Bits Bucket And Craigslist Finds For January 17, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Convicted Appraiser…
http://www.bloomberg.com/apps/news?pid=20601208&sid=aspX9JNoyFRE&refer=finance
At least seven states have opened investigations into the mortgage industry, including ties between appraisers, lenders and brokers.
Maybe if the fines are large enough and there’s jail time it’ll help clean up this mess.
That’s right…. make sure to close the barn door tightly… now that the horse is long gone….
“At least seven states have opened investigations into the mortgage industry, including ties between appraisers, lenders and brokers”
3 years too late. The 1000’s of scammers and con artists extracting sellers cashbacks thru fraudulent overappraisals have long since fled the coop, some to mexico, some to the caribbean, some change identities or rinsed the money thru other investments in member family names.
As usual the gov’t moves like molasses on widespread white collar fraud or any type of fraud. The less high profile U are the less chance U have of being caught in the net. The Gov’t will snare the high profile fraudsters like the bakersfield Crisp/cole(9) syndicate but thousands of lesser fry will get away.
“This country has nothing to fear from the crooked man who fails. We put him in jail. It is the crooked man who succeeds who is a threat to this country.”
Theodore Roosevelt
Don’t forget some of the borrowers and realtors were involved in this massive bubble.
Don’t forget some of the borrowers and realtors were involved in this massive bubble.
*Some* of the borrowers? I think any borrower who bought a house he couldn’t afford thinking some miracle was going to happen (like the equity fairy will wave her magic wand and keep the magic ATM going) is just as guilty.
This is what’s so disgusting about this whole thing. It’s not evil banks vs innocent borrowers. It’s evil banks + greedy borrowers against the minority of Americans who are trying to save money and invest in traditional equity investments.
Anna Eshoo, my local rep,, conducted a “rountable” discussion to figure out what to do about the mortgage mess. To my horror, none of the true victims were represented! She had lenders and FBs.
What about inviting some retiree who is trying to live off a fixed dividend+interest income? Now there’s a victim! But nobody cares about him.
RE: Crowley said she was forced out of the appraisal business because she refused to report property values that were higher than the actual worth. She has turned the e-mail list into a Web site, and says she now works with a snub-nosed .38-caliber pistol at hand because she’s afraid of retribution.
This woman was a major contributor to an appraisal blog which I used to follow before finding Ben’s.
She is articulate, professional and exceedingly knowledgable relative to her business.
That her professionalism has got hersleepin’ with a loaded .38 on the bedpost is an unspeakable travesty which perfectly exemplifies the cesspool which the real estate lending industry has become.
We are SUBPRIME Nation
Just something I noticed while in Chicago …
With bad times comes more commercials/push for more education. To Diversify.
I saw so many commercials that were U of Phoenix, Devry, and other colleges and all of the people shown were people of older ages.
Now some of these commercials were already showing in the past years, but it just seemed that were so many more advertising New Educations to replace those lost.
Anybody else seeing the same scenario playing out?
“Observe that he does not expect you to feel a causeless fear. When his kind get into power, they are expert at contriving means of terror, at giving you ample cause to feel the fear by which they desire to rule you.”
John Galt
Been watching your John Galt quotes and it inspired me to pick up a copy of “atlas shrugged”. it’s amazing how prophetic some of it has become.
my neighborhood was hit by a tornado a week ago (the house next door, one of my outbuildings and our camper were toast… but at least we have a house) and I’ve seen first-hand some of the things Rand discusses in AS.
Anyway… http://www.wheatlandtornado.info if you’d like to read about it… I did the website
Amazing, isn’t it?
Like a glimpse of the future, from 50 years ago…
J., good luck to you all. visited your site, amazing.
The community is lucky to have someone like you to organize and spearhead this. Good luck with your recovery. I’m glad you just got nicked.
ECB says today they are prepared to raise interest rates if rising wages are threatening to drive up inflation.
That sounds hawkish, but in reality the statements get weaker every time. Until third quarter of last year, the ECB talked about keeping inflation near 2% (their official ceiling). They were hoping that slowing growth in the EU would dampen inflation figures, but that didn’t work. After a few months of more than 3% inflation (and now that it is clear that this is a trend and not an exception), the talk changed to ‘vigilant on inflation being passed on into wages’. After a few weeks that last policy seems to give too, because it is evident that wages for some groups in the EU are rising at rates that are way above official inflation figures, and will continue to do so for some time. So now it is ‘rising wages should not drive up inflation’ - well, don’t worry - I don’t think wages drive inflation, it’s usually the other way round … especially now when increases are caused by higher commodity/energy/food prices and government taxes. What more can these banksters think of to defend their policy of doing nothing while inflation is raging?
P.S.: what was that strange blurb yesterday in the euro/dollar exchange rate? 1.5% down within an hour or so, but no mentioning of it on the news exchanges, nor was there any plausible explanation for the slide.
The ECB indicated a policy change.
“The US dollar rallied strongly against the euro and other forex trading counterparts, as surprisingly dovish commentary from a prominent European Central Bank official sparked aggressive short covering through New York currency trading. ECB Governing Council member Yves Mersch said that the central bank should exercise caution in the face of sharp risks to economic growth and signs that inflation will moderate through the medium term. The previously hawkish Mersch forced a clear correction in euro interest rate expectations, and the single currency fell sharply in response to the surprising rhetoric.”
http://biz.yahoo.com/fxcm/080116/1200507118213.html?.v=1
BTW, the American “empire” as you called it yesterday will be around for centuries to come. As a country we’ve survived far worse than the current idiocy. Sorry to burst your bubble, nhz.
Yves Mersch is Luxembourg’s member of the ECB council, so only one of 15 and represents the smallest EUR country. So, what he says is not that important.
Axel Weber, representing Germany at the ECB, is very hawkish, and so is Trichet. The problem is that now the Southern European countries with traditionally weak currencies, now have the majority in the ECB Council.
There certainly is a debate going on within the ECB, and my take is they will do nothing.
The mandate of the ECB is very clear: The task is to maintain price stability.
And the mandate for the mob is to provide protection from the mob!
Hi Lou,
thanks, I missed that - but still puzzled by the big drop that statement caused (maybe Trichet was puzzled too and had to make a new statement today because of that … euro is now close to where it was two days ago).
regarding the US Empire: I don’t think the US military empire will be around much longer; maybe 5 or 10 years and everybody will see it is no longer working. But I do believe that the US will survive as a nation because they have many resources (especially the american people themselves, who are pretty good at adapting - but I think they need to look a bit better at what is happening outside their borders). Just look at the UK: they are in decline for nearly one century now and they still rule most of the financial world from their City
It’s a small point, but the British military is a strong component of their continued power and influence. As are their diplomatic and intelligence services.And they enjoy a close and influential relationship with the US, regardless of the administration.
“Just look at the UK: they are in decline for nearly one century now and they still rule most of the financial world from their City ”
Up too 1914 the entire worlds financial system was run out of London. After WW1 the world financial system was jointly managed by US-Britain. Britain really declined as a world powerhouse after the Japanese invaded and occupied all of their eastern lucrative half of the the Empire during WWII. The losses of HK(temprarily) and Singapore were devasting blows to the british empire, as well as the loss of India right after the war.
Britain was reduced to a pittance of it’s former self after WWII , do in no small part to exhausting it’s economy and resources waging war against the Axis powers. It stood firm and was a stalwart ally of the US(thanks to Churchill) but the effects of the war reduced its power greatly. It lost most of it’s empire and US and Russia became the two dominant world powers.
I think the power transfer from UK to US started right after WWI; but these things take time. The comment about the City is because many people feel that the US FED is actually run by the private financial elites that hide (mostly) in the City.
Food was rationed in the UK after the war, until the early 1950’s, to give you an idea of how far they fell…
Selling $20 Billion worth of armaments to the Saudis, is about equal to what the financial majordomos lose every day on the 3rd thread, here.
“Selling $20 Billion worth of armaments to the Saudis, is about equal to what the financial majordomos lose every day on the 3rd thread, here”
A note about the fall of the Britsh empire after WWII. Note only did they lose the far east but the British also either lost or divested themselves of much of the middle east as well , including Palestine, which later became the new state of Israel. Also the British were instrumental along with the US in middle east Oil exploration and extraction. Iraq i believe was a british UN mandated territory.
The loss of African colonies in the early sixties was probably a net benefit to Britain.
The colonies on the whole were a huge drain on Britain. Of course, the colonies could be very profitable for individual businesses (hence there was political support), but not for the country as a whole.
Would you say that the fact that British resources went toward clean-up and rebuilding after all the bombing (something the US avoided) also played a part?
What if america exists as shown in Idiocracy?
Brawndo, it’s got what plants crave!
See that written in stone anywhere?
Empires fall–ALL of `em. Nothing special about this one.
All previous empires thought they were ’special’, and all of them fell.
I think Shelley wrote a poem about it, entitled “Ozymandias”.
This idea that increasing wages drives inflation is a bit absurd. Wages are one subset of the total set of prices. To the extent that one would measure inflation with price changes saying that increasing wages causes inflation (of prices) is saying that increasing prices causes increasing prices. It’s a bit absurd, definately circular logic and avoids discussion of the real cause of inflation.
nhz, where are all the European housing bubble blogs? I looked for some (specifically UK) but couldn’t find any. Do they exist?
I recognize that I can’t read Dutch so I would not be able to find a Dutch one. I should be able to read Dutch considering I worked on a project for KPN Telecom for 9 years….
I don’t think there is any major housing bubble blog in the EU, there are soms popular blogs in the UK and Spain though (but I don’t follow them). In Netherlands there was some lively discussion about home prices on the general (extremely popular) investment blogs about five years ago. After getting death threats from realtors and their kin for discussing the Dutch bubble (plus having many postings removed by the editors of the site because I scared their advertising public), I decided I had enough of visiting there.
The RE mob is still in full control of de media and most of the blogosphere in Europe, and the average EU citizen (including most speculators) still think there is NO housing bubble in Europe and home prices will continue to climb into the sky indefinitely. And even if prices start falling, most people fully expect government to bail them out (which will probably happen until they run out of money too). Keep in mind that in countries like Netherlands the last housing crash is nearly 30 years ago. Nobody remembers, and the realtor statistics conveniently start many years after the crash. Talk about a bubble and people will think you are a looser who failed to grasp the new economic reality, much like it was in the US a few years ago.
Also because there has not been a recent housing bubble in much of Europe. Germany had its bubble following re-unification, then it collapsed in the mid 1990s and prices have been rising in line with or below inflation ever since. Swiss residential housing prices fell 30-50% between 1995 and 1999 but have been rising a bit slower than general inflation ever since. Ireland, UK, and Spain seem to be the main European bubble candidates, but keep in mind that even these countries did not have the brokered liar loans and mass “investments” in multiple houses and condos that blew the US bubble all out of proportion.
JJ, friends in the UK use UK Housnng Price Crash
http://www.housepricecrash.co.uk/
http://www.azcentral.com/realestate/articles/0117realestatetrends0117.html
“Home prices will stop falling. New- and used-home sales will pick back up. And the subprime-lending debacle will be over but not forgotten.
But it could take a few years for that to happen in metro Phoenix.”
“Because of foreclosures, metro Phoenix home prices could fall 30 to 35 percent from 2006’s peak and values won’t likely return to that high before 2015, said Gadi Kaufmann of the national real-estate advisory firm Robert Charles Lesser & Co.”
WOW,30-35% off peak!!!! That is still too optomistic, IMO, and is probably talking real dollars not inflation adjusted… but WOW!!! It is way better than the “we are almost at bottom” that the local paper has been filled with since prices started slipping 21 months or so ago.
2015 be back at peak? Well, if we get nothing but 5%+ annaul wage increases between now and then… which I do not see happening in a recessionary economy. Back to that peak in inflation adjusted dollars? NEVER!
“Many of us thought last year would be the worst for the housing market, but 2007 was just the beginning, due largely to the credit crunch,” said John Chadwick, president of builder Pulte’s Southwest operations.”
Yeah, and your bottom in 2008-2009 is just as overly optomistic as the bottom in 2007 predictions were a year ago.
To sum up that article, we are finally getting admission that the price still has a long way to fall, but the koolaide drinkers will not give up the illusion of rebound to peak or that our population growth was largly fueled by the housing bubble and with the bubble dead population is unlikely to keep growing at previously projected rate.
2007 was just the beginning, due largely to the credit crunch
They don’t want to let of this, do they? They act as if everything would be just fine if it weren’t for that pesky “credit crunch.” As if the credit crunch was some unexpected external thing that was dropped from a spaceship.
News Flash: You created the credit crunch yourselves — and a predictable timeline for it — by offering “grace periods” on exotics to NINJAs. It’s like saying the cake would taste great — if it wasn’t for all that salt we added before we baked it.
just imagine how it is in Europe: realtors are getting a bit nervous here because inventory is piling up, sales are slowing and price increases are getting close to zero. My newspaper has a two-page spread article (government made similar statements earlier this week) explaining that the Dutch economy and housing market are extremely healthy and that such things can never happen in the Netherlands. But at the same time, some realtors are saying that if the papers write too much about subprime (they don’t, maybe once a week or so) and credit cruch, Dutch buyers will get nervous too and hold of on purchasing that new home. Can’t have that, so government and media are organising some peptalk. And if things DO go wrong we will blame the US (and not the Dutch RE / mortgage mob).
One of the most funny bits I read is from a spokesman for the realtors who explains the subprime crisis by saying that J6P with his $50K income should be able to buy a $150K home but got a $ 200K home instead; and now that US rates have gone from 4.5 tot 5.5% they are a bit overextended. Drop rates a bit and everything is fine again. Can’t happen in the Netherlands where the median home costs 8.5x median income and rates are near 3-century lows (and home prices - corrected for inflation - near 3-century highs).
Do you have a link for 3-century data or graph? It sounds like interesting data.
it’s based on the famous Herengracht Index, research from Dutch professor Eichholtz and Robert Shiller
http://www.nrc.nl/achtergrond/article816285.ece
please note: corrected for inflation!!.
suggests Dutch home prices could drop 80% from current level; and nominal home prices could drop a lot more!
I’ve never heard of the index. It’s a fascinating graph! Many thanks for the info.
to JP:
the Herengracht index records home prices from the early 1600’s until about 1975 for the Herengracht in Amsterdam, Netherlands. The Herengracht is a canal lined with homes for wealthy merchants, that were essentially unchanged over the centuries (of course, they got running water, toilets, electricity and wireless internet etc. when that became in vogue). The index shows that home prices can fluctuate widely in the short run, but over a longer timeframe they rise with just a little (about 0.5% yearly) more than inflation / GDP. Robert Shiller used this data for some of his books like Irrational Exuberance. Another important observation is that real homeprices (corrected for inflation) can go up or down for many, many years once they start climbing or falling.
In a previous post to another reader:
“I don’t think the US military empire will be around much longer; maybe 5 or 10 years and everybody will see it is no longer working.”
You better hope this isn’t true, since the U.S. is the only nation on Earth that can defend your and other European countries in the event China or Russia decide to resume business as usual. One protracted war in Iraq does not make a failed military empire. The problem with our military–and this has been true for many decades–is that its policies are heavily influenced by business interests, not the other way around, and many American companies now openly sell weapons and technology to hostile governments and interests, as our own government done at least since the Cold War (arming both sides to keep a “balance”).
I think it’s interesting that so many European countries that would have been destroyed without our intervention, now think they are morally superior (these are the same countries that used to burn “heretics” by the hundreds of thousands). Since when has surrendering or doing nothing in the face of aggression towards ones children been considered an evolved trait? Hiding under the bed and waiting for Uncle Sam to ride to the rescue, and then slapping him when life returns to normal seems to be the order of the day.
I suggest that the next time America-bashers want the U.S. to save them, they read “The Little Red Hen” and make peace with their own extinction.
typing corrections:
“that can defend your COUNTRY and other European countries . . .”
“as our own government HAS done . . .”
don’t want to argue about moral superiority because that isn’t the issue; many foreign governments and politicians (especially those in the EU) that work very closely with the US in this ‘forever war’ share the blame. If the rest of the world does not (or no longer) want to be ‘protected’ by the US, then that is their choice I think.
Just ask the people from Iraq, Pakistan and many other nations how they like the protection from their Big Brother overseas ;-(
Yes, of course it’s their choice, but when something happens, do you think they will stick to their guns? Are will they come begging?
Much of the mess in the Middle East is a holdover from Dutch, French, and British meddling and abuse from the 18th century through the mid 20th century, and America is left holding the bag because of its dependence on Middle Eastern oil.
Now that France, Germany, and Great Britain are being overtaken by Muslims, originally imported for cheap labor, the issue will become moot, since Muslim law, once installed, will make everybody happy.
Typo alert! “Are will they = “OR will they”
“If the rest of the world does not (or no longer) want to be ‘protected’ by the US, then that is their choice I think.”
Funny, I was in the UK when Reagan was sending the Pershing missiles over..I got in a long discussion with a Dutch engineer who said they didn’t want or need our protection. I said great, we’d save a lot of $$ by pulling troops out of Europe. He was shocked and couldn’t believe we all weren’t just dyin’ to keep troops stationed over there forever. I say pull them out.
Incredulous: better read up a bit on history …
the Dutch never had any serious involvement with the Middle East before WWII. And after WWII there is only their support for Israel (and sometimes a bit for the Palestines too, to keep the Arabs happy) and their stupid cooperation in the US War on Terror. Yes, the French and English were heavily involved but they were not left with the mess, they took the mess over by trickery and force - it was their own desire to do so. Regarding the muslims think what you want, but I’m not scared at all. The majority of ‘muslims’ in my country probably visits the mosque about once a year, just like some ‘catholic’ people see the inside of the church a few times in their lives. There are many problems with these new immigrants (just like you have problems with the Mexicans), but the threat of muslim law in Europe is not one of them. Countries like Netherlands have had these immigration problems for at least five centuries, with groups from very different background. The Dutch republic survived all of those episodes and often benefited from the new cultures.
I agree. Let’s see how long they can protect themselves, once we’re out, and they’re perceived as sitting ducks. They don’t seem to grasp the fact that they HAVEN’T been attacked by Russia, or the former U.S.S.R., or China, or whomever because we’ve been there the whole time.
It’s easy to preach peace and love when somebody else is watching your back, and picking up the tab.
“I think it’s interesting that so many European countries that would have been destroyed without our intervention, now think they are morally superior (these are the same countries that used to burn “heretics” by the hundreds of thousands).”
You don’t want to go there . . .
The Uber-patriots in this country love to thump their chests over our “specialness” while ignoring the inconvenient fact that our country was built on the bodies of dead Native Americans and their stolen land with the labor of kidnapped African slaves. Oh yeah . . . I think we might have toasted a few “witches” in our day, too.
In the early 20th century our country had many pro-fascist robber baron types who lent much support to Adolph Hitler. Henry Ford sure loved doing business with Hitler–as did grandpa Bush (Prescott).
As Tom Friedman says: “You can’t have McDonalds without MacDonald Douglas.” Same as it ever was . . . .
Gadfly, I think you’re confused. There were no witch burnings in America (hanging or pressing were the favored methods of killing), and greedy businessmen don’t own this country (yet), but you also cannot judge the actions of former centuries by the ethics of the modern world. Had you grown up in a culture where slavery and racism were normal, you might very well have approved of them.
Every country has uber-patriots, and thinks itself special. But Dutch colonialism is and was a fact, and its behavior in Indonesia, with a huge Muslim populace, has come home to roost. Here’s my question: If you think America is so evil, why do you live here? There are many other prosperous countries, most with slavery in their backgrounds, for you to choose from. Some of the worst tortures and executions for heresy were practiced in the Netherlands and Switzerland, both supposedly benevolent; some of the worst racism and slavery were promoted by the British and Dutch. And nothing in our history compares to Stalin or Hitler. If you want to feel guilty about Native Americans, fine (should Native Americans feel guilty about their ancestors killing each other as well?), but I wasn’t involved, at least not in this lifetime (the only one I remember).
Muslims weren’t imported for cheap labor in Britain - they were granted asylum as they were kicked out/fled their own countries back in the 70’s. And many people in Britain extended their hand and helped house and feed them when they arrived.
I don’t think the current Dutchies were involved in cruel tortures (except for some episodes in Afghanistan etc. together with you-know-who) or slavetrade either, so I plead not guilty. But people sure are responsible (if only officially) for what their current government is doing and hopefully they can learn a bit from past mistakes.
Also, many (EU?) historians argue that if the US had not perceived Nazi Germany as an economic threat after the war had been going on for some time, they would have gladly worked together with Hitler; a large chunk of the US intelligentia had very similar ideas in those days. Going back to the present time, at least 75% of the world population considers the US the biggest threat to world peace and they are right IMHO. Even if you don’t agree at all, that fact should tell you something.
It does tell me something: that people in general,are incredibly gullible, and easily swayed by media propaganda. Acording to some polls, more than 1/3 of the French believe America rigged 9/11–based on the cut and paste fantasy called “Loose Change.” And, of course, we all know that global warming is American made, because Al Gore says so. Michael Moore mockumentaries are treated as Revealed Truth (has anybody looked at Michael Moore lately?), so there you go. Given their histories, I think Russia and China, not to mention millions of Muslim extremists, pose a far greater threat to world peace than we do.
Seems you’ve forgotten the Dutch role in South Africa.
For Claire (above):
“Muslims began immigrating to Europe in large numbers following the Second World War. They were part of a great wave of immigration that brought workers from the poorer countries of the Mediterranean, Eastern Europe, and the former colonies to the industrialized states of the West that were enjoying an economic boom and trying to rebuild in the war’s aftermath. Private employers and governments across Western Europe actively recruited foreign workers to provide the labor necessary to continue the economic expansion (Bade 1983:59–95; Frémeaux 1991:209–75).
“In the face of the economic recession of the early 1970s, however, European states gradually closed their borders to low-skilled workers but allowed for the possibility of family reunion and political asylum. Host countries assumed that immigrants were temporary workers who would want to return to their country of origin, but many foreign-born residents had no interest in doing so.”
From “Muslims and the State in Britain, France, and Germany” by Joel S. Fetzer and J. Christopher Soper, Cambridge University Press, 2004.
Excerpt quoted here: http://tinyurl.com/2hpzot
Muslims weren’t imported for cheap labor in Britain - they were granted asylum as they were kicked out/fled their own countries back in the 70’s.
That’s only a small minority of Muslims in the UK, mostly Ismailis (a liberal Shia sect) who were forced to leave Africa.
The great majority of Muslims in the UK were indeed brought into the UK for cheap labor, especially in the textile mills in the Midlands and North (e.g. Bradford), post-WWII. And the biggest number came from Pakistan, which is about the last country on earth that would kick out Muslims, since the country was established as a homeland for Muslims.
Throwing money at people to buy homes they could not afford pushed prices to levels where nobody could afford them. Prices falling off that level coupled with the sinking household balance sheets of the aforementioned FBs led to the insolvency crisis. Don’t know nothin’ about no crunchy credit, though…
Prices got so high compared to returns (equivalent rent) that paying them ONLY made economic sense if RE continued to appreciate at (nominal) double digit rates. Renting is SO much cheaper that current prices can’t be supported without double digit wage inflation.
Are we at double-digit inflation already? I guess it depends on whom you ask. Headline CPI is running at 4.1 percent YOY according to the SD Onion Tribune…
according to shadowstats.com the US CPI is in double digit territory already (currently 12%).
Possibly, but neither housing or wages are appreciating at double digits and those are the things that matter
Note he said double digit WAGE inflation. We are definately NOT getting that!
“metro Phoenix home prices could fall 30 to 35 percent from 2006’s peak”
Fred’s on record here 2 years ago: 40-60% off peak. Fred is an Phoenix area expert from the 80’s. Good deals will be had at 25% of peak prices for some properties. I see no chance of median incomes doubling in 10 years, so I expect a recovery to 2006 prices will be longer than 10 years..
“I expect a recovery to 2006 prices will be longer than 10 years..”
Ditto….
Had dinner with my in-laws last night. Pushing 60. Live in a giant, golf course, gated community with granite and stainless with giant built-in BBQ in the back, near their koi pond with stream. They owe $250K on the place which had a peak value of $500K but probably under $400K now. Sun Lakes…. Ouch.
Anyway, last night they announced plans to sell the place and move to po-dunk Texas, an hour outside of Dallas.
My boss’s wife had gotten a job with the state. She got furloughed last week. May, but probably will not, have a job with the state 2 months from now after the current budget is worked over.
He told me they have their house up for sale for 10% under any other place in his neighborhood ($450K vs. $500K). Wants out from under the $3K monthly nut. Will rent for half the price until this storm blows over.
Work is not hitting revenue targets so aims to hit profit growth target by trimming costs. Limit for not needing prior VP approval of expendature down from $500 to $200. Open reqs to hire are frozen.
SIL that bought a new house with full intention of letting her old (2002) home go into foreclosure, has lost her job.
Yeah, and your bottom in 2008-2009 is just as overly optomistic as the bottom in 2007 predictions were a year ago.
Yeah, you just wait ’til after the Super Bowl, buddy.
Builders’ confidence edges up from record low
http://tinyurl.com/33okr6
But despite that glimmer of hope, their overall outlook is still near the recent record lows.
The National Association of Home Builders/Well Fargo index had a 19 reading in January, up slightly from the downwardly revised December reading of 18, a record low. The index is based upon three subindexes that measure their view of current market conditions, outlook for six months down the road and the level of buyer traffic.
That’s not much of a glimmer of hope, but I’m sure the MSM will make this look like a certain and prolonged rebound for housing. Buy now before all the deals are gone!
Now there are stories that lenders are doing their best to not let homes go into foreclosure. They are working more closely with borrowers to try to keep borrowers making their payments. This isn’t because of government intervention, either. It’s because foreclosures are really expensive for the lender. I’m waiting for this to cause the foreclosure numbers to tick down and all of the shills to yell, “it’s getting better. The bottom is in.” I wish we had a “Bottom Is In Meter”. It would be in the millions by now.
But that only because they’ve finally got their production down to the new low point of demand (for now) so they are not adding to their bloated inventory!!!
Sounds like builder confidence has reached a permanently low plateau — at 18 or 19 for four months running now…
What goes on in Vegas stays in Vegas. (It’s all local, ya know)
The tightening lending market is jeopardizing the ownership of a multibillion-dollar hotel-condominium development under construction on the Strip.
The owner of the $3 billion Cosmopolitan confirmed Wednesday that he received a notice of default from Deutsche Bank after payments on a $760 million construction loan came due.
“This action by our lender comes as no surprise to the senior management,” Bruce Eichner, the New York-based owner and developer of the south Strip development, said in a statement. “With the current challenges within the real estate and debt capital markets, which are out of control, being felt across the country, we both anticipated and planned for this.”
http://www.lvrj.com/business/13860847.html
No Curt,
This is obviously a bail-out. Haven’t you heard, everything is a bail-out now.
Rate moves? BO. HC gives a speech? BO. Fiscal stimulous? BO. Fed guy mentions passing gas? BO.
“I am from the gov; I am here to help you ”
Please no BO from gov; they screw up, they pay. Who bail me out with my stock loss?
One of the most disingenuous, cynical things Reagan ever said.
“I am from the gov; I am here to help you ”
One of the most honest things ANY politician ever said.
“One of the most disingenuous, cynical things Reagan ever said.”
Ed, agreed. Though I’ve always liked Reagan’s remark…”
trees are the major source of air pollution”.
I thought Reagan was a dangerous dummy, but I didn’t despise him until he chose to hang wreaths on the gravestones of SS officers…the same bastards who murdered prisoners of war from the 101st Airborne.
Reagan was never an honest man…nor a decent one.
The go to term is no longer “bailout” the word smiths say it sounds to much like a handout, we now have a …. “Stimulus Package”! So get ready to have your package stimulated.
Merrill Lynch & Co., the world’s largest brokerage, on Thursday posted a fourth-quarter loss of nearly $10 billion after writing down some $14.6 billion worth of investments and trades slammed by the ongoing credit crisis.
Can’t you see it? ML didn’t lose $14 billion, you did!
I take the blame for Merrill’s ill-advised bullishness.
My bad.
Ben, I like your anger.
No, seriously. Go check your bank account. Hillary Clinton took 14 billion out last night.
damn . . . I thought it was that cheese pizza I got.
Do you know my online PIN? There is exactly $14,000,000,000 missing.
I have been the one believing you that the bailouts have not materialized. I just hate the politicians on principle. I think the stimulus package, even if it isn’t a bailout, is a stupid idea.
Imagine how long it’d take for an ATM to spit out $14 Billion worth of twenties?
At a rate of 2 Jacksons/second ==> 221.82 years.
My bank’s ATM spits out a max of $300 per transaction (per day?). So I’m glad I don’t need to wait around for $14B. Frankly, I have no time for that.
that’s funny… I can go to a medium desert town in Chile (Arica, Chile) and take out the equivalent of USD $500 from my USA bank per day.
Oh… I see now. They don’t consider that as being worth much.
My kid brother called me this morning wanting a bailout - $300 until he gets paid next week (car troubles, he’s a typical American UNsaver). Doesn’t sound too bad after reading this, so maybe I’ll be sending him a check.
Ben,
Is there any question in your mind that the big financial and RE companies would like to get massive infusions of tax money?
Is not a stimulus package a targeted infusion of tax money? And won’t the “suffering sectors” likely be part of the target recipients in some way, shape or form? Isn’t this a great cover, the blowback from their bad investments, to give them these infusions?
I’m not saying it’s going to work. You’ve made a good case that any bailout will be too small to support RE prices.
But the transfers of tax dollars to the RE companies and financial companies will make this bubble-unwinding last a lot longer, and will take tax money from people like me, who tried to be prudent, and give it to RE industry, financial companies, and FB’s. I mean, Hillary was on Meet the Press this past Sundays echoing Greenspan’s sentiment that strapped homeowners should get cash payments!
Let’s not conflate the two separate issues: 1) “Will there be a bailout?” and 2) “Will a bailout work?”
Hillary’s quote on the housing market from the Meet The Press this past Sunday:
http://www.msnbc.msn.com/id/22634967/page/5/
Of course, she’s not quoting Greenspan for no reason. She says she’d “do it a little differently” - but she’s on board with the concept!
‘Is there any question in your mind that the big financial and RE companies would like to get massive infusions of tax money?’
I have been over this a thousand times. Are you worried the government will rip you off? Yes, they have, are, and will. I myself spent years fighting that for no pay, and came to the conclusion that eventually the gov will run our finances into the ground. I no longer waste energy on it.
$30 billion? So what? How about a $400 B Medicare program that nobody even asked for? The pentagon? Nuc subs the navy didn’t even want? Interest payments that eat up almost all of our income tax? Like I said before, if someone wants to constantly focus on the unfairness of the tax code/gov, that person will never have a happy day again.
I am chronicling possibly the biggest financial event of the century, and I have already proven dozens of times, including today, that this stuff is simply paranoia. It’s a side-issue. The HB is deflating and I couldn’t be happier about it.
Just about anything the feds do to this thing is going to be just so much pissing in the wind. Of course, when you or I piss into the wind we don’t expect everyone to adulate us for it. I’ve come to the same realization myself as Ben - worrying about what the Feds do makes as much sense as writing letters to the editor to complain about the weather.
“Murren said the project was a challenge from the start because it is wedged in between MGM Mirage’s Bellagio and its $7.8 billion CityCenter development. He said the amount of site work plus the challenge of selling high-rise residential condominiums in the hotel and casino project may have doomed the Cosmopolitan.”
So it’s only in trouble because of all of the other similar inventory scheduled to hit the market at the same time? So all of the current excess supply and falling prices have nothing the do with their problems? If this project is in trouble, then what will be the fate of the larger and massive City Center project?
Murren said the project was a challenge from the start because it is wedged in between MGM Mirage’s Bellagio and its $7.8 billion CityCenter development.”
That’s cute. Murren’s sniping at Eichner, but in 2004, Eichner was slobbering all over the City Center:
“The announcement of MGM Mirage’s CityCenter reaffirms our business model and is a tremendous boost for our independently-owned project,” said Eichner. “The MGM Mirage brand is known the world over for hospitality and gaming excellence. Their mass appeal will compliment our hip, boutique property’s unique mix of fine dining restaurants, upscale retail stores, exciting nightclubs, high-end and mid-level gaming, and exclusive spa and salon. Quite frankly, we couldn’t think of a better set of neighbors,” Eichner added.
Here’s a clueless bunch:
‘Housing market: What went wrong? InmanTV: Presentation digs into causes and fixes for housing mess’
Cause? People buying MBS allowed disconnect of risk from originations, allowing originators to lower lending standards to the point that anyone could get a loan for any amount. This allowed speculator and fraud filled market to drive prices waaayyyyyy to high.
Fix?
People stop buying MBS to reattach risk to originations. Check.
Originators tighten lending standards. check.
Prices start to fall back toward historic norm. check.
People that can not afford their loans default on them. In progress.
People holding MBS recognize their losses. In progress.
Bond insurers that have exposure to MBS go insolvant. In progress.
Foreclosure rate at historic high cleans out the bad loans. In progress.
Economy suffers a harsh recession as misallocated investements turn into losses and there is pain as resources are refocused. Fed cuts rates and government pushes for more spending to ease pain, help the reallocation of assets, and win elections. In progress.
Counter party risk causes cascade of failures. On the way!
Banks, builders, pension funds, equity funds, insurance companies, and others with excess exposure to MBS go insolvant and need to be liquidated. Government prints money needed to cover insured accounts and keep FDIC, Fannie, Freddie, major insurers and other institutions from shutting down. This printing of money to keep the econmy afloat tirggers higher inflation. On the way.
Decade of stagflation as economy resets from excess debt, misallocation of resources, trade deficits, budget deficits, money supply growth, commodity and equity price bubbles, etc. LIKELY
American standard of living falls, imports fall, people return to work actually making stuff instead of just originatig debt and selling it off to the goods producers, Social Security is means tested, healthcare is rationed, taxes increase, kids live with parents longer, and elderly parents live with children more often….
Wall Street created a massive Debt Machine and the sheep jumped in with reckless abandon. It was all about creating debt and shaving off a piece for themselves. The Housing Mania had nothing to do with homes but the sheep are still too stupid to realize this. It was “the debt, stupid”.
Bleak picture,
but what you missed is that… you see what’s going to happen is….. er…. Well it’s just wrong!
II think our standard of living might not fall all that much. Technology is improving and that is the key to long term improvement.
We will probably have less cheap toys and junk from China. Not to mention smaller, more affordable vehicles. So that will not be a drop.
People will have to work in manufacturing again and perhaps agriculture. Hard work is a blessing from God, so we should enjoy it.
I don’t think that is a standards drop. Should be fine.
You are kidding, aren’t you?
Hopefully they’ll start with the price was too high.
But that begs the question “why did the price get too high?”
Wealthy May be Next.
http://www.reuters.com/article/inDepthNews/idUSN1530426720080117?feedType=RSS&feedName=inDepthNews&rpc=22&sp=true
One can only hope.
“Keeping up with the Jones.” This is the kind of mentality that gets lot of people in financial trouble as they don’t live within their means.
I heard a funny radio commercial on refinance. It goes like “I even talked myself into getting a Porsche because I deserve it”. Jeez. Refinance so you can get a Porsche. so unreal. LOL.
From Rolex commercial: “What is costs to buy a Rolex is nothing compared to what it takes to deserve it.”
Just another way of saying that you should buy it even if you can not afford it, because you deserve it.
appealing to a person’s sense of entitlement is a time tested and effective advertising technique.
Yeah.. 3 main tactics…
1) Buy this product or you can not possibly be happy. AKA: Buy this or you will be that kid in school that was picked on because they did not wear the right clothes, shoes, haircut, etc.
2) This product will get you laid. (Any-old-laid works for men, but for women it has to be targeted as laid-by-the-right-guy-in-the-right-way.)
3) You are entitled to it.
You forgot:
4) Better buy it now - this deal won’t be here tomorrow.
A watch is a prison
You wear it, it shines
but if enjoying life is your mission
Then your enemy is time
Where is that from, alad?
Nice.
Dreamed it up…
I, for one, always try to balance quality and price. I don’t want to buy the cheapest piece of junk and I don’t want to buy more than I need. It seems that the “Buy Junk Gang” and the “Gotta Have it at Any Price Gang” are in the super majority in this country. I’m willing to pay a lot to get exactly what I need. But I don’t want to pay more. Buying something like a Rolex, unless you really have a lot of money, makes no sense to me.
Buying something like a Rolex, unless you really have a lot of money, makes no sense to me.
And even then: Donating your money to the Rolex cause makes a lot less sense than many other causes.
Watch sales have plummeted amongst younger folks who’ve all got a cell phone that for some reason or another, tells exactly the same time as a Rolex…
But those young people spend ridiculous money on electronics they don’t need. They have just shifted their frivolity. Walk down Bleecker Street and see how many stores sell $1,500 handbags.
I have a backwards goofy watch….it’s my prized possession.
I must admit i recently recieved a new watch for x-mas from my wife. she bought it for me becuase she knew i never would get it for myself i am always putting all my money in the bank.
it is not a rolex but it was not cheap and she got a great bonus and i guess she felt i deserved it
the one lesson i am still teaching my wife is their is no such thing as “extra” money
i just paid off my cc bills for december and it feels good to not have to deal with x-mas season into may like most fb’s and spendthrift types
i have also ramped up my savings and will sign a new lease in may so i will not be even looking to buy well into 2009 at the earliest
with the recession pretty much upon us and the financial
crisis looming it feels damn good to be 100% debt free and saving like a madman at this point in time
besides being a lowlt renter with not much in the way of flashy toys people will think i am broke and not ask for $$
I use my cell phone to tell time, but I don’t think I any longer qualify as “young”.
I have a backwards goofy watch….
and now I find myself coveting my neighbor’s goods. lol.
I asked for a watch this Xmas and never got it.
I didn’t even want one of the fancy ones, I was just looking for one of those $60 watches from the department store.
I didn’t want one enough to buy it myself though, so I guess even I don’t think that I “deserve” it more than I deserve an extra $60 in the bank. Maybe that is for the best though…
Lots of “you deserve it” type marketing for McMansions too. You work so hard for your money…and commute so long to that job of long hours…you deserve to get away from ‘it all’…have a soak in that marble tub that looks like it was built for Julius Ceasar… (no thanks, I know what happened to Julius Ceasar)
Wife bought me a Rolex a few months back. Hit one of those milestone birthdays. Do I deserve it? I don’t know but it sure looks nice wearing it. Oh yeah, she bought it cash. She works ya know.
Watches and pens are kind of funny luxury items. Way back when, spending more on these got you products that actually worke better than cheaper alternatives. Gold plated nibs work better than steel nibs. Jewell bearings DO improve the functioning of watches. But now luxury pens often contain the same cartridges as more modest pens. Cheap digital watches tell time more accurately than expensive chronometers did 50 years ago. A Rolex IMHO is something like a sextant: a complicated and impressive feat of precision engineering that no longer serves a meaningful purpose.
But it does serve a meaningful purpose (just not one you recognize.)
It’s a social marker, and as such conveys a purpose.
Just hop onto Metro North at rush hour, or take a trip to Greenwich or New Canaan.
My wife bought me a Breitling watch a couple of years back. I am an Aviator and it is an Aviators watch. With GPS today in my aircraft that tells more accurate time it is not the great tool it once was. I can figure out fuel burn and time remaining etc. with it, but in truth it is a status symbol that reflects what I do. My wife bought it for me because she knew I never would pay that much for a watch. I was a little angry internally but the smile on here face made me realize this was not a fight to pick. It is a nice watch but not worth the money. I don’t even notice the money gone from our accounts. I also figured it was only worth about a thousand Starbucks venti Vanilla Lattes and since I make my own ‘Saveabucks’ latte I could afford it
Sorry, but when I see someone wearing a Rolex or carrying a $1500 handbag, I just think “another who got suckered by Madison Ave.”
Now that I think about it, I have yet to see anyone wearing a Rolex out here in the sticks or carrying a purse of any kind, so how would I know what I’d think?
In their ads, Rolex loves the arctic explorer in particular…
It’s always some clown that walked to the north pole, and only got there, thanks to his trusty timepiece.
LiU, but a few hundred dollars of wheat mildewing in storage pails, that’s something you’ll se in Utah.
LOL - not where I live, not even any Mormon foodies out here in BFE.
Yeah, apply this expensive mascara ‘because you are worth it’.
You wouldn’t believe how many of our “potential” customers ask if we do “financing”……probably a mistake on our part that we don’t, but I am so debt phobic that I don’t even want to traffic in it. These folks have maxed out their credit cards or they would have just hit the buy now button……Seriously, if you don’t have the $5-60K in your pocket then you really shouldn’t be purchasing a ROLEX……What else have these people been “financing” because they “deserve” it….Plasmas, Jet Skis, Pools, Kitchen Remodels, Vacations?? Perhaps I should just short more Capital One?
you can finance a bed from the bed distributors
so you can buy a burger at mcdonalds on a payment plan
The credit card companies aren’t nearly as stupid as the mortgage companies have been.
1) Credit cards take 1.8% to 4% of the total from merchant… so when you pay $125.99 total to buy a hotel room… the credit card company is only getting 98% of that amount. They get 2% of the sales tax even, 2% of the total transaction.
2) A merchant pays for charge backs, not the credit card company. That means if you claim a vendor didn’t ship you an item or was a stolen credit card use… it isn’t the bank.
Both of these lead to higher prices for everyone. Think of it like a tax or social service on all goods. As deadbeats, liers and thiefs are subsidised.
Now admittedly all-cash had it’s share of waste… but I think it was more spread on the people who made mistakes.
Auto loans could very well sink first. Lots of car purchase money dumped into wasteful things like fancy wheels, leather, etc that do not hold their value (especially when not well maintained). I bet the average HELOC / FB probably spends more like $450 a month on car payment than more sensible $150.
Heaven forbid if they drove a 12 year old car with 52,000 miles on it and fully paid for. The shame
==========================================
I bet the average HELOC / FB probably spends more like $450 a month on car payment than more sensible $150.
Many of them are posers who got into a McMansion via stupid lending and liar loans. They were never wealthy to begin with.
I think this whole thing is collapsing faster than most realize. People like to trot out that reset chart that shows 2009-2011 being worse than now. I don’t think those option ARM people will hold out until 2009-2011. I think most of them couldn’t afford the payments from the beginning.
“I don’t think those option ARM people will hold out until 2009-2011. I think most of them couldn’t afford the payments from the beginning. ”
Exactly. When the value of a home drops below the amount borrowed, the expectations of appreciation evaporate and paying the monthy payments becomes the “option.”
Yeah we’re deep into it now. Our paper today had an ap release that said either we’re in a recession or will be shortly. Most are now saying 50-50 or even more than a 50% chance. Herb (can’t remember his last name) on CNBC yesterday afternoon said the bears were right and the bulls were wrong. We’re always into a recession before anyone actually admits it.
We’re always into a recession before anyone actually admits it.
True, if by anyone you mean politicians and anyone in the financial “industry.” Call them analysts or bureaucrats, at some level they’re all salesmen, just like the RE crowd.
Recession looming in US housing-boom states
By Krishna Guha in Washington and Matthew Garrahan in Los Angeles
Published: January 16 2008 22:08 | Last updated: January 16 2008 23:39
California and Florida – the biggest and fourth biggest state economies in the US – are either in recession or on the brink, many economists now believe.
http://www.ft.com/cms/s/0/e3d4086c-c47b-11dc-a474-0000779fd2ac.html
Stein
Go to Yahoo Foreclosures and type in McLean, VA (ignore ones that are obviously apartment/condo complexes). You’ll be shocked out how many homes in the 5-6 million dollar range that are in foreclosure (I count 3, and I’m ignoring the the 50k sqft that I assume that are not SFH).
If anyplace would have a $50k sq. ft. SFH, it’s McLean, Va. They have real mansions there, not just the Ronald McDonald clown variety.
However, your point is well taken. Who in their right mind would take (or get) a mortgage on a $5 million residence? I mean, I know lending standards got pretty lax, but…
A friend at the gym was telling me yesterday her daughter who is a cfo of a large company lives in an upscale neighborhood. She said they went to visit and there were several houses in their cul-de-sac that were in foreclosure. She said her area in Lexington Kentucky has lots of foreclosures. She can’t figure out what people were thinking, as they bought their house with a fixed 10 year loan and are making double payments to get it paid off in 5. I guess she’s a conservative accountant.
Now that’s a smart use of credit, good for her. Debt should not be a state of being.
The next wave of problems will come from prime borrowers who bought too much house or borrowed too much against it.
Yeah, and this is a surprise to who? I live in one of these wealthy communities in Michigan and we have been going through this purging of over-extended ‘prime-borrowers’ for 2 years now. It isn’t pretty. I have pretty much seen my own house go from its peak 2004 price to a 1998 price! Our drop has been a good 30%, if not more. People here are finally realizing this and we are seeing some houses selling well below the price the owner bought it for back in 1999 or 2000. I have two neighbors, 1 who over extended and is now a FB and the other who is just moving out of state changing jobs. Both have had to price well below market and are taking a lose because of all the over-extended FBs in our community.
I make great money and have for some time (knock on wood), but we live in a modest smaller home, drive nice cars but own them and enjoy some luxuries but don’t go nuts. Yet, for most of this decade I watched similar young, yuppie couples like us buy huge homes for around $600-$900k, drive a new Mercedes and BMW, and walk around with their Bugaboo strollers. Eventually reality was going to catch up with them and sure enough, the past two years reality has hit and in a massive way.
The best part of all this is that my wife would constantly bug me a few years back asking why don’t we get a bigger house? Claiming I was cheap. I’m not cheap at all; rather, I am just not into over-extending my lifestyle to the point that I am house poor and a FB the minute values decline. Now the wife gets it and is happy we didn’t trade up a couple years ago. Though we both wished we had sold in ‘04. Problem is I would’ve rented, she would’ve over bought. So we stayed put and thank god.
Chris’ post makes me think of the time value of money…as in how much of your future life are you willing to throw on the counter to buy something? I’ve worked out about what I earn an hour when I’m working and it’s a figure i keep in mind when i think about buying something…as in how many days, weeks, months of my life am I selling to pay for this. A quick calculation that’s been known to stop me in my tracks, even at the Apple store.
My technique is to remind myself that I basically have “x” units of 1000 dollars a year to work with after taxes, rent, food, insurance, and gas. I have no debt, but pay more in rent than I’d like.
When I look at expenses in comparison to the number of units I have (say 20 to 40 units), the idea of spending a unit on a trip to Vegas or a new plasma TV just doesn’t seem like a good idea. I’ve reached the point where I don’t really buy much of anything because, as it turns out, most stuff is just a little nicer version of what you already have.
“The cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.”
- Henry David Thoreau
Chris, you’re smarter than your peers.
My technique for not buying is to check and see how long it takes to get out here to the sticks. I figure by then I’ll have forgotten I bought it, so why bother? (Amazon books being an exception).
I am just not into over-extending my lifestyle to the point that I am house poor and a FB the minute values decline. Now the wife gets it and is happy we didn’t trade up a couple years ago.
Over the holidays I attended an event at a young relative’s newish place. It was a classic case of too much house no furniture. The house was nice, it had the standard issue open foyer, bamboo floors, granite counters, etc. But the trade-off was the young woman, husband and two little kids inhabited the place with husband’s mom. Living with mom-in-law in order to keep up with the Joneses is going way beyond the call of duty IMO.
Just be glad your wife’s mom wasn’t part of the trade-up bargain!
I am so glad to see this article. I live near Hinsdale and have been saying for years that something is wrong with the real estate market here in DuPage County, but have been shot down by naysayers at every turn. There has been a huge speculative boom in McMansions. No way can all of the people buying these monsters afford them, the demographics just don’t support it.
Our income is way above the median, yet we live in a median house well below our means. Sometimes I’ve felt like a fool as everyone around us has doubled down on houses. I’ve resisted the temptation to join them and have soldiered on. You wouldn’t believe the “keeping up with the Joneses” attitudes here. It isn’t just limited to the coasts.
Another one bites the dust in Oceanside, CA (92057)…
Here’s a foreclosure that would have sold for $400K (bad condition) to $480K (decent condition) at the peak. It’s now listed at $193,000. It’s down at least 50% AND this is the first listing I’ve seen under $200K since 2001-ish. IOW, this is 2000-2001 pricing, and getting close to break-even as a rental, IMO.
It’s a bad area, and the house would no doubt need a lot of work, but we are definitely seeing some major progress here.
BTW, you can easily ride your bike to the beach via a bike path a couple of blocks away (so it can happen in coastal area).
Oceanside is such an appealing name, for such a hanky place.
So’s Hawaiian Gardens.
I won’t defend o’side. There is a sweet part here full of lush gardens and ocean views. Fire Mt.
I would never buy here but living like a queen in a so so town is better than the alternative.
Fire Mtn. is also my favorite part of O’side.
Problem with O’side is even if you’re in a “good” enclave, the bad parts are all around you. Too much crime risk for me, though we did live there before, and were grateful for the low cost housing (under $1,000 PITI for a nice 3/2 house in a working-class neighborhood). Low housing costs and the resulting bubble (we cashed out), have kept us out of debt for 10 years.
Merrill Lynch Posts Steep 4Q Loss
http://tinyurl.com/2kou7w
Merrill Lynch & Co., the world’s largest brokerage, on Thursday posted a fourth-quarter loss of nearly $10 billion after writing down some $14.6 billion worth of investments and trades slammed by the ongoing credit crisis.
“While the firm’s earnings performance for the year is clearly unacceptable, over the last few weeks we have substantially strengthened the firm’s liquidity and balance sheet,” said John A. Thain, Merrill’s new chairman and chief executive, in a statement.
I wonder how long that strengthened liquidity and balance sheet will last.
But CNBC keeps wheeling people out that tell me to buy the financials?
Has anyone noticed how hard Ben Stein is working to destroy whatever credibility he might have had? Credibility is like your virginity. Once it’s gone, it’s gone forever. Luckily I still have both.
Hey we need bagholder, you know
go read liar’s poker by M. Lewis if u have time. It will be an eye opener on how WS works.
http://en.wikipedia.org/wiki/Liar’s_Poker
Read it and then please provide a nice summary on Wiki.
Yeah right !!!!!!!!
I’m hoping that Ben Stein’s money, follows his advice.
A good one from Liar’s Poker.
“Blowing up a customer — Successfully convincing a customer to purchase an investment product which ends up declining rapidly in value.”
If that’s true, then why is Larry Kudlow still on my tee vee?
I have also been puzzled by Stein’s columns and his interviews. I saw him on Kudlow’s show earlier this week and heard him say something to the effect of “everyone knew there was housing bubble”. My recollection is that he was a bull on all aspects of the economy and never said a word about the housing bubble. His unhinged bullishness, combined with his suggestion in his recent NY Times column that the Federal Reserve should buy stakes in banks are really puzzling. While I never felt the guy some sort of financial genius, up until the past 12-18 months I always thought he gave some good commonsense financial advice to the average person.
Yikes, sorry about the blue, it’s a blown
I can’t remember the article, but a couple months ago Ben Stein was out trying to play down the risk of the subprime debacle by claiming that the mortgage value of all homes purchased with subprime loans between 2205-2007 was some number less than $100 billion. Then he went on to claim that number was less than a fraction of 1% of the stock market. This was supposed to show us that the subprime issue was such small potatoes that we shouldn’t even bother thinking about it.
He used a similar argument to claim that the total market capitalization of all home builders was some tiny portion of the market as well.
Its too bad we don’t live in Ben Stein’s world or the government could use its stimulus package to simply buy up all the subprime loans turn them into section 8 housing, score some points with democrats, and just move on like nothing had ever happened.
Shit, what did Ben Stein say THIS time…? I saw him pimping MER back in August when the markets were starting to go haywire…
Merrill Lynch & Co., the world’s largest brokerage, on Thursday posted a fourth-quarter loss of nearly $10 billion after writing down some $14.6 billion worth of investments and trades slammed by the ongoing credit crisis.
Wonder what this will do to the market today.
I am guessing the S&P 500 will be very sticky around TxChick’s 1375 level…
http://www.marketwatch.com/Quotes/?symb=spx
I have read something to the effect that ML, while hammered early by subprime taint, actually has MUCH less total exposure than the other firms still (as of last fall) pretending to be above it all. Could this actually be the kitchen sink for ML? (For subprime, excepting all the other shoes that are in the air.)
A billion here a billion there………
Merrill Posts Second Straight Loss After $11.5 Bln Writedown
By Bradley Keoun
Jan. 17 (Bloomberg) — Merrill Lynch & Co. reported a second straight quarterly loss after writing down $11.5 billion of subprime mortgages and bonds, ousting its chief executive officer and losing almost half of its market value in 2007.
The fourth-quarter net loss of $9.83 billion, or $12.01 a share, compared with earnings of $2.35 billion, or $2.41, a year earlier, New York-based Merrill said today in a statement. Analysts were estimating the largest U.S. brokerage would post a loss of $4.82 a share, according to a survey by Bloomberg. The decline resulted in Merrill’s first full-year loss since 1989.
Don’t worry, the Chinese will save us.
Yeah, but 20 minutes after they bail us out, we’ll be hungry for more.
really did almost spit out iced tea
Every once in awhile you nail one, aladinsane.
OK, carry on.
No, the Chinese will buy us. Once that is complete, they’ll start outsourcing their manufacturing to the US, so the serfs have a job.
Every time I am reading this blog I am cracking up. My husband always wants to know what is so funny. You guys have the best humor. Thanks
Ummm…I have been saying this for years…. the market will crash like 1929, and china will swoop in in buy GE MSFT GM at $10 a share and will put all those autoworkers factory workers back to work at china wages. But you will have a house to live in rent free. China will own the 9 million mortgages Kountriewwiiide & BankahMerika now “owns”
What goes around comes around.
With all the news of all these financial institutions loosing “billions”, I want put that figure into perspective.
A billion seconds ago it was 1959.
A billion minutes ago Jesus was alive.
A billion hours ago our ancestors were living in the Stone Age.
A billion days ago no-one walked on the earth on two feet.
A billion dollars ago was only 8 hours and 20 minutes ago, at the rate our government’s spending it. (Maybe less now)
Ben, thanks for starting and keeping this blog running, it helps me prepare for the coming tsunami of trouble heading our way.
Lip
http://www.snopes.com/inboxer/trivia/billions.asp
The fourth-quarter net loss of $9.83 billion, or $12.01 a share, compared with earnings of $2.35 billion, or $2.41, a year earlier, New York-based Merrill said today in a statement
Wasn’t Citi’s 4th quarter loss also $9.83B?
How many kitchen sinks do they have at Merrill ?
Ahha………..interesting day coming up
http://www.bloomberg.com/markets/stocks/futures.html
S&P keeps trying to ralley off the 1375 that TxChic keeps talking about, but the bad news keeps saying “No soup for you!”
The guy on CNBC this morning stated that if the Dow hits 11,900 there is really no support until 11,000. He has been the most bearish of the traders they interview. I believe his name is Ben Lichtenstein.
Did they ask Ben how many puts he has?
This has been an uncommonly bearish beginning of the year. I can’t remember anything like it.
Good point. I would bet he has index puts.
if they’re not in the money, they’re not doing that well. Vix really hasn’t blown up given the severity of this selloff.
1375 is not magic. That was the area of the triple bottom. If it fails, it fails and you have a different ballgame. That’s all.
I see no reason that liquidity injections cannot be used to support the S&P 500 at 1375 or whatever other level is desired, provided that other asset prices are unconstrained (including the FOREX value of the $US). I don’t believe it is possible to control all of the ($US) prices all of the time, but it surely is possible to control some of the prices most of the time.
1375 or bust…
http://www.marketwatch.com/Quotes/?symb=spx
Will history repeat itself? Last time the interest rate drop was on a Friday option expiration day and pretty much blow all the shorts out of water with 300(?) DJ rally
or maybe it will do the April 14, 2000 thing
What happened on April 14, 2000. I see the monster red candle but what set it off? Thanks.
All these quotes from Bloomberg makes me think Bloomberg will throw his hat into the presidential ring and run as an independent. He certainly has enough money and needs no online fundraising group, past political heros, or hollywood star to tout his success.
Tell him to give his money to Ron Paul.
sp 500 doesn’t look good. -5.0
http://new.quote.com/us/futures/chart.action?s=SP+H8&ref=60
“The Trend is Your Friend” has been my mantra for the last 15 years, and has saved me from reacting to news headlines and stock gurus that fight the charts. Thanks for the heads-up on SP500 today
Was the trend your friend in October of ‘07? We were beginning to short then.
Actually I bought Pulte (PHM) puts Jan 08 when stock was 45 in Nov 2006, and bailed in Oct 2007 with a huge profit. Had never bet on a stock going down before, but the chart and Ben’s Blog yelled “going down”. The trend was definitely my friend on this handsome return.
That chart looks glued to 1375 (give or take a point). What were you trying to show?
Fiscal Stimulus Folly
“In the best of times, most members of Congress are to fiscal irresponsibility what alcoholics are to the bottle — unable to resist even though they know they should. So imagine how our leaders will behave once they are told that budgetary indiscipline is no longer a vice but a virtue.”
“We may never reap the benefits of a fiscal stimulus, if it comes to pass. But rest assured, we’ll be paying the price for years to come.”
http://www.realclearpolitics.com/articles/2008/01/fiscal_stimulus_folly.html
The article goes on to talk about the Dems and their policies this election year. Now that they’re running the show, a balanced budget has absolutely no chance of ever occurring. And the Republicans are hardly any better.
Therefore, we should start a movement to “link” the retirement programs for the members of Congress to a balanced budget. In effect, they can have a retirement funding next year if our budget is in the black this year.
Sounds like more of a fistful stimulus.
I would argue that when the controlled both houses of Congress and the White House, the Republicans were considerably worse. The level of pork spent in vulnerable districts to ensure a “permanant majority,” steamrolled over any sense fiscal discipline.
Which party was in power when the budget was last balanced?
budget was in the black in 1998. But, if I named the party, the post is blocked…
Well, neither party had total control. The standard argument goes something like this:
There was a stock market bubble, increasing revenues. But because power was split, the Republicans couldn’t cut taxes on the rich, and the Democrats couldn’t give it away to those underserving poor.
Linking balanced budgets to pensions is a bad idea. Then if a deficit was required for some reason (national emergency etc) they would have no incentive to govern properly.
No I think the American people just need to wake up and elect people who serve the public interests instead of “x” lobby instead of voting for something that “sounds” good.
Bank of New York Mellon’s 4Q Profit Drops 68 Percent From Exposure to Debt Obligations
http://tinyurl.com/3b6nbt
Even the little guys are feeling the crunch.
Bernanke Aims to Avoid Greenspan Stimulous “Regret”
http://www.bloomberg.com/apps/news?pid=20601087&sid=axNV4KGulqxI&
Sounds like an economic stimulus package is all but a given. I plan to write my congress people about it. Since there is pretty much nothing that can be done to avoid it, we might as well try to make it useful. Therefore, I will be making my case for a massive infrastructure modernization plan. It’s crumbling and needs to be rebuilt. The American Society of Civil Engineers has a special report in their magazine this month. It’s very thorough and in-depth and points out many things that need serious improvement. Replace the matching funds requirements (the states are broke…) with even more transparency than Obama’s law required and the money would start flowing to all the middle class engineers and construction workers and suppliers, etc. Focus on rebuilding instead of new so we don’t get more crappy sprawl, etc.
I think this is a great idea, Brian. If we’re going to force future generations into debt via deficit spending, at least we should use that spending for things that will pay dividends in the future.
Spending money on energy independence would be a better plan.
Absolutely, QUESTION: What if we spent the 800 billion not on a war to secure our energy source but to secure our energy independence? Energy is a strategic national interest so there are 2 ways in which to secure this interest. I thought America was founded on Freedom. Anyone else have thoughts on this?
Totally agree that infrastructure improvements and energy development would be the best uses for any kind of “stimulus”.
WTH…they’re talking about food stamps and increased unemployment benfits!?!?!? They’re nuts.
If we’re going to spend money, at least do something productive with it. Another WPA-type program is the least of all evils.
japan did that in the 90s. guess what happened. their national debt jumped to more than 100% of gdp.
Evildoc’s observations about the function of society. Two attempts to buy food (one at Wegman’s Supermarket- a rather well run upstate NY chain and one at Subway in the Mall). Syracuse NY. Dunno if this yields insight or not into the great jobs and great folks who staff ‘em, but no doubt they are the future and will save the housing market
So, i stop at Wegman’s to grab lunch at their usually well run prepared foods section. $1.25 bottled water. $4.99 frsh strawberries and- from the mediterranean bar (think it was called that) a small container full of my hand chosen olives, stuffed grape leaves and fresh mozzerella. At $6.99/lb this container usually runs around $5-6 by weight.
I reach the checkout. The girl begins to swipe hand scanner on the strawberries. It fails to register. with blank stare she continues to swipe the scanner a total of 18 times during a 2+ minute period. Finally, i stop her and suggest she enter the price or the product code. “Oh, we cannot just enter price. I will try the product code”. She hand types the maybe 20 digit number 5 times each time failing to register the proper code.
Finally she calls over another check out person. She scans the strawberries 8 times and manages to get the thing to register. Yay.
Meanwhile she’d already scanned in the fresh olive container and the water. SHe announces. “wheh. Finally done. Your total is $22″. Keep in mind this is for $6.25 for strawberries and water and for the olives/etc that usually run $6 in this size.
I politely and quietly say, “are you really sure about that?”.
“Yes, the cash register says $22″
I reply, “well do you really think there those Olives n’ Cheese in the little container run $22??”
“That’s what it says on the cash register”.
“You know where you erred? “, says evil doc
“huh?”
“You scanned in the code for the olives but you have all three items including my large bottle of water sitting on the scale built into the checkout tray”, says I.
She looks dazed, but then offers to rescan the olives, which she proceeds to do and announces i have a huge weight in olives at which point i inform her she STILL has the water and strawberries on the scale.
Finally, she offer to void the sale and start over. She picks up the strawberries (oy vey) and TRIES to scan them in. You can guess where this is going. I wish her a nice day and leave the mess in front of her, cautioning the 8 customers stacked up behind me to try another line.
Very next day i stop at Subway in Carousel mall. Toasted Tuna sub with two cheeses n’ sweet onion sauce. Freshly made and smells great. Then i hit checkout.
Customer - 25 ish year old woman- two slots ahead of me is arguing and fearful seeming, going at it with the checkout girl. Her VISA card to pay for the $7 sub sandwhich has been rejected. Who they heck buys fast food $7 with VISA (no not an airline card i’ll bet)? But fine. The card did not fail to register, it was rejected. The girl is encouraged to keep trying as the customer has but $4 in cash. After the 15th rejection i point out to the other counter girl that my sandwich is growing cold. Nothing i can do, she apologizes. I hear, “My card cannot be rejected. This is the good one! It must be an error”. Few more minutes, i offer to pay my sandwich rounded up to nearest dollar. They can keep change and enter it later. Nope. Cannot do that. Finally i wander away leaving the Subway girls with my sandwich on their counter. At least Sbarro has some tasty ziti as i rush off to errands.
No doubt all this means we are ready to keep median housing at $275k or whatever in the USA.
Annoying and disheartening.
cheers
evildoc
Thanks for the laughs, evildoc!
evildoc…
A few years ago my wife and I went to a $3 matinee, and I handed $21 to the young adult that was selling tickets, and she broke out a calculator to figure out how much to give us back.
I consider myself poor at arithmatic, but sometimes when I was waiting in line to buy something, I’d calculate the 5% tax on my purchase and count out exact change. The clerk would often have a funny look when I handed them exact change before they had rung it up.
My wife and I went to Paris for her 30th birthday a few weeks ago. There is a little post office up in the Eiffel Tower, so I wanted to send a post card home with a postmark from “Le Tour Eiffel” with her birthday as the date so she could keep it in her scrapbook stuff. Get up to the gift shop, pick out two nice post cards and try to pay. The teenager at the register tells me she can’t make change for my 20 Euro bill. OK, fine. I walk over to the post office and buy the stamps first. The middle-aged man is happy to make change. I walk back over to the gift shop and the teenager rings me up again. The total is 1.60 Euro. I look at what I’ve got in my hand and give her 2.10 Euro. Oh boy, that was a mistake. She looks incredibly confused. And then looks at me with a “stupid American can’t even count” look on her face. At this point, I’m starting to get worried - am I mistaken? Is there no 50 cent piece in the Euro zone? The girl rolls her eyes, types 2.10 into the register, and then stares in disbelief at the result. As if the register must have done the math wrong or something.
So don’t feel bad, the United States is not the only country where young people can’t do math.
PS - there is a Euro 50 cent coin.
A few days ago, a girl at the health foods store didn’t know that there were two dimes and a nickel in a quarter. My food totaled $7.10. I gave her a ten and a quarter. She brought out a caculator to figure out how much change to give me back. Unbelieveable!
It’s the dumbing down of America
Thanks for the stories. A couple of things, though: A debit card carries a Visa or Mastercard logo. I use mine for almost everything as it’s so much more convenient than cash. Every once in a while though, I’ll find some establishment where the card just won’t work. Doesn’t mean that there’s no cash in the bank, just means there’s a glitch. The first couple of times this happened I was baffled as well.
It is quite so that surprises happen. Card wrongly blocked. Electronic glitch (usually fails to register, not result in rejection), unexpectedly cash poor state. I should be more tolerant
Still, the note of fear in her voice…
regards
david
I use my debit card for things like that all the time. It usually saves time for the line because they just scan it and you go (no waiting while they try to figure out the change).
David, you real point in all this story is how much time you waste with these people and how little they care. I was at Sears lately to get a 12v cordless drill on sale for $24.99. Even included a second battery. 60% off…
I ordered online, one hour after ordering I get a SMS phone message that my order is ready for pickup. Drive 30 miles to town… go for it… and it isn’t there. employees spend 20 minutes can’t find it, I ask to talk to manager. I say, well, substitute the 14.4 or something, as you told me it was ready. Nope. “We can call you in 3 days when they come in”.
Oh yha, call me AGAIN, so I drive in to find you don’t have it. It is a $25 purchase, how much is your and my time worth here?
I decided I had to make a stand. While waiting on her to do something more… my wife comes up and says “hey, over here in the locked cabinet is the drill you ordered” And sure enough, there it was. Completely visible.
Oh yha, they also have a promise that if your order isn’t ready in 5 minutes or less you get $5. So I have to ASK the manager for this… and she goes and gets it (no appology) and it really is nothing more than a $5 off $50 purchase coupon. Worthless. ANYONE could download a $5 off $5 coupon from Sears this month on their website. Insult to injury.
you were very patient i would have lost it
remember when you actually had to ring up each item individually pre bar coding??
this generation of 20-somethings leaves alot to be desired
I notice a few of those dazed and confused types at the supermarket, and then I encounter a clerk like the pony-tailed 18-year-old guy clerk I went to at Giant. I expected the worst because I had one of those “manager special discount” items in hand.
So much for prejudice: As expected, the thing didn’t ring up right. The clerk took one look at it, voided, re-entered the item number manually lickety-split, came out wrong price, voided, and he manually put just the price in. All in 15 seconds. Nice job! And he whipped through the rest of the stuff as fast as the best cashiers I’ve ever seen. (Right, he won’t be there long. I’d hire him off of ‘em in a second if I had a spot I could put him!)
And as for using credit for groceries and lunch, it’s just amazing to know that people walk around with only $4 in their pocket.
Personally, I feel naked without $50 or more. “But what if you get robbed, or lose your wallet?” Heck, then $50 is the least of my worries, compared to getting the credit cards cancelled and reissued, redoing the auto-charge for the gym and newspaper subscriptions that use the cards, and standing in line at the DMV to get a new drivers license.
Expect people to be walking around slightly dazed and slightly confused for the next few years, with 8% of their minds engaged in worry about finances and only another 2% free to control current activity. I feel it happening to me and I’m not even broke or out on a limb.
For some people, those worry cells haven’t been used for awhile, so it will take extra effort to get warmed up and worrying on all cylinders.
Carrying around more usually results in it being spent quickly. And it does go quickly. In a snap.
Socially, studies have shown that men usually walk around with a few hundred dollars or so at all times. And women, socially, it is studied, only walk around with a twenty or two.
I don’t remember why that study proved this but it usually holds true.
Something we have all been socialized to do or have seen our fathers and mothers have the equivalent in wallets/pockets.
As a 28 year old myself, I cringe at these anecdotes from the incompetence of my generation.
All I can say in my defense is that I can count change without a calculator and I don’t use credit cards for any reason other than a major purchase to get the air miles.
Not all of us 80’s babies are functioning retards…
Lots of smart people left Syracuse long ago. They were the ones who were smart enough to go to out-of-region colleges and find their first job in another city. (did that myself.) Syracuse/Buffalo lost 10% of population since 1990. But the area is still gorgeous. And I still contend that somebody they could melt their snow and sell it as water to the Southwest.
Who they heck buys fast food $7 with VISA
Credit cards and debit cards have been trying to break into the under-$20 market for YEARS. Watch the actors in the commercials. They aren’t rich execs throwing down for diamonds. They are pretty young things swiping Big Macs McDonald’s and $10 T-shirts at Hot Topic. The new generation doesn’t know about the days when you needed a $20 minimum to use credit.
Even safeway/lucky is taking credit card for grocery.
I use my debit card for groceries. I don’t usually carry enough cash for a big grocery trip and anything beats writing a check. Nothing tics me more than the woman in front of me digging around for a pen and a big wallet/check book thing and then, for some reason, waiting until the whole order is rung up to even start writing the date. Then, she’ll write really slowly, in big loopy letters, “S-A-F-E-W-A-Y”, etc. and then carefully record the transaction in the little register sloowwwllly while I’m standing there impatiently. *rant off*
And to top it all, this happens in the express lane, right? I think that same lady hangs out at every grocery store in Tampa.
Oh and btw, that’s when $20 bought a lot more. Unless you spawned a litter of rugrats, it would not have been possible to spend $20 for movie tickets, so it was cash only.
I don’t like using my debit card because they sell that information to Accenture (or whoever) for marketers to buy. I like to walk in, plunk down cash, and nobody knows who I am. But I don’t have the time to go to the ATM each day and I don’t like to carry around $100 in cash, which is about what I go through in a week — and that’s just in food and toothpaste perhaps a pack of socks. ya gotta have the debit card now.
Since oxide brought up the privacy issue with credit cards…I recently walked away from a purchase at a jewelry store. The clerk refused the transaction because I would not divulge my name, address, & phone number despite the fact that I was paying cash. Their loss!
Dunno if i’m smart, but Syracuse has made me probably the best compensated Hospitalist in all NY. Downstate pays far worse, despite living costs down there being so high. THe hospital system up here is excellent. Four seasons not a bad thing. LARGE houses $200k and little ones $60k. Me… i rent, despite the grand hospital job. $850/month gets me a 3/2 1400 ft-2 with all utilitieis including aircon tossed in
the banks want you to use your debit card for small purchases. they really are hoping you will overdraft so they can hit you with a $39 NSF charge. and the young women who asked her card to be run 3 times, if it was a debit card she just was charged $117 in NSF fees for a $7 sandwich
I use my debit card for groceries all the time. For me, it’s a matter of convenience. But then, I’m pretty careful with my money and accounts, and I have never ever had an overdraft, even when I was young and flat broke. It’s just a matter of keeping track of your money.
Our friend just graduated college and scored a job in Syracuse. He is moving up there this summer I guess. He was able to get a better offer there than here in more expensive Norfolk/Newport News. $65K starting out of college, not too shabby.
I don’t think checkoutgirl at Wegmans was completely at fault. They are always asked scan (& avoid entering price manually) and if the damn system has glitches it is not their fault.
The checkout people take a lot of sh!t from the arrogant customers. I wish customers wouldn’t give them unnecessary grief. I was at local grocery store yesterday. The person in the front was holding up our line because she wanted to use the $1.50 off coupon on a cereal box that was already part of ‘buy 1 get 1 free’ deal from the store. The checkout girl was saying that she couldn’t scan the coupon because of the in-store deal. The abusive customer was so fu$$ing arrogant. Made the check out girl of Asian origin made feel so small with all kinds of insults. I was quite sad.
Valid point though i do observe an “apples and oranges” element. I was not asking for inappropriate deal. I pointed out to her (she should sort of… know?) she had options beyond the scanner. I pointed out to her that she was charging 3 items to the weight based purchase of a single item… and she just didn’t get it.
Customers might be abusive and arrogant and inappropriate in life. They, too, are part of the problem.
regards
evil
she had options beyond the scanner
Indeed! But the lazy way is to just try the same routine she already knows. OK, sometimes there are rules that employees just HAVE to follow. Still, a motivated worker will push the limits to get the customer what he needs.
I worked at a rigid firm in my younger years where we put our customers through way too much tedium. They got aggravated, and some took it out on us. Fair enough, why do I work at such a shite company anyway! Seriously! I was putting myself up as a rep for this dirtball firm, and after a dozen customers berated me, I got the point and moved on — to a better job, I might add. In most cities these days, it’s not like you’re locked into a low level job at one place, especially in the DC area.
“But the lazy way is to just try the same routine she already knows.”
I call it the definition of insanity: Doing the same thing over and over again and expecting different results!!
I just recently stopped working part time at Wegman’s here in the Philly Burbs, at the level their paying full time employees, your story doesn’t shock me and reminds of similar problems.
After working there for about a year, I was left puzzled as to how they were on the “Top Companies To Work For” list for 10 years.
Evildoc, when reading your post, my first thought was, wish I could get good stuff to eat like that out here.
My final thought was, the poor guy/gal’s gonna starve to death at this rate. LOL.
typo. I asked if the olives ran $16, not $22. sorry if made the numbers confusing.
Don’t worry Evil Doc. I’ve got 101 of them in my classroom that will make those ladies look like bloody Einsteins.
Some of you may remember awhile back I posted that my landlord’s children were receiving free lunch while living in a million dollar home and collecting rent on our home. I haven’t reported this as they are some very scary people. I keep thinking in due time they will get caught.
I’m just curious if anyone knows if there has been any organized crime involved in all this fraud. The folks that I’m speaking of have “family meetings” that last for about an hour with 15 or more black mercedes every Sunday. They also have a new car every few months. He isn’t working, was a sleazy mortgage broker, but leaves town every few weeks. They spend money like it’s going out of style on furnishings and landscaping. They take lavish vacations. These are the same folks that freaked when we tried to break our lease early. In 2003 they moved to Florida from NY or NJ and could only afford a 350,000 home. I just can’t help but wonder what other illegal activities they are involved in. Organized crime doesn’t seem so far fetched as he isn’t smart enough to come up with all this money and or schemes on his own.
There was a guy like this in Buffalo when I was growing up. Had the contract to replace sewer pipes, and no he wasn’t Italian-surnamed. I know his kids (8) at the local Skating Club. He had a statue of the Virgin on his portico and was an active donor to Catholic Charities. Bilked the city for millions, and escaped to Boynton Beach Florida. Got into some hot water there, and moved to Westchester, where he did some deals with the District Attorney’s crooked husband. Guy has to be in his 80s now…never did jail time. Beware these folks…they are often more politically connected and protected than you can imagine.
I’d like to think that true professionals would shy away from notarized crime.
Can Kimball Hill save itself?
http://www.dailyherald.com/story/?id=115346
Florida finally grows a pair and suspends Allstate Insurance from doing ANY business in the state. Been a long time coming. Should have been done decades ago. If more government officials at all levels would do this, we’d have a lot less problems.
http://tampabay.bizjournals.com/tampabay/stories/2008/01/14/daily22.html
You have to wonder about the survivability of many insurance firms, as they’ve been pounded relentlessly by Mother Nature over the past decade, and I think she’s got more tricks up her sleeve.
Homeowner’s insurance is probably not viable business and is only worthwhile if offset by auto and life, etc. States will probably require insurance companies to offer homeowners if they wish to peddle auto and life. Florida contemplated this move years ago, but never went ahead with it. Probably will now.
Actually Allstate has been barred from writing any new automobile policies in Florida. Current policyholders with them won’t be affected.
They had better be darn sure that Allstate will not just use this situation to pick up their blocks and go home. I know that my insurance company would love to get out of Florida. If the Florida politicians had such a good hand, they would have already made headway on the insurance issue.
Yeah, wouldn’t surprise me if Citizens soon becomes the only way to get ANY kind of insurance, auto, homeowners, renters, ect. in Florida.
Anyone watching Cramer right now? Holy S**T!!
what is he ranting about? I found him entertaining but won’t touch his advices on a 10 foot pole.
He just screamed that most of the big banks financials are pure fiction, perpetuated by Wall Street guys that all play golf together. He said that it’s such fiction it should be written by Hemingway, etc. He said that the monoline insurers have absolutely no money to cover the obligations the big banks are claiming in their financials. He said that the justice department and the SEC should immediately investigate these dealings. He said nobody should buy financials except for perhaps Goldman and a few others. He said what so many of us have been wanting to hear, but everyone in the MSM is scared to say. My opinion of Cramer just went from negative to positive in a 10-minute span.
You aren’t making this up, are you? (I am not willing to pay any direct attention to Cramer, so I will have to take your word for it…)
Please post a YouTube link if one comes available.
It does sound unbelievable, but maybe he tells the truth every now and then. Remember when he said don’t buy a house right now, you’ll lose money?
Left out the best part - he said that the banks had to choose between selling themselves to the Communists, or the TERRORISTS. He said that at least twice. I almost fell out of my chair, it was great. I’m not making any of this up. I’ll let you guys find your own YouTube link, I already have a job.
And here it is.
http://www.cnbc.com/id/22706231
It does sound unbelievable, but maybe he tells the truth every now and then.
Well he is a philly boy - can’t keep the no BS gene suppressed forever. It’ll be back in the box by tonite, though. He has to please his corporate masters.
Cramer, unfortunately, is a moron who could not cut it managing the hedge fund. While he was smart enough to cut right around the time when making money for funds became difficult, he does not get that neither economy nor businesses can change on the spot to accomodate “new reality” the way someone can change long position into short or short into long. I find it absolutely amazing that someone who worked with these banks before would -ever- believe their finances were in order. Hell, 4% is the acceptable accounting error!
right and if he’d made those comments while you could still avoid losses or play the downside? Then it would have been worth something. He’s the master of the obvious.
Also the master of cyclical trend reinforcement.
Yep! Those kind of opportunists know it’s perfectly okay not to be the first to get something right - but under no circumstances can they be the last to get something wrong.
I generally don’t like tooting my own horn but I distinctly recall posting here last spring that brokers such as Bear and USB might be good long dated put candidates based on the notion of being forced to mark to market. That seemed pretty obvious at the time. Wish someone would pay me what Cramer makes.
I generally don’t like tooting my own horn
Are you the same txchick who made 50% trading last year, and gave it all away to the less fortunate?
Emerging noncontainment
Emerging Markets Feel Drag of U.S.
By Joanna Slater in New York and Antonio Regalado in São Paulo, Brazil
Word Count: 809 | Companies Featured in This Article: Kohl’s
To escape woes in the U.S., investors have piled into shares in fast-growing economies like China, India and Brazil. Now it looks like these markets might not offer a hoped-for refuge.
http://online.wsj.com/article/SB120053579654996387.html?mod=todays_us_nonsub_money_and_investing
The emerging market Indexes feel the drag! The indexes are made up of 25 -40% financials which are getting creamed.
An American investor in the S&P500 would not look so stupid if they had shorted the financial stocks. They would have a huge return for the last year.
The same is true of emerging markets - banks are the kiss of death.
It is difficult to invest in individual stocks in many emerging markets - so investors are stuck with funds that are heavy in banks.
Hoz, are you buying any more EEV right now? Or waiting?
EEV is one of my main hedges and am still long.
Are you buying here or do you think it will pull back for better buying opportunities?
Hoz —
Thinking of gently nudging my aging father back into the stock market later this year (after the current route has played out a bit more). Do you have any suggestions for passive portfolio strategies that would be suitable for providing long-term stock market exposure with international diversification?
Here’s a question for all of you traders out there: What do you think of Bob Brinker? My BIL is a diehard follower and says BB suggests that the S&P in the low 1400s or under is a steal of a buy. I disagree. Thoughts?
Bob Brinker is about as useful as Jim Cramer.
ask the people he put into the qqqq at 50 almost 8 years ago
I also think the market is buyable with the caveat that there could be more downside before the excess is washed out. The bullish%s on point and figure at are levels last seen in Oct 2002.
I called his radio show in 2005 and tore him a new ass for his wall of denial regarding housing. A few callers would ask his opinion on housing and he was saying there is no bubble and all is well.
He’s way too conventional and doesn’t seem to recognise cycles and bubble situations at all. Those are the times to “pull back” from bubble exposure, and he just refuses to acknowledge that. If someone is investing steadily for the long term (e.g. decades) then fine, but his advice does nothing to discourage people from jumping into an obviously overheated market and then taking a huge hit a year or two later.
I have given over 100 bad opinions on this clown over the years on this blog!
Some thoughts on Fiat Currency, Gold, and Real Estate:
I know that there are many on this blog that are very negative toward Gold even though the U.S. Constitution defines money as Gold and Silver. Perhaps the best way to view Gold today is as a Standard by which to value the US Dollar as well as other currencies.
First some history. Gold has been used as a medium of exchange for almost 6000 years of recorded history, compare that to the average life of fiat currencies. The only guarantee with fiat currencies is that they will, at some point reach their intrinsic value (zero), as history has shown time and again. Two thousand years ago during the Roman Empire, the government of Rome pegged the value of 1 oz. of gold at 100 loaves of baked bread. Will 1 oz. of gold still buy 100 loaves of baked bread today, probably more like 400 loaves. Compare that to the purchasing power of fiat currency over the past 20, 100, or 1000 years. The USD has lost 97 percent of its purchasing power since the Federal Reserve was created in 1913. As an example, after I left the military in late 1969, I purchased a new 1970 Dodge Challenger. The drive-out cost was $2,800. Compare that to the cost today for a new automobile today. I purchased my first home in late 1970. It was a 22 year old 2-1-1 house in good condition for $7,800, including closing costs. By using these examples we are able to determine that the value of currencies (purchasing power) is falling against other assets including the Standard (gold).
Yes, I know in 1980 gold fell from $850 to $250 per oz. as it was bid up during a bubble. There are many more factors involved but not enough time to discuss those issues here. My question is why those people who are negative on gold would use the one month bubble top in 1980 to prove gold does not hold its value. WTF, there are 6,000 years of recorded history where gold HAS retained its value, therefore those quoting the bubble price in 1980 as their proof are unaware of history or they believe the Media version of history.
In defense of the USD, it does have the full “Faith and Credit” of the U.S. Government backing it. “Faith”, I have no faith in the USG and soon neither will the remainder of the world. “Credit”, the USG is insolvent and even with the power to print, can only accomplish a greater devaluation of the USD.
Therefore, it is a suggestion that those negative on gold may still wish to use it as a Standard to compare the value of consumer goods, oil, and Real Estate to determine the worth of those items verses currencies. Bottom-line, use gold as a tool to determine assessment worth, even if you chose not to invest in the time-proven investment that has no counter-party risk. The intrinsic value of gold is in itself, with no default possible.
I truly believe that in the foreseeable future investors will be much more concerned about retaining their capital, verses a return on capital.
Got Gold?
You’d probably count me as one of the gold bashers, but I think that it’s likely to go up significantly before it peaks. I wouldn’t be surprised to see it double if the economy gets as bad as I worry it might. That said, I think that it is unlikely to stay at those lofty heights anymore than it stayed at the heights that it reached in 1980. Buy low and sell high is a great way to make money. Buy high and try to sell higher can be a good strategy. Buy high and hold on forever rarely works, and this is the typical strategy of “goldbugs.”
Historicly, as an ultimate store of value, land has been considered superior to gold, it’s just less liquid, it even returns dividends. (actual or imputed rents) And yet this website exists because many of us are convinced tha RE is currently overpriced. Like anything else, the price of gold (or dollars if you prefer) is determined by supply and demand. The total supply of gold changes very little, but the demand varies considerably: mostly driven by those who fear hyperinflation or economic collapse. It’s the small number of people who are VERY VERY afraid that drive the price. Moderate aggregate shifts in perception of the economy can drive LARGE shifts in the price of gold. When you shift a bell curve, the far ends can have large percentage shifts, just as we are seeing in foreclosure stats.
Fiat currenencies ore ok if the issuer sticks to proper fundamentals. The past history of them shows that people are not very good at sticking to these fundamentals. The full faith & credit of the govenment is fine until people lose faith in the govenment. The dishonesty with inflation calcs, GDP numbers, unemployment stats, etc has got a lot of peoples faith wavering. Once the huge deficit of the govt and many banks, businesses, and households has sunk in, then they realize that the interest cannot be paid back without expanding the money supply, who will be left to borrow more money into existence?
I’m a bearish goldbug, if such a thing exists. In our household, gold is only one thing: a form of savings that offers no interest, no upside or downside, and no long or short term viability as anything but the form of savings.
I refuse, generally, to put my money in interest-bearing accounts. Why? Because it holds up what I consider the immoral fractional-reserve banking system. Stick money in a money market account, and the bank uses that short term investment to pad long term investments. Google commercial paper for proof. Stick money in a checking account and the bank loans it out with a small reserve, not even 10% in many cases. No thanks.
We’re hoarders in our house. If we want something (a house, a car, a vacation), we hoard during the boom years, and buy during the recessions. I love hoarding, because the experts and common man believe that hoarding our cash (dollars, gold ounces, euros, etc) means we lose money to inflationary pressures. Yet this is One Big Lie. Hoarding is what many elite wealthy people I know do (one friend in his 80s has been known to mattress hundreds of thousands of dollars during boom year with massive inflation).
We sold our home in 2004, just shy of peak. We owned it for cash, and took the cash out. I bought dollars, euros and gold. We hoarded for 3 years, eyeballing another home we’ve wanted for 12 years. When the owners were issued a pre-foreclosure notice, we jumped. Short-sale, cash, 60% off peak price in the area. Yes, my dollars and euros lost “value” due to government inflation, but by knowing what we wanted, and our price, we actually made money on hoarding.
I love gold. My wife does, too. When I met her, she was a 10K-14K girl, like most white folks. I started buying her 22K and 24K jewelry. We just got back from India and Dubai (16 day trip), and we bought a ton of 22K-24K jewelry. I refuse to pay more than $20-$40 for labor for jewelry (800-1600 Rupees in India). I think we came back with US$6000 in gold jewelry (22K and 24K), of which the labor cost was well under $600 (about 10%) for all the pieces. She wears it so it is jewelry, but she knows that to me it is a form of savings.
All our gold is valued at the bottom price of the year’s cost it was bought it. I bought gold at $280 per ounce, and on our books it is valued at that price. When I bought gold at $350 -> $500 in a year, I book it at $350. My gold hoardings are probably undervalued by 60%, but it’s OK for me, since I am prepared for a downswing, as well as an upswing.
Our vacation to Paris was great because of the Euros we were hoarding. We visited Paris for 4 days on a weak dollar, never meeting a single U.S. tourist in one single location. Our hotel, right on Victor Hugo Ave 1 block from the Arc d’Triomph, was mostly Asians and a rare few Brits. Surprise, surprise.
Gold will always be my favorite form of savings. It extricates me from having to support fiat fractional reserve banking investments, and it keeps me from overspending. Dollars, Euros, savings accounts etc can all be easily spent worthlessly — they’re too liquid. Gold, though, is very liquid, but the sheer weight and beauty of it make it hard for me to want to spend. If I need to sell it, I can get 5% under spot at one of 3 dozen pawn shops or gold dealers in my tri-county region. When I want to buy some, I can usually buy gold for 10-15% under spot by running ads in the paper or on craigslist. People are desperate. I recently bought a family’s gold (about $2000 worth) for $1600 (20% below spot), even though I told them they can sell it for more at a pawn shop. They were desperate and didn’t want to be seen selling their jewelry, so I grabbed it. 7 days on eBay got me $2300 for it, and I used the cash to by 99.99% coins.
Gold is easy to store, since a basketball size of it would be about a ton of gold, and be worth millions of dollars. Impossible for me to ever own more gold than I can easily travel with or hide. I keep almost no gold at home, so I’m not too concerned with people robbing me.
That being said, I don’t believe gold is a good investment, or an investment at all. It is just an asset I hold to keep me from overspending, and to protect my interests only in bad times ahead, if they ever come. If gold fell to $400 an ounce US, I’d have no concerns at all, since my average value of all my holdings is set to $483 as of today. A 20% loss won’t worry me. If I had to sell everything at $900 right now, I’d actually be twice as rich as my book value lists.
In 2008, we’re going to try to increase our hold on gold by at least 15%. We have nothing we need. I just spent $2000 to better insulate my 100 year old home, and our heating bill was 70% lower than our neighbors! The house is automated so the lights turn down, room vents turn off if they’re not being used and the door is closed, and we don’t use our fridge for most items so it’s set to its warmest setting (we prefer fresh foods that are consumed within a few days).
Most Americans are sheep. They honestly think the stock market is a good return on investment. Unless you’re day-trading properly, I think the stock market is a fool’s game. I do have a few CDs that I roll over each month (usually 12 month CDs) but that’s only something I do because I’ve done it since I was 17. The house is paid off, the cars are paid off, and we increase the deductible on all our insurance policies each year (we’re at max on vehicle and max on health but trying to find a new provider) as we sock away more cash that is hoarded.
My biggest fear is death and severe illness, because it will rob me of the life I actually LOVE to live every day. I’d love a kid, too, but so far God hasn’t granted us that wish. Maybe this summer though, the wife is acting really hormonal, haha.
I think we came back with US$6000 in gold jewelry (22K and 24K), of which the labor cost was well under $600 (about 10%) for all the pieces. She wears it so it is jewelry, but she knows that to me it is a form of savings.
How much were the customs fees on that?
Good stuff. Thanks for taking the time to write it.
Tightening noose of building inflationary pressures leaves little room for policy easing…
Consumer prices up 4.1% last year
Costs for energy, food jump most since 1990
By Martin Crutsinger
ASSOCIATED PRESS
January 17, 2008
http://www.signonsandiego.com/uniontrib/20080117/news_1b17economy.html
I have a feeling today will offer a great chance to buy the dip! In gold, that is…
January 17, 2008 10:38 A.M.EST
BULLETIN
Stocks sinking as Ben talks
Market also takes a hit on gloomy Philly data
Wall Street gives up earlier gains as the Fed chief speaks to Congress and Philadelphia data comes in worse than feared.
• Stocks in the spotlight|Tech weakness is misleading (24/7 Wall St.)
• Gold might correct before push to $1,000
Slow going for Trump resort
Two years after a high-profile sales event, Baja project stuck in red tape, slow market
By Sandra Dibble
STAFF WRITER
January 17, 2008
http://www.signonsandiego.com/uniontrib/20080117/news_1b17trump.html
Trump has devalued his image by lending his names to so much thing. What’s next? toilet paper?
Howzabout “Trump street tacos”?
Housing starts drop by more than expected…
Housing Starts Plunge 14%, Marking Lowest Level Since 1991
By Jeff Bater
Word Count: 862
WASHINGTON — Home construction plunged in December, tumbling to its lowest point in 16 years, while a sign of future groundbreakings also dropped sharply.
Housing starts decreased 14% to a seasonally adjusted 1.006 million annual rate, after falling 7.9% in November to 1.173 million, the Commerce Department said Thursday. Originally, Commerce reported November starts 3.7% lower at 1.187 million.
The big decline surprised Wall Street. The median forecast of economists surveyed by Dow Jones Newswires was a 5.0% drop to a 1.130 million annual rate. The level of 1.006 million was the lowest since 996,000 in May 1991.
http://online.wsj.com/article/SB120057592779297397.html?mod=hps_us_whats_news
Since starts are down to their lowest level since 1991, a bottom is obviously going to be reached by later this year, right???
The other issue is how long construction will stay at the bottom once it is reached. It is too early to contemplate this for the time being, as starts are still in excess of current demand, indicating the inventory pyre continues to grow.
well, at least this news was good for a 1.5% jump of joy in the Dutch stock index… maybe a 1% rate cut is now in the bag?
Look at the revision for Nov. 3.7%/1.187 becomes 7.9%/1.173 - that ain’t even close. Looks like we need to disregard every number we hear for about sixty days until the truth comes out.
“Fiscal Stimulus Folly”
http://tinyurl.com/2z7wuq
We’re at 128 comments and the Californians haven’t even stumbled to the coffee pot yet. This poor blog is going to get growing pains. A far cry from 2005, eh?
Which brings up an interesting weekend talk possibility, Ben. How about posting links to some of the early posts and comments from this blog that seem interesting now that we can view them in 20/20 hindsight? Both stuff where we were ahead of the curve, and stuff where we made bad predictions. It would be interesting to see.
Deal Fees Under Fire Amid Mortgage Crisis
By Liam Pleven and Susanne Craig
Word Count: 2,208 | Companies Featured in This Article: Merrill Lynch, Citigroup, Credit Suisse, Moody’s, Standard & Poor
To understand a root cause of the financial crisis shaking global markets, take a look at Kevin Schmidt’s paycheck.
Mr. Schmidt arranges mortgages in Shreveport, La. He earns his money upfront, taking a percentage of each loan once papers are signed. “We don’t get paid unless we can say YES” to loans, his firm’s Web site says.
The problem, which Mr. Schmidt says he sees clearly: Brokers have little incentive to say “no” to someone seeking a loan. If a borrower defaults several months later — as Americans increasingly are doing — it’s someone else’s problem.
http://online.wsj.com/article/SB120053371948296235.html?mod=todays_us_nonsub_page_one
Aido Annie:
It ain’t so much a question of not knowin’ hut to do
I knowed what’s right an’ wrong since I’ve been teen.
I heared a lot of stories an’ I reckon they’re true
About how girls are put upon by men.
I know I mustn’t fall into the pit
But when I’m with a feller
I fergit!
I’m just a girl who cain’t say ‘no’
I’m in a terrible fix!
I always say ‘Come on, let’s go’
just when I aughta say ‘Nix.’
When a person tries to kiss a girl
I know she aughta give his face a smack!
But as soon as someone kisses me
I somehow sorta want to kiss him back!
I’m just a fool when lights are low
I cain’t be prissy an’ quaint
I ain’t the type that can faint
How can I be what I ain’t?
I cain’t say ‘no!’
Ronald Coase would have enjoyed this discussion…
REVIEW & OUTLOOK
Too Big to Succeed?
January 16, 2008; Page A12
The first goal of any new CEO taking over at a time of trouble is to clear out the other guy’s losses and move on. For Citigroup CEO Vikram Pandit, the job also seems to include traveling the world with a tin cup begging for new capital. Once he’s done with that, maybe he’ll ask whether the oft-troubled bank has become too big to succeed.
http://online.wsj.com/article/SB120044489489392889.html?mod=googlenews_wsj
ABK down 60%
A guy on FBN just said had an interesting thought . . . what if these brokerage writedowns are reversed in 6-9 months as a result of mark to market?
If pigs had wings, one large barbecued wing would feed me.
LOL. I think my measles have morphed into whooping cough. I’m running the whole gamut of childhood diseases here.
I am so sorry, I had no idea you were ill. Get better or else I’ll visit you with my Aunt’s soup which would really make you sick.
Sovereign Wealth Funds…
What if they were loading up on Sovereigns, as per their name?
(British Gold Coin that weighs around 1/4 troy ounce. 1st minted in 1489, still being produced today)
http://en.wikipedia.org/wiki/Gold_sovereign
Either my glasses are foggy, or else up has morphed into down today…
January 17, 2008 10:05 A.M.EST
BULLETIN
Stocks higher on rate view
Girding for Bernanke, investors also eye Merrill’s red ink
http://www.marketwatch.com/tools/marketsummary/
Bouncing ball market…
http://www.marketwatch.com/Quotes/?symb=spx
Here comes the break. Understand the role of program trading, option expiration and stop running in all of this.
52 week low on the s&p probably a bunch of stops there.
next major support?
135 strike on the Jan sp puts
there’s 300K 137s
If it accelerates here, I’m going to stop myself out again. So far, it’s just a razor nick. Not interested in a gaping wound.
The only part that puzzles me is these “support levels.” I guess it could be a bunch of technical palm readers fixating on round numbers (e.g. 1375) which holds the market in place until support evaporates?
No. It is where the last three major selloffs ended. That’s a triple bottom and it’s good until it isn’t. This time could be a fakeout breakdown or the real thing. Anyone who says they know is full of crap. We may have the real bear going now.
So the idea being that just below the support level there are a bunch of limit orders waiting in the wings, exerting upward pressure, whereas above the support level all the limit orders have been filled - right?
Six-mo view of L-T T-bond yields tells a most interesting story… ignore the Cramers and Kudlows of the world and read the tea leaves if you want a clear picture of where we are headed.
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TYX&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=7&freq=1&startdate=&enddate=&hiddenTrue=&comp=tnx&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
i would like a list of cheerleaders who say you are getting great deals at 50 cents on the dollar.
i also would like a list of people who say anyone who buys now is getting a great market rate buying FROM SOMEONE who did not get a good deal by paying 2 dollars on the dollar in 2005.
We bought in 2005 and probably paid too much, but we also have 3 sources of freshwater on our many acres, including a 50 gpm well.
Hard to place a value on water, until you run out.
Japan unnerved by latest subprime fears
By FT reporters
Published: January 16 2008 22:01 | Last updated: January 16 2008 22:01
Shares in Japan’s largest banks fell sharply on concerns about their subprime exposure. Analysts warned of further writedowns across the Asian banking sector, but on a much more limited scale than in the US and Europe. …”
http://tinyurl.com/ys3×9a
I don’t see any higher stocks. Where do the marketwatchers get this BS?
January 17, 2008 10:12 A.M.EST
BULLETIN
Stocks higher on rate view
Early data viewed as solidifying chances of rate cut. Merrill down on losses.
http://www.marketwatch.com/tools/marketsummary/
Ackermann seeks greater banking transparency
By Gillian Tett in London
Published: January 16 2008 22:08 | Last updated: January 16 2008 22:08
Josef Ackermann, chief executive of Deutsche Bank, has called for a thorough overhaul of the operations of investment banks and regulators to combat a widespread loss of investor confidence in complex finance.
Banks needed to find ways of making complex structured products, such as mortgage securities, far more transparent, thus reducing investors’ dependency on credit ratings, Mr Ackermann said…..”
http://tinyurl.com/3c8sn9
i wonder why this guy thinks that any investor would trust banks in the future? those days are gone in my opinion.
L-T T-bond yields are falling up a wall of worry…
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TYX&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=2&freq=9&startdate=&enddate=&hiddenTrue=&comp=tnx&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
The new condo plan- A large condo project in downtown Orlando(30+ floors) was foreclosed and rejuvenated as an office building. 300 plus 1000 sf offices. Hope they loaded the building floors for offices with filing cabinets instead of flat screens. Now we have an overbuilt office market as well as condos.
Just a few years ago, ISTR an article in WSJ about them turning office buildings into condos. Really bad serpentine floorplans so that you’d have a window in the living room, and a couple of “studys,” so called because you can’t call a windowless room a bedroom.
Any idea of the name the condo tower?
A relatively decent breakdown of many of the nations large and mid-sized banks from COSTAR.
Bankers Re-Evaluate Deteriorating Real Estate Loan Portfolios
Troubles Mainly Limited to Residential, but Starting To Bleed Over Into Commercial Lending
“…
What follows is a breakdown of how financial and real estate market conditions impacted banks nationally and regionally. The comments come from bank holding company press releases and transcripts of quarterly conference calls provided by the Seeking Alpha Web site. We believe the comments are generally reflective of what other banks not mentioned are also reporting. …”
http://tinyurl.com/2dmn8f
I have a question for everyone: Do you think Europe (and in particular London/the UK) currently have a housing bubble? How will it be effected by the crashing American bubble and how will any crash there effect the US?
In case any of you are unaware, real estate prices in London are absolutely sky-high.
definitely, most of Old Europe has a housing bubble that is bigger (by percentage of gains from the start) than the US bubble ever was. Huge downside in UK, Ireland, Spain and Netherlands; most of the other ‘Old’ EU countries (except Germany) could easily see a 50% drop before prices start making some sense again. If this bubble crashes the effect could be FAR bigger than the fallout from the US housing bust.
For the newer EU member states it is difficult to tell - some had a huge runup in the last 5-10 years, but except for a few big cities prices are still low compared to the older EU member states. But prices are certainly high when you factor in local wages/rents (just a guess how much wages/rents will rise in the next years to catch up).
And in the newer states a reasonable argument can be made the it truly is “different this time.” With EU expansion and “deepening,” one would expect RE and wages to flatten somewhat between member states. Of course what happende is that a bubble in England and other established members spilled over into cheaper states. But it wouldn’t surprise me if many of those equity locusts stayed in their new countries and prices never returned to pre-bubble levels.
yes, I agree; but it’s very difficult to predict the outcome. Some of those new member states are ‘cheap’ for a good reason, and that won’t change within 5 or 10 years. And no one knows how much of this price increase is caused by speculator demand; I think in the bigger cities speculation is the major factor driving prices higher; that will revert as soon as the money spigots from Brussels are turned down, or when the bubble in Old Europe pops.
Cramer on TV is all an act. He is nothing like that in real life. He worked for Alan Derschowitz at Harvard Law back in the day so has a bit of a liberal bent. He lived in his car while he was a reporter for the LA Times. I know several people that worked for him and he was tough but fair and a good listener. And he did make a “take it off the table” call back in the Spring of 2000, me thinks.
It’s all about ratings. Get someone to act nuts and viewers will tune in. If the show is boring then viewers will change channels.
Your recollection of the spring of 2000 is wrong, he advised buying on any and all breaks.
“We are still long Cisco. Bought some more yesterday. It has been a poor performer though. Maybe that is enough.”
James J. Cramer - January 1, 2000
“I have a word for that. It’s called ‘the bottom.’ Again, if you want to know why this market bottomed, I urge you to read my most recent version of the checklist that I set up during the bear market to tell you how to determine when you could get bullish again.”
James J. Cramer - Jan. 8, 2000
“Once again, I reiterate that the bear phase is over. This rally looks like the real deal. It has the financials and the techs and the drugs all up. Maybe we bounce down a little off NDX 3000, but then we just reload and go through.”
James J. Cramer January 11, 2000
and one year later
“Nasty Friday selloff. Nasty. And to me it means an opportunity to put money to work. I am using typical bull-market rules. You get these profit-taking pullbacks and they inspire tons of worry. They make people nervous as heck. They shake out the weak holders.”
James J. Cramer - Feb. 2, 2001
History does not take kindly to an individual that has caused serious loss of capital to thousands of individuals.
His bearish forecasts started in 2001
“It is bad to be in a bear’s den in a bull market, but I keep thinking of all the mail I get from people who are thrilled that we–this site–have been pretty unrelentingly negative about tech during this sell-off. We are proud of that. I can’t stress how riddled the whole client base in this country is with cellphone stocks. They are cancers on your portfolio, though, and I don’t think a cancer gets better with time.”
James J. Cramer - Feb. 27, 2001
Unfortunately this first bearish call came after the market was down over 50%.
looks like silver could be over $20 by the Spring
Bernanke testimony is sending market into the tank. I swear his voice is cracking throughout.
I’d guess he wishes he could crawl back into the halls of academia and become somebody nobody had ever heard of…
Poor guy…
nhz: Bernanke just said that the real estate problem does not exist in Europe. Amazing that the fed chair is so uninformed.
Or is it just a matter of deliberate deception which is amazing?
I hope he doesn’t play poker much…
His tells are painfully obvious.
that’s a tough job he’s got
and I stopped myself out. Second time.
BTW for anyone who cares or is interested in second guessing, I use 10% of available equity for these index positions and had only 40% of that in.
Stocks keep dropping as he keeps talking…
Isn’t it the same thing we see all the time: this person is either flat out lying or incredibly stupid. My guess is he is lying, but I’ve also known some very successful people that have massive information blind spots.
He scored 1590, out of a possible 1600 on his SAT.
He’s not dumb and he’s not a very good liar.
Christ. What do you expect him to say “Housing is screwed, all over the world. Banks are screwed. We’re in for a serious recession. I recommend saving as much money as you can to make your way through it.” Even if that’s 100 percent correct and he knows it with 100 percent certainty, he cannot say it. He must pretend like this all the way down to avoid an immediate panic meltdown.
At some point, our leaders have to actually lead.
I agree with Michael Viking. BB is leading in the best way possible, given difficult circumstances.
7 years of subterfuge has gotten us nowhere, fast.
he probably double checked that with the Dutch realtors and our politicians
Bernanke is full of it. He spoke against the possibility of a recession saying that they were forecasting not recession but minimum growth (0-2%). At the same time he asked the legislators for some kind of a “stimulus package”. Why doesn’t someone call his bluff - why does he ask for a stimulus package when he predicts no recession?
Maybe he meant to say “no recession except for in Florida and California.”
Recession looming in US housing-boom states
By Krishna Guha in Washington and Matthew Garrahan in Los Angeles
Published: January 16 2008 22:08 | Last updated: January 16 2008 23:39
California and Florida – the biggest and fourth biggest state economies in the US – are either in recession or on the brink, many economists now believe.
While state-level data are patchy, the available figures suggest that economic activity is probably contracting in Florida and may be declining in California as well.
http://www.ft.com/cms/s/e3d4086c-c47b-11dc-a474-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fe3d4086c-c47b-11dc-a474-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
post got lost, but in defense of Cramer, he’s a nice guy in real life. TV is all an act. He used to work for Alan Derschowitz while at Harvard Law and has some socially liberal views. I know several people that worked for him and CB and have nothing but respect….
He’s a character on TV so ding him all you want.
sorry if this is posted twice.
Oh so he feeds the squirrels, does he? He must be one heckuva guy then!
Act is what Seinfeld did. Act is what you do when you want to entertain people. Peddling stock advice is very removed from acting - people can actually make money, people can actually get hurt badly as well. As a financial expert on CNBC, he does have a fiduciary duty towards his audience. I hope someone sues him or CNBC. Hell, I hope someone sues the advertisers instead - that will get CNBC’s attention even quicker.
“he does have a fiduciary duty towards his audience”
that’s hilarious! he’s a f&*^ing shill.
These pictures make great screen savers btw
http://macromarketmusings.blogspot.com/2007/09/helicopter-ben-pictures.html
I log onto CNN Money and am seeing everyone’s predictions on this blog a year or so ago coming true. Unreal, just unreal.
Merrill reports $10B loss
Homebuilding: Sharpest drop in 27 years
Mortgage meltdown: Now the rents
Real estate appraiser sues WaMu
Ambac troubles deepen
Congress must act fast to fix economy - experts
Apple’s market share slips
Credit crunch hits $3 billion casino project
Creditors approve Delphi’s bankruptcy plan
“Losing the AAA stamp would cripple the bond insurers’ business and throw doubt on the ratings of $2.4 trillion of debt the industry guarantees, causing as much as $200 billion in losses, according to data compiled by Bloomberg.”
Now 2.4 Trillion ? Is it me or are the figures getting larger and larger ? Another $200 Billion in losses if these firms get re rated… how large will the losses be when they fail outright ? Its all a house of cards and the wind is blowing stronger and stronger.
http://www.bloomberg.com/apps/news?pid=20601109&sid=adLFXGDwqM2Y&refer=home
“Is it me or are the figures getting larger and larger?”
Same comment apparently applies to IB writedowns. Last year’s $3 bn writedowns have already morphed into this year’s $15 bn+ writedowns.
Don’t be surprised if liquidity dries up completely because of solvency questions.
Banks already don’t trust each other enough to freely lend each other money.
The day may come when checks are no longer immediately honored and a two-week hold will be placed on a deposited check. This action would drasticly slow down the rate of money flow and associated transactions.
It’s time to raise cash for the cookie jar.
Twin peaks
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=SPX&time=20&freq=1&comp=&compidx=aaaaa%7E0&compind=&uf=0&ma=&maval=&lf=1&lf2=&lf3=&type=2&size=1&txtstyle=&style=&submitted=true&intflavor=basic&origurl=%2Ftools%2Fquotes%2Fintchart.asp
Unless it’s different this time (than in 2000), it looks to me like the next support level (below 1375) is 800 or so…
Cramer was a trader and changes as the market changes. Hoz, he really did make an excellent call in March. You can Google it..
“The most well-known example of Cramer switching his views, which being candid he discusses upfront in his book (pg 18), was when he went from being bullish (pounding the table bullish, if I correctly recall his website comments at the time) in December 1999 and January-February 2000, to a “March 15, 2000, RealMoney.com piece saying to take things off the table, four days after the exact top in the Nasdaq.”
Bullshit.
http://www.thestreet.com/funds/smarter/891820.html
2/29/00: “We don’t use price-to-earnings multiples anymore at Cramer Berkowitz. If we talk about price-to-book, we have already gone astray…If you can raise the bar, or brighten the outlook for your company, if you can see your growth accelerating, your stock will go higher and you will be given the currency to expand, acquire and do whatever you want. That’s the secret of the quintessential New Economy stock: Cisco (CSCO:Nasdaq - news). This giant networker has the ability to control its own destiny. ”
Cisco topped out a little less than a month later, never to return to those heights…
The other good one was he was all over the AOL/Time Warner merger saying you had to buy AOL. That was on the first trading day of 2000. AOL NEVER saw that price again.
Then of course we have the famous call to abandon the market one hour before it bottomed on 10/8/98 at the bottom of the LTCM debacle.
That is hysterical! I googled and all I can find is Mr. Cramer saying that he said this on March 15, 2000…BUT THERE IS NO RECORD OF HIM SAYING IT IN REALMONEY.COM! from RealMoney.com
March 15, 2000
“…Creme_Delacramer: I bought stock at the bell because I thought it might have pulled back enough and because I am thinking that it has had quite a pullback. I do worry, as I said today and yesterday, that margined players are involved there and caused it to go down at the end of the day.
sandkey1 asks: What’s your opinion on wireless broadband plays like NTRO?
Creme_Delacramer: I have been playing wireless with majors like ERICY and NOK, not much smaller stuff.
JJCfan asks: What’s your take on the large pharmaceuticals ie MRK, BMY?
Creme_Delacramer: I think they are rallying in a bear market. I don’t think they have more than a few days for rallies. And I love your name, by the way!! You aren’t related to me are you???
Eric99_55 asks: JJC, was the down move in YHOO overdone and do you see moving back towards 200?
Creme_Delacramer: I remain long YHOO but I did not add to it today because it was not down enough. I bought stocks that were down 15, 20 and 30 points not down 8.
jfm_77027 asks: You have written about old tech stocks as the place to be in this market. I consider Cisco one of these. However it did not follow some of the tech stocks like Intel, but instead followed the rest of the NASDQ down. What’s up with Cisco? …”
http://tinyurl.com/33mtus
That is your Mr. James Cramer long Yahoo, bottom picking.
The guy’s a buffoon and I have old emails from him too going back over 10 years. In those days, he’d talk to anyone. BFD.
His rants on the banks today is a joke! 8 months ago he pooh-poohed this whole mess. Just another Johnny Come Too-Late!
Cramer(2007) vs. Cramer(2008)
i really like how he implys that there is really no money to just give away!!
Bush, Bernanke Support Stimulus Package
Moreover, Bernanke said any fiscal package should also be “efficient in the sense of maximizing the amount of near-term stimulus per dollar of increased federal expenditure or lost revenue,” he said.
Any such package also must be temporary to avoid making a big boost to the federal government’s budget deficits and adding to the country’s long-term fiscal burdens.
“The nation faces daunting long-run budget challenges associated with an aging population, rising health care costs and other factors. A fiscal program that increased the structural budget deficit would only make confronting those challenges more difficult,” Bernanke warned.
http://biz.yahoo.com/ap/080117/economy_stimulus.html?.v=27
PB, amazing chart, isnt it? Everything looks so easy when you turn the focus knob to look at a larger view.
DAVID WEIDNER’S WRITING ON THE WALL
Wall Street’s error-oids era
Commentary: Like baseball, banks juiced, goosed and are paying for it now
By David Weidner, MarketWatch
Last update: 9:38 p.m. EST Jan. 16, 2008
NEW YORK (MarketWatch) — This quarter’s earnings season for Wall Street is like the Mitchell Report for baseball. We’re finding out who was on the juice.
http://www.marketwatch.com/news/story/chasing-goldman-rivals-used-performance/story.aspx?guid=%7B65492902%2D4FCF%2D44A4%2D81BF%2D7F7A5B123C9B%7D
“Ballplayers have ruined their bodies and reputations and often forced themselves into an early retirement for the sake of RBI and ERA. Banks ruined their balance sheets and market values for the sake of SIVs and MBSs.”
]
Take me out to the ball game,
Take me out with the crowd;
Buy me some peanuts and Cracker Jack,
I don’t care if I never get back.
Let me root, root, root for the home team,
If they don’t win, it’s a shame.
For it’s one, two, three strikes, you’re out,
At the old ball game.
I’d like some popcorn, please.
You know, I’ve never seen Professor Bear and Neal in the same room at the same time….
I dont have the 3/15 column which is quite explicit but 3/27 he reiterates. I was IM’ing with him during this time period. He became very bearish, very quickly….
http://www.thestreet.com/funds/smarter/906492.html
we’d be lucky to see only a drop to SPX 800. i’d guess 500.
I like. and i also think richard russell is right, that the spot gold price will be higher than the Dow.
CNBC is “entertainment” and that’s a stretch. I wont watch it personally. If one gets their news and views from there, one deserves to lose money.
freefall now. Saved myself a lot of money by not letting a small loss turn into a big one.
The bear is in da house. Now, does the Fed have anything to fight him with?
I might have to try something on the long side at the end of Gentle Ben’s testimony. This is incredible. Something small.
I’m back in with small size. I see MA came and got that gap.
Yeah. Way oversold but Maximum Pain has that bad boy pegged at 145 for January OpEx. I’m staying away.
I am looking for a short term bounce late today or tommorow. Rumors of “emergency rate cut” will be started to drum up a short term rally…
itching . . . maybe going in 20% again. Ah, what the hell.
The only trader on TSCM that ever made anyone a dime was Todd Harrison, who told people to get the hell out of the market in August of 2000.
“Rumors of “emergency rate cut” will be started to drum up a short term rally”
I’m wondering if emergency rate cut (and stimulus package, and…) is already at least partially priced in. There is money to be made in volatility, but I’m starting to get the feeling that the long term trend is finally negative (yes, I’m one of the recession believers). More kicks in the groin coming to the economy and the financial giants who are saying that “this write-down is the last one, we PROMISE”, more news of contractions, commercial RE vacancies, and layoffs, etc. Think “snowball rolling down hill”. Just my amateur 2 cents.
“The bear is in da house.”
Tex, Any chance you are ‘calling’ a medium/long term top, or do you think there may be more bounces to go?
No, not calling anything. Just saying that all support has been broken. I know there’s a bounce in here somewhere and it’s gonna be a doozy so I’m concentrating on trying to be there for it.
Why do you think it’s in there and it’ll be a doozy?? Charts, or all the chatter about rate cuts, or something else?? Thanks.
bullish percentages on p&f, squareouts on the indices, supports broken, etc. I wouldn’t advise anyone to invest in this mess who needs their money back anytime soon, but trading, it looks to me like the easy short money has been made. Hell, was made three days ago. When I see people here talking about S&P 500, that makes me bullish, at least short term. But I’ve been stopped out twice trying to catch this knife. Don’t do anything because of what I say.
Not doing anything just ’cause anyone says so, I’m just in major learning mode now and have so many questions about trading and technical analysis I don’t even know where to start.
Nosy question: do you use that MB Trading you recommended (just looked it up), or is there something even beyond that for real pros??
No, I don’t use them but a lot of daytraders do. They’re good and the people at that firm have been there a long time and and are great to work with.
I prop trade.
“I prop trade. ”
Another question for the list, lol. Will save it for another time. Thanks!!
Same here, wow. Add prop trade to stopped out..
A money tree with bullsh!t for fertilizer. But I still fervently believe that you can only fertilize a money tree with bullsh!t for so long before the roots die and the fruit rots on the branches.
Countdown to the close:21min8sec
January 17, 2008 3:38 P.M.EST
BULLETIN
DOW INDUSTRIALS SLIDE 300 POINTS IN FINAL HALF-HOUR OF TRADING
Blue chips sink 300 points
U.S. stocks continue to sell off, with the Dow industrials touching nine-month lows, after Fed Chief Ben Bernanke warns an economic slowdown is in the cards, and weak data back it up. | Treasurys rally | Mortgages hit 30-month low
MarketWatch.com
‘cmon chick, give it up. you LOST MONEY! this market is a pig you can’t put a dress on. crash iminent.
i’m a buyer (long), scaling in these next 2 weeks for a 2-3 month horizon, if the setup develops favorably.
what would u buy? Index call?
sinking fast???
UPDATE 1-S&P cuts Hovnanian preferred stock to default
The company failed to pay a quarterly dividend on its $140 million series A preferred stock on Tuesday due to terms in its bonds that restrict dividend payments when its breaks certain ratios, in this case known as fixed-charge coverage.
http://www.reuters.com/article/marketsNews/idUKN1640068620080116?rpc=44
Here’s why the foreclosures are probably going to double in the next year.
This house in Celebration FL has chased the market down and is still overpriced by a good $71sf over others in the market just like it. They’re not selling either, so my guess is it’s about $130sf overpriced.
Price Reduced: 08/01/07 — $439,000 to $399,000
Price Reduced: 09/05/07 — $399,000 to $384,900
Price Reduced: 10/02/07 — $384,900 to $349,000
Another one has been on the market 487 days, has gone from:
$499,924 to $444,000 on 5/12
$444,000 to 379,000 on 9/16
It’s still priced at $197 a sq ft. About $75-80 over what they’ll probably get if the market doesn’t fall even lower.
I noticed listings there were at 444 right before the holidays then they dropped to 407 by Christmas. Now they’re back up to 437. Before Christmas there were 7 short sales, pre-foreclosures, and foreclosures. Now there 19. This is one small, little more upscale town. Imagine what the rest of the state is doing.
Forgot to add to the above post that I saw 2 priced at $180sf and one was on the market since 10/11/06 and the other 12/1/06. I’d say $180sf isn’t cutting it.
My off topic ramble for the past couple of days.
The president and assorted candidates were talking about about the recession and probable “solutions”.
Bernake just came out and talked about getting money to the people. So, if the governemtn does this.. puts money into the hands of the people… its just monitization of debt. Or the governemnt rolls up more long term debt and we have more debt expansion.
How the heck does the really expand the real economy or make us more competative internationaly or internally?
Bush/Republicans talked tax cuts. How does that help? Tax rates are pretty low and we have debt problems.
How about Clinton and Obama? They talked about expanding food stamps and extending unemployment. How is that supposed to work?
They are encouraging not working. That is the old school democrat problem that made the welfare system into a disaster.
If the government is doing anything it should be building electrical infastructure for future electric vehicle use. Build more power line capacity or plants or what ever needs to be done. That would lower our oil dependance and cause prices to drop dramatically. Put some effort into better roads and mass transit so the transportation system is more efficient.
Put some money into research on new technologies.
Put additional effort into education.
Perhaps they should really look at the laws surrounding pension funding and reform that so we don’t have another GM problem.
Work on healthcare costs and see what is it about American lifestyle that is so unhealthy. For gods sake outlaw the use of transfats in our foods.
Anyhow, either group of democrats or republicans, are talking about inflationary measures to stimulate the economy. So, there isn’t any diffence in the proposals excep they are focused on different groups in society.
Neither attack the root of the problem.
Real leadership would attack the root of the problem. Problem is, none of the presidential candidates are showing a willingness to assume the mantle of real leadership (much less indicating they have the faintest clue about the nature of the problem). We can thank experts like Lawrence Summers for adding to the confusion, by suggesting the problem can be fixed by throwing lots of money at it.
I guess a helicopter drop of $250 into the bank account of every U.S. household is supposed to fool the populace into thinking an $800 bn problem has been solved. Where do I get that figure? From the graph posted by Tony in the lead post to yesterday’s bits buckets:
http://img337.imageshack.us/img337/3119/picture4hb5.png
Here are the stylized facts:
Peak U.S. hh mortgage borrowing = $1 t in 2006
Decline from peak in 2007 = $250 bn
Additional decline necessary to return to long-term trend (pre-1998) = $550 bn
Total decline in U.S. mortgage borrowing needed to get back to normalcy = $250 bn + $550 bn = $800 bn. Sorry to be so rude as to refer to actual data to make my point. (Also sorry if this data is somehow flawed — I am pretty much taking Tony’s word for it here…)
The Summers plan (which appears on a regular basis in leading financial newpaper Op-Ed columns) for up to $150 bn in free money does not look up to the task of fixing this, either in the short-run or the long-run. What we need (as NYCityBoy already pointed out) is economic perostroika. Whichever candidate proposes meaningful economic restructuring, including a plan to drain the Wall Street swamp, will definitely get my vote.
“Neither attack the root of the problem.”
They all want to keep you spending…nothing more, and nothing less. If you keep spending, even if you have to borrow the money, the economy keeps humming. If you stop spending, either because you run out of money, or you actually start saving, our consumer based economy starts contracting, starting a snowball effect. They want you to feel good and keep spending. That’s all there is to it.
I guess they never really think about what happens when there is no more money (even borrowed money/credit) left to spend. It’s left for the next fool politician after them to worry about.
Think house of cards.
‘You might very well think that; I couldn’t possibly comment’
Tucson developer sued by bank for mucho dinero:
http://www.azstarnet.com/sn/biz-topheadlines/220856
The weak hands are folding fast…
Te he he…
January 17, 2008, 11:17 am
Bernanke As CEO
Separated at Birth?
Democratic Rep. Marcy Kaptur of Ohio launched into a lengthy question to Ben Bernanke during the Fed chairman’s House testimony about community banks, securitization of home loans and investment banks role in the crisis, ending with this point: “Given that you were the former CEO Of Goldman Sachs…”
She was quickly stopped by the laughter in the room.
“Did I get the wrong firm? Where were you?” she asked, before being corrected that she was thinking of Treasury Secretary Henry Paulson.
http://blogs.wsj.com/economics/2008/01/17/bernanke-as-ceo/
How utterly embarrassing for her…
I was watching and wondered how she could mix up tweedle dee, with tweedle dumb?
Aren’t they clones
Marcy Kaput
Most of her constituents probably think that Goldman Sachs is a department store.
LOL!
Given how much time he had to spend explaining securitization, CDOs, SIVs, etc. for the upteenth time, can anyone be surprised?
hat tip Hoz.
FXP @69, 92 exit….
serving up any more home run balls Hozzie?
did you miss the CFC one the other day?
not really..
I have saved this from the WSJ this morning and in a few years I suspect this will be my new trading mantra.
“Thain says it is “not likely” that ABS CDO values are likely to recover.”
“Yuh thunk?” Hannah Montana
Too big to scrutinize?
Appraiser Exposes Toxic Debt Tie to Inflated Values (Update1)
By Sharon L. Lynch and Bob Ivry
…
Appraisal practices are drawing the scrutiny of prosecutors. At least seven states have opened investigations into the mortgage industry, including ties between appraisers, lenders and brokers.
In New York, Attorney General Andrew Cuomo subpoenaed Fannie Mae and Freddie Mac, the two biggest buyers of U.S. mortgages. He also sued First American Corp.’s eAppraiseIT LLC for allegedly caving to pressure from Washington Mutual Inc., its biggest customer and the largest U.S. thrift, to inflate values.
Cuomo said in November he uncovered a “pattern of collusion” between lenders and appraisers to bolster home values.
$4.7 Trillion Market
The investigations call into question $4.7 trillion worth of mortgage securities guaranteed by Fannie Mae and Freddie Mac, and may limit the availability of home loans to borrowers with good credit, CreditSights Inc. analysts Frank Lee and Sarah Rowin said in a Nov. 8 report.
“If there is a disruption in Fannie and Freddie trying to buy conventional loans, that would be very, very bad right now,” Lee said.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aspX9JNoyFRE&refer=home
Good lord. If anyone reads down to this point. . .
What is the max % a broker can charge on a simple buy or sell order for a NYSE listed stock?
What’s the best way to buy/invest in gold?
what the hey, I thought this was a housing blog… just wondering
Look at the quote near the top of this thread PLEASE!
“Please post off-topic ideas, links …”
I see “off-topic” in that biline. Now to answer the question, I say the best way to buy gold is with cash and buy bullion.
Buy modern bullion coins from certified dealers. Specifically, American Eagles. There is a list of coin dealers fromt the US mint. I only buy gold and platinum from dealers on that list, at whatever city I live in or near.
As BIDU goes, so does the ^SSEC
Foreclosures Higher Than Workouts in 3Q
Thursday January 17, 2:01 pm ET
Number of Foreclosures 60 Percent Higher Than Home-Loan Modifications in Third Quarter
WASHINGTON (AP) — The number of new U.S. foreclosures in the third quarter was 60 percent higher than the number of borrowers the industry was able to help, a trade group said Thursday.
Nevertheless, the Mortgage Bankers Association said its analysis shows banks are working hard to reach strapped borrowers to set up loan modifications and repayment plans. Making matters difficult, the group said, is a high proportion of homes owned by speculators and situations in which borrowers didn’t respond to repeated attempts to contact them.
http://biz.yahoo.com/ap/080117/loan_modifications_report.html?.v=3
as BIDU goes, so does the ^SSEC.
this Spoos setup is looking good, same for the nasties
Some feet to the street news from Colorado’s Roaring Fork Valley (Aspen, Glenwood Spgs, etc.) - my engineer friend there does basically 100% of the inspections for modulars under contract, he’s recommended by virtually all the realtors in the entire valley. Modulars are about the only way a middle-income person can have a place there, and sales are usually good (we’re talking modulars already on land, quite a few there in areas downvalley).
Business has gone from brisk to absolutely NOTHING. I mean zero. He says the realtors are getting nervous, very few sales of anything real estate related.
And speaking of modulars, am seeing half-price sales in my area (E. Utah) for new modulars.
some of the Demarks I follow are on the verge of flashing a buy sign very soon…
10 more minutes to ContraHour ends. bought first tranche. talk of Black Monday, yada yada yada
arpdds, you can buy gold:
1)ticker: GLD
2)physical gold at apmex.com or kitco.com
3)options on the XAU or HUI indices
4)gold futures
5)Gold mining stocks, mix of seniors or juniors
6)Gold mutual fund like Fidelity’s FSAGX (check holdings, dont follow it)
7)fractional gold interests
8)overseas physical stored in vaults in Swiss and other countries
etc etc.
many ways to buy gold. most traders use GLD or SLV (for silver) but it’s still paper money. if you have a commod account, hold in “Customer Segregated Account” which is less like paper. i like the futes personally. please be careful though
Or coins or bullion from a local dealer (e.g. coin shop). Also there are a ton of other places to buy from online - e.g. the US mint, nwtmintbullion.com, goldmoney.com, etc. Even eBay.
AU and NEM are a couple of good gold stocks.
http://money.cnn.com/2007/12/19/news/companies/morgan_stanley_earnings/index.htm
I’m sure everybody remembers the sidebar that used to be on the CNN articles about the lenders. In the article I linked here, it is the little bar graph on the right titled “wall street’s expanding black hole”. What ever happened to this? They seemed to have it on every article up until they started releasing the actual 4th Quarter earnings, and then it just sort of disappeared.
Did they realize that the losses were going to be far worse than the Q4 estimates and figured that people might panic when they realized that by the time Q4 was over it would be topping 70billion and there would still be a number of bad quarters to go?
I remember the billboards which used to be on display at PetCo park for the lenders as well as the homebuilders. There were not many to speak of this past season…
Looking for a higher open on the headline stock market indexes tomorrow. The alternative is the DJIA goes back to 2006 price levels, erasing all of last year’s gains (so much for the January effect…).
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=INDU&sid=1643&dist=TQP_chart_date&freq=1&time=9
Surging Credit Costs
Hit Comerica Results
By DONNA KARDOS
January 17, 2008 8:20 a.m.
Comerica Inc. posted a 60% drop in fourth-quarter net income on surging credit costs and a year-earlier gain, as the regional banking company felt the sting of exposure to credit markets with an increase in the provision for loan losses and declining margins.
http://online.wsj.com/article/SB120057223451297515.html?mod=googlenews_wsj
Another long-discussed HBB topic goes mainstream…
American house prices
Baby boom and bust
Jan 17th 2008 | ANN ARBOR, MICHIGAN
From The Economist print edition
The housing market has a new problem: ageing Americans
IN THE first years of the 21st century, no area of the American economy has excited more emotion than the property market. First came the excitement of soaring prices. Then spirits came crashing down with the subprime crisis, and now homeowners are agonising over how far values could fall. An even bigger story, however, may be yet to come.
America should be bracing itself for the end of the “generational housing bubble”, according to a new study by Dowell Myers and SungHo Ryu of the University of Southern California. As the country’s 78m baby-boomers retire, the report argues, the housing market will change dramatically.
http://www.economist.com/finance/displaystory.cfm?story_id=10534992
yep demographics are a hugh driver of the economy.
Maine home prices defy national slump http://pressherald.mainetoday.com/story.php?id=163046&ac=PHnws
Dated, but impressively prophetic article:
PAUL B. FARRELL
13 reasons Bush’s bailout won’t stop recession
Like the tide, recessions are natural, healthy, positive … and inevitable
By Paul B. Farrell, MarketWatch
Last update: 7:40 p.m. EST Dec. 10, 2007
ARROYO GRANDE, Calif. (MarketWatch) — “What do you call an economist with a prediction? Wrong.”
That was the headline of a Business Week column in late 1999, just months before the 2000 dot-com crash.
Yes, wrong: Conservative supply-siders, balanced-budget centrists and liberal Keynesian stimulators, too. All wrong! And the 2000 to 2002 recession proved it.
Unfortunately, everybody thinks they’re an economist today, even politicians. But they’re bad at it, too. So we need to update the headline to fit the mortgage bailout and other quick-fix solutions to America’s problems.
http://www.marketwatch.com/news/story/13-reasons-why-bushs-mortgage/story.aspx?guid=%7B9CE18A60%2DC0CF%2D4CB4%2DA38B%2D6AFFE1D6E37E%7D
THE FED
Bernanke endorses quick, temporary fiscal stimulus
Fed chief not predicting recession, but urges preventive action
By Rex Nutting, MarketWatch
Last update: 11:54 a.m. EST Jan. 17, 2008
WASHINGTON (MarketWatch) — Congress could help steer the economy away from recession if it adopted a quick, efficient and temporary fiscal stimulus plan, Federal Reserve Chairman Ben Bernanke told Congress on Thursday.
http://www.marketwatch.com/news/story/bernanke-endorses-quick-temporary-fiscal/story.aspx?guid=%7BF10569DE%2D6604%2D4C5B%2D85A0%2D4431A94C88AA%7D&dist=TNMostRead
China pushes to top as world’s largest gold miners
Foreign producers break ground as gold prices rise
By Laura Mandaro, MarketWatch
Last update: 5:06 p.m. EST Jan. 17, 2008
SAN FRANCISCO (MarketWatch) - China became the world’s largest gold producer last year, helped by Canadian- and Australian-led projects that aim to add millions in ounces to the world gold supply.
http://www.marketwatch.com/news/story/china-now-worlds-largest-gold/story.aspx?guid=%7B8C528CE8%2D0262%2D485D%2DACEB%2D2247D18282CB%7D
This is why I love and hate gold.
Yes, it has inherent value, as a rare metal. It will never drop to zero in value (unless society totally collapses and we’re reduced to trading beans for rice).
However, it has virtually no industrial uses (as compared to other cheaper and even some rarer metals). And when its price is bid up during periods of economic uncertainty, the result is unproductive investment in gold mining.
I vote that we replace gold with HEU as the new precious metal. The latter actually has some worth for creating energy in an energy-intensive world. Not unlike oil, but much more compact.
If you cannot stand gold as an alternative currency, and must have some currency that has some industrial value, consider buying an oil ETF. The world is not running out of oi, but the world is running out of cheap oil, and the price will continue to rise over the long haul as tens of millions of more motorists take the roads in the world (India and China, and you can bet on that, with the new $2,500 car being produced in India).
Well said. I’ve held UCR at various points during the past couple of months, but thinking it may be a good long term investment. Even if crude dips temporarily from its current value, 10-15 years from now, it has nowhere to go but up.
1. Fiscal Stimulus Smoke and Mirrors
Federal Chairman Ben Bernanke is testifying on the U.S. economy here and vaguely endorsing a Fiscal Stimulus package that is itself at this point quite vague.
The quickest option for immediate stimulus - allowing Fannie Mae (FNM) and Freddie Mac (FRE) to raise loan limits above the current cap of $417,000 - was shot down by the Treasury Department yesterday afternoon because Treasury said it will only back raising the loan limits if it is bundled with reform. Reform is a very contentious issue, it’s been years in the making. It will probably not be resolved anytime soon.
http://www.minyanville.com/articles/C-jpm-fre-fnm-wfc/index/a/15570
This is just another way of staving off the day of reckoning. It’s a short term fix (as I write this, gold spot price continues to fall and it’s now below $877 per ounce). The stimulus needs to be offset by spending cuts - and we can substantially make the spending cuts by withdrawing completely from Iraq, for one, and by shutting down some entitlement programs.
Retirement location some day? LOL
http://tinyurl.com/2fh7rf