Bits Bucket And Craigslist Finds For July 13 2007
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This was in this morning’s Charlotte Observer. It’s a short interview with the CEO of Lending Tree.
http://www.charlotte.com/business/story/195504.html
Two things happened to the market. One was totally expected, which was rates are going up so refinances are coming down. The second piece was unexpected, and that was the subprime fiasco.
The second piece was unexpected? Must have been to drunk on kool-aid and running along with blinders on. Great forward thinking!
Those guys are living in the dream world.
http://www.axisoflogic.com/artman/publish/article_24895.shtml
Scary stuff:
“The worst off will be people locked into retirement funds which have a heavy load of mortgage-related securities. Entire investment portfolios are likely to disappear overnight.
The banks, along with the bank-leveraged equity and hedge funds, are preparing for the biggest fire sale in at least a generation. Insiders are going liquid to get ready. If you think Enron was “the bomb,” you won’t want to miss this one.”
Question? Where should/can we take our IRAs or 401Ks? Cash? Large Cap funds?
Lip
There are a few good lines in this one!
http://news.yahoo.com/s/ap/20070713/ap_on_bi_ge/ipsos_consumer_confidence;_ylt=AtVnX2eca86HgwjQ5HUzl6uyBhIF
and yet on CNNMoney
“Consumer sentiment soars to 6-month high
Index jumps to a better-than-expected 92.4 in July on a booming stock market despite higher gas prices”
So which is it boys?
this one’s a little wierd (especially the $2500 per week part):
WILLIAMS BAY-Residents here are upset that some houses are being rented as if they were resort properties.
http://www.gazetteextra.com/wmsbayrentals071207.asp
Temecula housing bust video:
http://www.youtube.com/watch?v=pDbgUVM98YI
Florida half price home sale video:
http://www.youtube.com/watch?v=10WoQZKZkNs
Old news
Second video was great. I can almost feel the investors squirm when they watch that.
My fav part is when the women says “The developer promised they would not sell homes below market value”. Ugh, lady, do you realize what an auction does? An auction sets the market value, you harpy!
The interesting question (because, although it’s kind of nice to be right, we all knew/know that FL is look at a 50% haircut in many locations) is what happens to the taxes for those who bought at 300K? Obviously they are paying 2X the taxes as their new neighbors; and that’s not going to make anyone happy.
I anticipate a surge of reappraisal requests in FL for the next 5 years. The only question is; does the law even have a provision for lowering the taxable value below the price paid for the home? My other FL posters; does anyone know??
On a side note, very nice to be a renter sometimes. My fridge broke, called the landlord to tell him I am calling a repair guy. Guy comes, 275 bucks, fixes the fridge. I deduct 275 from my upcoming rent. Not a bad deal at all.
“… very nice to be a renter sometimes.”
Can’t put a price on that kind of happieness. I’ve still got mixed feelings about it. Our P&I/T&I is still about the same as rent. Get all those great write-offs when the tax man comes. Still, if I wanted to sell right this second I’d be forced to put my price $20K below everyone else’s just to get bites in a reasonable time. Kind of makes you a hostage.
On a side note, very nice to be a renter sometimes. My fridge broke, called the landlord to tell him I am calling a repair guy. Guy comes, 275 bucks, fixes the fridge. I deduct 275 from my upcoming rent. Not a bad deal at all.
Best of all Michael, you do not have to be around when the guy comes to make the repairs. When I was a self-imposed mortgage slave my gas oven broke twice. I had to not only miss work for half a day each time (gas company only gives a range of time - morning or afternoon - when it gets to your address, and I missed $27 per hour work in the early 1990s for 4 hours), but I had to pay the repair bill. Vivid memories plus the current real estate bubble (rent is much cheaper than mortgage slave payments) are why I’m renting now.
In Economic Principles 101 we learned “Nothing ever goes below it’s market Value.” Doh!
Thats an amazing video, 6 minutes long and never got the camera in focus!
Great video, the sad thing is that same video could be made in Murrietta, Lake Elsinore, Corona, San Bernardino…etc
gee, GE shouldn’t you have sold mort division in 05 ?
big companies are scary stupid sometimes
Especially considering their number one business unit, GE capital now accounts for roughly 35% of profits, down from 50% in the late 90’s. Immelt ain’t no John “just call me Jack” Welch but Jeff is betting on some form of national healthcare.
GE breaking out at 40…..its gonna be a $60 stock.
heavy global demand growing overseas earnings due to pathetic dollar, gotta tell ya, Im five years long…and I may double down…
Dividend is rising…
Everyone is cheerleading GE the last two weeks. No thanks.
I guess I was cheerleading when it was 22, now Im thrilled its 40. No, thank you.
meh….
Talk about kool-aid they must of had that and something to smoke yesterday on Wall Street. A few days ago we learned that business was going down at Home Depot and Sears. Yesterday WalMart said same store sales were up some. As someone else speculated are they selling more food? Is that why the numbers were up? Even if that is wrong, I cannot see why the Dow was up 283 points. This is gonna make the crash even more painful.
Yup. Today the consumer confidence survey numbers are out and they are at the lowest level in a year- time for Wall Street to celebrate!! We’re gonna’ party like its 1999!!
Not to mention consumer spending actually went DOWN by 0.9% in one month.
WAMan~
WTF am I missing here?
The dollar is at an all time low against world currencies, especially against the Euro and GBP and the market goes up 283?
How can this be a positive for a country that doesn’t produce anything anymore?
Imagine the escalating cost of a parts for all those foreign import cars…oh, that’s right…they are all leased.
American’s are all car-TENANTS now.
Sure looks like my two week jaunt to England in Sept. is goin’ down the crapper.
My hunch is flight out of a dying currency
my few days in England is costing so much thus far due to the weak greenback.
“Imagine the escalating cost of a parts for all those foreign import cars…”
My kids ask me why I buy American cars — I remember the last time this happened in a big way, in the 1970s. The mix is different now, but my cars have super-high made in USA content. And if I have a boo-boo, the body shop has replacement parts the next day.
Know what you mean……my brother’s VW was in the shop almost 3 months after he got hit in the back…..two month plus wait for parts to come from der Vaterland.
The CEO of my company’s BMW Five Series, broken into and the interior trashed? Same story…..
“This is gonna make the crash even more painful.”
When the real estate market suffers the stock market gains. When the stock market suffers, durables gain. When durables suffer and the stock market is level money gets pumped back into real estate. It’s a horrible cycle.
We’ll be writing on the DOW bubble blog pretty soon.
To paraphrase GetStucco, it’s 1929 again. Got international stocks? Got gold? Got treasuries?
“…it’s 1929 again…”
God I hope not. Stuc might be right though.
But if your basis is low and you don’t need to get to the equities part of the portfolio for 20 years, not much to worry about the dizzying heights of the market. Sometimes I think the people on this blog who are swearing off stocks are 65 years old and are retiring next year. I think they are doing a terrible disservice when they say young people should get out of stocks. It’s as bad as medical malpractice and almost as damaging.
Sometimes I think the people on this blog who are swearing off stocks are 65 years old and are retiring next year. I think they are doing a terrible disservice when they say young people should get out of stocks. It’s as bad as medical malpractice and almost as damaging.
Why? I’m 33 years old and I’m interested in hearing alternative points of view. I can get “buy stocks and hold onto them forever” advice from the MSM.
The one factiod (pointed out on this blog) that sticks around in my mind is that it took 2 decades for real stock prices to recover after the onset of the Great Depression. I *can* hold out for that long or longer in need be.
However, the real issue for me is opportunity cost. For instance, if I sold out in ‘29 close to the height (and found a bank that didn’t fail), I could have had alot more money 2 decades later with a simple 4-5% investment (or even 2-3%) than waiting for stocks to go back up.
I’m 45 and sold every last stock I owned, a few months ago…
While hard to predict what will be coming our way, we are blinded by history into thinking it will be just like previous events.
It never is.
“The one factiod (pointed out on this blog) that sticks around in my mind is that it took 2 decades for real stock prices to recover after the onset of the Great Depression. I *can* hold out for that long or longer in need be.”
Nasdaq all-time high 5048.62 March 10, 2000.
Nasdaq July 13, 2007 pre-noon trading 2701.82
Anyone else think I’m “doing a terrible disservice?”
7 years later and we’re not anywhere near the alltime high.
So let’s look at it this way. At age 33 I invested $10,000 in the NASDAQ tracking stock at peak and $10,000 in a high yield savings account.
In 7 years at age 40 (or about 25 years to retirement for most) My NASDAQ tracking stock would be worth $5350
My savings account would have $14,071…not quite enough to make up for my stock loss.
But if your basis is low and you don’t need to get to the equities part of the portfolio for 20 years, not much to worry about the dizzying heights of the market. Sometimes I think the people on this blog who are swearing off stocks are 65 years old and are retiring next year. I think they are doing a terrible disservice when they say young people should get out of stocks. It’s as bad as medical malpractice and almost as damaging.
Look, if you’re going to compare my advice to medical malpractice, then I have a right to tell you that you’re full of sh!t.
Your argument is equivalent to “price doesn’t matter in investing”, which is pure horseshit. That’s the same stupidity that got people to buy houses over the last few years. Now maybe you just think it’s impossible to know whether stocks are overpriced; a lot of Dollar Cost Averaging investors believe that. But unless you believe we’re in a New Era, that’s also wrong. Just like ratios of rents-to-prices and incomes-to-prices can give a rough idea of when houses are overpriced, there are measures which tell you when stocks are over- or under-priced — measures which have worked over centuries, not just a couple decades, and which make perfect theoretical sense as well.
One such measure is the ratio of stock prices to earnings. But “earnings” here must be adjusted for temporary blips over a few years and the like. Robert Shiller showed that using the past ten years of earnings works very well, and I strongly suggest everyone read his book Irrational Exuberance. He really knows his stuff.
Another measure that works is replacement value, i.e. how much money would it take to re-create all the companies in question from scratch. This is also known as “Q”, and you can read Andrew Smithers’s work to learn more. With some important caveats, Q can be approximated by book value, and Smithers clearly shows that the ratio of total market price to book value predicts future stock returns as well as anything, and quite well 10 years or more out.
Now, as far as I know, these are the best predictors of future stock returns, and they should be, because they’re the only ones that make any theoretical sense. And both methods show that U.S. stocks are currently about twice as expensive as they “should be”. By that I mean that stocks need to fall about in half before you could reasonably expect to obtain average stock-like returns of ~10% per year. Put differently, there’s a very good chance you’ll get negative inflation-adjusted returns over ten years if you buy an average stock today. So unless you are an extremely good stock picker, you should not be putting money into stocks today. Wait for better prices, unless you think we’re in a New Era and all previous centuries of stock behavior are meaningless.
Your mention of “low basis” also shows that you don’t completely understand investing. There’s only one possible reason your basis should affect your typical investing decisions, and that is taxes. But at the very least you should have then specified that basis doesn’t matter for tax-free accounts. And in any case, it makes no sense to hold on to an investment that is 100% overpriced in order to not pay 15% in cap gains tax. A computation is required, not just a dumb “hold forever” rule.
Finally, your references to age also suggest you don’t fully understand investing principles. It is very important that people start investing as young as possible, but that does NOT translate into “always buy stocks”. You are blindly following advice based on (very) long-term average returns, while ignoring the fact that actual returns depend on the buy price. Yes, over say a hundred years, paying twice intrinsic value won’t matter much, but over any real lifetime, it WILL matter.
Again, I strongly recommend the books by Shiller and by Smithers, especially if you think I’m exaggerating the degree that stocks are currently overpriced.
“blah blah blah….Finally, your references to age also suggest you don’t fully understand investing principles. ”
Net worth 1995: $50,000. Net worth now: $850,000. And I don’t understand investing principles. go figure.
All I can say is that your timing (luck) is pretty bad because you got in at the peak. Your example is cherry picking at best. How about if you invested $10,000 in Microsoft stock and $10,000 in savings back in 1990? Which investment is worth more?
Numerous studies have been released that buying and holding, not market timing, yields better returns. The markets are irrational - just look at this real estate market.
have to agree with Bill on this one. New Era = bubble economy, The US is a bubble economy, the markets are bubbling. However, that said… a balanced portfolio relative to risk tolerance and time horizons are whats important…
net worth 1999…..-22k
net worth 2007…..140k
Im younger than Bill Im sure, but the best gains have always been self employment, stocks, mutual funds.
jungle_man
Key words are “balanced,” “risk tolerance” and “time horizons.” You’re doing well. In 2001 my net worth took a big haircut but I kept dollar cost averaging into equities and added savings bonds and municipal bonds. I’ve been into 401ks since 1989, fully investing, and into IRAs since the mid 1990s, fully investing. If you can handle seeing your $140k shrink to $70k but still dollar cost average into your funds and not care to get to them for another 20 years, you will get many times that $140k back.
GnneMay 15%
Corp Bond Fund 15%
Energy 15%
BIG CAP FUND 40%
15 % Cash- may seem large, but I like a big cushion.
“Your example is cherry picking at best.”
It is ONLY an example but calling stocks a great bet is like saying real estate only goes up. Over time anything is bound to make money unless it doesn’t. Good examples of bad investments:
K-Mart pre-bankruptcy
Highland Appliance
Enron
Housing in 2004 and 2005
Virtually any tech startup late 1990’s
Diversity is the best bet, but it’s still a bet now isn’t it?
“Net worth 1995: $50,000. Net worth now: $850,000. And I don’t understand investing principles. go figure. ”
i know lots of homeowners who make the same argument about their wealth from their house. Just like in Vegas, its easy to mistake luck for genius.
David. All and good, but tell us how you can dollar cost average into a house.
Hi Bill, income average into RE buy REITS ( but I sold all mine). anyway I’m with you, sold my Townhome a year ago and bought stocks. I figured the geniuses at the FED would increase the money supply to try and keep the housing crash “under control” and blow a stock bubble.
If I thought deflation was on its way I’d go to cash. I still beleive in asset allocation and only in extreme cases will sell out one entire asset, like RE. risky to do that but RE was so screwed up last few years, like the dot bomb nasdaq was before that. now it looks like a dollar crash, not good.
Does anyone else who reads and posts here find themselves wondering whether Bill in Phoenix (and Gekko before him) makes his living selling stocks?
“Net worth 1995: $50,000. Net worth now: $850,000. And I don’t understand investing principles. go figure.”
Do you understand the Greenspan Put (AG’s tenure at the Fed: 1987-2005)?
“Net worth 1995: $50,000. Net worth now: $850,000″
and how much of that 800k increase came from your pocket? 12 years, assume 50k per year average, 600k. 200k net, still not bad.
In the last 4 years, probably $300,000 from my own pocket and that went into savings bonds, AZ muni bonds, and precious metals.
However in January 2000 my net worth was around $400,000. In 2001 or so it dropped down to somewhere around $280,000, maybe less. I kept buying stock mutual funds in the years you chickens didn’t: 1993, 1994, 2000, 2001, 2002. For example, I bought VFINX in 2002-2003 when its Nav was in the $80 range. Where were you?
And I don’t care if I rode the 18 year Greenspan “put.” Gain is gain. where were you?
GS. I have a BA in Mathematics/Csci from a lowly Cal state university (1985). MS CS in 1990. I’ve been working in embedded software engineering since 1985. Stock mutual funds and dollar cost averaging are for people who don’t make their living as financial experts. I think it’s very safe to say that Michael Sivy (Money Magazine) does not post here. Nor do Kiplinger’s, Smart Money, Forbes columnists post here. They are full time into the investing subject and they all seem to agree (oddly) with the Personal finance text book my mom had when she was in community college. I read their articles and learned from them a long long time ago. I subscribed to some of those magazines for 5 years before I had enough money to invest out of my 401k. I learned from them. I don’t learn from peanut galleries (I am not referring to you when I say that).
“I have a BA in Mathematics/Csci from a lowly Cal state university…”
I would never know Cal State education. Thanks in part to the global economy, there are lots of very good professors at some humble sounding institutions.
And please don’t take my jibes personally — I just like to stir the pot. In all seriousness, I appreciate the posts of you (and anyone else) who forms their views independently. That is excactly which makes this blog a stimulating and fascinating discussion forum.
knowknock (ugh!!!)Repeat after me:
Past performance is not necessarily indicative of future results.
The last 20 years in the stock market were a complete anomaly, and will not be repeated. Assuming otherwise is the height of folly.
That said, I congratulate anyone that made hay while the sun shines (provided they did it legally and ethically).
Exactly.
And I like how Bill’s response ignored all the money he put in along the way. Of course he corrected this when called on it.
I present a well reasoned argument with a wealth of supporting data and theory (a pointer to well reasoned books, anyway; hard to do in one post). And Bill gives a single (misleading) anecdote. Did you take any inferential statistics in that math career, Bill?
Mr. Vulture. Which financial periodical do you write for? Because I am about to trust your advice. Not.
I did say that my basis in all my stock mutual funds is comfortably lower than the current NAV. I had invested quite a lot of money every year since 1989 in stock mutual funds, yes. But if you would notice the charts, there were up weeks and down weeks. The math I took in elementary school illustrated that in those weeks where the prices were low and I bought SMF’s I also bought more shares. I did this in 1989, 1990, 1991, 1992, 1993, 1994, and in the boom times, and in 2001, 2002, and 2003 and in the boom times since. You don’t know my exact portfolio. You are wishing to be right and can only guess. Keep having fun blowing hot air.
Dollar will continue down on this news as an interest rate increase won’t happen if the consumer economy is going down. Stock market may still go up on the cheap dollar and low interest rates. The dollar needs an interest rate increase or its going to become the next peso.
Oil being denominated in dollars (and today over $73), how would Europe cope with the true price of oil if say, the euro and the dollar were one to one?
In the middle east today:
“Iran asked Japanese refiners to switch to the yen to pay for all crude oil purchases, after Iran’s central bank said it’s cutting holdings of the U.S. dollar.
Iran wants yen-based transactions “for any/all of your forthcoming Iranian crude oil liftings,” according to a letter sent to Japanese refiners that was signed by Ali A. Arshi, general manager of crude oil marketing and exports in Tehran at the National Iranian Oil Co. The request is for all shipments “effective immediately,” according to the letter, dated July 10 and obtained by Bloomberg News. ”
and
“…Despite the second round of revaluation by Kuwait, analysts said yesterday that it is unlikely that other Gulf countries will revalue their pegged currencies. “The rationale of keeping the peg by the Gulf regimes is more political than economic,” said a Dubai-based currency trader.
Brice said yesterday that the further revaluation by Kuwait hinted at two possibilities. First, their new basket (against which dinar is pegged) consists only of dollar, and the authorities are calling it a basket to have enough flexibility to move whenever they see fit. Second, there is indeed a basket, but the central bank does not set the rates every day to keep the basket stable but rather makes the adjustments at irregular intervals….”
Gulfnews.com
Here’s what I-Ran is looking at:
USS Enterprise deploys to Gulf, 3 US carrier groups now to operate
http://www.earthtimes.org/articles/show/81119.html
Got Cheney?
I hate to break this news to you but Gulf state oil producers are not the least bit interested in the US dollar. When Kuwait and Syria both announce at the same time that they are moving out of the dollar, something is very wrong with our money. The majority of other gulf states have already moved off the dollar bias.
Arabs buy things from Asia and Europe, all they purchase from the US are giant IOU’s in the form of bonds and treasuries.
PS The true price of oil is the spot market, they really don’t care how you pay for it.
As long as they can us it to buy Bugattis, Bulgari, Breitling, Fendi, Armani, Sony, Nokias, Maybachs, Lexus, BMW’s, Bang & Olfuson, Italian Yachts, A380 private jets, etc, etc,
Get the drift, we have nothing anyone else wants except debt.
“USS Enterprise deploys to Gulf, 3 US carrier groups now to operate”
Are you suggesting the U.S. is threatening Iran over the refusal to further accept our devaluing currency? Curiouser and curiouser…
I’m sure it was a COMPLETE coincidence that Iraq was invaded after announcing that they weren’t going to take dollars for their oil anymore.
The thing to remember is that right now there is a complete disconnect between Wall Street and Main street. A lot of what is pumping stocks is M&As and LBOs. There is still a lot of equity fund money out there. And until and if the CDO meltdown really hits, the market will continue to rally. There is also faith that consumers will go deeper and deeper into debt and keep buying.
Also, life for those who make their money by playing with all this cash flying around is pretty good. They are not part of the world we live in. They have a great house and good health insurance. Their retirement is guaranteed.
I think the consumer will falter soon. Then they might have to rethink their bullish ways. But not right now.
ed, you hit the nail directly on the head. i am quite close to the M/A, LBO world and nobody is the least concerned about real estate “crashing.” which is why all the “luxury” properties are still selling.
as consolidators continue to gobble up companies, write off billions of dollars of assets, and make a fortune on the transaction, everyone is living large…….except of course if you happen to be a worker at one of those facilities who have now been deemed “redundant capability.” bottom line: their world is not our world.
truly nauseating.
worker at one of those facilities who have now been deemed “redundant capability.” bottom line: their world is not our world.
Michael Douglas movie ?
But they need their taxes cut to a rate lower than ours.
What taxes?? The big dogs aren’t paying taxes on their billions. That’s for schmucks like us.
The Blackstone Group has devised a way for it’s partners to avoid paying taxes on 3.7 billion it raised last month from selling shares to the public.
http://www.nytimes.com/2007/07/13/business/13tax.html?_r=1&hp&oref=slogin
“That’s for schmucks like us.”
You remind me of a story that circulated a few years back about some IRS agent who tormented a poor old lady whose federal tax payment was discovered to be $0.10 short.
They have a great house and good health insurance. Their retirement is guaranteed.
hehehe…in the French Revolution these were the one’s who all of a sudden found themselves in the horsecart on its’ way to the square and Madame Defarge.
What no bread? Why not let them eat cake?
That’s the thing. Last year I spent 14k at Wal-Mart. 11k was groceries and groceries have gone up 30% in the last 6 Months. Here in Florida when You go to Wal-mart the Grocery Section is Mad Packed , the rest of Store, Traffic is thin. $4.40 Gal of Milk, $3 Cottage Cheese, $2.40 loaf of Bread, $4 to $13 a pound for Meat.
Who needs to sell Flat Screens. I don’t think Wal-mart should be considered in the same Class as Retailers of electronics, etc.
There was a heated discussion over the real inflation rate the other day. Your 30% in 6 months seems much more realistic than the understated 40% in 7 years I was hearing.
Good thing I don’t cook at home. The restuarant I’ve been going to for three years is still the same price, so no inflation around here.
It’s because the Feds relaxed the margin limits again. In this market all it takes is a little tweaking and the computers go on a buying spree. Parameter A is adjusted, Parameter B sees a positive change in A and executes and adjustment and so on until some Trader looks at the screen and see a positive change and presses a button and starts another traidng program and we are off to the races. Kind of like the butterfly in China theory. Traders are like lemmings.
The robbery of the century
By Chan Akya
I have previously written [1] about the impending failure of US mortgage borrowers, whose failure to pay would affect not only the US economy as many of them declare bankruptcy, but also worldwide markets, as the risk has been widely sold to investors in other countries, with the bulk of the losses coming in Asia.
http://tinyurl.com/ysmkh2
Nice quote from above:
“With more than $3 trillion in such reserves being invested (wasted) on low-return US and European securities just across Asia, perhaps it is time for citizens to raise the question with their central banks: Just whom are you working for, your citizens or American homeowners?”
“Unlike in previous crises such as that involving the telecom sector in 2002, most of the losses will be absorbed by central banks around the world rather than North American or European commercial and investment banks.”
A little anger from the bagholders.
guess they don’t own stocks
“showed that confidence tumbled to 76.1 in July. That was considerably weaker than June’s 81.4 and was the worst reading since
consumer confidence in the negative is a contrarion bullish signal.
just as other times, when the market has heavy bearish pressure (ie:pricey options contracts), it rarely pays off….
Everything that ever happens is either a contrarian or direct bullish signal, much like any day of the year is a good occasion for an alcoholic to celebrate.
its always a good time to buy…
pick your bubble. good luck, sir.
pretty ugly retail numbers:
WASHINGTON (AP) — Consumers put away their wallets in June, sending retail sales crashing by the sharpest amount in nearly two years.
http://biz.yahoo.com/ap/070713/economy.html?.v=7
add shty consumer confidence and stir
Walmart has a better month and all is great?
This economy is a total joke. Goldilocks will come back to haunt everyone.Yesterday was a massive short covering rally.There is huge number of people who are short right now. For some reason some buyers came out spooked everyone yesterday. Do not beleive the crooks they are interviewing everyday on cnbc.They will stab you in the back and leave you broke.They know how to play the game.
They know how to play the game ?
That is why I don’t and never have owned any stock…
“Consumers put away their wallets in June, sending retail sales crashing by the sharpest amount in nearly two years.”
SHHHHHHH don’t tell anybody.
“WASHINGTON (MarketWatch) — With weak demand for durable goods and falling gasoline prices, U.S. retail sales dropped 0.9% in June, the largest decline since August 2005, the government said Friday.”
So gasoline is considered part of retail sales? It’s no wonder oil keeps climbing. They’re gonna have to bring retail in the black soon and if gasoline is included they should have no problem. Other than that little bitty inflation thing.
Buh–buh–but I thought yesterday’s record DJIA run was driven by rosy retail results?
Bloomberg Radio reported this morning that HUD secretary Alphonso Jackson is in China today with the explicit instructions to hawk MBS and CDO.
These pandering liars know no bounds.
Unfortunately, while they may be our enemies, the Chinese aren’t stupid and know better than to buy financial paper garbage.
Hey, they send us toxic fish, we send them toxic paper. Sounds even to me.
Did you see that report that the Chinese are selling biscuits made from chopped cardboard and pork fat?
http://tinyurl.com/3blvg8
O.K., Lets all take a deep breath and step back before someone goes off the deep end and starts being all negative about ingesting huge portions of rendered lard…
That’s funny. I’m luck I had no water in my mouth at that moment…
I am so glad I had finished my coffee before reading that!
Got popcorn?
Neil
“…chopped cardboard and pork fat?”
LOL — sounds like our old C-rations.
Come on, it’s patriotic. Would you rather Jackson solicit Ma and Pa? Screw the Chinese–that’s the plan.
yeah, maybe but there ain’t enough patriotism on the planet to cover this mess. and keep in mind, the chinese are already holding enough paper to drop this economy at any time.
Who is screwing who? They are modernising their country at a fantastic rate because they buy our paper to keep the value of things they produce cheap. After we have been hollowed out and their consumer class has been established and their real costs go up enough, it will be to their benefit to let the paper peg go. What options will we have?
the empire is demanding tribute.
good luck with that fonso.
Here’s one property type that continues to climb:
For Parking Space, the Price Is Right at $225,000
In Houston, $225,000 will buy a three-bedroom house with a game room, den, in-ground pool and hot tub.
In Manhattan, it will buy a parking space. No windows, no view. No walls.
While real estate in much of the country languishes, property in Manhattan continues to escalate in price, and that includes parking spaces. Some buyers do not even own cars, but grab the spaces as investments, renting them out to cover their costs.
http://www.nytimes.com/2007/07/12/us/12parking.html?em&ex=1184472000&en=e2ce80308d542297&ei=5087%0A
In Telluride, Colorado, you can get a fireplace permit for 100k. Allows you to burn real wood in your fireplace. Classic case of limited supply creating demand among the wealthy.
To get a return on that investment. You would need to get $2000 a month renting the parking space. I dont think spaces go for that much even in Manhattan. In San Francsico, a house without a parking space is worth $200,000 less than a similar house with parking. But spaces can be leased for $200 per month. (cost is 1000x rent). Some homeowners spend $100,000 to add a space into their basement. (cost of 500x rent). More housing rent versus buy craziness.
Crain’s Chicago Business released their market facts 2007 a little bit ago. I hope this isn’t a repeat, but I thought that two of the PDFs released were of interest to this blog.
First, Residential Real Estate (~2MB PDF) shows a map of the city of Chicago with all foreclosures in 2006 plotted on the map. The map doesn’t really give a scale, and those unfamiliar with the city may not know what’s what, so… If you look along the right hand side, you’ll see a Florida-shaped piece of land sticking out. That’s Northerly Island, the southernmost section of downtown (South Loop). Above that there are two piers that stick out. That’s Navy Pier and the water filtration plant - which is approximately the northernmost section of downtown. That distance (from the bottom of Northerly Island) is about 4 miles. Go about 2 miles (half the distance) inland and you have the boundaries of “downtown.” The wealthiest residential section goes north from downtown to approximately the 2nd piece of land jutting out on the right above downtown. I hope that makes sense. It’s very interesting that foreclosures are most common in the two poorest sections of the city and nearly non-existent downtown.
Second, Banking (~700KB PDF) has a graphic showing the lenders involved in the 2006 foreclosures and the percentages for each lender of variable-rate loans. Looks like DB, US Bank, and HSBC all had the highest percentage of their loan defaults happen on variable-rate mortgages.
“In Chicago, 10 lenders were involved in nearly 70% of foreclosure cases started in 2006–many of which involved adjustable-rate mortgages. In Cook County, the number of foreclosures is expected to reach between 30,000 and 36,000 in 2007.” Interesting, eh?
The neighborhoods exeperiencing the highest foreclosures are subprime lending central. Dowtown condoland is more skewed to Alt-A and A, when there’s any financing at all. Several of those units are paid for in cash. The downtown dwellers aren’t feeling any pain. For them (i-bankers, attys at big Loop firms, trust fund babies) life is still very sweet. The southside may as well be on the far side of the moon to them.
You are probably right about downtown condos being skewed towards Alt-A and A. However, downtown is where the biggest towers are going up. Right now there are two 90+ floor condo towers under construction, one 80+ condo tower under construction, two ~70 floor condo towers under construction, and of course the 150 floor condo tower ready to start drilling at any moment (last time I rode my bike past that site there was a lot of expensive equipment freshly delivered, and crews were drilling down into and grouting the abandoned freight tunnels criss-crossing the site). This is all downtown. I don’t think there are enough richy-riches to fill them up - the regular folks are going to have to step up to the plate…
For the record, I live downtown, and in the last few years the number of regular folk has been steadily increasing. But I suspect many of them are just like me - renters. Downtown has become pretty vibrant after 5pm, so I plan to stay. I’ve got my eye on one of those 70 floor buildings that looks top-notch, hoping that at worst the value stays the same until I’ve got the savings to buy a unit there come 2010-2012. Crossing my fingers that it drops in value, but like you said, it sure seems like life is still very sweet for downtown.
I’ve heard (perhaps from you in an earlier post) that the real high end stuff in those new towers is being marketed mainly to foreigners because even the most starry eyed developers know that the local market for that stuff has run dry or isheading that way. Unless your last name is Pritzker or Field it’s awfully heard for the locals to throw down $10 mill+ on a penthouse place.
Downtown has come a long way just in the last 15 or so years. On the whole it has been good for the city and tourists (dwntn used to be scary deserted at night), but the benefits of the RE boom have not been shared much elsewhere in the city.
Rumor that Warren B is taking a stake in Hovanian.
Don’t shoot the messenger.
And they Dow continues to go higher - up another 21 as ofd 7:14
http://finance.yahoo.com/q/bc?s=HOV&t=5y
HOV is down to its Jan 03 price…….
Might not be too bad, if the stock is cheap enough. If I remember correctly, they don’t have the land debt of the others and don’t have to have the large volume of sales just to cover their interest payments on land. Their returns are going to suck for a while as they continue to reduce volume and shrink in size, but unlike most, they have a decent shot at staying in business long-term. I think it is way too early to make such aquisitions, but I don’t have 50 billion in cash sitting around looking for something to do with it. WB is just willing to gamble early that Hov is going to be one of the survivors of this mess.
If WB buys Hovnanian it will be through the bankruptcy proceeding. I wonder who started this rumor.
The Boeing Company
Chicago, IL
Oak Ridge, TN
Boeing Inc. will end more than 25 years in Oak Ridge and begin laying off
more than 260 employees next month after deciding to move airplane parts production to its Utah plant. Boeing’s announcement was made after it was disclosed that the aviation giant would no longer be handling centrifuge production for Maryland-based USEC Inc., which supplies fuel for commercial nuclear power plants. Boeing opened its Oak Ridge plant in 1981 to support manufacturing of centrifuges. The plant also has made parts for commercial airliners, including flight deck consoles, forward instrument panels and aisle stands, for Boeing 737s, 747s, 767s, 777s and 787s, as well as defense products. Boeing said a decision to close the operation was made because the facility no longer has sufficient commercial airplane or other parts production work to remain open. The Oak Ridge plant has dealt with recent labor discord and last year experienced a 102-day strike, forcing some production to be shifted to other sites.
Approximate Affected Workforce: 101-500
Source: Knoxville News-Sentinel - June 28, 2007
Ginn Racing Llc
Mooresville, NC
Daytona Beach, FL
Several in-shop employees were laid off this week from Ginn Racing as part of a re-evaluation of its organization, team officials confirmed Thursday. The team manager said last week the organization may have grown too fast and a re-evaluation was in order, particularly since two of its three Cup teams lacked full-time sponsors this season. A team spokesman would neither confirm nor deny additional layoffs were being considered. Last month, the team announced it was scaling back its Busch Series program, as it felt that driver Regan Smith was nearly ready for a move to Cup and needed more experience in that series before he joins it full time next season. This week, Ginn’s No. 14 Chevrolet driven by Sterling Marlin has sponsor Waste Management on the car while the No. 13 driven by Joe Nemechek carries a paint scheme honoring the nine firefighters from Charleston, S.C., who died in a warehouse fired on June 18.
Approximate Affected Workforce: N/A
Source: The Charlotte Observer - July 5, 2007
Campbell Mithun Inc.
Minneapolis, MN
Ad agency Campbell Mithun confirmed Monday that it laid off some of its employees last week in an attempt to better align costs and revenue. The CEO said that “a small percentage” of the agency’s 375 Minneapolis workers were told last week that they were being let go. The staff reduction, which took place immediately, was not the result of the loss of any account, he said. Campbell Mithun, the largest ad agency in Minnesota, has a number of high-profile accounts, including General Mills, H&R Block, Verizon and Alberto Culver.
Approximate Affected Workforce: N/A
Source: Star Tribune - July 3, 2007
First Data Corporation
Englewood, CO
Daytona Beach, FL
First Data Corp. will close its call center in Daytona Beach, Fla., by next spring, gradually laying off 400 employees, the company announced yesterday. Less than two weeks ago, First Data said it will lay off about 300 of its 400 call-center employees at its Tulsa, Okla. facility. First Data will transfer the call centers’ work to other facilities throughout the United States and the Dominican Republic.
Approximate Affected Workforce: 101-500
Source: Cardline - June 29, 2007
Hewitt Associates Inc.
Lincolnshire, IL
Chicago, IL
Hewitt Associates Inc. on Wednesday confirmed it plans to lay off 41 employees as part of its ongoing initiative to reduce costs. The jobs affected will be in Chicago and its Lincolnshire headquarters. The human resources outsourcing firm said it employs 6,300 people in the Chicago area.
Approximate Affected Workforce: 1-50
Source: Chicago Daily Herald - June 28, 2007
Outsource Partners International Inc.
New York, NY
Houston, TX
Outsource Partners International Inc. plans to lay off 77 Houston employees by early September. The professional services firm will eliminate the positions between Aug. 24 and Sept. 7. The local facility will continue to operate following the layoffs. Outsource Partners was formed in 2002 as a result of the merger between KPMG LLP’s national business process outsourcing division and an outsourcing company named itAccounts. Outsource Partners International, is headquartered in New York and provides finance, accounting and tax outsourcing services.
Approximate Affected Workforce: 51-100
Source: Houston Business Journal - July 9, 2007
KB Home
Los Angeles, CA
Indianapolis, IN
KB Home said it would exit the Indianapolis market, a decision based on eroding demand from a shrinking population. The Los Angeles-based home builder said that it would consolidate its Indiana operations with its Chicago office and that layoffs would result. A KB Home spokeswoman said the company would not disclose the number of job cuts. It’s a very small division, she said, we’re consolidated, we only had small communities in and around Indianapolis. The company has 139 homes under construction in the Indianapolis area, she said.
Approximate Affected Workforce: N/A
Source: Los Angeles Times - July 12, 2007
ABN Amro Holding, N.V.
Amsterdam, The Netherlands
Chicago, IL
Troy, MI
LaSalle Bank Corp. said it plans to complete the layoffs of as many as 1,000 employees, including 300 in Michigan, as part of a company-wide cost-cutting effort by mid-July. The Chicago-based bank, which announced the cuts late last year, has about 4,400 workers in 261 branches in Michigan. Most of the job cuts will be on the commercial side of the bank and primarily at the Troy office. LaSalle Bank, whose Michigan headquarters are in Troy, is a unit of the Netherlands-based ABN Amro NV. The Dutch bank is in the midst of an international bidding war that could end up being the most expensive acquisition in the history of financial services.
Approximate Affected Workforce: 501-1000
Source: Detroit Free Press - June 28, 2007
American Equity Mortgage Inc.
St. Louis, MO
West Palm Beach, FL
Cleveland, OH
Detroit, MI
Las Vegas, NV
San Diego, CA
Portland, OR
The slowdown in the housing market is prompting American Equity Mortgage Co. to close offices in seven markets, the president and chief executive, said Friday. About 40 employees will be laid off in the closings. On July 31, American Equity will close one office each in West Palm Beach, Fla.; Cleveland; Detroit; Las Vegas; San Diego; and Portland, Ore. All but the managers and support staff in those offices have been let go. American Equity Mortgage is based in St. Louis. Its remaining offices are in 14 states. A combination of thin margins on loans, slowing housing appreciation and “dramatic changes in the non-prime market” has forced the company to pull back to its core markets. The company is keeping 24 offices open and retains about 250 employees.
Approximate Affected Workforce: 1-50
Source: St. Louis Post-Dispatch - July 7, 2007
American Home Mortgage Investment Corporation
Melville, NY
American Home Mortgage Investment Corp., the Melville-based real estate investment trust, has laid off hundreds of workers without notice or even time to clear out their desks, current and former employees said this month. The company, which holds diverse interests in mortgage-related securities and retail lending, was once considered a highflier, posting double-digit growth quarter after quarter in recent years. But as things turned south for many housing-related businesses, American Home has offered what one analyst called “overly rosy” earnings predictions. As of mid-May, American Home had employed about 1,460 people on Long Island. Analysts said that layoffs are inevitable due to the cyclical nature of the mortgage business and that they believe the company will ultimately weather the cycle. But several current and former employees, speaking on condition of anonymity for fear of reprisal, said there was a total of about 200 layoffs. American Home is particularly vulnerable because it does not have diversified operations in other areas of banking.
Approximate Affected Workforce: 101-500
Source: Newsday - July 11, 2007
Arizona Department of Transportation
Phoenix, AZ
Arizona Highways magazine, the glossy and iconic publication designed to promote the state as a vacation spot, faces tough times ahead. The state-owned magazine is operating at a deficit, circulation has dropped by an average of 10 percent in each of the past four years and state lawmakers’ raid of its reserve funds has left little financial cushion. The magazine will be $1 million in debt by 2010, even though the publisher has made steep cuts, including cutting staff by 45 percent.
Approximate Affected Workforce: N/A
Source: The Associated Press State & Local Wire - June 30, 2007
Don’t forget about the layoffs coming to Florida’s government(s). Miami-Dade is layoff almost 700 people and many other cities and counties will be following suite. I would not be suprised to see about 10,000 government works loose their jobs by Oct. in Florida. That should help the RE industry.
This is only the first of three layoff reports I posted the others have not shown up yet. I deliberately excluded government layoffs, teacher layoffs etc.
I try to keep the layoff report ‘to impacted by a slowing housing economy’.
Nice work Hoz….
Every layoff tells a story, don’t it.?
Good stuff Hoz…
Hoz is our “Just the facts, m’am,” guy. His reports say it all. Thanks.
Thanks for your hard work, Hoz.
Agreed, Hoz. Your work is much appreciated.
Noteworthy that ABN Amro is cutting on the commercial side. Guess you dont need underwriters and loan officers when you no longer have money to loan out (due to bag-holders of non-performing or negative cash-flow commercial properties already out there).
On a side note, one of our multi-million dollar clients is trying to move into new commercial space (and) renew credit line - in both instances they are requiring much more for the approvals then in recent past years.
Looks like commercial credit is quietly drying up - and fast.
But but but….. why are you being all negative? Everyone knows the economy is roaring and the unemployment rate is 4.4%. You must be an AmericaHater….. that’s it!
ABN AMRO is just preparing for the upcoming sale of LaSalle Bank to Bank of America. BoA is planning to gut the place - they are buying the deposits, not the employees.
These layoffs now are probably humanitarian in nature - get as many people as possible a decent separation package. I know a number of LaSalle/ABN AMRO employees in Chicago and they’re telling me that pretty much every project not absolutely necessary is being ended as quickly as possible. One friend left for a 2-year stint in Amsterdam earlier this year and is now back in Chicago - project cancelled.
My brother in law works for LaSalle in Chicago. They were hoping that RBS could pull a rabbit out of the hat, but now it’s looks as if that ain’t gonna happen. The CVs are flying all over town from there. Nice of them to pick up the tab for his U of C MBA though.
Good post Hoz. This helps to tell the true story of the bust in housing.
Nice post, Hoz. Of course, an academic would naturally point out that your take is biased by only focusing on layoffs and ignoring info on new hires (nothing wrong with that, IMO, provided one recognizes the bias).
Alameda County Medical Center
Oakland, CA
Trustees of Alameda County’s financially stretched public hospital system approved a move to cut 21 positions, including 12 at the county psychiatric center, despite worries the change would compromise the quality of care to patients at the facility with a troubled past. The cuts were included in the Alameda County Medical Center’s $460 million budget, which board members approved Tuesday. The new budget provides for more nurses to meet state-mandated nurse-patient ratios, as well as the hiring of more administrative staff. The position cuts will not affect patient care.
Approximate Affected Workforce: 1-50
Source: Inside Bay Area - June 28, 2007
Emageon Inc.
Birmingham, AL
Emageon Inc. has trimmed nearly 10 percent of its work force this year following lowered financial projections. The Birmingham-based health care imaging company has cut nearly 40 positions since Jan. 1. The company ended 2006 with 438 employees, including 130 in Birmingham. The job cuts have been spread between the Birmingham headquarters and branches in Wisconsin and Ottawa, Canada.
Approximate Affected Workforce: 1-50
Source: Birmingham Business Journal - July 2, 2007
Good Samaritan Clinic
Waynesville, NC
Canton, NC
The Good Samaritan Clinic is taking a new direction, a move that the organization’s executive director says will allow more people to be served at the free health clinic. Two employees are leaving and a reorganization plan will reduce the number of paid employees at clinics in both Waynesville and Canton from six to two. Other staffing needs are provided by volunteers, and contracts with other providers will replace departing paid staff members. The N.C. Association of Free Clinics requires at least two months worth of reserve money for accreditation. Budgeted expenses for the Good Samaritan clinics are 415,000, while the financial support budget is only 9,000. Twenty-four percent of the organization’s revenue comes from restricted grants; while 15 percent comes from a small fee charged for medication assistance, 14 percent from individuals, 13 percent from churches and 13 percent from in-kind contributions, 8 percent from the United Way (25,000), 7 percent from the county and cities, 5 percent from unrestricted grants, and the remainder from businesses and civic groups.
Approximate Affected Workforce: 1-50
Source: The Mountaineer - July 9, 2007
Gwinnett Hospital System, Inc.
Lawrenceville, GA
After making $22 million in budget cuts, the Gwinnett Medical Center says it will be more efficient without sacrificing its patient care. The increased efficiency, though, has a human toll — 72 jobs were eliminated. Of the 72 jobs, 29 were administrative, 23 managerial, nine clerical, six support and five clinical. None were care-giving positions.
Approximate Affected Workforce: 51-100
Source: The Atlanta Journal-Constitution - June 30, 2007
HCR Manor Care Health Services
Toledo, OH
Bethleham, PA
Two chaplains who served Manor Care nursing homes in Bethlehem, Bethlehem Township and Palmer Township have lost their jobs, along with Manor Care staff chaplains across the state. The eight staff chaplains in the company’s Pennsylvania nursing homes had been among the only ones left in HCR Manor Care Health Services, which operates nursing homes and assisted living centers in 33 states and was bought out by a holding company last week. As medical costs have risen, many owners of health care facilities like nursing homes have been bought out or gone private. In addition, the demand for long-term care in nursing homes has plummeted as more seniors choose assisted living facilities or in-home nursing care. More patients now use nursing homes for short-term rehabilitation after hospital stays.
Approximate Affected Workforce: 1-50
Source: Morning Call - July 10, 2007
Sarasota Memorial Hospital
Sarasota, FL
Sarasota Memorial Hospital is laying off seven people from its emergency room as it restructures to find more work for nurses. Seven employees, two paramedics, four technicians and a materials specialist, will lose their jobs. Hospital officials said the moves will not hurt patient care, as nurses are shifting into those roles. The layoffs are part of a larger effort to staff units primarily with nurses. When the expanded emergency care center opened in late 2005, it had 19 nursing vacancies. The paramedic and tech positions covered that shortage. Since then, the hospital has recruited more nurses. About 70 are attached to the emergency care center. Shifts vary widely based on time and patient load. The move will make it easier to manage the unit’s rapidly changing demand. The shift to a nurse-centered staff should also maintain a 4-to-1 ratio of patients to nurses and help the emergency room meet its “30-minute guarantee” of service.
Approximate Affected Workforce: 1-50
Source: Sarasota Herald-Tribune - July 7, 2007
Southwest Illinois Healthcare Foundation
East St. Louis, IL
Centreville, IL
Kenneth Hall Regional Hospital in East St. Louis and Touchette Regional Hospital in Centreville, which are owned by the same non-profit foundation, will soon merge into a single hospital with two campuses. The marketing director for the Southwest Illinois Healthcare Foundation pointed out that the hospitals are just five miles apart and serve the same declining population base. Each hospital will continue to operate its respective emergency room to handle relatively minor injuries, such as a broken arm, for example. And Kenneth Hall will continue its trauma center to handle more severe injuries, such as those suffered in a car accident or a shooting. For now, the merged areas include radiology, the pharmacies and accounting. While those services will continue at each hospital, it will be done with fewer workers. The merger will reduce duplicate services and will cut the number of staff. Just how many jobs will be cut remains unclear, said the chief operating officer at the two hospitals.
Approximate Affected Workforce: N/A
Source: St. Louis Post-Dispatch - June 28, 2007
Southwest Washington Medical Center
Vancouver, WA
In an effort to staunch serious red ink, Southwest Washington Medical Center announced plans Tuesday to cut up to 100 jobs from its work force. In addition, salaried medical center employees working at the director and vice president levels will see pay cuts ranging from 3 percent to 5 percent, effective immediately. The medical center has been losing as much as $1 million a month for the past four months, said the medical center president and CEO. In addition to its hospital, it operates clinics in several other locations and is Clark County’s second-largest employer with about 3,200 full- and part-time workers. Our intention is not to cut jobs related to direct patient care nurses and other caregivers, he said. He said the cuts would come throughout the rest of the operation. The medical center has seen a 7.4 percent decline in patient volumes.
Approximate Affected Workforce: 51-100
Source: The Columbian - July 4, 2007
TeamHealth Inc.
Knoxville, TN
Livermore, CA
TeamHealth Inc., a company that staffs hospital emergency departments, is shuttering its Livermore billing facility and laying off 84 people. The Knoxville, Tenn.-based company said it would likely be phasing out operations in Livermore by September. The reason for the closure is the “cost of doing business” in the San Francisco Bay area, according to the vice president of marketing for the company, and that the company can perform billing functions more cheaply in other regions. The company has four other billing centers across the country, including one in Alcoa, Tenn., where the Livermore operations will be moving. Positions being eliminated at the Livermore center range from clerk to vice president of billing operations. The company’s regional office in Pleasanton, which handles recruiting, scheduling and credentialing, will remain open.
Approximate Affected Workforce: 51-100
Source: East Bay Business Times - July 9, 2007
Adept Technology, Inc.
Livermore, CA
Adept Technology, Inc. has said that the CFO is leaving in July. The move comes as the company plans a restructuring that will see its overall headcount reduced by 15%. The plan includes a headcount reduction of around 15% and a rationalization of certain manufacturing operations at its Livermore, California headquarters, with a corresponding reduction of leased space. The company will also close its Canada and Connecticut facilities due to North American market erosion, and relocate some operational headcount from the U.S. to Europe. The company will consolidate software development activities in its Livermore headquarters and will consolidate U.S. sales and service operations in the Company’s new Cincinnati technical center. Adept also said it will realign its North American sales organization to create dedicated sales teams focused on the life sciences and packaged goods industries. Adept will transfer and consolidation of sales coverage of the disk drive and electronics market to the company’s Singapore office and will further the outsourcing of manufacturing operations for standard products. Livermore, California-based Adept is a global provider of robotics systems and services used for assembly, handling, packaging, testing and other automated processes.
Approximate Affected Workforce: N/A
Source: FinancialWire - June 29, 2007
Corbis Corporation
Seattle, WA
Fifteen percent of Corbis employees are losing their jobs in cuts orchestrated by the incoming CEO who starts his new job Monday. On Thursday he said he was letting go 160 employees in 17 offices worldwide. The lost jobs span many departments and include positions as high as vice president. He is also getting out of two businesses in which it had struggled: assignment photography and digital asset management, a service aimed at managing corporate media libraries. The number of people working for Corbis is now between 900 and 950.
Approximate Affected Workforce: 101-500
Source: PhotoDistrictNews.com - June 28, 2007
Implant Sciences Corporation
Wakefield, MA
Implant Sciences Corporation announced that as of Friday, June 29, 2007, it had completed the first phase of its plans for exiting the radioactive prostate seeds business, which included a major reduction of staffing in this business segment. Additionally, the Company announced it has reduced the size of its employee base in other areas of activity. The Company has discontinued sales and manufacturing of its I-PlantTMradioactive prostate seeds and exited the business by successfully selling a portion of its assets to a medical device manufacturer for approximately $350,000. Additionally, the Company is actively pursuing the sale of other operating assets associated with the prostate seeds business, the terms of which are still under negotiation. Implant Sciences, established since 1984, a developer and manufacturer of products for the national security, semiconductor and medical industries, uses its patented ion beam technology to develop, manufacture and sell products through its primary business units: (i) trace explosives detection systems for homeland security, defense, and other security related applications and (ii) state of the art services for the medical and semiconductor industries. The Company has developed and begun shipments of handheld, portable trace explosive detection systems to a growing number of locations around the world and domestically.
Approximate Affected Workforce: N/A
Source: Business Wire - July 2, 2007
Kana Software Inc.
Menlo Park, CA
Kana cleverly chose a sleepy Friday afternoon to bury some bad news; that it is cutting jobs on the back of some disappointing revenue projections for its second quarter. The Menlo Park, California-based provider of CRM software provider hopes to save up to $6m a year as a result of the cuts. Kana didn’t say how many people it planned to lay off.
Approximate Affected Workforce: N/A
Source: ComputerWire - July 9, 2007
Micron Technology Inc.
Boise, ID
Micron Technology Inc., a maker of computer memory chips, said Thursday it will cut its work force after posting its second consecutive quarterly loss. Micron did not say how many of its 22,000 workers will be laid off, but reductions will likely affect Idaho employees as the company moves production closer to customers in Asia, where it does more than 70 percent of its business. A spokesman said some of the job cuts will affect Micron facilities near Boise, where the company employs about 10,000 workers.
Approximate Affected Workforce: N/A
Source: The Associated Press - June 29, 2007
STMicroelectronics NV
Geneva, Switzerland
Carrollton, TX
Phoenix, AZ
Swiss chip maker STMicroelectronics NV said it will close manufacturing plants in Texas, Arizona and Morocco, cutting 4,000 jobs. The company currently employs more than 50,000 people worldwide. The factories are being phased out in Carrollton, Texas; Phoenix, Arizona, and Ain Sebaa, Morocco, over two to three years. Growing revenue is important, but we’re also committed to improving our cost structure by reducing the number of our manufacturing sites and, as a result, trimming excess capacity and lowering manufacturing overhead, said the President and Chief Executive Officer. STMicroelectronics said the closings follow its completion of a plan to move most of its worldwide production of 6-inch (15-centimeter) wafers to operationally less expensive 6-inch (15-centimeter) fabs in Singapore or to finer-geometry 8-inch (20-centimeter) facilities around the world. In May, STMicroelectronics announced that they would create a new independent semiconductor company that will supply flash memory devices for cell phones, MP3 players, digital cameras, computers and other high-tech equipment.
Approximate Affected Workforce: over 1000
Source: Associated Press Worldstream - July 11, 2007
Sycamore Networks Inc.
Chelmsford, MA
Sycamore Networks tonight announced a workforce realignment that will include a reduction of 46 employees. The realignment, which will be largely completed by the end of July, represents approximately 10 percent of Sycamore’s total workforce. Sycamore Networks, Inc. is a leading provider of intelligent networking solutions for fixed line and mobile network operators worldwide. From multiservice access networks to the optical core, Sycamore products enable network operators to lower overall network costs, increase operational efficiencies, and rapidly deploy new revenue-generating services. Sycamore’s global customer base includes Tier 1 service providers, government agencies, and utility companies.
Approximate Affected Workforce: 1-50
Source: Midnight Trader - June 29, 2007
Micron did not say how many of its 22,000 workers will be laid off, but reductions will likely affect Idaho employees as the company moves production closer to customers in Asia, where it does more than 70 percent of its business.
10% of staff in Boise area laid off. From Seattle PI:
—————–
Micron says it’s cut ‘less than 10 percent’ of Idaho work force
By JOHN MILLER
ASSOCIATED PRESS WRITER
BOISE, Idaho — Micron Technology Inc., a maker of computer memory chips, said Tuesday it’s cut less than 10 percent of its 11,000-person work force in Idaho, though it indicated more cuts are possible as the company attempts to recover from losses fed by falling prices for its products.
“We have completed many of these work force reductions, which account for less than 10 percent of our work force in the Treasure Valley,” Micron CEO Steve Appleton said in a statement.
Company officials declined to say just how many of Micron’s 23,000 total workers in locations including Singapore and Utah were affected by the cuts.
Micron was hit by a global supply glut on products including Dynamic Random Access Memory chips for personal computers and NAND flash memory, prompting prices to dive and leading to the company’s second loss in as many quarters. In the third quarter that ended May 31, Micron lost $225 million, from a profit of $88 million in the year-earlier period. In the second quarter, the company lost $52 million.
…
umm…
Toll Bros. Co-Founder Exercises Options
http://biz.yahoo.com/ap/070713/toll_brothers_insider_transactions.html
Over 11 million in just a few minutes.
Bowater Inc.
Montreal, QC
Dalhousie, NB
Nearly 50 workers at the Bowater paper mill in Dalhousie will lose their jobs as a result of restructuring. The company, while detailing little, is blaming rising electricity costs in New Brunswick for the cost-cutting. Bowater’s Dalhousie mill employs 300 people in the small town of 3,676 people. The cost-cutting measures were the result of a decline in newsprint demand, mostly from their export market in the United Kingdom and continental Europe.
Approximate Affected Workforce: 1-50
Source: The Telegraph-Journal - June 29, 2007
Brunswick Corporation
Lake Forest, IL
Salisbury, MD
Brunswick Corp., which makes boats, bowling and billiard products, said Monday it will buy a boat manufacturing plant in Navassa, N.C., and close a plant in Salisbury, Md., cutting 180 jobs. The company is buying the plant from KCS International Inc. for an undisclosed amount. Brunswick said the plant will allow it to build larger boats and will give it the ability to make several brands of cruisers. The company plans to close its Salisbury, Md., plant and transfer cruiser production to the new North Carolina facility. It will eliminate 180 production and support positions in a phased shutdown in Salisbury.
Approximate Affected Workforce: 101-500
Source: The Associated Press - July 2, 2007
Burner Systems International
Vergne, France
Chattanooga, TN
Burner Systems International, which makes burner parts and equipment for appliances, will cut about 70 jobs in Chattanooga and shift the work to Mexico. The company plans to trim the jobs over the next six to seven months and that labor costs are “a big factor” for the business. The company has about 435 workers in Chattanooga, including 60 corporate and international employees. The company manufactures burners, manifolds and lighter tubes for appliances and does engineering design and laboratory testing.
Approximate Affected Workforce: 51-100
Source: Chattanooga Times Free Press - July 3, 2007
Hydro Aluminum
Linthicum Heights, MD
St. Augustine, FL
Hydro Aluminum Co. has laid off 23 workers, part of a staff reduction at the St. Augustine plant that has been going on since January. The workers lost their jobs because the company decided to outsource some machining work, said a company spokesman of the U.S. corporate headquarters for Hydro Aluminum in Linthicum Heights, Md. So far this year, the workforce at the St. Augustine plant has gone from 450 to 380. The St. Augustine plant manufactures aluminum extrusion products, which has experienced a 20 percent reduction in worldwide demand in the last year.
Approximate Affected Workforce: 1-50
Source: Florida Times-Union - July 6, 2007
Kohler Company
Kohler, WI
Mosel, WI
Kohler Co. said Monday it would lay off 160 employees. The layoffs will affect the company’s distribution center and cast iron and engine divisions, all within the village of Kohler, and the generator division in the Sheboygan County town of Mosel, said the company’s manager of kitchen and bath public relations. The layoffs are a result of slow production in the housing industry.
Approximate Affected Workforce: 101-500
Source: The Capital Times - July 10, 2007
Noel Group
Wake Forest, NC
Youngsville, NC
Nomaco Insulation is blaming stiff competition and the need to streamline its businesses for the decision to cut 63 jobs at its manufacturing plant in Youngsville. The company, which is a subsidiary of the Noel Group, a Wake Forest industrial management company that specializes in making foamed synthetics, shut down its polyethylene pipe insulation production in Youngsville and shifted the work to plants in Tarboro and Oklahoma. As part of the reorganization, Nomaco is moving its offsite warehousing operations from Louisburg to Youngsville. After the cuts, the company will have 187 workers in Youngsville. The Noel Group employs about 1,100 workers at its seven subsidiaries. It plans to open a new plant in Tarboro this year that is expected to employ 100 people within three years.
Approximate Affected Workforce: 51-100
Source: The News & Observer - June 30, 2007
Rumpel Felt Company, Ltd.
Kitchener, ON
One of Kitchener’s oldest manufacturers is fighting for its life. Felt maker Rumpel Felt Co., which has operated in various forms for 132 years, was recently forced to lay off 16 employees due to continued softness in its markets. Rumpel said there are no immediate plans to close the business, which makes industrial felt for a variety of products including winter clothing and auto parts. But the high value of the Canadian dollar makes it difficult to compete south of the border. And the “volatility” of the U.S. market hurts orders because a number of manufacturers who use felt are not buying in large volumes anymore. Making matters worse, a Canadian customer that makes winter clothing that incorporates Rumpel felt, is in the process of closing.
Approximate Affected Workforce: 1-50
Source: The Record - June 30, 2007
Spectrum Brands Inc.
Atlanta, GA
Spectrum Brands Inc., which makes batteries and personal products, said Friday it was cutting an undisclosed number of senior management jobs as part of a cost-cutting effort. The company cut positions including senior vice president and general counsel, corporate chief information officer, senior vice president of purchasing, vice president of information technology in Europe, vice president of operations finance and other vice president and division vice president positions. Responsibilities were redistributed to other staff.
Approximate Affected Workforce: N/A
Source: The Associated Press - June 29, 2007
Worthington Industries Inc.
Worthington, OH
Worthington Industries will close some operations and cut jobs next year as part of a plan to trim as much as $40 million in costs. The diversified steel-processing company didn’t say which plants will be affected when it announced its plans along with its year-end results yesterday. Worthington employs more than 8,000; about 3,000 work in Ohio, including 1,200 in the Columbus area. Worthington officials have identified plants that “are not performing up to their potential.” But how they will be affected and which jobs will be cut have not been determined, the company said. Twelve of the company’s 64 operations are in the state, including three in central Ohio.
Approximate Affected Workforce: N/A
Source: The Columbus Dispatch - June 29, 2007
Red Cross of Greater Idaho
Boise, ID
The Red Cross of Greater Idaho said it will trim more staff in August as it continues to rely more on volunteers because of fewer donations in the absence of major disasters such as Hurricane Katrina. The Idaho Red Cross aids disaster victims, including victims of house fires; provides first aid, CPR, baby-sitting, lifesaving and other training; and educational services; and provides emergency connections for members of the armed services and their families. The Idaho chapter isn’t alone in cutting back: Seventy percent of American Red Cross chapters, including Idaho and Utah, have reported charitable contributions that trail their budget forecasts.
Approximate Affected Workforce: 1-50
Source: The Associated Press State & Local Wire - July 12, 2007
Encysive Pharmaceuticals Inc.
Houston, TX
Encysive Pharmaceuticals is implementing a strategic restructuring that will result in an estimated 70 per cent reduction of its US workforce, to about 65 people. Approximately 150 employees, including the US sales force, will be terminated immediately, with a smaller group leaving in the coming months.
Approximate Affected Workforce: 101-500
Source: Pharma Company Insight - June 28, 2007
Merck & Company, Inc.
Whitehouse Station, NJ
Merck, the American drugs giant, is to cut spending on its promotion and salesforce by 9% before the end of this year. A source at Merck said the spending cuts would include job losses, although a final figure had not been agreed. A Merck spokeswoman declined to comment. The company employs around 60,000 staff worldwide. Figures for its salesforce were unavailable from the company, although analysts believe they employ up to 10,000 representatives worldwide. The news comes as a growing number of big pharmaceutical firms, including Pfizer, Sanofi-Aventis and Wyeth, are slashing their sales staff. Merck will increase its spending on marketing to healthcare insurers and patients, while decreasing the amount it spends overall on promoting new brands by between 15% and 20% compared with current levels, after 2010. The company aims to focus more on its major disease areas.
Approximate Affected Workforce: N/A
Source: The Business - June 30, 2007
Meredith Corporation
Des Moines, IA
Meredith Corporation, which owns Better Homes and Gardens and Parents magazines, has announced changes to the company’s Books Division, most notably the elimination of 15 jobs. The Des Moines, Iowa-based company will keep approximately 100 employees. According to the AP, Meredith hopes to refocus its book publishing program, concentrating on areas including cooking, crafts, building, gardening and remodeling, where it has previously had success. Recently, the company expanded to publish children’s books and single-author titles.
Approximate Affected Workforce: 1-50
Source: TheBookStandard.com - July 2, 2007
Liz Claiborne Inc.
New York, NY
Liz Claiborne today is detailing its long-term growth plans, which includes a reorganization, job cuts, selling several brands and refocusing more attention on others. These savings, which will drive significant operating margin expansion beginning in 2008, will be realized through the streamlining of corporate management, consolidation of organizational structure and fewer layers in Partnered Brands, cost rationalization in supply chain and reduction in corporate overhead throughout the company. The company expects a net reduction in 2007 of 600 to 800 positions, or 7% to 9% of its non-retail based global work force, which includes significant staff reductions at the more senior levels of the organization. The company is conducting a review of strategic alternatives, including possible divestiture, discontinuation, or licensing, for the following brands: C&C California, Dana Buchman, Ellen Tracy, Emma James, Enyce, First Issue, Intuitions, J.H. Collectibles, Kensie, Laundry by Design, Mac & Jac, prAna, Sigrid Olsen, Stamp 10, Tapemeasure and Tint. These brands are expected to generate 2007 sales of approximately $800 million.
Approximate Affected Workforce: 501-1000
Source: Midnight Trader - July 11, 2007
Stop & Shop Supermarket Company
Quincy, MA
Cherry Hill, NJ
Stop & Shop Supermarket Co. is pulling the plug on an expansion into Southern New Jersey, closing nine money-losing stores that the Quincy-based chain operated there since 2005. Stop & Shop intends to lay off 300 full-time employees and 600 part-timers who worked at the stores, located in and around Philadelphia’s Cherry Hill, N.J., suburb. The chain continues to operate 50 Stop & Shops elsewhere in the Garden State. Southern New Jersey is an area that we’re leaving for the time being, but we continue to be a strong presence in New Jersey, a company spokesman said.
Approximate Affected Workforce: 501-1000
Source: The Boston Herald - July 7, 2007
Spirit Airlines Inc.
Miramar, FL
Detroit, MI
Spirit Airlines is closing its Detroit area reservations call center, eliminating 131 positions by Aug. 31, an airline spokeswoman said. The Miramar-based airline will outsource its reservations to Plantation-based PRC. Spirit had closed its Miramar reservations call center in March, laying off 25 workers, and consolidating at its Detroit area operation. The decision to close that center is geared to ”meet the needs of customers,” she said.
Approximate Affected Workforce: 101-500
Source: The Miami Herald - July 12, 2007
These are just a sampling of layoffs over the last 2 weeks. I excluded government, teaching positions, budget layoffs and previously announced outsourcing (e.g. Abbott Labs). The vast number of layoffs and repositionings in the health care industry are disturbing. On the California post last night Homer asked why I thought NFPs would be hit by rising foreclosures. My answer is that Health Care is a discretionary expense for 40% of the population. People will skip going to the dentists and doctors unless they are seriously ill. As the cheese binds, the amount of charitable giving drys up.
A most interesting next few months.
What has to be realized is that these are not low paying jobs and jobs filled by illegals.These people will be forced to sell assets (cars, boats, campers, houses).
“Felt maker Rumpel Felt Co., which has operated in various forms for 132 years, was recently forced to lay off 16 employees due to continued softness in its markets.”
Now there’s a pretty sad pun, given the nature of the report.
Likely just the tip of the tip of the iceberg that is coming our way. With all the gross malinvestment and horrendous conspicous consumption that has transpired with the Greenspan Put, just think how all of this “must” unwind in due time. Looks like one needs to try to get a fix on all of this and try to protect ones self from the eventualities that are likley to unfold in due time. Think “Deflation” may soon become a “new” word in the MSM before too long.
This is the second time this has happened here in NJ in the past month. A developer is asking the town to rezone senior citizen homes because he can’t sell them….
http://www.nj.com/news/ledger/somerset/index.ssf?/base/news-2/1184301934134070.xml&coll=1
Countrywide Mortgage in deep doo-doo…
Note the $10k mortgage broker’s fee for the swindle.
http://www.boston.com/business/globe/articles/2007/07/13/borrowers_sue_subprime_lender_allege_race_bias
“Also, earlier this year, longtime mortgage analyst James Campen, a former economics professor, released a study of 2005 lending data that concluded 70 percent of African-American and Latino borrowers with incomes between $92,000 and $152,000 bought homes with subprime mortgages in Greater Boston, compared with just 16 percent of whites.
“There’s no question in my mind” the subprime industry discriminates, said Campen.”
This raises some questions. I am tired of the race card being used without any supporting documentation. There may be discrimination, and the facts presented suggest there is such discrimination.
But the amount of money one makes has no impact on whether an individual is prime or subprime. Paying bills in a timely fashion determines prime/subprime.
Do the Latinos and Blacks have such poor FICOs that they are subprime? And if they have such poor FICOs, is that the result of a lack of education in “How to pay bills in a timely fashion” ? Is Countrywide responsible for unethical independent mortgage brokers?
If I were a lawyer I would rather defend Countrywide than argue this suit.
at those income levels, its gonna be a tough road to prove “un-educated” consumer was not aware that other types of financing vehicles were available…
now about that strawberry picker…..
Unless they were putting people into Stated Subprime ARMs who could have qualified Full Doc A Paper on fixed 30yr mortgages, then you might see some big problems for those CW folks. That should be pretty easy to prove.
On the other hand, if it’s a broker horde door-to-dooring neighborhoods and dishing out subprimes… well, I’m going to guess that the borrower and broker were alike in skin tone. It’s going to be hard to nail CW for that. They could try mortgage fraud against the brokers, but it’s a self-implicating sort of a charge to level.
Either way, law suits are coming and the credit noose tightens.
Vultures Make R.I. House a Tough Sell
http://seattlepi.nwsource.com/national/1120AP_ODD_House_Vultures.html
If this isn’t iconic, I don’t know what is.
Yup, got irony written all over it. From the story:
But real estate agent Patrick Murray said he’s optimistic it could make a good home for the right buyer. It’s listed at $189,900, below the assessed value of $222,800, and Murray is pitching it as a place that could “make an excellent bird-watching bed-and-breakfast establishment.”
“What am I supposed to do?” Murray asked. “I’m trying to turn lemons into lemonade.”
For now, the house is empty after a March foreclosure.
How about starting a Rent-A-Vulture venture there?
Look at Wall Street’s machinations in a different light…
If you were the average rank and file member of our society, and get snippets of news @ best?
What are you hearing now?
“Wall Street sets new record”
And every day higher than the other, from this point onwards is by definition, a “new record”.
Sounds impressive to the masses, yes?
Sounds like there has never been a better time to buy stock to me.
got euro?
I was checking out housing fliers today on campus, and saw two for the same house. One was a rental flier and the other was for sale. They wanted $1400/mo for rent and $389,000 to buy. The house is in Peoria, Az, a suburb of Phoenix on the northwest side. 100 to 120 times rent comes to $140,000 to $168,000. They are asking 278 time rent. Ouch. That purchase price had been recently reduced too. They didn’t have the original price listed.
You could look up the address in the Maricopa County assessor’s website. From there, you can find out what the most recent purchase price was.
Sales Price: $337,115
Sales Date: 2/1/2005
Thats why I rent.
Geezlouise - just found out a friend in calif did the classic FB scenario, bought a dream house before selling the first one. she has no clue what’s going on. From her email: “Still have to go to the other house and finish getting it cleaned up and out. If it doesn’t sell by the end of this month, we’re going to lease it. So, I promise I’ll let you know more later. Just wanted to let you know we are finally on the right track.”
Is that the same track with the light at the end of the tunnel?
Parking spots…the next bubble.
Manhattan parking spot going for $225,000
http://biz.yahoo.com/cnnm/070712/071207_parkingspots.html?.v=4
hmm… hasn’t Buffet been wrong before?
NEW YORK, July 13 (Reuters) - Shares of Hovnanian Enterprises Inc. (HOV.N: Quote, Profile, Research), the No. 6 U.S. home builder, rose sharply on Friday as rumors swirled that Warren Buffett’s Berkshire Hathaway Inc. (BRKa.N: Quote, Profile, Research) would buy an interest in the struggling home builder.
“There is talk that Warren Buffett is buying a stake in Hovnanian,” said Jon Najarian, co-founder of optionmonster.com. “We think such a move by Buffett would clearly signal a bottom is finally in or near this battered housing sector.”
http://www.reuters.com/article/topNews/idUKN1331819920070713?rpc=44
Just as there was a talk that Bank of America will buy Countrywide, and many other “rumors” that propped up stocks of respected companies. I suspect folks at Hovnanian realized now may be a good time to dump their shares. Since Mr. Buffett mentioned before he might homebuilders after the bust, this rumor seems plausible. I will be interested to see the insider activity over the next few weeks. However, I am willing to bet $1 Mr. Buffett is not buying homebuilders this year.
Gold closed @ Exactly $666, on Friday the 13th…
A true double witching hour daily double
From MarketTicker:
I own a mortgage shop, I myself stil orginate loans and have for over 10 years and so I thought I’d chime in here on what’s really going on.
First of all back in the early part of this year when the crap hit the fan I started reading all of this because well it’s important to me and during that time I learned how these CDO’s were done.
I’ve been in lending for over 20 years and what they’ve effectively done is simply divided up these bonds into different LTV tranches and that makes sense, the lower the ltv the less risky a loan is etc.
The fatal flaw in their thinking as everyone now knows is that in a down market all the loss assumptions are for crap.
In a down market it’s not at all unusual to eat upwards of 40% of the principal of a loan because of the term quick sale price, ie a house worth 100k in a down market might only command 60k if it’s torn up and the market is weak and investors for various reasons have great incentives to clear these things off as fast as they can, they won’t fix them up, they won’t dress them up they just want them gone.
That’s bad enough but oh it gets much much worse.
I see day to day about 4 applications for loans myself, and upwards of 70 company wide I can look at if I want, that’s pretty small in the scheme of things but being I do it every day you get a feel for this stuff and I can tell you that never in my career have I seen anything like this in fact I’m scared out of my ever loving mind!
My company is doing fine, we specialize in cleaning up other lenders mistakes and that’s a booming business now, effectively I use my knowledge to replace these improperly placed loans in more correct products and it’s a niche market but it’s not near big enough to support our whole industry, not even close.
I market to Subprime customers who have the 2/28’s all the time and here’s what I’ve found so far.
About 20% or so are can be saved into a better product and made whole, they have income, they have equity and their credit while marginal is good enough to get them out of the death arms, but almost 80% are walking foreclosure zombies.
Now this isn’t a scientific sample, of course the bottom of the barrell call in, the more desperate call first etc but that dosen’t matter, their loss models will gap WIDE!!!! Their percentages are for crap!
This is depression sized stuff no doubt in my mind, not one shred of doubt we are headed off the cliff, no one can stop this their aint that much money, only a turn around in the market could save this and……..
I’ve also never seen guidelines ratchet up this fast in my life, 80/20’s are dead, gone annihilated and My Community, also gone for all intents and purposes because the risk premiums comming into the pricing makes buyers go…. WHAT!!! I thought rates were 6%, your saying 7% plus 1% more in PMI? Well I can’t afford squat now…… which is the 2nd shoe dropping.
I do FHA and that’s it folks and FHA aint like these other things, too many dings forget it, you can’t have a nice pretty collection of collections and get an FHA no money down loan, you can forget it.
People with 2nd mortgages can forget refinancing them, people who bought the last 2 years might be toast with perfect credit if improperly placed in an exploding arm just due to being underwater from lack of appreciation, alt a toast, it’s all freaking toast!!!
I’ve got reps bothering me daily for loans, then they stop calling cause they are gone, suddenly lenders that wouldn’t give me the time of day due to my less than impressive volume are kissing my butt, playing solitare when I call with a question.
It’s biblical in scope and if I read what they did with CDO’s and derivatives OMG it’s the end of life as we know it.
You mark my words, this is going down in October in the market, the housing sector will lead down, not lead more like an anchor thrown off the boat that has a chain wrapped around the United States economy.
The MEW’s are done, people are actually paying money at close, those that can to refinance out of these abmoninations of evil, and they dance in to sign again those few that can, there is not cash out, no one has any equity, it’s all baked out, arb’d out if you would.
I have buddies that own bigger shops, one is out of business now due to buybacks, he used to give me a ration of crap for never stepping up to be a mortgage banker, I told him for years that they don’t pay enough more to make it worth holding that bomb for them.
I have another friend of years who just folded his company and then killed himself 2 days later. He was a banker too and the putbacks will destroy almost any banker type lender as this turns down, almost all have 1st payment default clauses built into their line agreements that means even if everything is great, no fraud no hanky panky if the borrower don’t pay, toast.
These guys play hard ball especially Merrill, they putback loans at the first whiff of trouble, the mortgage banking field is going to be a complete wasteland, utter devastation, brokers will probably be rounded up and shot by Congress and then we’ll all be left with banks that would run screaming into the night if you asked them to do some of the loans we do. It’s pretty much the rolling up of an entire industry one month at a time.
Builders are in all out panic mode which dosen’t bother me too much as I’m not fond of them except to say that it’s never a pretty sight to see true fear in someones face, outright fear.
Realtors, of course think the bottoms just around the corner which of course means it’s the exact opposite, sorry for the brief amount of derision towards them I can’t help myself.
I’ll just say that my industry did fail utterly to police itself, those of us not doing wildly fraudulent lending should have stood up and shouted about it more, done more to protect the industry but we didn’t and it’s done now, I suppose we deserve this but not all of us took adavantage, just not enough said anything to stop it, to be fair though we were vastly outnumbered, after they allowed net branches it was like a plauge of new loan officers piling in completely amazing and it ruined everything.
In October the earnings will hit for 3Q, that’s where all the music will stop IMO, the customers are charging charging charging now but that should tail off by then due to the horror show statements that will start comming through and the realization they can’t pay it off again.
It may last longer than October but we will not get through 2008 without the wall comming, October just is a guess of mine, lot’s of crashes happen then, I think it’s psychological with winter comming on and all.
Last modified: 2007-07-13 01:02:05 by bw8472
http://www.tickerforum.org/cgi-ticker/akcs-www?post=431
“The fatal flaw in their thinking as everyone now knows is that in a down market all the loss assumptions are for crap.”
These folks ought to educate themselves about the Law of Small Numbers.
——————————————————————————-
Inference by Believers in the Law of Small Numbers
Matthew Rabin, Economics Department, University of California, Berkeley
ABSTRACT:
Many people believe in the “Law of Small Numbers,” exaggerating the degree to which a small sample resembles the population from which it is drawn. To model this, I assume that a person exaggerates the likelihood that a short sequence of i.i.d. signals resembles the long-run rate at which those signals are generated. Such a person believes in the “gambler’s fallacy”, thinking early draws of one signal increase the odds of next drawing other signals. When uncertain about the rate, the person over-infers from short sequences of signals, and is prone to think the rate is more extreme than it is. When the person makes inferences about the frequency at which rates are generated by different sources — such as the distribution of talent among financial analysts — based on few observations from each source, he tends to exaggerate how much variance there is in the rates. Hence, the model predicts that people may pay for financial advice from “experts” whose expertise is entirely illusory. Other economic applications are discussed.
SUGGESTED CITATION:
Matthew Rabin, “Inference by Believers in the Law of Small Numbers” (June 4, 2000). Economics Department, University of California, Berkeley, Working Paper E00-282.
http://repositories.cdlib.org/iber/econ/E00-282
I guess they were all Fooled By Randomness.
There’s a pretty good concensus here that prices are going to fall in the housing market. I agree with that, in fact, I think prices are going to go way down.
I was at the car dealership (Honda) today inquiring about trading in my CRV. On the other side of the screen were a whole bunch of agents complaining that nothing was selling and wondering outloud as to why. One guy says, “everyone I know is losing their house, how are they going to buy a new car?”
My question to all of the experts here: do you expect car prices to tank?
My guess, based on nothing more than a hunch, is that you’ll see the shortfall mitigated through heavily subsidized lease deals, since that way the companies can shove the actual losses to a future year (unless I misunderstand the accounting). Production cutbacks would seem a logical adjunct to that.
I think the low interest rate easy money that fueled the lending bubble is about spent. Your dealership example is a perfect window into the FB world. With personal debt at levels not seen since the Depression, and credit tightening, there is no more borrowed money to chase the consumer goods. When consumer goods aren’t bought people loses their jobs. When that happens even less goods are purchased, and the cycle feeds itself. I think we’re in for a world of hurt soon.
The market highs signal to me that all the sheeple are making a last-ditch effort to stave off the credit reaper by pouring what’s left into the market — as soon as the numbers really start to reflect reality, the market, the economy, the bubbles, etc. will whither and die. I think it’s going to be painful.
Tonight on Bloomberg TV there was an interview with Jim Grant of Grant’s Interest Rate Observer. He struck me as super-bearish about MBS CDOs and pointed out that the losses will in no way be limited to the subprime portion of the market. Very down on the future for RE and at the end I think he hinted at dangers in the commercial loans end of the business, though it’s no surprise.