MaxedOutMama

US Domestic

2008-05-15T05:50:00.000-07:00

The general business conditions index fell below zero, to -3.2. The new orders index remained close to zero, and the shipments index, while positive, declined markedly. The prices paid index exceeded its earlier record high by a wide margin, reaching 69.6, while the prices received index dipped several points.

Expectations by firms were that they would be raising prices considerably more than last year in 2008. Input cost increases were not recovered in the earlier period, and some of that should show up this year. Expectations were for input costs to continue to rise.

Initial Claims, while not dire, are still increasing on a seasonally adjusted (SA) basis. On an NSA basis they continue to decline. The same pattern holds true for continuing claims, which dropped over 123,000 for May 3rd (continuing claims run a week behind initial claims). The level of claims is consistent with recession. To understand the impact, compare May 3rd's continuing claims this year (2,833,473 NSA) to the comparable week in 2007 (2,290,364), or a YoY increase of 23.7%. Needless to say this does not help the economy. It equates to an NSA insured employment increase of 0.4%, which is significant.

One of the weaknesses of measuring insured employment is that after six months unemployed individuals drop off the rolls.

Although May treasury receipts could recover, the deposit pattern for FUT (Federal Unemployment Tax) compared to May 2007 is markedly worse. I did expect to see this, but not quite as emphatically. As we move into the spring and summer months building is at its height and therefore the change in employment indicators should be emphasized for this period.

April G.17: Industrial production dropped 0.7, and the numbers look very similar to February. Of most concern is the 1.1% drop in business equipment. That is a very bad sign, and markedly worse than February. Based on that figure, one might suspect that Q2 GDP will be negative. On a YoY basis, industrial production has managed to climb 0.2%. Hardly strong. The positive subcategories on a YoY basis are business equipment (3.0), materials (1.3), mining (3.1), and utilities (.8). And for April the changes were business equipment (-1.1), materials (-.7), mining (-.8), and utilities (+.3).

Capacity utilization dropped to 79.7. Compare that to the lows for the previous two recessions, which were 78.6 for 91 and 73.6 for 01 (with the bottoms occurring later in those cycles). So the technical economic description of this report should be "piss-poor". April was quite cold, which would have driven up the demand for utilities.

Philly Fed: (the theme is great expectations; note the 2001 pattern)

The effect of the rebate checks on the general economy will probably be muted. I expect utility companies and credit card companies to see better payment patterns and lower delinquencies. I would expect some benefit to the Walmarts of the retailing world, as people who have been avoiding spending on clothing go in and spend on jeans and the like. But consumer psychology is not going to change at these gas and food price levels, so very few will spend most of it in the stores, and continued increases in food and gas prices indicate that the essentials will suck up this money from Washington for the majority of the recipients.

The major story for the US consumer economy over the next six months will be high prices for essentials and much more conservative spending by consumers. Also, the major impact of the home price debacle is due to hit this year. Refinance money usually provides at least a one year cushion for consumer spending, and the restrictions on HELOCs and home equity loans are quite recent. The major tightening on CC standards dates to last fall. Thus we are moving into the period in which 80% of the consumer credit restrictions are due to show up in economic numbers. The Wall Street layoffs are also moving some of the economic impact to a previously immune area with high incomes.

On gas consumption: I have seen estimates of the current drop YoY between 5.8% and 6.0%. However the pattern will accentuate through the year because of the marked drop in construction activity. Also, service businesses aimed at consumers such as home remodeling and lawn maintenance are due to have a tough season. Construction workers drive trucks and transport a lot of materials, so consumption falls should accelerate. The vehicle replacement effect is cumulative over time and will keep building.

One little-discussed aspect of the US economy, especially with respect to employment, is the impact of replacement of illegal workers. I suppose it is simply too politically incorrect to discuss.

The US economic numbers would look much worse and consumer consumption would be much worse if it were not for a very strong replacement of illegal workers by legal workers that is taking place. Because many illegal workers were trying to send money to foreign countries to support families, the consumption effect of illegal employment is very low, and may in fact be overbalanced by consumption of social services. This has some offsets for the US economy, which are preventing more dire numbers at this time.

It is almost certain that the relative impact of replacement of illegal workers with legal workers is providing more impetus to the US economy than the stimulus checks. Also, it will continue for longer. It is not just the replacement of workers, but the effect of removing underbidding for labor. A US worker simply cannot compete by bidding for wages sufficient to support him- or herself along with dependents in this country compared to an individual who is supporting dependents in a country with much lower living costs.

The Domestic Story Of The Day Is Polar Bears

2008-05-14T15:13:00.001-07:00

Internationally, it's probably the Ashkelon attack. Ms. Rice was taken off to the scene to survey the damage. Israel suspects that the Grad rockets, which are capable of reaching further into Israel, are coming from Iran. In any case, Israel is going to have to go back into Gaza.

But domestically, it's polar bears. They will be named an endangered species, but apparently Interior is changing a few things:

In making the announcement, Kempthorne said, “I am also announcing that this listing decision will be accompanied by administrative guidance and a rule that defines the scope of impact my decision will have, in order to protect the polar bear while limiting the unintended harm to the society and economy of the United States.”
...
“Listing the polar bear as threatened can reduce avoidable losses of polar bears. But it should not open the door to use of the ESA to regulate greenhouse gas emissions from automobiles, power plants, and other sources,” said Kempthorne. “That would be a wholly inappropriate use of the ESA law. The ESA is not the right tool to set U.S. climate policy.”
...
To make sure the ESA is not misused to regulate global climate change, Kempthorne promised the following actions:

* The U.S. Fish and Wildlife Service is proposing a 4(d) rule that states that if an activity is permissible under the stricter standards of the Marine Mammal Protection Act, it is also permissible under the ESA with respect to the polar bear. This rule, effective immediately, will ensure the protection of the bear while allowing us to continue to develop our natural resources in the arctic region in an environmentally sound way.
* Director Hall will issue guidance to staff that the best scientific data available today cannot make a causal connection between harm to listed species or their habitats and greenhouse gas emissions from a specific facility, or resource development project or government action.
* The Department will issue a Solicitor’s Opinion further clarifying these points.
* The Department will propose common sense modifications to the existing ESA regulatory language to prevent abuse of this listing to erect a back-door climate policy outside our normal system of political accountability.

And let the lawsuits begin! Hall's three page letter ruling out greenhouse gas emissions as an issue requiring consultation is here. The Sierra Club is correct in pointing out that allowing this to stand would greatly weaken ESA, so I think it's back to court:

“The Bush administration’s sham plan also proposes changes that could gut the Endangered Species Act and prevent it from ever being used to actually protect the polar bear or address global warming—which is precisely what is pushing the bear toward extinction.

“We don’t need to sacrifice polar bears and other wildlife just so Big Oil can add to their tens of billions in record profits. America already has the technology and the will to embrace a clean energy economy that will end our dangerous dependence on oil, fight global warming, and leave wild, pristine places like the Arctic intact.

This will be the issue that eventually breaks the back of the extreme wingers in the environmental movement by forcing Congress to impose some common sense limitations to the ability to sue forever. Because the wingers now have the law on their side; they will win in court on the basis of the SC's ruling about CO2. All of that work would be wasted if this interpretation sticks, so it's all of the non-rich population of the US against the wingers now. There are more non-rich US citizens than wingers.

If you love polar bears, don't worry. They'll do fine either way. It's wacky environmentalism that is now the endangered species!

God, I'm tired. Hopefully I'll get back to more blogging tomorrow. I'm sorry for not answering the comments and things. Everyone has their limitations.

Update: The 2007 CO2 case was Mass vs EPA, and the decision is here in pdf.
Further Update: The Anchoress turns her face to the wall and the wife chart, Dust My Broom provides an example of the "clean energy technology" the Sierra Club is advocating, Dr M points out tangentially that the Republicans do not get it, which they don't, and SC&A discovers that some people think environmental problems are the fault of the world-destroying Jews, enabled by the world-destroying Americans.

Retail & ECB Bank Lending

2008-05-13T05:49:00.000-07:00

Advance retail clocked an overall decline of 0.2% from March to April and an annual increase of 2.0%. On an annual basis that is well below the inflation rate.

Overall spending on gas dropped, even though gas prices increased. The pinch is really hitting now.

On an annual basis, some selected figures:
Motor vehicle dealers: -8.0%
Groceries: +6.1%
Gasoline: +16.3%

According to the ECB lending survey, banks plan to tighten business and household credit by the highest margins in 5 years (the length of the survey). The four future questions showed tightening quite similar to 2003, a year in which GDP in the core EU countries grew at less than 0.5%. So one would say that the European slowdown is underway.

The consumer outlier was purchase money mortgages, for which 32% of respondents intended to tighten. This is significantly higher than the previous height of 25% recorded in January 2004.

The business outlier was loans to large enterprises. 54% of respondents expected to tighten in the next quarter, whereas only 33% expected to tighten for small to medium enterprises. Short term lending was less affected, with only 33% expecting to tighten, whereas 53% of respondents intended to tighten long term.

There is a steep 3-quarter rise in tightening shown for all categories of lending. The trajectory for long term business loans beginning Jan 2007 through April 2008:

Jan 07: 3%
Apr 07: 8%
Jul 07: 10%
Oct 07: 34%
Jan 08: 35%
Apr 08: 53%

That is going to show up in the economy, no ifs, ands or buts. The percentage of respondents tightening short term business credit increased 10% points between January and April. In general European companies tend to be more dependent on bank lending than US companies.

In 2003 the tightening bias was easing throughout the year. I would say that Europe will be in recession by the end of this year. Inflation does have some masking effect there as well as in the US, but these are intimidating numbers.

Consider It Kenneth Fisherism In Action

2008-05-12T16:37:00.000-07:00

WSJ has this story charting the progress of a California family now going into Chapter 7. They will lose their home, of course. They owe more than $500,000 on that home and they have five kids. He's a truck driver and she's a clerk. They also have more than $100,000 of other debt. According to the article the BK total is $670,000 including CC, auto, etc.

Act 1: In 1995 they buy a house for $170,000. The downpayment is $11,000. Even figuring high closing costs, they couldn't have started out with a balance over $165,000. So, they must have pulled out somewhere around $340,000 on that house in twelve years to get to their current mortgage balance. That's over $28,000 a year.

Act 2: In 1999 he had a knee operation and was out of work for six months. They ended up filing bankruptcy and made payments for a couple of years. Needless to say, that was rough (they really don't allow you much to live on). I'm guessing that was the motive for...

Act 3: The 2001 refi. I'm sure they pulled cash out, plus financed some hefty fees. Obviously it was a high interest mortgage, because they must have been in BK at the time. Maybe they paid off the rest of their creditors. It must have felt good, and so set the stage for

Act 4: In 2003 they refinanced. I'm sure they rolled everything in. Needless to say the mortgage was probably more than they could really pay then, and so I'm sure they charged up some stuff, leading to

Act 5: In 2005 she was pregnant and went part-time, and they refinanced:

At the time, their house was appraised at $610,000. They took out a $505,000 loan -- roughly $452,000 went to pay off their prior loan, about $15,600 went to other outstanding debts and fees and the Floyds took out almost $23,000 in cash.

Before the last refi, in ten years they had managed to build up their mortgage balance to the tune of at least $290,000. It looks like they tried again in 2007, but no dice. They stopped paying the mortgage in April 2007, and the house is set to be sold in May 2008. Here is where this gets quite bizarre.

By December, the Floyds monthly payments, including back payment fees, reached $5,600. Mrs. Floyd has since asked Option One for loan modification. The couple also contacted Hope Now, a coalition of mortgage companies, investors and credit counselors. But the group said that they couldn't help the Floyds because they'd missed too many months of payments.

Yeah, and they don't have the income to pay a bleeping 500K mortgage! The interest rate is not their real problem. If they were paying IO on this at 7% (prime I-O) their mortgage payment would be over $35,000, plus taxes and insurance. Their joint incomes probably aren't more than 80K, and they have 5 kids, so that makes it effectively 70K max. Hoo-hah.

They didn't have the income to pay this mortgage in 2005, either. But of course Option One did not care, because it looked like they had plenty of equity margin. Option One knew this couple was going to lose the home sooner or later. Option One just didn't think Option One would be taking a loss on it when they did lose it.

FWIW, the 2005 appraisal is suspect. However they probably could have sold it then for about $550,000, and walked away after costs with more than the cash they got out then. They probably had at least $90,000 equity, and they might have been able to exit with 50K to pay all their bills. They would have been way ahead, aside from the rent-free feature of CA RE nowadays. You can pretty much count on getting 8 months free.

So why was this couple even thinking they had a chance to keep the house? This is the quote that got to me:

"I want to pay my debt. I pay my federal and state taxes like I'm supposed to, I go to work, and I just can't find any help," said Ms. Floyd. "It just isn't fair."

It isn't fair? This couple really can't afford a mortgage over 240K, and 210K would be a lot more achievable. To return these people to the ability to pay their mortgage, they need to be bailed out to the tune of 50%. After that Hope Now would probably have to hire a Vinnie to follow them around and break their fingers if they tried to use their credit cards or buy a new car. I don't even know how to express what I am thinking.

You don't want to pay your debt when you have $670,000 of it, less than 80K in annual income, and 5 kids. Obviously that is not this couple truly desires. They want to feed, clothe and raise their kids in an intact family, plus to stay in this house. Which is not going to happen, because the current value of the home is far above what this family can afford to pay on a mortgage. No lender is going to write the loan down more than it would cost to foreclose. The lender should come out at least $150,000 ahead by foreclosing, so that's what is going to happen.

There appear to be so many darned people who lived off their houses in the bubble markets and got themselves in trouble like this.

This is why I got so mad about Kenneth Fisher's screed claiming that subprime lenders were doing a wonderful thing:

If you look at the history of subprime loans, they tend to average about a ten percent default rate. Now we're up around 14 percent. So all this brouhaha is about the increase from that historic ten percent default rate to today's rate of 14 percent.

But a ten percent default rate means that 90 percent of the people who got these loans ended up owning homes that they wouldn't otherwise have been able to buy. The question is: Do we want more people to have homes or do we want fewer people to have homes? My view is more people owning homes is moral and good. Fewer people owning homes is immoral and bad.

We should be encouraging subprime loans. Because it's the way these people get homes.

It's not moving into a home that improves a family's position. It's being able to live there long-term. Most subprime loans out there are really refis, and the current default rate on 2/28s seems to be about at 50% for some portfolios.

Subprime lending is only moral and good if it stops at the point at which the borrowers have a reasonable chance of paying off their loans. Beyond that, it's just predatory lending.

I don't believe that Congress or any agency should be in any way paying off lenders like this. They need to be driven out of business. I cannot say that this couple was faultless - they would have lost their home far earlier if they hadn't been given all this credit - but I will say that although they are obviously economic doofuses and subprime as subprime gets, it was still not moral or good to load them up with debt past the point at which they could emerge from the situation.

The endpoint for this family is that now they cannot find a rental and the family will be split up. That is what Kenneth Fisherism has created.

There are many similar cases. I find it unutterably tragic that people who could not afford to remain in their homes but did have significant equity essentially had that equity siphoned off by the loan industry. There comes a point for many people when they need to let go of the house and walk with the equity they have. That nest egg helps them find a rental, keep reasonable credit, and continue their lives.

The Obligation

2008-05-12T15:34:00.001-07:00

The transcript of Obama's speech in WV was interesting. The topic was veterans, and most of it was the type of thing which any politician must say, whether he or she believes it or not (I do not mean to imply that Obama does not believe what he said). Almost nobody in public life quarrels with most of this stuff:

The brave Americans who fight today believe deeply in this country. And no matter how many you meet, or how many stories of heroism you hear, every encounter reminds that they are truly special. That through their service, they are living out the ideals that stir so many of us as Americas – pride, duty, and sacrifice.

Some of the most inspiring are those you meet at places like Walter Reed Army Medical Center. They are young men and women who may have lost a limb or even their ability to take care of themselves, but they will never lose the pride they feel for their country. They’re not interested in self-pity, but yearn to move forward with their lives. And it’s this classically American optimism that makes you realize the quality of person we have serving in the United States Armed Forces.

This, after all, is what led them to wear the uniform in the first place – their unwavering belief in the idea of America. The idea that no matter where you come from, or what you look like, or who your parents are, this is a place where anything is possible; where anyone can make it; where we look out for each other, and take care of each other; where we rise and fall as one nation – as one people. It’s an idea that’s worth fighting for – an idea for which so many Americans have given that last full measure of devotion.

There was one point at which my eyes opened quite wide:

When our troops go into battle, they serve no faction or party; they represent no race or region. They are simply Americans. They serve and fight and bleed together out of loyalty not just to a place on a map or a certain kind of people, but to a set of ideals that we have been striving for since the first shots rang out at Lexington and Concord – the idea that America could be governed not by men, but by laws; that we could be equal in the eyes of those laws; that we could be free to say what we want and write what want and worship as we please; that we could have the right to pursue our individual dreams but the obligation to help our fellow citizens pursue theirs.

Actually, the obligation to help our fellow citizens pursue their dreams was never part of the deal. By their nature dreams are often grandiose and uncertain, and vary widely. A lot about the social freedom to go your own way involves letting other people go their own ways.

I read McCain's carbon speech. I'm really not sure that he understands the difference between pollution and carbon dioxide emissions; I know he's got the science wrong; I know he's playing with fire with the idea of carbon cap trading systems. He seemed to be waffling a bit on nuclear energy. It seems to me that there is little meaningful difference between his plans and Obama's, and no need to worry about Mrs. Also-Ran's plans any more.

We aren't going to get a meaningful choice on some of the most important political issues of our times in this presidential race, and that's a pity. The same is true of immigration, etc. Everything seems dominated by the current political CW, and I fear that CW will turn out to be just as facile and ultimately destructive as the theory that handing out mortgages like popcorn would lead to widespread prosperity.

So how much change will Mr. Change be bringing to DC? If he shares essentially the same positions as this very long-time Washington insider, where is the change? Just asking.

Very Expensive Myths

2008-05-12T10:39:00.000-07:00

There was recently a meltdown in arctic ice, but the arctic ice expanse is right back this year. (For what is really happening, go to this blog post.) There, is in fact, no evidence that the world is getting warmer, and considerable evidence that the short-term trend is one of cooling. But truth moves slowly at federal levels, and in DC the Arctic icecap is almost gone, taking the polar bears with it. One is tempted to suggest that we should ask the Canadian government to give them up, because when Canada ruled on the status of the polar bears it said there were plenty.

It may or may not surprise us all that a shift in sunspot cycles has occurred and now we are getting cooler. That is the historical correlation; if you graph sunspot cycles by intensity and length, when the cycles get low and slow, the earth cools. We are now in the extended interim between cycle 23 and 24. 23 keeps hanging around; 24 has popped a few sunspots but can't seem to get going, and we're chilly. We are so chilly that a big chunk of planned US corn may not have been planted due to conditions in the upper midwest. Timing is important on corn.

In any case, while only Al is left looping the world in his jet, making speeches with frenetic arm motions bewailing the demise of the polar bears, an environmentalist group has gone to court to make the Interior Dept declare the polar bear threatened by global warming. That would make it a matter of federal law that CO2 emissions directly threaten the polar bear.

They don't, of course, because the polar bear has been around during periods with temperatures significantly warmer than ours. But facts no longer matter.

I'm hoping that the inevitable happens, because all our energy decisions are now controlled by courts and leftist environmental nutcases. This will not end until the population rebells, and REBELLION IS ON THE WAY!

Here's an article in an Alaskan paper regarding the judge's order. The way this works is that since the Supreme Court ruled that CO2 is a pollutant, if the polar bear is endangered, and if the polar bear is endangered because of global warming, then almost any type of energy project or any project using energy can be blocked.

Also, the law mandates all federal agencies not to do anything that harms the environment of endangered species. This will have many interesting results, because almost anything emits CO2. Did you know that making concrete emits a great deal of CO2 into the atmosphere?

I have been laughing for days about this. Consider what might have happened if polar bears had been ruled endangered and the SC had ruled CO2 a pollutant, oh, say ten years ago:

The FEMA caravan for relief of a drowned New Orleans after Katrina would have been awesome. The bicycle convoy would have extended for hundreds of miles, and we'd all have had a great deal of time to cheer it as it went through our communities. I'm sure the first shipments of medical supplies and water would have reached the people in slightly under 3 weeks.

This is real, and hilarious.

Happy Mother's Day!!

2008-05-11T06:09:00.000-07:00

(To all the mothers out there.)

I do believe that I've got to mow the lawn, so don't expect much from me today.

The Real Mortgage News

2008-05-10T14:47:00.000-07:00

MGIC significantly tightens its criteria for mortgage insurance. The latest changes go into effect June 1st. The March changes became obsolete quite quickly, didn't they?

First, the entire states of New Jersey, Kentucky and Michigan go on the declining list (MGIC calls it restricted). Congratulations to the lucky winners!!! We know you worked hard for that honor....

Jumbos get hard hit. Max $ insurable amount is $650,000 or GSE buy. In a restricted market, max CLTV is 85%, whereas it is 90% in an unrestricted market. Min FICO for all markets is 700.

General: No cash-outs, no 3-4 units, no non-warrantable condos, no condotels, it looks like no EAs, no low-docs, no low-doc Alt-As, no option-ARMs. Min 5% dp, min 3% borrower funds on a purchase. No non-owner occupied. <720 requires two months PITI reserves.

If the appraiser describes the market as declining, the loan automatically goes into the restricted bucket. Also DU declining, or lender-identified declining. In other words, if the underwriter or appraiser IDs it as declining then MGIC IDs it as restricted. This is important, because it is unlimited, and because the lender cannot ignore the matter. If the loan ever defaulted and the lender hadn't used the right category, MGIC could and would refuse to pay.

The new restricted list (which automatically expands whenever a particular lender expands their own list) is here, and now contains either portions or the entire area of 30 (thirty) states.

The much-coveted distinction of having your entire state be restricted is still for a select few:

Arizona
California,
DC,
Florida,
Kentucky,
Michigan
Nevada
New Jersey

Okay, okay, GA is not on that list. However, if you look at the MSA and county details, you'll see that GA is pulling long and strong, as are states like VA. So those of you who have won the laurel crown can not afford to rest easy on your laurels. We're right on your heels.

And do you receive for having made the list? There's a surcharge for your MI. DC is unaccountably not included in the surcharge list, possibly because it might irritate too many Congress Critters and/or their favorite prostitutes.

After looking at the list, I'd say that MGIC might write insurance for maybe 40-50 90% CLTV jumbos in the second half of 2008. Everything else will be at 85%.

You need a 680 credit score for a purchase or refi in restricted markets (700 for jumbo). There's an across-the-board surcharge of 10 bps for rate/term refis as of June. MGIC will no longer write any insurance for condos or attached housing in Florida.

Barney Frank was threatening lenders last week because jumbo rates were still so high; he'd better start threatening mortgage insurance companies. As it is these guidelines are still too lax in some markets. Sure, you get a $105,000 downpayment on that $700,000 home, but when it winds up defaulting in 2010 and selling for $450,000, that's a nasty loss. Hard to make a profit this way, and FICOs aren't going to help.

A Pretty Good Column On Inflation

2008-05-09T07:03:00.000-07:00

Sesit at Bloomberg, explaining why monetary policy won't affect food and fuel inflation very much.

The one main contribution to the pot left out for fuel is that many of the Asian economies with rapidly growing demand subsidize fuel costs substantially. This keeps fuel price-insensitive for a time.

The other factor involving food inflation not discussed are biofuels, which are driving up food costs by draining ag capacity to produce fuels from relatively energy-thin base materials (the exception being palm oil).

Eventually it will break, but the probability is that the near-term break will occur when various countries have to cut back on their fuel subsidies due to rising budget deficits. In India's case, the cost of the subsidy is hidden in the form of bonds issued by the fuel companies to cover their operating losses. These bonds are backed by the government. In countries such as Indonesia, the subsidy is paid from the government budget.

As background I suggest this 2005 Asia Times article reviewing the situation in Singapore, Malaysia, Indonesia and Thailand. The situation has already forced some changes in govenrment.

In the last week the current Indonesian president announced that Indonesia would be raising fuel prices:

Officials have yet to say how large the price rise will be, but President Susilo Bambang Yudhoyono has said his advisers were talking about a 20 to 30 percent hike.
...
Budget committee chairman Haris Azhar Azis said the fuel price hike was necessary to prevent even greater damage to the economy in future.

"With a 30 percent rise, inflation may jump from the government's target of 6.5 percent to 11.1 percent this year. But if we do not do anything it may reach 13.2 percent," Azis was quoted by AFP as saying.

Indonesia's economic growth is expected to slow as a result, of course, but the alternative is an even worse hit to the economy. The reason is that the amount of the subsidies had gotten so high that Indonesia's currency, the rupiah, was beginning to lose value as money left, which of course raises the cost of all of their imports.

The subsidies have become increasingly expensive as the price of oil has surged, and are projected to nearly triple this year to 126.8 trillion rupiah (13.8 billion dollars).

That amounts to about 12 percent of the state budget, based on a revised oil price of 95 dollars per barrel -- although black gold hit nearly 124 dollars on Thursday.

So the government has no option. To maintain growth it has to cut the money spent on subsidies.

Now consider the impact on all those who consume products exported from Indonesia. Some of that additional inflation will transfer through via the products. The Indonesian government is still hoping for about 6% GDP growth in 2008, but the vectors indicate slackening growth to be sure.

As consumers absorb the impact of these increases, they will, like US consumers, have to cut back on discretionary spending.

Malaysia is reviewing its fuel subsidies and says it expects to make a change by 2009. Among other measures, the government is trying to figure out how to stop subsidizing foreigners. Singapore does not subsidize fuel substantially, but then it can afford not to. Average percentages of income spent on food:

Singapore: 8%
Malaysia: 15%
Indonesia: 26%
Thailand: 26%
China: ~28% (hard to get good figures)
India: 33%
Vietnam: 40%
Pakistan: 40%.

Needless to say rising food prices are adding more pressures in many of these countries. The heavy subsidizers with growing consumer sectors are going to have to figure out how to target their subsidies more efficiently.

As inflation in the region moves steadily upward (averaging well over 7% so far), it is a fallacy to think that we won't see it abroad. Thus the near-term global future is for higher inflation transmitted in bumps and starts. Global growth is pressured downwards as a result.

Politics: Bye Bye Hillary

2008-05-08T09:37:00.001-07:00

I do not know who I think should be president out of the top three, but I do know that Hillary has convinced me that she should not be.

What an amazingly classless exit.

Unemployment Not Too Bad

2008-05-08T06:49:00.001-07:00

NSA continuing claims have been dropping for three weeks, and SA initial and continuing claims dropped this last week. SA insured employment has risen to 2.3%, but NSA holds steady at 2.2%. The levels are still consonant with a recession but not with a deepening recession.

Undoubtedly the larger proportion of older workers is helping a bit - as people retire it lessens unemployment. Also all the anecdotes about illegal workers leaving (which are backed up by some real data) are probably helping the numbers.

Bleeping Stupid, Lazy Economists

2008-05-07T16:05:00.001-07:00

You know what? You too can become a bleeping brilliant economist if you are willing to do just one thing - READ THE BLEEPING REPORTS! Actually look at the data! Use your common sense!

Look at this Bloomberg article about the Consumer Credit release:

U.S. consumer borrowing jumped more than double the amount economists forecast in March, indicating a slowing economy is forcing Americans to accumulate credit-card and other forms of debt.
...
Consumers are turning to credit cards after banks tightened standards for home-equity loans and other borrowing. The March figures brought U.S. consumer borrowing in the first quarter to $34 billion, the most since the first three months of 2001, when the economy entered its last official recession.

``Consumers are strapped as incomes are not keeping up with inflation and this is leading them to rely increasingly on credit to see them through the worst housing downturn since the Great Depression,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York.

There's only one thing wrong with all of this brilliant bleeping pundrity and scintillating nonsense: Revolving credit dropped in March. The reason why it looks like it rose is that it was paid down at a slower than normal rate. And guess what - the same thing happened last year.

Consumers always run up CC debt leading up to the holidays, and then they pay it down over the first part of the next year. This year, like last year, they are paying it down at a slower-than-normal rate. Naturally this makes the SA adjustment look like consumer revolving credit is rising, but it isn't rising. More than likely the higher helped the trend, as did the earlier Easter.

I couldn't resist this. Last year the same trend was noted and misreported in March, so I went back and found last year's post. Here is a quote from the particular news article that flipped me out last year:

Consumers boosted their borrowing in March at the fastest pace in four months, suggesting they are remaining resilient in the face of rising energy prices and a painful housing slump.

The Federal Reserve's report, released Monday, showed that consumer credit increased at a brisk annual rate of 6.7 percent in March. That marked a pickup from February's 2.8 percent growth rate and was the biggest increase since November.
...
Use of revolving credit, primarily credit cards, rose at a sizzling pace of 9.2 percent. That was up from a 2.9 percent growth rate in February and was the biggest increase since November.

So last year the trend was evidence of a growing economy, and this year the same trend is evidence of the worst housing slowdown since the Great Depression? Nonsense.

The situation this year is the same as last year's - consumers are pressured and having a harder time paying down those credit card bills. But they are working them down, and my guess is that as heating costs dissipate you will see those numbers return to a more normal trend. Consumers usually use the pause between heating and cooling bills to catch up. There's no notable difference between this year's report and last year's if you look at the NSA numbers.

Look at the YoY comparison for NSA Jan, Feb & March:

2008 revolving: 958.4; 949;.1 944.1
2007 revolving: 889.1; 880.6; 878.1

2008 non-revolving: 1599.3; 1592.9; 1596.9
2007 non-revolving: 1537.7; 1532.2; 1533.7

2008 total consumer credit: 2557.7; 2542.0; 2541.0
2007 total consumer credit: 2426.9; 2412.7; 2411.8

Yes, totals grow each year, but even that is right in line with recent trends. Compared to last year, consumers paid down a little more on the CCs this year in March, and rolled up a bit on the non-revolving. As a hunch I'd say that non-revolving was mostly buying small cars to compensate for gas price rises.

By the way, the individual cited in the first article is a bank economist. Do y'all think this sort of thing might have been a factor in causing banks to get into the stupidest mortgages ever granted? Is it possible that these critters never bothered to look at the underlying realities and just produced reports setting out the CW of the day?

I've got to tell you, from the viewpoint of community banks in GA, it sure looks that way.

Pendings

2008-05-07T07:12:00.000-07:00

What's really notable about this pending sales report is the regional pattern that showed up in both February and March. Sales in the west are stabilizing as sales in the south and the northeast continue to fall. For the last three months, the pending index in the west has run 93.8, 92.5 & 92.1. Compare that to the 07 average of 92.4.

But in the west sales are coming at the cost of very rapid price declines. What's happening is that the foreclosures and other forced sales (REO, NODs, shorts, etc) are coming on the market in such numbers that they are the bulk of moving homes in many areas.

These are two year list price trends for some CA MSAs (data from Housing Tracker, Apr 06 to beg May 08):

LA:
Low: $445,333 -> $330,000
Med: $579,666 -> $450,000
High: $805,300 -> $675,000

Orange County:
Low: $529,900 -> $375,000
Med: $694,833 -> $529,900
High: $973,333 -> $849,000

Riverside:
Low: $349,600 -> $215,000
Med: $435,000 -> $299,000
High: $577,500 -> $410,000

Sacramento:
Low: $344,833 -> $199,000
Med: $439,500 -> $305,000
High: $594,833 -> $489,000

San Diego:
Low: $399,000 -> $289,900
Med: $537,666 -> $419,000
High: $749,946 -> $675,000

San Francisco:
Low: $499,983 -> $349,875
Med: $654,663 -> $525,000
High: $891,325 -> $799,000

San Jose:
Low: $599,966 -> $427,900
Med: $739,333 -> $575,999
High: $1,098,833 -> $799,000

Santa Cruz (from Aug 06 to beg Apr 08):
Low: $599,000 -> $450,000
Med: $769,166 -> $685,000
High: $1,098,500 -> $1,049,000

Santa Cruz is small enough to make their numbers less reliable - total inventory is under 2,000. Generally you have to get over 4,000 before the data is reliable. Below that matched sales and true comps are the best measures.

Here is the one year trend (Apr 07 to beg May 08):

LA:
Low: $425,800 -> $330,000
Med: $546,000 -> $450,000
High: $749,600 -> $675,000

Orange County:
Low: $499,720 -> $375,000
Med: $649,920 -> $529,900
High: $921,780 -> $849,000

Riverside:
Low: $330,940 -> $215,000
Med: $415,760 -> $299,000
High: $544,920 -> $410,000

Sacramento:
Low: $309,124 -> $199,000
Med: $399,720 -> $305,000
High: $566,610 -> $489,000

San Diego:
Low: $389,400 -> $289,900
Med: $509,780 -> $419,000
High: $737,115 -> $675,000

San Francisco:
Low: $463,000 -> $349,875
Med: $600,345 -> $525,000
High: $825,780 -> $799,000

San Jose:
Low: $577,100 -> $427,900
Med: $687,970 -> $575,999
High: $910,590 -> $799,000

Santa Cruz (from Aug 06 to beg Apr 08):
Low: $577,200 -> $450,000
Med: $749,200 -> $685,000
High: $1,103,200 -> $1,049,000

The bottom brackets are dominated by the outlying areas (long commutes to work) and condo hell. Condo hell can best be described as being forced to pay HOA on all the vacant units. Condos are unique in that in bad markets, frequently the annual carrying costs rise sharply. Not a good thing, and it gets even worse when special assessments occur. Then the local board is faced with rent, and drive prices down, or don't rent, and drive fees up, which drives prices down.

Here is a helpful table showing the price DECLINES by area and bracket:

*MSA*	*2 Yr Decline*	*1 Yr Decline*
LA:
Low	25.9%	22.5%
Med	22.4%	17.6%
High	16.2%	10.0%

Orange County:
Low	29.2%	25.0%
Med	23.7%	18.5%
High	12.8%	7.9%

Riverside:
Low	38.5%	35.0%
Med	31.3%	28.1%
High	29.0%	24.8%

Sacramento:
Low	42.3%	35.6%
Med	30.6%	23.7%
High	17.8%	13.7%

San Diego:
Low	27.3%	25.6%
Med	22.1%	17.8%
High	10.0%	8.4%

San Francisco:
Low	30.0%	24.4%
Med	19.8%	12.6%
High	10.4%	3.2%

San Jose:
Low	28.7%	25.9%
Med	22.1%	16.3%
High	27.3%	12.3%

Santa Cruz (from Aug 06 to beg Apr 08):
Low	24.9%	22.0%
Med	10.9%	8.6%
High	4.5%	4.9%

As you can see, the declines are concentrated in the last year. That's because lending standards changed, causing resales potential to be limited. It is the change in lending standards (which is necessary and driven by rising defaults) which is causing the decline.

As this wears on, the declines will continue and will work their way up the brackets. For one thing, the top brackets have a lot more loans like OAs that will reset later on, forcing a roll-out to the market. Declines of these magnitudes do make housing far more affordable and thus open up new sources of demand. So the rapid price declines will stabilize sales. Far more people can afford to buy at $250,000 than at $350,000, that's for sure.

The market peaked in many areas earlier than 2006, so total losses for lenders will be higher than shown. If you have to foreclose and then sell, to the declines shown above you should probably add another 10% for starters.

Aside from legal costs, there is the broker's fee, there's usually a 5% discount for foreclosures, and then there are the costs of utilities, vacant home property insurance, taxes, etc. It doesn't pay you to keep your REO smiling on the shelf. Last year it seemed like many lenders were letting these sit, hoping that the market would pick up later and that they could then move them without too much trouble. This year, that fantasy is seen for the fantasy it was.

Roundup of News

2008-05-07T04:22:00.000-07:00

March European retail sales fell 1.6% on a YoY basis. That's pretty steep, and much worse results than the US is seeing. In Germany they fell 1.1%; in France sales were down 0.8%. The Euro traded down as a result.

US oil usage is declining, but global oil consumption is rising. Those who say higher taxes are needed to discourage consumption should think again. What's needed is either more domestic production of oil, or alternate domestic production of energy. If we bothered to get up and do it, the decline in our trade imbalance would be amazing. That change would support our economy as we go through the difficult demographic period when the baby boomers retire.

Hmm,. It turns out there is more to subcutaneous fat than previously thought - in some places it protects against diabetes? So I guess women with thunder thighs shouldn't worry?

The situation in Myanmar (Burma) remains bad. Supposedly some UN supplies are trickling in. New teams have not arrived. The US has some naval assets in the area and has asked that the government permit disaster assessment teams to go in. To make a very bad situation even worse, Irawaddy reports that the rice-producing region has been very badly hit. Burma doesn't import rice, but depending on how bad the losses are, they may have to. But the people can't pay the prices.

Update: Vallejo, CA is filing for bankruptcy. It's really over pension costs. In another attempt to shore up banks, the Fed is considering asking Congress for authority to pay interest on bank reserves:

The central bank isn't authorized by Congress to begin making such payments until 2011. Allowing interest on bank reserves may allow the Fed to pump more funds into the banking system without pushing its main policy rate lower, in effect separating action to boost liquidity from monetary policy.

``It would have the effect of putting a floor under the federal funds rate,'' said Walker Todd, a research fellow at the American Institute for Economic Research in Great Barrington, Massachusetts.

I repeat that I think the Fed will stop cutting until the EU economy worsens enough to send US manufacturing on another leg down.

McCain & Clinton Are Right About The Gas Tax Holiday

2008-05-06T16:51:00.000-07:00

While we are waiting for the election results, let's talk about the overwhelming punditry against the gas tax holiday.

Listening to ivory tower economists and professors is not as good as populism. For instance, in this article we get the professor's opinion:

In a press release today, Joseph Doyle (right), the Jon D. Gruber Assistant Professor of Applied Economics at MIT Sloan, said that drivers hoping for a break from such proposals will likely be disappointed; gas prices would likely fall by significantly less than the full amount of the actual tax cut, assuming that the proposed tax suspensions become reality. "There is a common misperception that if a state tax of 5 percent per gallon is eliminated, then the price at the pump will fall by 5 percent," Doyle said in a statement. "In fact, our research suggests that retail gas prices drop by as little as 3 percent following the elimination of a 5 percent sales tax. Given tight supply and demand conditions, the benefits of a tax holiday are shared by station owners and consumers. For the federal excise tax, we would expect a reduction in prices at the pump on the order of 10 cents."

The key phrase here is "tight supply and demand conditions". Demand continues to fall and the decline will continue no matter what the government does, because a large component of the decline in demand is stemming from vehicle replacements, and it is a one-way phenomenon that builds year after year. The decline in demand has continued for several years now, and has placed many gas stations in situations in which they are facing strong competition. The last time gas consumption was this low was in 1996, in the middle of a mid-cycle slowdown. It was then business-led. Now it is consumer-led. Because of the competition for decreased sales, gas stations would pass on most of this to consumers. We'll call it 15 cents out of of the 18.8 cent federal gas tax.

Click on the graph above to see a larger version. The data comes from the EIA, so I don't want to hear any nonsense about me making this up. That is the best data available.

A household consuming 35 gallons of gas a week would save $5.25 a week. In a month that would amount to about $22.60 (4.3 weeks). Over 3 months that would amount to almost $70. Now I know this will shock some people, but for many families, that amounts to more than the money they have one week a month to buy food. There are tons and tons of working class families for whom this would be a significant benefit. The problem is that professors are too out of touch to understand how people are really living. I'm talking people that own homes!!!

The best thing about the gas tax reduction is that it imposes no administrative burden on the government, such as rebate checks. It is highly regressive - it benefits the tightly strapped far more.

If the government also cut the higher diesel tax, it would benefit truckers and help to control inflation, so there would be an additional benefit.

The only problem with the proposal is that it needs to be done for at least a year, but a summer break would help. It's possible that some states would follow suit by reducing or suspending their own gas taxes, and that would magnify the benefit considerably.

Consider how much it cost to mail those $600 checks. Cutting taxes is a far more efficient way to pass stimulus into the economy than rebates. Cutting regressive taxes is an even more efficient way to stimulate the economy.

Politicians need to get a grip. Inflation is cutting people to the bone, and many families are having difficulty feeding themselves. Other things that need to be done are to increase food stamp allotments and expand that program to cover more people by raising the gross and net income limits. It is totally weird and stupid for politicians to be discussing expanding government medical insurance programs when people can't afford to buy healthy food.

I'm not kidding you. I know of multiple families with incomes between 40-50K in which the adults hardly eat for one week a month in order to buy food for their kids. For people who cook with the basics, the effective inflation on food has been much higher than the average reported - more than double.

I Am Going Through Fannie's SEC Filings

2008-05-06T09:34:00.001-07:00

This won't be quick. The Investor Summary is 52 pages (pdf here). The 10-Q is 140 pages (pdf here).

I got to page 4 on the Investor Summary and started laughing out loud. EPS increased $1.23 from Q4 07 to Q1 08!!! Of course, that comes in the form of a drop in loss per share from $3.80 to $2.57. Heck, if they sell a bunch more shares, I'm sure they can report another EPS gain next quarter. To address market-related volatility of capital they proudly report that they used SFAS 157 and 159 to stop marking to market. Darn! That surely improves the fundamentals, doesn't it! What the heck - maybe we need to modify SFAS 157 and 159 to allow for write-ups! Then the happy days would be here again!

While I am spending this time with Fannie Mae's entry in the Comedy Club Mortgage Sweepstakes, I'd like to recommend some other reading.

Tanta at Calculated Risk wrote a fine post explaining why all these plans to expedite mortgage workouts are so much window-dressing. None of them address the problem of not enough money to do the job, plus the second-lien problem. The second lien problem is exceptionally important, especially when dealing with piggies used for purchase money. Nor can regulators write regulations cancelling the rights of second lienholders under the law. It's nonsensical, and it brings me back to my first theory, which is that Congress should write a law allowing bankruptcy cramdowns. It is the cheapest way out of many bad loans.

Since all of our presidential candidates are favoring a carbon cap and trade system (total economic insanity), and since the US federal government remains stubbornly in favor of the ethanol subsidy, even while the individual politicians bewail inflation, I thought Climate Skeptic's superb post examining Al Gore's theory that the US can generate all its electricity from solar panels would be a great read for anyone who cares about plausibility in government. It's only a matter of time until some economically illiterate politician gets on this bandwagon.

If you won't read the post, the bottom line is that just installation costs would be 21 trillion dollars. By the time it was done it would have cost more than 2 year's GDP (with inflation). Maintenance costs would add to that. For example, you have to keep the dirt off your solar panels for them to produce energy!!! And that doesn't address the problem of storing the energy (unless the nation is prepared to experience nighly blackouts), which would have to be done somehow and would cost a great deal extra.

The reason our politicians don't get anything done is because they don't spend the time to understand problems before they recommend solutions. This should worry us all. We are going to become a benighted civilization if we don't stop this trend. Someone should have called Al Gore on his increasing trip into fantasy a long time ago. No doubt the reason Al Gore gets away with his nonsense is the same reason that Nancy Pelosi walks around claiming that Social Security and Medicare can be paid from non-existent trust funds for many years to come. Our politicians are entertaining lunatics. They would be great for a sitcom, but we cannot run a country this way.

Update: FNMA Home Price Index:

Nargis

2008-05-06T06:54:00.001-07:00

I have been watching the grim and grimmer reports from Nargis. Myanmar (Burma) officially has 15,000 dead and maybe 30,000 missing.

If you recall, there were protests led by Burmese monks last year over the government's decision to raise fuel prices. The Myanmar government is a repressive junta, and in response to those protests the army was sent out to beat and kill the monks. So this is an even more serious situation because a large part of the population was living in marginal conditions before the storm and there are difficulties in getting aid in. This makes extremely painful reading:

9.15am
Nyan Win, the foreign minister, announced on state television that 10,000 people died in just one town, Bogalay.

"Many superstitious Burmese cannot help but believe that nature has finally intervened and punished Burma," the Irrawaddy website, run by exiled Burmese in Thailand, reports.

9.30am
The regime has announced that international aid agencies will have to negotiate with the military authorities before being allowed into Burma, according to BBC News 24.

Irawaddy:

Traditionally, Buddhist Burmese consider that if the country is ruled by a bad king, it is doomed to face natural disasters—floods, storms and fire. It’s a sign that the tyrant or inept ruler needs to be removed.

And there is reason to believe. The regime unleashed its wrath through brute force on peaceful gatherings of Buddhist monks and their supporters in September, killing dozens of innocent people. Killing monks is an unthinkable crime in a predominantly Buddhist country. Since then, many Burmese people have been warning that bad karma was coming and the generals would be punished.

The ruling junta is probably going to be more afraid of further popular unrest than worried about the welfare of the people. If you read the above link it reports that the establishment got out of Rangoon in 2005, and this is attributed to the advice of an astrologer. Not a promising situation.

ISM Services = Mfrg Gains In Some Sectors

2008-05-05T07:40:00.000-07:00

The average person just does not grasp how strong an economic impetus is generated by adding to your manufacturing base. ISM Services came in at 52.0, with some signs that there could be strengthening later in the year. This is unequivocally the result of gains in some segments of manufacturing.

I am quite sure this is real because it picks up some trends I started seeing in the county data last year, and it matches NACM. It is also consonant with the industrial construction report and the freight data.

It is true that the vehicle manufacturing is tanking, but adding parts orders, etc, is going to cause a real ramp up in everything from rail to trucking to credit to metals, etc.

What's good about this is that it strengthens the case that the US will continue to do well in the war for money, which is frankly dominating world affairs about now.

Export orders for services are tanking though. I think the world economy is far weaker than most observers do. The question is whether the US can gain enough to offset the backlash from that weakening, which should really begin to be felt sometime in the last half of 2008. By 2009 we'll really feel it, and that's when I expect the Fed to go to 1 percent to keep it going.

I thought this Times of India coverage of Warren Buffet's remarks was interesting:

Buffett said the Fed acted properly when it arranged a $2.4 billion buyout in March of New York-based Bear Stearns by JPMorgan Chase & Co.

The billionaire said he turned down the opportunity because he lacked enough capital and time to craft a solution. More failures and wider panic may have resulted if the regulators didn't halt the run on Bear Stearns, he said. ‘‘The worry was that there would be contagion; it was a very real worry,'' Buffett said.

‘‘If Bear Stearns had gone, the next day, somebody else would have gone. It could've been a very, very, very chaotic situation.'' Buffett, 77, said he was contacted in March before JPMorgan, the third-biggest US bank by assets, agreed to buy Bear Stearns. The person calling him, whom he wouldn't identify, was ‘‘someone responsible'' and wasn't from the Federal Reserve or the Treasury.

The call lasted about half an hour, Buffett said. ‘‘As I understand it, Bear Stearns had $65 billion due on Monday and I didn't have $65 billion,'' Buffett said.

There's a lot of screaming about the Bernanke Fed, but from where I sit it has done a pretty darn good job playing the hand it was dealt.

I repeat that we are in a recession, but the worst of the manufacturing recession has passed (for now), and that is backstopping jobs and an intense constriction in consumer spending.

Countrywide Is On A Slide

2008-05-05T06:33:00.000-07:00

Not surprisingly, given the results I posted about last week, the BAC deal to buy Countrywide is being questioned. CR, Bloomberg, Reuters. Look at those results. BAC would be getting a money pit.

I wonder if the Feds are going to have to cough up to get CW tucked away safely somewhere. Before someone starts screaming bailout, remember that Countrywide is into the FHLB system for quite some chunk of cash. Schumer was right to raise the question last year. So it is likely just a question of payees - of whether the Feds fund a CW takeover or whether they have to ante up to protect the FHLB system, not whether the Feds have to ante up.

As home prices decline, the ability to buy homes increases. So the path to least losses is to allow the market to work. The viable outfits will be able to lend to the new buyers as long as they can get the money to fund those mortgages. Sustaining that flow of money is the purpose of the FHLB system.

But CW looks to be as dead as they get while still walking and it is just not thinkable that they will continue to walk alone.

Here's Schumer's press release last November. Yes, he is a camera hound - yet he had a point:

While other banks have also increasingly relied on the FHLB system, none have done so with more haste than Countrywide. Through the first three quarters of this year, Countrywide’s advances from the Atlanta-based FHLB bank had soared 81 percent, to a total of $51 billion. That represents nearly 40 percent of FHLB Atlanta’s total advances, according to the bank’s latest SEC filing—a potentially dangerous level of exposure considering Countrywide’s track record in poor underwriting and predatory lending practices in recent years.

CW originally handed over a significant overcollateralization in its loans, but as my post last week pointed out, the value of those loans is dropping rapidly.

The FHLB system will have to be sustained, because it is critical to the ability of lenders to continue to grant mortgages.

As to why BAC ever wanted into this deal, the reason is that they have run up against the 10% limit on domestic deposits. CW has been frantically opening bank branches. Once BAC merges with CW, it can exceed the limit if internal growth is generated. I left a link to this article reviewing BAC's growth problem in 2003 over at CR. At that point BAC was merging with FleetBoston, and this is the relevant portion:

H. Rodgin Cohen, chairman of the New York law firm of Sullivan & Cromwell and a specialist in banking law and mergers, said that once the deal closes and the combined bank starts operating as a single entity, it's acceptable under the law to exceed 10% of total deposits, so long as it happens "organically" from internal growth as opposed to another merger.

Honestly, that's why BAC got into this in the first place. I'm sure of it. BAC has no other way to expand easily in the US, and it is very costly to move into new markets by building new branches.

Switzerland Repents, Will Defend Individual Right To Life

2008-05-04T22:56:00.001-07:00

The individual right to life of plants, that is. Knocking off your family member is okay if they are dying, suffering or nuts. If you are caught weeding, you should probably claim that the weeds feared winter and asked for your help in ending their doomed lives. It would be hard to prove that they didn't. The Canucks were way ahead of the Swiss!