Most irritating expressions in 2004
hotpink
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inkognito
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Comments (7)For those who live in the State of California, the law regarding "security deposits" is contained in California Civil Code Section 1950.5, which is (and I shall copy and paste from the online Code): 1950.5. (a) This section applies to security for a rental agreement for residential property that is used as the dwelling of the tenant. (b) As used in this section, "security" means any payment, fee, deposit or charge, including, but not limited to, any payment, fee, deposit, or charge, except as provided in Section 1950.6, that is imposed at the beginning of the tenancy to be used to reimburse the landlord for costs associated with processing a new tenant or that is imposed as an advance payment of rent, used or to be used for any purpose, including, but not limited to, any of the following: (1) The compensation of a landlord for a tenant's default in the payment of rent. (2) The repair of damages to the premises, exclusive of ordinary wear and tear, caused by the tenant or by a guest or licensee of the tenant. (3) The cleaning of the premises upon termination of the tenancy necessary to return the unit to the same level of cleanliness it was in at the inception of the tenancy. The amendments to this paragraph enacted by the act adding this sentence shall apply only to tenancies for which the tenant's right to occupy begins after January 1, 2003. (4) To remedy future defaults by the tenant in any obligation under the rental agreement to restore, replace, or return personal property or appurtenances, exclusive of ordinary wear and tear, if the security deposit is authorized to be applied thereto by the rental agreement. (c) A landlord may not demand or receive security, however denominated, in an amount or value in excess of an amount equal to two months' rent, in the case of unfurnished residential property, and an amount equal to three months' rent, in the case of furnished residential property, in addition to any rent for the first month paid on or before initial occupancy. This subdivision does not prohibit an advance payment of not less than six months' rent if the term of the lease is six months or longer. This subdivision does not preclude a landlord and a tenant from entering into a mutual agreement for the landlord, at the request of the tenant and for a specified fee or charge, to make structural, decorative, furnishing, or other similar alterations, if the alterations are other than cleaning or repairing for which the landlord may charge the previous tenant as provided by subdivision (e). (d) Any security shall be held by the landlord for the tenant who is party to the lease or agreement. The claim of a tenant to the security shall be prior to the claim of any creditor of the landlord. (e) The landlord may claim of the security only those amounts as are reasonably necessary for the purposes specified in subdivision (b). The landlord may not assert a claim against the tenant or the security for damages to the premises or any defective conditions that preexisted the tenancy, for ordinary wear and tear or the effects thereof, whether the wear and tear preexisted the tenancy or occurred during the tenancy, or for the cumulative effects of ordinary wear and tear occurring during any one or more tenancies. (f) (1) Within a reasonable time after notification of either party's intention to terminate the tenancy, or before the end of the lease term, the landlord shall notify the tenant in writing of his or her option to request an initial inspection and of his or her right to be present at the inspection. The requirements of this subdivision do not apply when the tenancy is terminated pursuant to subdivision (2), (3), or (4) of Section 1161 of the Code of Civil Procedure. At a reasonable time, but no earlier than two weeks before the termination or the end of lease date, the landlord, or an agent of the landlord, shall, upon the request of the tenant, make an initial inspection of the premises prior to any final inspection the landlord makes after the tenant has vacated the premises. The purpose of the initial inspection shall be to allow the tenant an opportunity to remedy identified deficiencies, in a manner consistent with the rights and obligations of the parties under the rental agreement, in order to avoid deductions from the security. If a tenant chooses not to request an initial inspection, the duties of the landlord under this subdivision are discharged. If an inspection is requested, the parties shall attempt to schedule the inspection at a mutually acceptable date and time. The landlord shall give at least 48 hours' prior written notice of the date and time of the inspection if either a mutual time is agreed upon, or if a mutually agreed time cannot be scheduled but the tenant still wishes an inspection. The tenant and landlord may agree to forgo the 48-hour prior written notice by both signing a written waiver. The landlord shall proceed with the inspection whether the tenant is present or not, unless the tenant previously withdrew his or her request for the inspection. (2) Based on the inspection, the landlord shall give the tenant an itemized statement specifying repairs or cleaning that are proposed to be the basis of any deductions from the security the landlord intends to make pursuant to paragraphs (1) to (4), inclusive of subdivision (b). This statement shall also include the texts of subdivision (d) and paragraphs (1) to (4), inclusive, of subdivision (b). The statement shall be given to the tenant, if the tenant is present for the inspection, or shall be left inside the premises. (3) The tenant shall have the opportunity during the period following the initial inspection until termination of the tenancy to remedy identified deficiencies, in a manner consistent with the rights and obligations of the parties under the rental agreement, in order to avoid deductions from the security. (4) Nothing in this subdivision shall prevent a landlord from using the security for deductions itemized in the statement provided for in paragraph (2) that were not cured by the tenant so long as the deductions are for damages authorized by this section. (5) Nothing in this subdivision shall prevent a landlord from using the security for any purpose specified in paragraphs (1) to (4), inclusive, of subdivision (b) that occurs between completion of the initial inspection and termination of the tenancy or was not identified during the initial inspection due to the presence of a tenant's possessions. (g) (1) No later than 21 calendar days after the tenant has vacated the premises, but not earlier than the time that either the landlord or the tenant provides a notice to terminate the tenancy under Section 1946 or 1946.1, Section 1161 of the Code of Civil Procedure, or not earlier than 60 calendar days prior to the expiration of a fixed-term lease, the landlord shall furnish the tenant, by personal delivery or by first-class mail, postage prepaid, a copy of an itemized statement indicating the basis for, and the amount of, any security received and the disposition of the security and shall return any remaining portion of the security to the tenant. (2) Along with the itemized statement, the landlord shall also include copies of documents showing charges incurred and deducted by the landlord to repair or clean the premises, as follows: (A) If the landlord or landlord's employee did the work, the itemized statement shall reasonably describe the work performed. The itemized statement shall include the time spent and the reasonable hourly rate charged. (B) If the landlord or landlord's employee did not do the work, the landlord shall provide the tenant a copy of the bill, invoice, or receipt supplied by the person or entity performing the work. The itemized statement shall provide the tenant with the name, address, and telephone number of the person or entity, if the bill, invoice, or receipt does not include that information. (C) If a deduction is made for materials or supplies, the landlord shall provide a copy of the bill, invoice, or receipt. If a particular material or supply item is purchased by the landlord on an ongoing basis, the landlord may document the cost of the item by providing a copy of a bill, invoice, receipt, vendor price list, or other vendor document that reasonably documents the cost of the item used in the repair or cleaning of the unit. (3) If a repair to be done by the landlord or the landlord's employee cannot reasonably be completed within 21 calendar days after the tenant has vacated the premises, or if the documents from a person or entity providing services, materials, or supplies are not in the landlord's possession within 21 calendar days after the tenant has vacated the premises, the landlord may deduct the amount of a good faith estimate of the charges that will be incurred and provide that estimate with the itemized statement. If the reason for the estimate is because the documents from a person or entity providing services, materials, or supplies are not in the landlord's possession, the itemized statement shall include the name, address, and telephone number of the person or entity. Within 14 calendar days of completing the repair or receiving the documentation, the landlord shall complete the requirements in paragraphs (1) and (2) in the manner specified. (4) The landlord need not comply with paragraph (2) or (3) if either of the following apply: (A) The deductions for repairs and cleaning together do not exceed one hundred twenty-five dollars ($125). (B) The tenant waived the rights specified in paragraphs (2) and (3). The waiver shall only be effective if it is signed by the tenant at the same time or after a notice to terminate a tenancy under Section 1946 or 1946.1 has been given, a notice under Section 1161 of the Code of Civil Procedure has been given, or no earlier than 60 calendar days prior to the expiration of a fixed-term lease. The waiver shall substantially include the text of paragraph (2). (5) Notwithstanding paragraph (4), the landlord shall comply with paragraphs (2) and (3) when a tenant makes a request for documentation within 14 calendar days after receiving the itemized statement specified in paragraph (1). The landlord shall comply within 14 calendar days after receiving the request from the tenant. (6) Any mailings to the tenant pursuant to this subdivision shall be sent to the address provided by the tenant. If the tenant does not provide an address, mailings pursuant to this subdivision shall be sent to the unit that has been vacated. (h) Upon termination of the landlord's interest in the premises, whether by sale, assignment, death, appointment of receiver or otherwise, the landlord or the landlord's agent shall, within a reasonable time, do one of the following acts, either of which shall relieve the landlord of further liability with respect to the security held: (1) Transfer the portion of the security remaining after any lawful deductions made under subdivision (e) to the landlord's successor in interest. The landlord shall thereafter notify the tenant by personal delivery or by first-class mail, postage prepaid, of the transfer, of any claims made against the security, of the amount of the security deposited, and of the names of the successors in interest, their address, and their telephone number. If the notice to the tenant is made by personal delivery, the tenant shall acknowledge receipt of the notice and sign his or her name on the landlord's copy of the notice. (2) Return the portion of the security remaining after any lawful deductions made under subdivision (e) to the tenant, together with an accounting as provided in subdivision (g). (i) Prior to the voluntary transfer of a landlord's interest in the premises, the landlord shall deliver to the landlord's successor in interest a written statement indicating the following: (1) The security remaining after any lawful deductions are made. (2) An itemization of any lawful deductions from any security received. (3) His or her election under paragraph (1) or (2) of subdivision (h). This subdivision does not affect the validity of title to the real property transferred in violation of this subdivision. (j) In the event of noncompliance with subdivision (h), the landlord's successors in interest shall be jointly and severally liable with the landlord for repayment of the security, or that portion thereof to which the tenant is entitled, when and as provided in subdivisions (e) and (g). A successor in interest of a landlord may not require the tenant to post any security to replace that amount not transferred to the tenant or successors in interest as provided in subdivision (h), unless and until the successor in interest first makes restitution of the initial security as provided in paragraph (2) of subdivision (h) or provides the tenant with an accounting as provided in subdivision (g). This subdivision does not preclude a successor in interest from recovering from the tenant compensatory damages that are in excess of the security received from the landlord previously paid by the tenant to the landlord. Notwithstanding this subdivision, if, upon inquiry and reasonable investigation, a landlord's successor in interest has a good faith belief that the lawfully remaining security deposit is transferred to him or her or returned to the tenant pursuant to subdivision (h), he or she is not liable for damages as provided in subdivision (l), or any security not transferred pursuant to subdivision (h). (k) Upon receipt of any portion of the security under paragraph (1) of subdivision (h), the landlord's successors in interest shall have all of the rights and obligations of a landlord holding the security with respect to the security. (l) The bad faith claim or retention by a landlord or the landlord's successors in interest of the security or any portion thereof in violation of this section, or the bad faith demand of replacement security in violation of subdivision (j), may subject the landlord or the landlord's successors in interest to statutory damages of up to twice the amount of the security, in addition to actual damages. The court may award damages for bad faith whenever the facts warrant such an award, regardless of whether the injured party has specifically requested relief. In any action under this section, the landlord or the landlord's successors in interest shall have the burden of proof as to the reasonableness of the amounts claimed or the authority pursuant to this section to demand additional security deposits. (m) No lease or rental agreement may contain any provision characterizing any security as "nonrefundable." (n) Any action under this section may be maintained in small claims court if the damages claimed, whether actual or statutory or both, are within the jurisdictional amount allowed by Section 116.220 of the Code of Civil Procedure. (o) Proof of the existence of and the amount of a security deposit may be established by any credible evidence, including, but not limited to, a canceled check, a receipt, a lease indicating the requirement of a deposit as well as the amount, prior consistent statements or actions of the landlord or tenant, or a statement under penalty of perjury that satisfies the credibility requirements set forth in Section 780 of the Evidence Code. (p) The amendments to this section made during the 1985 portion of the 1985-86 Regular Session of the Legislature that are set forth in subdivision (e) are declaratory of existing law. (q) The amendments to this section made during the 2003 portion of the 2003-04 Regular Session of the Legislature that are set forth in paragraph (1) of subdivision (f) are declaratory of existing law....See MoreVery basic question--may be irritating.
Comments (26)Always nice to have conversation! I'd like to change one comment I made. I suspect smartphone email use is very high. How high, I don't know, but almost every public and private system of any size accommodates their use with special access and apps. Google's Mail Fetcher will combine up to 5 different email accounts into one, so that you can access them all in one place. When you do "reply", you can change the return address so it looks to have come from the other "remote" account. I suspect you could do more than 5 by cascading the accounts, but no one should need more than a few email accounts. If that's wrong, let me know! grandms, my comments had nothing to do with work vs private use. Awkward is awkward, easy is easy. Make yourself happy with however you want to go about your mail tasks. I was just trying to offer a suggestion to people having questions or trouble trying to do something that they may not have known was unnecessary DA, if your governmental agency didn't want web access used, they could turn it off. I suspect the reason is an attempt to decrease the load on their system by offloading some of the work to the client software. Mudlady, keep up the good attitude. Be open to new ways, that's what technological advances are all about. Without those advances, you'd still be struggling away with that Zenith and getting by without all the great functionality today's online world offers. Those changes seem to have been ok with you, you may be more open to change than you think....See MoreOn July 19, 2004, my Brother passed away
Comments (13)Starduster, I'm sorry for your loss. You had a very special relationship with your brother and I can imagine that your pain is doubly felt. The first days and weeks are certainly the worst, but it does get better. I think you need to open up a little to your family and friends. I know it's tough, you just want to hide from the pain, but soon you will see others moving on with normal life and you will still be feeling the grief. Get as much of it out as you can now. Talk, reminisce, laugh and cry with others who can share you loss now, because it will be more difficult and awkward to do it later. One of the things I did after Dad died was start a list of all the positive things that happened in the days after he passed. I made note of every little thing I could think of, every random act of kindness, condolensces from strangers, every reunion with family and friends that I hadn't seen in years, even things like the competance and compassion of the funeral director and the preacher at the funeral. I did this because I wanted something positive to grasp onto, to prevent being overwhelmed by the darkness of those days. As I was recording these events and moments, I was amazed at just how much that was good could be found in what was the worst experience of my life. I know that it helped me. Maybe give it a try, before those memories fade or are swallowed up in your grief....See MoreState AGs Warn OCC in 2004 About Subprimes
Comments (9)Here's a story from that time period that is also worth reading. History continues to repeat itself! The Limits of Madness by Martin D. Weiss, Ph.D. 12-01-03 For the first time in many years, I was speechless. I didnât know what to say. It was Thursday evening, on Thanksgiving. My wife Elisabeth, my son Anthony, plus other family members stood around the dinner table, gazing at me patiently, waiting for me to open my mouth. But I was mute. My problem was simple: Elisabeth had asked each of us to say a few words about what weâre thankful for. But by the time my turn came around, all the more important things in life �" health, happiness, and love �" had already been covered by the others. Little did they realize, during those moments of silence, that a torrent of thoughts was flashing through my mind, most of which I will share with you now ⦠THE TRUE PESSIMISTS Some people on Wall Street seem to think Iâm a die-hard pessimist �" that I have nothing to be thankful for. They call me a âperma-bearâ for ânever recommending stocksâ or âChicken Littleâ for âpredicting one disaster after another.â Well, I have news for them: Iâve been recommending stocks throughout the bear market and throughout the recent recovery. The main difference is my stocks went up; most of theirs went down and are STILL way down from their peaks. As to the disasters �" the dot.com bust, tech wreck, bankruptcy crisis, accounting scandals, and broker scandals �" guess what! They happened. But thatâs all water under the bridge. Right now ⦠LOOK AT WHAT THE âOPTIMISTSâ ARE SAYING! The so-called âoptimistsâ say Fed Chairman Greenspan will continue holding down interest rates, and Congress will continue spending us into prosperity. They say no one has to worry about �" or deal with �" the ballooning federal budget deficit, the record trade deficit, or the huge debt burden of millions of consumers. They think the sinking dollar is âno big deal,â and we should âjust let it fall.â They donât seem to give a darn that your interest income has been reduced to a pittance. Nor do they seem to care very much about the havoc inflation can wreck on your retirement. They tell you ânot to worryâ about the threat to your Medicare or the danger to your Social Security �" let alone to the other retirement benefits that were promised to you. Worst of all, they seem to think thereâs no significant connection between the shaky pillars of our economy and the equally shaky pillars of our society �" falling educational standards, deteriorating public health, broken families. And they say âMartin Weiss is a pessimistâ?! Give me a break! WHY I AM REALLY A DIE-HARD OPTIMIST A few seconds had gone by, and I could smell the Thanksgiving dinner spread out before me on the table, still steaming from the oven. Anthony looked at me expecting a profound �" or humorous �" statement. But I kept my words to myself and pursued my thoughts in silence ⦠I am an optimist because I love my country. Yes, I see trouble ahead, but I disagree vehemently with the idea that our society is going down the tubes. All of the trends we are witnessing today �" fiscal irresponsibility, massive debt build-ups, and social malaise �" are part of a single, growth-at-any-cost megatrend. But theyâre coming to a head. And when they do, we will confront them. We will resolve them. And we will move on to better and safer times. Admittedly, we are half mad, always pushing ourselves to extremes, to the limits of our technological and economic capacity. This week, for example, the U.S. Commerce Department announced that the economy spurted forward at a breakneck speed of 8.2% per year �" a phenomenon largely driven by government tax cuts and spending. Sounds great, right? But at the very same time, Moodyâs, one of the worldâs leading credit rating services, announced that, if our government continues cutting taxes and spending without restraint, the United States of America could lose its triple-a credit rating! Thatâs not good. Not even close. THE LIMITS TO OUR GOVERNMENTâS MADNESS Fact is we are NOT on the right path. But there is a LIMIT to how far we can go down this path, and, sooner or later, we WILL reach that limit. Thatâs when we will rise to the occasion, make the sacrifices, and move on. Take the budget deficit and inflation, for example. In other lands and in previous times, deficits and inflation could run amuck, almost without limitation. Kings or queens �" presidents or prime ministers �" had almost unlimited power to temporarily inflate their economies. They could print paper money to their heartâs content. They could destroy their currency, drive millions of citizens into abject poverty, invite wars of ruin ⦠even threaten the world. Youâve probably heard the stories about the German hyperinflation during the Weimar Republic, before Adolph Hitler rose to power. Thatâs when it took three TRILLION German realmarks to buy just one U.S. dollar. Thatâs when their paper money was so utterly devalued people needed wheelbarrows to cart their cash around. Once, a man parked his wheelbarrow of money in front of a store while he shopped. When he returned, he was shocked to discover that it had been stolen. More shocking, however, was the fact that all the money bundles were left behind, stacked neatly on the ground. Even the thief knew that the wheelbarrow had more value than the worthless bank notes. Plus, last week, I told you about the currency destruction that I personally experienced in Brazil as a young boy �" and how, over the years, their money was devalued by a factor of one quadrillion (a thousand trillion) to one. These are vital lessons from history we must learn, and we seem doomed to learn them the hard way: Our government today is running up its debt at a rapid pace, just like the previous governments of Brazil and pre-Nazi Germany. Our leaders seem willing to sacrifice our strong dollar in order to keep the people happy and stay alive politically, much like the leaders did back then. But, as I also told you last week, the United States is not Brazil. Nor is it Weimar Germany. Indeed, there is one, all-important, structural difference that separates those episodes of hyperinflation from the United States of today: THE DEBT MARKET Unlike Brazil and Weimar Germany, we have a huge, powerful, fully developed debt market. They didnât. A debt market is where investors buy and sell government bonds, corporate bonds, mortgages, bank loans, and other debts �" much like investors buy and sell stocks. As in any market, when sellers are more numerous or aggressive, prices go down. When buyers have the upper hand, prices go up. You probably know this already. But bear with me. You may not be aware of its ultimate implications. The primary hub of our huge debt market is downtown Manhattan �" in the large, cavernous trading rooms of major broker-dealers and banks like Merrill Lynch, Salomon Smith Barney, J.P. Morgan Chase, Citigroup, Credit Suisse First Boston, and a few dozen others. Plus, thereâs a secondary hub �" in Chicago. Between Jackson Boulevard and Van Buren Street, the Chicago Board of Trade runs a 32,000-square-foot trading floor where, every day, they buy and sell futures contracts representing billions of dollars in U.S. government debt �" Treasury bonds and Treasury notes. About nine blocks to the north-northwest, the Chicago Mercantile Exchange operates two state-of-the-art trading floors for futures on Eurodollar deposits, Treasury bills, and other debt instruments �" also with billions of dollars changing hands each day. My point is this: The U.S. debt market is not just a small entity that exists on the periphery of our society. Itâs embodied in massive, tangible structures of concrete, marble, steel, and glass ⦠housing tens of thousands of staff ⦠and handling far more money than all the worldâs stock exchanges put together. Every day, millions of investors �" individuals, companies, cities, states, pension funds, universities, churches, and foreign countries �" buy and sell the debts in these huge markets. And every day, the market value of these debts goes up or down, depending on the supply of new debts being offered ⦠depending on the willingness of investors to buy them ⦠or ⦠contingent on the zeal of investors to get rid of their old ones. This goes far beyond the realm of money and finance. The debt market �" particularly the market for U.S. government bonds �" also serves as a de-facto POLITICAL FORUM, a place where U.S. government officials must ultimately answer for their sins. How? Itâs similar to what you saw recently in the stock market. Remember how wayward CEOs and CFOs faced their day of reckoning? Remember what happened to THEM when major accounting scandals were revealed? Investors dumped their shares like hot potatoes. Almost immediately, the companies either changed their ways or were smashed by the market forces. Heads rolled. Some CEOs were even marched off in handcuffs. A similar fate awaits wayward officials of the U.S. government �" but for them, it will be in the bond market. Sounds bad, doesnât it? But actually itâs a very good thing. Because it means there IS a LIMIT to their madness. You see, in other eras and other places, if you were unfortunate enough to lend your money to a reckless, irresponsible government, your choices were minimal: Youâd usually have to wait years until the bond matured. Then, if they paid you back in worthless money, tough luck! Unless you wanted to join a revolution, there was really nothing you could do about it. Today, thanks to the giant debt market, itâs another story entirely. FIRST, YOU DONâT HAVE TO WAIT. If youâre angry as all heck about the ballooning federal deficit, the threat of inflation, the sinking dollar, Medicare, Social Security, and anything else for that matter ⦠or ⦠if youâre worried the clowns in Washington are going to stiff you with cheaper money ⦠you donât have to just sit around and gripe about it. You can sell your bonds and get all or most of your money back at almost any time, almost any day. SECOND, POLITICS IS NO ISSUE. You donât have to hire a lobbyist. You donât have to run down to Washington to bang an angry fist on the desk of some faceless bureaucrat. You donât even have to wait for the next election. All you have to do is pick up the phone, call your broker, and utter one four-letter word: âSell!â THIRD, THE CENTER OF POWER HAS SHIFTED. Millions of people own bonds today. They own them directly in their IRAs, brokerage accounts, or trust accounts. Or they own them indirectly through a mutual fund, an insurance policy, a pension fund, or even a bank account. Any one of these investors or institutions has the power to utter that same four-letter word. SELL! This is so, so important. If you get nothing else out of my weekly âMartin on Monday,â you must get this. Because it means that ⦠THE ULTIMATE POWER TO DECIDE THE FATE OF OUR COUNTRY HAS BEEN TRANSFERRED FROM THE HANDS OF POLITICIANS INTO THE HANDS OF MILLIONS OF PEOPLE. THANK GOD! This ultimate power is more powerful than laws, even more powerful than the now-defunct gold standard which, in the old days, used to restrain how much paper money governments could print. And if youâre thinking the American people have never exercised that power, think again! THE GREAT BOND MARKET REBELLION OF 1980 The president was up for re-election, just as he is now. The economy was shaky, much as it is today. Except â¦. instead of a Republican in the White House, we had a Democrat �" Jimmy Carter. Whether Democrat or Republican, however, you would have expected him to do everything in his power to pump up the economy, make the people happy and get himself re-elected, right? Youâd think heâd do very much the same kinds of things President Bush is doing now, right? Indeed, the LAST thing youâd expect from Washington �" then or now �" is a hard right jab to the underbelly of the economy. Yet thatâs exactly what Carter gave us. He called in Fed Chairman Paul Volcker. Volcker slapped Draconian controls on virtually all forms of debt and credit created in America. They imposed stiff controls on credit cards, making it difficult for the average cash-poor American to spend a dime. They slapped controls on bank lending and business borrowing, making it hard for most companies to invest, hire, or buy raw materials. They even slapped controls on money market mutual funds, making it impossible for them to sell any more shares in existing funds. Within just a few short weeks, the economy was plunging. Gross national product nosedived. And Carterâs chances for re-election were forever doomed. Ronald Reagan became our next president. And the rest is history. âBut why,â you ask? What invisible, mysterious force could have possibly driven a Democratic president ⦠up for re-election just months away ⦠desperate to pursue his vision of the world for another four years ⦠to suddenly and deliberately sabotage an already-shaky economy? Was he possessed by aliens from outer space? Did he go bananas? Not quite. Hereâs how it happened: In 1979, the government was pumping up the economy with easy money and rampant government spending. Inflation was heating up. So, millions of people who had invested in U.S. government bonds were spooked ⦠and angry. They called their brokers. They uttered that powerful, four-letter word. And the market price of U.S. government bonds �" especially long-term bonds �" crashed. It all came to a head in February of 1980. The Soviets had invaded Afghanistan. There were rampant fears of another expensive arms race. Inflation was soaring into double digits. And the bond market crashed again. In desperation, a delegation of major New York bond dealers �" including Merrill Lynch and Salomon Brothers �" made a pilgrimage to the White House. A few hours later, a dozen powerful Wall Street men in three-piece suits sat before the president in the Oval Office. I donât know exactly what they said, but hereâs the gist: âWe have a message for you,â they declared to Carter. âThe message is from the millions of government bond investors in America and all over the world. You know �" the people who have been loaning you the money you desperately need to run this country.â âOh, really?â Carter asked solemnly. âWhat are they saying?â âTheyâre saying theyâre fed up with the governmentâs reckless spending and with the inflation thatâs destroying the value of their bonds. Theyâre saying theyâre not patsies and they wonât sit back passively when theyâre paid back with worthless dollars. Their message to you is simple: âEither you end the inflation now �" RIGHT now �" or weâre not lending you any more of our money.ââ Carter was stunned. âIs it really that bad?â âNo. Itâs worse. Now, these investors arenât just refusing to buy your new bonds. Theyâre also SELLING back the OLD bonds they bought previously ⦠dumping âem on the market in torrents. That drives their prices down and the interest rates you have to pay through the roof! Thatâs why your 30-year Treasury bond has plunged to a meager 50 cents on the dollar! Thatâs why youâre going to have to a whopping 13% interest for long-term money, over 16% for short-term money!â Carter still didnât get it. So the delegation from Wall Street explained further. âLook! Your Treasury bonds are crashing in value. No oneâs buying âem and everyoneâs selling âem. Weâre having trouble selling even a small lot of $5 million. Itâs getting so bad, bond dealers like us are getting ready to quit.â âWhy should I care?â âBecause you canât survive without us. We are the ONLY ones in the world who can sell your bonds to the public ⦠to raise the cash you need. And now WE ARE SHUTTING DOWN. Weâve lost so much money holding inventories of your Treasury bonds weâre running out of capital. We canât afford to be your dealers any more. Weâre going broke!â âBut what do you want me to do?â âYouâve got to stop the value of the dollar from falling, end the inflation �" even if that sabotages the recovery.â âBut what about the election next November?â Carter asked under his breath. âForget about next November. Unless you can convince bond investors that youâre going to end this inflation, you wonât be able to borrow the cash you need to meet government payroll next WEEK! The entire government will have to shut down �" right now.â THE NEXT BOND MARKET REBELLION Finally, Carter got the message. And thatâs when he gave Fed Chairman Volcker the green light to do whatever he needed to squash the inflation �" even if that meant squashing the economy too. Can something like this happen again? You bet it can! Fast forward two decades and three years �" to December 2003. Once again, government spending is running amuck ⦠Once again, Wall Street is beginning to worry about the consequences (remember what Moodyâs has just announced!) ⦠Once again, bond investors are getting ready to start selling ⦠And when they do, GOVERNMENT BOND PRICES WILL CRASH AGAIN! Ultimately, the president and the Fed Chairman will face the same stark choices that Carter and Volcker did in 1980: Stop the fiscal madness ⦠or ⦠shut down the government! I have no doubt they will choose the former. I am also very hopeful that it will be just the first of many steps to confront and resolve the Medicare crisis, Social Security crisis, and others that loom in the not-too-distant future. But alas, our leaders will probably not start to make the right choices until AFTER theyâre up against a major, life-threatening crisis. Thatâs the nature of the beast. They push it to the limit, and then they change their ways only under extreme duress ⦠* when inflation is already surging toward double digits ⦠* when the dollar has been beaten down to painfully low levels ⦠* when foreign investors are dumping their U.S. investments by the boatload ⦠* when sky-high interest rates are strangling the U.S. economy ⦠* And when the bond market has been beaten down so dramatically, the market mechanism itself is on the brink of shutting down. Itâs a frightening, maddening scenario. But be thankful that there is a limit to the madness. It WILL end �" and for the better. In the meantime, be sure youâre protected �" And hold onto your hat. Itâs going to be one heck of a ride. " A link that might be useful: www.moneyandmarkets.com/the-limits-of-madness-8841...See Moreroseofsharon_on
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