We asked Kirk Nace for his take on this, and in his typical style he answered us with "if home sales, and expectations for home sales were strong do you think they would have continued allowing investors to absorb some of the MASSIVE inventory that exists today and will be with us for many more years? They are doing whatever they can to prop up the numbers, they know that when an investor buys and "flips" that will be counted as 2 sales thereby making the numbers, and the "recovery" look far better than in reality it is."
Click on the title above or the link below to review the entire Reuters article.
http://www.reuters.com/article/2011/01/28/usa-housing-idINWAT01484820110128
Monday, January 31, 2011
Is it still the "American Dream"?
Multi generational housing, decreased desire to buy homes, and a few other points to consider.
Click on the title above or the link below to review the entire USA Today article.
http://www.usatoday.com/money/perfi/basics/2011-01-30-life-stages-housing_N.htm
Click on the title above or the link below to review the entire USA Today article.
http://www.usatoday.com/money/perfi/basics/2011-01-30-life-stages-housing_N.htm
Friday, January 28, 2011
"a number of years"
Here are a couple of interesting articles that claim at least 5 more years of down market. Hmmm...isn't that what someone who posts on here regularly has been saying for many many years now???
Click on the links below to review the entire CNBC & Bloomberg Businessweek articles.
http://www.cnbc.com/id/41295173
http://www.businessweek.com/magazine/content/11_06/b4214044575550.htm
Click on the links below to review the entire CNBC & Bloomberg Businessweek articles.
http://www.cnbc.com/id/41295173
http://www.businessweek.com/magazine/content/11_06/b4214044575550.htm
No Federal bailout of States
Interesting article touching on state and local government default potential. I forwarded it to Kirk Nace to get his take and here's his response...
"Hmmm...
What happens when individual and families can't or don't pay their bills?
What happens when companies don't or can't pay their bills?
What happens when small local governments can't pay their bills?
What happens when state governments can't pay their bills?
What happens when the federal government can't pay it's bills?
Think in terms of who suffers, future borrowing costs and availability of money/credit, precedents set and the like."
Click on the title above or the link below to review the entire Yahoo News article.
http://news.yahoo.com/s/ap/us_states_federal_help
"Hmmm...
What happens when individual and families can't or don't pay their bills?
What happens when companies don't or can't pay their bills?
What happens when small local governments can't pay their bills?
What happens when state governments can't pay their bills?
What happens when the federal government can't pay it's bills?
Think in terms of who suffers, future borrowing costs and availability of money/credit, precedents set and the like."
Click on the title above or the link below to review the entire Yahoo News article.
http://news.yahoo.com/s/ap/us_states_federal_help
Tuesday, January 25, 2011
Things are getting better . . . right CA?
As I read the Bloomberg article (click on title above or cut and paste from below)and am again informed that jobs are still being lost in most places, and even according to Bernanke “it could take four to five more years for the job market to normalize fully,” Fed Chairman Ben S. Bernanke said Jan. 7 in testimony to the Senate Budget Committee after the jobs report. We continue to be told things are getting better.
I had the opportunity earlier this month to be the speaker for The CA Desert Assoc of Realtors Annual Kick off event. The crowd was only a few hundred and I find it fascinating that fewer than 10% were willing to grasp the message and the reality of their situation. The remaining 90%+ were upset and offended.
Another report was released today on consumer confidence. It stated that consumer confidence rose more than expected last month and now stands at an 8 month high. We continue to see people celebrating a "recovery." Yet if we stop and think about the reasons for the apparent "recovery" we will see that things aren't quite as we would like to believe they are.
Sure, retail spending is up and we are saving a little more than in the past. Of course, when millions of Americans aren't paying their mortgage, taxes, insurance and the like it would make sense that they can spend more!
Although I haven't yet seen the official numbers, I believe we will see December record the 20th consecutive month that the number of Americans on food stamps has grown over the previous month - 20 CONSECUTIVE MONTHS!!!
Yep, things are getting better, or perhaps we are becoming dumber?
Good news is that there are plenty of competent informed professionals out there who are not only knowledgeable and skilled but who are committed to helping others who all too often are finding themselves in difficult situations. If you need to know how to find one, email Kirk@TRGHelp.com
Be well, it is after all a choice
http://www.bloomberg.com/news/2011-01-25/payrolls-decrease-in-35-u-s-states-led-by-new-york-minnesota-florida.html
I had the opportunity earlier this month to be the speaker for The CA Desert Assoc of Realtors Annual Kick off event. The crowd was only a few hundred and I find it fascinating that fewer than 10% were willing to grasp the message and the reality of their situation. The remaining 90%+ were upset and offended.
Another report was released today on consumer confidence. It stated that consumer confidence rose more than expected last month and now stands at an 8 month high. We continue to see people celebrating a "recovery." Yet if we stop and think about the reasons for the apparent "recovery" we will see that things aren't quite as we would like to believe they are.
Sure, retail spending is up and we are saving a little more than in the past. Of course, when millions of Americans aren't paying their mortgage, taxes, insurance and the like it would make sense that they can spend more!
Although I haven't yet seen the official numbers, I believe we will see December record the 20th consecutive month that the number of Americans on food stamps has grown over the previous month - 20 CONSECUTIVE MONTHS!!!
Yep, things are getting better, or perhaps we are becoming dumber?
Good news is that there are plenty of competent informed professionals out there who are not only knowledgeable and skilled but who are committed to helping others who all too often are finding themselves in difficult situations. If you need to know how to find one, email Kirk@TRGHelp.com
Be well, it is after all a choice
http://www.bloomberg.com/news/2011-01-25/payrolls-decrease-in-35-u-s-states-led-by-new-york-minnesota-florida.html
Monday, January 24, 2011
A market rebound far off???
We've long told you FL was in many ways, the nation's housing market crystal ball. The question for many has simply been how far are we behind what is happening in FL, particularly SW FL? Well, here's a look at what's coming in FL...
Click on the title above or the link below to review the entire Gulf Coast Business Review article.
http://www.review.net/section/detail/1-21-2011-florida-market-rebound-far-off/
Click on the title above or the link below to review the entire Gulf Coast Business Review article.
http://www.review.net/section/detail/1-21-2011-florida-market-rebound-far-off/
State Bankruptcy?
NY Times article on problems facing states and possibility of their vacating pension obligations via a bankruptcy type strategy. I'm pretty sure both William Wallace and Ouch! (Kirk Nace) have discussed this here in the past...stay tuned.
Click on the title above or the link below to review the entire New York Times article.
http://www.cnbc.com/id/41189172
Click on the title above or the link below to review the entire New York Times article.
http://www.cnbc.com/id/41189172
Friday, January 21, 2011
Welcome to the New Real Estate Reality!
Take a second, click on the title to this above, or the link below and read what is written there . . . go ahead do it now
http://finance.yahoo.com/news/Home-sales-hit-13year-low-apf-1272155599.html?x=0
Did you do it?
Let's look at some of the article's highlights:
* The number of people who bought previously owned homes last year fell to the lowest level in 13 years, and economists say it will be years before the housing market fully recovers. MY FRIEND AND FREQUENT CONTRIBUTOR HERE OUCH! (KIRK NACE) HAS BEEN SHARING THIS FOR OVER 5 YEARS AND YET SOMEHOW IT'S STILL NEWS???
* High unemployment and a record number of foreclosures are deterring potential buyers who fear home prices haven't reached the bottom NO REALLY, FEAR IS STOPPING PEOPLE FROM TAKING ACTION? WHEN WILL THE FEAR GO AWAY?
* "We built too many houses during the boom, and now after the crash, it will take us a long time to get back to normal," said David Wyss, chief economist at Standard & Poor's in New York. SO IT'S A SUPPLY AND DEMAND ISSUE? DEMAND IS LOW BECAUSE OF FEARS THAT WON'T DISAPPEAR ANYTIME SOON AND SUPPLY EXISTS, IT ISN'T GOING AWAY UNLESS GOD FORBID WE SUFFER NATURAL DISASTERS (ASK THE FOLKS IN NEW ORLEANS ABOUT THAT OPTION)
* "The job market is still very weak, and unemployment is very high. Until we get more jobs, people will be reticent about buying homes," INTERPRETATION -> DEMAND IS GOING TO STAY LOW
* Zandi (chief economist at Moody's Analytics) said home prices would fall another 5 percent this year. Sales of previously occupied homes would likely exceed 5 million. That's a slight improvement from last year, he said, but it will probably take until 2013 or 2014 for sales to reach a healthy level of 6 million units a year.SO WITH SUPPLY AT AN ALL TIME HIGH AND DEMAND EXPECTED TO TAKE ANOTHER 3+ YEARS TO RISE BY JUST 20% (4.91 MILLION IN 2010) IT'S LOOKING LIKE PRICES WILL CONTINUE TO DECLINE FOR AT LEAST ANOTHER 4-5+ YEARS . . . I'VE HEARD THIS SOMEWHERE BEFORE (READ THE OLDER ENTRIES ON THIS SITE FOLKS)
* Still, the unemployment rate is not expected to fall much below 9 percent this year. And the housing market cannot fully recover until the glut of foreclosed homes is cleared. Last year, a record 1 million homes were lost to foreclosures, and foreclosure tracker RealtyTrac Inc. predicts 1.2 million more will be lost this year.HOW WILL THE GLUT BE CLEARED WHEN 2010'S FORECLOSED HOMES (THE MOST EVER) AREN'T BACK ON THE MARKET YET AND FORECLOSURES ARE EXPECTED TO INCREASE ANOTHER 20% THIS YEAR???
SUMMARY:
We built too many homes
We have several years worth of inventory and shadow inventory currently available
This supply is still growing, rapidly
Demand is low because of fear
Unemployment and other causes of the fear aren't going away anytime soon
Kirk Nace's projections (that he has shared with some of us for many, many years) are looking more accurate all the time . . . prices bottom between 2015 and 2020 and then stay flat for a decade of more.
Of course he does tell us that the longer the government meddles in the market the more this pain will be extended. I've known him for a long time, and he can be incredibly annoying, but folks, the reality is becoming more and more difficult to ignore.
Any questions?
http://finance.yahoo.com/news/Home-sales-hit-13year-low-apf-1272155599.html?x=0
Did you do it?
Let's look at some of the article's highlights:
* The number of people who bought previously owned homes last year fell to the lowest level in 13 years, and economists say it will be years before the housing market fully recovers. MY FRIEND AND FREQUENT CONTRIBUTOR HERE OUCH! (KIRK NACE) HAS BEEN SHARING THIS FOR OVER 5 YEARS AND YET SOMEHOW IT'S STILL NEWS???
* High unemployment and a record number of foreclosures are deterring potential buyers who fear home prices haven't reached the bottom NO REALLY, FEAR IS STOPPING PEOPLE FROM TAKING ACTION? WHEN WILL THE FEAR GO AWAY?
* "We built too many houses during the boom, and now after the crash, it will take us a long time to get back to normal," said David Wyss, chief economist at Standard & Poor's in New York. SO IT'S A SUPPLY AND DEMAND ISSUE? DEMAND IS LOW BECAUSE OF FEARS THAT WON'T DISAPPEAR ANYTIME SOON AND SUPPLY EXISTS, IT ISN'T GOING AWAY UNLESS GOD FORBID WE SUFFER NATURAL DISASTERS (ASK THE FOLKS IN NEW ORLEANS ABOUT THAT OPTION)
* "The job market is still very weak, and unemployment is very high. Until we get more jobs, people will be reticent about buying homes," INTERPRETATION -> DEMAND IS GOING TO STAY LOW
* Zandi (chief economist at Moody's Analytics) said home prices would fall another 5 percent this year. Sales of previously occupied homes would likely exceed 5 million. That's a slight improvement from last year, he said, but it will probably take until 2013 or 2014 for sales to reach a healthy level of 6 million units a year.SO WITH SUPPLY AT AN ALL TIME HIGH AND DEMAND EXPECTED TO TAKE ANOTHER 3+ YEARS TO RISE BY JUST 20% (4.91 MILLION IN 2010) IT'S LOOKING LIKE PRICES WILL CONTINUE TO DECLINE FOR AT LEAST ANOTHER 4-5+ YEARS . . . I'VE HEARD THIS SOMEWHERE BEFORE (READ THE OLDER ENTRIES ON THIS SITE FOLKS)
* Still, the unemployment rate is not expected to fall much below 9 percent this year. And the housing market cannot fully recover until the glut of foreclosed homes is cleared. Last year, a record 1 million homes were lost to foreclosures, and foreclosure tracker RealtyTrac Inc. predicts 1.2 million more will be lost this year.HOW WILL THE GLUT BE CLEARED WHEN 2010'S FORECLOSED HOMES (THE MOST EVER) AREN'T BACK ON THE MARKET YET AND FORECLOSURES ARE EXPECTED TO INCREASE ANOTHER 20% THIS YEAR???
SUMMARY:
We built too many homes
We have several years worth of inventory and shadow inventory currently available
This supply is still growing, rapidly
Demand is low because of fear
Unemployment and other causes of the fear aren't going away anytime soon
Kirk Nace's projections (that he has shared with some of us for many, many years) are looking more accurate all the time . . . prices bottom between 2015 and 2020 and then stay flat for a decade of more.
Of course he does tell us that the longer the government meddles in the market the more this pain will be extended. I've known him for a long time, and he can be incredibly annoying, but folks, the reality is becoming more and more difficult to ignore.
Any questions?
Thursday, January 20, 2011
Fixing the mortgage market?
Interesting thoughts here, many sound very familiar to those of us who have been following Kirk Nace for the past many years.
Click on the title above or the link below to review the entire AEI article.
http://www.aei.org/paper/100189
Click on the title above or the link below to review the entire AEI article.
http://www.aei.org/paper/100189
Tuesday, January 18, 2011
Pay to the order of Uncle Sam...
Congratulations USA! We now have a new record and it will only cost each citizen $45,300. The United States is now at a record $14 trillion-plus deficit. Within a few months we will be at our debt limit unless the government votes, again, to raise the legal debt limit.
Click on the title above or the link below to review the entire Yahoo News article.
http://news.yahoo.com/s/ap/20110115/ap_on_re_us/us_debt_wars
Click on the title above or the link below to review the entire Yahoo News article.
http://news.yahoo.com/s/ap/20110115/ap_on_re_us/us_debt_wars
US Housing market with another 50% decline still to come?
We asked Kirk Nace, the top national prognosticator his take on this information. Mr Nace commented "While we are not calling for quite another 50% from here, it's entirely feasible that if the US Government continues it's futile Band Aid approach, we could over the next few years see additional valuation declines of 50%, or even more dependent upon how slowly the government gets out of the housing market."
Click on the title above or the link below to review the entire Market Oracle article.
http://www.marketoracle.co.uk/Article25597.html
Click on the title above or the link below to review the entire Market Oracle article.
http://www.marketoracle.co.uk/Article25597.html
Thursday, January 13, 2011
No really...THIS time it's getting better...
When we asked Kirk Nace about this, he simply responded with "no, really you are kidding, there will be more foreclosures in 2011 than ever? It's a good thing Realtors and politicians are telling us the market is improving, because if they say so it's got to be true." For those of you who don't know Kirk, imagine gallons of sarcasm oozing from that statement, but then again Kirk has been sharing this message for years.
Click on the title above or the link below to review the entire Yahoo Finance article.
http://finance.yahoo.com/news/Banks-repossess-1-million-apf-1937862554.html?x=0
Click on the title above or the link below to review the entire Yahoo Finance article.
http://finance.yahoo.com/news/Banks-repossess-1-million-apf-1937862554.html?x=0
Municipal Bond defaults?
Municipal Bond defaults edge closer as governments can't pay their debts. I'm pretty sure we shared this with you a long time ago when Kirk Nace told us it was coming...
Click on the title above or the link below to review the entire CNBC article.
http://www.cnbc.com/id/41036244
Click on the title above or the link below to review the entire CNBC article.
http://www.cnbc.com/id/41036244
And the hits just keep coming
More on the MA Supreme Court rulings - enjoy.
Click on the title above or the link below to review the entire New York Post article.
http://www.nypost.com/p/news/opinion/opedcolumnists/another_housing_market_nightmare_p8dc29PqBARzizaXrzXkzL
Click on the title above or the link below to review the entire New York Post article.
http://www.nypost.com/p/news/opinion/opedcolumnists/another_housing_market_nightmare_p8dc29PqBARzizaXrzXkzL
Tuesday, January 11, 2011
More on the recent MA Supreme Court ruling...
and it appears Kirk Nace was once again accurate in his prognostications.
Click on the title above or the link below to review the entire CNBC article.
http://www.cnbc.com/id/40969556
Click on the title above or the link below to review the entire CNBC article.
http://www.cnbc.com/id/40969556
MA Supreme Court ruling...
Watch out, this could get ugly! I was on a call with Kirk Nace several months ago where this was discussed and he told us all it would take a while to work itself out but this foreclosure mess has the potential to be hugely negative for lenders and possibly even for those who bought properties that had been foreclosed on...stay tuned.
Click on the title above or the link below to review the entire article.
http://www.massrealestatelawblog.com/2011/01/07/ibanez-foreclosure-ruling-upheld-an-indictment-of-the-securitized-mortgage-system/
Click on the title above or the link below to review the entire article.
http://www.massrealestatelawblog.com/2011/01/07/ibanez-foreclosure-ruling-upheld-an-indictment-of-the-securitized-mortgage-system/
Whats another 4 or 5 years?
Even Bernanke is starting to acknowledge housing prices will go down further and that high unemployment rates will be sticking around for years!
Click on the title above or the link below to review the entire CNBC article.
http://www.cnbc.com/id/40962516
Click on the title above or the link below to review the entire CNBC article.
http://www.cnbc.com/id/40962516
Wednesday, January 5, 2011
WOW - underestimates on mortgage mess???
I'm pretty sure our favorite housing market guru, Kirk Nace, would say "Gee, IF only we had known." Of course, Kirk has shared this with his followers FOR YEARS!
Click on the title above or the link below to review the entire CNBC article.
http://www.cnbc.com/id/40913381
Click on the title above or the link below to review the entire CNBC article.
http://www.cnbc.com/id/40913381
Baby Boomer Bust
click on the title above or cut and paste here:
http://finance.yahoo.com/news/Why-Baby-Boomers-Are-Bummed-usnews-1665637998.html?x=0
To access one of many great articles on how the economy is impacting Baby Boomers.
For most, there is no boom, just a huge bust. In general they are disappointed and disgusted, they can't afford to retire and live the life they were promised. How did this happen? Glad you asked:
1 They were irresponsible in that they allowed their elected officials to consistently rob from Peter to pay Paul.
2 They enjoyed the moment without thinking of the future. Have you seen the movie "Ants?" Baby Boomers lived as grasshoppers, they were the all powerful biggest population group ever. Everyone needed to tend, or cater, to their needs - yeah, how did that work out?
3 They bought into the hype that children are ENTITLED to a better life than their parents. Of course theirs were the parents who created this myth. Having survived the 1st Great Depression, parents of the baby boomers swore that their kids would never suffer the way they had suffered during the 1st depression, so they gave baby boomers more than they had earned. This of course taught baby boomers that this is what parents do, so the baby boomers then did the same with their children.
4 They turned over responsibility for their well being to others. To the companies they worked for, to their government, to an army of financial types all of whom claimed to have their best interests at heart . . . they have now learned that talk is cheap and they should have looked over their financial well being themselves.
5 They looked the other way - repeatedly. It's impossible to mention all the times and places where, as a nation, we looked the other way because it was easier. Now, and for decades to come, we will pay the price for this.
I hold no animosity for the baby boomers, they didn't plot to maliciously harm others (and themselves in the process.) Instead they were simply lazy . . . like most of the rest of the Sheeple in the US today.
What's the answer? Another great question. We could do what this country did in the 30's and 40's - roll up our sleeves and go to work rebuilding. Honestly, I doubt that as a nation we have the fortitude to undertake and succeed with such a plan. So reality will most likely prove to be that the US, or in the future the pieces that it becomes, will drop to a second tier country and we as a mass of sheeple learn to settle because it will be easier.
Where do you see things going?
http://finance.yahoo.com/news/Why-Baby-Boomers-Are-Bummed-usnews-1665637998.html?x=0
To access one of many great articles on how the economy is impacting Baby Boomers.
For most, there is no boom, just a huge bust. In general they are disappointed and disgusted, they can't afford to retire and live the life they were promised. How did this happen? Glad you asked:
1 They were irresponsible in that they allowed their elected officials to consistently rob from Peter to pay Paul.
2 They enjoyed the moment without thinking of the future. Have you seen the movie "Ants?" Baby Boomers lived as grasshoppers, they were the all powerful biggest population group ever. Everyone needed to tend, or cater, to their needs - yeah, how did that work out?
3 They bought into the hype that children are ENTITLED to a better life than their parents. Of course theirs were the parents who created this myth. Having survived the 1st Great Depression, parents of the baby boomers swore that their kids would never suffer the way they had suffered during the 1st depression, so they gave baby boomers more than they had earned. This of course taught baby boomers that this is what parents do, so the baby boomers then did the same with their children.
4 They turned over responsibility for their well being to others. To the companies they worked for, to their government, to an army of financial types all of whom claimed to have their best interests at heart . . . they have now learned that talk is cheap and they should have looked over their financial well being themselves.
5 They looked the other way - repeatedly. It's impossible to mention all the times and places where, as a nation, we looked the other way because it was easier. Now, and for decades to come, we will pay the price for this.
I hold no animosity for the baby boomers, they didn't plot to maliciously harm others (and themselves in the process.) Instead they were simply lazy . . . like most of the rest of the Sheeple in the US today.
What's the answer? Another great question. We could do what this country did in the 30's and 40's - roll up our sleeves and go to work rebuilding. Honestly, I doubt that as a nation we have the fortitude to undertake and succeed with such a plan. So reality will most likely prove to be that the US, or in the future the pieces that it becomes, will drop to a second tier country and we as a mass of sheeple learn to settle because it will be easier.
Where do you see things going?
Tuesday, January 4, 2011
Got A Pension Plan? Are You Sure?
Happy New Year!!! It's now 2011 and after many years of hard work and long hours, you've finally reached that magic number and are ready to retire. Or are you?
Just last week we posted an article about the town of Prichard, Alabama. IF you haven't already read it, go back and do so and see how the unthinkable happened. Then click on the title above or the link below to review the entire Yahoo Finance article and see if your pension plan is in trouble.
http://finance.yahoo.com/news/7-Signs-Your-Pension-Fund-Is-investopedia-4127115396.html?x=0&.v=1
Just last week we posted an article about the town of Prichard, Alabama. IF you haven't already read it, go back and do so and see how the unthinkable happened. Then click on the title above or the link below to review the entire Yahoo Finance article and see if your pension plan is in trouble.
http://finance.yahoo.com/news/7-Signs-Your-Pension-Fund-Is-investopedia-4127115396.html?x=0&.v=1
Want Multiple Offers???
I spoke with Kirk Nace, the creator of The 6 Week Listing Strategy, regarding multiple bids and he said that his strategy allows all sellers to create the competition necessary to maximize their equity preservation. You can find more information at www.6weekListingStrategy.com
Click on the title above or the link below to review the entire Star Tribune article.
http://www.startribune.com/business/112696234.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aUoD3aPc:_2yc:a_ncyD_MDCiU
Click on the title above or the link below to review the entire Star Tribune article.
http://www.startribune.com/business/112696234.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aUoD3aPc:_2yc:a_ncyD_MDCiU
Market taking longer to absorb foreclosed properties
S&P says 44 months, and growing, to clear out shadow inventory. If the estimate is now up to 44 months, and that number gets larger each quarter...when will we truly see a bottom?
Click on the title above or the link below to review the entire MarketWatch article.
http://www.marketwatch.com/story/sp-warns-on-shadow-inventory-of-foreclosures-2011-01-03?reflink=MW_news_stmp
Click on the title above or the link below to review the entire MarketWatch article.
http://www.marketwatch.com/story/sp-warns-on-shadow-inventory-of-foreclosures-2011-01-03?reflink=MW_news_stmp
100,000 foreclosures in January?
NAR chief economist is now "hopeful" that housing market will improve. READ THIS AS NOW EVEN NAR IS RECOGNIZING THAT THE $HI!* IS ABOUT TO HIT THE FAN!
Click on the title above or the link below to review the entire NPR article.
http://www.npr.org/2011/01/03/132523689/u-s-home-foreclosures-may-top-100-000-in-january
Click on the title above or the link below to review the entire NPR article.
http://www.npr.org/2011/01/03/132523689/u-s-home-foreclosures-may-top-100-000-in-january
The LAW of Supply and Demand as applied to real estate
Click on the title above or the link below to review the entire Bloomberg article.
http://www.bloomberg.com/news/2011-01-03/how-i-missed-the-housing-recovery-of-2010-commentary-by-caroline-baum.html
http://www.bloomberg.com/news/2011-01-03/how-i-missed-the-housing-recovery-of-2010-commentary-by-caroline-baum.html
Monday, January 3, 2011
So Simple a caveman could understand:
Why did Bernie Madoff go to prison? To make it simple, he talked people into investing with him. Trouble was, he didn't invest their money. As time rolled on he simply took the money from the new investors to pay off the old investors.
Finally there were too many old investors and not enough money from new investors coming in to keep the payments going.
Next thing you know Madoff is one of the most hated men in America and he is off to jail. Some of you know this, but not enough of you.
Madoff did to his investors what the government has been doing to us for over 70 years with Social Security. There is no meaningful difference between the two schemes, except that one was operated by a private individual who is now in jail, and the other is operated by politicians who enjoy perks, privileges and status in spite of their actions.
Do you need a side-by-side comparison here?
BERNIE MADOFF = Takes money from investors with the promise that the money will be invested and made available to them later.
SOCIAL SECURITY = Takes money from wage earners with the promise that the money will be invested in a "Trust Fund" and made available later.
BERNIE MADOFF = Instead of investing the money Madoff spends it on nice homes in the Hamptons and yachts.
SOCIAL SECURITY = Instead of depositing money in a Trust Fund the politicians use it for general spending and vote buying.
BERNIE MADOFF = When the time comes to pay the investors back Madoff simply uses some of the new funds from newer investors to pay back the older investors.
SOCIAL SECURITY = When benefits for older investors become due the politicians pay them with money taken from younger and newer wage earners to pay the geezers.
BERNIE MADOFF = When Madoffs scheme is discovered all hell breaks loose. New investors won't give him any more cash.
SOCIAL SECURITY = When Social Security runs out of money they simply force the taxpayers to send them some more.
BERNIE MADOFF = is in jail.
POLITICIANS = remain in Washington.
The taxpayer: "That's someone who works for the federal government but doesn't have to take the civil service examination." - Ronald Reagan
"If you put the federal government in charge of the Sahara Desert, in five years there'd be a shortage of sand." - Milton Friedman
Finally there were too many old investors and not enough money from new investors coming in to keep the payments going.
Next thing you know Madoff is one of the most hated men in America and he is off to jail. Some of you know this, but not enough of you.
Madoff did to his investors what the government has been doing to us for over 70 years with Social Security. There is no meaningful difference between the two schemes, except that one was operated by a private individual who is now in jail, and the other is operated by politicians who enjoy perks, privileges and status in spite of their actions.
Do you need a side-by-side comparison here?
BERNIE MADOFF = Takes money from investors with the promise that the money will be invested and made available to them later.
SOCIAL SECURITY = Takes money from wage earners with the promise that the money will be invested in a "Trust Fund" and made available later.
BERNIE MADOFF = Instead of investing the money Madoff spends it on nice homes in the Hamptons and yachts.
SOCIAL SECURITY = Instead of depositing money in a Trust Fund the politicians use it for general spending and vote buying.
BERNIE MADOFF = When the time comes to pay the investors back Madoff simply uses some of the new funds from newer investors to pay back the older investors.
SOCIAL SECURITY = When benefits for older investors become due the politicians pay them with money taken from younger and newer wage earners to pay the geezers.
BERNIE MADOFF = When Madoffs scheme is discovered all hell breaks loose. New investors won't give him any more cash.
SOCIAL SECURITY = When Social Security runs out of money they simply force the taxpayers to send them some more.
BERNIE MADOFF = is in jail.
POLITICIANS = remain in Washington.
The taxpayer: "That's someone who works for the federal government but doesn't have to take the civil service examination." - Ronald Reagan
"If you put the federal government in charge of the Sahara Desert, in five years there'd be a shortage of sand." - Milton Friedman
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