Euro worth over 1.50 USD

[Oleander Ardens]

So who stills wonders that more and more countries try to get the stable Euro instead of the green endresult of a monetary policy similar to a banana republic? As an asset manager who actually keeps an eye on the health of the economy I rather happy that the ECB is so steadfast, while the FED seems to be a little shy maid doing whatever the financial market wants.

Cheers

[Papewaio]

What is the buying power of the Euro?

Does 1 Euro buy 1.5 times as much US Dollars?

I think too many people wrap up to much emotions/prestige/baggage with currency rates to truly use it as a non-subjective index of the health of a countries economy. Just like any other commodity or share the value can be quite well economically grounded to just another emotional rollarcoaster.

[KukriKhan]

Good question. What will 1 Euro buy?

Its equivalent, 1.50 dollar, will buy two 12-ounce cans of discount beer in a southern california supermarket.

-edit-
got the comparison backwards the first time. :)

[Kagemusha]

Good question. What will 1.50 Euro buy?

Its equivalent, 1 dollar, will buy two 12-ounce cans of discount beer in a southern california supermarket.

Ofcourse it depends on a country´s set of prizes. In US one Euro buys anything worth 1.5 dollars does.~:wave:

[KukriKhan]

Ofcourse it depends on a country´s set of prizes. In US one Euro buys anything worth 1.5 dollars does.~:wave:

Outside of New York City, one would be hard-pressed to find anywhere that would accept a Euro as cash.

But, today, in Finland, how much beer can you get for 1 Euro?

[drone]

KukriKhan wisely chooses beer as a reference for spending power comparisons. :bow:

Another comparison: In my area, $3.10 will buy you 1 US Gallon (3.785 Liters) of gasoline, or $0.82 a Liter.

IANAE, but I'm leery of the Fed lowering rates any more than they already have. They may as well be printing money. As a country, we need to suck it up and deal with the recession coming, not making it worse by piling inflation on top of it.

[Kagemusha]

Outside of New York City, one would be hard-pressed to find anywhere that would accept a Euro as cash.

But, today, in Finland, how much beer can you get for 1 Euro?

Well ofcourse you should first change it to local currency.:yes: Our beer is quite expensive over here 0,33 dl bottle costs about 80 cents. But for example in Estonia same size beer costs about 40 cents or less. The prizes are just not comparable in Euro zone. In Southern and Eastern Europe the prizes are lower then in US, but im sure in central and Northern Europe the prizes are comparable or higher then the US prizes.

[Husar]

Outside of New York City, one would be hard-pressed to find anywhere that would accept a Euro as cash.
That's why you change the currency first. ~;) You pay a fee usually but you should still get quite a bit more than 1$ for your Euro.


But, today, in Finland, how much beer can you get for 1 Euro?
Don't know about Finland or here (may check tomorrow) but I got four 0.33l bottles for free today. ~D
I think you won't get a lot though, prices here are pretty inflated so your point about purchase power remains. I am, however, looking forward to coming to the US. ~:)

[KukriKhan]

Yeah. We also have to consider the sales environment: beer and fuel both get several levels of sin-taxation added, and many euro countries have state-controlled liquor outlets, all factors that warp the prices, and skew comparisons.

Let's try bread:

A French Loaf Made With Hearty Wheat Flour and Crunchy Grain.
1 Count
$1.49/each
Our Price: $1.49


^^from my local supermarket, almost $1.50. Can you get a loaf of bread for 1 Euro?

[Uesugi Kenshin]

That's why you change the currency first. ~;) You pay a fee usually but you should still get quite a bit more than 1$ for your Euro.


Don't know about Finland or here (may check tomorrow) but I got four 0.33l bottles for free today. ~D
I think you won't get a lot though, prices here are pretty inflated so your point about purchase power remains. I am, however, looking forward to coming to the US. ~:)

Actually the best way to go, especially if you're "in country" long-term, is to just bring your ATM card with you. Don't bother exchanging anything more than 100 euros or so, it's waaaay too expensive. With a US mastercard debit card you can take money out at German banks (and probably elsewhere as well) and you only pay 1 euro per transaction and they convert your cash at whatever the rate happens to be.

[Husar]

Actually the best way to go, especially if you're "in country" long-term, is to just bring your ATM card with you. Don't bother exchanging anything more than 100 euros or so, it's waaaay too expensive. With a US mastercard debit card you can take money out at German banks (and probably elsewhere as well) and you only pay 1 euro per transaction and they convert your cash at whatever the rate happens to be.
I have a master card credit card and I hear taking money costs me 5EUR or 1% of the amount I take IIRC so I'm not sure that's the best idea, unless my normal EC card works or I take a lot of money at once. My bank advised me to take some traveler cheques with me, they can give me those here before I go anywhere, not sure about any additional costs they may cause. :shrug:

[Mikeus Caesar]

Pahahaha, you silly humans, you should change to the almighty Pound Sterling, worth 50 of your Earth dollars.

[Uesugi Kenshin]

I have a master card credit card and I hear taking money costs me 5EUR or 1% of the amount I take IIRC so I'm not sure that's the best idea, unless my normal EC card works or I take a lot of money at once. My bank advised me to take some traveler cheques with me, they can give me those here before I go anywhere, not sure about any additional costs they may cause. :shrug:

Well it really depends on how long you're going over for. I went to Germany for a year, so taking money out was definitely better, and the charge was only a buck, though it may not work out the same way for you on this side of the pond.

Your EC may work, but some card that a bunch of German exchange students brought here only worked in specific banks, so I'm not sure if that's a great alternative.

If you're not going for long traveler's checks are probably a really good idea.

[Ice]

IANAE, but I'm leery of the Fed lowering rates any more than they already have. They may as well be printing money. As a country, we need to suck it up and deal with the recession coming, not making it worse by piling inflation on top of it.

The hell with that drone. Ben and the boys at the Federal Reserve say more Rate Cuts!

http://online.wsj.com/article_print/SB120412412525296845.html

I wonder if we can cut rates into the negative. I mean cutting rates to 1% last time did wonders for the economy... oh wait, it ended up contributing to the massive housing downturn and credit crunch we are currently experiencing. Silly me.


DOW JONES REPRINTS
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Bernanke Hints at More Rate Cuts
Amid Multiple Economic Risks
By TOM BARKLEY and BRIAN BLACKSTONE
February 27, 2008 4:26 p.m.

WASHINGTON -- Federal Reserve Chairman Ben Bernanke Wednesday delivered an economic forecast fraught with risks from housing, labor and credit markets, suggesting policymakers remain on track to lower interest rates further next month.

Meanwhile, Mr. Bernanke indicated that inflation risks are more two-sided, though skewed slightly to the high side -- a nod to the stagflationary mix of weak growth and rising price data of late.
MORE ON THE FED
ers6

But Mr. Bernanke made it clear where the Fed's main worries lie. "It is important to recognize that downside risks to growth remain," Mr. Bernanke told members of the House Financial Services Committee in prepared semiannual testimony on the state of the economy and monetary policy.

Fed officials "will need to judge whether the policy actions taken thus far are having their intended effects," Mr. Bernanke said, adding the central bank "will act in a timely manner as needed" to keep the economy on track.

Mr. Bernanke's remarks, which echo those he made earlier this month as well as comments Tuesday by Fed Vice Chairman Donald Kohn, suggest officials will most likely lower the federal-funds target rate at their March 18 meeting, as most economists expect. The Federal Open Market Committee has already cut the fed-funds rate at which banks lend to each other by 2.25 percentage points since September to 3%, including 1.25 percentage points over an eight-day period last month.

In Wednesday's report, the Fed noted that investors expect 100 basis points in additional rate cuts this year.

In his testimony, Mr. Bernanke offered no indication that the beleaguered housing sector is approaching a bottom. Housing should weigh on the economy "in coming quarters," Mr. Bernanke said. And one of the building sector's only bright spots last year -- nonresidential construction -- "is likely to decelerate sharply," he added.

That weakness appears to be spilling over into other sectors of the economy like consumer and business spending that had withstood the housing carnage for much of 2007.
RBS Global senior economist Michelle Girard doesn't expect a recession this year, but still has worries about the tight credit market and further falls in home prices. MarketWatch's Steve Gelsi reports.

Consumer spending "appears to have slowed significantly," Mr. Bernanke said, while higher energy prices and a weakening job market could weigh further on consumption. "The business sector has also displayed signs of being affected by the difficulties in the housing and credit markets," Mr. Bernanke said.

Financial markets, meanwhile, remain under "considerable stress," he added, and officials will monitor financial developments "closely."

In its quarterly economic forecasts released last week, the Fed downgraded its 2008 gross domestic product forecast by 0.5 percentage point to a range of 1.3% to 2%. That's even further below what officials expected back in July.

"The incoming information since our January meeting continues to suggest sluggish economic activity in the near term," Mr. Bernanke said.

Indeed, in a recent National Association for Business Economics survey, nearly half of surveyed economists think the U.S. is either already in a recession or will be this year. Mr. Bernanke's testimony made no mention of recession, though.

And he noted some bright spots, including strong business balance sheets, balanced inventories and rising exports, which Mr. Bernanke said have been helped by the lower dollar. The recently enacted fiscal stimulus package should boost growth in the second half of this year and into 2009, he added.

Mr. Bernanke was mixed on inflation. It has increased in recent months due largely to higher energy prices, Mr. Bernanke said. But looking forward, "inflation could be lower than we anticipate if slower-than-expected global growth moderates the pressure on the prices of energy and other commodities or if rates of domestic resource utilization fall more than we currently expect," Bernanke said.

Still, recent energy and commodity price gains "suggest slightly greater upside risks to the projections of both overall and core inflation than we saw last month," Mr. Bernanke said. Core inflation excludes food and energy prices. The weaker dollar is another inflation risk, he said.

But core inflation should moderate after this year, Mr. Bernanke added, since officials "expected inflation expectations to remain reasonably well-anchored and pressures on resource utilization to be muted."

Mr. Bernanke also outlined steps the Fed would like to take on deceptive mortgage practices, including a prohibition against making high-priced mortgages without "due regard" to a homeowner's ability to pay and requiring lenders to establish escrow accounts for property taxes and homeowners insurance. The proposal was released for public comment in December.

"We expect substantial public comment on our proposal, and we will carefully consider all information and viewpoints while moving expeditiously to adopt final rules," he said.

Fed Forecasts

The U.S. Federal Reserve said Wednesday it foresees a negative combination of below-trend growth and inflation rates topping 2% this year, though conditions are expected to start improving in 2009.

In its semi-annual monetary policy report to Congress, the Fed reiterated the downgraded forecasts it issued last week, for the economy to expand at a 1.3% to 2.0% pace this year, down a half-percentage point from the earlier forecast range.

The housing slump and tightening credit conditions for consumers and businesses are expected to continue to weigh on growth through this year and into 2009, with the recent rate cuts expected to return the economy to above-trend growth by 2010, it said. Gross domestic product is forecast to rise between 2.1% and 2.7% in 2009, and then increase to a 2.5% to 3.0% pace the following year.

Starting in the fourth quarter, "economic activity decelerated significantly, and the economy seems to have entered 2008 with little forward momentum," the Fed said in the report.

Tighter credit conditions for consumers and businesses have exacerbated the housing correction and weakened capital spending, the Fed said. Consumer spending has also started to be impacted by a range of factors, including "steep increases" in energy prices and falling prices in stocks and homes, it said.

The economy grew at a meager 0.6% pace in the fourth quarter, resulting in a 2.2% growth rate for all of 2007 that was the weakest in five years.

Most Fed officials see downside risk to their growth estimates, with an upward bias to their outlook for unemployment. The unemployment rate is projected to rise back above 5% this year, ending the year between 5.2% and 5.3%.

"The potential for adverse interactions, in which weaker economic activity could lead to a worsening of financial conditions and a reduced availability of credit, which in turn could further damp economic growth, could further damp economic growth, was viewed as an especially worrisome possibility," it said.

The Fed has cut its benchmark fed funds rate by 225 basis points since September, to 3%, amid signs that the troubles in the housing and financial markets are impacting the broader economy.

Investors anticipate an additional 100 basis points of easing by year-end, according to the report.

"Uncertainty about the path of policy had been very low during the first half of (2007), but it increased appreciably over the summer and generally has remained around its long-run historical average since then," the Fed said, citing the decline in Treasury yields.

The Fed has also sought to contain financial market volatility by injecting liquidity into the system through a new Term Auction Facility. Lower bid-to-cover ratios and spreads in the most recent auctions in January and February suggest the effort may be helping financial markets, it said.

Meanwhile, inflation is expected to remain above the assumed comfort zone for policymakers of 1.5% to 2%.

The Fed repeated the 2008 forecast for overall PCE inflation of 2.1% to 2.4% that it gave last week, which is above the previous estimate of 1.8% to 2.1%. The core PCE projection for this year has also been lifted to a range of 2.0% to 2.2%, from 1.7% to 1.9%.

Inflation is expected to start moderating later this year as energy prices come off their highs and the economic slowdown impacts other costs, the Fed said. Overall inflation is forecast to remain between 1.7% and 2.0% in 2009 and 2010, with nearly the same ranges for core prices.

The Fed acknowledged, however, that elevated price pressures could persist longer than expected, or that its recent easing could be "misinterpreted as reflecting less resolve" in containing inflation.

The Fed's latest report on the economic outlook accompanied Wednesday's prepared semi-annual testimony on the economy by Fed Chairman Ben Bernanke to the House Financial Services Committee.

[Xiahou]

I wonder if we can cut rates into the negative. I mean cutting rates to 1% last time did wonders for the economy... oh wait, it ended up contributing to the massive housing downturn and credit crunch we are currently experiencing. Silly me.Meh. I attribute it more to dumb buyers and even dumber lenders.

How much of our current inflation can be attributed to energy prices and our corn ethanol boondoggle?

[Ice]

Meh. I attribute it more to dumb buyers and even dumber lenders.

Which was sparked by the massively low interest rates at the time.

I do blame people for their stupidity, but this idiotic central bank isn't helping by giving a crack addict more crack.


How much of our current inflation can be attributed to energy prices and our corn ethanol boondoggle?


Not much considering core inflation excludes energy and food prices.

[drone]

Meh. I attribute it more to dumb buyers and even dumber lenders.

How much of our current inflation can be attributed to energy prices and our corn ethanol boondoggle?
I wouldn't say dumber lenders, but greedy lenders backed by dumber bond insurers and purchasers. Short-term, it was a great money maker, but like all bubbles, they have to burst.

Huge consumer debt, depressed housing market, rising energy and food prices, decreasing dollar, war expenditures, financially stretched local and state governments, and baby boomers retiring and getting old (i.e. sick). It's going to be ugly for at least a few years. Feel free to tack on more depressing indicators...

[Xiahou]

Not much considering core inflation excludes energy and food prices.I'm sure you realize that long-term high energy and food prices will inevitably affect the prices of other goods.

[Ice]

I'm sure you realize that long-term high energy and food prices will inevitably affect the prices of other goods.

Long term it seems logical that this would be true, but I wouldn't pin it as the sole reason for the recent rise in inflation.

[Boyar Son]

Great. Now I can get a mcdonalds dollar menu burger and half of another. Congrats Europe:yes:

[Oleander Ardens]

Of course a high euro is a mixed bag, but right now all major currencies are doing very well against the dollar. I really wonder if the longstanding faith in the USD is fading. If it does it will have serious repercussions on the US-economy and make it harder and costlier to maintain such a high deficit.

As far as I know growth in the last quarter of 2007 was just 0.6% down from over 4% in the third quarter. Given that the population of the USA is rising fast - 1% per year - its economy has to expand also faster than in the EU to keep the people employed. So one can already consider 0.6% as a de facto recession.

Now we all now that things are getting worse and worse so I can not imagine that the USA will avoid a harsh recession. Thankfully Mr. Bush was able to finance a good deal of growth with tax cuts and huge military spending so that now the deficit is at record highs. Inflation is greatly on the rise as global growth continues as well as because of the financial run into commodities. The trade deficit is still huge and the exports are only slowly rising. A great deal of Americans are now feeling what it means to live above one's means. The senate is unable to agree on debt relief and Mr. Bush is still saying all is fine and that the economy is just slowing down a bit...

Sounds right :yes:

[Caerfanan]

But, today, in Finland, how much beer can you get for 1 Euro?
I truly think that taking ONE product to stand a point is a mistake. some things are expensive ine a contry, other things not, when viewed from abroad. For instance, in Sweden, Alcohol is horribly expensive, if you look from France. From other countries, it might look average or fair.

But I remember in 2002 people from america laughing at the Euro currency, because the rate was 1.3 euros for 1 dollar. America did look expensive those days (I went there a few times during this period). Now you have people crossing the Atlantic to do some shopping in NYC...

[Pannonian]

Good question. What will 1 Euro buy?

Its equivalent, 1.50 dollar, will buy two 12-ounce cans of discount beer in a southern california supermarket.

-edit-
got the comparison backwards the first time. :)
In the US, 1 dollar can buy a bottle of Budweiser, while in Britain, 2 pounds can buy a pint of Broadside. Now which currency is worth more?

[Mikeus Caesar]

In the US, 1 dollar can buy a bottle of Budweiser, while in Britain, 2 pounds can buy a pint of Broadside. Now which currency is worth more?

Yes, but Budweiser is about as good as tapwater, and thus is worth 1 dollar.

[KukriKhan]

Yes, but Budweiser is about as good as tapwater, and thus is worth 1 dollar.

LoL. In NYC some shops have gone "Euro only" (http://www.washingtonpost.com/wp-dyn/content/article/2008/02/24/AR2008022401642.html?referrer=digg), catering to tourists, so they won't have the hassle of currency exchange.

[Xiahou]

Yes, but Budweiser is about as good as tapwater, and thus is worth 1 dollar.
Don't insult tapwater like that. :no:

[TosaInu]

1,50 Euros will buy 1 liter (!) of petrol. How many gallons does $2.25 buy?

[drone]

1,50 Euros will buy 1 liter (!) of petrol. How many gallons does $2.25 buy?

Another comparison: In my area, $3.10 will buy you 1 US Gallon (3.785 Liters) of gasoline, or $0.82 a Liter.
Gasoline, like alcohol, is not really a fair comparison, due to the varied taxation by our respective governments. I'm guessing a much better benchmark would be staple foods, since they are generally the least taxed items.

[TosaInu]

Hello drone,

Sorry, missed it. Indeed, petrol is heavily taxed over here, and again.

Comparing food would be good, leave out things like cheese though, that became expensive for some reason.

[Ironside]

Yeah. We also have to consider the sales environment: beer and fuel both get several levels of sin-taxation added, and many euro countries have state-controlled liquor outlets, all factors that warp the prices, and skew comparisons.

Let's try bread:


^^from my local supermarket, almost $1.50. Can you get a loaf of bread for 1 Euro?

Depends on the bread. I can buy a loaf of bread from about 0.66 to 2.20 euro (well I got them in sek so it's around those values).


Comparing food would be good, leave out things like cheese though, that became expensive for some reason.

All dairy products have gone up in price. Not sure how the US market is affected.

[Tribesman]

Comparing food would be good, leave out things like cheese though, that became expensive for some reason.

Thats down to a run of very bad years for fodder combined with very wet winters , plus the recent spread of bluetongue .
It means that while the finished products are shooting up in price , cattle are dropping in price .

[Shahed]

So who stills wonders that more and more countries try to get the stable Euro instead of the green endresult of a monetary policy similar to a banana republic? As an asset manager who actually keeps an eye on the health of the economy I rather happy that the ECB is so steadfast, while the FED seems to be a little shy maid doing whatever the financial market does.

Cheers

Well not me, I always bet on the Euro, and I'm coastin just fine !


:idea2:

Every good thing must come to an end though, I'm not sure yet where that end is ... got ideas Ole ? Let me know.

[OverKnight]

What about computer games? Looking at Gamersgate, I see games marketed at 29.99$ and 29.99 euros.

Small comfort for me since I just got back from vacation in London (4$ cup of coffee, and no half and half just whole milk :laugh4: ).

[Husar]

What about computer games? Looking at Gamersgate, I see games marketed at 29.99$ and 29.99 euros.
That my friend, happens everywhere, hardware, software, all the same, I could go to newegg.com and put a € sign instead of the $ signs and they would mostly fit, last time I checked. They also sell Call of Duty 4 on Steam and Americans are shown 50$ as a price while Europeans are shown 70...
I'm pretty sure someone somewhere can afford a golden nose now because when the Dollar and Euro were equal the prices were probably the same. And I wouldn't be surprised that when the Dollar comes up again, companies here will say: "Oh we're sorry but since the dollar is stronger now, we'll have to raise the prices to keep our margins because we're oh-so poor *raises his own monthly payment to a million*" :juggle2:

I myself decided not to buy new games over 40EUR, someocompanies try to push for 50EUR it seems (EA :sweatdrop: ), most games average 45 I'd say but I just look for where I can get them for 40 or less or I just wait.

It's harder to do that with milk/food though, but then again if I wait/boycott long enough I'll never need food again. :skull:

It's pretty good here concerning internet though, I pay 28EUR per month now for 6Mbit and an unlimited flatrate, somewhere further north the situation is even better but then that's not really an import good and we have a lot of competition here as well.

[Oleander Ardens]

Well Sinan I don't usually give tips because I think that a) investing is hard b) everybody knows something but nobody knows the wholething c) every person has specific needs.

That said I'm a firm believer of investing longterm in a basket of shares or exchange-traded funds with the latter being the best for a private investor with not so much time. Give them a look in the Wiki. They should beat managed funds reliably on the long term. But spread your money so that you can have an accessible reserve which you can desinvest without capital loss.

I'm personally staying out of the markets because I think the stock market will go down when more and more companies have to declare that their earnings are slowing down because the consumers in the USA have to cut back. The losses in the stock market will ripple to Europe and Asia before the effects of the US recession will be felt in the overall economies.

Commodities are IMHO the next bubble to bust, however it is very difficult to predict when. There is now a huge amount of money in search of a nice place where to rest. So this is streaming into the commodities as a hedge against the turmoil in the markets and as a hedge against the weak dollar.
All this money will boost the commodities but at some stage panic will spread because the recession in the USA will get felt in decreased consume and the slowing of the other economies.

So the trouble is as always to figure out when what happens and how it interacts. So in this times it is good to stay out of the market and wait before buying once again with a sound longterm strategy with several baskets storing your eggs. And one of this baskets might be for me US financial stocks in USD because I'm convinced both the dollar and the financial stocks will rise in the long term - I'm just waiting to see them fall further - 2008 should be a bad year for the housing market and the US economy. Perhaps a strong new president brings the hope back and the stocks and the dollar up.

Personally I'm right now investing in my house - which stands in Europe :)

[Oleander Ardens]

The Dollars is diving and diving: 1.53 :dizzy2:

I should have put more money in commodities - an error of omission, but at least one with good reasons :yes: Wonder when this bubble bursts...

[Husar]

Wonder when this bubble bursts...
Not before 2.00 I hope ~D

[Oleander Ardens]

Actually I hope it dives and dives so that the FED has to fkeep a very close eye on the ever increasing inflation. This will weaken its ability to soften the fall of the US stocks and I will hopefully be able to buy very cheap stocks traded in a very cheap currency. Then the stocks and the USD can recover.

Long live the discounter called USA
:clown:

[Oleander Ardens]

Over 1.54 - just 46 working days until 2.00 :egypt:

[Ice]

Over 1.54 - just 46 working days until 2.00 :egypt:

... and I thought 1.30 was bad when I went to Europe. Sheesh, I'm staying domestic for the foreseeable future.

[Oleander Ardens]

I really never thought that the € could reach 1.40.

I had now to read another Bush speak in bushspeak or newspeak about the US economy. It is sad when a government openly manipulates his own reports - this doesn't only apply to the Bush administration but they turned it into an art. There are plenty of indicators that the economy is in real terms already in a recession since October-November 2007. Mr. Bush says in March, no the US is only slowing down and the stimulus package will avoid the recession. :clown:

Credit is now tight as hell in US. Almost all companies in the overblown financial market are hoarding money because their is real fear that one might be the next hit by bad credits. They might talk differently but they put not their money there. So do almost all other companies now because credit becomes very expensive. Trillions of asset wealth will become hot air because the housing prices will continue their dive for months to come. Inflation, already higher than pointed out by the goverment will increase further because the USD seems to have gained recently only on the Zimbawe dollar and everybody with money is already in commodities or is going there. Trust, the base of every trade is hit badly now. Seems that Gold, Wheat and Oil are now the safe haven of us speculators which will drive the inflation.

Bernake now will be pressured by Mr.Bush, Wall Street and company to print more and more money and I confess that I can hardly see where the dive of the $ ends. But perhaps it may be coming soon the time to buy USD because everybody now hates it :book:

[Ice]

Bernake now will be pressured by Mr.Bush, Wall Street and company to print more and more money and I confess that I can hardly see where the dive of the $ ends. But perhaps it may be coming soon the time to buy USD because everybody now hates it :book:

Don't buy now. Wait until the fed cuts rates again, and maybe again, and then buy. They can only raise rates from there, and once the other rate cuts kick and we come out of this recession I'm predicting the value of our dollar will increase due to increased interest rates, lower inflation, and stronger economic growth.

[Oleander Ardens]

The question is timing. Actually I would only buy USD in the mid or even longterm. The market has no faith anymore in the USD and the trend is pointing downwards. Actually now we have rumours spreading since 2007 that the FED sells gold because a round very high number like $1000 for one ounce would send shockwaves through the media and increase the race of the money into gold. A surge in gold basically means that people with money don't longer trust the currencies, especially the USD no longer much and the stockmarket.

So right now I'm in gold and other commodities although in a lower percentage that I would like to be. Almost all other captial is liquid and in €. BTW in Egypt it seems that young couples have troubles to get married because the traditional gold gift (rings, necklace etc) to the bride is getting unaffordable. The odds of worldwide captialism.

Cheers
OA

[Husar]

Happy times. ~D

[Ice]

.

So right now I'm in gold and other commodities although in a lower percentage that I would like to be. Almost all other captial is liquid and in €. BTW in Egypt it seems that young couples have troubles to get married because the traditional gold gift (rings, necklace etc) to the bride is getting unaffordable. The odds of worldwide captialism.


Good call with gold. I put a few hundred in a gold trust and it has gone up 10% in about a month.

I wish I had put all my money there :P.

[Oleander Ardens]

Well there are good reasons why i did not put more of my money into gold - I live in €land. So gold has first of all to outperfom the € not the $ - a far harder task in these days. For economies in $ gold is the perfect hedge, because Mr. Bernake will print money and cut rates as the US. goverment isn't able to stop the foreclosure tsunami which hits the USA. Thus if the $ goes down, gold goes up. Now the Fed tries actively to stop the gold from piercing the 1000$ wall because this shows the world just how bad the $ and inflation are. :no:

So now there might be a time that the € will outperform or contain (for me) the rise of gold. I also hoped for a setback of the commodities put this didn't quite happen in the last three months - which shows just how strong the commodities are right now. So now I fear for a bubble in some commodities.

Anyway I have large stocks of liquid capital and I will try to buy cheap stocks in a cheap currency as far as I see light at the end of the tunnel :book:

[Oleander Ardens]

The Fed is on the verge to pump more billions into the system :dizzy2:

20.11.2008: 2$=1€ :clown:

[Vladimir]

I really never thought that the € could reach 1.40.

I had now to read another Bush speak in bushspeak or newspeak about the US economy. It is sad when a government openly manipulates his own reports - this doesn't only apply to the Bush administration but they turned it into an art. There are plenty of indicators that the economy is in real terms already in a recession since October-November 2007. Mr. Bush says in March, no the US is only slowing down and the stimulus package will avoid the recession. :clown:

etc

Saw a good show on Science channel yesterday which revisited the 90's tech bubble. Hell, it's only been 10 years since "the traditional economic model was obsolete."

Do you even know what the definition of a recession is? Show me the negative growth reports.

[Ice]

Saw a good show on Science channel yesterday which revisited the 90's tech bubble. Hell, it's only been 10 years since "the traditional economic model was obsolete."

Do you even know what the definition of a recession is? Show me the negative growth reports.

Well, the classical definition is two consecutive quarters of negative GDP growth.

However, we are experiencing an number of the symptoms of a minor recession currently without the negative GDP growth.

Besides, official numbers such as the unemployment rate do not tell the entire story. It is very hard to base whether we are in a recession off of one or two figures.

[Ice]

For Example:


Prepared at the Federal Reserve Bank of Boston and based on information collected on or before February 25, 2008. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.

Reports from the twelve Federal Reserve Districts suggest that economic growth has slowed since the beginning of the year. Two-thirds of the Districts cited softening or weakening in the pace of business activity, while the others referred to subdued, slow, or modest growth. Retail activity in most Districts was reported to be weak or softening, although tourism generally continued to expand. Services industries in many Districts, including staffing services in Boston, port activity in New York, and truck freight volume in Cleveland, appeared to be slowing, but activity in services provided some positive news in Richmond and Dallas. Manufacturing was said to be sluggish or to have slowed in about half the Districts, while several others indicated manufacturing results were mixed or trends were steady.

Residential real estate markets generally remained weak; reports on commercial real estate markets were somewhat mixed, but also suggest slowing, on balance, in many Districts. Most Districts reporting on banking cite tight or tightening credit standards and stable or weaker loan demand. Districts reporting on the agriculture and energy sectors said activity is generally strong.

Upward pressure on prices from rising materials and energy prices was noted in almost all the District reports, but Philadelphia said increases in input costs and output prices had recently become less prevalent, and San Francisco indicated pressures were limited for products other than food and energy. By contrast, wage and salary pressures were generally said to be modest, as the hiring pace slowed in various sectors and labor markets loosened somewhat in many Districts.

Sounds good, yes? :thumbsdown:

[Oleander Ardens]

Actually I studied quite a bit economy, even earning an degree in it but this doesn't matter much here. If you would kindly study the history of our recessions you would understand that they get only official after they have long begun. Besides the technical difficulties to collect the data, goverments are notorious for interpreting it in ways which makes them look best, and Mr. Bush and company have turned that into an art.

But you will see Vladimir, you will see. The wise ones with money have already bought gold, silver and other commodities to reap good profit and to hedge against the inflation. Strange that so many had the same idea. The rest gets hit by falling housing prices, a credit crunch, tight money, mistrust, higher inflation, falling stock markets, great public dept and a falling dollar. But we are of course not yet in a recession, because Bush says so, and because the data is not out yet. :smash:

[Vladimir]

But you will see Vladimir, you will see. The wise ones with money have already bought gold, silver and other commodities to reap good profit and to hedge against the inflation. Strange that so many had the same idea. The rest gets hit by falling housing prices, a credit crunch, tight money, mistrust, higher inflation, falling stock markets, great public dept and a falling dollar. But we are of course not yet in a recession, because Bush says so, and because the data is not out yet. :smash:

The best word to describe our current economic state is, "meh".

Reading your posts reminds me of those who claim the '80s was a decade of greed while the '90s was one of unprecedented prosperity. When someone favoring your political agenda is in the White House we'll no doubt return to prosperity. It's not a recession just like I'm not a pink dancing elephant, like this guy: :elephant:

Your wishing it is so doesn't mean it is so. Did we have positive or negative growth last quarter?

[Oleander Ardens]

"Beati pauperi spiritu et elephanti purpurati sunt" :clown:

Anyway I don't have to convince you. I made good money by betting on gold and on silver, although it could have been more if I had known it would be that bad. I guess you still hold your stocks in $ and accuse others of being bad to Mr. Bush and company and unpatriotic by selling them. Fair enough.

[Oleander Ardens]

Gold over 1000$ - Euro 1.56 $

Now I guess Gold will continue its sprint, especially when the money comes in from the industrial commodities when they get hit.

[Oleander Ardens]

Emercency Bailout for Bears, stocks down 47%. Seems that liquidity is right now a huge problem in the USA. !/3 of all CFO say that there companies are the credit cruch creates serious liquidity troubles for their companies.

Incredible. I guessed it would be bad - but that bad? :dizzy2:

[Ice]

Emercency Bailout for Bears, stocks down 47%. Seems that liquidity is right now a huge problem in the USA. !/3 of all CFO say that there companies are the credit cruch creates serious liquidity troubles for their companies.

Incredible. I guessed it would be bad - but that bad? :dizzy2:

Yeah dude it's REALLY BAD.

It is best to park your assets somewhere safe right now if you don't like the volatility.

[Oleander Ardens]

Well somehow I almost wished that the FED would not have given up one of it's wise core principals - to allow a company to fail. Now it looks like:" How bad it must be when the FED throws away the timehonored rules and starts to rescue the perpetuators of this crisis"

[KukriKhan]

Dunno about the rest of you guys, but I wanna know:

when Oleander Ardens thinks it's wisest to sell gold. He seems to have the inside track on that commodity.

When he sells, we've hit the bottom, so then: buy land.

[Caerfanan]

1 euro = 1.59 US dollars, now... I wouldn't have believed that 3 monthes ago...

[Fragony]

Greenspan;

http://www.ft.com/cms/s/0/d386202c-f3c3-11dc-b6bc-0000779fd2ac.html

[Oleander Ardens]

Actually now we are in situation where panic seems to reign supreme when it comes to financial stocks and the USD. As I said in the posts before we have huge amounts of money trying to get out of the stocks, particulary where they have gone up like crazy since four years like in India and China and to get out of the USD asap. So what we witness is a huge votum of mistrust for the US economy and the greenback, something which I think was underestimated by the FED and the US goverment. Somehow they thought that the huge investments of foreign cash in $, funding the trading deficit and the US consumer where a neverending loan. Now it seems that ordinary people and big funds try to diversify their investments and are using commodities as a hedge.
Risk is right now a big no-no-no-no for many so they are piling up liquidity as I did and invest partly in gold.

I personally believe gold will still go up, because people seem to get used to expensive gold and start more and more to compare the situation right now with what happend 25 years ago when gold hit with over 2000$ the peak in relative terms. I think that gold will attract also the money from industrial commodities which skyrocketed, as the recession in the US will be felt. Most very big funds are seemingly disinvesting rather slowly to not cause a nosedive as continue to get out slowly out of the $, while the private money flees at much higher rate. Also many fear now a earning bubble, which means that the big companies have overestimated greatly their earning. So it looks like alot of things are working for a even higher gold price. But who knows for sure?

So I would retain liquidity, buy some gold and start to take a close look at stocks with a strong earning so that you are ready to invest there when the tide turns. Buying gold is a excellent hedge for guys which buy with $. But most importantly play it save so that you don't get knocked out by all that volatility

An outlook into the midterm future. I can not quite imagine to see a long dollar rally anytime soon, because most seem to use every rise of it as an oppertunity to sell. Who knows if not more and more central banks and funds invest in the €urozone which could really mean that the dollar will remain a weak currency for a good while because it lost the trust of the world. And that the € might become the worlds leading currency in twenty years or so. As a matter of fact the loss of trust inside the US and into the USA is right now the biggest problem of the $.

OA

[Fragony]

FED is pumping out more then they should, this could get nasty. Trust is key, no 'our coin your problem' now.

[Husar]

I still like the current trend. :painting:

[Fragony]

I don't, they just keep printing dollars, americans really should stop acting as if they own the place.

[Ice]

I don't, they just keep printing dollars, americans really should stop acting as if they own the place.

Go on

[Fragony]

Go on

Didn't you know? It's our country you guys just live there :laugh4:

[Ice]

Gold was a horrible idea.

Why must I always FAIL at investing? :embarassed:

[Oleander Ardens]

To come back to the topic:

The USD gained a good deal against the €. It is 1.54 now.


Gold is now down to 900$. Personally I will buy another good percentage of gold, although I would not advise everybody to do so because many could now become really nervous. There are huge amounts of money in the market and many made huge gains so a sell-off could be possibly. Basically I still think that the longterm trend is good, but the shortterm trend might finally point a bit downwards, so this one is also a matter of timing.

The longterm prospect of the US economy is bad for 2008. Inflation is rising, unemployment is rising, house prices keep falling in many areas. And the FED has already used a great deal of its bullets. If it continues to cut like that it will mean that in some months the banks can lend money for 0.00%

So cheers and do not take this advice as the truth - nobody nows what the future holds

OA

[Banquo's Ghost]

Bear in mind that if you are buying gold in euros or sterling, the deal is not anywhere near as good as it seems when priced in weak dollars.

OA is right to note that there's likely to be a good deal of profit taking by short term investors around the psychologically attractive level of $1000 per ounce.

There's a lot of rumour mongering going about too, especially about the banking sector. This is not a time for the amateur, but those of you more than 10 years from retirement and holding pension funds should be laughing.

[Oleander Ardens]

Ice and I already wrote that gold is a great hedge for $ investors. But don't let asset manager fool you that just because you hold an ETF in € or Sterling you won't get affected by currency trends. They are not directly visible but they are of course there, as gold rises when the dollar falls, among other things.

As Ghost and I said, there are huge amounts of nervous money in stocks, bonds, commodities, derivatives and so on. It is packeged, levereged, hedged, exchanged, traded, repackeged so that it is impossible to understand how it is exactly connected. Note that falling stocks might drive commodities up (safe haven) or down ( because they need liquidity for a margin call etc) if things get bad for many funds. It is a complex world.

P.S: Never since 1929 has there been so much volatility!

OA

[Oleander Ardens]

Seems that this crisis will really last quite for some time. From todays NYT.


March 26, 2008
Consumer Attitudes and Home Prices Sour
By MICHAEL M. GRYNBAUM

Americans are bracing for rising unemployment and shrinking salaries, a gloomy outlook that could translate into a serious cutback in consumer spending, the primary engine of the economy.

A private survey of about 2,500 households found that Americans feel worse now about the economy’s prospects than at any time since 1973, when Americans struggled with soaring oil prices and runaway inflation.

Fears often prove overblown, of course, and this particular survey, which was released on Tuesday by the Conference Board, has a spotty track record as an indicator. But expectations can often be self-fulfilling: worried consumers are less likely to make the big purchases that help keep the economy humming.

“It signals a great deal of concern and anxiety and uncertainty among consumers,” Bernard Baumohl of the Economic Outlook Group, a research firm in Princeton, N.J., said of the survey.

“Add that to the fact that the job market has weakened dramatically, and incomes haven’t been rising very much — certainly below the pace of inflation — and you really have the ingredients of a significant cutback of consumer spending,” he said.

With home prices falling at record rates, Americans are also finding it more difficult to draw on their home equity, further depressing their spending power. A separate report on Tuesday said the value of single-family homes in major metropolitan areas plummeted 10.7 percent in January from a year earlier, the steepest annual decline since the 1990s housing slump.

“Consumer-led recessions are among the most difficult to turn around in an economy,” Mr. Baumohl said. “Particularly this one, because of the fact that many households feel a lot poorer than they did a year ago, primarily because of the collapse in the value of their homes.”

Sales of goods and services make up more than two-thirds of gross domestic product, so a significant spending slowdown can speed the onset of a recession or make a downturn even worse.

And the gloom among consumers appeared widespread. A quarter of those surveyed said that businesses conditions would worsen in the next six months, and nearly a third said the economy would have fewer jobs. Fewer Americans plan to purchase big-ticket items like refrigerators, vehicles and television sets, and more than half said that jobs were currently “not so plentiful.”

Responding to a question about income expectations, the proportion of Americans who said they expected their incomes to rise over the next six months dropped to 14.9 percent, the lowest level since the Conference Board began its survey in 1967.

Still, some economists said the report may represent the worst of the current downturn, rather than a harbinger of more pain to come.

“Typically, these readings look the worst when the economy is bottoming,” said Michael T. Darda, chief economist at MKM Partners, a research and trading firm. He said that on average, the stock market has risen substantially in the six months after Americans’ economic expectations bottom out.

“As bad as this looks — and it is bad — it might mean we are in a recession right now,” Mr. Darda said. “It’s not necessarily a forward-looking indicator.”

Over all, consumer confidence — a measure of current sentiment — stood at a five-year low in March, the Conference Board said. The results echoed a separate consumer survey by the University of Michigan and Reuters, which reached a 16-year low in March.

Home values are also falling at a rapid rate, according to the closely watched Standard & Poor’s Case-Shiller index, which on Tuesday released its latest survey of home prices in 20 metropolitan areas.

In January, all 20 regions recorded price declines, with the steepest losses in Las Vegas, Phoenix, and Los Angeles. Over all, prices dipped 2.36 percent in January, after falling 2.1 percent a month before.

Homes in Miami and Las Vegas have lost nearly 20 percent of their value in the 12 months ended in January. In only one area, Charlotte, N.C., have prices risen over the last year.

Though the price declines will hurt homeowners, they may also help to lure buyers back into the ailing housing market. Economists said the price drop was necessary to bring down inventories, which have ballooned in recent months as buyers waited for prices to fall even further.

“It’s a necessary thing,” Joshua Shapiro, an economist at the research firm MFR, said. “If pain is necessary, bring it on. That’s where we are right now.”

Falling prices may have already started to attract some buyers. Sales of previously owned homes ticked up last month, according to the National Association of Realtors, ending a six-month streak of declines.

The positive sales figure led some analysts to suggest that the housing market is approaching its bottom. But other economists predict that prices will have to fall further, and for several more months, before sales pick up in earnest.

In the New York metropolitan area, home values fell just 0.9 percent in January, and 5.8 percent compared with a year earlier. But the decline appeared to be gaining speed: values are down nearly 10 percent on a three-month annualized basis.

[KukriKhan]

Yeah. Home prices.

In 1999, I tried to buy a 3 bedroom, 2 bath 40-year old house for $164K. Deal fell through.

In 2004 (5 years later), that same house - the only improvement having been a fence installed - sold for $342K. And this Spring, it's in foreclosure, and vacant.

It wasn't worth $342K in '04, but the market forced that price because of speculators and "free money" given out by banks with little to no security; the same was happening throughout the neighborhood and the region. You cannot travel more than 2 blocks in my city without seeing an empty house, with a "bank-owned" for-sale sign out front.

So now we're seeing home prices dropping, trying to re-tie actual home-value to price. That would seem a good thing - apart from mortgage-payers paying on over-valued notes. At the county level, the taxman's gonna take a hit when we demand a reassessment from that hyper-inflated price we paid, down to what it's really worth (saleable).

In the end, who comes out ahead? The bank. No wonder they were giving away free candy 5 years ago: the Fed (the taxpayer) will bail them out if a few loans go "poof", and the suckers (the mortgage-paying taxpayers) will keep plugging along anyway.

[drone]

Until the crash, the banks loved it when they foreclosed on some poor sucker who couldn't pay the loans. They could take the house and resell it at an even higher price. Real estate agents loved it, they got their 3% of inflated sale prices (and probably colluded to get prices up, I'm pretty sure they did in my neighborhood). That "business model" came to an abrupt end when the housing demand dropped.

On the county taxman front: I got my reassessment last month from the county. The value of my house dropped precipitously, due to lower demand and "market corrections". Mysteriously though, the value of the land under my house shot up precipitously, so the overall assessment was the exact same as 2007. :inquisitive: Apparently I was not the only one, a fuss (http://www.washingtonpost.com/wp-dyn/content/article/2008/03/12/AR2008031201653.html) ensued (http://www.washingtonpost.com/wp-dyn/content/article/2008/03/19/AR2008031903329.html). I got a new assessment last week, home value down, but not as much, land value up, but not as much, end result is the exact same assessed value as 2007. Shenanigans :yes:. Of course, I wouldn't be able to sell the home anywhere near the value it was set at last year, but I don't really expect taxes to drop, that would be crazy. Fairfax County is really worried about revenue.

[naut]

We've got some reasonably bad property prices in Sydney at the moment. We've got houses that were priced at AUS$500k-1mil five or so years ago and now they're worth AUS$1-3.5 mil in somecases around where I live. It's absurd, especially considering the national debt level.

However, I just noticed this on the news, the US market is falling slower than Japan's or Shanghai.

[Vladimir]

President Obama.

[Oleander Ardens]

Very interesting, especially the observation by drone. It shows that value is in the end mostly guesswork and interpretation, done in markets or by agents.

BTW I never ever trust banks and lawyers when it comes down to account for your money. Already my grandfather pointed showed me how often companies and persons miscalculate - strangly mostly to their favor. My prof. for controlling has made often a nice bonus by taking a good look at them for other people he happened to consulte. 10% from a discovered 130000€ ain't bad for half an hour of calculating :clown:


Here is how things work out when you have a bad time to live and a harder time defend yourselve against the vultures...




--------------------------------------------------------------------------------

March 30, 2008
The Foreclosure Machine

By GRETCHEN MORGENSON and JONATHAN D. GLATER
NOBODY wins when a home enters foreclosure — neither the borrower, who is evicted, nor the lender, who takes a loss when the home is resold. That’s the conventional wisdom, anyway.

The reality is very different. Behind the scenes in these dramas, a small army of law firms and default servicing companies, who represent mortgage lenders, have been raking in mounting profits. These little-known firms assess legal fees and a host of other charges, calculate what the borrowers owe and draw up the documents required to remove them from their homes.

As the subprime mortgage crisis has spread, the volume of the business has soared, and firms that handle loan defaults have been the primary beneficiaries. Law firms, paid by the number of motions filed in foreclosure cases, have sometimes issued a flurry of claims without regard for the requirements of bankruptcy law, several judges say.

Much as Wall Street’s mortgage securitization machinery helped to fuel questionable lending across the United States, default, or foreclosure, servicing operations have been compounding the woes of troubled borrowers. Court documents say that some of the largest firms in the industry have repeatedly submitted erroneous affidavits when moving to seize homes and levied improper fees that make it harder for homeowners to get back on track with payments. Consumer lawyers call these operations “foreclosure mills.”

“They get paid by the volume and speed with which they process these foreclosures,” said Mal Maynard, director of the Financial Protection Law Center, a nonprofit firm in Wilmington, N.C.

John and Robin Atchley of Waleska, Ga., have experienced dubious foreclosure practices at first hand. Twice during a four-month period in 2006, the Atchleys were almost forced from their home when Countrywide Home Loans, part of Countrywide Financial, and the law firm representing it said they were delinquent on their mortgage. Countrywide’s lawyers withdrew their motions to seize the Atchleys’ home only after the couple proved them wrong in court.

The possibility that some lenders and their representatives are running roughshod over borrowers is of increasing concern to bankruptcy judges overseeing Chapter 13 cases across the country. The United States Trustee Program, a unit of the Justice Department that oversees the integrity of the nation’s bankruptcy courts, is bringing cases against lenders that it says are abusing the bankruptcy system.

Joel B. Rosenthal, a United States bankruptcy judge in the Western District of Massachusetts, wrote in a case last year involving Wells Fargo Bank that rising foreclosures were resulting in greater numbers of lenders that “in their rush to foreclose, haphazardly fail to comply with even the most basic legal requirements of the bankruptcy system.”

Law firms and default servicing operations that process large numbers of cases have made it harder for borrowers to design repayment plans, or workouts, consumer lawyers say. “As I talk to people around the country, they all unanimously state that the foreclosure mills are impediments to loan workouts,” Mr. Maynard said.

LAST month, almost 225,000 properties in the United States were in some stage of foreclosure, up nearly 60 percent from the period a year earlier, according to RealtyTrac, an online foreclosure research firm and marketplace.

These proceedings generate considerable revenue for the firms involved: eviction and appraisal charges, late fees, title search costs, recording fees, certified mailing costs, document retrieval fees, and legal fees. The borrower, already in financial distress, is billed for these often burdensome costs. While much of the revenue goes to the law firms hired by lenders, some is kept by the servicers of the loans.

Fidelity National Default Solutions, a unit of Fidelity National Information Services of Jacksonville, Fla., is one of the biggest foreclosure service companies. It assists 19 of the top 25 residential mortgage servicers and 14 of the top 25 subprime loan servicers.

Citing “accelerating demand” for foreclosure services last year, Fidelity generated operating income of $443 million in its lender processing unit, a 13.3 percent increase over 2006. By contrast, the increase from 2005 to 2006 was just 1 percent. The firm is not associated with Fidelity Investments.

Law firms representing lenders are also big beneficiaries of the foreclosure surge. These include Barrett Burke Wilson Castle Daffin & Frappier, a 38-lawyer firm in Houston; McCalla, Raymer, Padrick, Cobb, Nichols & Clark, a 37-member firm in Atlanta that is a designated counsel to Fannie Mae; and the Shapiro Attorneys Network, a nationwide group of 24 firms.

While these private firms do not disclose their revenues, Wesley W. Steen, chief bankruptcy judge for the Southern District of Texas, recently estimated that Barrett Burke generated between $9.7 million and $11.6 million a year in its practice. Another judge estimated last year that the firm generated $125,000 every two weeks — or $3.3 million a year — filing motions that start the process of seizing borrowers’ homes.

Court records from 2007 indicate that McCalla, Raymer generated $10.4 million a year on its work for Countrywide alone. In 2005, some McCalla, Raymer employees left the firm and created MR Default Services, an entity that provides foreclosure services; it is now called Prommis Solutions.

For years, consumer lawyers say, bankruptcy courts routinely approved these firms’ claims and fees. Now, as the foreclosure tsunami threatens millions of families, the firms’ practices are coming under scrutiny.

And none too soon, consumer lawyers say, because most foreclosures are uncontested by borrowers, who generally rely on what the lender or its representative says is owed, including hefty fees assessed during the foreclosure process. In Georgia, for example, a borrower can watch his home go up for auction on the courthouse steps after just 40 days in foreclosure, leaving relatively little chance to question fees that his lender has levied.

A recent analysis of 1,733 foreclosures across the country by Katherine M. Porter, associate professor of law at the University of Iowa, showed that questionable fees were added to borrowers’ bills in almost half the loans.

Specific cases inching through the courts support the notion that figures supplied by lenders are often incorrect. Lawyers representing clients who have filed for Chapter 13 bankruptcy, the program intended to help them keep their homes, say it is especially distressing when these numbers are used to evict borrowers.

“If the debtor wants accurate information in a bankruptcy case on her mortgage, she has got to work hard to find that out,” said Howard D. Rothbloom, a lawyer in Marietta, Ga., who represents borrowers. That work, usually done by a lawyer, is costly.

Mr. Rothbloom represents the Atchleys, who almost lost their home in early 2006 when legal representatives of their loan servicer, Countrywide, incorrectly told the court that the Atchleys were 60 days delinquent in Chapter 13 plan payments two times over four months. Borrowers can lose their homes if they fail to make such payments.

After the Atchleys supplied proof that they had made their payments on both occasions, Countrywide withdrew its motions to begin foreclosure. But the company also levied $2,793 in fees on the Atchleys’ loan that it did not explain, court documents said. “Every paycheck went to what they said we owed,” Robin Atchley said. “And every statement we got, the payoff was $179,000 and it never went down. I really think they took advantage of us.”

The Atchleys, who have four children, sold the house and now rent. Mrs. Atchley said they lost more than $23,000 in equity in the home because of fees levied by Countrywide.

The United States Trustee sued Countrywide last month in the Atchley case, saying its pattern of conduct was an abuse of the bankruptcy system. Countrywide said that it could not comment on pending litigation and that privacy concerns prevented it from discussing specific borrowers.

A generation ago, home foreclosures were a local business, lawyers say. If a borrower got into trouble, the lender who made the loan was often a nearby bank that held on to the mortgage. That bank would hire a local lawyer to try to work with the borrower; foreclosure proceedings were a last resort.

Now foreclosures are farmed out to third-party processors who hire local counsel to litigate. Lenders negotiate flat-fee arrangements to try to keep legal bills down.

AN unfortunate result, according to several judges, is a drive to increase revenue by filing more motions. Jeff Bohm, a bankruptcy judge in Texas who oversaw a case between William Allen Parsley, a borrower in Willis, Tex., and legal representatives for Countrywide, said the flat-fee structure “has fostered a corrosive ‘assembly line’ culture of practicing law.” Both McCalla, Raymer and Barrett Burke represented Countrywide in the matter.

Gee Aldridge, managing partner at McCalla, Raymer, called the Parsley case unique. “It is the goal of every single one of my clients to do whatever they can do to keep borrowers in their homes,” he said. Officials at Barrett Burke did not return phone calls seeking comment.

In a statement, Countrywide said it recognized the importance of the efficient functioning of the bankruptcy system. It said that servicing loans for borrowers in bankruptcy was complex, but that it had improved its procedures, hired new employees and was “aggressively exploring additional technology solutions to ensure that we are servicing loans in a manner consistent with applicable guidelines and policies.”

The September 2006 issue of The Summit, an in-house promotional publication of Fidelity National Foreclosure Solutions, another unit of Fidelity, trumpeted the efficiency of its 18-member “document execution team.” Set up “like a production line,” the publication said, the team executes 1,000 documents a day, on average.

OTHER judges are cracking down on some foreclosure practices. In 2006, Morris Stern, the federal bankruptcy judge overseeing a matter involving Jenny Rivera, a borrower in Lodi, N.J., issued a $125,000 sanction against the Shapiro & Diaz firm, which is a part of the Shapiro Attorneys Network. The judge found that Shapiro & Diaz had filed 250 motions seeking permission to seize homes using pre-signed certifications of default executed by an employee who had not worked at the firm for more than a year.

In testimony before the judge, a Shapiro & Diaz employee said that the firm used the pre-signed documents beginning in 2000 and that they were attached to “95 percent” of the firm’s motions seeking permission to seize a borrower’s home. Individuals making such filings are supposed to attest to their accuracy. Judge Stern called Shapiro & Diaz’s use of these documents “the blithe implementation of a renegade practice.”

Nelson Diaz, a partner at the firm, did not return a phone call seeking comment.

Butler & Hosch, a law firm in Orlando, Fla., that is employed by Fannie Mae, has also been the subject of penalties. Last year, a judge sanctioned the firm $33,500 for filing 67 faulty motions to remove borrowers from their homes. A spokesman for the firm declined to comment.

Barrett Burke in Texas has come under intense scrutiny by bankruptcy judges. Overseeing a case last year involving James Patrick Allen, a homeowner in Victoria, Tex., Judge Steen examined the firm’s conduct in eight other foreclosure cases and found problems in all of them. In five of the matters, documents show, the firm used inaccurate information about defaults or failed to attach proper documentation when it moved to seize borrowers’ homes. Judge Steen imposed $75,000 in sanctions against Barrett Burke for a pattern of errors in the Allen case.

A former Barrett Burke lawyer, who requested anonymity to avoid possible retaliation from the firm, said, “They’re trying to find a fine line between providing efficient, less costly service to the mortgage companies” and not harming the borrower.

Both he and another former lawyer at the firm said Barrett Burke relied heavily on paralegals and other nonlawyer employees in its foreclosure and bankruptcy practices. For example, they said, paralegals prepared documents to be filed in bankruptcy court, demanding that the court authorize foreclosure on a borrower’s home. Lawyers were supposed to review the documents before they were filed. Both former Barrett lawyers said that with at least 1,000 filings a month, it was hard to keep up with the volume.

This factory-line approach to litigation was one reason he decided to leave the firm, the first lawyer said. “I had questions,” he added, “about whether doing things efficiently was worth whatever the cost was to the consumer.”

James R. and Tracy A. Edwards, who are now living in New Mexico, say they have had problems with questionable fees charged by Countrywide and actions by Barrett Burke. In one month in 2002, when the couple lived in Houston, Countrywide Home Loans withdrew three monthly mortgage payments from their bank account, Mrs. Edwards said, leaving them unable to pay other bills. The family filed for bankruptcy to try to keep their home, cars and other assets.

Filings in the bankruptcy case of the Edwards family show that on at least three occasions, Countrywide’s lawyers at Barrett Burke filed motions contending that the borrowers had fallen behind. The firm subsequently withdrew the motions.

“They kept saying we owed tons and tons of fees on the house,” Mrs. Edwards said. Tired of this battle, the family gave up the Houston house and moved to one in Rio Rancho, N.M., that they had previously rented out.

Countrywide tried to foreclose on that house, too, contending that Mr. and Mrs. Edwards were behind in their payments. Again, Mrs. Edwards said, the culprit was a raft of fees that Countrywide had never told them about — and that were related to their Texas home. Mrs. Edwards says that she and her husband plan to sue Countrywide to block foreclosure on their New Mexico home.

Pamela L. Stewart, president of the Houston Association of Debtor Attorneys, said she has become skeptical of lenders’ claims of fees owed. “I want to see documents that back up where these numbers are coming from,” Ms. Stewart said. “To me, they’re pulled out of the air.”

An inaccurate mortgage payment history supplied by Ameriquest, a mortgage lender that is now defunct, was central to a case last year in federal bankruptcy court in Massachusetts. “Ameriquest is simply unable or unwilling to conform its accounting practices to what is required under the bankruptcy code,” Judge Rosenthal wrote. He awarded the borrower $250,000 in emotional-distress damages and $500,000 in punitive damages.

Fidelity National Information Services has also been sued. A complaint filed on behalf of Ernest and Mattie Harris in federal bankruptcy court in Houston contends that Fidelity receives kickbacks from the lawyers it works with on foreclosure matters.

The case shines some light on the complex relationships between lenders and default servicers and the law firms that represent them. The Harrises’ loan servicer is Saxon Mortgage Services, a Morgan Stanley unit, which signed an agreement with Fidelity National Foreclosure Solutions. Under it, Fidelity was to provide foreclosure and bankruptcy services on loans serviced by Saxon, as well as to manage lawyers acting on Saxon’s behalf. The agreement also specified that Saxon would pay the fees of the lawyers managed by Fidelity.

But Fidelity also struck a second agreement, with an outside law firm, Mann & Stevens in Houston, which spelled out the fees Fidelity was to be paid each time the law firm made filings in a case. Mann & Stevens, which did respond to phone calls, represented Saxon in the Harrises’ bankruptcy proceedings.

According to the complaint, Mann & Stevens billed Saxon $200 for filing an objection to the borrowers’ plan to emerge from bankruptcy. Saxon paid the $200 fee, then charged that amount to the Harrises, according to the complaint. But Mann & Stevens kept only $150, paying the remaining $50 to Fidelity, the complaint said.

This arrangement constitutes improper fee-sharing, the Harrises argued. Texas rules of professional conduct bar fee-sharing between lawyers and nonlawyers because that could motivate them to raise prices — and the Harrises argue that this is why the law firm charged $200 instead of $150. And under these rules, sharing fees with someone who is not a lawyer creates a risk that the financial relationship could affect the judgment of the lawyer, whose duty is to the client. Few exceptions are permitted — like sharing court-awarded fees with a nonprofit organization or keeping a retirement plan for nonlawyer employees of a law firm.

“If it’s fee-sharing, and if it doesn’t fall into those categories, it sounds wrong,” said Michael S. Frisch, adjunct professor of law at Georgetown University. Greg Whitworth, president of loan portfolio solutions at Fidelity, defended the arrangement, saying it was not unusual for a company to have an intermediary manage outside law firms on its behalf.

The Harrises contend that the bankruptcy-related fees charged by the law firms managed by Fidelity “are inflated by 25 to 50 percent.” The agreement between Fidelity and the law firm is also hidden, according to their complaint, so a presiding judge sees only the lender and the law firm, not the middleman.

Fidelity said the money it received from the law firm was not a kickback, but payments for services, just as a law firm would pay a copying service to duplicate documents. In response to the complaint, Fidelity asserted in a court filing that the Harrises’ claims were “nothing more than scandalous, hollow rhetoric.”

But the Fidelity fee schedule shows a charge for each action taken by the law firm, not a fee per page or kilobyte. And Fidelity’s contract appears to indemnify Saxon if the arrangement between Fidelity and its law firm runs afoul of conduct rules.

Mr. Whitworth of Fidelity said that the arrangement with Mann & Stevens did not constitute fee sharing, because Fidelity was to be paid by that law firm even if the law firm itself was not paid.

He also said that by helping a servicer manage dozens or even hundreds of law firms, Fidelity lowered the cost of foreclosure or bankruptcy proceedings, to the benefit of the law firm, the servicer and the borrower. “Both parties want us to be in the middle here,” Mr. Whitworth said, referring to law firms and mortgage servicing companies.

THE Fidelity contract attached to the complaint also hints at the money each motion generates. Foreclosures earn lawyers fees of $500 or more under the contract; evictions generate about $300. Those fees aren’t enormous if they require a substantial amount of time. But a few thousand such motions a month, executed by lawyers’ employees, translates into many hundreds of thousands of dollars in revenue to the law firm — and the lower the firm’s costs, the greater the profits.

“Congress needs to enact a national foreclosure bill that sets a uniform procedure in every state that provides adequate notice, due process and transparency about fees and charges,” said O. Max Gardner III, a consumer lawyer in Shelby, N.C. “A lot of this stuff is such a maze of numbers and complex organizational structure most lawyers can’t get through it. For the average consumer, it is mission impossible.”

[KukriKhan]

Stunning bit of news from the IRS about those "economic stimulus" rebates getting mailed out: LINK (http://marketplace.publicradio.org/display/web/2008/04/01/april_1st/) (either click "listen to this story" (about 2 minutes run-time), or read the text - especially the final sentence, if you're in a hurry.)

[Oleander Ardens]

Great find. Who would have imagined to find such a neat piece of "central planning" in the symbol of capitalism?

BTW, while the stocks are having a decent rally, especially in Europe - after UBS just had another record write-down, which seemingly brought "transparency" to the market - the US economy is on a bad track. That's what at least 81% of Americans think, the highest number ever.


April 4, 2008
81% in Poll Say Nation Is Headed on Wrong Track
By DAVID LEONHARDT and MARJORIE CONNELLY
Americans are more dissatisfied with the country’s direction than at any time since the New York Times/CBS News poll began asking about the subject in the early 1990s, according to the latest poll.

In the poll, 81 percent of respondents said they believed “things have pretty seriously gotten off on the wrong track,” up from 69 percent a year ago and 35 percent in early 2002.

Although the public mood has been darkening since the early days of the war in Iraq, it has taken a new turn for the worse in the last few months, as the economy has seemed to slip into recession. There is now nearly a national consensus that the country faces significant problems.

A majority of nearly every demographic and political group — Democrats and Republicans, men and women, residents of cities and rural areas, college graduates and those who finished only high school — say the United States is headed in the wrong direction. Seventy-eight percent of respondents said the country was worse off than five years ago; just 4 percent said it was better off.

The dissatisfaction is especially striking because public opinion usually hits its low point only in the months and years after an economic downturn, not at the beginning of one. Today, however, Americans report being deeply worried about the country even though many say their own personal finances are still in fairly good shape.

Only 21 percent of respondents said the overall economy was in good condition, the lowest such number since late 1992, when the recession that began in the summer of 1990 had already been over for more than a year. In the latest poll, two in three people said they believed the economy was in recession today.

The unhappiness presents clear risks for Republicans in this year’s elections, given the continued unpopularity of President Bush. Twenty-eight percent of respondents said they approved of the job he was doing, a number that has barely changed since last summer. But Democrats, who have controlled the House and Senate since last year, also face the risk that unhappy voters will punish Congressional incumbents.

Mr. Bush and leaders of both parties on Capitol Hill have moved in recent weeks to react to the economic slowdown, first by passing a stimulus bill that will send checks of up to $1,200 to many couples this spring. They are now negotiating over proposals to overhaul financial regulations, blunt the effects of a likely wave of home foreclosures and otherwise respond to the real estate slump and related crisis on Wall Street.

The poll found that Americans blame government officials for the crisis more than banks or home buyers and other borrowers. Forty percent of respondents said regulators were mostly to blame, while 28 percent named lenders and 14 percent named borrowers.

In assessing possible responses to the mortgage crisis, Americans displayed a populist streak, favoring help for individuals but not for financial institutions. A clear majority said they did not want the government to lend a hand to banks, even if the measures would help limit the depth of a recession.

“What I learned from economics is that the market is not always going to be a happy place,” Sandi Heller, who works at the University of Colorado and is also studying for a master’s degree in business there, said in a follow-up interview. If the government steps in to help out, said Ms. Heller, 43, it could encourage banks to take more foolish risks.

“There are a million and one better ways for the government to spend that money,” she said.

Respondents were considerably more open to government help for home owners at risk of foreclosure. Fifty-three percent said they believed the government should help those whose interest rates were rising, while 41 percent said they opposed such a move.

The nationwide telephone survey of 1,368 adults was conducted from March 28 to April 2. The margin of sampling error was plus or minus 3 percentage points.

When the presidential campaign began last year, the war in Iraq and terrorism easily topped Americans’ list of concerns. Almost 30 percent of people in a December poll said that one of those issues was the country’s most pressing problem. About half as many named the economy or jobs.

But the issues have switched places in just a few months’ time. In the latest poll, 17 percent named terrorism or the war, while 37 percent named the economy or the job market. When looking at the current state of their own finances, Americans remain relatively sanguine. More than 70 percent said their financial situation was fairly good or very good, a number that has dropped only modestly since 2006.

Yet many say they are merely managing to stay in place, rather than get ahead. This view is consistent with the income statistics of the past five years, which suggest that median household income has still not returned to the inflation-adjusted peak it hit in 1999. Since the Census Bureau began keeping records in the 1960s, there has never been an extended economic expansion that ended without setting a new record for household income.

Economists cite a variety of factors for the sluggish income growth, including technology and globalization, and it clearly seems to have made Americans anxious about the future. Fewer than half of parents — 46 percent — said they expected their children to enjoy a better standard of living than they themselves do, down from 56 percent in 2005.

Respondents were more pessimistic when asked in general terms about the next generation, with only a third saying it would live better than people do today. (Polls usually find people more upbeat about their personal situation than about the state of society, but the gap is now larger than usual.)

Charles Parrish, a 56-year-old retired fireman in Evans, Ga., who now works a maintenance job for the local school system, said he was worried the country was not preparing children for the high-technology economy of the future. Instead, the government passed a stimulus package that simply sends checks to taxpayers and worsens the deficit in the process.

“Who’s going to pay back the money?” Mr. Parrish, an independent, said. “We are. They are giving me money, except I’m going to have to pay interest on it.”

Democrats have asserted recently that the lack of wage growth has made people more open to government intervention in the economy than in the past, and the poll found mixed results on this score.

Fifty-eight percent of respondents said they would support raising taxes on households making more than $250,000 to pay for tax cuts or government programs for people making less than that amount. Only 38 percent called it a bad idea. Both Senator Hillary Rodham Clinton and Senator Barack Obama, the Democratic presidential candidates, have made proposals along these lines.

More broadly, 43 percent of those surveyed said they would prefer a larger government that provided more services, which is tied for the highest such number since The Times and CBS News began asking the question in 1991. But an identical 43 percent said they wanted a smaller government that provided fewer services.

And although both Mrs. Clinton and Mr. Obama have blamed trade with other countries for some of the economy’s problems, Americans say they continue to favor trade — if not quite as strongly as in the past. Fifty-eight percent called it good for the economy; 32 percent called it bad, up from 17 percent in 1996.

At the same time, 68 percent said they favored trade restrictions to protect domestic industries, instead of allowing unrestrained trade. In early 1996, 55 percent favored such restrictions.

Dalia Sussman and Marina Stefan contributed reporting.



The only good note is that most Americans think that their income situation is "fairly good", not bad but also not good. They also think that the inflation will outgrow their rise in income.

BTW I skipped over some comments, almost all of them negative and I found this one was highly recommended


Bush and Cheney's legacy in Presidential history will be two fold! They will be considered the worst President and VP in the history of the US!!

Cheers
OA

[Oleander Ardens]

General Electrics profit falls short. I my humble opinion it will become more and more clear that many big companies, especially in the US will suffer severe hits, because it has become much more difficult to do business.

What I find especially worrying for the USA is that the trade deficit is actually growing while it should be shrinking because of the dirt cheap $.
I guess it is because the Amercian economy is not geared for export and, perhaps even more important is the simple fact that the prices for almost everything are going sharply up. I'm glad to live in €uroland where the ECB has kept the interest rates steady, so that the inflation is, while still very worrying not as high as it could have been.


In Rare Miss, G.E. Profit Falls Short
By MICHAEL M. GRYNBAUM
General Electric reported a 5.8 percent decline in first-quarter profit on Friday, falling far short of expectations and stunning investors who consider the company one of the nation’s most reliable earners.

The unexpected decline, from a company known for rarely missing its estimates, will probably further erode confidence in the economy’s ability to rebound from the current financial crisis.

The Dow Jones industrial average, which includes G.E., dropped more than 140 points at the opening bell before recovering somewhat. G.E. shares fell 11.4 percent, to $32.56, but the market losses were broad-based: the Standard & Poor’s 500-stock index was down about 1.1 percent, and the Nasdaq composite index also lost about 1.1 percent at 9:45 a.m.

G.E.’s losses came primarily from the company’s financial services division, popular with consumers and small businesses, which was buffeted by recent economic shocks.

“We failed to meet our expectations,” Jeffrey R. Immelt, the company’s chief executive, said in a statement. “We knew the first quarter was going to be challenging, but the extraordinary disruption in the capital markets in March affected our ability to complete asset sales.”

The company reported net income of $4.3 billion for the quarter, or 43 cents a share, down from $4.57 billion, or 44 cents a share, in the period a year earlier. Analysts had been expecting about 51 cents a share in net earnings, and the company had projected earnings of 50 to 53 cents a share.

G.E. also sharply lowered its full-year earnings forecast; the company now predicts little to no growth for all of 2008.

As he fielded questions from disgruntled analysts on a conference call Friday morning, Mr. Immelt insisted that “the core business remains solid.” But he acknowledged that recent financial developments, including the collapse of Bear Stearns, took a severe toll. Earnings at the company’s financial services operation plummeted 19 percent for the quarter.

Mr. Immelt said he regretted the poor performance. “We hate missing our numbers,” he said.

[Louis VI the Fat]

Spotted in the shops! :beam: I am sooo going to wear this all summer. ~;p


https://img215.imageshack.us/img215/1813/eurowm6.jpg

[Watchman]

"Some experts believe it may have something to do with the fact that U.S. has a :daisy: economy." Or the currency markets may just hate freedom (http://www.theonion.com/content/node/27513).
In related news, the dollar's also dropping against counterfeit dollars (http://www.theonion.com/content/news_briefs/u_s_dollar_drops_against). And Canadian acorns (http://www.theonion.com/content/node/42363). :wiseguy:

[Oleander Ardens]

Over 1.60...

[Vladimir]

Over 1.60...

:shame:

[Oleander Ardens]

Just a critical view of the things said by me here in this thread.

1) The US economy seems harder hit than many thought it would be. My educated guess proved right.


The longterm prospect of the US economy is bad for 2008. Inflation is rising, unemployment is rising, house prices keep falling in many areas. And the FED has already used a great deal of its bullets. If it continues to cut like that it will mean that in some months the banks can lend money for 0.00% May

2) Stocks would tumble. As a matter of fact the major indexes bar the Dax reched 1-2 year lows

3) Gold would be a good investment and push above 1000$. I clearly failed so far my guess about the price of gold. Still the buys at 900$ or even lower (now 942$) proved to be very good.


Gold is now down to 900$. Personally I will buy another good percentage of gold, although I would not advise everybody to do so because many could now become really nervous. There are huge amounts of money in the market and many made huge gains so a sell-off could be possibly. Basically I still think that the longterm trend is good, but the shortterm trend might finally point a bit downwards, so this one is also a matter of timing.

After gold reached 1000$
Now I guess Gold will continue its sprint, especially when the money comes in from the industrial commodities when they get hit. March

4) Cash was king. It is still.


Anyway I have large stocks of liquid capital and I will try to buy cheap stocks in a cheap currency as far as I see light at the end of the tunnel March

So now I have to think what to do now...