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04-13-07, 03:24 PM
http://www.itulip.com/images/ElsbetGray.jpg Are We Idiots?

Deloitte Research chief economist doth protest too much

by Eric Janszen
"Are they seething with righteous anger with pitch forks and torches in hand? Are they ready to storm the bastions of so-called housing boosters like the closing scene in some modern day Frankenstein movie? Or does the ‘I’ in iTulip actually stand for idiot?"
- Carl Steidtmann, chief economist and director, Consumer Business - Deloitte Research - April 11, 2007)It was inevitable. As the housing bubble collapses and the credibility of housing bubble boosters melts like a popsicle in the Texas summer sun, those of us who have been critical of them will become objects of their derision. Still, it's surprising to be called out in this way–with name calling–and by none less than Deloitte Research's chief economist and a director of Consumer Business Research, and on such a weak pretext.

Dr. Steidtmann is mentioned in passing in a single 267 word post (http://www.itulip.com/forums/showthread.php?t=369)–one of 8,890 on our forums–on August 27, 2006 as a candidate for a potential new housing bubble Pundit Watch list, in the spirit of iTulip's stock market Bubble Pundit Watch (http://www.itulip.com/awards.htm) from the stock market bubble era. Back then we featured Goldman Sach's Abby Joseph Cohen, then a certified "investment guru," and TV personality James J. Cramer, then shilling tech stocks in his inimitable way. We noted records of bad advice, and in some cases apparent misrepresentations of previous statements made from the top of the market all the down to the bitter bottom.

After the stock market crashed, Abby had finished her role on the Goldman stock sales team and was put out to pasture. Even though most of JJ Cramer's audience must have lost piles of money if they were foolish enough to take his advice, that hardly put a dent in his career. He took some time off and has been back on the air with his CNBC television show “Mad Money” for the past few years, as stock market bubble was nominally re-inflated as a side-effect of what retired IMF chief economist Kenneth Rogoff calls (http://www.guardian.co.uk/economicdispatch/story/0,12498,1117180,00.html), "The best recovery money can buy." The reinvention of JJ has gone smoothly, save for the interview he recently had with TheStreet.com TV where he told TSC's executive editor Aaron Task that he used to manipulate stocks and the market when he was a hedge fund manager, and explained how such people today can't "do anything remotely truthful" if they want to make money. Judging by the odd camera angle, it appears Cramer was not aware that he was being recorded. The resulting jaw dropping YouTube video has been pulled. If you try to go watch it, YouTube explains, "This video is no longer available due to a copyright claim by TheStreet.com." Everyone here who believes TheStreet.com's issue with the video was copyright infringement, please send $1,000 dollars to the How to Lose $1,000 Contest here at iTulip.

http://www.itulip.com/images/awards.jpgAfter gracing iTulip for seven years beside a circus clown, we've never heard a peep out of JJ. And we don't expect to. No doubt he laughs at iTulip and our parody of him–all the way to the bank. We didn't pursue the idea of a housing bubble Pundit Watch list for the reasons that Carl quotes, because the pain from the collapse of the housing bubble will be no joking matter. Already the hearings have started and calls for bailouts of home owners and lenders have begun, and we're perhaps at the top of a credit collapse process that is likely to into extra innings.

Why Most Get it Wrong

Dr. Steidtmann isn't the only one out there to get the housing bubble story wrong. Interest and ideology conflate wherever money is concerned. The interested, versus disinterested, approach to the housing bubble is to start with a view, then search out evidence to support it, to the exclusion of all evidence that contradicts it. Then, dig your heels in and rant away. Our approach to economics and finance is to develop a hypothesis and then talk to a lot of experts to help us beat it into shape–or throw it out the window, if new evidence demands it. We developed our housing and consumer credit bubble hypothesis in 2002. We flogged it by interviewing dozens of economists, authors, and industry professionals, including in Can Anything Bring Down the Monthly Payment Consumer? (http://www.itulip.com/forums/showthread.php?t=808), Peter Morici, University of Maryland business school professor and former chief economist of the U.S. International Trade Commission under the Clinton administration; Kevin Hassett, director of economic policy studies at the American Enterprise Institute; Lakshman Achuthan, managing director of the Economic Cycle Research Institute and a governor of the Levy Economics Institute at Bard College; James O’Sullivan, a UBS economist; Ken Goldstein, an economist with the Conference Board; Dean Baker, co-director of the Center for Economic and Policy Research; Russ Roberts, a professor of economics at George Mason University; Ron Blackwell, chief economist of the AFL-CIO; and Dr. Richard Curtin, director of the Surveys of Consumers at the University of Michigan; Dr. Michael Hudson (http://www.itulip.com/forums/showthread.php?t=1088), advisor to the White House, State Dept. and Defense Department at the Hudson Institute; Dr. James Galbraith (http://www.itulip.com/forums/showthread.php?t=654) in an interview; and James Scurlock (http://www.itulip.com/forums/showthread.php?t=1192), Creator of "Maxed Out" in an interview; and so on.

Source of paycheck needs to be factored into any expert's opinion. We interviewed Dr. Hudson and interpret his views from the perspective of an expert who consults to the Chinese government. We'd be surprised if Dr. Hudson's public statements on China were wholly inconsistent with the interests of his clients. Likewise Dr. Steidtmann. The Deloitte web site says, "In 2003 Consulting Magazine selected Dr. Steidtmann as one of the 25 most influential consultants for his work in consumer spending forecasting. The obvious question is, consulting to whom?

The FDIC web site bio of Dr. Steidtmann states, "He has addressed hundreds of groups on economics, technology and productivity, including the National Retail Federation, the Food Marketing Institute, and the International Mass Retail Association in addition to individual companies."

This is not a point of criticism, but an acknowledgment that one needs to know where one's economic "expert" is coming from.

In our experience, economists fall into roughly one of three groups: those on the FIRE Economy (http://www.itulip.com/forums/showthread.php?t=891) payroll, those who are angling to get onto the FIRE Economy payroll, and those who are not and are not trying to get onto the FIRE Economy payroll. We'll leave it up to readers to decide to which group Dr. Steidtmann belongs.

We'd forgotten our note about starting a housing bubble Pundit Watch list and mentioning Dr. Steidtmann in it, in a post buried among thousands of other posts on the iTulip boards. Apparently Dr. Steidtmann hasn't.

He certainly has a right to explain himself. But we have to ask, why now and why in this way?

The economist doth protest too much. He also doesn't appear to known much about asset bubbles. Let's help him out. Here's what he wrote, with our comments.


Economist's Corner: The housing bubble revisited (http://www.deloitte.com/dtt/article/0,1002,sid%253D15288%2526cid%253D152742,00.html)
Has Goldilocks left the building?

By Carl Steidtmann, chief economist and director, Consumer Business, Deloitte Research

I don't want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year. Our future is not as bright as what we would like it to be.
— D.R. Horton Chief Executive Officer Donald Tomnitz

It’s not often that one gets such candor from a CEO. But the question that the current state of the housing market begs is: Will housing bring down the economy? This is not a new issue. Back in June 2005 I wrote a piece entitled "The Myth of the Housing Bubble." The conclusion then was that the appreciation in housing prices was not a bubble but a reflection of the very strong fundamentals in the housing market that were limiting supply and boosting demand. It also suggested that at some time in the not too distant future, interest rates would rise and demand would cool but the result would not be the catastrophe that the bubble heads were hoping for. That conclusion was met with some derision by the bubble heads that run some of the housing blogs on the internet. One went so far as to suggest darkly in the summer of 2006: "Maybe it's time to start collecting the names of the housing bubble boosters… . I've considered guys like Carl Steidtmann, who went on record at the top of the market with articles like 'The Housing Bubble Myth' in July 2005.
"I've resisted doing this because, as painful as the tech stock bubble collapse was, I worry that the housing bubble will cause much greater economic damage and inspire far more widespread desperation and hatred. This won't be middle class and upper middle class people, made temporarily rich by a stock market bubble, falling back to earth when it popped. Rather than objects of derision, the housing bubble boosters won't simply wind up as clowns splattered with virtual eggs in the Internet town square. These guys may find themselves the targets of deeper passions, and I don't want iTulip to be any part in that... ."
Quite noble of those iTulip folks not to draw attention to us housing bubble boosters. So here we are nearly two years on and interest rates have risen, mortgage lending practices have been tightened up and housing has cooled. Do we find the middle class wiped out? Are they seething with righteous anger with pitch forks and torches in hand? Are they ready to storm the bastions of so-called housing boosters like the closing scene in some modern day Frankenstein movie? Or does the ‘I’ in iTulip actually stand for idiot?Our prediction from January 2005 (http://www.itulip.com/housingbubblecorrection.htm) is of a 10 to 15 year housing bubble collapse process. We called a top June 1, 2005 (http://www.itulip.com/forums/showthread.php?t=606). As we are only two years into the correction, we do not expect the pitch forks and torches to come out for a while yet.

Why the housing market is not a bubble

http://www.itulip.com/images/dtt_stlouisbase_041007.gifA financial bubble has a few distinctive characteristics to it. First and foremost a bubble is a monetary phenomenon. Bubbles are created in large part by central bank mistakes. Massive increases in money supply are a requirement for all bubbles. The NASDAQ bubble was fueled by dramatic growth money supply during the late-1990s. The Fed pumped up the monetary base, first in response to the Asian currency crisis and then later out of concern about the effects of the Y2K bug on the economy.

The result was a dramatic growth in monetary reserves in 1999, much of which ended up fueling equity market speculation. When the monetary fuel for the speculative bubble was removed, the bubble broke. Over the course of the past five years we have seen a steady slowing of money reserve growth, bringing into question the possibility of any asset bubble.No. The Fed lights the fire and stands back–along with the SEC during the stock market bubble and the FDIC during the housing bubble–to watch it burn. Once an asset bubble gets underway, the markets generate their own money in a self-reinforcing cycle, such as between the Venture Capital and IPO markets in the case of the NASDAQ bubble and mortgage-backed securities and mortgages during the housing bubble. Asset bubbles are primarily belief systems that have the following five main ingredients:

1. Extremes of popular, positive investor sentiment–the general belief that the price can only go up, such as gold in 1980, tech stocks in 1999, and housing in 2005.
2. Valid Core Beliefs that are based on fact, such as the value of the Internet during the Internet bubble, that drive early adopters into the market.
3. Invalid Apocryphal Beliefs that are later invented by those who are benefiting the most from the bubble, such as investment banks and venture capital firms during the Internet bubble, but readily accepted by everyone else who is also benefiting–to explain extreme price increases that go far beyond the level justified by the Core Beliefs.
4. A well developed system of sales, marketing and distribution, that includes the mainstream press, and employs an army of analysts, consultants, lawyers, accountants, and so on, all of whom adopt first the Core Beliefs and later buy into the Apocryphal Beliefs.
5. A duration that exceeds the warnings of early bubble spotters by months or even years.

A second sign of a bubble is a big spike in prices. In the year before it peaked, NASDAQ rose by more than 130 percent. The Nikkei was up 84 percent in two years prior to its peak. When the Hunt brothers tried to corner the silver market they created a price bubble that sent silver prices from single digits to over $50 an ounce. Now those were price bubbles.

The best year for housing prices was 2005 when existing home prices rose 13 percent while for new home prices the peak came in 2004 when prices were up nearly 14 percent, hardly the stuff of a real financially driven bubble. You can see how ridiculous the claims of a housing bubble are when you compare new home prices to a real bubble.
http://www.itulip.com/images/goldReal.jpg

We are almost in agreement on this point. Here we show the difference between the last gold price bubble and recent price increases. The appearance of the rate of increase can be shown either as extreme or not depending on choice of price index and scale. Here by inflation-adjusting the gold price, a recent nominal price bubble disappears.


http://www.itulip.com/images/dtt_medianhomeprices_041007.gif


Dr. Steidtmann's shows the slightest of blips.


http://www.itulip.com/images/NewYorkTimesHousingChart.jpg

The New York Times graph of housing prices shows massive price appreciation.

What matters from an macro economic standpoint is the total amount of fictitious value created during an asset bubble. The stock markets are capitalized at a fraction of the housing market. Approximately $5 trillion of fictitious "bubble" capital–or 27% of the total $18.5 trillion in total market cap–was wiped out in the 2000 to 2002 stock market crash (http://en.wikipedia.org/wiki/Stock_market_downturn_of_2002). Even at a much lower growth rate than the stock market bubble, the collapse of the housing bubble will have a larger impact because the total amount of fictitious value in the real estate market is about twice the amount created during the stock market bubble.

A third sign of a bubble is that when it breaks, everyone tries to head for the exits at the same time resulting in a collapse in prices. When the Nikkei bubble broke in 1990, prices declined just over 80 percent over the next decade. Seventeen years later the Nikkei is still half its peak value. The bursting of the NASDAQ bubble took that index down from 5132 to a low of 1108 in eighteen months, a decline of just under 80 percent. Five years later, the NASDAQ is still less than half the peak price.

So what has happened to housing prices since the bubble supposedly broke in 2005? The problem the bubble heads have is that housing prices for the most part are still collapsing upward. Since the summer of 2005, existing home prices are up 12 percent while new home prices have risen 3 percent. As we explained back in January 2004 in Housing Bubbles Are Not Like Stock Market Bubbles (http://www.itulip.com/housingnotlikeequities.htm), "Unlike stock market bubbles, real estate bubbles don't pop. Collapsing stock market bubbles are characterized by a sudden collapse in prices because stock markets are highly liquid. You see huge volumes of transactions at ever lower prices during a stock market collapse. Collapsing housing bubbles, on the other hand, are characterized by illiquidity, a sudden collapse in transactions. Buyers and sellers seem to disappear."

Dr. James Galbraith told us (http://www.itulip.com/forums/showthread.php?t=654), "...the negative wealth effect of a collapsing stock market is more immediate and concentrated than the impact of a housing slowdown. Everyone marks their portfolio to market within a quarter after the collapse. A housing bubble deflates slowly. Housing price value changes are not experienced by property owners until they try to turn the property into a liquid asset, either by selling or by refinancing."

A housing market correction is a slow process.

Unlike Internet bubble stocks, Japanese stocks or silver, people still need housing and the demand for housing continues to grow. Population growth creates the need for 1 to 1.2 million new units. Tear downs and depreciation add another 300K to 500K units and second home buying can add another 200K to 400K units or more each and every year. Even in a weak demand year that adds up to 1.5 million units and in a strong year more than 2 million. Tell that to the over 1 million homeowners who abandoned their homes in Houston during the 1980s. The Center for Responsible Lending (CRL) recently told us on a call (http://www.itulip.com/forums/showthread.php?t=723) that their exhaustive study, which resulted in a 40 page report, "2.2 million households in the subprime market either have lost their homes to foreclosure or hold subprime mortgages that will fail over the next several years." Not because they don't need a place to live, but because they cannot afford the mortgage.

The reason 1 million households could not pay their mortgages around the Houston area is because oil prices collapsed and the regional oil industry along with it. Government is now at par with the goods producing sector as an employer. If not for the fiscal deficits the US has been running since 2001, the government cannot support this level of employment. If not for continued foreign lending on a scale unprecedented in world history, these deficits cannot be maintained without creating extremely high levels of inflation as the US will be forced to monetize its own debt, or reduce the creation of new debt. As the US economy slows, so shall foreign lending and the ability of the US government to create jobs without also creating levels of inflation which will not be acceptable to bond holders. Neither unemployment nor inflation are positive for housing prices, as the former reduces incomes which can be spent on housing, and the latter raises interest rates which increases monthly mortgage costs. We expect to see both unemployment and inflation as the recession progresses and the Fed, the Whitehouse, and Congress attempt to navigate between the politically untenable and the politically disastrous, between inflation and unemployment, as the policy space between them narrows.


There are a lot of reasons why home prices have been rising in this decade. Demographics remain favorable, financing is still cheap, land-use restrictions continue to tighten, second home buying continues to rise and urban gentrification is making for better neighborhoods. All of these have to do with the fundamentals of supply and demand.We debunked this notion way back in August 2002 (http://www.itulip.com/qc082002.htm), "The market went from an investors' market to a speculators' market and no one rang a bell this time, either. We agree that rising residential real estate prices are caused by scarcity, but not the scarcity of housing relative to demand. Housing prices are rising because of the scarcity of housing relative of the money supply. Cheap credit is creating a housing bubble."

We explain in detail in Fueling the FIRE Economy (http://www.itulip.com/forums/showthread.php?t=1114) how the housing bubble happened from the standpoint of monetary policy. In summary:

As mortgage-x.com (http://mortgage-x.com) explains, the variable rate that lenders offer for the introductory period of an ARM is based on short term interest rate indexes: "CMT, COFI, and LIBOR indexes are the most frequently used. Approximately 80 percent of all the ARMs today are based on one of these indexes." All three indexes are close to each other.


http://www.itulip.com/images/6molibor.jpg



For our purposes, we compare 6-month LIBOR and National Average
Contract Mortgage Rate.



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Watch it Again (http://www.itulip.com/video/fixedvsarms.swf)


Short rates drop to extremely low levels between 2001 and 2004.
Not surprisingly there was a jump in borrowing.



<object height="400" width="850"><embed src="http://www.itulip.com/video/homeeuityloans.swf" type="application/x-shockwave-flash" wmode="transparent" height="400" width="850"></object>
Watch it Again (http://www.itulip.com/video/homeeuityloans.swf)


Home equity borrowing sky-rocketed.


Why housing won’t sink the economy

While the action in housing prices in no way resembles a bubble, housing nonetheless has been hurting over the past year. Overbuilding and a slowdown in home sales due to higher interest rates and tighter lending standards have created an overhang of unsold inventory. Housing starts have fallen more than 30 percent. Home price appreciation has slowed and by some measures has declined. Both new and existing home sales are down.

Declines in housing construction in the past have been an early warning of a pending recession in the broad economy. Over the past the declines in home construction have taken 1 percent off of top line GDP growth. That loss has slowed real GDP growth from the 3-3.5 percent range down to the 2-2.5 percent range. It means that the economy is more at risk for a recession, but by itself, not enough to cause a recession.

At its peak, home construction made up a little more than 6 percent of GDP. To get a full blown recession, the problems in housing have to spill over into some other sector of the economy. The most likely candidate for that spillover is the consumer. Making up 70 percent of GDP, any loss of consumer spending could take the economy down. Housing is such an important part of the US economy, even without bubble heights to crash down from, a major downturn in housing can produce significant economic fallout for the whole economy. Housing permits authorized are a solid leading indicator of recession.


http://www.itulip.com/images/housingpermits1966-2006.gif

We were on a call recently with Lehman Bros. economists (http://www.itulip.com/forums/showthread.php?t=1103) who disagree. They explained during Q&A: "From the standpoint of borrower risk, the crisis is much worse than the S&L crisis. From a risk ownership standpoint, not nearly as bad." Meaning the banks will be okay, but homeowners and consumers will get hammered. Their "Housing Crash" scenario calls for 1.6% GDP growth in 2008 as many segments of the economy go into recession, housing first.

Employment and Real Wage Growth

http://www.itulip.com/images/dtt_realwagegrowth_041007.gifOne of the remarkable characteristics about American consumers is that if you give them cash, they go out and spend it. Real consumer spending has not declined on a quarterly basis since the fourth quarter of 1991. Through currency crises, government shut downs, natural disasters, stock market meltdowns, accounting and financial scandals, terrorist attacks and real recessions American consumers continued to spend. As Morgan Stanley's chronically bearish Stephen Roach has pointed out: "The forecasting landscape has long been littered with carcasses of those who have been dumb enough to bet against the American consumer. From time to time, there have been unconfirmed sightings of my skeletal remains in that heap." We argue this point all the time, and warn readers not to hold their breath waiting for The End. As long as the Fed and lenders can work together to create a new asset bubble, and as long as the Chinese and other export economies are stuck buying bonars (http://www.itulip.com/glossary.htm#Bonar) to prevent their currencies from appreciating, the dollar will stay strong, and as a consequence both inflation and interest rates low, the Monthly Payment Consumer (http://www.itulip.com/glossary.htm#monthly_payment_consumer) will keep consuming. Here are the long term trends.


<object height="400" width="850"><embed src="http://www.itulip.com/video/USdebt.swf" type="application/x-shockwave-flash" wmode="transparent" height="400" width="850"></object>
Watch it Again (http://www.itulip.com/video/USdebt.swf)

Without ever more rapid public and private sector debt growth, current GDP growth cannot be maintained. This measure tells you how much new debt is needed to generate economic growth.


<object height="400" width="850"><embed src="http://www.itulip.com/video/USDebtvsGDP.swf" type="application/x-shockwave-flash" wmode="transparent" height="400" width="850"></object>
Watch it Again (http://www.itulip.com/video/USDebtvsGDP.swf)

In 1983, $1 of debt was needed to generate $1 of GDP. Now nearly $3 is needed.

The first bears called an end to this process back in the early 1990s. We are predicting a revelation of fraud (http://www.itulip.com/forums/showthread.php?t=1200) in one or both of the GSEs will get the ball rolling. When? Maybe soon, maybe not until after the 2008 presidential election. You have to be a political insider to know for certain when someone's going to pull the plug on that racket.

Much is made of the wealth effects of falling housing prices and the loss of refinance money. Refinance activity peaked in the fourth quarter of 2005 and has declined by half since then. Real consumer spending has slowed, but continues to grow at a 3.5 percent clip. Refi could go to zero, but even if that did happen, but it is not likely to have much more of an impact on consumer spending than it already has, which is very little. Indeed. The lending industry keeps finding new ways to lend the Monthly Payment Consumer more money. Everyone knows the Monthly Payment Consumer's income isn't rising in real terms. Secured against the consumers' house is better from a default standpoint, but lenders are not so picky that they won't extend even more revolving credit to make up for what consumers are no longer getting from cash-out refis.

Declining home prices could make consumers feel poorer and through a wealth effect, dampen spending. However back in 2001-2, when household wealth really did decline following the breaking of the NASDAQ bubble, consumers continued to spend. And so far, despite the worries of the bubbleheads at places like iTulip, household net worth has risen by some $5 trillion since mid-2005. After the NASDAQ popped, losses were over only a few quarters marked to market and affected only a fraction of US households. Household net worth has risen $5 trillion. Unfortunately, most of those gains are not evenly distributed on a bell curve; most have gone to the top 10% of the wealth holders. Where is most of that net worth tied up? Stocks and bonds? No, in real estate.


http://www.itulip.com/images/networth2.jpg


The debt-to-net worth picture is even worse. The top 10% are in good shape, the top 20% in okay shape. Everyone else is in bad shape. The negative net worth of the bottom 40% is so extreme they need their own scale, which goes up into the 1,000s of percent on the left. Note the debt/net worth ratio of the bottom 40% is very sensitive to recessions. That group's household debt was nearly 20 times net worth in 1962, 6% of net worth in 1984 (briefly at parity with the top 10%), more than 20 times net worth in 1998, about 40% in 2001, and back up to 16 times net worth today. That'd be the torch and pitchfork crowd, assuming they can't be kept distracted by reality TV and shipped off to war as that ratio plunges back toward positive net worth levels during the next recession.


http://www.itulip.com/images/ahdpnw.gif


What will keep consumers spending is cash flow. Right now consumer cash flow is getting a dual boost from the somewhat unusual combination of steady employment growth and rising real wages. Agree on the cash flow point but on rising real wages–you're kidding, right? "Wages and salaries now make up the lowest share of the nation’s economy since the US began recording the data in 1947," says The New York Times (http://www.nytimes.com/2006/08/28/business/28wages.html?ex=1314417600&en=c60dea87527e4510&ei=5088&partner=rssnyt&emc=rss). "US real wages fall at fastest rate in 14 years," says The Financial Times (http://www.ft.com/cms/s/f269a8f4-c173-11d9-943f-00000e2511c8.html). Even the most bullish of the economists we've interviewed didn't assert that real wages are rising.

On the employment front, the goods-producing and government sectors now employ the same number of people. Employment growth has largely been in government, and that doesn't count the number of jobs which are for companies which produce products for sale to the government, which if included make government the nation's largest employer. How long can we keep printing money to employ people to keep the economy going, with the printed money monetized by trade partners? Latin American countries tried that back in the 1980s. Didn't work out.


http://www.itulip.com/images/totalemployment.jpg



Conclusions and observations

No business cycle lasts forever and the current one will be no different. In the middle of the expansions of the 1960s, 1980s and 1990s, the Federal Reserve tightened credit policy to dampen inflation. Interest rate sensitive sectors of the economy in general and housing in particular slowed. The weakness in economic growth allowed the Fed to ease policy, producing a jump in the stock market and several more years of growth. While a recession at this point in the business cycle can not be ruled out completely, given the strength of consumer spending, continued slow growth in the economy seems the most likely outcome.We'll get an "official" recession by Q4 2007 (http://www.itulip.com/forums/showthread.php?t=743), officially acknowledged in Q1 2008, although important sectors of the economy and regions of the country will fall into recession before then.

http://www.itulip.com/images/bank2.jpgAs James Scurlock points out, the best analogy for the housing bubble is Enron. The housing bubble was a kind of fraud on a nearly unimaginable scale. The Fed lowered rates to reflate the economy starting in 2000, LIBOR on which ARMs are based dropped 5% in less than a year, Greenspan joined the sales team in February 2004 and suggested homeowners buy ARMs even though fixed rates were are at 40 year lows, lenders sold homeowners on the idea of taking equity out of homes to raise cash to make discretionary purchases versus supporting the tradition of preservation of equity to build wealth and buffer household financial emergencies, the lending abuses we're all now hearing about–liar loans, etc.–ran for years under the noses of the Fed and FDIC, and Wall Street sold mortgage securities to naive pension fund managers in Europe and Asia by the billions. All with hardly a peep out of the press. Which is, by the way, one of the reasons the mainstream press is getting into trouble as businesses: after years of failing to report on the Enrons until after the damage has been done, few believe or trust them anymore. (Was at an event at MIT the other night and in a discussion about the financial press among a group of CEOs and VCs the consensus was that most of the financial press needs to be read as advertising.)

Dr. Steidtmann is dreaming if he believes that there will be no serious political fallout from the righting of the upside down consumer credit system (http://www.itulip.com/forums/showthread.php?t=1200). Maybe consultants to the consumer products, lending, and real estate industries won't get tagged. Maybe they will merely fade away, in the manner of Abby Cohen, or re-invent themselves as JJ Cramer did. Hard to say who exactly will get most of the blame. The usual targets of popular enmity are the banks themselves, at least that's been the case in other countries. People get cranky when their homes are taken away and their savings are wiped out.

We'll check back in with Dr. Steidtmann in a couple of years, after "investors" view property ownership with the same enthusiasm as they now have for pets.com stock. Maybe by that time we'll be deep into an Energy or Infrastructure bubble, and the housing bubble will be merely another finished chapter in the book on bubbles that's still being written. But if it's the last bubble, we'll keep our eyes open for the Frankenstein crowd.

Addendum: See our prediction of events to follow the collapse of the NASDAQ bubble (Nov. 1999) (http://www.bankrate.com/brm/news/investing/19991129f.asp?keyword=):
How about fraud? If this mania is like every other, the smell of easy money has attracted a lot of shady characters and motivated unseemly behavior among the otherwise ethical and lawful. Don't be surprised if the management of a few Internet favorites turns out to have cut a few legal corners. Finally, since so much consumer spending is done due to the addition of stock market "wealth" on the family balance sheet, expect consumer spending to drop fast, slowing the economy.

So what happens if the bubble pops? The Fed will of course pump up the cash supply again -- "flood the streets with money" as a previous Fed chairman was fond of saying -- as in late 1998 and the early part of 1999. And the bubble picks up where it left off, growing to the next stage of outrageous proportion. As scary as that is, the alternative is worse. If the new liquidity doesn't re-inflate the markets, we crash hard. The result of that unlikely event is a topic for another day.What happens to bubble pundits who take us on (March 2000) (http://origin.bankrate.com/brm/news/investing/20000321l.asp):
Your article "When (and Why) the Bubble Must Burst" is proof that you are eloquent and very well learned. However, your vision of the stock market is misguided and wrong. If you have been predicting the end of the so-called "mania" since 1998, you and any one who followed you would have missed the boat on the largest economic expansion of our time. - Steven Cadoff, PaineWebber

I have no quarrel with anyone who is in this market or who encourages playing the market. But I do take issue with those who fail to mention the risks. This leads many to put retirement money into the market, or take out a second mortgage on the house to buy stocks, or borrow money against stocks to buy property. My message is for them. - Eric Janszen iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032) the inside scoop.
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bart
04-13-07, 03:49 PM
...
Still, it's surprising to be called out in this way, and by none less than Deloitte Research's chief economist and a director of Consumer Business Research, and on such a weak pretext.
...




(*adjusting tin foil hat*)

My granpappy used to say that until you get ripped a new one by someone "in power", you're not getting across... so kudos to us all. :)

Perhaps this applies too:
"Economics exists to make astrology look respectable."
-- John Kenneth Galbraith

:eek: :rolleyes: ;)

bill
04-13-07, 04:32 PM
[quote]
The Deloitte web site says, "In 2003 Consulting Magazine selected Dr. Steidtmann as one of the 25 most influential consultants for his work in consumer spending forecasting. The obvious question is, consulting to whom?



I’m not sure whom Dr. Steidtmann is consulting for but I do know the name of the team he’s on “Panic Protection Team” and the abbreviation stays the same “PPT”

Uncle Jack
04-13-07, 08:33 PM
Speaking of pitchforks, I have been a little nervous about throwing my tin hat in with you guys for some time now. Warning that good times are coming to an end is about as popular as standing with a pile of money on the "Don't Pass" line at the craps table during a hot streak of Pass-line winners. When you win and the mob loses, it's the mob that gets upset, especially if you utter the words "I told you so."

I think this shot across the bow is but the first of many to come as they realize that EJ was right, and right early.

Jim Nickerson
04-14-07, 12:11 AM
Certainly not meaning to hurt anyone's feelings, I personally do not know what "we" are on iTulip. I would agree with EJ in his post, it is going to take some time to see how things sort out.

In the meanwhile, assuming "we" aren't idiots, does anyone wish to put forth arguments as to where "we" are in Ka-Poom right now?

The way interest rates have bounced suggests that the disinflation is over, while at the same time Pimco's Gross I believe has called for the "last bull market in bonds" or something to that effect, and if that happened it completely slipped by me.

The way gold is moving might suggest the Poom is happening now.

Personally, I think the disinflation is yet to fully occur, and the the current run-up in gold will correct. If anyone questions these thoughts, the basis for them is the way my joints are aching.

tree
04-14-07, 08:45 AM
Saw a commercial the other day in which a young woman shopped impulsively, first buying a pedicure thanks to her debit card, then shoes to go with the pedicure, then a new dress to go with the shoes. She finally drew the line at a huge diamond necklace, although by this point she clearly had the city at her feet thanks to her new (red) purchases.

I found it interesting that the commercial explicitly said "debit" card, not "credit." At least with a debit card one is not racking up huge interest payments, merely choosing to deplete one's resources, making the advertiser encouraging impulse spending more "responsible."

Dr. Steitdmann's contemptuous and derisive imagery to describe working people betrays his lack of humanity...and fear.

jk
04-14-07, 10:19 AM
Personally, I think the disinflation is yet to fully occur, and the the current run-up in gold will correct.
my read is the same as yours, jim. if/when we go into recession [or at least a more serious slowdown], we will be ENTERING the land of ka.

BK
04-14-07, 11:14 AM
The best barometer - is Property Tax overrides. The success/failure rate of Property tax over rides that are necessary to fight the rising tide of inflation tells the tale of how much pain is inflation and falling Home Equity causing the average American.

The Average Middle class guy/woman will OK these over rides until it begins to hurt their monthly spending. It appears that towns with large numbers of employees in the FIRE Economy, the over rides will pass easily (these folks due well with inflation).
In towns that are reliant on service and manufacturing you are beginning to see these over rides fail. In these towns many citizens will begin to pay close attention to how they spend their money and how Politicians are spending Tax receipts.

Sapiens
04-14-07, 11:16 AM
You did not need to dignify him with a reply.

But in that spirit, see this:

http://www.dieoff.com/page185.htm



SOCIAL PHYSICS
The true nature of the highly artificial economic organization on which peace rested becomes of utmost significance to the historian.
-- Karl Polanyi

Modern economics is shrouded in idiosyncratic self-serving definitions, arcane mathematics, and circular arguments which make it very difficult to understand. But once one gets the scorecard straight, it can be seen that modern economics is nothing more than a social imitation of nineteenth-century physics:

"[ With the development of modern physics ] it became possible to see orthodox economic theory for what it really was: a bowdlerized imitation of nineteenth-century physics…It was not the methods of science that were appropriated by the early neoclassicals as it was the appearances of science, for the early neoclassicals possessed a singularly inept understanding of the physics they so admired… [ Neoclassical economists attempt ] to reduce all social institutions such as money, property rights, and the market itself to epiphenomena of individual constrained optimization calculation. All these attempts have failed, despite their supposed dependence upon mathematical rigor, because they always inadvertently assume what they aim to deduce… Conservation principles are the key to the understanding of a mathematical formulation of any phenomenon, and it has been there that the neoclassicals have been woefully negligent." [[8]]

Economists are trained to believe that "money" is to the economy what "energy" is to the physical world. This leads them to believe that whatever is "economically" possible is "physically" possible too. What economists fail to realize is that the economy is a subsystem of the physical system, and thus constrained by universal physical laws that they have not studied.

Economists do not know that something must be physically possible before it can be economically possible. Since they only study money, they have no idea where the physical limits, and thus, economic limits are.

Since economists study the prices of everything, they feel they are qualified to issue opinions about everything. But the reality is quite the opposite. Economists first abstract all commodities to money -- which of course, obliterates all physical differences between the commodities themselves. This leaves economists uniquely unqualified to know the physical relationships between the commodities they purport to study. Because of their total dependence on the measure of "money", today's leading economists do not know the difference between "libraries" and "oil":

"Should we be taking steps to limit the use of these most precious stocks of society's capital so that they will still be available for our grandchildren? … Economists ask, Would future generations benefit more from larger stocks of natural capital such as oil, gas, and coal or from more produced capital such as additional scientists, better laboratories, and libraries linked together by information superhighways? … in the long run, oil and gas are not essential." [Nobel Laureate Paul Samuelson and William Nordhaus] [[9]]

Obviously, the economics taught by Samuelson and Nordhaus has nothing to do with science. [[10]] If it isn't science, it's ideology. Since economics has a political agenda, it becomes nothing more than politics in disguise.

bill
04-14-07, 01:09 PM
[quote] No. The Fed lights the fire and stands back–along with the SEC during the stock market bubble and the FDIC during the housing bubble–to watch it burn.



I want to be there the next time Bernanke pulls the book of matches out of his pocket and lights the next bubble fire. The next bon-fire will attract enough consumers as the government will implement more policy triggering new industry as stated in my post http://www.itulip.com/forums/showthread.php?p=8983#post8983 and http://www.itulip.com/forums/showthread.php?p=9033#post9033. Policy implementing change in a industry ( as Schwarzenegger calls it we” Green Clean” here in California</ST1:p) will be the spark that starts the next bubble fire. The consumer will follow new policy implemented and line up and purchase. I can hear it now, honey look what I purchased today it’s “green clean” and blah, blah, blah.

The use of Japanese energy saving technology, produced in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-comhttp://www.itulip.com/forums/ /><st1:State w:st=<ST1http://www.itulip.com/forums/ /><st1:country-region w:st=China</st1:country-region> and exported to the <st1:country-region w:st="on">US</st1:country-region> will create a new consumer market in the <st1:country-region w:st="on"><ST1:pUS</ST1:p</st1:country-region> as well as a global demand. The Japanese and Chinese would fund the consumer based on their export profit and keeping the factory workers at home going strong.
Infrastructure projects here in the US<ST1:p</ST1:p will also play a big role in the economy as pointed out in my previous post. http://www.itulip.com/forums/showthread.php?p=8445#post8445 and http://www.itulip.com/forums/showthread.php?p=8414#poststop I believe the US<ST1:p</ST1:p consumer will line up as stated above, but we will see a little “KA” before Bernanke (shaking hand) gets around to lighting the match to his "first" bubble fire.

tree
04-14-07, 07:46 PM
Just followed through on Bill's link to forum posting on building on toll roads.
Who will build them? Not expensive union labor but millions of Latino "guest workers"--better not let them be put on the path to citizenship however or Latinos will control elections. (Actually probably soon to do that anyway :o )

grapejelly
04-15-07, 10:15 AM
Just followed through on Bill's link to forum posting on building on toll roads.
Who will build them? Not expensive union labor but millions of Latino "guest workers"--better not let them be put on the path to citizenship however or Latinos will control elections. (Actually probably soon to do that anyway :o )

that will be done. The US needs millions of new immigrants to honor promises made to Boomers in terms of health care and retirement. So both problems are addressed :D

Charles Mackay
04-15-07, 10:54 AM
That'd be the torch and pitchfork crowd, assuming they can't be kept distracted by reality TV and shipped off to war.

Good One! :D

Here is a video from Kenneth Heebner, Co-Founder, Capital Growth Management

http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vvefEajX3Khs.asf

Apr 13 (Econotech FHPN)--"The one thing they [investors] shouldn't go anywhere near is a CDO or residential mortgage-backed securities rated triple-A by Moody's and S&P because these securities are going to get downgraded by the hundreds of billions because they are secured by sub-prime and Alt-A mortgages where there's going to be massive defaults ... most of them appear to have been sold to hedge funds and foreigners and pension funds. Interviewer: Who owns them? Heebner: No one wants to talk about it ... They [hedge funds] buy a pool of mortgages that yield 8%, and they borrow against the yen and pay 3% [a yen carry trade], and they lever it ten to one, and so you have a lucrative profit. The hedge fund that you're running, the manager gets 20% of the gain. So even if you go a year before you go broke in the hedge fund, you get rich until the thing gets shut down. So there's a huge incentive to gamble recklessly here in the hedge fund business ... They [largest investment banks] created, they invented this machine. They're the ones that came up with the idea of securitization. They know the products are toxic. I don't think they're going to suffer losses. They simply passed them on to everybody else ... The only impact [on the i-banks] this will have when it shuts down is that the profits flow from it will get less ... So, they know the product is toxic; they're not going to get caught. Interviewer: And basically you think they've disposed of all the risk. They created it, they made their fees, and they got rid of the risk. Heebner: That's right." Kenneth Heebner, manager, CGM Realty Fund, Bloomberg video, Apr 12, my transcription

stumann
04-16-07, 10:59 PM
The points made in the R WE IDIOTS article are oh so similar to those raised in countless Peak Oil books like The End of Suburbia & The Long Emergency. The housing/finance bubble might rightly be viewed as the last hurrah of US suburbanization. Yet then again, Itulip doesn't believe in Peak Oil...

- BUT the huge financial bubble behind housing/stocks was needed to finance more costly oil - the low hanging fruit was all gone, and the more costly oil could not be cost-effectively extracted under the then existing US suburban dream paradigm.

- the suburban dream paradigm we continue to be trapped in should've ended in the early 80s, yet Reagan's "morning in America" & a Michael J Fox "me generation" mentality gave it new, anti-depressent filled life -a bogus one, but a new life nonetheless

- the high % rates of the early 80s reflected the fact that cheap oil was gone. oil was getting too costly to extract & defend. % rates should've continued HIGHER - CHANGING AMERICAN BEHAVIOR - changing the suburban model to something else, but that didn't happen. Instead we got the Reagan/Bush/Greenspan voodoo econ cabal giving America what it really wanted - by hiding the true costs of the suburban dream under an ever more financialized carpet. globalization & global empire resulted in % rates not mattering - and they still don't...debtor falls behind on his or payments? push it farther into the future, extract a bit of equity, and everything continues swimmingly.

- the Ponzi debt creation now occurring inside the globalized financial apparatus has allowed the American consumer (the world's petty aristocracy) to continue down the path of suburbanization - Ford Explorers & Urban regeneration in the 90s - Hummers & MacMansions in the 00s. the true costs need never be addressed. subprime housing is only just a bump in the road, because "these people don't vote" (qoute from a New Orleans rescue person explaining why some neighborhoods remained flooded)

- as the US middle class grows ever smaller, the benefits of the current system will actually increase for those who remain within the priviliged class - meaning, the suburbanization model can well continue on in it's twisted logic because the lucky ones will have more at stake. meanwhile, America could well go the way of New Orleans, keeping in mind that what occured in New Orleans is the G rated version of what's going on in Bahgdad or any major city in Africa or South America. It's only shocking to some, the formerly priviliged American's now caught in the downdraft of suburbanization/globalization. To those outside the US, that's how it goes. life is hard.

- since it's a safe bet to say most of most of those involved in "investing" (internet gambling, more like) were probably included in the Reagan faithful, to now be waiting for the other shoe to drop, for the Big Decline to occur, is probably as foolhearty as believing it was "Morning in America" back in 80s. it wasn't. we were richer then as a nation than now, we just weren't being told we were on an hour by hour basis.

- the present paradigm has been uneconomical for nearly 30 years - but just because the evidence is now overwhelming doesn't mean it stops. we could very well continue down the path of global Ponzification for another 30, until Africa is pretty much depopulated, until South America becomes one big meat-4-export hacienda, until China becomes openly pro-slavery, and the US populace gives up on a university degree is preference for the Russian Dream - organized crime for the boys, prosititution for the girls.

- Elliotwave patterns suggest the financial system has been so skewed in order to pursue the Suburban American Dream worldwide, the pattern is dead! sounds foolish? it means the market mechinism is dead. the true cost of oil might never be realized and the big decline will continue to be pushed farther & farther into the future.

Chris Coles
04-18-07, 07:34 AM
If you take a look at the science behind disaster theory you will find that a collapse in the housing market is going to be as instantaneous as any other bubble burst. Basically, you get a long run up to a point where deep resistance is felt and then a fairly long period where no matter how hard everyone tries, the increases level out. But at some point, a complete collapse occurs taking the market right back to the beginning. A good book to read is The Downwave by Robert Beckman.

My money for the trigger is on another problem altogether; global warming. When New Scientist reported that the ice shelf Larson A had broken off Antarctica, it added that we should all worry if Larson B followed within the next 35 years. The following March, it too disintegrated, but not by breaking off. No, instead it went blue on the surface and melted before our eyes in three months. http://news.bbc.co.uk/1/hi/sci/tech/1880566.stm

Recently, we have had reports about the top of Greenland's Ice shelf, 10,000 feet above sea level, becoming covered in pools of blue water that run into Moulins, http://www.cei.org/pdf/ait/chXIV.pdf which are rivers, yes, rivers that flow into the top surface of the ice sheet.

http://www.msnbc.msn.com/id/9827949/displaymode/1107/s/2/framenumber/1/

If Greenland should suddenly go the way of Larson A sea level will rise by about 23 feet putting most of the worlds sea ports and coastal cities such as Los Angeles under water. http://news.nationalgeographic.com/news/2004/04/0408_040408_greenlandicemelt.html

http://www.msnbc.msn.com/id/11385475/

http://www.commondreams.org/headlines06/0811-06.htm

In addition, that single event might also trigger the plugging of the flow of the great conveyor of warm water to Western Europe triggering a collapse of the European economy.

You might think this is as fairyland an idea as Eric's about a collapse of house prices. But if you had been in my shoes over the last year, you would have seen that everywhere I visited, NM last autumn, TX This early spring, and here back in the UK; the weather has gone nuts. Las Cruces normal rainfall is 8 inches per annum but had had 20 inches before I arrived last October with another 2 or 3 inches during my stay. Houston was freezing in January but I watched as storms with tornadoes started a month early and temperatures beat all spring records right across the mid west. Back here in the UK, friends tell me that they had a very warm February with Strong winds that blew trees down all over the place and now we have summer temperatures in April.

Arctic ice is melting at an alarming rate http://news.nationalgeographic.com/news/2006/09/060914-arctic-ice.html and as it does so, the amount of heat it took to melt it is now available to heat the atmosphere rather than the ice. http://www.ens-newswire.com/ens/apr2006/2006-04-04-04.asp

The Arctic Tundra has been melted all summer since 2001, for the first time in history. http://www.sciencedaily.com/releases/2007/04/070410140922.htm

In my opinion, we are already seeing a greatly increased rise in temperatures that will accelerate and cause a sudden increase in sea levels that will trigger a collapse in trade world wide within the next few years. Forget about economics, worry about the weather. That is what is going to trip the world economy into a sudden collapse.

grapejelly
04-18-07, 08:07 AM
If you read the superb book by David Hackett Fischer, The Great Wave: Price Revolutions and the Rhythm of History (http://www.amazon.com/Great-Wave-Revolutions-Rhythm-History/dp/019505377X/ref=sr_1_1/102-8847550-1748152?ie=UTF8&s=books&qid=1176897782&sr=8-1), you learn that over the past thousand years there have been several well-defined long upward cycles in prices, punctuated by periods of relative equilibrium. The upward price cycles often, at their terminus, involve great social unrest.

But what is most interesting is that they also often involve unusual weather patterns!

How it all syncs is beyond me, but it seems to. In earlier periods unusual weather was so dire because human existence depended so much on the weather. One year there would be no summer, and mass starvation would result. One year there would be extremely unusual massive rains, and mass starvation would result.

I don't think things are like that anymore. Over the course of the millenium covered in the book, each price cycle often ends with a combination of political upheavals and bad weather, but the results of the weather are less and less dire as technology has advanced and made existence less borderline.

In any event, as you read a book like this you realize how bad things really were in the past compared to today. Some perspective anyway.

Chris Coles
04-18-07, 09:30 AM
I am not talking about weather in the sense of this years or next; what I am saying is that we are witnessing the swing change to a completely new paradigm. The changes to come will not swing back the following year, they will stay for thousands or even millions of years. When the sea rises, it will stay risen and the consequences will return the human race to a new dark age that will make the price of a house the very least of our worries.

SSmith
04-18-07, 03:36 PM
I've been wondering about this with respect to food. Global warming projections suggest that some food-growing areas will become unsuitable for farming, while other land--often further north--will become arable. A lot depends on the timing of factors like these:

1. Whether the new farmlands become suitable for farming before the old ones cannot sustain agriculture.

2. Whether an infrastructure, such as roads and railroads, will be in place to transport the food out of the new farming areas when needed. Brazil has trouble transporting food for export out of its interior because building this infrastructure is expensive.

3. When will governments admit that the old farmland will no longer support agriculture? Trade negotiations and agricultural subsidies show how tenaciously governments support existing farmers, so one would think they would not give up on these farmers easily after only a few bad years that could be explained away as part of the normal weather cycles. And if rich-country governments are not willing to abandon their existing farmers, they probably will not finance or otherwise support infrastructure construction elsewhere.

It also depends on the effects of global warming on agriculture in many countries at once. It's impossible to know how it will play out, or how quickly the climate changes will occur, but one can see developments ranging from a relatively easy and painless transition to extended periods of catastrophic famine. Even a few years of food shortages during a period of transition would be difficult, and it's hard to see anyone implementing the necessary (and expensive) changes before they become absolutely necessary.

Chris Coles
04-18-07, 07:32 PM
Personally, I do not believe there is anything that can be done to stop this change. I have ideas about some new forms of energy, but like every other outside the box thinker we cannot get access to funding for our thinking. So the ideas lie fallow. Financial institutions do not invest in thinkers; their world centres upon totally ephemeral concepts such as hedge funds, not real research or innovation. Governments only fund large research projects in large companies. That is the way of things in today's world. You get a minimal grant to make yourself attractive to a large company to fund you on-wards. Forget about freedom, free enterprise and the like. Just like the unstoppable train in a movie; nothing will change until it is too late to stop.

Certainly the record shows that within a century or so, there may be sufficient CO2 to match the time when the largest animal in North America was the size of a small dog. But my money is on Greenland losing most of its ice within the next decade. Yes, the experts say it cannot happen for a thousand years. Well, the second Larson went inside a year when the experts said it might go in another 35 years.

Go down to the nearest port and look at the sea level, it will come to within six feet of the top of the wharf. Now add another 20 feet.

DemonD
04-19-07, 02:19 AM
I just hope that hyperinflation doesn't cause pitchforks to become too expensive. I'll be prepared either way. :)

FRED
01-22-08, 10:03 PM
Here comes the pitchfork crowd. The first wave is peaceful.

Group plans to physically block evictions (http://www.bostonherald.com/business/general/view.bg?articleid=1068186&srvc=rss)

Local activists vow to begin this week physically blocking eviction of Bostonians who lose homes to foreclosures - even if protesters wind up in jail.

“We feel stopping evictions is important enough that if arrests are necessary, some people will be arrested,” said Steve Meacham of City Life, a Jamaica Plain group that plans to launch a civil-disobedience campaign tomorrow.

rabot10
01-30-08, 07:54 PM
The Idiot thing cought my attention, OK yes I"m an Idiot - but don't tell my kids OK

bart
01-30-08, 08:02 PM
Thought for the thread for today:

http://www.nowandfutures.com/grins/caution_idiot.png

jk
01-30-08, 08:32 PM
time for an interview with Carl Steidtmann, chief economist and director, Consumer Business - Deloitte Research? maybe he can cheer us up.

FRED
01-30-08, 09:11 PM
time for an interview with Carl Steidtmann, chief economist and director, Consumer Business - Deloitte Research? maybe he can cheer us up.

Great idea! Even if he doesn't accept, it'll be fun sending him letters.

Sharky
04-02-09, 03:14 AM
Carl Steidtmann seems to write most of the editorial for Deloitte's Economic & Market Review. Some entertaining stuff in the Apr 2007 issue:

http://www.deloitte.com/dtt/cda/doc/content/dtt_EMR1Q042007.pdf
http://www.deloitte.com/dtt/article/0,2297,sid%3D40742&cid%3D41537,00.html


Much of the economic pessimism comes from a strong belief that in the face of a dismal housing market, the consumer can not continue to spend. Nothing could be further from the truth. While consumer cash flow has been hurt by a reduction in home mortgage refinancing, job and wage growth continue to be healthy. Employers added nearly 450K net new jobs in Q1 2007, a slowdown from a year ago but still enough to lift real consumer spending by more than 3%.

tombat1913
04-02-09, 05:53 AM
http://i.dailymail.co.uk/i/pix/2009/04/02/article-1166349-04384C59000005DC-99_468x286.jpg

http://i.dailymail.co.uk/i/pix/2009/04/01/article-1166349-0438475A000005DC-500_468x738.jpg

He's right, I don't see one pitchfork! :D

Rajiv
04-02-09, 05:59 AM
Yes, but we do see batons, handcuffs and tazers and of course "star trooper" helmets!

Chris Coles
04-02-09, 06:35 AM
Yes, but we do see batons, handcuffs and tazers and of course "star trooper" helmets!

BBC TV and Channel 4 TV news reports have clearly shown that there was very little violence. The young man is almost certainly wearing red paint on his face. The worst that I have seen was some idiots breaking a window in RBS and being clearly watched and subsequently caught and charged.

The UK has got civilised protest down to a fine art form that many other nations could learn from.

Rajiv
04-02-09, 06:39 AM
I was in no way implying that there was violence -- I was responding to the "pitchfork" comment -- It was clear that the young man had used paint.

Chris Coles
04-02-09, 06:54 AM
I was in no way implying that there was violence -- I was responding to the "pitchfork" comment -- It was clear that the young man had used paint.

No Problem Rajiv, I had not assumed you were thinking the worst and I should have put a big smily at the end to show that.:D:D

staci_vay
04-02-09, 10:32 AM
Heck, we don't have to worry anymore about banks entering into foreclosures. With the storke of a pen, we just added $100 trillion in notional value to banks balance sheets with the new mark to magic FASB rules. Banks will be much happier now and much more solvent. Amazing after all this stimulus and bailouts, all anybody needed to do was stoke a pen and create fictitious bank value. When will the American public wake up??????????????????????

pwcmba
10-27-09, 12:05 PM
http://www.chicagobreakingnews.com/2009/10/american-bankers-association-protest-michigan-avenue-chicago-showdown.html

Bank protesters descend on downtown Chicago

<ABBR class=published title=2009-10-27T10:39:43-06:00>October 27, 2009 10:39 AM</ABBR> | No Comments (http://www.chicagobreakingnews.com/2009/10/american-bankers-association-protest-michigan-avenue-chicago-showdown.html#comments)

Streets near the Loop (http://www.chicagobreakingnews.com/neighborhoods.html?region=29734) are shut down as several hundred protesters rallied this morning against the American Bankers Association holding its annual convention in Chicago (http://www.chicagobreakingnews.com/neighborhoods.html?region=3275031).

At about the 10:30 a.m., the northbound lanes of Michigan Avenue were closed as the protesters marched across the bridge and gathered near Pioneer Court.
The demonstrators had arrived in buses on Upper Wacker Drive and Michigan Avenue just south of the Chicago (http://www.chicagobreakingnews.com/neighborhoods.html?region=3275031) River.
Check back for more details.

pwcmba
10-27-09, 12:44 PM
More coverage-

http://www.cnbc.com/id/15840232?video=1310035421&play=1

number of protestors has grown to "several thousand" WOW.

metalman
10-27-09, 02:56 PM
More coverage-

http://www.cnbc.com/id/15840232?video=1310035421&play=1

number of protestors has grown to "several thousand" WOW.

who organized this protest? let's send money.

Slimprofits
10-27-09, 03:15 PM
who organized this protest? let's send money.

The SEIU

http://action.seiu.org/page/s/abarsvp

http://www.seiu.org/2009/10/photos-the-first-steps-toward-change.php

and the AFL-CIO

Slimprofits
10-27-09, 03:19 PM
On the final day of a three-day protest directed at the banking industry's top trade group, civil rights leader Jesse Jackson addressed a crowd of what is reported to be more 5,000 people, along with did AFL-CIO president Richard Trumka, SEIU President Andy Stern and Secretary-Treasurer Anna Burger.

http://chicago.indymedia.org/newswire/display/87906/index.php

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strittmatter
10-27-09, 03:25 PM
hmmmm.....

no mention of this on foxnewsdotcom nor googlenews headline page??????

you tryin to start trouble pwcmba???

metalman
10-27-09, 03:39 PM
hmmmm.....

no mention of this on foxnewsdotcom nor googlenews headline page??????

you tryin to start trouble pwcmba???

google news has it...

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Demonstrators protest at Chicago banker's meeting (http://www.kwqc.com/Global/story.asp?S=11393205)

KWQC 6 - ‎23 minutes ago‎
AP - October 27, 2009 3:14 PM ET CHICAGO (AP) - Police estimate about 2000 protesters, joined by the Rev. Jesse Jackson, marched to demand banking reforms ...
"Showdown In Chicago": Thousands Of Protesters Gather, Jesse Jackson, Labor ... (http://www.huffingtonpost.com/2009/10/27/showdown-in-chicago-thous_n_335533.html) Huffington Post (blog)

Thousands protest bailout bonuses at Chicago bank meeting (http://www.google.com/hostednews/afp/article/ALeqM5iZ5UJumwTlpF4areO0Xq0WApx1Fg) AFP

Thousands Rally For Financial Reform In Chicago (http://tpmlivewire.talkingpointsmemo.com/2009/10/thousands-rally-for-financial-reform-in-chicago.php) TPM LiveWire (blog)

Chicago Tribune (http://www.chicagotribune.com/chi-091026-bankers-protests-photos,0,7018324.photogallery) - Bay Area Indymedia (http://www.indybay.org/newsitems/2009/10/27/18626859.php)

metalman
10-27-09, 03:40 PM
great... sleazy bankers breathing new life into sleazy unions.

we_are_toast
10-27-09, 04:45 PM
Time to go long Guillotine manufacturers?

goadam1
10-27-09, 04:49 PM
Time to go long Guillotine manufacturers?

silly protesters. Anyway, if they are looking for bankers, they can start here at 15 central park west. Lovely building and filled with bankers.

http://curbed.com/uploads/2005_09_15cpw.jpg

metalman
10-27-09, 06:23 PM
no kidding... have friends on unemployment 1 yr now who say they 'don't know what they will do' if the gov't stops sending checks.


Please note: We are experiencing heavy call volume on our toll free line. If you continue to receive a busy signal, please either try again later or consider filing your new or continued claim through our new online Unemployment Insurance System (https://nhuis.nh.gov/claimant/).

If you are having trouble accessing the new online Unemployment Insurance System (https://nhuis.nh.gov/claimant/), you can submit a request for assistance via the Claims Assistance Form (https://www4.egov.nh.gov/nhes_eforms/comments.asp)

http://www.nh.gov/nhes/

thunderdownunder
10-27-09, 08:02 PM
http://www.chicagotribune.com/media/photo/2009-10/50088843.jpg

GS $23 Billion bonus package - Thats just the Bonus - Donate It to stop all the Foreclosures in 2010 - Is it just me that looks at this and wants to punch someone so hard, not stopping until they wake up, really wake up and see just how sick, virally, obscenely sick this has become.

The Scales of blind justice are not just crooked. They were broken on purpose.
reminds me of that song "American Idiot" by Green day from Boulevard of broken dreams (aptly named)

http://www.youtube.com/watch?v=FRFfpBOX-Pk
3 mins of truth

HOWEVER - being a History buff I would remind you Goldman Sucks(sic), that a certain Japanese Commander after a raid which rightly outraged the American public said "I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve."
Anger them and they will serve you up as b-b-q Calamari el dent'e.
And you can take that to the Bank!!

BiscayneSunrise
10-27-09, 08:21 PM
http://www.chicagotribune.com/media/photo/2009-10/50088843.jpg

GS $23 Billion bonus package - Thats just the Bonus - Donate It to stop all the Foreclosures in 2010 - Is it just me that looks at this and wants to punch someone so hard, not stopping until they wake up, really wake up and see just how sick, virally, obscenely sick this has become.

HOWEVER - being a History buff I would remind you Goldman Sucks(sic), that a certain Japanese Commander after a raid which rightly outraged the American public said "I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve."
Anger them and they will serve you up as b-b-q Calamari el dent'e.
And you can take that to the Bank!!

Your quote from Yamamoto reminded me of the sinister underside of western civilization. That is, throughout our history, from the Greeks on, when the west was threatened we often dithered. Once the collective decision was made that the threat was existential, action was swift and sure: The threat is eliminated in the harshest way possible: "Carthago delenda est"

The Romans laid waste to Carthage; in the 18th Century, George Washington saw Indian alliances with the British as a major threat to the fledgling nation and crushed the Iroquois nation. Most recently, In the 20th Century threats to the west from Germany and Japan were met with fire bombing and atomic weapons. "Shock and Awe" is not a new concept.

There is no doubt there will be some sort of backlash against the wealthy and bankers. But if public opinion really turns on this financial issue and continuation of current policy is recognized as an existential threat, it could get ugly.

Chris Coles
10-28-09, 04:31 AM
Interestingly, Radio 4 Today here in the UK, (Our very reliable flagship news program, better than ANY TV news service), had a very interesting interview in Pakistan about the perception that the whole nation blames their current problems on India and the US.

0733
US Secretary of State Hilary Clinton has arrived in Pakistan for a mission President Obama considers crucial in the military strategy against the Taliban. While the outside world focuses on the Pakistan/Afghan border and the offensive launched by the Pakistan army against the Taliban in south Waziristan, many Pakistanis blame their troubles less on the insurgents and more on their old antagonist, India, and their long-term ally, the US. Correspondent Andrew Hosken reports from the extraordinary ceremony which marks the closure of the Pakistan-India border crossing near Lahore each evening.

http://news.bbc.co.uk/today/hi/listen_again/default.stm

The Listen Again service gives you the full program from 06.00 am, the item in question is timed at 07.33 am.

VERY thought provoking. But, in the end, just another example of "Blow Back". (And no, I deliberately did not put a question mark at the end).

FRED
11-15-09, 05:43 PM
As Foreclosure Nightmares Increase, Will More Homeowners Pay Off Their Bankers in Violence? (http://www.alternet.org/world/143813/as_foreclosure_nightmares_increase,_will_more_home owners_pay_off_their_bankers_in_violence?page=1)
By Scott Thill, AlterNet. Posted November 9, 2009

The economic crisis revealed late-capitalism's central offense: Human beings are being transparently treated if they were mere transactions. And they're going postal over it.

Anger and discontent are reaching a boil as a lethal combination of economic corruption and political collusion are deleveraged across the United States.
From recent rampages in Orlando, Fla., to mortgage-related torture in Los Angeles, certain members of the citizenry seem to have had their fill of being manipulated for the financial gain of others, and they're firing back with force.

And the situation threatens to burn hotter as the winter holidays -- always a peak period fof domestic violence, due mostly to financial stress -- approach to spark its frazzled strands. The economic crisis revealed late-capitalism's central offense: Human beings are being transparently treated if they were mere transactions. And they're going postal over it.

"They left me to rot," Jason Rodriguez said when asked why he went on a shooting rampage at the Orlando engineering firm Reynolds, Smith and Hills that had fired him two years ago.

That compressed vitriol is also found in the Los Angeles case, where Daniel Weston and Gustavo Canez allegedly imprisoned and tortured loan-modification agents Lamond Dean and Luis Garcia while three others -- Mario Soloman Gonzales, Marissa Parker and Mary Ann Parmelee, a realtor -- sat and watched.

According to the Los Angeles District Attorney's office, "Weston and Parmelee live in a house that is in foreclosure," and they "allegedly sought loan-modification assistance from the victims but believed that nothing was being done and wanted their money back."

When they didn't get it, they evidently extracted their payback in violent revenge. more... (http://www.alternet.org/world/143813/as_foreclosure_nightmares_increase,_will_more_home owners_pay_off_their_bankers_in_violence?page=1)

touchring
11-16-09, 04:35 AM
no kidding... have friends on unemployment 1 yr now who say they 'don't know what they will do' if the gov't stops sending checks.




for ladies especially, there's always the foreign language teacher job in East Asia.

dylan132
11-17-09, 09:26 AM
Here is a link to the video of Cramer.:eek:

http://www.deepcapture.com/jim-cramer-cowly-hints-how-he-broke-the-law-2-mar-2007/

metalman
02-16-10, 06:11 PM
"Are they seething with righteous anger with pitch forks and torches in hand? Are they ready to storm the bastions of so-called housing boosters like the closing scene in some modern day Frankenstein movie? Or does the ‘I’ in iTulip actually stand for idiot?"
- Carl Steidtmann, chief economist and director, Consumer Business - Deloitte Research - April 11, 2007)

http://www.itulip.com/forums/../images/bank2.jpg
three years later...


Greece: Bomb explodes at JPMorgan branch (http://finance.yahoo.com/news/Greece-Bomb-explodes-at-apf-1278864848.html;_ylt=An9gVauWU0f1xViVLBTtN2e7YWsA; _ylu=X3oDMTE1cjUydm04BHBvcwM2BHNlYwN0b3BTdG9yaWVzB HNsawNncmVlY2Vib21iZXg-?x=0&sec=topStories&pos=4&asset=&ccode=)

On Tuesday February 16, 2010, 1:48 pm EST
ATHENS, Greece (AP) -- Police in the Greek capital say a bomb has exploded at the offices of American financial services firm <ygg:entity id="t2" ref="#RttB0HT73BGcQT93XWfsEA">JPMorgan Chase</ygg:entity> & Co., causing no injuries.

The blast occurred early evening Tuesday in an upscale area of central Athens, following a warning telephone call to an Athens newspaper.

Slimprofits
07-17-10, 11:41 AM
http://www.cnn.com/2010/CRIME/07/17/illinois.carbomb/

A man is in custody on charges of felony arson after allegedly driving a car bomb into an Illinois bank Friday evening.

David A. Whitesell, 48, of Blue Island, Illinois, was arrested after witnesses at the scene identified him, the Lockport Police Department said.

Whitesell drove his car into the front entrance of a PNC bank in Lockport, police said. The car exploded as he walked away, police said, adding that he used the same material found in fireworks.

No injuries were reported because the bank was closed and unoccupied at the time, authorities said.

Whitesell is being held on charges of felony arson and felony criminal damage to property with an incendiary device.

His motive is unknown, according to police.

dummass
07-17-10, 11:46 AM
His motive is unknown, according to police.

:o Hummmm, what might be his motive? :o

Rajiv
07-18-10, 12:30 AM
:o Hummmm, what might be his motive? :o

1 In Custody After Explosion At Lockport Bank
Motive May Have Been Related To Foreclosure and Repossession of Car (http://cbs2chicago.com/local/lockport.bank.explosion.2.1810085.html)

dummass
07-18-10, 03:57 PM
The media is doing a good job of containing this event. With the derelict picture of the perp and all the one sided opinions of witnesses, case closed.

metalman
07-18-10, 05:58 PM
The media is doing a good job of containing this event. With the derelict picture of the perp and all the one sided opinions of witnesses, case closed.

er... msm can't condone bombings & arson.

reggie
07-18-10, 11:25 PM
http://www.cnn.com/2010/CRIME/07/17/illinois.carbomb/

A man is in custody on charges of felony arson after allegedly driving a car bomb into an Illinois bank Friday evening.

David A. Whitesell, 48, of Blue Island, Illinois, was arrested after witnesses at the scene identified him, the Lockport Police Department said.

Whitesell drove his car into the front entrance of a PNC bank in Lockport, police said. The car exploded as he walked away, police said, adding that he used the same material found in fireworks.

No injuries were reported because the bank was closed and unoccupied at the time, authorities said.

Whitesell is being held on charges of felony arson and felony criminal damage to property with an incendiary device.

His motive is unknown, according to police.
Let me guess, as this story develops we'll hear reports that the man has no recollection of the event whatsoever. Then the story will quietly die.