So my accounting professor has just gotten to the unit on pension plan accounting. In a nut shell it works like this: Pension plans have two components. The first, depending on how the benefits are defined, the company pays into the pension at a certain rate. This rate is determined by, among other things, the actuarial data on each employee, and the mood and capability of the company to pay. The second component is accounting for those paid-in assets, which are usually placed into a trust, managed by another entity entirely.
Accounting for all securities is a hairy business. I mentioned this a bit in my last post, when I asked you all if you knew the difference between Trading Securities (TS), Available for Sale securities (AFS) and Held-to-Maturity (HTM) securities. Net Income, one of the most important pieces of investment information is determined by all streams of income, but operating income is usually based on making money on what the company "does." However, very few companies keep too much cash on hand: it's a waste of money that could be out making more money. But cash (value of the dollar notwithstanding) is relatively stable. Trading in equities is a volatile business, particularly in the last three decades. Since all large companies invest their cash, the trick is to account for investment income when it's earning money, and shielding the income statement when it's losing money. I think my professor would argue that point, that is, investment volatility is a fair argument for companies looking to keep their net income stable--in good times and in bad. The way to do that is to report gains and losses in Other Comprehensive Income--which gets aggregated into Net Consolidated Income. In otherwords, not Net Income.
But this is where my political persuasion comes into play. Trading in equities is a risk. Why should companies get a pass because they made a poor investment, or worse, because they chose to make an investment at all? That's heresy in my business, securities litigation (though I'll explain why that is not true momentarily.) Which leads me to another issue. In economics we talk about how prices are determined--to wit--the more market players, the more accurate the price. The short-sellers, and all traders, argue that the constant trading of these stocks creates the fairest price.
My question is this: Is it really fair to include buyers of an item who buy, not because of perceived value, but who buy simply to reverse the sale in hours, days, or months? I think there is another component to value, that isn't obvious in the market mechanism--and that is longterm value. Again my whole philosophy comes down to timing. If half the market for a product represents people buying a product just to sell it hours later, does that really reflect the actual value of the product? It calls to mind the SEC banning the split-second trading made possible by speedy computers. Where trading on the difference between prices minute to minute, second to second can make a lot of money, consistently.
I guess the question is really the volume of these sorts of trades. If, like prior to The Depression, cartels were specifically driving up prices of certain stocks, something made blatantly illegal by the Exchange Acts of 1933 and 1934, then these prices are clearly inflated. But the SEC monitors that stuff pretty efficiently, so let's say that's not the case. So then that would mean that the value of the market prior to October of 2008 was the actual value of the market, and that prices are currently undervalued across the board. My own investment strategy banks on that assumption. But is it really true? If the entire market was inflated from 2005 to 2007, then the market really is at it's true value now.
But let's get back to accounting for a minute. The volatility of the market is greatly enhanced when people buy-to-sell in a narrow time frame. I think the inflation of the past few years has a lot to do with companies providing online trading facilities by which the ordinary investor can trade without the benefit of having an account manager at an investment bank. It only makes sense for large cap companies to have finance divisions (GMs finance division was the only group that made money in the last three years) if the overall value of the market continues to climb. Which was a ludicrous assumption, particularly when matched against BLS statistics of the last decade. So why should these companies get this sort of investment earnings protection?
When I buy into a company, I'm buying into it because I think that they are selling a product which will be bought. Not that they will take my capital and use it to finance their own investment strategy. Unless of course, I'm invested in a bank, or investment bank, in which case, really I'm betting on the market--not the company at all.
I'll close with why I think, given my feelings above, I think investors still need to be protected. It's not whether or not you lose money: it's a question of good faith. And that faith is based on truth and competence. If a company fails to demonstrate either, they should be liable to the investor for their malfeasances.
Thursday, November 12, 2009
Wednesday, November 11, 2009
Bear Stearns, Cioffi and Tannin Acquitted
This is absolutely intolerable.
Having been a primary witness to a jury allowing high-class fraudsters off scott free (JDS Uniphase), watching this happen with Bear Stearns gives me real doubt about our judical system, and what it means to be tried before a jury of your peers.
Voir Dire is the process by which juries are selected. It involves some intense questioning of the witness by both parties and the Judge. The answers automatically disqualify jurors in certain cases. If you owned Bear Stearns or JPMorgan stock for instance, you would have been immediately disqualified. It's a necessary process, but sometimes I think the term "peers," is taken too loosely.
Complex financial fraud is incomprehensible. I've been studying Accounting for nearly two years now, and I still don't understand much of it. Maybe I'm an idiot--but consider the following terms and tell me how much you know about each, derivative, mortgage-backed securities, loan loss reserves, credit default swaps, credit default obligations, Credit-default window. How much do you understand about securities? Do you understand the difference between trading securities, available-for-sale securities, and held-to-maturity securities? Do you know what options backdating is? Maybe the call price of an option?
High finance has moved far beyond the realm of what someone who isn't "in the biz" can realistically comprehend. That trial wasn't a jury of peers, but a jury of inanimate objects. All they can look at is the physical. (Times article with Jury consultant, Robert S. Duboff "“Both sides will probably pitch this at a very gut and emotional level, which is how most cases are decided anyway,” Does this man look guilty? Is he crosseyed, or does he look shifty? I mean, the defense ended their closing remarks with a remark addressed to Tannin, "Send this boy back to his family," for chrissakes!
Worse, every poor person in America has the essential belief that he too can be rich someday. So people are sympathetic to the rich. That is--until they can't eat. The Jury made their decision in 6 hours. The JDS jury made their decision in 1 day. There were mountains of documents, literally twenty or thirty boxes of bankers boxes to look at--6 hours? In JDS, Lawyers on both sides spent six years fighting about the case, and you're telling me a fair decision was made in 1 day?
Traditional jurors are not equipped to decide financial fraud. Despite the proliferation (read: inflation) of stock market sales, the only precedent for which occured prior to the Great Depression, still less than 10% of the country will ever buy a stock. Pension plans, Contribution plans be damned. Most of these holdings are managed by professionals and the principals never even see their money. Most of whom have never purchased a stock in their lives, let alone experienced a loss. And the law is strict on juror research. If a juror attempts to gain outside insight on a case--they are promptly thrown out, and either party can seek a mistrial. What hope does the average man have in understanding financial fraud based on two weeks of testimony?
I don't have time to be more coherent. Let me just say: I am incensed. Cioffi and Tannin, weren't the worst of what the financial industry had to offer, they were doing the same thing everybody else in high finance was doing. But someone needs to hang for this. Bernie Madoff was a patsy, a straw man. Ponzi schemes? Illegal, but insignificant precisely because they have always existed. However, when the spirit of an entire profession has been corrupted by greed and willful blindness, (rest assured, Tannin and Cioffi will have great new jobs before the year is over,) then the industry as a whole has to hang out a few examples.
The jury forewoman made the following statement, which closed the Times piece, ‘We’re not going to look at the fact that we’re in a recession, or that the markets are down. Because that wasn’t relevant to the case.’" That is surely what the defense thought. And given Judge Frederick Block's resistance to try the case, what he thought as well. But it is the point--It's the point exactly. The Bear Stearns Hedgefunds, when they closed, were the bellweather for the entire crash and recession. The industry started to turn things around then--but it was far too late.
I'd like to make one point to the Jury: If a black man shoots someone while making an attempted robbery of $50--he can go to prison for life. That's a nice black and white line because all a juror needs to know is whether or not the man shot the victim. But when two men lose 1.6 billion dollars, there's no brightline for right and wrong. The crime is that these men lost what most other people will never see the thousandth of a percentage because they were over-confident, misinformed, and negligent. Worse, when things started to go south, they lied about it to their investors, in desperate plan to get out before the market blew up. Their negligence destroyed Bear Stearns, and the investment industry as a whole.
Having been a primary witness to a jury allowing high-class fraudsters off scott free (JDS Uniphase), watching this happen with Bear Stearns gives me real doubt about our judical system, and what it means to be tried before a jury of your peers.
Voir Dire is the process by which juries are selected. It involves some intense questioning of the witness by both parties and the Judge. The answers automatically disqualify jurors in certain cases. If you owned Bear Stearns or JPMorgan stock for instance, you would have been immediately disqualified. It's a necessary process, but sometimes I think the term "peers," is taken too loosely.
Complex financial fraud is incomprehensible. I've been studying Accounting for nearly two years now, and I still don't understand much of it. Maybe I'm an idiot--but consider the following terms and tell me how much you know about each, derivative, mortgage-backed securities, loan loss reserves, credit default swaps, credit default obligations, Credit-default window. How much do you understand about securities? Do you understand the difference between trading securities, available-for-sale securities, and held-to-maturity securities? Do you know what options backdating is? Maybe the call price of an option?
High finance has moved far beyond the realm of what someone who isn't "in the biz" can realistically comprehend. That trial wasn't a jury of peers, but a jury of inanimate objects. All they can look at is the physical. (Times article with Jury consultant, Robert S. Duboff "“Both sides will probably pitch this at a very gut and emotional level, which is how most cases are decided anyway,” Does this man look guilty? Is he crosseyed, or does he look shifty? I mean, the defense ended their closing remarks with a remark addressed to Tannin, "Send this boy back to his family," for chrissakes!
Worse, every poor person in America has the essential belief that he too can be rich someday. So people are sympathetic to the rich. That is--until they can't eat. The Jury made their decision in 6 hours. The JDS jury made their decision in 1 day. There were mountains of documents, literally twenty or thirty boxes of bankers boxes to look at--6 hours? In JDS, Lawyers on both sides spent six years fighting about the case, and you're telling me a fair decision was made in 1 day?
Traditional jurors are not equipped to decide financial fraud. Despite the proliferation (read: inflation) of stock market sales, the only precedent for which occured prior to the Great Depression, still less than 10% of the country will ever buy a stock. Pension plans, Contribution plans be damned. Most of these holdings are managed by professionals and the principals never even see their money. Most of whom have never purchased a stock in their lives, let alone experienced a loss. And the law is strict on juror research. If a juror attempts to gain outside insight on a case--they are promptly thrown out, and either party can seek a mistrial. What hope does the average man have in understanding financial fraud based on two weeks of testimony?
I don't have time to be more coherent. Let me just say: I am incensed. Cioffi and Tannin, weren't the worst of what the financial industry had to offer, they were doing the same thing everybody else in high finance was doing. But someone needs to hang for this. Bernie Madoff was a patsy, a straw man. Ponzi schemes? Illegal, but insignificant precisely because they have always existed. However, when the spirit of an entire profession has been corrupted by greed and willful blindness, (rest assured, Tannin and Cioffi will have great new jobs before the year is over,) then the industry as a whole has to hang out a few examples.
The jury forewoman made the following statement, which closed the Times piece, ‘We’re not going to look at the fact that we’re in a recession, or that the markets are down. Because that wasn’t relevant to the case.’" That is surely what the defense thought. And given Judge Frederick Block's resistance to try the case, what he thought as well. But it is the point--It's the point exactly. The Bear Stearns Hedgefunds, when they closed, were the bellweather for the entire crash and recession. The industry started to turn things around then--but it was far too late.
I'd like to make one point to the Jury: If a black man shoots someone while making an attempted robbery of $50--he can go to prison for life. That's a nice black and white line because all a juror needs to know is whether or not the man shot the victim. But when two men lose 1.6 billion dollars, there's no brightline for right and wrong. The crime is that these men lost what most other people will never see the thousandth of a percentage because they were over-confident, misinformed, and negligent. Worse, when things started to go south, they lied about it to their investors, in desperate plan to get out before the market blew up. Their negligence destroyed Bear Stearns, and the investment industry as a whole.
Thursday, November 5, 2009
Bush Crimes Remembrance Day
As we near the end of the first year of Obama's administration, with the excitement of losing two governor ships of dubious importance, and the media's insistance that Obamania is dead, I thought we should look back and remember just how grateful we all are that Bush and his cronies are out of the Oval Office.
To do that, I'll turn to my friend Frank Rich, in The Greatest Story Ever Sold. So we all knew the media was/is completely complicit in managing Bush propaganda, but I don't remember hearing all of these stories in those awful years. The gist is that about 1.6 billion dollars was spent, by the administration, that means "government spendin'" to you wingnuts, on creating fake news to be devoured by major news networks. In otherwords, actual government agencies, creating fake news reports to extol Bush programs. Again, to the wingnuts, or perhaps, nutbaggers, that is "facism."
Rich highlights a couple of them, pg 166-172.
The Department of Health and Human Services, devoted $124 million to sell the public on how great Bush's Medicare reforms were. That's right, these reforms. These "freelance journalists" were actually shills. This is old news, but remember Bush Remembrance Day is a time for old news.
Another oldie but goodie is when Armstrong Williams was $240,000 to shill for "No Child Left Behind." He was issued citations for it by the FCC.
And let's not forget my personal favorite, Jeff Gannon. Or should I say James D. Guckert. Who was issued a press pass by the White House, and sidelined as a gay prostitute. Scotty McClellan would regularly, during tense moments (the only tense moments in a Bush press grilling were when he stumbled over his failure to grasp the English language). To quote Rich, "A close reading of the transcripts of televised White House press briefings over the preceding two years revealed that at uncannily crucial moments, "Jeff" was called on by McClellan to field softballs and stanch stuff questioning on such topics as Abu Ghraib and Rove's possible involvement in the outing of the CIA officer Valerie Plame Wilson." (pg. 172).
Ah the memories, it makes just about everything that has occurred in the newsosphere over the last year pale in comparison.
To do that, I'll turn to my friend Frank Rich, in The Greatest Story Ever Sold. So we all knew the media was/is completely complicit in managing Bush propaganda, but I don't remember hearing all of these stories in those awful years. The gist is that about 1.6 billion dollars was spent, by the administration, that means "government spendin'" to you wingnuts, on creating fake news to be devoured by major news networks. In otherwords, actual government agencies, creating fake news reports to extol Bush programs. Again, to the wingnuts, or perhaps, nutbaggers, that is "facism."
Rich highlights a couple of them, pg 166-172.
The Department of Health and Human Services, devoted $124 million to sell the public on how great Bush's Medicare reforms were. That's right, these reforms. These "freelance journalists" were actually shills. This is old news, but remember Bush Remembrance Day is a time for old news.
Another oldie but goodie is when Armstrong Williams was $240,000 to shill for "No Child Left Behind." He was issued citations for it by the FCC.
And let's not forget my personal favorite, Jeff Gannon. Or should I say James D. Guckert. Who was issued a press pass by the White House, and sidelined as a gay prostitute. Scotty McClellan would regularly, during tense moments (the only tense moments in a Bush press grilling were when he stumbled over his failure to grasp the English language). To quote Rich, "A close reading of the transcripts of televised White House press briefings over the preceding two years revealed that at uncannily crucial moments, "Jeff" was called on by McClellan to field softballs and stanch stuff questioning on such topics as Abu Ghraib and Rove's possible involvement in the outing of the CIA officer Valerie Plame Wilson." (pg. 172).
Ah the memories, it makes just about everything that has occurred in the newsosphere over the last year pale in comparison.
Monday, November 2, 2009
NYTimes, Alan Grayson - Problem Child
The Times did an unfortunate hit piece on Rep. Alan Grayson. Salon did one last week, after the Rep called a female lobbiest a K-Street whore. The Times piece ended with a nice comment by Barney Frank, but the New York Times wrote the book on good journalism (I know, I know) and so they also know that very people make it to the end of an article anyway.
In the very fourth paragraph, they call Grayson a "wingnut." "Mr. Grayson could be the latest incarnation of what in the American political idiom is known as a wing nut."
I know each side thinks they're right, I know that's the very definition of partisanship. But really? Rush Limbaugh is a wingnut, not because he is a loud voice on the right, but because he is actually really scary. This is a man who despite his October 12th mea culpa, is roundly regarded as openly racist. Now, I mean, the far right is a believer of the aristocratic elite, but is racism, really a defendable political ideology? Shouldn't racism be condemned as a matter of course?
The Times cites Grayson "Then, appearing on MSNBC, he said of former Vice President Dick Cheney: “I have trouble listening to what he says sometimes because of the blood that drips from his teeth while he’s talking.”
Again, this is loud rhetoric, but Dick Cheney actually believes in the value of torture. Ask him. There is no hiding, no obfuscation, no exageration: Cheney believes in torture. That may not make him a vampire, though his involvement in Haliburton and government contracting might make him one, but why should Grayson be condemned for a comment that aptly sums up what any rational person ought to know. Dick Cheney is a dangerous man, and for all intents and purposes has some really filthy, disgusting ideas.
The Times also cites Grayson: "“If you get sick, America, the Republicans’ health care plan is this: Die quickly.” This was the remark that Barney Frank, bless his heart, thought was spot on. And it's the type of rhetoric that America needs to hear more of. It's the type of rhetoric that would shame the Republicans who oppose healthcare reform to do one of two things: 1) Explain why they don't believe that (forcing them to spout factually incorrect data-contrived to make their point, thereby digging themselves deeper or 2) Force the more moderate Republicans to get on board.
Anyway, in true Times fashion, I'll save my apology for the last paragraph. The article isn't that bad. It does say some nice things about Grayson, and being a Problem Child isn't always a bad thing. Buuuuut....no. Fortunately, the American Left does have an outlet now--as opposed to 9 years ago, when the internet was really just a toddler.
I'll close with a Grayson quote I got from Think Progress:
“Rush Limbaugh is a has-been hypocrite loser, who craves attention. His
right-wing lunacy sounds like Mikhail Gorbachev, extolling the virtues of
communism. Limbaugh actually was more lucid when he was a drug addict. If
America ever did 1% of what he wanted us to do, then we’d all need pain
killers.”
Thursday, October 29, 2009
Cute quote--Intermediate Accounting--Spiceland 5th Ed.
From my Accounting Textbook "The financial community continually devises increasingly exotic ways to flavor financial instruments in the attempt to satisfy the diverse and evolving tastes of both debtors and creditors." Chapter 15, Bonds
Wow.
Yes, clearly the evolving tastes of debtors and creditors are difficult to satisfy. Thank God for those busy investment bankers and their crazy hijinx--else us debtors would never be sated.
Wow.
Yes, clearly the evolving tastes of debtors and creditors are difficult to satisfy. Thank God for those busy investment bankers and their crazy hijinx--else us debtors would never be sated.
Wednesday, October 28, 2009
Thomas Friedman's - Op-Ed Today
Two blogs in one day! I know crazy! I must have nothing to do!
Hardly.
So Tom Friedman is an interesting columnist at the Times. He's liberally minded, but has an independent streak, and for several years during the Bush era, was pretty uncritical at a time when that sort of thing could have really made a difference.
But he has a piece today which pretty much sums up my opinion on Afghanistan. And Iraq. This will piss off the gf--she's a you break it you, you buy it kind of gal. The buzz on Afghanistan this month from a ton of people ostensibly in the "know" is that the real reason Afghanistan isn't getting any better is that the American presence isn't large enough and that the only a solid, longterm commitment from the US can achieve any lasting stability. NPR and Charlie Rose have been beating that drum to death.
First point: America is a democracy, far far away from Afghanistan. Even if we sent them half a million troops tomorrow--there could never be a firm committment. It would come up every two years at the very least. Foreign policing actions are black holes with a very low rate of success, and are almost unilaterally rife with corruption. So if the venture cannot succeed without a firm committment, and such a commitment is genuinely, logically, impossible--then it stands to reason that we should leave.
Second point: To those that say leaving Afghanistan and Iraq in such a terrible way would inflict a terrible human cost--you're right. But is it so much better now? Sure there may not be any massacres, but the bombs keep blowing up, and the taliban doesn't quit--and I'm not sure that a firm commitment would change that, so what's to gain but more death, and waste.
I spend a lot of time on these pages talking about caring for other people, and so I want you to understand that I do not think I am being hypocritical. But religous fundamentalism is beyond my ken. The handmaidens of fundamentalism, poverty, ignorance and cynicism, are too strong in these places.
The United States needs to regroup at the very least. This half ass continued engagement will be the end of us.
Hardly.
So Tom Friedman is an interesting columnist at the Times. He's liberally minded, but has an independent streak, and for several years during the Bush era, was pretty uncritical at a time when that sort of thing could have really made a difference.
But he has a piece today which pretty much sums up my opinion on Afghanistan. And Iraq. This will piss off the gf--she's a you break it you, you buy it kind of gal. The buzz on Afghanistan this month from a ton of people ostensibly in the "know" is that the real reason Afghanistan isn't getting any better is that the American presence isn't large enough and that the only a solid, longterm commitment from the US can achieve any lasting stability. NPR and Charlie Rose have been beating that drum to death.
First point: America is a democracy, far far away from Afghanistan. Even if we sent them half a million troops tomorrow--there could never be a firm committment. It would come up every two years at the very least. Foreign policing actions are black holes with a very low rate of success, and are almost unilaterally rife with corruption. So if the venture cannot succeed without a firm committment, and such a commitment is genuinely, logically, impossible--then it stands to reason that we should leave.
Second point: To those that say leaving Afghanistan and Iraq in such a terrible way would inflict a terrible human cost--you're right. But is it so much better now? Sure there may not be any massacres, but the bombs keep blowing up, and the taliban doesn't quit--and I'm not sure that a firm commitment would change that, so what's to gain but more death, and waste.
I spend a lot of time on these pages talking about caring for other people, and so I want you to understand that I do not think I am being hypocritical. But religous fundamentalism is beyond my ken. The handmaidens of fundamentalism, poverty, ignorance and cynicism, are too strong in these places.
The United States needs to regroup at the very least. This half ass continued engagement will be the end of us.
Oy! Idiots!! --New Home Sales in Surprise Drop
I'm going to try and make this brief. CNN reports that there's a surprise drop in new home sales.
I don't see why this is so surprising. Some good data in the article, but it's overall misleading. I'm not blaming the reporter this time--not really.
So new home sales dropped 3.6%. They've been rising for the past five months. But here's the kicker. Nothing has changed. The article even acknowledges that the drop off is likely due to the expiry of the New Home Buyer Tax Credit. A tax credit is a nifty way to stimulate the economy, without making overt signals the free-market flag wavers.
But think of the big picture. Employment continues to worsen--the dawn may be soon, but it's still pretty damn dark. The last estimate I read, in yesterday's Times Op-Ed, suggests the rate will exceed 10% by next year. Where do they think all of that home-buying power is coming from?
Allow me to apply a little amature pyschology, without the fancy words. Late in 2008 the market craters, the banks are closing, and you've started keeping a fat wad of cash under your pillow. January, new president, new times ahead, you start coming out of your fetal position, and start looking around. You know what people say about investing, buy low sell high. You were smart, you were saving your money, you probably would have bought a house in 2007 if you'd had the money saved. Now it's 2009, you have the money, prices are down, and Obama springs a fancy tax credit on you. Great. You buy.
But demand isn't just a current measure-it's a stream. And most of the demand of the last 5 months were from people who were ready to buy in 2008 and just put it off until things settled. So where is the new demand going to come from? Middle class wages continue to stagnate, and more jobs are still being lost than created. What's the big difference? Credit has totally evaporated, and the fake credit of a housing credit (which was a very good idea at the time) is really a go along to get along measure.
Obama had a really good opportunity to change things. But I think his team really wants things to just go back to the way they were--minus the Bush nastiness, of course. Look who his financial team is--all heads of the old order.
But things weren't cool. The kids were not all right. I don't know what the answer is, but I think I have a pretty good idea. The infrastructure of this country is rotten. Bridges over a hundred years old, crumbling highways, terrible rail and freight systems. Subways in metropolitan areas, like New York, falling apart, and totally inadequate to deal with demand.
People talk about Zeitgeist too much, but I have to say it. The Zeitgeist of this country has been in the shitter for 9 years now. The powers that be, the politicians, the media, the CEOs, they don't give us enough credit. We know that the rich are taking their money and leaving the party, we've been watching it for close to a decade. We don't blame them, but then they're puzzled when they don't see economic growth? I've yet to work through a period of economic growth. The Bush Boom was a boom only for the top 1%. That hasn't changed. And it's depressing as hell.
I don't see why this is so surprising. Some good data in the article, but it's overall misleading. I'm not blaming the reporter this time--not really.
So new home sales dropped 3.6%. They've been rising for the past five months. But here's the kicker. Nothing has changed. The article even acknowledges that the drop off is likely due to the expiry of the New Home Buyer Tax Credit. A tax credit is a nifty way to stimulate the economy, without making overt signals the free-market flag wavers.
But think of the big picture. Employment continues to worsen--the dawn may be soon, but it's still pretty damn dark. The last estimate I read, in yesterday's Times Op-Ed, suggests the rate will exceed 10% by next year. Where do they think all of that home-buying power is coming from?
Allow me to apply a little amature pyschology, without the fancy words. Late in 2008 the market craters, the banks are closing, and you've started keeping a fat wad of cash under your pillow. January, new president, new times ahead, you start coming out of your fetal position, and start looking around. You know what people say about investing, buy low sell high. You were smart, you were saving your money, you probably would have bought a house in 2007 if you'd had the money saved. Now it's 2009, you have the money, prices are down, and Obama springs a fancy tax credit on you. Great. You buy.
But demand isn't just a current measure-it's a stream. And most of the demand of the last 5 months were from people who were ready to buy in 2008 and just put it off until things settled. So where is the new demand going to come from? Middle class wages continue to stagnate, and more jobs are still being lost than created. What's the big difference? Credit has totally evaporated, and the fake credit of a housing credit (which was a very good idea at the time) is really a go along to get along measure.
Obama had a really good opportunity to change things. But I think his team really wants things to just go back to the way they were--minus the Bush nastiness, of course. Look who his financial team is--all heads of the old order.
But things weren't cool. The kids were not all right. I don't know what the answer is, but I think I have a pretty good idea. The infrastructure of this country is rotten. Bridges over a hundred years old, crumbling highways, terrible rail and freight systems. Subways in metropolitan areas, like New York, falling apart, and totally inadequate to deal with demand.
People talk about Zeitgeist too much, but I have to say it. The Zeitgeist of this country has been in the shitter for 9 years now. The powers that be, the politicians, the media, the CEOs, they don't give us enough credit. We know that the rich are taking their money and leaving the party, we've been watching it for close to a decade. We don't blame them, but then they're puzzled when they don't see economic growth? I've yet to work through a period of economic growth. The Bush Boom was a boom only for the top 1%. That hasn't changed. And it's depressing as hell.
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