Bits Bucket And Craigslist Finds For March 15, 2008
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The Housing Bubble
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Lenders pull out of mortgage deals as market volatility worsens
By Sharlene Goff and Jane Croft
Published: March 15 2008 02:00
Lenders are frantically withdrawing many of their mortgage offers - sometimes with less than an hour’s warning - as severe funding constraints mean that they are unable to meet demand for the most competitive deals.
Brokers had as little as 10 minutes’ notice on Thursday when Scottish Widows removed the bulk of its mortgage range.
Some borrowers have agreed mortgage deals only to see them disappear from the market just hours before completing their applications.
The root of the problem is unprecedented volatility in the mortgage markets.
Three-month Libor - the rate at which banks lend to each other - yesterday climbed to 5.93 per cent, its highest level since the start of the year. “Certain lenders are pulling deals at extremely short notice,” said Paul Welch, managing director of Clegg Gifford Private Clients, the mortgage broker. “So few lenders are in the market now that those left just cannot cope with the business.”
According to Moneyfacts.co.uk, the comparison service, there are just 6,186 mortgages left in the market, less than half the number available at the end of August.
The market for borrowers without a deposit has practically dried up. Only two major lenders - Mortgage Works, a division of Nationwide, and Abbey - are now offering 100 per cent loan-to-value mortgages. Mortgage Express, part of Bradford & Bingley, withdrew from this market earlier this week.
In the past lenders would typically have given at least a few days’ notice before they withdrew rates. But some are now choosing to give little or no notice so as to avoid a last-minute stampede from borrowers desperate to secure the best deal.
Scottish Widows, which is part of Lloyds TSB, said it had withdrawn from the market for a few days because it was seeing “very high levels of applications”.
C&G, also part of Lloyds, announced yesterday morning that it was pulling a number of buy-to-let mortgage loans from brokers at the end of the day to prevent its levels of service from being flooded by new applications.
Halifax, Mortgage Express, Bank of Scotland and Woolwich have also withdrawn rates at short notice in the past month.
“Borrowers can no longer afford to delay their application once they have found a mortgage that suits them,” said Mr Welch. “I would not be at all surprised if more deals were pulled at the last minute. This could pose a real problem for borrowers.”
http://tinyurl.com/27loh8
“Brokers had as little as 10 minutes’ notice on Thursday when Scottish Widows removed the bulk of its mortgage range.”
I’m going way off topic here, but for all you Scotts/golfers…
http://www.youtube.com/watch?v=BKA_LxHEyPo
“….Three-month Libor - the rate at which banks lend to each other - yesterday climbed to 5.93 per cent, its highest level since the start of the year….”
Wrong: LIBOR 3 month is 2.87%. A year ago it was 5.36%
There is so much mis-information going around it is like the Anti-Housing Bubble! When I see this much fear and this much hypebole, it tells me there are bound to be some vastly underpriced assets available to buy!
I just had a contract accepted on a short sale (offer submitted 7 weeks ago) for $109/sf in Sacramento. The price is 40.5% of the sale price in December of 2006. That is 15 months ago. Guess who the lender is? Bear Stearns. 100% 80/20 piggy back mortgage for $710,000 for 2,650 SF. That is a $422,000 loss, excluding the additional costs they will pay, like $15,000 in unpaid taxes and HOA, broker commissison, title & escrow fees.
You could call this a 60% price drop, except the seller probably received $100,000 cash back at the close and she bought the place sight unseen from Seattle! It was NEVER worth that much money. I am paying 12 times the annual rent and will receive a 5% return on my 25% down payment. My return will really be 8.9%, since I have it leased to a great tenant, and manage and maintain my own properties.
Thank you Bear Stearns. You guys are idiots.
Or should I say, Thank you Bear Stearns. You are the smartest guys in the room! LOL all the way to the bank.
So, in general, how does one make a detailed analysis of what price to pay for a rental property? 12x rent may be a good rule of thumb to filter out possibilities, but as with any investment, there must be details to be considered. If I were taking investing into a rental seriously, I’d make up a spreadsheet with all of the relevant numbers. Being inexperienced, I’d probably leave out some detail.
Different areas have different tax and insurance rates, HOA fees vary, etc. You need to determine that it cash flows on a property specific basis.
What about some of the things that could be easily overlooked? I actually have made up a spreadsheet that is fairly complex that takes into account all of what you mentioned (it’s more of a tool designed to see if buying or renting is better, and is way more sophisticated than what you’ll find online). I was surprised on how good of an investment real-estate can be compared to typical returns on other investments. Okay, I swear this isn’t flamebait, but the returns were favorable at the current price of a Saint Petersburg, Fl condo that I’m renting even though the price is about 175xrent which is quite a bit more than the 100-125 x rent number ( or in your case 144) that is frequently floated on this blog. I was just wondering if I’m overlooking something.
Is it for you to live in? If not, you need to consider managment fees and periods without rental income. Also don’t forget maintenance costs. Also I would never consider a condo conversion (or most condos for that matter unless they are in incredible locations, i.e., NYC, waterfront, etc.) as they are usually have short expected useful lives, HOA fees can sky rocket, you can’t control who the other residents are or how they maintain the building, etc. You are better off buying a foreclosure or pre-foreclosure single family home. You might be able to get some close to cash flow now, but because of the credit and liquidity crisis and the recession, some ppl will have to dump in the next few years regardless of price, so they should come down another 25-30% in my opinion. Now is the time to start saving if you havent already, not buying. 2010 will have better opportunties.
I was initially only evaluating buying for myself, but your post got me thinking about investment properties. Thanks for the advice on condos. I’d thought about how condos appreciate(depreciate?) over time since the ones that are older that I’ve seen tend to look cruddier than SFH’s of similar age. I definitely agree than prices are going down and will take on the order of years to get to a point where you won’t have to worry about more substantial drops.
lep, the basics are pretty simple. There are other items not so appearant. For example, I consider the paydown of prinicple thru amortization to be part of my “cash flow”, though it does not get paid to me. I also think you need to consider maintanence. I used $50/mon for this home, because it is almost brand new. With a condo, you need to see the HOA balance sheet, to determine if they have been reserving for new roofs, parking resurfacing, etc. If not, you are buying deferred maintenance. Also, the taxes. You get to depreciate the value of the building over 29 years and subtract that from your income. HOWEVER, if you are in a low tax bracket, beware that when you sell the property, the IRS makes you recapture the depreciation at a 25% rate. If you were in the 15% tax bracket when you deprecitated the property, it will take many years of compounding your initial tax savings to make that work.
All in all, if you can buy at 12 x’s the annual rent and your financing costs are at 6% or less, it will usually make sense.
I think even when you buy for yourself ,if the house/condo can be rented and cover costs ,than you aren’t forced to sell if you have to move .Now many borrowers don’t have the option of renting out to cover costs because of the boom ,and thats another reason why homeownership tracts with local rental prices . Usually investors pull out when the prices get to high ,but with this boom more came in ….crazy.
“You get to depreciate the value of the building over 29 years and subtract that from your income.”
You get short term depreciation for appliances, carpets
roughly 10% more than straight line over 29 years. Can make it positive cash flow
>>> I am paying 12 times the annual rent and will receive a 5% return on my 25% down payment. My return will really be 8.9%, since I have it leased to a great tenant, and manage and maintain my own properties.
Are you sure that they were talking about USD LIBOR? I thought this article was about the UK market??
London sets USD LIBOR.
“LIBOR [_____]” means the rate for deposits in United States dollars for maturities of [___] months which appears on Telerate Page [____] as of the relevant date and time of determination. Telerate Page [___] means the display page so designated on the Telerate Service (or such other page as may replace that page on such service, or such other service as may be nominated as the information vendor for the purpose of displaying the British Bankers Association fixing of the London Interbank Offered Rate.
The article, from a UK newspaper, refers to 3-month LIBOR for Sterling denominated debt, not US Dollar debt. 3-month Libor for Pounds is around 5.8-5.9 percent.
Thank you T.J. That clears up a big piece of the question.
Thank you! They’re lending Pounds, so the Dollar rate is irrelevent.
Jingle,
The article refers to LIBOR-Sterling rates not the LIBOR-USD rates usually quoted on this blog. This is a sharp increase (from about 5.4% at the beginning of the month, if my faulty memory is correct) and a sign of growing instability in the British market.
From the Financial Times website:
Interest rates in sterling money markets jumped on Friday with three-month interbank lending at its highest rate since the start of the year and the highest one-day move since rates began rising again in mid-February.
Sterling three-month libor - the rate at which banks lend to each other - jumped 9 basis points overnight to 5.93 per cent from 5.84 per cent on Thursday and from 5.8 per cent on Wedndesday. That compares with the Bank of England rate of 5.25 per cent.
I’m in Sacramento. Could you tell me the location of the house (area, sub-division)? Thanks.
South Placer County.
From the field- I was in a project knwon as Black Bear Reserve yesterday to appraise an REO and I was shocked to see that the project of $500,000 plus homes a year ago in tanking such as it is. Every other previously occupied house is empty and dark. Brown grass and long weeds dominate the subdivision. Sales office closed. Unlike past busts there were no partially completed units so I think these were all contract builds and bails. Sub-prime-NOT! This was upper level stuff. So it goes.
The first time I played golf there I went out as a single and the starter added me to a threesome. Before we even tee off on 1, one of the dudes tells me he’s got a great deal on a house in Black Bear Reserve, and he just dropped the price from 525k to 425k. Well, I keep my mouth shut and play the round. During the round he tells me what a great investor he is because he bought this house from the builder for 175k, in 2004. I became friends with a few guys in the group and we play every so often. I ask, “how’s ?” Well, he left town and the house he tried to flip is in the condition you describe. And one of the guys turns green every time I mention his name–I think somebody done somebody wrong!
Excellent! You should bring up the name often. And then mention “naively” that it looked like he sold some “clueless” people some seriously overpriced houses, and then left town. And now the houses are pretty worthless too.
Aim for maximum social embarrasment.
Then, order a round of beer, and pay in cash. Hand out a generous tip too. Gotta do these things right. No point p*ssing around like an amateur.
You should bring up the name often. And then mention “naively” that it looked like he sold some “clueless” people some seriously overpriced houses.
I almost spit out my oatmeal reading this thread!
I am waiting for my Florida real estate tycoon buddy to admit he’s been wrong about real estate and gold and that I was right to be in savings bonds and gold outside my retirement plans. The next milestone in my prediction is oil above $150 per barrel, and I think we won’t hit that this year but in the next couple of years.
Faster Pussycat, Sell Sell,
You have one mean streak in you. I like, I like, I like.
You should see me misbehavin’ in the Bay Area.
Most fun ever. Particularly Shallow Alto.
Do your part, go update the Wikipedia:
http://en.wikipedia.org/wiki/Black_Bear_Reserve
DD~
You need to be opening a “residential purchase consultanting” biz.
to advise people on project’s you might see having future viability and potential.
You can promote the enterprise by differentiating yourself from the lying, self-serving hucksters of the NAR with properly worded inferences that they and their fellow racketeers in the mortgage industry are largely responsible for this debacle in the first place.
HD- I might do just that if I had any idea which ones might be viable in the future. I simply don’t. This thing is so far off the tracks I can’t hear the whistle anymore.
RE: This thing is so far off the tracks I can’t hear the whistle anymore.
DD~
Nothing like gettin’ the dimensions of the calamity straight from the horse’s mouth. When a legit, experienced appraiser can’t get a handle on the direction of everything-it’s fookin’ bad.
hd74man/dimedropped . Don’t you think the developers/builders just made up prices ? It was all based on speculator marketing ,not end user marketing . No logical reason for the prices that were set other than demand from a speculation mania of liar loans and unable borrowers (at least long term ability to pay )
Usually what the market will bear ,or a “market appraisal “,works ,but hell all the rules went out the window when you
have a mania of unqualified buyers creating the demand (which is a underwriting mess up ) . Alternative tract comps weren’t and are still not reliable either .
So that leads me to say that it goes back to what a “willing and able borrower demand ” can pay,(not just market demand )sets the real market value .So the liar loan speculators and lenders were fraudulent because they were not “able” buyers .
Had all the speculators been forced to put 20%or 25% down or had been forced to pay higher rates,or had been forced to proved they could cash flow on their investment ,than the demand could not of taken off.
At some point what is a appraiser to do when his job is to comp out other sales ,but its the lenders job to underwrite how viable that sale is in terms of preventing fraud or liar loans. In other words ,hard to determine “market value ” at this point especially when you have foreclosures determining the values right now . How about “foreclosure value”,is the market value today .
hd74man/dimedropped . Don’t you think the developers/builders just made up prices ? It was all based on speculator marketing ,not end user marketing . No logical reason for the prices that were set other than demand from a speculation mania of liar loans and unable borrowers (at least long term ability to pay )
For me it was a very subtle thing. I was deeply immersed in FHA foreclosures. I worked for them for 15 years and was consumed with the number of orders for foreclosed properties.
Then magically they began to dry up. I was completely blindsided by this phenom as there are always foreclosures. Suddenly none and the market began to rise dramatically. I really was not geared for mortgage work, thank god, but business was tanking in my field. I began to research the activity and frankly I was mystified for a long time. I had only the old rules to go by and there was a completely new model at work. I began to research the monetary aspects of closings and was again shocked to see the terms of purchases. I simply could not sign off on 100% financing even though it was happening.
I shifted to more and more commercial work and I do a lot of expert testimony work. I tried a few mortgage assignments and got fired immediately for doing “cash equivalency adjustments” on sales. I used traditional models for these and found that the current market 03′-06′ was loaded and I knew it would implode. TRacking incomes and associated expenses here in Fl could lead nowhere else. So basically I had little work and made 1/3 my usual income. I knew my day would come and I did not want a bunch of reports out there with my name on them.
I kept my finger on the pulse or lack therof and there are certain names which keep popping up and they were the ones making the most foolish loans. BS, JPM/C,Citi, ML, they were all in collusion and playing follow the leader.
Countyrwide was a bunch of pukes from day one. They had a philosophy not even a mother could love. It shown through their dealings top to bottom.
IN 4 years of sipping the koolaid laden mortgage market I never met one person who was actually in the process save the homeowner and many times not even them. Hundreds of millions of dollars was going in and out of computers across the country without one person seeing the people or the property. 60% of loans were made from computer models, AVM’s and no appraiser was involved. This crap data came from computers much more so than appraisers. Models are just that. Data in data out. As far as I know these are what really drove the prices up through the roof.
Builders, yes they simply began to raise prices, start rumors of shortages such as concrete for 3 gorges damn in China, etu bs????? I saw one bulder go through a slowdown and pull back for about 6 months and when he came back on line his prices were 40% higher and noone flenched. This was late 03′ and then the race was on.
I quizzed LO’s at various lenders and asked them. ” Do you guys not realize that this is going to be a river of quicksand at some point?” The answer was ubiquitous ” well I just keep the line movin and I won’t be here when it stops”. They knew! I knew! You knew! Hell the whole world knew but noone did a damn thing till the wheels came off, save this blog.
I will not give AG or any of those asshats a pass on this. BB knew, GB knew, Tony Soprano knew. Go figure. IN fact it was a wise guy game. A nation playing loan shark to its people. The only problem now is they don’t know where the guy lives.
Finally, I am busy once again. Foreclosed properties, testifying in court about fraud, construction defects, crooked practices of developers and their mortgage company. I am also teaching a fraud seminar for attorneys around the state in a few months. I am certain that this effort wil be my swan song as I have been in the business 35 years and am going to try to make 50. I will be almost 75 then. Hey what a career. Think I will be able to say I saw it all? Probably NOT!
Thanks for the great post . You and hd74man are two of my favorite appraisers/people and your guys are the rare good guys of the industry. Good luck to both you and hd74man in your efforts going forward .
DIMEDROPPED — I hope you write a book about your experiences. Could be a best-seller.
My sister is Kathleen Parker who has a new book coming out in June and we have talked about a ghost writing situation.
By the way her new book is called “Save the Men” and is quite good even if I do say so.
From Boston.com..
“The United States has already slipped into a deep recession that could be the most serious since World War II, said Martin Feldstein, president of the Cambridge group that is considered the official word on economic cycles.
“The situation is bad, it’s getting worse, and the risks are that the situation could be very bad,” Feldstein said in a speech yesterday at a financial industry conference in Boca Raton, Fla.
Feldstein, president of the National Bureau of Economic Research and a professor of economics at Harvard University, said the chief causes of the shrinking economy are sinking housing prices, months of job losses, and turmoil in the financial markets.
The National Bureau of Economic Research is the official arbiter of when recessions begin, and it could still be months before the organization makes that determination. If it does, that would mark a formal end of six years of economic expansion.”
Hmmm.. I think he’s just wee bit late….
Must have been due to the elevator ride down from the Ivory Tower, oh wait, it’s Harvard, does that make it an Ivy Tower?
Good for Marty Feldstein! Most of the talking heads on the boob tube are still saying the bottom of real estate is this year. And most of us HBB’ers are guessing sometime after the Fall of 2009. Some of us (including myself) say 2012 and then a long flat bottom for another decade after that.
No more politically feasible stimuli can rescue us from the one-two punch of baby boomer downsizing/real estate price cuts and the beyond peak oil. If not for peak oil and rising demand from India and China, I’d say we are in for severe deflation. But prices will have to continue to rise to meet demand for oil based products. Most people don’t realize food is an oil based product (fertilizers, pesticides, energy to power farm equipment).
It bodes well for higher spot prices of precious metals for several years.
The best ways to combat the recession are 1) raise the federal funds rates, 2) stop the war on terror and cut defense spending by at least 50%, and 3) completely stop all entitlement programs and corporate subsidies and 4) abolish the income tax, dividends tax, and capital gains tax.
“Some of us (including myself) say 2012 and then a long flat bottom for another decade after that.”
2012 has long been and still is my best guess for when the housing crash will settle at the bottom of the cliff it is currently bouncing down. And I also agree with your long bottom thesis. It will take quite a while before the fools who said “real estate always go up” loudly and often stop talking about real estate being the worst possible investment.
inflation in essentials means deflation in other areas.
land values — rents — are the hidden shock absorbers of the system. Renters will only pay what they can afford. If taxes, gasoline, food goes up — and wages remain depressed — either rents or occupancies will have to go down.
Jane Quinn Bryant on the PBS Newshour had similar things to say. I’m looking for an economic turnaround — in 2010. If things were more rational we would be turning around now, because some of the crap wouldn’t have happened and some would have stopped in early 2006.
Since you watched the newshour last night. What do you think about the govermint bailing out millioniare’s in NY and then putting poor people in poisonous homes in New Orleans?
You just have to marvel at the ignorance of poor people in New Orleans, here was a chance of a lifetime to get job and make money.
So instead of Jesse Sharpton Mfume…marching for jobs, they sat back and let 15,000+ illegals do all the cleanup and rehab work………So it wont be a chocolate city anymore after the work is done.
I think the government has no business providing homes for anyone. The HUD should be abolished and those useless people can go to work and find a place to live. Why is all the rest of the Katrina region being taken care of by the people that lived there and NO, the only area that gets much news attention. Simple. Most of the people there are Black and the news can cry racism. The Mississippi gulf coast got wiped out. Those people picked up their lives and have been busy putting them back together. The NO crowd is still waiting for the “government” to come fix their house and neighborhood. Get a clue.
I didn’t hear many people bitch when the Feds stepped in and help the families of the 9/11 victims. Well, except for the families of the Oklahoma City bombing victims that didn’t get anything and wondered what was so special about NYC.
I was bitching. I thought it was outrageous to give away government money for life insurance coverage. I carry my own life insurance.
It’s not the Fed’s job to pay out money when things go bad.
I do fault the Fed for those people being allowed in the country in the first place. Borderless Country, everyone welcome. Please rob and kill us.
I for one think it stinks. 3 years later and the people are still homeless and poverty stricken from Katrina. And we the taxpayers bail out the banks on a dime, so that the folks can ride around in maserati’s and drink $750 glasses of brandies? the thousands that are homeless shows the utter disconnect, the prejudice and unfairness and callousness of our system. the inability to rise to the needs of our fellows who have been utterly decimated by a hurricane. I hope someday soon we get our priorities straight here that we are a United states and we should care for the Common good.
I don’t favor any bailout of rich white folks.
I oppose ALL government “handouts”. NO Welfare, corporate or individual. Get the goverment OUT of our lives and lower taxes.
It is unfortunate that people chose to live in a fishbowl and then NOT prepare for a disaster.
But, the disaster is over. Get to work and fix your neighborhood. Don’t sit on your ass and wait for me to fix it for you.
Comment by diogenes (Tampa,Fl)
2008-03-15 08:49:00
I don’t favor any bailout of rich white folks.
I oppose ALL government “handouts”. NO Welfare, corporate or individual. Get the goverment OUT of our lives and lower taxes.
It is unfortunate that people chose to live in a fishbowl and then NOT prepare for a disaster.
But, the disaster is over. Get to work and fix your neighborhood. Don’t sit on your ass and wait for me to fix it for you.
Diogenes, are you a white person?
The black people in New Orleans were being mistreated long before the hurricane hit.
The current mistreatment is just a continuation of their previous mistreatment.
Spook
Calling BS! Get off ass, put body in gear, go to work!
I’ll call some BS also. folks who have had to work all their lives in poverty work their a$$es off with little return. this stereotype that they just sit around all day is a load of crap. they have been mistreated with only recent improvements in voting rights and only little more than half a century away from lynchings and downright prejudices.
pull up your bootstraps is such a load of crap. i’m sick of hearing it. we should be pulling up each other and that would mean federal bailout for the victims of Katrina BEFORE the suits on Wall street. ‘Everybody get in line!”
and that is not to say that people aren’t working right now. check it out. they could use some more help! if there are any wall streeters out there who might have wanted that $750 brandy tonight, maybe a little less expensive glass and send a little to those trying to rebuild. thanks
http://www.commongroundrelief.org/
I think it speaks for itself that they had to bring in a bunch of illegals to do whatever clean-up and rebuilding got done in New Orleans, as most of the locals were sitting on their fat haunches waiting for Uncle Sam to come to the rescue. This is what multigenerational entitlement programs gets you. What a worthless, corrupt, parasitic bunch. Texas made the mistake of welcoming them with open arms, and has paid a price for such misplaced generosity. The people of NO elect deeply corrupt, incompetent “leadership” and then surprise surprise, these “leaders” failed to take the most elementary precautions to protect and serve the populace, while the police actively joined in the looting and theft, while zealously disarming the good folk trying to protect their property with firearms. Are there good people among the people of NO? Yes, but I suspect those are a tiny minority.
I heard her also on the radio…She laid out a pretty bleak picture….
Another new phenom. I am getting the most ludicrous questions from review appraisers about the market even though I state it is declining and no end in sight. “PLease justify a declining market.” Oh yes please, do justify it. Look at your books asshat.
RE: I am getting the most ludicrous questions from review appraisers
DD~Gotta be appraisal hell…you have my complete empathy.
The rubber stamp, number punchers have screwed it royally.
I’ll ply you with beer if you actually make that your reply.
Fed Will Take Into Account Weak Dollar
By Greg Ip
Word Count: 530 | Companies Featured in This Article: Bear Stearns
This seems to be advance notice that the rate drop will be 50 basis points rather than the 75 expected by certain people.
Not to mention the 100 bps expected by a few other people. It would be very interesting if the stock market sold off on a 50 bps cut…
50 bps stock market selloff and dollar rally. 75 bps or more, both tank.
What makes you think the stock market would tank in either case, given it’s remarkable resilience last week in the face of two major international financial firms’ spectacular blowups?
“the dollar also has joined its worry list. But it isn’t clear whether that argues in favor of a smaller or larger cut in interest rates.”
Who writes this sh*t? One of our cats was looking over my shoulder when I read this and she started laughing.
It means a larger cut, in your world, dummy.
Perhaps they are realizing that cutting rates simply weakens the dollar and drives up the prices of commodities, particularly energy. As energy goes up, the amount of money available for Joe and Jane 6Pack to spend goes down. A downward spiral.
The bad news is it looks like energy prices could go much higher this year, no matter what the Fed does. China’s year-over-year oil imports were up 18%, this even as US is in recession. The only solution is for the US to dramatically cut its use of oil, like by 25 or 30 percent immediately. Car pooling, conservation as a lifestyle, expand public transportation, etc. But I just don’t see that happening willingly. It looks like we will get conservation forced by price rises.
“Perhaps they are realizing that cutting rates simply weakens the dollar and drives up the prices of commodities, particularly energy.”
It amazes me that most of the MSM appear to be totally clueless about this fact.
Actually, it is happening. It was just reported that public transit ridership hit a 50 year high–so it’s even higher than during the hot economy in the late 1990’s. Amtrak, despite cutting routes since the late ’90’s also is posting major revenue and ridership increases. They have been turning riders away from some trains.
And a friend of mine at work just moved into a trailer in Interlachen “three minutes away” from a buddy of hers on the night shift so they can carpool. (And no, they aren’t romantically involved.)
“The only solution is for the US to dramatically cut its use of oil, like by 25 or 30 percent immediately. Car pooling, conservation as a lifestyle, expand public transportation, etc.”……………..
I have always been a “conservative” person by nature. I don’t waste resources. I buy economical vehicles and use resources till they are completely expended or can be converted to other uses.
Naturally, I have been appalled by the events of the last few years.
The EQUITY EXTRACTION/conversion to “wealth” game resulted in the most fuel wasting automobiles to be seen on the highways since the 70’s.
Hummers, Escalades, Navigators, Suburbans, and a myriad of other wasteful styles litter the roadways of America. Vans and trucks have big V-8’s and get 14 MPG. This is Waste. It doesn’t happen in Europe. Gas is $1.65/Liter.
They drive Volvos, VW’s and Fords made in Europe that get 30MPG.
I can’t find a decent car here that gets good fuel economy. A changed from a 4 cyl. mustang to a 6 cyl. because you can’t get a 4 cyl. anymore.
People love to waste to show a sense of “style” and “image”, so long as they have the money to squander. Recession will help us conserve. It’s long overdue.
I agree. I was happy around 1990 because they were building great fuel-efficient cars and I figured I’d be able to get one used when I graduated.
Then we had the giant SUV boom of the 1990’s, with freaking tax breaks on SUVs and special exemptions to the CAFE standards. And this was under Clinton!
Of course, it got worse under Bush. By now I am thinking about getting a car … but my options suck! Until this year, you could overpay for an ancient 1990-mobile that probably burned more oil per mile than gasoline. I mean, damn, look at the premium on CRX’s.
Even the so-called economical cars being built today aren’t really. Guess I will keep waiting. In the meantime I have learned that you really can walk two miles to work, that you get what you pay for with bicycles, and if you really want to learn about the place you live, ride the bus from 10-11AM, and listen.
I am thinking about getting a car … but my options suck!
How about a VW TDi? I’ve had one for four years. Supposedly “not reliable” but knock on wood no problems at all for me. Consistently gotten 38mpg city, have heard most people get upper 40s highway. I live on Maui so can’t certify the latter. I bought the thing for 20K new. Diesel engines often last 200K+ miles too, good for those of us who want to run things into the ground.
Very true. We have regressed. I bought a new Toyota Tercel in 1991 for 7K. Still driving it. 45 mi/gal. I love that car to death and haven’t seen anything worth a damn to replace it with.
RE: Hummers, Escalades, Navigators, Suburbans, and a myriad of other wasteful styles litter the roadways of America. Vans and trucks have big V-8’s and get 14 MPG. This is Waste.
It was an embarrassment to return home to view the digusting, grotesque pieces of pig-iron Americans drive after a visit to England in 2005 when the UK/US gaz price equivalent was $8.00.
However, this is a reflection of what is offered to them by the Big 3.
The stylish, fuel efficient, models produced by their European divisions never make it to US shores.
“How about a VW TDi? I’ve had one for four years. Supposedly “not reliable” but knock on wood no problems at all for me.”
DO NOT buy a VW. Those POS’s are in the shop more than they are on the road. I know, I have three sisters who just loved those trendy VW’s. They never heeded my advice, until the repairs just bled them dry. Sure, the warranties took care of certain repairs on the new vehicles, but the breakdowns never stopped. They finally had enough and moved on. Of course they’ve since moved up in the world, and are now into expensive BMW’s, which seem to be a better product.
and are now into expensive BMW’s, which seem to be a better product.
Hahahahaha..just wait till the warranty expires on those suckers, you better hope one of them is dating a BMW mechanic.
The really fuel efficient small turbo-charged diesels produced by Euro carmakers can’t be sold in much of the USA because of EPA restrictions, which will be getting tighter shortly.
“Hahahahaha..just wait till the warranty expires on those suckers, you better hope one of them is dating a BMW mechanic.”
Money is no object for either of them. They paid cash for their cars, and fritter away more money per year than I earn in several. I could liquidate everything I own, and it probably wouldn’t touch what’s in their closets. Such is life.
The really fuel efficient small turbo-charged diesels produced by Euro car makers can’t be sold in much of the USA because of EPA restrictions, which will be getting tighter shortly.
There are a ton of new diesels coming out in the next two years, including Honda Accord Diesel. There are also rumors of a VW polo.
On the earlier comment on VWs sucking, yes I have heard that, but again, four years no problems for me. And it is absolutely laughable that you would recommend a BMW over a VW. And if money is no object for them, how did the VW repairs “bleed them dry?”
Just drivin’ my Expedition and luvvin’ it!
“On the earlier comment on VWs sucking, yes I have heard that, but again, four years no problems for me. And it is absolutely laughable that you would recommend a BMW over a VW. And if money is no object for them, how did the VW repairs “bleed them dry?””
I’m certainly not recommending BMW’s. However, I do know that they (M3 and M5) have been much more reliable than those VW’s. As far as bleeding them dry, it wasn’t meant to be taken literally-just a hastily chosen phrase I suppose, but I think it got my point across.
All that means is that it is time to sell more dollars.
“…In reality, of course, America does not have a dollar policy — other than letting the market determine its value. The American government does not intervene in the foreign exchange market to support the dollar, and the Federal Reserve’s monetary policy certainly is not directed toward such a goal. Nor is the Fed specifically aiming to lower the dollar’s value. Although cutting the Federal Funds interest rate to 3% from 5.25% in the summer of 2007 now contributes to dollar depreciation, this has been aimed at stimulating a weakening economy.
Nevertheless, all U.S. Treasury secretaries, going back at least to Robert Rubin in the Clinton administration, have repeated the mantra that “a strong dollar is good for America” whenever they were asked about the dollar’s value. But, while this seems more responsive than “no comment,” it says little about the course of current and future U.S. government action….”
The European $afety Net
http://tinyurl.com/3b3×3r
By MARTIN FELDSTEIN
Project Syndicate
March 14, 2008
I bet Mr. Feldstein is glad he turned down Mr. Bernanke’s current job.
Realtors offer sunny outlook for 2008.
SAN MARCOS —- Real estate agents said during a conference Friday that the region’s sagging housing market has started to bounce back and blamed the media and banks for delaying the recovery.
George Chamberlin, a panelist at the event and columnist for the North County Times, said that some news reporters biased their reports because they are jealous of homeowners.
Most real estate agents who spoke at the conference seemed to agree, with one agent suggesting that agents and builders pull all advertising from newspapers until positive articles are printed.
http://tinyurl.com/2qa9tb
“Most real estate agents who spoke at the conference seemed to agree, with one agent suggesting that agents and builders pull all advertising from newspapers until positive articles are printed.”
The trees and I would both be forever grateful if a lot less ad copy were wasted on used home listings priced to never sell.
I just made my periodic check on the median list price of used homes in our zip code (92127). It is currently at $1.1m (in 4S Ranch), which is $335,000 below the peak median list price I recorded last year of $1.445m (2/17/07). I suspect the median list price is a lagging indicator of where the market is headed, as it reflects seller expectations, and sellers only indirectly face credit constraints.
P.S. It cannot be a good sign that the median-priced used home is a never-lived-in bank-owned foreclosure sale, or that it has been on the market already for 106 days, or that it is getting sold by Dutch auction. I will have to watch how far it falls before a buyer is forthcoming…
17177 SAN ANTONIO ROSE CT, SD - Rancho Bernardo, CA 92127**
List Price: $1,100,000 - $1,100,000
ZipRealty will give you up to $6,600 cash back.*
Bedrooms: 4
Full Baths: 4
Partial Baths: 1
Square Feet: 3,704
Price per sq ft = $1.1m/3.704K = $297 No Way!
Lot Size: 18,889 Sq. Ft.
Year Built: 2006
Listing Date: 11/30/07
On Market: 106 days
Type: SFR
Status: ACTIVE
Description
Opportunity knocks with this well priced bank owned foreclosure property (this is not a short sale). Entire home surrounds a courtyard with fireplace. New construction- never lived in. Ready for you to add all of your personal touches. Beautiful kitchen with granite and custom backsplashes, viking see supplement….
ZipRealty Price Track:
Price Reduced: 01/03/08 — $1,300,000 to $1,275,000
Price Reduced: 02/06/08 — $1,275,000 to $1,199,000
Price Reduced: 03/11/08 — $1,199,000 to $1,100,000
wow..$175,000 price reduction..
you better jump on it..fast…
PB, it is hard to tell what this home cost to build, but today, land is worth nothing, lot improvement costs are about $75,000 each and construction costs might be $150/SF for a well built home with amenities. So until this home sells for under $700,000, you risk builders undercutting you in the future. If you can get it for less than reproduction cost, then you know you have a house worth purchasing. It seems the upper end still has a long way to fall.
Thanks for the great advice. I am not in the market at the moment (for reasons that seem obvious).
P.S. It is useful to consider MLS (caution: .pdf file link) statistics as a gauge of how far prices may have to fall in 92127 going forward to restore equilibrium (overshoot?).
For February 2008, there were 74 new SFR listings on the MLS for 92127 at a median list price of $895,000, compared to only 17 sales at a median sale price of $745,000. You can see the new listings price undercuts the median existing price of $1.1m by a gap of $205,000, and the median sale price undercuts the median new listing price by another $150,000.
Today’s lower sales prices are tomorrows lower comp prices, and homes priced higher than new listings will never sell.
Like this one?
http://portland.craigslist.org/clc/rfs/606289401.html
Probably a Guinness record. And on Craigslist, no less
$65,000,000 on Craigslist??
WTF?
According to the video, the “seller” expects to get the $65,000,000 in about 15 years….Hmm…15 years of showings and advertising, etc…that’s enough to drive anyone mad.
I alos like the fact that there is very limiting parking..
$65 mill… I want to able to land a 747 on the driveway.
I want TWO of these.
“$65,000,000 on Craigslist??”
That’s even “out of reach” of those Salinas lettuce pickers!
A mere $5,417 per sq.ft. And a $3.9 mil commission at 6% for everybody’s favorite professional.
‘The trees and I would both be forever grateful if a lot less ad copy were wasted on used home listings priced to never sell.’
Testify, PB! Oh, isn’t that the truth.
There could be all-out war ragin’ and the realtors would offer a “sunny” outlook.
“Blamed banks” hahahahahiihiihiihii
As Alanis sang, isn’t it ironic…
Isn’t it blackmail to say that you will pull advertising unless the press prints positive articles ? Wasn’t this part of the problem during the mania that the press only reported positive news about real estate, often times giving the REIC ‘free positive press “,with all their real estate myths that were unchallenged .
I can’t forget how the ” commissioned sales person ” or self-serving trade groups were set up as authorities or experts on real estate .
The REIC want to be able to brainwash the public again . I don’t even think the REIC should be allowed to say ,”It’s a great time to buy “,because that is investment advice . The only thing that most real estate agents are really qualified to comment on is what the list price is for a property and where the bathroom is .
WEEKEND EDITION
Rewriting the golden rules
Have ‘gold bugs’ finally won the respect of mainstream investors?
By Polya Lesova & Nick Godt, MarketWatch
Last update: 6:43 p.m. EDT March 14, 2008
Sounds like it’s the dawn of a whole New Era again.
No, it’s the dawn of capital flight.
If cash is king, then cash is king in ANY safe currency, and that may not be the dollar.
Serious question on one of your posts yesterday: I constantly run into academic folk in my day job who claim no evidence is valid unless it is backed by “statistically significant” results based on a sample that came from a controlled experiment. Trouble is, there aren’t many controlled experiments that just plop down from the sky into the real world.
Do you have any good references (academic or otherwise) that refute this nonsense? (It is hard to refute academics if you are merely armed with common sense…)
I’ll take common sense over biased-based funded research, any day.
The problem that I have always found with the academics, is that they tend to ignore common sense or actual events.
“statistically significant”..Hmm… ok..statistically 1% inflation may be low, but it still eats away at your spending power…statistically, the illnesses associated with living under power lines/cell towers, don’t prove that there is a danger with living under them, but I still wouldn’t buy a house under a gazillion watt power line…
Arguing with an academic can be like arguing with a zealot.
Off the top of my head, I would not look in the “economic” literature but the “philosophical” literature.
Empiricism is the game you are looking at, and the critics of “naive empiricism” did a hatchet job long before economics turned all mathematical and sh*t.
Gimme some time though. I’ll try and hunt down some references.
On a side note, look at this:
http://www.itulip.com/forums/showthread.php?p=30006#post30006
EJ is a seriously smart man, and I would at least take the time off to ponder about what he says.
We seem to be most closely related to Sweden in 1991. Except Bernanke doesn’t get it, and seems hell bent on keeping the zombie banks operating à la Japan.
Thanks for the itulip link — one that Jas Jain might want to peruse…
From the itulip link:
” … there is by his estimate $6 trillion in excessive leverage built up over the past ten years that has to be unwound.”
Six trillion dollars is a lot of money that is subject to doing a disappearing act. Its disappearance is going to make the remaining amount of money - cash - that much more valuable.
Those who have access to the remaining money, the cash, will be dictating prices to those who are cash short and are forced to sell.
Per the philosopher Hume, and later further elaborated by Karl Popper, “from no finite number of observations, no matter how large, can any unrestrictedly general conclusion be drawn.” We don’t know anything…
Hume may have been unaware of the works of Thomas Bayes. What was Popper’s excuse? (Perhaps he was a philosopher — aka, academic…)
One of the tenets of nihilism is not only that we don’t know anything, we can’t know anything. I know that, for sure.
Claiming an inability to know anything sounds like nice cover for the hard work of learning something about how the world works. I see their point — learning is difficult work!
Ask the folks at Bear Stearns if they would consider cash as their king.
Cash is the one solution to their woes.
Are you buying dollars all the way down?
I’m collecting as many dollars as I can.
“Cash is the one solution”
I’m confused techie, are you in favor of cash? Lol…
Perhaps some of the answers are here:
“All Models are Wrong: Reflections On Becoming A Systems Scientist” (warning: PDF)
http://web.mit.edu/jsterman/www/All_Models_Are_Wrong_(SDR).pdf
The first paragraph might provide some ideas. It discusses the importance of formal models, but also their limitations.
It’s like 1980 again and the gold bugs are everywhere.
With unending hubris too.
The same week that we saw how that worked out for Mr. Spitzer.
What ended Gold’s run in the 1980s was a man by the name of Paul Volker, who raised real interest rates to almost 20%.
If there is a Paul Volker out there willing to subject the economy to 20% interest rates, fine, sell your gold. But otherwise, it seems clear what the govt’s plan is, vis a vis the debt.
Personally, I think the gold shorts are showing the hubris by trusting in a piece of paper that represents money rather than in money itself. But that’s just my opinion.
I’m continuing to accumulate gold and silver on a monthly basis and have no plans to stop anytime soon.
“a piece of paper that represents money rather than in money itself”
Gold = metal
Money = green pieces of paper w/ pictures of dead white men inscribed thereon
No.
money = whatever the market will take in exchange for whatever they are selling.
It’s this hubris of economists that the government sets the money. It doesn’t. The market does. Specifically, the largest market does, and if that is the black market then so it goes.
Ask anyone in Russia before recent time, or India before the 1990’s what money was. It wasn’t the rouble or the rupee.
My gold purchases were largely made in ‘05. Then, and now, I did not/do not envision them as permanent anything…but do see them as a probable investment target as the rest of this mess implodes/unwinds. Just as in real estate…..or dot coms….., when your manicurist is advising which juniors to grab, I’d plan to be cashed out.
Logic is sadly lacking when the panic button has been pushed.
I hope when the times comes it will be as fun to ride gold down as it was to ride it up.
“It’s like 1980 again and the gold bugs are everywhere.”
And I recall the suicides, broken families, bankruptcies when the bottom fell out of gold. I’ve never seen an “investment” unwind so in size in scope since.
” I’ve never seen an “investment” unwind so in size in scope since.”
So are you all inferring PM’s will tank soon? I saw Louise Yamada, and some other reputable voices still saying $1500. by years end. … That being said, I find it hardly safe to accumulate in US$…
No, I wouldn’t argue with the Old Lady. The blowoff hasn’t occurred yet, that is my belief. But the sand is running out of the timer…
“So are you all inferring PM’s will tank soon?”
I’m saying that it’s not different this time. Regardless what the speculative fools say.
Your picture of Sarkozy with Bush is a classic.
Ooops, wrong name……sorry!!
My post wrongly using the wrong name on the guy with Bush on your webpage hasn’t shown up yet.
Great picture.
FELDSTIEN…
http://www.guardian.co.uk/feedarticle?id=7384728
Remember this is the group that ‘Officially’ calls a recession!
I’d say it has already been unofficially called at this point. How long until this new reality diffuses to the masses?
I don’t care about the stupid NBER. Driving in the rearview mirror instead of looking at coincident indicators. Who cares?
I just observe as to how many people argue with the poor cashier girls at the grocery store over the prices and the weights, and how companies that have never offered discounts in the past, are now offering steep ones.
We are firmly in a recession.
It is not so much about whether we are in a recession, but whether the recognized experts who date them say we are in a recession, which affects media reports and public perceptions. Once this consensus is tipped, it is only a matter of time before J6P himself knows and begins acting like he is in a personal recession. This is what Robert Shiller describes as an information cascade.
I feel like a recession is coming, but not here. I live on Maui — tourist central. Were there a recession things would seem quiet around here. They aren’t. Plenty of tourists clogging the restaurants and bars here.
I travel a lot for business. Recently visited Alexandria, VA and San Antonio, TX. Both locations restaurants were bustling. Had to wait an hour for a table at La Fogata in SA TX on a Thursday night.
Sorry to burst the “we’re in throes of a recession/depression/whatever” but I remember what a recession feels like, and this isn’t one yet. I was here in the early 90s in Hawaii, which was hit much worse than the U.S. by the recession. There were no jobs, people were leaving Hawaii in droves for the mainland, people were openly talking about it, and there was just a general feeling of malaise and depression in people. This isn’t even close yet.
RE: Plenty of tourists clogging the restaurants and bars here.
You know the saying-”Eat, drink, and be merry, for tomorrow we all die…”
Kinda like all the Berliner’s dancing and partying it up, as the Russian 7th Army hordes were coming over the ramparts.
As I posted the other week, Aspen is having record vacancies in their hotels, in spite of record snow. Have a friend who skied at Snowmass the other day, mid-week, and he said at one point it was just him and his buddy on the slopes, reminded him of the good old days.
Talking to a couple of people here in SE Utah with tourist businesses (restaurants/hotels, this is a BIG tourist area), and they’re saying it’s a bit slower than last year, too early to tell if really down or not, but March-May are big here for tourists, so will know soon. The price of gas isn’t prohibitive yet, but the pocketbooks are hurting from other things going up. A friend who does work for a BIG tourist draw near Aspen says they had a meeting last week to discuss/predict what slower biz was going to do to them, how to adjust.
Aspen is having record vacancies in their hotels, in spite of record snow.
Was in North Conway with the family to do some skiing last week. Vacancies everywhere, despite the fact that they received 10ft of snow this season and conditions are the best they’ve been in years.
Was at Attitash for two days, and the mountain was pretty much dead. Granted it’s a small mountain, but it was almost deserted except for a school trip or two. Had lots of fun teaching my 4yo to ski…
Yup, kids are fun on the slopes - except when they run into you
A few years ago I was skiing at Monarch, and a hot-dogging snowboarder plowed into my then-girlfriend. I beat the crap out of him. Some other skiiers that saw what happened kept anyone else from intervening. Very satisfying, I must admit.
Sammy, that Monarch cold freezes up your knees, didn’t you know that?
I’m growingly convinced that what we have going on isn’t “Peak Oil” but really more of “Peak Consumption“. Shipping/airplane/transport technology has taken the import/export game to the limit.
An entire economy that progressively took consumption too far, way too far. The negative savings rate http://mwhodges.home.att.net/save_personal.gif the credit bubble. It isn’t so much that we had a boom, it is the masturbation nature of the boom. Anything with excess was what it was about. It was all caused by too many years of predictable inflation / good times / “steady growth”.
As an empire it isn’t just economic corruption. It is democracy itself, and the founding fathers who were so fearful of a strong central government. We love strong central government now, we can’t imagine life without it. We can’t seem to concieve of taking money from the federal level and giving it to the local level ourselves - we only seem to know how to raise taxes at BOTH levels.
Maybe we already reached “Peak Freedom” in the 1980’s. The protest of the 1960 and 1970’s lead to more freedom, but then we gave up the fight. 9/11/2001 only made it more obvious / popular.
“I’m growingly convinced that what we have going on isn’t “Peak Oil” but really more of “Peak Consumption“.”
So…oil is infinite? Can I have some of what you are smoking?
So…oil is infinite? Can I have some of what you are smoking? Nothing except smog from cars.
My comment is that oil is just one of the many things that our empire/the USA has wasted without concern. What happened after 9/11, we ran out and bough a bunch of new SUV’s and McMansions that waste energy like never before!
As a country: We have become fat, lazy, self obsessed, flashy, obnoxious, you name it.
The USA votes with dollars, and we keep making stupid choices.
Excellent post Sparrow. Isn’t it odd that the peak oil liars never seem to address the fact that natural oil production is an ongoing process and the volume of new oil produced daily has never been quantified???
Exeter, the burden of proof is on fools such as yourself. Of course, the natural process is at work creating more oil. However such spin doctor sticklers of language such as you fail to tell the gullible that it takes tens of thousands of years for natural processes to create one barrel of oil. Why is oil called a fossil fuel? (quiz question).
“takes tens of thousands of years for natural processes to create one barrel of oil.”
And a moonbat bent on speculation for his own personal gain attempts to further blow smoke up everyones behind by lying and attacking the messenger because the message can’t be disputed.
Nice work Bill.
“Why is oil called a fossil fuel?”
Let me guess: Because in a few hundred years, the oil-based energy regime we currently enjoy will seem as ancient as dinosaurs do today?
“Exeter, the burden of proof is on fools such as yourself.”
Your ad hominem argument just eroded your credibility.
natural oil production is an ongoing process and the volume of new oil produced daily has never been quantified???
So what? There’s a lot of hydrocarbons on the moons of Saturn, they will be of no use to us on Earth.
ummmm…. it might have something to do with supply?
Well, SOMETHING started 9,999 years ago; where is it now?
Excellent post Sparrow. Isn’t it odd that the peak oil liars never seem to address the fact that natural oil production is an ongoing process and the volume of new oil produced daily has never been quantified?
Preface: I sort of just hijacked “peak oil” to imply that oil is just one of the things we overconsume - and excess good times (excess liquidity) has resulted in excess consumption.
Even if we found an and quantified enough oil for 50,000 years at current levels…. the real point is we use to much. The USA car mfgs cried how you couldn’t make more efficient cars in the 1980’s - but that just isn’t true. And public transportation isn’t going to take off until people start using it and more $ flow away from the single-person suburban commuter.
Houses are just one more example of overconsumption. It isn’t two cars for every garage, it is two garages for every two cars.
We reached Peak Consumption at about the time the housing prices peaked. The big car sales have since declined, the HDTV prices have fallen dramatically (now it is about cheaper, not bigger and better). Hell, even the Apple iPod looks to me to be all about conspicuous consumption.
“Economic law dictates reform at some point. But should we wait until the dollar, now 1/1,000 of an ounce of gold, [sinks to]1/2,000 of an ounce of gold? The longer we wait, the more people suffer and the more difficult reforms become. Runaway inflation inevitably leads to political chaos, something numerous countries have suffered throughout the 20th century. The worst example of course was the German inflation of the 1920s that led to the rise of Hitler. Even the communist takeover of China was associated with runaway inflation brought on by Chinese Nationalists. The time for action is now, and it is up to the American people and the U.S. Congress to demand it.” (Readers who are worried about the sharp decline of the U.S. dollar should download and print this long fact-packed article by Representative Ron Paul. You don’t have to subscribe to his political beliefs. In fact, you may think he’s totally out of step with the mainstream, but he was part of Ronald Reagan’s Gold Commission 27 years ago and he understands today’s currency problem better than anyone else in Congress.)
wmbz,
have a link? Thanks.
NEW YORK - The lawyer for the call girl linked to the downfall of Gov. Eliot Spitzer lashed out at the media on Friday for thrusting the 22-year-old woman into the “public glare” without her consent and publishing revealing photos.
But media interest in Dupre still swirled. Hustler Publisher Larry Flynt told the AP Friday that he had e-mailed Dupre, offering her $1 million to pose nude for his magazine. He said he hadn’t heard back.
“It will be something that will very tastefully done,” Flynt said of the proposed photo spread, but he added that Dupre would have to appear completely naked and not just topless.
“Hustler readers don’t like to compromise,” he said. “They want the whole enchilada.”
http://tinyurl.com/2jko4a
“Hustler Publisher Larry Flynt told the AP Friday that he had e-mailed Dupre, offering her $1 million to pose nude for his magazine.”
Yawn. Isn’t that his standard offer? Shouldn’t he be offering like 3 million or so because of inflation?
Did you see the “rap” video she’s in shooting the bird with both hands? Yes, very classy. I just laugh at those expensive “escort” sites. I would think the aggregate IQ of the entire stable would have trouble reaching the three figure mark. Of course, they’re not being paid to think, or so I’m told, but they’re sold as intelligent conversationalists.
Hmmm. I kinda doubt that IQ has any value in her profession.
And OT: Evolutionary psychology can argue that men might seek low intelligence / high beauty for just that role. (Beauty in this case defined as: those traits indicating probable fertility and ability for healthy birth.)
“they’re sold as intelligent conversationalists.”
Reminds me of an old Peter Arno (New Yorker Magazine) cartoon from the 1930s or 1940s, of one of those old prosperous bankers chatting up a young woman at some formal party. He keeps talking, she keeps her mouth shut. Then he pats her on the knee and tells her she’s a very bright young woman. Back in the day, there was a little bit of class and humor to debauchery. Now, it’s just so low class.
“Did you see the “rap” video she’s in shooting the bird with both hands?”
Yo, chick why you is hatin’? My girl juz try’n to be herselves, n’aw w’uh’I'm sayin’?
WTF you sayin’, playa? You be trippin’, man, talkin’ that NONSENSE in he’e. Child, please.
Here’s the link to her my space page. There’s a short “about me” bio of sorts for inquiring minds.
http://tinyurl.com/2a2g2n
“what destroys me strengthens me” LOL
Should be, “what destroys others strengthens me ” LOL . I just wonder how long this gal would of lasted in New York City without her side job .
Post link to pix, please.
Roidy
ny post had her n the front page nude cupping her silicone
she is one classy dame —zzzzzzzz
dime a a double dozen around these parts
Will the shoe storm that has recently hit Manhattan trickle down to Main Street? If so, how long until its peak effects are felt?
What are you talking about? It’s the cr@p storm on Main St. that goes up not the other way around.
The economy is a sum total of individual private decisions not some fancy doo-wop emanating from Wall St. downwards like a Tsar commanding his troops.
The sh*t hitting the fan on Wall St. are precisely the Main St. problems just observable in concentrated toxic form.
You might be right about the “crap, not shoes” part, but I expect the crap to slosh back and forth between Main Street and Wall Street for some time. Neither street goes one way.
http://www.syracuse.com/articles/business/index.ssf?/base/business-12/1205571717275770.xml&coll=1
CNY housing market escapes crisis
It wasn’t overheated to begin with, so there’s less danger of a meltdown.
Saturday, March 15, 2008
By Rick Moriarty
Staff writer
What housing slump?
“Two economists told a Syracuse audience Friday they shouldn’t believe everything they’ve read about the big downturn in the housing market.
It’s true that home prices are plunging and mortgage foreclosures are skyrocketing in some places, they said.
The big declines are all about these super-overheated markets in California, Florida and Las Vegas,” said Robert Denk, assistant staff vice president for forecasting and analysis at the National Association of Home Builders. “Most other markets, they’re not marching to the cliff and diving off.”
Ken Fears, manager of regional economics for the research division of the National Association of Realtors, said the meltdown in subprime mortgages - loans to people with poor credit ratings - has even helped places like Syra-
cuse. As banks have redirected mortgage money away from subprime loans to safer conventional mortgages, interest rates have fallen, making homes more affordable, he said.
Even in cities hit hard by the meltdown, there will be “short-term pain and long-term gain” as bad lenders disappear and home prices come down to more sustainable, affordable levels, he said.
Denk and Fears spoke to about 100 people at the New York State Fairgrounds. Their appearance was sponsored by the Greater Syracuse Association of Realtors, the Central New Mortgage Bankers Association and the Home Builders and Remodelers of Central New York. ”
I think that last sentence says it all. Paid shills. (Eye roll)
That’s not what Rochester is saying!
http://democratandchronicle.com/apps/pbcs.dll/article?AID=/20080315/BUSINESS/803150322
that’s the same garbage they spout here in Dallas
with foreclosures up 40% ytd in one county and up 19% ytd in the rest of the area.
NYSAR #s for January showed all negatives for counties around Syracuse although the county w/the city itself was only down single digits. My county right next door was down 25% YOY. So they’re just plain lyin’ thru their teeth about how great things are.
what is the temp today in syracuse?
i spent a week one night in rochester
alaska would be better from what i hear they have jobs
“Even within the Rochester market, real estate is very local, said Armand D’Alfonso, president of Nothnagle Realtors. ”
There you have it. Very local. Very, very, very local.
Classic Rochesterian, “Hey, dis market here heere, it’s soo freakin’ local.”
Hey Armand, I heard you sold a house in Brighton. Since you sold dat house dere, sales on dat street went up 200%. It’s freakin’ local, I tell ya.
After that he’s going to Wegmans to get bread eeeeand milk.
Ahhh, I miss Rochester, even it’s it’s very, very, very, local.
Real estate might be “Very local. Very, very, very local”
But as a wise man once added, “but credit is not”
wegmans mmmmmmmm good market
always go when i am at my sisters in jersey
beautiful store with excellent food products
Gotta love the upstate NY raft of BS denial. Their standard line is “prices never went up so they won’t go down”. WTF????
Ya know the scary thing is I did see a bunch of sold signs out and about yesterday. Someone is buying. I’m starting to wonder if this is an out bubble migration destination akin to Bye Fla’s fascination w/PA as a cheap place go hang out till its over.
This particular winter would not scare people away. I’m in the hills of Syracuse where temps are often 10 degrees lower than in the city. We haven’t had more than 4″ of snow and usually I’m staring at muddy grass. 48* yesterday.
tell me what drives demand in upstate new york ? Would anyone in their right mind want to live thru those winters ? No wonder population is migrating south and west with some cities/towns/states in the northeast losing population.
“tell me what drives demand in upstate new york ?”
Sausage, custard, white hots… basically any artery-clogging, fatty food product.
hey you can get that anywhere…this is America !
“hey you can get that anywhere”
It’s different in Rochester. All custard is local. Very local.
Cross-border shopping? Isn’t that all there’s left?
everyone i talk to says there area is immune from this
they still do not see the big picture
I love my Saturday morning routine, grab coffee, read the HBB.
While in line this morning I heard two women talking. One said, “well, at least you’ve got some interest. We’ve dropped the price twice and nobody cares!”
Oh, honey, I care. Just not the way you think I should care.
Especially when it’s a particularly cr@ppy Saturday with cold drizzlin’ rain!
Reminds me of a date I once had in college..
jus kidding!
“Oh, honey, I care. Just not the way you think I should care.”
I’m a bear; my friends think I’m a pessimist. I’m starting to get bad vibes about the economy. I knew it would get bad. But it’s sinking much faster than I thought. If I don’t shift my views soon, I might find that I’m still on the optimists’ side of the crash…
“…on the optimists’ side of the crash…” = time for bears to buy stuff
I feel the same way this thing is already down more than I thought it would get. I am suprised about BS I thought C would be first.
Tallest U.S. skyscraper to be built — in Philadelphia???!!!
Oh yeah, a pension fund is funding this.
http://philadelphia.bizjournals.com/philadelphia/stories/2008/03/17/story1.html
My coworkers swear their pensions are safe. They do think SS will go away. They said that they will keep raising the age (which I agree with). I tried to tell them about all the bad investments piled upon bad investments, but they didn’t believe me. They are receiving pensions (’double dipping’) or about to now.
They did agree that me saving as much as possible in Roth IRAs and otherwise was a good idea.
Pension failures are going to hit African-American families very hard.
Well when we stop sending 12 billion a month to Iraq we can pay a lot of pensions.
Touché, my friend, touché
“We” (I assume you mean the gov’t.) shouldn’t be paying anybody’s pensions. Count me out of that one, along with the national health care BS.
Question?
Why would black folks be more effected than everyone else? Are more of them receiving pensions?
What’s your reasoning?
The proposal is only 63 stories, so it might be the tallest in Philly but not even remarkable in any of the biggest cities. With ongoing improvements in the engineering and technologies involved that is actually pretty close to the point where additional height stops paying off at all. Also, Philly has gone very slow with downtown and tower development relative to other cities, so this isn’t far off from what markets are likely to support. This still smells of bubble, but it isn’t as far off as it seems at first. It would also not be a stretch to see pension firms such as those that paid for it becoming the long term occupants of the structure.
Yes, it only has 63 stories of office space, but this proposed building is still MASSIVE. It is taller than the Sears Tower (without the TV antennas). It’s taller than the Empire State Building. It’s taller than the old Twin Towers. Yet it’s planned for Philly.
The pension fund is from the state of Washington. Not sure if they want offices in Philly, but who knows?
The height of the building is 1500
Is there a size limit? My larger posts get lost.
Post inflation: More posts => each post is individually worth less than last period’s posts. Longer posts chew up relatively more blog space. With over 500 posts per day, it becomes necessary to choose whether to include relatively more short posts or let fewer long ones through.
Here is my hedonic post.
Priceless!
I guess I have to summarize. It was a response to the “let investment banks fail crowd.” Due to the recent explosion of entities, including municipalities and pension funds, entering into interest rate and total rate of return swaps and other derivatives with investment banks in an attempt to save a few basis points on their debt, sometimes in connection with a securitization, and sometimes not, and the collateral calls and termination payments associated with early termination thereof (failure to satisfy a collateral call, downgrade, etc), including the loss of the hedge, such entities and their investment banks are now dependent on each other for survival. Regardless of whether that is where we should be, it is where we are. Bear Stearns is only the beginning. Just remember as they fail, so will the entities in which they are entangled. Be careful for what you wish for . . .
The Fed must involve itself in the liquidity crisis. I cant tell you the number of entities that are currently in default. Counterparties are holding off forcing insolvency in the hopes liquidity will improve. We have not seen anything yet.
So we should keep on bailing out millionaires?
No. I am against most forms of bailouts, especially for homeowners (as opposed to global banking liquidity). They need to prevent a enormous depression. It’s not saving the millionaires or not saving the millionaires. It’s how do we prevent massive unemployment, poverty and misery for millions of innocent ppl. The point is that you cant ignore the complex relationship between investment banks and their clients. Anyone that reads my posts knows that I am for housing prices falling and the stock market falling. I also support indictments for those engaged in fraud, and more regulation of the banking/securitization industry. A major depression, however, is not in anyone’s best interest. The millionaire line doesnt work anyway. Unless you can indictment or take their assets, which in most cases you cant, they will be the ones the take advantage of the cheap assets the collapse would bring. This was all planned. The investment bankers already minimized their exposure and risk, most ppl dont realize that they have not minimized theirs.
“The investment bankers already minimized their exposure and risk”
Then why the bailout?
I said the “bankers” and not the “banks.” The banks get shut down screwing everyone they did business with. The bankers move on and get to buy cheap assets with the millions they stashed working for themselves or a competitor. Also, many investments bankers, especially near the top, are independent contractors and dont give a sht even about the which firm they work for. They did this knowing the importance of mobility. In bankruptcy it’s the creditors of the bank to get screwed, the brain trusts move on to do what they do.
“In bankruptcy it’s the creditors of the bank to get screwed, the brain trusts move on to do what they do.”
This is where a rule of law should come in — to make it illegal to screw companies and shareholders, then move on to another highly-paid opportunity to do the same.
“The Fed must involve itself in the liquidity crisis.”
And they will trading bad debt for treasuries. treasuries should now become worth less or have a higher interest rate.
We are already F’ed. No one is denying it. Some things actually can get worse. You seriously think a world of bank, municipality, pension fund, and major company collapses is going to improve things? Its not about whether we are screwed. It’s about death tolls for the innocent. Rather than seeing just housing and stocks fall and have us endure some hardship, you would prefer that members of your family are unemployed with their entire savings and retirement gone? It’s not a hypothetical anymore.
It’s all hyperbole to engage in moral hazard. Our nation is strong because of its ability to reinvent itself. These zombies threaten the integrity of the entire system. It’s time to cut them loose.
Tim is a securitizaton lawyer. His clients are investment bankers, and when he talks, I listen!!
Thanks Earl. No worries. I enjoy being told I’m wrong, especially if the person has useful information or is enlightening as to how ppl with different backgrounds view the problem. My job gives me an insider’s perspective, but is also accompanied by bias. I encourage the open forum.
Tim’s central point, as I read it, is to warn of a general credit collapse, which would lead quickly to widespread failures of otherwise viable businesses and huge levels unemployment. Bank bailouts, en/dis/couragement of moral hazards, measures to prevent future economic bubbles, are all peripheral issues, however emotionally stimulating these issues are. A major depression is another matter, and best avoided, if possible.
You got it.
IMO I don’t think any of the bailout measures are going to prevent the major depression if it is going to happen. They just delay, obscure, and relieve the guilty.
So the “Derivatives Market” is failing, “nuts”.
Appears to be quite a few dead bodies in the Liqiduity pool. The Fed is trying CPR, but in the end the pneumonia will either kill them or make them a shadow of their former self. Financial Darminism at it’s finest.
That’s complete utter BS, Tim.
There are other competitors in this space willing to absorb Bear’s share of business. The system will only get stronger as we get rid of the zombies.
To some extent “there are other competitors” would appear to be true.
The risk is domino failure. There are $36T in deleveraging that is taking place. There is no market for this crap.
Bear Stearn’s problems are now the street’s problems. This is not like DBL going under or LTCM. This is orders of magnitude larger. And some inept bank that is quite possibly insolvent is going to bail these mopes out? Nobody knows who is counterparty to all this crap.
$200B is a drop in the bucket in the current demand for cash.
You are ignorning Bear’s creditors which is what my post was about. Also, the investment bankers that used to work for Bear will move to one of the surviving investment banks. Do you think that those that lived through the Great Depression would share you view that such events make the system stronger? Maybe after the recovery, but certainly not during. Do you think they felt lucky to experience it? There appears to be much confusion about getting back to norms, which is what I strongly support, v. letting temporary liquidity problems exacerabated by those taking advantage of the system to tear our economy apart. Liquidity is not back to historical norms, it is completely frozen, allowing behind the curtain manipulations. Don’t be fooled.
Thank you Hoz. Sometimes I feel as if I’m the only person that knows for whom the bell tolls if investment banks fail. Those of us in the biz know that such failures are not contained, they have domino effects resulting in tsunamis for the entire economy. I never said they shouldnt take a hit. I just want us all to get back to normal. Failures of this magnitude will not result in a return to historical norms. It will be devastating.
Right, we are all doomed if Bear Stearns fails. I get it now. Therefore, we should do everything in our power to keep that turd alive. Heck, our survival depends on it. Keep the turd alive! Keep the turd alive!
There is a huge difference between keeping a company solvent for the benefit of its creditors v. making it profitable.
Keep the turd alive! lmao….
They lost the franchise when those two hedge funds blew up and their clients lost everything. The reason they are failing is because no one believes a word they say anymore. Would you trust Bear with your money?
Perhaps the better analogy is to not flush the turd during a period of starvation until you make sure you have recovered any nutrients it may have remaining.
mrktMaven,
You shit head, I can’t stop laughing..my sides hurt. What a visual!
The reason they are failing is because no one believes a word they say anymore. Would you trust Bear with your money?
Again please remember Bear Stears is just a group of ppl. Those that engaged in fraud are subject to liability, and/or being ousted. The actions of some are not necessarily reflective of everyone that works for the firm. In any organization ppl range from 0-10 on various scales. The real question is if the turd owed you money, would you want it flushed? Execution is the purist form of solving a health issue, but sometimes surgery comes more highly recommended.
Tim,
Quit puckering. Let the turd go. You’ll feel a lot better. If you hold on to too many of them, the toxicity level of the entire system rises and the patient dies.
You need to have faith in the capitalist system. In this system, companies with great ideas and superior management succeed. Companies with poor ideas and poor management fail. Believe it or not, companies fail everyday. What’s more, better ones replace them.
“$200B is a drop in the bucket in the current demand for cash.”
Hoz — what you are saying in so many words is that gold prices always go up, right?
LOL. I will let it go after this post. I disagree with any indication that the risk takers were necessarily ignorant. Many understood the risk and spread it out to others brilliantly. These are not fools that opened up a candle shop or dog bakery. They understood the risk completely and did what was in their best interest. It’s in their blood. These are the same ppl that will create vulture funds, etc. in a year or two with their war chests and will be praised as brilliant. Everything is gray in the business world.
Tim — I was just talking with my dad about the war chest idea not more than two hours ago (especially the part about “everyone will praise them as brilliant”…).
“Everything is gray in the business world. ”
Sorry but that is exactly why we are here.
It’s already in the works Professor. Always has been.
“Always has been.”
It is not every week of the century that a few war chests get crushed by falling shoes, though…
Bear Sterns, should fail. Ok, so its ripples thru the economy. Asset classes would fall faster, companies would go bankrupt, un-employment would sky rocket, a depression. For those investment bakers, I have a window on the tenth floor of my building you can rent to jump out. Think about the changes that would occur. Our housing costs would drop to sane levels, our educational system would cleanse itself of deadbeats and excess overhead. One auto per household. No need for day care. People would actually believe, that you have to work for a living.
Comment by Tim:
Be careful for what you wish for . . .
And how exactly is this Bad Bad scenario any worse for the average middle class American than the huge and unknown effects of a bailout of infinite size?
You answered your own question by saying “infinite size.” I am not generally in favor of bailouts. I am in favor of targeted intelligent efforts to keep certain cos. solvent so that they are not allowed to have defaults that would make the economic environment much worse. I am open minded. Each plan has to be analyzed on a case-by-case basis to determine if it would do more harm than good for our economy overall. Doing nothing, however, would lead to disaster. It was doing nothing on the way up that got us into this mess. There are no easy answers, but difficult choices must be made anyway. We can only do our best. Most plans I have seen I have been opposed to, but some concentrated efforts are necessary.
I realize from previous posts you have an inside track on the investment bank end of this quagmire, but I also think you are seeing the possible disastrous results from your end only.
IIMO in the end, no matter how this goes down, the middle class is going to pay the SAME piper. I quote from one of your previous posts..
“you would prefer that members of your family are unemployed with their entire savings and retirement gone? It’s not a hypothetical anymore.”
IMO, there is just as much probability of this happening with the FED’s bailout as letting the chips fall where they may. The difference of course, that a whole lot of rich guys on WS escape paying any portion of their share.
Ok Tim, so if bail-outs are a social good to prevent a greater disaster ,than why not just give a loan in which the investment banks have to pay the money back over time .It’s one thing to bail-out and it’s another thing to aid with a loan to spread out the loss with time . Making a Company whole again should not involve a out-right money injected bail-out that the taxpayers pay for in the future . I’m all for letting the banks and investment firms spread out their loss for years for example . Its just like when persons suffers a loss and they need a loan ,and paying back that loan will prevent them getting ahead to much until that loan is paid . So what if the banks and investment firm make less in the next decade to come .Is there some law that a investment firm has to make a certain yield every year ? Any stockholder in those firms took the risk of holding that stock ,so to bad if they have to pay back a debt .Think about the excessive profits during the boom times that these firm in fact did not deserve if you look at in the light of the inflated market that was created and the faulty way investment were rated .
I dont disagree. The investment banks need a bridge to cover liquidity issues that emerge because many of us believe that the current valuations of certain securities are below what they would be in a historical normal market. Players are using current market conditions to manipulate prices. I just want to see if we can get them through the next 18 months. If we do a major crisis might be averted and we still can get housing back to historical normal levels. Im all for having ppl pay back any concessions they were given. Some of the bailouts announced earlier are similar in concept to what you suggested, such as the creation of an entity to buy mortgaged back securities for a period of time at par in a structure similar to a repurchase agreement (a form of collateralized loan in which the ownership of the underlying asset changes as opposed to just being pledged). The reason I use the term “bailout” is not because I dont believe the money should ever be paid back, I certainly do, but because the “loan” is made on terms a market lender wouldnt agree to (i.e., the government is taking the credit risk, i.e., the risk that the entity they are helping will go under, but not charging a huge premium or collateral position for such risk or is valuing assets at par rather than mark-to-market). It is also true for all this to work, you have to believe that there can be a recovery if we can keep them going for a bit, but if we dont act now collapse is inevitable. There are other injections into the market that are not similar to a loan being proposed, either in the form of free money, taking an equity interest, etc. There are too many complexities with each to give a global statement as to their validity and public purpose. I would look at such efforts with more skepticism but with an open mind.
The problem from where I view this mess (far, far away from Wall Street) is that all the smart guys in the room are counting on Tim’s “too-big-to-fail” logic to guarantee them a bailout if their gambles turn into losses. Too many too-big-to-fail financial entities has added up to a too-big-to-bail mess.
“The problem from where I view this mess (far, far away from Wall Street) is that all the smart guys in the room are counting on Tim’s “too-big-to-fail” logic to guarantee them a bailout if their gambles turn into losses. Too many too-big-to-fail financial entities has added up to a too-big-to-bail mess.”
Right ON, PB!
Bigger is better, isn’t it?
Thats what I have heard. Posts, I mean. And more often.
“Is there a size limit? My larger posts get lost. TIM.”
Sorry that the above post came after a serious discussion.
I guess it depends on the capacity of the end user.
Check out this article on Woodside in Queens from the New York Times: Cheap, Convenient and Teeming.
Single-family houses in Woodside tend to sell for $500,000 to $600,000, said Yasser Aziz Bassily, a Queens-based broker with Prudential Douglas Elliman.
HAHAHAHAHHHHHAHAHAHHHHHHHHH!!!
Delusional is what they are.
Don’t get me wrong. I love Woodside. They have some of the best Thai food outside Thailand but the idea of plonking down $600K to live in a lower-middle-class neighborhood just cracks me up. This stuff should go for no more than $200K.
For total amusement though, check out the little slideshow they provide.
The selling points are “arresting pattern of lights on the subway”, a few Irish pubs, and jet contrails?!?
Please also note the hardly subtle wink-wink-nod-nod to Irish equity “liberators” to buy in Woodside.
Un-freakin-believable!!!
This is a new low. I’m impressed.
Maybe those SFDs are illegal 2-families? Woodside and Sunnyside have been working class neighborhoods at least since WWII. A real SFD should not be more than $200k, maybe $250k if within walking distance of a subway station.
BTW, is Sunnyside Gardens still in existence? I recall that there was professional wrestling there 25 to 40 years ago (Haystacks Calhoun and that ilk).
Sunnyside gardens is a community of houses on the other side of queens blvd. The Wresting aka roller derby rink was on 45th st queens blvd now a Wendys. link:
http://www.thesweetscience.com/boxing-article/1414/end-era-new-york-boxing/
Haystack Calhoun. LOL. Here’s some other ones: The Sheik; Bobo Brazil (he had a steel plate in his head, and subdued challengers with a “Coco Butt”); the Love Brothers: Reginald and Hartford Love; the Masked Asassin. Ah yes, those guys were back when wrestling was…uh…still fake!
Faster, we live in Sunnyside off Greenpoint and 39th st. near the LIE.
I’ve noticed a lot of closed businesses on Greenpoint ave in the last 6 months, and when i drive down hunter point.. lots of industrial buildings have for rent will subdivide on them…very few were there last year.
600k woodside shacks are sold to “investors” who knock em down and build these brick 3 story fedder jobs and rent the basement illegally. (trust me i am in the business on the wholesale side)
there you go 4 rents coming and no parking to speak of
blackouts,exotic diseases,flooding and sardine can subways
queens ny home of the tweeded masses and the real melting pot of the good ol usa with over 100 languages spoken here
come one come all we can squeeze you in
woodside and suunyside is aimed at people priced out of long island city and astoria. close to the city but not for me
i live a few miles away but it might as well be another planet as far as i am concerned
woodside used to be an recent irish immigrant enclave but now it is the south pacific or mexico in nyc
Coworker who was REagent in NYC last 2 yrs said Ireland
folks/investors were the major buyers in 07 of NYC prop by about 60+ %, speaking of irish and St Paddy’s day.
Let’s review some basics. I made the contention in Bull’s Eye Investing that we should look at bull and bear market cycles in terms of valuations rather than price. Stock markets go from high valuations to low valuations and back to high valuations over very long term cycles, averaging around 17 years. That would mean we are roughly halfway through this secular bear market which began in 2000. I also pointed out a few weeks ago that the bottom in terms of price in the last secular bear market (1966-1982) was made in 1974, but it was 8 years later than the bottom in valuations as expressed by Price to Earnings Ratio was reached. These periods of low valuation are the springboard for the next bull market rise, so there is a bull market coming. We just have to be patient.
And why is that important? Because the returns on your stock portfolio are closely and highly correlated with the P/E ratios at the time of your investments. Besides the following chart, you can go to http://www.2000wave.com and look at the stock market charts on the right side to see what kind of returns you would have had over any given period during the last 100 years. Notice on those charts that if you start with high P/E ratios, your returns could be negative for 20 years! Not quite the 10% compounding that many planners promise.
So, where are today’s P/E ratios? Let’s go to the data provided by Standard and Poor’s for the S&P 500. In January of 2007, S&P estimated that earnings for 2007 would be $89. Earnings for 2007 were actually $71.56, down about 20%. Last year about this time S&P estimated that earnings for 2008 would be $92. Today they estimate 71.20 for 2008. Lately every time new estimates come out they are down. But that is typical in a recession. Analysts are generally behind the curve.
But as the table below shows, we are now at P/E ratios that are back up over 20, and going to 22 by the middle of the summer. That would suggest that total returns are going to be under pressure for the next few years at a minimum and maybe for a decade. That does not bode well for retirees who are expecting the stock market to compound at 8-10% annually in order for them to be able to retire in the style to which the want to be accustomed. Real (inflation adjusted) returns of between 0 and 4% are more likely based on historical returns from today’s valuations.
http://www.frontlinethoughts.com/printarticle.asp?id=mwo031408
“That would mean we are roughly halfway through this secular bear market which began in 2000.”
I think John is right about halfway through a bear market. Fugly.
these are long and ugly. We still have about 10 years to go imo. I think the US will end up more like Japan in the 90s with low rates and meager “growth” that doesn’t keep up with inflation. It will take most banks this long just clean up their balance sheets. Its no wonder TPTB didn’t want Wal Mart to enter banking. This would be the perfect time for a new dominant entrant for the consumer but TPTB would never allow it because it would kill Wall Street and leave them with little control because of the size and scale Wal Mart could reach. It all makes sense now.
From the article:
“Homeowners are going to see $5-6 trillion in home equity vanish in the next year.”
Poof.
That loss is definitely going to be felt.
“That’s the latest report from Lyndon H. LaRouche, outlining how the Queen and the Rothschilds masterminded the Soviet overthrow, so that they could reclaim lands they had annexed during the Holy Roman Empire.” - So I Married An Axe Murderer (1993)
This thing sold for 136k in 2005.
http://chicago.craigslist.org/sox/rfs/606967773.html
uh..this is 42.6 miles from chicago. Let’s not call a remote suburb of Chicago “Chicago”….its Joliet, IL.
First ever bad news article from Chico, CA. Building permits tank, but they can still sell the cost BS to the local reporter.
Quote form article:
“Subcontractors can only lower (their prices) so much when there’s the cost of building materials going up.”
http://www.chicoer.com/news/ci_8580405
Thank you, SuperB. Without your super liquidity powers, we’d all be toast:
“If the Fed hadn’t acted this morning and Bear did default on its obligations, then that could have triggered a very widespread panic and potentially a collapse of the financial system.”
http://www.nytimes.com/2008/03/15/business/15risk.html?ref=business
In St. Petersburg, FL paying any more than 100% of rent is asking for trouble. This (was) a low cost town that had housing less than rent due to the migration trends. With rusing taxes and insurance costs, it will one day be again. Catch a falling knife at your own risk.
http://www.larouchepub.com/other/2008/3510fed_irrelevant.html
The Federal Reserve has become irrelevant.
Then come up with something to replace it!
F**k LaRouche and his parasitic organization. I would rather deal with the Federal Reserve.
Ditto. There is nothing worse than a critic of governance who has no better alternative to offer.
That is flippant even for LaRouche. If, for example, the Fed cranked up the rates then real rates would also rise precipitously and the result would be a wave of foreclosures and bankruptcies that might have been delayed a while longer or even recovered from. Having the ability to lower the axe on many thousands if not millions of Americans is not “irrelevant”, and this situation is no place for that kind of simplistic math is hard thinking.
Moleman, the axe has already been lowered on thousands, if not millions, of prudent savers.
Somebody has to eat the cost of speculative excesses by BigBank, Inc.
Just opened two CD accounts this morning at SunTrust;
both 70K each. The 5 month rate is 3.4%, which was better than I expected and far less than I deserve.
Larouche polemic technique.
1) Quote someone else’s seminal research.
2) Use whatever stolen quote was used in 1) to legitimize wacky positions.
Forgot to mention
3) Vehemently attack anyone who dares to oppose them.
1,2,3 can be seen in use on web forums all the time, and not just by Laroucheans.
3329 E. Coconino ST Phoenix 85044 priced to sell at 1,450,000
featured on “Flip that house” spacious 4 bedroom with a huge closet.
I saw this flipper in the paper a few months ago and now have a glossly flyer in hand. I could rent a house like this for 3000 a month. OK this guy must be from California.
Which bank is going to follow the Bear?
So who is next? As advisers to Bear Stearns struggle to find a buyer or funding in the next 28 days, Wall Street, the City and the financial district in Tokyo were scrabbling to find out who is the most exposed to Bear Stearns, either through loans or trading positions.
Traders in all three centres were panicking even for those banks not directly exposed to Bear. They feared that the problems experienced at the stricken bank signalled that the credit crisis has deteriorated to a new level.
Yesterday, traders began to look anxiously at the robustness of Lehman Brothers, which, although bigger than Bear, is small compared with JPMorgan Chase, Morgan Stanley and Citigroup.
Shares in Lehman dropped 11 per cent yesterday, a far bigger fall than its other rivals, which saw their stock decline by about 3 per cent.
…He said that should the US Federal Reserve, the US Treasury and the Securities and Exchange Commission not devise a broad rescue plan to address the credit turmoil on Wall Street this weekend, “I would not be surprised to see an emergency bank holiday announced. That hasn’t happened since Roosevelt.” During the Depression, 75 years ago almost to the day, Franklin Roosevelt declared a four-day bank holiday, which stemmed a frantic run on banks. Mr Whalen added that should banks such as Lehman continue to be unable to sell the billions of dollars of mortgage-backed securities held, they were doomed. He said: “Broker dealers have to be able to get rid of assets. If they are illiquid, they die.”
http://tinyurl.com/3c6p3u
He said: “Broker dealers have to be able to get rid of assets. If they are illiquid, they die.”
Asset…..something of value held in their possession, I presume. Let’s see, I have a whole bunch of papers that say someone has promised to pay me $millions per month on the mortgages we hold.
Most of the borrowers have no income and no other net assets, than the house, and they are valued, on average, at $380,000 per household. Many of the notes are from Detroit and Lansing. A bunch from FLorida and Nevada.
What do you bid????
As of 11:00am CST, the worry is Merrill Lynch (formerly known as Merrill, Lynch, Pierce, Fenner and Bean- I would wager Charlie Merrill is rolling over in his grave) and Lehmann Bros (foremerly known as Lehmann Bros Kuhn, Loeb - I would wager Dick Loeb is doing the tango with Charlie Merrill). The current odds for the melt down is 30%. (in a normal year, the resting odds for a melt down are 5%).
For those of you that trade options, (I do not trade options) - look at the put volume on Friday in Merril and Lehmann.
Tim
Remember that “bailout of infinite size” term I used in my post above? ML and LB could be the next step to that infinity.
Does anyone else here have in mind the image of the Fed throwing away good monies down a black hole of mortgage obligations gone bad?
I made my $3,900.00 monthly tax deposit for my small buisness yesterday, and I have a picture of me throwing money into a black hole.
Does anyone else find it ironic that BEAR Stearns was the first to fail this time around. Kind of apropo given the name
Ah my friend, you were not around in 1998 when Bear refused to help the other firms out. re: LTCM. Payback is a bitch.
The hope and wish is to stop the damage with Bear.
Heard on NPR’s “Wait Wait, Don’t Tell Me” today:
- Spitzer was a rising star in D-ratic party politics.
- He was one of the few politicians known to honor his campaign promise: “I will bring passion back to Albany.”
- “Kristen, I’d like you to meet the lieutenant governor.”
http://www.hsdent.com sign up for Harry Dent’s mailing list to get the pdf file. His latest (January 2008) free newsletter reiterates his belief that the next great US depression will start in late 2009 or in 2010 and last to 2024. He says the commodities and oil bubble will burst in 2009 (he is not a peak oiler). He predicts this 2008-2009 inflation will tick off interest rate hikes.
Again, I think it’s wise to hold precious metals as long as the ten year notes are yielding under 4%. Look to start selling off precious metals if treasury rates are above 6%.
Dent says in his deflationary scenario, high quality bonds and cash will be the best investments. Well, yeah.
Bush talking sense on his radio address, today?
“Many young couples trying to buy their first home have been priced out of the market because of inflated prices,” the president said. “The market now is in the process of correcting itself, and delaying that correction would only prolong the problem.”
He is reading someone elses ideas/thoughts printed out for him.
You can’t believe for one second he Knows ’sense’? ;>
Free hot air balloon ride if you buy this house.
http://denver.craigslist.org/rfs/606719365.html
What’s a balloon ride, a couple hundred bucks at most?
They should offer the hot air balloon ride a year after you buy the place. That way you can fling yourself out of the gondola at a thousand feet and end your financial misery.
jingle said today (at the top of Bits):
“Wrong: LIBOR 3 month is 2.87%. A year ago it was 5.36%”
———————————-
Couldn’t be more wrong, LIBOR is quoted today at just under 6%.
oops, my bad:
http://www.bankrate.com/brm/ratewatch/other-indices.asp
Now I know why Ben advocates furnishing references.
Rate / Current / 1 Mo Prior / 3 Mo Prior / 6 Mo Prior / 1 Yr Prior
3-Month Libor 2.76 3.06 4.97 5.65 5.35
The 3-Month Libor rate is sinking into the black hole of a liquidity vacuum.
PB posted:
“Hoz — what you are saying in so many words is that gold prices always go up, right?”
Gold is a commodity that is so small that it can be influenced and impacted by small governments as well as large traders. Gold has always held value, but like all commodities it is subject to supply and demand.
Gold’s value as an investment is solely in times of economic stress. (deflation or inflation). I choose not to invest in gold. I do not fault anyone that does invest in gold. It is at worst a safety play and at the end of the year, you will still have a shiny piece of metal.
A reason not to invest: At the end of the year, 1 oz of gold is still 1 oz of gold. It has no added value other than as gold. You decide to sell and take your profit. the capital gains tax is profit to the government from 1 oz of gold. It adds nothing to real GDP. For active traders, this is different. For investors I would recommend only two pieces of gold-A US $10.00 coin and a US $5.00 coin. With those two coins, at any time, one can fly anywhere in the world.
Like all commodities gold goes up and down. And like all commodities it currently will be in a trend up as a result of incipient inflation.
“It has no added value other than as gold.”
You mean you really cannot eat gold?
And at what point is incipient inflation fully priced in? In how many ways can BB explicitly signal that he is going to drop, drop, drop and drop interest rates again until they are all the way to the floor?
On the bullish side for Gold
I refer all to Mr. Eric Sprott as quoted in Bloomberg.
I have recommended his funds.
“…We’re in a systemic financial meltdown,” Sprott said in a March 6 interview at the company’s Toronto headquarters. “There are probably 10 companies that are broke that are still trading — banks and financial institutions.”…
“The brokerage companies, the investment banks are the easiest to short,” Sprott said. “Do I understand what’s happening in the business? Yes, there is no business.”…
“Government bonds are a joke at the interest they’re paying,” Sprott said. “You can buy gold, or other real things: gold, silver, platinum, palladium, things that hold value.”…
Bloomberg
http://tinyurl.com/2ejrz7
or read his commentary at Sprott.com
“Government bonds are a joke at the interest they’re paying,’’
Even if there is a financial tornado whose vacuum force can spontaneously suck in $200 bn worth of TAF monies before they even begin to thaw frozen credit markets?
And who is to say that interest rates are on a permanently low plateau? (You certainly don’t seem to believe so…)
The Kabuki dance between the Fed’s signaling games / head fakes and speculators’ guessing games constitutes a primary white noise data generating mechanism.
lol
Just remember what Mr. Paulson, Treasury Secretary said yesterday.
“…As we have been saying for some time, there are challenges in our financial markets …”
Nothing to worry about - just “challenges”…
No doubt the challenges are contained.
Suppose the gods smiled on you by dropping $100,000 into your lap from a helicopter. You are neither an inflationist nor deflationist nor gold bug, but rather a diversificationist who is trying to survive the bear market and the war on savers until the great deleveraging currently underway has played out, at which time you will buy a home to live in. Where would you park your bank to protect it from the vagaries of central bank interventions?
Real estate!
(Runs, hides)
“Her name is Rio and she dances on the sand
Just like that river twisting through a dusty land
And when she shines she really shows you all she can
Oh Rio, Rio dance across the Rio Grande”
I’d go the Spitzer short term investment strategy. Except I would head to Reynosa.
Opinions on Peter Schiff (and his book)? I see him all over the airwaves. I respect very much many of the frequent posters here - where are the weaknesses in his thinking?
Wow, what’s with this const. crane collapse in NYC? I just now heard about it on Fox…working on new apts. Anyone close?
http://www.wnbc.com/news/15605562/detail.html?dl=mainclick
Crane collapse in Manhattan - at least four dead.
Kaplan said the company had subcontracted the work to different companies and was not in charge of the crane. Phone messages and an e-mail left for the crane company were not immediately returned.
Kaplan wasn’t sure whether any workers at the site were among those killed.
Neighborhood residents said they had complained to the city several times about the construction at the site, saying crews worked illegal hours and the building was going up too fast.
City Building Department records showed that on March 4, a caller told officials that the upper portions of the crane appeared to lack the proper number of safety ties attaching it to the building.
A city inspector visited the site and determined on March 6 that no violation was warranted.
Another call questioning the crane’s safety was dismissed as unwarranted by another inspector in February.
A developer that sub-contracts work to the lowest bidder. Crews that cut corners on safety - probably at the “urging” of management. The City Building Department blows off calls from concerned citizens - wouldn’t surprise me to learn the inspectors were on the take from the builder. I hope I’m wrong, but this incident seems to have all the ingredients of developer greed and local government collusion. The discovery phase of the inevitable lawsuits is going to be interesting.
I have been following Schiff for awhile too. I have yet to see him get something wrong. He seems to be dead on with all of his predictions. He’s going to be having a free seminar this month in Newport Beach CA, you just need to register in advance. He will be there talking