Bits Bucket And Craigslist Finds For February 14, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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we talk alot about mbs and debt explosions- where does that end- is all the toxic loan product in 401 k’s and pension funds-
if not held by banks?
GE for example, how much do they hold
I suspect with all the derivatives floating around toxic loan exposure is going to turn up where it’s least expected.
And despite the careful explanations I’ve been reading on blogs like Calculated Risk and Mish’s about the safety of the Prime tranches, I’ve got a gut feel that at some point “toxic” is going to suddenly widen out.
British Land warns property boom over / uk
from the 2nd. largest property company in europe
http://immobilienblasen.blogspot.com/
why the rebound from 6/04 ?
UK is a wildcard
I can speak about parts of the UK, because I have relatives there.
The UK market has bifurcated since 2004. London and surrounds have done very well, plus all areas where Londoners have second homes. There have also been large price rises in and around Edinburgh.
Large parts of the Midlands however, have been virtually flat over the same period (and some of the apartment/condo submarkets have fallen quite sharply).
Ooooh, that sounds like Japan late 80s/early 90s.
I was in London last weekend. Gaze at the City from the south bank of the Thames and it’s cranes, cranes, cranes, everywhere you look cranes. If London’s boom is suddenly stopping dead in its tracks there will be a lot of overhanging inventory from the stuff that’s just getting built now.
Reminded me of vegas or miami, except that london has a real economy that shows no signs of slowing down yet. Also, the women were much better looking than I remember, which is one of the better indicators of how vibrant a city’s economy really is. (Another is how good the club scene is, and London is still solidly #1 in the world whereas NYC has faded in recent years.)
Rents are over moon, with decent 1BRs within the Tube’s Zone 1 going for $2500-3000/mo. 2BRs were around $3-4K, and I saw bigger places well into five figures. I was trying to figure out how rents related to prices, but a lot of properties are on those screwy leaseholds so I wasn’t sure how to discount that.
In other news, I’m starting a new job next week, and it’s a real job, so I will be reading and posting here a lot less. It’s been fun, though, and don’t think I won’t keep paying attention.
Trading job?
I’m essentially moving from one side of the business (trying to produce returns) to the other (deciding where to place client assets, and these are some HUGE clients). Much better in the longer term IMO.
I worked for hedge funds for the better part of five years; never wanted to mention it because of the biases people here have. I actually haven’t worked in more than a year, and it should feel exhilirating to do something productive for a change.
I don’t think there’s anything wrong with working for hedge funds. Pay is unbelievable. I’d do it too but I can’t stand the idea of having to get up and report to work somewhere. Good luck with what you’re doing. That’s gonna be a minefield.
Actually I made chicken scratch. I did much better trading futures, but I never wanted to do that my whole life. Nothing motivated me to get up early quite like the possibility of making $80K by 8am (that happened one morning, but was a huge outlier).
It’s much easier in the hedge fund world if you have connections and can launch with a decent amount of seed capital. Otherwise it’s real, real tough, the operational/marketing part of it sucks, and many managers will forego a draw for a couple years while they try to produce a track record. That’s one reason it’s so nice to be on the other side.
Passthebubbly,
Congrats on your new job. Best wishes and do post occasionally.
Yes, Congratulations.
IPO’s all moving from NY to London as a result of Sarbanes Oxley?
That and geography. London is closer to eastern Europe, Russia and the MIddle East. And it’s a more multicultural and tolerant place to begin with than NYC is. Not that London doesn’t have terrorism, but if you’re among the 97% of Middle Easterners or Africans who just want to make a buck where would you rather be?
And good riddance to them IMO.
London has a much higher crime rate than NYC.
Petty crime, yes. Violent crime, no. Legalized theft in the form of everything being too damn expensive, I’d give London the edge.
London has a much higher violent crime rate, excluding murder, as well as a higher property crime rate. The US murder rate is low, if one excludes certain areas that most people never enter.
London is a good place to work if you run a global fund…since you get to work when Tokyo market is closing, Eur market is opening and 6 hours before US opens. Plus, it’s a great city…expensive as hell, though.
not for long
SarBox was mostly a good thing because transparency is good. London might get some good IPO’s but after a while there will be a lot of junk and at some point there will be a crisis due to fraud. same thing happened in the US.
1990’s no one cared because the market was booming and everyone was making money. come 2002 when most of the fraud came out everyone was suddenly screaming for blood because they thought they were scammed when everyone knew it all along
NYC now 3rd behind London and Hong Kong (I think, some city in Asia, but not Tokyo) in new issuances and listings.
Direct result of SOX.
jmf - you have made a very biased comment - the press release reads nothing like that.
BL have quite rightly pointed out that yield compression, which has given everyone in commercial property a free ride, is over, and that it is back to fundamentals.
London is doing pretty well - there will probably be oversupply in the City of London office market in 2009 as the new towers come on stream, but most sectors are balanced, and even in London, the strength of the financial sector and move of power away from New York is underpinning the market.
Looking at the housing bubble in the UK, I am selling my house currently (best bids tomorrow, c.$2m!) and I have never seen a market like it.
When this goes “pop”, it will be very loud.
Loafer
hello,
thanks for the hint. i´ve mixed the wrong url in the headline.
but i think when you read between the lines the message is pretty clear that times are getting tougher.
i agree with your forecast that in london the challenge will be the year 2009-2011 with almost a complete new skyline
http://www.ft.com/cms/s/10598aa4-bb92-11db-afe4-0000779e2340.html
that´s what the world was waiting for……
more derivatives……
liquid market for commercial property derivatives? sounds like a sandbox for hedge funds.
“… sandbox for hedge fund.”
They appear to view the world as their sand box.
Everything is OK. Corection is over.
http://www.pressofatlanticcity.com/news/local/capemay/
wow Ocean Shtty
wonder how those condos in the potato fields are doing-?
flatff. Do you have a family member that can translate for you?
Potato fields? Honestly, I have no idea what you are trying to say in 90% of your posts.
there were lots of condos being built near oc in fields far from the beach-hows that
Wrong state. I think you referencing O.C. MD?
“We’re still seeing the negativity and the gloom and doom from the Wall Street Journal and The New York Times. ‘The bubble is going to burst.’ Sooner or later, people will start believing that,” Marotta said.
Um, maybe because it’s true?… This is hilarious that they are essentially saying the WSJ and NYT (and all other media publications I imagine) are falsely reporting. Let’s rewind to when there was nothing but Rah, Rah, Rah, Go Housing! in the news. God forbid that would ever end.
The Jersey shore is desperate. They’ve always been overpriced, but it’s completely ridiculous now.
“The city’s Board of Realtors is launching an advertising campaign this month to spur interest among Philadelphia-area investors.”
Gee, why would they need to advertise Ocean City real estate now? And why didn’t they advertise during the last five years?
Hey TL you in Philly?
It seems either articles about the bubble are slowing down or Ben is getting tired of posting. I’ve been reading the same few articles the last few days. Ugghh
I’m in the wedding business and I had a young couple come over the other day who were looking for a house. They put an offer in on the house and they said they were out bid. I’m not sure what to make of that one.
Very little over $350,000 is moving in my area, the amount of properties for sale has shrunk by about 25% in the last 3 months yet is now stable and has been for about 1 month. I’m still in the frame of mind that listings will soar in the next couple of months, and home builders will start cutting prices. We’ll all be seeing big reductions by Late Summer. Most peoples jobs arent as secure as they once were.
my mom has a house in RI I’ve been begging her to sell…….RI gets hit the worst cause they’re so anti -biz and many commute to greener pasture to work.
“I’m still in the frame of mind that listings will soar in the next couple of months,”
In the areas that I’m watching, I’m still seeing ‘two steps forward, one step back’ regarding increasing inventory. Not “The Big Dump”, but I’ve got my eyes peeled (mmmmmm, peeled eyes).
I haven’t seen great increases in the 93552 either. Inventory is up 75% YOY though.
NODs continue to increase with the monthly total for Jan. at the second highest level since tracking began 3 years ago. (December was the highest) January eased back on the parabolic increase just a bit but Feb. is off to a pretty good start.
LA Times:
Sub-prime lender seeks bankruptcy protection
ResMAE joins a list of mortgage companies hurt by the growing number of defaults.
http://tinyurl.com/2stqpq
“ResMAE said it made nearly $8 billion of loans in 2006. The company said its offices would remain open during the sale process.
ResMAE said that Merrill Lynch & Co. helped trigger the company’s tailspin by demanding that it buy back $308 million of loans under so-called early payment default provisions.”
=====
But everything will be (eventually) OK:
KB Home results hint market is improving
http://tinyurl.com/2wasvy
“But the improvement is coming at the expense of profit margins. KB Home and other builders find they must keep lowering prices and offer other discounts to snag buyers.
“If you can get to the price point in any market, there is underlying demand,”"
Russ Winter mentioned that Lennar is threatening subcontractors with a 6 month moratorium on bid requests if they don’t agree to 5-10% discounts on prices for work already completed. I’m wondering if the subs are feeling cheated, and whether this is a sign of desperation by Lennar?
Its done all the time by the “Big Boys” hooper….The contracts are “Very” large and they provide a sub the opportunity to hold his workforce intact for a long period of time…Pays all the overhead….The sub just turns to his workers and tells them they have to do more for less….They are brutally tough…
cheated?
if the subs dont like it, adios amigo.
Hablas Espanol?
Notice the KB home puff piece is written by the NAR’s fave L.A. Times reporter, Annette Haddad.
another one bites the dust
my apologies if already old news
http://biz.yahoo.com/cbsm/070213/5d76d8ddb54449beafcbb50fc56d311d.html
I noticed a headline story that calls the Alcoa takeover “unlikely”. I wonder if the market will give back yesterday’s gains since they had their basis in an unfounded rumor.
A Sinking Sensation for Subprime Loans
The default rate for borrowers in the sector has jumped faster than anyone was expecting, raising risks for housing and the overall economy
http://www.businessweek.com/investor/content/feb2007/pi20070214_954191.htm?chan=top+news_top+news+index_businessweek+exclusives
by Joe Niedzielski From Standard & Poor’s Equity Research
The gathering storm clouds over the nation’s housing and lending markets grow darker each day. Fueling the latest concerns is further fallout in the subprime mortgage loan market, where lenders offer financing to less-creditworthy buyers.
Global banking giant HSBC Holdings (HBC), the third largest subprime lender in the U.S., disclosed on Feb. 7 that full-year 2006 impairment charges at its U.S. mortgage unit would be 20% higher than the $8.8 billion or so that analysts had been projecting. On Feb. 8, New Century Financial (NEW), the nation’s second largest lender to subprime borrowers, said it expected to report a loss for the fourth quarter, and that it would have to restate its financial results for the first three quarters of 2006 (see BusinessWeek.com, 2/9/07, “Subprime Time Bomb”).
——————————————————————————————-
(Here is the earlier Businessweek article…)
Subprime Time Bomb
With HSBC and New Century Financial suffering losses from subprime borrowers, which other mortgage lenders face an unpleasant reckoning?
http://www.businessweek.com/bwdaily/dnflash/content/feb2007/db20070206_488329.htm
I think we all knew it was coming…. Just that much of the evidence is being hidden from the public while the insiders dump as much stock as they can.
Just look at the mess with New Century…. all of the lawsuits that have been filed stating that New was aware of the problem long before they chose to report it. I have a feeling this is going on with all of the other sub-prime lenders as well and we will continue to hear about it as, one by one, they come clean.
“I have a feeling this is going on with all of the other sub-prime lenders as well and we will continue to hear about it as, one by one, they”
… go bankrupt.
I have a post up on the implications of tighter mortgage lending standards, which were discussed in a Wall Street Journal story this morning. Here’s an excerpt (the rest can be found at my blog):
“It seems every day, another mortgage lender pulls one of its higher risk products … As I’ve been pointing out in earlier blog posts, including this one on the Fed’s latest loan officer survey, the thing that had been missing in this housing market slump — until recently — was a tightening lending market. Lenders kept the pedal to the metal DESPITE obvious signs the housing market was deteriorating in 2005-2006. Their goal: Keep loan volume up, future defaults be damned.
Now, that’s changing fast as secondary market conditions tighten up. Will this have a “second round” impact on the housing market? I believe so. More borrowers at the margin will not qualify for financing, and that will erode demand for both new and existing homes.”
http://interestrateroundup.blogspot.com
Let’s all chant together now:
“SOFT LANDING, SOFT LANDING, SOFT LANDING…”
This must be a great time to be in the PMI biz. Because the 20 in the 80/20 product is a substitute good (aka, competitor which undercut PMI demand during the recent speculative euphoria).
Yes, I think so, too, especially now that PMI payments have become also tax-deductable. Can PMI take the role of risk assessor and risk pricer at the closing table?
You can’t keep a Ponzi scheme going without entry level players propping up the base of the pyramid. Tighter lending standards will excelerate the collapse, no doubt.
Getting back to yesterday,
“I was trying to say I could demonstrate how TA works even in tiny time frames for you skeptics. That’s what I do every day and it’s fed me for years.”
You are selling your own unique abilities short. If TA was the reason for your success, no one who practices TA would lose. There is no grey area when it comes to reading an indicator. But if TA was a valid predictor of the future, black boxes would work, when in fact they DO NOT.
In a macro example, I doubt Ben set up this blog after plowing through charts filled with technical indicators and determining there was a housing bubble. He read a bunch of stories, saw crazy housing prices, and made an internal decision that things don’t look right and became concerned, same as most of us.
Traders are like baseball players. A pitcher sucks so he may decide one day to wear his underwear inside out. He wins a game and will then wear his underwear inside out for each game thereafter until he loses. Ditto for traders, only instead of wearing their underwear inside out they chalk up their gains to John Bollinger. Until the Bollinger Bands fail and they move on to some other piece of magic.
You successful traders should give yourselves the credit for your ability, not the voodoo artists.
As I said yesterday, one of the best uses of TA for me is for fade type trades. This isn’t the forum for it but for instance, a major trendline break the first time is often a great fade because a lot of people who just use TA without thinking will pile onto that and it’s a way to generate volume or trip stops off. I remember in ‘05 seeing RIMM break a long uptrend line (this was in early September) and that night I saw 5-10 trading advisories saying to get short. I actually got long with a 5% stop and did they ever ream everyone who shorted that break. It came back over the trendline and went up another 20 bucks or more.
another one was a few months ago when the homebuilding index was rejected at the 50% fibonnaci retracement area which I and others here noted. That got people excited about shorting and that didn’t work out either now, did it?
I follow you. I agree with Lou, you do have a remarkable feel for the market and how it works. I have learned quite a bit from reading your posts.
The retracement level is .618 and its reciprical .382. Where did you come up with 50%? There is not fibo at 50%. You need to do your home work before you comment.
pitcher decide one day to wear his underwear inside out…..
That’s a little difficult since my cup is not reversible but, I have wore my socks & sleeves backwards….
I think what happens is that the TA gets the traders’ attention. When one hunts game–it is the odd crack of the stick, slight patch of movement, or a snort or wheeze that focuses all that predator attention on the cause. From the mass of sensory data–the sigificant emerges.
You cannot use it mechanistically, when you do, you become food for the trader who is looking for you.
What’s a “so-called subprime mortgage?”
————————————————————————————————-
Fears grow over subprime loan market
By Richard Beales and David Wighton in New York
Published: February 13 2007 19:53 | Last updated: February 13 2007 19:53
Concerns over risky US mortgage lending mounted on Tuesday as a key indicator of credit problems hovered at record levels, another small mortgage lender failed and a big homebuilder admitted borrowers’ difficulties could damage its business.
Investor worries over loans made to US borrowers with weak credit histories have grown since housing market activity slumped last year. They were thrown into sharper relief last week when two big lenders, HSBC and New Century, warned they had underestimated the spike in defaults on so-called sub-prime mortgages.
https://registration.ft.com/registration/barrier?referer=http://www.ft.com/home/us&location=http%3A//www.ft.com/cms/s/10ebfef4-bb9a-11db-afe4-0000779e2340.html
Does anyone care to elaborate on what a hedge fund is and why those on this board dispise them so?
A Hedge Fund is a description used for many and varied types of fund, but in it’s purest and original sense it is a fund which owns debt, equity and commodity securities and derivatives against which it borrows money.
This means if they get the bet right, the returns are fantastic, but if they get it wrong, they get it very wrong.
The top 10 global FI I work for is VERY wary of its exposure to the sector for this reason.
People hate them because they pump too much liquidity into the markets by gearing - there is roughly the same amount of equity money around, but hedge funds create huge increases in M4 (money created through gearing) which, in turn, produce asset bubble (vis Commodities and Housing).
Hope this helps.
Loafer
I’m not sure anyone knows what it is.
The term “hedge” implies the funds accept lower returns by using financial instruments to protect against downside risk.
But it appears instead that most charge high fees with a promise of sky-high returns, which are generated by massive leverage. Which means they take gains up from, but investors could be wiped out if the market changes. The opposite of what their name implies.
Perhaps what makes them so despised is the combination of high fees, arrogance and the deceptive advertizing inherent in their names. If they were called “Wild Gamble Funds” they would have fewer critics, and fewer investors.
TY Loafer and WT, I’m not sure i am any clearer on this but, i appreciate the efforts. To put into my terms, would that be like taking a 4 team parlay when betting on sports?
I think you have to have a “net worth” in order to invest in hedge funds. 1 million dollars not including primary home. Something like that. I don’t know I don’t have the money and if I did I would probably just stick with indes funds. Timming the RE market is enough excitment for me.
You have to be what’s known as an “accredited investor”. Google that term, you’ll get the picture. Same thing with investing in pre-public offerings like series as or bs. I have an investment in a series B of a company that may IPO late this year or next if the market doesn’t puke.
The “hedge” comes from the fact that originally, they were marketed to hedge an investor’s overall portfolio, and that they accepted risks others were unwilling to take (ie wanted to hedge against). A classic example would be a short-equity or distressed debt fund.
I think the reasons most people don’t like them is (1) they don’t really understand what they invest in and (2) a few people in the business make an awful lot of money, and lots of people loathe people who seem “too successful” by whatever their metric is.
That’s not why I dislike them (some of them). I’d prefer they play by the rules everyone else has to (such as in naked short selling, PIPE abuses, etc.)
Well, I’d just let everyone have the same toys HFs get to play with, but I guess that’s the same idea.
What’s it going to take to tank this market. This is getting seriously old.
a nuke setting off anywhere
“…originally, they were marketed to hedge an investor’s overall portfolio,…”
Portfolio insurance is so-o-o 1987…
Systemic risk often leads to tax funded bailouts They’re robbing us - eyes wide open.
“….The offer was rejected and the same day the Federal Reserve Bank of New York organized a bail-out of $3.625 billion by the major creditors”
http://en.wikipedia.org/wiki/Long-Term_Capital_Management
Wasn’t it Warren Buffet who said that hedge funds will be the downfall of the financial markets?
How ironic that would be, as BRK is pretty much a hedge fund in disguise. Especially considering what it costs to buy in.
Most of Buffett’s agitation about derivatives and hedge funds is that they are pushing margin way down in his insurance biz. He’s a savvy player, so when a thret pops up he tries to get it removed.
Recall that in late 2001, he was out pushing for government reinsurance of terrorism threats. The guy is one of the few that pretty much is always thinking of how to make a buck.
Hedge funds are a catagory name for limited partnerships that charge a fee structure that is 2 and 20 (the general partner gets 2% of assets and 20% of returns), also they are not generally registered investment managers (in the US) so they are not allowed to market on performance. Aside from that most hedge funds have very little in common. They got very popular post 2000 because most trade on volatilty (how much things go up and down rather than the overall direction of the market) or by looking for little inconsistencies in how something is priced (an easy example is merger arb where a long position in an acquisition target is offset by a short position in the acquirer–there’s usually a gap between the two based on how likely the deal is to go through).
I think most of the vitriol comes from three sources: first, most people can’t invest in a hedge fund. Second, they are blamed being the reason that a trade or investment doesn’t work (because it’s well known that they make up a decent amount of the trading on global markets, but it’s not known what exactly they are doing). Finally, I think a decent number are just jealous that the managers tend to pull in huge coin.
Adding to some of the others excellent comments, The problem with hedge funds (as TXchick et al have said) is that they are unregulated! That means that, in theory, the hedge fund could be long stock with little money down and should the stock tank lose not only their investors money, but create a world wide liquidity crisis. Google LTCM and also google LTCM’s directors. The collapse of LTCM nearly brought down the house in 1998. Anybody long Russian bonds?
from Serhan Cevik Morgan Stanley
“…The rise of hedge funds and the explosive growth in structured financial instruments. The outstanding notional amount of exchange traded and over the counter derivatives contracts snowballed fromm US77.3 Trillion (or 245% of global GDP) in 2000 to more than US $400 trillion (or 840%) last year. Likewise, in search of higher yields, private capital flows to emerging economies soared from US 50 Billion in the 1980’s to US $675 Billion last year. It may be so far so good, but the wave of liquidity that has boosted global GDP growth beyond its trend rate and depressed term premiums could easily become a source of financial volatility, as we have witnessed several times in recent years….”
The average hedge fund earned less than the average mutual fund last year. It is no better than playing poker on an internet web sight - not being able to see the other players eyes - trusting a computer program to come up with randomly distributed cards (currently not possible) .
The current greates risk in the hedge funds appears to be the Yen carry trade. The G-7 is trying to move the yen higher, but the fear is that at some point the unwinding of the yen positions will attempt to happen overnight; this will drain liquidity out of the entire world market and the inability to unwind bancrupt positions. Instant world economic morass.
I have posted before that I believe that 2% of the hedge fund operators are brilliant financial traders, 18% know what they are doing, 60% are mopes like me, 15% can’t balance a check book and 5% are out right crooks. (I originally posted that 3% were outright crooks , but recent events show I was too low).
LEND has announced they will not issue guidance for 2007.
Wow.
That is probably because they don’t know and can’t tell where they are headed. Kirk to Scotty “Warp 10 speed”. Scotty to Kirk “I don’t have the power captain.”
Kirk: “Bones, can you save him?”
Dr. McCoy: “I’M A DOCTOR, NOT A MIRACLE WORKER!”
Sales of condo-hotel suites hot at Hotel Del Coronado
By David Washburn
STAFF WRITER
February 14, 2007
Real estate slump? Don’t tell that to the folks at the Hotel Del Coronado.
While real estate sales throughout San Diego County have been in the doldrums for more than a year, the legendary hotel is enjoying brisk business with its new beachfront condo-hotel suites.
File photo
The condos, on the northwest corner of the property, will match the design of the the 119-year-old National Historic Landmark hotel and be available for occupancy in July.
More than half of the 35 two-and three-bedroom units have been sold since September at a total of $70 million. The condos, which are under construction, will range in size from 1,230 square feet to 2,030 square feet and are selling from $2.5 million to $3.6 million.
“We are ahead of schedule,” said Gary Driver Jr., vice president of the Hotel Del Realty Co. “It’s definitely been a ‘build it and they will come’ situation.”
The condos, located on the northwest corner of the property, will match the design of the rest of the 119-year-old National Historic Landmark hotel and be available for occupancy in July.
The Hotel Del is among the latest entrants in the “condotel” business, which has been booming nationwide in recent years.
http://www.signonsandiego.com/uniontrib/20070214/news_1b14del.html
did they film the shining at the del?
it sure reminded me of that place
No but they filmed the Marilyn Monroe film Some Like It Hot there.
And the Stuntman I think.
Shining hotel is in Estes Park, Colorado
The hotel King wrote about is the http://www.stanleyhotel.com . The film was not shot there, but the miniseries version and the movie Dumb & Dumber was. The film was shot in Mt. Hood Oregon and England where Kuberick lived.
I think the Shinning was at the Stanley Steamer Hotel in Estes Park, Colorado.
Although I think the Condotel is a loser idea ripe for losing money, if any place can pull it off it would be the Hotel Del Coronado.
Trade deficit at 5th high in a row
Export-import gap data serve as political fodder
By Steven R. Weisman
NEW YORK TIMES NEWS SERVICE
February 14, 2007
WASHINGTON – The United States ran a record trade deficit in 2006 for the fifth consecutive year, the Commerce Department reported yesterday in an announcement that quickly reignited the dispute between the Bush administration and Democrats over the value of past and future deals lowering trade barriers.
The department said the trade deficit, or gap between what the United States sells abroad and what it imports, reached a new high of $763.3 billion last year, a 6.5 percent increase over the year before. The deficit was fueled by the continuing American need for foreign oil and imports of consumer goods from China and other countries.
The record trade deficit was no surprise, since it had been foreshadowed in monthly figures over the past year. But in the current tense political climate in Washington, it was seized upon by both the Bush administration and its critics. It also seemed certain to become a factor in the accelerating presidential race.
http://www.signonsandiego.com/uniontrib/20070214/news_1b14economy.html
I don’t know if it’s because we’ve never been a net creditor nation, but here in Australia the Trade Deficit per se is not a headline number unless it’s either very bad or very good.
The major focus here is on the Current Account Deficit. Maybe that will also become the case in the US as the Net Interest Balance becomes increasingly negative.
Chrysler to cut more than 13,000 jobs as part of restructuring.
The auto industry is big-time hurting.
http://www.msnbc.msn.com/id/17128723/
But fortunately the bad news is all priced in now that GM has doubled in recent months.
Hillary Clinton KFC Special - Funny Picture
http://politicalhumor.about.com/library/images/blpic-hillarykfc.htm
LOL
Dataquick makes changes:
http://blogs.ocregister.com/lansner/archives/2007/02/dataquick_revises_its_entire_h.html#more
These guys never give up….
Doesn’t look as if there are any dramatic changes.
You know there is some RE influence behind this change; and it’s not to make the “numbers” look worse going forward from here. REIC is their primary customer. No reason to piss them off..
I’m interested in the new negative number for new residences…how did that happen? What new measurement did they use?
Oh wait…it’s monthly, not YOY…?
Anyway, I’d still like to know what kinds of sales are now being counted that weren’t before.
Change in Statistics Methodology
My neighbor just put his house up for sale. He and his wife are currently going through a nasty divorce (he’s been cheating on her for several months now). Well, he bought her share of the house by taking out a home equity loan. New, they did owe a reasonable sum (around $160000 or so) before this. I suspect she walked away with around $100K since he has put the house up for sale at a little more than $375000. So she’s walking away with a huge sum of cash, and he’s stuck with this home that he’s trying to sell along with the other ten or so in our neighborhood. Looks like she’s going to have the last laugh. The f%@!er deserves it!
I suggested this same tactic to a friend whose brother is divorcing, and waiting to sell the house in order to do so. It’s a great trip to pull in this market, because what looks like largess today becomes a knife in the gut tommorow for your ex.
I wouldn’t suggest this move if their are kids though because added animosity isn’t good when going to court over child support.
I wouldn’t suggest this move if their are kids though because added animosity isn’t good when going to court over child support.
They’re DINKs, so children are not an issue.
I’d call that irresistible opportunity meets immovable house.
So retail sales were flat in January - Auto sales drag the number down. We know house sales are down and now autos for two months in a row. How can growth continue? And where is this inflation the fed talks about? Where I live gasoline is much cheaper than a year ago. I do not see inflation - if anything I see deflation with home prices and commodities dropping as well.
Gas is climbing here in CA
How about food, healthcare, whatever….? Gas is too volatile to use as a measure of inflation. You’d go from +30% to -25% in one year. Anything but cheap Chinese crap is going up in price.
Marie Bernanktoinette would say: “Let them eat plasma-TV’s” …..
Stock markets are inflating
BB says “housing is stabalizing”
spin doctors will take this and run with it.
Dow is overdue for 2% correction, which comes on the heals of interest rate hike to stave off inflation.
I guess that means housing will continue to “stabalize” on a down-side trend.
Do all stocks always automatically go up on testimony day?
http://www.marketwatch.com/tools/marketsummary/
methinks the testimony is one of the most carefully planned and calculated “speeches”, post “irrational exuberance”
Is it me, or did BB look like somebody shot his dog prior to the “testimony”….this guy is getting handled by the big boys?
Why is New Century (NEW) rebounding today? I am very tempted to grab a few March puts on this pig on this surge…thoughts?
Uh-oh, it’s another NPR Driveway Moment!
http://www.npr.org/templates/story/story.php?storyId=7396141
don’t think so
http://dallas.craigslist.org/rfs/278541103.html
“100% Pay Option Arm”
“For complete details contact Damian”
“… last year nearly half of first-time buyers made no downpayment when they purchased their homes …”
Word is out that subprime lending is undergoing a major haircut. However, nobody in the MSM seems to have yet connected the dots between the subprime haircut and further home price declines to come.
http://www.itulip.com/forums/showthread.php?t=945
I heard that on NPR Chick……Get a credit card without a SS #…Un fricken Believable…..
I heard the NPR story on the way home yesterday. It was mentioned that the bank might require money to be deposited into an account to cover missed payments and also that rates will be high, possibly over 20%. I wouldn’t exactly say credit is being given away here…
Yup, article in the La Times as well.
Beside everything else, any reason a terrorist wouldn’t want one of these cards? Make up a name, use any gov’t id from any country–say Britain or Germany, with hostile immigrant communities–and voila, you’re in biz in the USA. Charge your scouting trips while you look for likely sites, load up on weapons, explosives, buy a truck or cars, use cash advances to send funds to associates overseas, et.al. Say there’s half a dozen of you, you could have six or a dozen cards between you. Move into vacant mcmansions in empty developments. No way anybody at Homeland is gonna be fast enough to track you–and you can terrorize America on her own dime. All thanks to the good corporate citizens at BOA.
dont forget the free air miles
Terrorists pay cash, silly. Stop embracing total government surveillance and control.
On July 8, 2001, Atta was recorded withdrawing 1000 Swiss francs from an ATM, and using his credit card to purchase two swiss army knives and some chocolate in an airport shop in Zurich, Switzerland.
And also hundreds of other wire transfers, ATM withdrawals, and credit card transactions among them. They seemed to prefer SunTrust for their primary banking needs.
i still have access to my school’s online library and they had some good financial research resources. going to have to look to see what people are really saying
This is from a WSJ article today on the tightening of credit standards and I can’t help but wonder if the guy at Credit Suisse who wrote the report reads here:
The Credit Suisse report said late payments and defaults have been particularly common on piggyback loans and those with less than full documentation. Borrowers who finance 100% of the home’s cost have “no skin in the game” and so might be more inclined to walk away from the house when they begin to suspect they won’t be able to afford it, the report said.
People who rent homes typically have to come up with a deposit to cover a couple months of rent, the report said. But “some homeowners who did not have enough savings to rent a home were able to actually buy a home,” it said.
http://tinyurl.com/2p8wpc
I see Bernanke (Or Bernankadonk butt as I affectionately call him) says the inflation risk is diminished. Dollar apparently tanks on assumption that interest rates will be held steady. Hmmm. It now takes more of our dollars to buy all the foreign goods from which we derive our… what is it 700 BILLION dollar trade deficit.
Hmm. That sounds like, um I know there’s a word for it…ummm…Inflation?!?
And of course nobody I know actually buys food or fuel or housing so there’s no need to count those when talking about inflation.
Somebody tell me again - why are these clowns not behind bars?
10 yr bond yields down 5 basis points. The Dow up almost 100 points. Oil down a buck, even though there was a total oil product draw of 11 million barrels. New Century up up up. Retail sales for Jan lamer than a deer in headlights. Q4 GDP to be revised down to 2.0% from initial 3.5%. It’s all good. Thanks PPT.
The next bubble? The Dow. 15000 by Q3
“The next bubble? The Dow.”
Too bad all bubbles come to an end — by popping.
“Somebody tell me again - why are these clowns not behind bars?”
Because the puppet master pulling Bernanke’s strings wants them to lie and lie some more.
Keep hard working Americans working hard and oblivious to the growing reality that the dollars they earn today won’t be worth jack tomorrow.
I listened to Mr. Bernanke’s testimony this morning. The loop holes that he left to scurry thru should the economy falter are large enough for two Mack trucks to go thru side by side. Regarding the housing, Mr. Bernanke said (in my rememberance) We are seeing some indications of an ending to the sales declines, however we will have a better picture after the spring selling season. (When asked how long it would take for housing to resume normal sales patterns), The housing market, if all goes well, should return by the 4th quarter, 2008. When questioned about the negative savings rate, This will take years to reverse. When questioned about the interest rate reversals causing bank distress: Local banks will be hurt, but it does not signal a recession.
In general I could not have done a better job waffling.
The S&P, NASDAQ and the Dow are at six year highs. Treasuries are selling robustly, even though they have apprx. a negative 6% return–who the hell in their right mind would by these pieces of trash? It seems like foreign investors are bidding up equities and bonds as a last gasp effort to find minuscule returns. You know it’s the end of the jig when crappy American equities are the financial players last resort. When it collapses it’s gonna be real ugly.
Might anyone remember the banks who claimed a large amount of NegAm in their income? Was reading yesterday and saw FED did and maybe HSBC…
people ask ‘What do you do about all the debt and trade imbalance’?
I say free the markets - stop borrowing and spending.
It’s time for a recession. People are living beyond their means and need to stop spending: stop buying SUV’s, trips to Italy, fat McMansions and the latest 400 dollar phone.
KBHomes decides to go repartment and then reconsiders 24 hours later.
http://www.bradenton.com/mld/bradenton/business/16691511.htm
Comment by arlingtonva
2007-02-14 10:17:04
“Somebody tell me again - why are these clowns not behind bars?”
Because the puppet master pulling Bernanke’s strings wants them to lie and lie some more.
Keep hard working Americans working hard and oblivious to the growing reality that the dollars they earn today won’t be worth jack tomorrow.
Thanks! I thought it was something like that.
Geeze. (I think you’re right, but…good grief)
Fed sees soft landing for economy
By Krishna Guha in Washington
Published: February 14 2007 15:58 | Last updated: February 14 2007 21:41
Stocks and bonds jumped on Wednesday after Ben Bernanke laid out a fundamentally benign analysis of the US economy in his twice-annual testimony to Congress.
The Federal Reserve chairman painted a picture of recovering growth, moderating inflation and reduced economic risks that evoked memories of the “Goldilocks” economy of the late 1990s – so-called because it was neither too hot nor too cold.
Mr Bernanke struck a temperate tone on inflation, reiterating the Fed’s view that it was still a bigger risk than growth but he made no effort to prepare the ground for another interest rate rise.
Instead, he dropped a heavy hint that rates might stay on hold at 5.25 per cent for some time, saying: “The current stance of policy is likely to foster sustainable economic growth and a gradual ebbing of core inflation”.
The absence of more hawkish language on inflation and interest rates, and recognition of the continued risks to growth from housing, was greeted with relief by investors, who had been troubled by recent talk from some Fed officials.
The S&P 500 index rose 0.76 per cent to 1,455.30 on Wednesday, while Treasury bonds also moved higher, with 10-year yields falling 7.6 basis points to 4.736 per cent.
http://www.ft.com/cms/s/1262b8fe-bc44-11db-9cbc-0000779e2340.html