracting every last dollar out of your investment. Forget jingle mail: don't leave until the sherrif forcibly evicts you, and fight it every step of the way to maximize your returns. Forget your sunk costs, that is a psychological fallacy: the fact you have lost money in the past does not mean you should continue to throw good money after bad. Analyze your credit score rationally: your credit score is only worth a few thousand dollars, most likely. If you can save $50K by walking away, the hit to your credit will be worth it.
The banks are more than happy to milk you like a cow until you are dry as a bone. Don't fall for their propaganda and misinformation that would keep you in their cattle pen, also known as perpetual debt enslavement.
Thursday, June 11, 2009
Media Spin on Foreclosures: Pick Your Headline
Ok, lets play the media spin game, you get to choose the headline. Which would you choose, and why?
a) "Foreclosure Increase Smallest in Three Years"
b) "Foreclosures Fall 6 Percent"
c) "Foreclosures Rise 18 Percent"
d) "Foreclosure Filings at Third Highest Ever"
Incredibly, they are all true, to wit: a) the year over year percentage increase, from May 2008-2009 is smallest in 3 years, b) they fell 6% from their all-time high of last month, c) they have risen 18% month to month since last year, and d) speaks for itself, and is the most truthful and relevent point of them all: the foreclosure flood is larger than ever in the last three months.
Do you think it is an accident that all the media headlines sound like A or B, chosing to mislead with percentages?
Here's my headline for the day: "Media Reality Distortion Sees Record Increase, More Credibility Lost"
a) "Foreclosure Increase Smallest in Three Years"
b) "Foreclosures Fall 6 Percent"
c) "Foreclosures Rise 18 Percent"
d) "Foreclosure Filings at Third Highest Ever"
Incredibly, they are all true, to wit: a) the year over year percentage increase, from May 2008-2009 is smallest in 3 years, b) they fell 6% from their all-time high of last month, c) they have risen 18% month to month since last year, and d) speaks for itself, and is the most truthful and relevent point of them all: the foreclosure flood is larger than ever in the last three months.
Do you think it is an accident that all the media headlines sound like A or B, chosing to mislead with percentages?
Here's my headline for the day: "Media Reality Distortion Sees Record Increase, More Credibility Lost"
Tuesday, June 9, 2009
Economy Still Grinding Down
The US press continues its black-out on reality. Our media handlers clearly view us as cattle. Hell, hard to blame them. Unfortunately, reality proceeds regardless. The debt deflation continues to wipe out business activity, while, as I noted in the last post, the global stimulus money drives up basic prices.
Thanks to AEP, and the British free press, for some unbiased reporting:
For guidance on where we are in this long-drawn saga, I look to Berkeley's Barry Eichengreen, author of the Great Depression classic Golden Fetters – which avoids the error of viewing the 1930s through a US prism. He has crunched the latest data with Trinity College Dublin's Kevin O'Rourke for VoxEU, concluding that the global rupture over the last nine months has been more violent than in the early slump. This is logical. Global debt leverage is much greater this time.
The fall in industrial output has been roughly equal to the 1929-1930 stage for Germany and the Anglo-Saxons, but worse for Japan, France, Italy, and Eastern Europe. The collapse in world trade has been swifter: the global equity crash has been twice as bad. "It's a depression alright. The good news is that the policy response is very different. The question now is whether that response will work," they said.
The elastic was bound to snap back, just as it did in the bear rally of early 1931. Whether the underlying economy has begun to heal is another matter. World Bank chief economist Justin Yifu Lin said capacity utilization is running at an historic low of 50pc-60pc. Companies will have to fire a lot of workers. This is where the danger lies, and why he fears that deflation is creeping up on us.
Trade data from Asia are flashing warning signals again. Korea's exports were down 28.3pc in May, reversing the April rebound. Malaysia has slipped to -26pc, and India has touched a new low of -33pc.
US freight data is getting worse, not better. The Association of American Railroads said traffic was down 22pc in the third week of May from a year earlier. Canadian freight was down 34pc. The American Trucking Association (ATA) said it saw fresh drops of 4.5pc in March and a further 2.2pc in April. Tonnage is down 13pc over 12 months. Bob Costello, the ATA's chief economist, said companies have not cut inventories fast enough to keep pace with declining sales. The contraction in truck volume has "accelerated".
Yes, the Baltic Dry Index for bulk shipping of resources has quadrupled since January, but this reflects China's bid to stockpile metals while prices are low.
Stephen Roach, Morgan Stanley's Far East chief, fears an "Asian Relapse", saying the region is prisoner to its fatal dependency on exports to the West. The export share of GDP has risen from 36pc to 47pc across developing Asia over the last decade.
"China's incipient rebound relies on a time-worn stimulus formula: upping the ante on infrastructure spending in anticipation of an eventual rebound of global demand," he said. The strategy cannot work this time because Americans have exhausted their credit, and their desire to borrow. Consumption will fall from its peak of 72pc of GDP to the "pre-bubble norm" of 67pc, if not more.
David Rosenberg from Gluskins Sheff expects Americans to retrench ferociously as 78m baby boomers face the looming threat of penury in old age. "The big story is that the personal savings rate hit a 15-year high of 5.7pc in April. I believe it could test the post-War peak of 15pc. Too many pundits are still living in the old paradigm of Americans shopping till they drop," he said.
The list of countries in deflation is growing every month: Ireland (-3.5), Thailand (-3.3), China (-1.5), Switzerland (-1), Spain (-0.8), the US (-0.7), Singapore (-0.7), Taiwan (-0.5), Belgium (-0.4), Japan (-0.1), Sweden (-0.1), Germany (0).
Yet markets seem to think otherwise, and this has its own awful consequences. Inflation fears have driven 10-year US Treasury yields to 3.86pc, a full point above levels in March when the Fed intervened to force rates down. US mortgage rates have jumped to 5.29pc. Gilts have reached 3.92pc, and French 10-year bonds are at 4.05pc.
This bond revolt is enough to bring any global recovery to a shuddering halt. The irony is that those fretting loudest about inflation may themselves tip us into outright deflation, with all the perils of a debt compound trap.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5461562/Merkels-inflationary-fretting-may-wake-the-bears-from-hibernation.html
Thanks to AEP, and the British free press, for some unbiased reporting:
For guidance on where we are in this long-drawn saga, I look to Berkeley's Barry Eichengreen, author of the Great Depression classic Golden Fetters – which avoids the error of viewing the 1930s through a US prism. He has crunched the latest data with Trinity College Dublin's Kevin O'Rourke for VoxEU, concluding that the global rupture over the last nine months has been more violent than in the early slump. This is logical. Global debt leverage is much greater this time.
The fall in industrial output has been roughly equal to the 1929-1930 stage for Germany and the Anglo-Saxons, but worse for Japan, France, Italy, and Eastern Europe. The collapse in world trade has been swifter: the global equity crash has been twice as bad. "It's a depression alright. The good news is that the policy response is very different. The question now is whether that response will work," they said.
The elastic was bound to snap back, just as it did in the bear rally of early 1931. Whether the underlying economy has begun to heal is another matter. World Bank chief economist Justin Yifu Lin said capacity utilization is running at an historic low of 50pc-60pc. Companies will have to fire a lot of workers. This is where the danger lies, and why he fears that deflation is creeping up on us.
Trade data from Asia are flashing warning signals again. Korea's exports were down 28.3pc in May, reversing the April rebound. Malaysia has slipped to -26pc, and India has touched a new low of -33pc.
US freight data is getting worse, not better. The Association of American Railroads said traffic was down 22pc in the third week of May from a year earlier. Canadian freight was down 34pc. The American Trucking Association (ATA) said it saw fresh drops of 4.5pc in March and a further 2.2pc in April. Tonnage is down 13pc over 12 months. Bob Costello, the ATA's chief economist, said companies have not cut inventories fast enough to keep pace with declining sales. The contraction in truck volume has "accelerated".
Yes, the Baltic Dry Index for bulk shipping of resources has quadrupled since January, but this reflects China's bid to stockpile metals while prices are low.
Stephen Roach, Morgan Stanley's Far East chief, fears an "Asian Relapse", saying the region is prisoner to its fatal dependency on exports to the West. The export share of GDP has risen from 36pc to 47pc across developing Asia over the last decade.
"China's incipient rebound relies on a time-worn stimulus formula: upping the ante on infrastructure spending in anticipation of an eventual rebound of global demand," he said. The strategy cannot work this time because Americans have exhausted their credit, and their desire to borrow. Consumption will fall from its peak of 72pc of GDP to the "pre-bubble norm" of 67pc, if not more.
David Rosenberg from Gluskins Sheff expects Americans to retrench ferociously as 78m baby boomers face the looming threat of penury in old age. "The big story is that the personal savings rate hit a 15-year high of 5.7pc in April. I believe it could test the post-War peak of 15pc. Too many pundits are still living in the old paradigm of Americans shopping till they drop," he said.
The list of countries in deflation is growing every month: Ireland (-3.5), Thailand (-3.3), China (-1.5), Switzerland (-1), Spain (-0.8), the US (-0.7), Singapore (-0.7), Taiwan (-0.5), Belgium (-0.4), Japan (-0.1), Sweden (-0.1), Germany (0).
Yet markets seem to think otherwise, and this has its own awful consequences. Inflation fears have driven 10-year US Treasury yields to 3.86pc, a full point above levels in March when the Fed intervened to force rates down. US mortgage rates have jumped to 5.29pc. Gilts have reached 3.92pc, and French 10-year bonds are at 4.05pc.
This bond revolt is enough to bring any global recovery to a shuddering halt. The irony is that those fretting loudest about inflation may themselves tip us into outright deflation, with all the perils of a debt compound trap.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5461562/Merkels-inflationary-fretting-may-wake-the-bears-from-hibernation.html
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