Rolling US Economy Into The Shitbin Thread

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http://bigpicture.typepad.com/comments/2007/10/more-inflation.html

El Tomboto, Thursday, 18 October 2007 23:44 (eleven years ago) link

personally I'm applying for a civil servant position ASAP

El Tomboto, Thursday, 18 October 2007 23:45 (eleven years ago) link

Just FYI, during the 1930s depression, many civil servants were paid with vouchers rather than cash, because local governments were unable to collect property taxes and their receipts fell into the shitbin.

Aimless, Friday, 19 October 2007 00:12 (eleven years ago) link

Economy's doing poorly enough as it stands, why do we deliberately want to roll it into the shitbin?

Abbott, Friday, 19 October 2007 00:14 (eleven years ago) link

Because that way Hillary can rescue us all.

Dandy Don Weiner, Friday, 19 October 2007 00:17 (eleven years ago) link

lol property taxes

El Tomboto, Friday, 19 October 2007 00:18 (eleven years ago) link

shitbin's a great word, BTW.

Dandy Don Weiner, Friday, 19 October 2007 00:20 (eleven years ago) link

you been loving my thread titles lately

El Tomboto, Friday, 19 October 2007 00:26 (eleven years ago) link

i came to this country some time ago with little more than a crippling debt burden in GB Pounds and the shirt on my back. i used to have to send back $1,200 each month to pay off my UK debt, and now I'm sending back over $1,400 to cover the same amount of debt repayment. that's two and a half thousand dollars disappearing from my tiny disposable income every year, for no explicable reason. i *heart* the decline of the US economy.

Roberto Spiralli, Friday, 19 October 2007 00:27 (eleven years ago) link

anyway why start this thread now because the bit where ritholtz points out that domino's pizza can't print new menus fast enough to keep up with inflation was pretty fucking amazing

I wish rasheed wallace was still around to show us the latest and greatest exploding bubble blogs

El Tomboto, Friday, 19 October 2007 00:28 (eleven years ago) link

wow Roberto that was some shitty timing, that sucks

El Tomboto, Friday, 19 October 2007 00:29 (eleven years ago) link

This was in the paper today:

Mortgage defaults

Hit an annual rate of 1.5 million in September. That compares with 900,000 last year from fewer than 800,000 in 2005. At the current rate, more than one million Americans will lose their homes to foreclosure, making this the worst housing recession since the Second World War.

Housing starts

Sank to a 14-year low of 1.19 million in September. Starts are a vital economic engine, creating jobs and growth as people stuff their homes with sofas and TVs. Starts peaked at 2.3 million in early 2006, and the decline will be a drag on the rest of the economy until the slide stops.

Mortgages

A quarter of the roughly 50 million U.S. home mortgages are subprime. That's seven times the number of high-risk mortgages there were in 2001. That means that many more marginal homeowners have mortgages, making it far more likely they'll wind up in default.

House prices

Fell 3.2 per cent in the second quarter. Prices are falling faster and more broadly than they have in decades, according to the closely watched Case-Shiller index.

http://www.theglobeandmail.com/servlet/story/LAC.20071018.IBUSECONOMY18/TPStory/Business

everything, Friday, 19 October 2007 00:29 (eleven years ago) link

where the hell is rasheed anyway?

economic blogs I read (they're all fairly liberal):

http://calculatedrisk.blogspot.com/
http://angrybear.blogspot.com/
http://delong.typepad.com/sdj/
http://www.marginalrevolution.com/marginalrevolution/
http://bigpicture.typepad.com/
http://www.janegalt.net/

Dandy Don Weiner, Friday, 19 October 2007 00:37 (eleven years ago) link

In regard to inflation, in the USA during the past three years inflation has been soaring - but almost entirely in the housing sector. The fact that people are encouraged to see their houses as investments rather than as expenses doesn't mean that skyrocketing housing costs weren't inflationary. They were.

As the bubble market bursts, I predict a recession with an extra added bonus of inflation running close to 10% - before the end of 2008. As it has for the past 30 years, the official CPI will understate the real inflation rate. It was rigged under Reagan so that government entitlement programs indexed to the CPI would not increase at the true pace of inflation.

If Bush continues to shovel shit on the dollar right up to the end of his term in January 2009, the inflation rate could hit 15%-20% by 2010.

Aimless, Friday, 19 October 2007 00:55 (eleven years ago) link

There are some good economics articles put up here as well:
http://www.VoxEU.org

stet, Friday, 19 October 2007 01:02 (eleven years ago) link

Which shit on the dollar are you referring to?

Dandy Don Weiner, Friday, 19 October 2007 01:02 (eleven years ago) link

As the bubble market bursts, I predict a recession with an extra added bonus of inflation running close to 10% - before the end of 2008.

lol

aaaaaaaaaaaaaaaaaaaaaaaaaa, Friday, 19 October 2007 06:11 (eleven years ago) link

this is why i live in canada!

J0rdan S., Friday, 19 October 2007 06:13 (eleven years ago) link

oh wait.

J0rdan S., Friday, 19 October 2007 06:13 (eleven years ago) link

Guys, this is a good time stay in academia right?

Catsupppppppppppppp dude ่Œ„่•ƒ, Friday, 19 October 2007 11:51 (eleven years ago) link

It's a good time to learn a European language.

Nubbelverbrennung, Friday, 19 October 2007 13:33 (eleven years ago) link

Prime shit examples:

When Bush was elected in 2000, the federal budget was in surplus and the national debt was being paid down. Had this state of affairs continued, as projected, it would have led both to lower interest rates and a strong dollar, together. Instead, Bush submitted a series of enormous tax cuts to the Republican-controlled Congress and lobbied them through. Immediately, the CBO's projected budget surpluses turned to projected deficits for the next decade.

Bush also initiated a war of choice, not necessity, in Iraq. This war has already cost well over $700 billion. Yet, Bush insisted on making his tax cuts permanent. Overall, the national debt has increased under Bush by about $2 trillion in seven years. This represents a difference of about $3 trillion of debt from what was projected at the start of his first term.

Because, due to Bush's tax cuts and other policies, the Federal government was in a far weaker position to stimulate the economy when the recession started after 9/11, almost the entire stimulus was delivered via lower interest rates. Because these rate cuts were artificial, and not based on a stronger dollar, this stimulus not only inflated the current housing bubble, but it also undercut the dollar even more than the ballooning national debt did.

Now the dollar is at an all-time low against the euro and the canadian dollar. However, the incomes of the top 10% of American households have increased at a good clip, while the lower 50% of households have seen a decrease in income after inflation. This is largely thanks to Bush's shitty policies. I expect more of the same mismanagement until he is gone.

Aimless, Saturday, 20 October 2007 18:36 (eleven years ago) link

I agree with everything you've just said. You're predictions still seem a tad extreme on the downside though, if I may so.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Saturday, 20 October 2007 18:50 (eleven years ago) link

i wonder if income inequality will ever arrive as a political issue in this country. americans tend to not begrudge the rich - so it'll have to be more of a "for everyone's good" type of angle. no?

jhรธshea, Saturday, 20 October 2007 18:54 (eleven years ago) link

I remember the 1970s and early 80s quite well. Back then people couldn't belileve it, either. Bush has done a bangup job of recreating many of the same policy errors under Johnson and Nixon that led to raging stagflation back then, except the underlying economy is now weaker than it was in the 1970s and the oil shocks we are likely to get are not political, as when OPEC was formed, but structural.

Oil will exceed $100/barrel some time this winter. The ever-weakening dollar will lead to smaller profit margins and rising retail prices on all imported goods (which means almost everything we buy in the USA). Transport costs will rise with pil prices. Stock prices will erode along with profits. With so many savings tied up in stocks and home equity, consumer spending will be crunched, and personal debt and bancruptcies will rise like a tide. Businesses will retrench and unemployment will rise. No end in sight.

I hope I am wrong.

Aimless, Saturday, 20 October 2007 19:07 (eleven years ago) link

Anyone want to join my modern-day James Gang? We shall ride across the lower Midwest, robbing and pillaging.

milo z, Saturday, 20 October 2007 19:09 (eleven years ago) link

sounds fun

jhรธshea, Saturday, 20 October 2007 19:13 (eleven years ago) link

Sorry, I don't want to relocate. But this scheme sounds ripe for franchising.

Aimless, Saturday, 20 October 2007 19:14 (eleven years ago) link

Oil will exceed $100/barrel some time this winter. The ever-weakening dollar will lead to smaller profit margins and rising retail prices on all imported goods (which means almost everything we buy in the USA). Transport costs will rise with pil prices. Stock prices will erode along with profits. With so many savings tied up in stocks and home equity, consumer spending will be crunched, and personal debt and bancruptcies will rise like a tide. Businesses will retrench and unemployment will rise. No end in sight.

I hope I am wrong.

-- Aimless, Saturday, 20 October 2007 19:07 (14 minutes ago) Link

The coming of $100/barrel oil is not Bush's fault. It's yours and mine and everyone else's for using too damned much energy. I agree Bush could and should have done a lot more with policy to encourage energy efficiency, but there's little he could have done to stop oil's eventual rise to that price level.

Hurting 2, Saturday, 20 October 2007 19:26 (eleven years ago) link

Part of the pricing of oil represents the weakness of the dollar. This hurts the USA more than it does other countries. US citizens are paid in dollars and the US government collects revenue in dollars, so they are stuck. EU countries can use euros to buy increasingly cheap dollars, so they don't see the same rise in prices as we do. The weakness of the dollar is mainly Bush's fault.

Aimless, Saturday, 20 October 2007 19:31 (eleven years ago) link

The US also uses way more oil than other countries.

Hurting 2, Saturday, 20 October 2007 19:33 (eleven years ago) link

he could have done to stop oil's eventual rise to that price level.
Not starting a war in Iraq would definitely have helped here.

stet, Saturday, 20 October 2007 19:57 (eleven years ago) link

arrgh, if that won't work then
http://calculatedrisk.blogspot.com/2007/10/imf-mortgage-reset-chart.html

El Tomboto, Monday, 22 October 2007 17:47 (eleven years ago) link

tombot u r freakin me out

gff, Monday, 22 October 2007 17:50 (eleven years ago) link

i hope my small apartment + modest savings plan + job in "information services" is enough to weather the shitstorm, if it comes. i got myself out of credit card debt a few months ago, at least

gff, Monday, 22 October 2007 17:53 (eleven years ago) link

well if you can hold down a job and don't have to worry about an ARM reset you should be okay, it's the homeowner with kids and a subprime loan and two cars who ought to be shitting themselves

El Tomboto, Monday, 22 October 2007 17:58 (eleven years ago) link

apart from some student loans and binging on credit cards over a few years, i'm kind of debt phobic.

which has actually made me lose out over the past several years, i realize, since i pay for EVERYTHING with a debit/check card... i could have just paid that balance on a credit card with some rewards scheme and has some air miles or something

gff, Monday, 22 October 2007 18:00 (eleven years ago) link

rolling gff personal finances into the shitbin thread, ha

gff, Monday, 22 October 2007 18:01 (eleven years ago) link

This will give you a boner Tombot

http://nymag.com/guides/money/2007/39952/

Dandy Don Weiner, Wednesday, 31 October 2007 11:30 (eleven years ago) link

the economy increased by 3.9% this quarter! bull market forever, baby. economy's better than ever. golden age.

yet me and so many people I know are getting laid off next month. granted we're all in the writing/design field, but urhhhhh. gggg.

burt_stanton, Wednesday, 31 October 2007 14:58 (eleven years ago) link

http://nymag.com/guides/money/2007/catastrophist071105_560.jpg
http://nymag.com/guides/money/2007/catastrophist071105_2_560.jpg

^^^ lol

most of that guy's scenario is not really news to regular bigpicture/CR readers I don't think. But #5, the "we don't pay attention" thing, yeah, well, evidently the awareness campaign is underway, but hell if the big players are paying attention.

He also leaves out the approaching demographic catastrophe as millions of inexperienced thirtysomethings and even some late-twenties kids are forced to move into arguably tougher jobs that the boomers have been holding for two decades. Beyond the social security and healthcare costs associated with mass retirement, I don't really know if this generation has the work ethic and definitely not the rolodex to just start filling in and not fuck up royally. too busy updating their linkedin pages.

El Tomboto, Wednesday, 31 October 2007 15:11 (eleven years ago) link

can someone explain what "being upside down on your mortgage" means, in plain English?

Tracer Hand, Wednesday, 31 October 2007 16:14 (eleven years ago) link

essentially, owing more than your home is worth.

Dandy Don Weiner, Wednesday, 31 October 2007 17:10 (eleven years ago) link

also Tombot I'm not going to blame this generation as much as I blame their parents.

Dandy Don Weiner, Wednesday, 31 October 2007 17:11 (eleven years ago) link

isn't that the way people buy homes? by paying for the privilege of a loan?

Tracer Hand, Wednesday, 31 October 2007 17:12 (eleven years ago) link

When you enter into a contract with a bank for a mortgage, both you and the bank assume that the property value will not plummet. The bank doesn't want you to default any more than you want to default. But if for whatever reason you need to sell your home, and you can't get what you owe on it, then you will owe the difference to the bank. And the bank knows that when that happens, you probably will not have enough assets to cover the difference.

Predatory-type loans (which seems like a nebulous description to me) typically compound the problem because they have higher transaction rates (points, etc.)

Dandy Don Weiner, Wednesday, 31 October 2007 17:17 (eleven years ago) link

oh certainly! well played baby boom letting healthcare slide for the 20 years you've owned the electorate

El Tomboto, Wednesday, 31 October 2007 17:18 (eleven years ago) link

yeah Tracer it's also called "negative equity"

El Tomboto, Wednesday, 31 October 2007 17:19 (eleven years ago) link

i don't think wework call it arbitrage. it's meant as an insult in this context.

๐” ๐”ž๐”ข๐”จ (caek), Thursday, 12 September 2019 23:01 (one week ago) link

in economics arbitrage just means buying something and selling it to someone else at a higher price

flopson, Friday, 13 September 2019 05:43 (one week ago) link

i agree w aimless wework aren't really arbitraging since they rent out the spaces then deck them out/renovate etc

flopson, Friday, 13 September 2019 05:46 (one week ago) link

like to me arbitrage implies you don't have to do anything in between buying and selling

flopson, Friday, 13 September 2019 05:47 (one week ago) link

Sure. Thatโ€™s fair but saying that the guy selling umbrellas on the street corner is doing arbitrage sounds a little funny.

o. nate, Friday, 13 September 2019 12:47 (one week ago) link

When I brought up REITs above it was to address the post "Um, since real estate cannot be bought in a market in one place, then sold in another market elsewhere where the valuation is different, that phrase makes no sense." In this example you can go from public to private market valuations for the underlying real estate. But maybe that post was specific to wework and not real estate in general?

Yerac, Friday, 13 September 2019 13:54 (one week ago) link

"negative arbitrage" was just a joking reference to the fact that they sublet real estate unprofitably.

longtime caller, first time listener (man alive), Friday, 13 September 2019 14:21 (one week ago) link

This is hilarious

Oh my https://t.co/9rENkZOQp3

— Eliot Brown (@eliotwb) September 13, 2019

๐” ๐”ž๐”ข๐”จ (caek), Friday, 13 September 2019 14:31 (one week ago) link

man alive, I thought your explanation was clear/concise.

Yerac, Friday, 13 September 2019 14:33 (one week ago) link

In case itโ€™s not clear

reminder that wework has raised over $10 billion of equity!

— Eliot Brown (@eliotwb) September 13, 2019

๐” ๐”ž๐”ข๐”จ (caek), Friday, 13 September 2019 14:34 (one week ago) link

House of Saud gonna take a bath on this one

president of deluded fruitcakes anonymous (silby), Friday, 13 September 2019 14:40 (one week ago) link

it's a $SNAP

Mitch C. Palace (Sufjan Grafton), Friday, 13 September 2019 16:21 (one week ago) link

like to me arbitrage implies you don't have to do anything in between buying and selling

โ€• flopson, Friday, September 13, 2019 1:47 AM (yesterday) bookmarkflaglink

Sure. Thatโ€™s fair but saying that the guy selling umbrellas on the street corner is doing arbitrage sounds a little funny.

โ€• o. nate, Friday, September 13, 2019 8:47 AM (yesterday) bookmarkflaglink

umbrella on the street corner in the rain is different from umbrella in cvs six blocks away though

flopson, Saturday, 14 September 2019 20:09 (one week ago) link

rip

WeWork postponing IPO until at least October. Scoop from @maureenmfarrell https://t.co/OVdYVDz8Ot

— Eliot Brown (@eliotwb) September 16, 2019

๐” ๐”ž๐”ข๐”จ (caek), Monday, 16 September 2019 22:07 (five days ago) link

dude looks like an acid casualty

president of deluded fruitcakes anonymous (silby), Monday, 16 September 2019 22:08 (five days ago) link

NB I don't know what an acid casualty looks like that's just the phrase that came to mind

president of deluded fruitcakes anonymous (silby), Monday, 16 September 2019 22:08 (five days ago) link

Iโ€™m kind of buying into the idea that SoftBank (begins WeWork, etc.) could be the epicenter of the next recession/collapse.

... (Eazy), Monday, 16 September 2019 22:23 (five days ago) link

me too. i was skeptical but then i learned the softbank money is like 50% saudia arabian and the whole situation there _also_ seems like it might be a financial contagion.

๐” ๐”ž๐”ข๐”จ (caek), Monday, 16 September 2019 22:34 (five days ago) link

Thatโ€™d be more like world economy into the shitbin, no?

El Tomboto, Monday, 16 September 2019 22:41 (five days ago) link

That main guy for WeWork is such a cartoon version of a tech ceo. He seems a pretty precious choad.

earlnash, Tuesday, 17 September 2019 00:21 (four days ago) link

WeWork more like WeDon'tWork

wario in the streets, waluigi in the sheets (m bison), Tuesday, 17 September 2019 00:26 (four days ago) link

Neon slogans on WeWork office walls implore you to โ€œHustle Harderโ€ and โ€œGet S#!t Done.โ€

https://www.bloomberg.com/news/features/2019-05-15/wework-wants-to-be-its-own-landlord-it-also-wants-2-8-billion

earlnash, Tuesday, 17 September 2019 00:27 (four days ago) link

WeSuck

earlnash, Tuesday, 17 September 2019 00:27 (four days ago) link

It's as though Adam Neuman said to himself "Let's do an experiment as see just how far we can take the unicorn scam" and the market responded "One step less far than you just went, that's how far"

longtime caller, first time listener (man alive), Tuesday, 17 September 2019 02:40 (four days ago) link

Meanwhile, unrelated but I guess sort of related, I was walking up second ave yesterday in an area I used to walk around a lot when I worked there a couple years ago, and there are a shit ton of empty and closed down stores, bars, restaurants now. Can't help but feel like that's a bellwether of something.

longtime caller, first time listener (man alive), Tuesday, 17 September 2019 02:42 (four days ago) link

I hate that there are so many vacant storefronts on Columbus Ave and on Polk St in SF. I don't understand it fully but guess it has to do with the leverage necessary to buy these buildings and the rents required to keep the asset value up - and the owners' bank loans afloat

I think the owners should be fined for keeping storefronts vacant beyond a reasonable amount of time, though

Dan S, Tuesday, 17 September 2019 03:15 (four days ago) link

we need a version of Vancouver's vacancy tax for commercial properties:

https://news.bloombergtax.com/daily-tax-report-state/u-s-cities-look-to-vancouvers-novel-empty-homes-tax

sleeve, Tuesday, 17 September 2019 03:18 (four days ago) link

yes

Dan S, Tuesday, 17 September 2019 03:42 (four days ago) link

the name softbank tells me all i need to know. yโ€™all soft

alomar lines, Tuesday, 17 September 2019 03:48 (four days ago) link

lol

president of deluded fruitcakes anonymous (silby), Tuesday, 17 September 2019 03:52 (four days ago) link

vacancy tax didn't do shit

flopson, Tuesday, 17 September 2019 07:21 (four days ago) link

It would be nice if all vacant commercial properties were subsidized down to a rent control level and allowed non-chain pop ups on a short term basis.

Yerac, Tuesday, 17 September 2019 11:58 (four days ago) link

whoops minus the subsidy for landlords who keep their storefronts empty on purpose.

Yerac, Tuesday, 17 September 2019 12:00 (four days ago) link

xxp flopson is that because it got watered down? or was it not enough to begin with?

sleeve, Tuesday, 17 September 2019 14:07 (four days ago) link

Things WeWork's Adam Neumann has said to others

-he was interested in becoming Israel's PM
-he was interested in becoming president of the world
-he wants to be world's first trillionaire
-he hopes to live forever https://t.co/DjjF8xt2sn

— Eliot Brown (@eliotwb) September 18, 2019

๐” ๐”ž๐”ข๐”จ (caek), Wednesday, 18 September 2019 16:52 (three days ago) link

I'd take him over Bibi certainly

president of deluded fruitcakes anonymous (silby), Wednesday, 18 September 2019 16:53 (three days ago) link

Working out of his Tribeca apartment, he started Krawlers, which sought to make baby clothes with knee pads to make crawling more comfortable.

president of deluded fruitcakes anonymous (silby), Wednesday, 18 September 2019 17:00 (three days ago) link

VC investors are the dumbest most credulous motherfuckers on the planet earth and I hope they all get leprosy

president of deluded fruitcakes anonymous (silby), Wednesday, 18 September 2019 17:06 (three days ago) link

as discussed above, not necessarily credulous, just thinking they can find a bigger fool. But this might turn out to be a situation where they can't.

longtime caller, first time listener (man alive), Wednesday, 18 September 2019 17:25 (three days ago) link

the 2008 financial crisis left commercial real estate in a smoldering crater but I'm sure this idiot has a plan to avoid that happening at we work before the next recession hits

officer sonny bonds, lytton pd (mayor jingleberries), Wednesday, 18 September 2019 17:39 (three days ago) link

I was trying to figure out when the GoPro CEO bought his $40m yacht and came across these sigh engulfing wiki facts.

To finance the business, Woodman borrowed $200,000 from his father (an investment banker in Silicon Valley), who still owned a 6.4% stake in May 2014.[17] Nick also borrowed $35,000 and a sewing machine from his mother, which he used to sew camera straps while experimenting with early designs.[18] Nick and his future wife Jill generated an additional $10,000 by selling shell necklaces they bought in Bali (for $1.90) from their car along the California coast (for $60).

On June 26, 2014, GoPro went public โ€“ closing the day at $31.34 a share. In 2014, Woodman was the highest paid US chief executive, paying himself $235 million while GoPro earned profits of $128 million.

Yerac, Wednesday, 18 September 2019 17:54 (three days ago) link

paying himself $235 million while GoPro earned profits of $128 million

Now there is a person who understands capitalism.

A is for (Aimless), Wednesday, 18 September 2019 18:04 (three days ago) link

ATH GoPro stock closing price was 93.85 on October 07, 2014. It's ~$4.50 today.

Yerac, Wednesday, 18 September 2019 18:07 (three days ago) link

I worked on an intellectual property case involving a start up and VCs and that whole world just seems like it entirely consists of hype filled powerpoint presentations and business dudes exchanging contacts and favors

officer sonny bonds, lytton pd (mayor jingleberries), Wednesday, 18 September 2019 18:32 (three days ago) link

So is this the thread for this story?

https://www.wsj.com/articles/this-is-not-the-way-everybody-behaves-how-adam-neumanns-over-the-top-style-built-wework-11568823827

And this...anecdote?

After firing hundreds of staff, the WeWork CEO held a somber all-hands meeting explaining why it was a necessary move, but then trays of tequila were handed out and DMC from Run-DMC burst into the room and performed "It's Tricky" https://t.co/t9oGq8ebTb pic.twitter.com/cuq0aM1Tqi

— Tom Gara (@tomgara) September 18, 2019

Ned Raggett, Wednesday, 18 September 2019 18:41 (three days ago) link

oh cool it finally happened pic.twitter.com/cyLCjLcNAg

— Ryan Broderick (@broderick) September 18, 2019

mookieproof, Wednesday, 18 September 2019 18:47 (three days ago) link


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