Those Missing Trillions. 
The magical Calculated Risk features a video tale from Jim the Realtor in Chula Vista, south of San Diego, that illustrates the scale of the missing money. And why it is believable that
the eight fool big banks may all be insolvent before the Four Horseman are done with the planet. With Jim the droll and crack wise realtor, we visit a block of $1.4 and $1.6 million homes that are bland, tidy, swollen with Toll Brothers extravagance, and laid out on the rolling naked hills of San Diego County just north of the border. All seems normal and upbeat until Jim stops at two foreclosed haciendas that most resemble the other bustling mansions. The first is 4300 square feet (right), and resembles a series of children's blocks all assembled to be a house for grownups. There is an abandoned fish pond in the front walk. The interior has been stripped by the fled owners (below). Jim keeps saying, "This is $585k." Walking through it, you wonder why anyone would buy it for anything. But then you realize that the rest of the block has million dollar plus mortgages. The scale of real estate crisis. The whole neighborhood is underwater. It is junk. The people are paying their monthly mortgages -- and Jim said 8 of the neighbors have $1 million dollar paper on their houses -- while nearby
is a ruin that wrecks all value. Next door to one ruin is another -- 5300 sq. feet at $889k. It is also grim, stripped, abandoned, with a hole in the backyard that was supposed to be a pool or a cabana. Jim reminds us that this whole neighborhood is beneath the flight path to the San Diego airport, and that several planes have passed overhead. Not pleasant to consider that it is easy to count at least $10m of completely never to be recovered house debt. Debt that is now a burden to rich people. Banks passed those mortgages along where they were rolled into the sausages that were sold around the world. And smart guy built derivatives to represent the sausage; and you coul buy and sell both sides. All this is now part of the toxic waste that has wrecked the banking system worldwide and made Citi and BofA and major EU banks insolvent. Those missing trillions all began in the empty smokey skies and shrub brush hills and beige stucco rancheros of Chula Vista.
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As the empty residential ruins proliferate in silent testimony to American excess, the blame game continues to go round and round. The spinning bottle stops randomly until each of the players has been kissed at least once. Innocence lost is never restored completely. We’re all adults now. Somehow, we all feel obligated to clean up the mess. The time for blame and band-aids has long passed. We will have to swallow our pride and shift our alliances. Starting at zero, we’ve been given a chance to reorder priorities. As such, we can still hope to stampede the colored horses of the apocalypse over the cliff before they stampede us.
Sources predict that the next shoe is yet to drop; that the commercial real estate bubble is yet to pop. The escaping gas is certain to raise temperatures. As tumbleweeds blow through our nation’s industrial parks, the outlines of the new template for American commerce will begin to emerge. Zoning restrictions against animal husbandry will need to fall to favor the need for milk, butter and bread for our vegetarian brothers and sisters. And therein lies the obvious way forward: cottage industries providing for the need and pleasure of the locals, each one with some with some good or service to swap for the privilege of keeping the stomach from eating itself …and occasionally to kiss without benefit of a bottle – the same as it is now in Afghanistan.
I feel truly sorry for the retirees who saved their whole lives to buy a nice place in California, Arizona, or Florida. They now have worthless possibly underwater real estate and the other nest eggs they were going to give their heirs is gone.
Retirees and investors are slow to anger, but when the truth slowly comes out, and who is to blame (everyone in Washington is to blame) heads will roll.
I saw Stephanopolis with several of the conspirators on "This Week" Everyone was chummy.
I'd take any home in my own modest neighorhood any day over those over-priced stucco elephants.
Chula Vista is also close to the Mexican border and is a target for kidnappings by the drug cartels. Especially affluent families with roots in South America that have settled there.
*How former communist regimes show they have become good capitalists*
Does any of this sound familiar?
Comrade President Medvedev spoke to the Russian people concerning the unemployment situation that is approaching 8%. The targeted stimulus plan of 44 billion rubles (1.4 billion USD) will be in roads and infrastructure projects, as well as, helping laid off workers obtain new qualifications. Interview is the first of many saying that the people have a right to know what the government is planning. Private industry support comes with governmental monitoring of how the money is spent.
"It's easy to work when there are large revenues, especially from the export of oil and gas," Medvedev said in the scripted, prerecorded interview on state Rossiya television. "It seems you don't have to do anything yourself, and the income drips and drips, and that's good.
"But in this situation, first you have to learn how to spend money, budget money, rationally, and second you have to prove yourself as a skilled manager," he said.
The president also sought to ease nervousness over the decline of the ruble, which has lost more than 30 percent of its value in recent months.
Funny about the reference to oil and gas revenues... like they just appear out of nowhere.
American ingenue, grit, and will, will provide opportunities for many crafty and zany entrepreneurs to make the best of this economic reboot. New fortunes are destined to be made and, as is usually the case, those who sign up for the gov dole, are simply left to stand in their recently updated and freshly refurbished quarter where time stands still and human spirit wanes. The old adages will still apply like "Nothing in life is free" and " Life is what you make of it" and "The early bird catches the worm." Despite the redundant (yes, it's been done before) political call for "change" to garner some votes, humanity forges ahead, sometimes too slowly, but, we are always adjusting as individuals, are we not? We do, if we want to.
Can anyone tell me that the all-in-one internet/ television fusion hasn't been possible for at least five years? What's the hold up?
CFB's have cut my electric bill by at least one third. Bring some more innovation worth my attention!!!
The list is long and the real horse and rider that can put the "Bit in the Teeth" will prevail.
*Aaahh, to be a young man!!*
*Aaahh to be a young man with a worthy steed*
As California is finding out, the State has been overstepping its bounds for years/ decades, and in doing so, jeopardized its very solvency... both budgetary ans socially. The forewarnings of massive layoffs (how many mid management jobs?) in government entities and rises in tax impositions to the public, shows that there is a tad of comprehension. Buy outs of career state employees will be immensely costly. Yet, there is not much of an alternative than to reset and then explore options that are actually more conservative in thought Big government is unsustainable. Smaller government and more enterprise? Maybe?
Businesses should run the business of the Nation from Postal Service to curb construction.
It's said, California is 10 years ahead of everybody else?
Let's hope they have lost the edge
Eisenhower warned of the military-industrial complex. I think he had the right idea but America has faced a much greater danger the past several decades from another kind of complex - the legislative-lobbying complex. As the geometric feedback cycle of lobbying and legislation developed and grew through the past several decades the concerns of Eisenhower have surely been eclipsed. At a minimum, there was a tangible benefit to the nation and our standing in the world from a well coordinated and minimally abusive military-industrial complex. In fact the preamble to his famous speech allowed as much:
“A vital element in keeping the peace is our military establishment. Our arms must be mighty, ready for instant action, so that no potential aggressor may be tempted to risk his own destruction… “
The same cannot be said of the current complex binding this great nation. The legislation-lobbying complex has reached its ultimate nadir and is now in the process of destroying its host. The current banking and tainted asset crisis devouring the world’s wealth and security was fueled and nurtured by the revolving door of graft, kickbacks, and influence peddling that entwists the legislative branch and K street. Nearly every bit of the legislative mounds emanating annually from the capitol has been engorged by this corrosive relationship. The nation, world, and our very future all are brushed aside with a mere hand wave by the insatiable menace that developed when the legislative branch joined in cahoots with the lobbying interests.
Follow along with me through President Eisenhower’s seminal speech replacing his concern with my own and see how Ike’s words still resonate truth:
“This conjunction of an immense legislative establishment and a large lobbying industry is new in the American experience. The total influence - economic, political, even spiritual - is felt in every city, every statehouse, every office of the federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the legislative-lobbying complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge lobbying and legislative machinery with our peaceful methods and goals so that security and liberty may prosper together.”
Again the only jarring portion of this prescient speech rewritten with our current crises in mind would be the line recognizing any benefit from such a complex. Perhaps Eisenhower anticipated this rotten evolution of his so-coined military-industrial complex when he actually drafted it as a dangerous triumvirate termed the military-industrial-congressional complex. The last third of this metastasizing cabal was dropped before his speech in order to please the legislature.
When you have Tom Daschle, mild mannered commoner from South Dakota, and his wife able to amass multi-millions of dollars in fees in just a few years simply due to his prestige and potential to influence Congress we have picked up a glint of what this ill-fated cartel has become. One can only imagine what benefit the companies that retained the Daschles received from Congress. Perhaps this is to be expected with a two trillion dollar budget that is crafted at the whim of individual politicians. Regardless, it is the root of our present demise and the end of Capitalism. Let the new Dark Ages begin.
Interesting about the Military industrial complex, however read the whole speech, it is prescient:
Important quotes
"Crises there will continue to be. In meeting them, whether foreign or domestic, great or small, there is a recurring temptation to feel that some spectacular and costly action could become the miraculous solution to all current difficulties. A huge increase in newer elements of our defense; development of unrealistic programs to cure every ill in agriculture; a dramatic expansion in basic and applied research -- these and many other possibilities, each possibly promising in itself, may be suggested as the only way to the road we wish to travel.
But each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs -- balance between the private and the public economy, balance between cost and hoped for advantage -- balance between the clearly necessary and the comfortably desirable; balance between our essential requirements as a nation and the duties imposed by the nation upon the individual; balance between actions of the moment and the national welfare of the future. Good judgment seeks balance and progress; lack of it eventually finds imbalance and frustration. "
Later on he says
"Another factor in maintaining balance involves the element of time. As we peer into society's future, we -- you and I, and our government -- must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow."
With regard to what Jee, Chuck and Eisenhower are telling us here, our current strategy in confronting every possible and impossible challenge suddenly becomes clear. As we recognize our (former) virtually limitless wealth, we have at the same time forgotten its source: "our toil, resources and livelihood... (and also) the very structure of our society". We dismiss our own role in the nurturing of the "golden goose" as we dismiss the inherent value of the currencies we print with abandon.
As such, we can be quite certain that every diplomatic effort advanced by our globe-trotting Secretary of State and the Special Envoys assigned to the various hot spots around the world will consist of nothing more substantial than buckets of dubious dollars which most will be eager to accept on the basis of the remnant of American ‘good will’ (in its commercial sense) but without any intention of keeping to their end of the bargain. We, on the other hand, will be satisfied to get exactly what we paid for – style over substance.
We have become far too dependent on financial solutions when faced with any crisis – from Katrina to TARP. The Obama administration represents the nadir of such ineffective policy. The expected result can be envisioned perhaps in the sequel to the “Slumdog” movie in which the protagonist finds himself back in some version of Mother Theresa’s hospice once again; or in Detroit where the autoworkers union, in need of ever increasing infusions of cash to sustain itself, ultimately receives it by the truckload, simply to burn in the oil barrels to keep the men warm during Michigan’s legendary winters.
Thanks for further fleshing out the Eisenhower speech, Jee! That goes quite a bit further in establishing Ike as a visionary.
To the video that prompted this posting: I could not help but think of Sternsville from Atlas after seeing the stripped pillars (pillars for goodness-sake) and trim from those abandoned (foreclosed) houses. I am reminded of the telephone wires used to pen chickens. John B. had it right when he referenced a potential, once unthinkable, future involving the raising of farm animals in locals such as these.
I can not imagine finding this information right on time, thank you.