Bits Bucket For October 28, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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case-shiller says prices inch up in Boston !
http://biz.yahoo.com/cnnm/081028/102808_august_case_shiller.html
That’s a one-month change — think statistical noise, and you will get the picture.
Maybe that is a 1-year change? If so, I am surprised, as the Boston folks were major imbibers of the funny money real estate investing Koolaide.
Read farther, as it dropped almost 5% YOY… MOM is largely irrelevant.
Thx — it is often hard to decipher the vague language of financial journalism. I often get the impression the writer has no clue about the precise meaning of the words he writes.
There is only one thing worse than financial journalism. It’s when they try and report technical science-y stuff in pop-format. It’s so bad it’s embarassing to read it.
“…technical science-y stuff in pop-format…”
Like catastrophic global warming, for example?
Naah, naah, the science sections.
Like some important discovery in physics or mathematics or chemistry.
It’s so cringe-inducingly bad and wrong I don’t want to think about it.
Agreed FPSS, from your resident HBB molecular biologist. WSJ is actually not too awful.
WSJ is actually not too awful. The WSJ has been awful about predicting & tracking the current Panic. The HBB has been far, far better at that task than the WSJ.
“The WSJ has been awful about predicting & tracking the current Panic.”
In their defense, they have been better-than-average at finding a silver lining of humor in the situation (as have The Daily Show and The Colbert Report)…
I was referring to their coverage of scientific content only. Better than most newspapers.
“sciency stuff”
I felt so sorry for poor Steven Hawking when I was reading “Brief History of Time” — having a publisher tell you, “Explain quantum physics, elementary particle theory, and black holes…but don’t use any equations.”
I agree with your sentiment, but I think they were accurate when they told him that every equation he insisted on including would cut sales in half. Sometimes the geeks really are better off trusting the marketing people, as distasteful as that might be.
You can put them in an appendix and those interested will look it up. You don’t need to stick it under the average person’s nose.
Sorry, just not buying even the general argument.
“Explain quantum physics, elementary particle theory, and black holes…but don’t use any equations.”
I just learned recently that Hawking produced a slimmer, watered-down version called “A Briefer History of Time,” as a good an indicator as any I know that people have become dumber over the past 20 years.
Prices went up 1 percent in Cleveland too, but if the average price is only 10K, that doesn’t mean much.
What is 1% of zero?
Prices up one percent in Cleveland? That means those one dollar houses are now $1.01 each? Well, that ought to kill the market!!
I was reading in the Plain Dealer that the median sales price for the first half of 2008 Cleveland was 18K, so a $180 increase seems reasonable!! You can now get reasonable housing in nice suburbs for 70K-100K
This is silly. Of course home prices had not bottomed by August. Didn’t these fooks notice that Wall Street investment banks largely folded their operations in October, or that most of the recent demand for housing was artificially propped up by investment bank funded mortgage securitization? You can stick a fork in these bottom calling efforts for the near term.
Have House Prices Bottomed?
10/28/2008
Maureen Maitland of Standard & Poor’s discusses the recent decline in the Case Shiller index of home prices, which showed a steep year-on-year drop. Have prices hit bottom? (Oct. 29)
Are stocks going to the moon today like they did in Asia?
Are there any major banks left to go under on their exposure to mortgages, or has the Fed essentially made an outcome like that impossible over the near to mid-term?
Yes, the dow will close today at 14,000. The crisis is over. No more trouble for banks. Our leaders have saved us. You should go right now and buy a house, a condo, a hummer, a 100 inch flat screen, etc. There, you heard it here first.
Is that you, Baghdad Bernanke?
You’re going to be one of those too afraid to buy and you’ll end up buying at the top!
My theory is that there is actually a lot of pressure to get stocks higher and they’ll rise very fast back to high levels. The reason we keep having these legs down is hedge fund de-leveraging. When the fund delevers, the stocks start rising hard until the next hedge fund unwinds. When the last unwinds, it will rise very quickly, I think, and people trying to pick the bottom will miss the boat. Obviously there doesn’t seem to be any good news anywhere, but still stocks seem to shoot up mysteriously. What’s your explanation as to why?
dude,
Stocks are strictly wants, not needs.
Who needs em’?
“Stocks are strictly wants, not needs.”
What about gold?
It’s blind faith fail-safe. That’s all it’s got going for it.
It is all blind faith when you can arbitrarily change the numbers. Housing, company financials or government spending take your pick.
“When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means what I choose it to mean, neither more nor less.”
“The question is,” said Alice, “whether you CAN make words mean so many different things.”
“The question is”, said Humpty Dumpty, “which is to be master - that’s all.”
touche’
“It depends on what your definition of ‘is’ is.”
Why do righty-tighties always have to pin the blame on the donkey named Clinton?
It’s like a knee-reflex move.
ahhhhh… Bring back Clinton!! He would have never let this bubble happen, too smart.
Good point Stan.
My bogeyman’s bogeyer than yours. Neener neener!
Like blaming the entire oil bubble (and collapse) on BushCo. Whatever works…
The USG has no meaningful control over global oil production, consumption or trading.
It has 100% control of the US housing market.
About the worst analogy possible.
Lmao. My thought exactly Yogurt. If DoughHead isn’t responsible for the mess he created, just what is he responsible for?
yogurt,
Well… they ‘did’. Through the American Dream Team (TM) ( Fannie and Fraudie ) they essentially achieved exactly that. Of course now all they can even attempt to do is control the “rate” at which it crashes. If that.
Btw, I don’t blame Clinton save for (1) thing. The Tax Reform Act of 1997. True, support on both sides and there really was no way of gauging the unintended consequences but when we passed that into Law ( and legalized flipping ) our fate was sealed. Tax Free Gains for Everyone! ( until there aren’t any? ) Great while it lasted.
The USG has no meaningful control over global oil production, consumption or trading. If the USG slapped a $50/barrel tariff on oil imports to the US, global oil production, consumption & trading would be immensely affected. The USA still accounts for a huge chunk of all these factors, and an import tariff is definitely within reach of its government. Rest assured, this will never happen.
Pay no attention to Morgan Stanley. Just completely ignore it.
Michael Viking,
I know it’s not popular here ( but I tend to agree ) At the right price, there’s a market for everything. The stock market right now is a symptom ( not a cause )
People’s 401K’s are paying the price ( in many cases ) for their own misguided “Adventures in Real Estate”. As always, I feel awful for those that minded their own knitting on the way up.
That being said, I think most stocks are still over valued.
The one thing that was semi-hopeful was that imports were down and exports were increasing. Both are now falling off a cliff.
Also sounds like the country is going into hunker down mode and saving more. That would be excess saving according to the economic school here in the us.
I expect the market to keep falling for a while. It should be cusioned somewhat by the Fed moves though. Would not be shocked to see 7000s this month and next.
The best analogy of what it happening at this current moment, would be the rapid disintegration of glaciers in Greenland, occurring @ a much higher rate of acceleration than anybody expected…
All the action is taking place underneath what looks to be solid ground, on top.
James,
Oh I don’t think anyone is going to argue that ‘too’ vigorously it’s just that Michael’s orginal context was, would it be the worst thing to do some dollar cost averaging on the way down?
There’s no question things are murky right now and will be for some time, yet at some point running around boasting about how you’re shorting the market and long on precious metals is going to look, frankly, dumb.
( Be Bearish, until it no longer makes SENSE to be Bearish )
@pressboardbox, Yeah, what up at MS? Down 12% and dropping?
Imports and Exports are ALWAYS EQUAL. There is no such thing as a “trade deficit” or an “imbalance of payments”.
Currencies are just another independently subjectively valued GOOD.
All trade only occurs because that which is received is valued MORE than that which is given away in exchange, for absolutely every single trade exchange that ever has been made, and ever will be made.
Thus all trade increase wealth for both sides. If it didn’t, no trade would occur, because at least one side would be worse off from doing the exchange. If you were to use government interference to prevent any and all free trade, no matter whether the trades occur across imaginary borders at the street, neighborhood, city, state, or country level, you would only be causing poverty.
That’s the primary reason we got a Great Depression, and that remains by far the biggest risk to a repeat of a GD.
Thus all trade increase wealth for both sides. If it didn’t, no trade would occur, because at least one side would be worse off from doing the exchange. One faulty assumption in your line of reasoning is that one or both sides may be mis-informed on what will make them better off or worse off. Certainly both sides hope they will be better off.
Your assumption also ignores treaties, tariffs, embargoes, and other protectionist schemes which change the economic terms of the deals.
A commodity can be worth more to one locale than another. A gallon of fresh water in Saudi Arabia is worth more than a gallon of fresh water in Michigan. A gallon of gasoline in Michigan costs more than a gallon of gasoline in Saudi Arabia.
Of course treaties, tariffs, embargoes and other protectionist schemes can change terms of deals. But any and all terms are always inclusive factors in whether trade occurs or not. Given any and all factors you can think or dream of, no trade will still never occur unless for both sides, that which is received is valued (all value is 100% extrinsic subjective and 0% intrinsic objective) more than that which is given away. at the time of the exchange. Trade is always PREFERENCE.
There’s no such thing as omniscience for anybody. Everybody is always trading with imperfect knowledge, and factors are valued with more or less consciousness. Fear of being worse off in the future after a trade exchange is always an input factor which is evaluated with more or less subjectively valued consciousness by both sides. Fear of being worse off in the future from not doing a trade is also always a simultaneous input factor. If any one side believes, or “knows”, they will be worse off, they won’t do the trade.
Example: HBBers who did not buy houses versus FBs who did “buy” (aka trade for) houses.
“Trade deficits” and alleged “import/export” numbers are wholly complete BS ignorance. They are spouted to confuse and manipulate people into protectionist schemes, which always by definition leave society net poorer.
–Economics Lesson #1 from CrookCounty, Chicago + Austrian School Hybrid
I’m working on a book titled “Strict Barter: The Epistemological and Economic Implications of Trade”. And when people mention “trade deficits” or “import/export imbalances” it bugs the hell out of me.
All trade, including trade of goods for “money” is barter. We never left, and never can leave, a barter system. The greatest error made by 20th century economists was to allege an “equation” of value between goods and money.
Think about everything you ever bought, and everything you ever sold. You only bought, and you only sold, because you preferred the offer. You by definition sell something for everything you buy. And you by definition buy something for everything you sell.
“stocks seem to shoot up mysteriously. What’s your explanation of why?”
I usually think “short covering” (??)
My humble opinion:
1. Financial stocks have largely taken their hits…if you buy a basket of these stocks, you will probably be OK if you fast forward 24-36 months.
2. Consumption is still getting hammered. Stocks tied to consumption will continue to get hammered over at least the next year.
3. We are generally in “indiscriminate selling mode”, before we will get into “indiscriminate buying mode” we will need to enter a “selective buying mode”. I think we are just beginning this process (ie. Warren Buffett buying is a good signal of this).
As an example of point #3, check out PLD (ProLogis)–this is a global industrial REIT with very little debt coming due in the next year (a few hundred million out of $10B of debt). Unlike investment banks who’s debt is short term, and income streams are short term, PLD has long term debt, and generally longer leases (ie. more stable cash flow, more stable cash requirements, and lower leverage than the failed banks). PLD is yielding ~17%. Their stock price is ~$12, and their FFO last quarter was something like $0.63. Even if their dividend does take a hit, they will still be yielding significantly above 10%. This stock is WAY oversold, IMHO.
Full disclosure–I moved to cash a while ago…I just stepped off the sidelines with a little of my cash and bought some PLD…two year from now, I wouldn’t be surprised if the stock is worth 2x what I paid…
There is a real risk to being too pessimistic, just the same way there was a risk at the top of being too optimistic. I am in no way jumping into the market (even in a widely diversified way), but there can be opportunities here and there to pick up good long term companies at great prices.
Stocks - if they don’t pay dividends, it’s just a bet on future appreciation. Sounds like the housing market doesn’t it?
RE: a hummer,
This purchase is the least you can do for GM who wants $11 billion of your tax dollars for their Chrysler merger.
Consider it an investment in America*
*(lifetime healthcare, pensions, and the “Good Time” contract provision which pays full salaries for 2 years when any UAW worker is put on mandatory lay-off)
Even now, the jobs bank survives. Disgusting.
Take the train - consider THAT an investment in America
Speaking of Amtrak…did you see the low rates on trips across America?
If you can ’stop and smell the roses’ maybe a trip across country would be a great thing to do!
Did that trip 4-5 times as a child and loved every minute of the train trip.
Portland to Chicago.
Los Angeles to Chicago.
Los Angeles to Portland.. and more. Several different trips.
No security lines, no luggage restrictions.
I agree HD…Some of these contract provisions are laughable..
Only good as long as “they” honor a contract that was negotiated, not at gunpoint, BTW. How long will ANY contract last if someone announces a government freeze~ala emergency? Even your insurance policy is void if rioting or insurrection occur.
I’d say it went to the moon. It remains to be seen when gold will go to the moon.
Look for sustained volume + increasing prices over several sessions.
Yep.
Whoever it was that was compaining about SRS (blano?) you will have one more chance to buy it.
Same for SKF, EEV, EFU, etc.
I hope you’re right about SRS, FPSS, I sold at 140, then whimpered all the way up to 200 yesterday.
There will be plenty of time to short in the S&P 950-1000 range.
You’re seeing a sharp short-squeeze. Too many people piled on to the short trades.
FPSS,
Absolutely. Thank you.
Additionally ( and you don’t have to be “on board” with this segment ) but… the IRS and NYSE needs to re-think their position on “shorting”. In the past investors needed certain levels of “financials” to be able to short the market/sector/stock. But with ETF’s they can in essence short within their IRA and without any more sophistication than that they heard it was a good idea in the lunch room?
It’s not that I have ANYthing against short sellers ( do it myself on ocassion ) but it’s clearly become too accessible.
“I got rich by selling too soon.” JP Morgan.
No need to whimper.
My personal favorite is:
You’re seeing a sharp short-squeeze. Too many people piled on to the short trades.
“Short, sharp shock.”
But with ETF’s they can in essence short within their IRA and without any more sophistication than that they heard it was a good idea in the lunch room?
It’s not that I have ANYthing against short sellers ( do it myself on ocassion ) but it’s clearly become too accessible.
—-
Certainly true. My fantasy portfolio on Marketocracy is only up 6.25% this the last 12 months (of course, that does make it up over 49.75% above the S&P
)… based on moving in and out of larger positions in some ultra shorts. I haven’t given it much thought this year. With a new job, the only interaction I have time for is selling off SKF and SRS when they make me non-compliant for going up too much. 
“Comment by oxide
2008-10-28 09:26:39
“I got rich by selling too soon.” JP Morgan.
No need to whimper.”
Indeed, oxide. This was made doubly clear to me when I called my brother to complain: A doctor, he was at work, taking a break from spending time with a mother and her young son, who essentially had been taken off life support. Yes, there are things far important than making a buck. And there are infinite ways to feel like a jackass.
I complained about SKF in the past I think, but not SRS.
I think they’re all too volatile for me right now anyways. The ol’ cat on a hot stove, cold stove theory as it were.
It wasn’t you, it was “bronco” and just last night.
I doubted my sanity for a moment there.
Blano, Bronco, let’s call the whole thing off!
I’m thinking of changing my nick to Blanco.
Good idea. I remember seeing Banco out here a few days ago…
Why not just put a fork through my forehead while you’re at it?
Why not just put a fork through my forehead while you’re at it? Stay where you are until I get back from the kitchen.
Hoo-kay, who b*tched about SRS yesterday?
Step up for your personal @ss-kicking. I’ll be happy to do the honors.
Here is something that I noticed going to the moon. Would sincerely appreciate an explanation from Hoz, FPSS or anyone else with suitable qualifications regarding the proper interpretation and future implications of the recent structural break in this time series.
“To the moon, Alice”
“Ralph: It just so happens that the Raccoon Lodge is going through a financial crisis. And I’m the treasurer, Alice, I’m responsible. If I don’t get some money into that treasury, you know what might happen? The Bensonhurst chapter of the Raccoon Lodge may no longer be. You know what that means?
Alice: Yeah. Real estate values in Bensonhurst will go up one hundred percent! “
lol
I used to love watching the honeymooners with my dad when I was a kid. Not that I was a kid when the honeymooners was out, they had long since been reruns by that time, but still funny.
Awesome explanation
Is that the $250 Tr the Treasury just put into banks?
Oops….$250 B
Need to make sure I get the two cups before my morning blog read. I was just over at Yahoo quotes looking for performance on FPSS.
ROTFLMAO
“The S&P/Case-Shiller home-price index dropped 16.6 percent in August from a year earlier, as forecast, after a 16.3 percent decline in July.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aqIegAAWns58&refer=home
“There’s still quite a bit further for prices to go down, even though the volume has probably bottomed out…Prices will probably find a bottom sometime next year.”
That may be true in nominal dollars in many places, given the speed of the decline, assuming at least some consumer price inflation continues to exist. Perhaps a 30% to 40% nominal decline, followed by several years of real declines relative to inflation.
In NYC, however, the decline is just gettting underway, so even if the rest of the country “hits bottom” we’ll still be dragging down the index.
I expect the NYC decline to create ripple effects through the rest of the country, due to the shocking revelation that it is not really different anywhere.
Wage Inflation and Unemployment are the numbers to watch for the Housing bottom. The question is are we going to overshoot to 2.0-2.5 X Income, or pin point land a rover a 3.5X Income?
The CPI numbers are worthless, manipulated to hell.
So roughly lets guess we will go to 3.0 X Income at 5.0% Unemployment and 7.0% interest rates. At 10.0% Unemployment and 14.0% interest rates lets guess we will go to 1.5X Income.
So median family income ~ $50K, median house price ~ 215K, gives a bottom range of median house price of $75K to $150K, an expected further drop of ~ 30%-65%.
Crook County,
Do you MEAN to suggest there should be a relationship between home p-r-i-c-e-s and “incomes”!? Patently ridiculous Sir!
No seriously, I like your math and it makes sense to me. How ARE things out in Prineville by the way? Tad chilly?
Prineville must be the lost sister County to Cook County, Chicago. Though I hear they can crook a good robster out there.
Interesting. In Mountlake Terrace Washington(North Seattle burb) The average family income is less than 50K(as of a year or two ago), but the houses start at around 300k. Condos “from the low 200’s” as the signs say(and that’s probably a tiny 1bdrm).
Methinks we might have a tad ways to go with this…..
SR
RE: So median family income ~ $50K, median house price ~ 215K, gives a bottom range of median house price of $75K to $150K, an expected further drop of ~ 30%-65%.
Wheeeee doggies…Another 65% value drop prognosticator.
2 years ago calls for a 50% drop made by members of this board was considered radical!
Radical is far too kind a word. Our predictions(which have since come true) got us lumped squarely in with UFO enthusiasts, insane evangelicals, and Scientologists(insane evangelical UFO enthusiasts).
I love the bumper sticker I saw on fark. It said:
_______________
Ron Paul
We told you so.
——————–
SR
RE: Our predictions(which have since come true) got us lumped squarely in with UFO enthusiasts, insane evangelicals, and Scientologists(insane evangelical UFO enthusiasts).
What has surprised me of late, is the insidious escalation of “societal breakdown’s coming-better be prepared” commentary.
Food storage, PM accumulation, home defense weaponry recommendations!
YIKES!
This does not bode well given this board’s previous accuracy in predicting what, where, and how we all got into this mess to begin with.
I don’t think you can use the median income for everyone in an area. I think you should use the median income of “likely” home buyers. Since about 70% of people are potential buyers (5% choose not to but could if they wanted), then I would exclude the income of the bottom 30% of the population. I would then calculate a new median income on the remaining 70% of families, and then apply the 3x median income rule and look for that level.
So if the median household income in the US is $50k, but excluding the lower 30% yields a median income of *potential* homeowners to say $70k… then 3x 70k yields a median home price around $210k.
(not sure what the actual median income is when excluding the lower 30%)
CincyDad,
mmmmaybe. I can definitely see your point as it confines the discussion and market to “active participants”. That much is fair. Where I question is this seems to imly there’s a permanently “Priced Out Class” ( Realtor (TM) )
Who will buy your starter home when you go to move up to your intermediate/dream home? Seems they should be a factor somewhere but I agree, not to the degree that they have. Without their inclusion you fall back on the very “creative financing” that drove us here in the first place?
Coffee..that post made me dizzy,cincy.!
I think that’s pretty much taken into account CincyDad by using the median, which is half the incomes and half the houses both priced lower and higher. The bottom of the barrel POS shack owners will be the ones in the 30% percentiles of incomes.
But the middle middle class suburbia home should be priced at $150K under normal circumstances.
And if anything, housing construction has far outpaced population increase, so I would expect more pressure to overshoot to the bottom of the Income-House Price historical range.
http://en.wikipedia.org/wiki/Household_income_in_the_United_States
The bottom 20% earned less than $20K. Top 20% is $90K plus. It looks like the bottom 30% break off limit is ~$30K. It’s kind of sad that earning $90K is doing better than 80% of everybody else, especially given that after a century of technological innovation and economic efficiency, houses, education, cars, and health care should be cheaper than ever. But that wealth was mostly counterfeited away by the banksters.
So I’ll stand by rough guesstimate of a further decline of 30% to 65% depending on how unemployment and interest rates play out.
Again, we cannot fix the problem with inflation unless there is wage inflation - HUGE wage inflation - to handle all those nice “affordable” starter houses that sell at 5x median income or more.
Anyone seeing wage inflation for anyone other than the top 1% of society? I didn’t think so…
More like wage deflation…
What wages?
Realtards - oops.
Construction - oops
Manufacturing - oops
Services - oops
Banks - oops
Credit expansion - oops
Bull market in bankruptcy lawyers, corporate litigation and debt-collection.
BWAHAHAHAHHAHHAHAHAHHAHAHAHHHHHHHHHHHHHHH!!!
Can a bureaucrat in Hong Kong stop massive global deleveraging? Bloomberg:
Financial Secretary John Tsang said the government will take steps to support the market if needed, without saying if that includes buying equities.
To stop the deleveraging a major country has to guarantee LOCs for international trade. It is currently not in the US interests to do that.
You can’t ignore the fact that it might be politically expedient, in certain circumstances. Look for more interesting grandstanding and bedfellows as the crisis evolves.
For instance, I found it interesting that Iceland (a NATO country), first approached Russia for their bailout. I have no doubt the reason initially was to goad the US and EU to provide a better loan for “strategic” purposes, but unfortunately for Iceland the Cold War is over.
Now they are kissing up to the EU, but the EU is distant because they have enough former Eastern Bloc nations and Turkey looking to get handouts at the expense of the more prosperous members.
Welcome to today’s “free” market: Massive fraud and deregulation when times are good, massive government intervention and pandering when times are bad.
welcome, indeed.
Iceland first approached the US. We turned them down.
The US is so f’ked that we are in an active pattern of beggaring other countries currencies hoping that it will keep the dollar stronger.
The problem with this lasting is that $10T is overseas in other countries accounts. It would not surprise me to see China guarantee EM currencies just to insure China’s continuing import of raw materials.
I heard Hungary hit us up as well, but we didn’t bite.
Lad..giggle.
we didn’t bite because we’re not Hungary yet.
‘we didn’t bite because we’re not Hungary yet.’
You’ve been quite superb today. Good on ya, treshy.
Iceland just raised interest rates to 18%:
http://biz.yahoo.com/rb/081028/business_us_financial6.html
Are they just two years ahead of us?
Pakistan has 6 days b/4 it blows up financially.
Skip,
Point taken but I hope we are a ‘little’ more economically diverse ( and less isolated? ) Sad to see though.
Maybe this is a good time to open an Icelandic bank account?
Why is this sad to see? They were living extremely well during the boom times, and now they are paying the price.
They are just another FB, albeit on a national scale. We’re in the same boat.
They’re a buncha fishermen (numbering 300,000 or so) who decided to borrow $60 billion.
That’s $200,000 per man, woman and child.
As my dad astutely pointed out, it’s a country the size of a large suburb in Tokyo or Mumbai.
What did you expect?
“What did you expect?”
Higher interest rates.
Well, DUH!
But I wouldn’t loan money to them. At least, not yet. With a history of changing rules, it’ll be a while before institutions pile in.
Get in before the institutions; sell to the institutions; get out. Works like a charm, every single time, after every devaluation.
“What did you expect?”
A rubber biscuit?
RE: They’re a buncha fishermen (numbering 300,000 or so) who decided to borrow $60 billion.
Cod’s all fished out.
Might as well give the sex industry a try.
Import a few red light girls from Amsterdam or maybe some of those legions of unemployed RealtaWhores from the US.
From the CNN article (hopefully my post will show up):
‘He admitted that Icelanders would suffer from higher borrowing costs. “This rate will obviously be very hard on the public and businesses. It should not come as a surprise given the enormous blow when 85% of the banking system collapses,” he said.’
For comparison purposes, about what percentage of the U.S. investment banking system collapsed this year?
Christmas Uprising?
Visa Vis consumer indoctrination, we’ve been conditioned to overspend on ourselves and others during the hole-liest of holidays…
The hoi polloi is dumb as a box of rocks, but they’ll figure out that they can’t afford much, if anything this xmas, and I think it will fark with their brains, more than anything else economic.
I think the video called “Pharmacratic Inquisition” does an excellent job of explaining where most of our “Christmas Traditions” really come from.
Pharmacratic Inquisition
I’ll be losing my home this Christmas;
You can count on me.
We have no dough and mistletoe
or equity, you see.
Christmas Eve will find me
Where the motel-light gleams.
I’ll be home for Christmas
If only in my dreams.
That’ll do lad, that’ll do.
Gnosticism? No thanks.
Like it or not, we are our very own gods capable or incapable of so very much.
Some of us need invisible of support to justify our existence, others just live their lives like there’s no tomorrow and have a lust for life.
I do believe you are your own god.
“I do believe you are your own god.”
Perhaps you could High to Kolob some day…
‘I do believe you are your own god.’
I think so too. And verily, I do worship Myself with candy and shoes and lavish libations and other suitable offerings. Of course, I am also a jealous God, and so when I anger Myself, there’s just hell to pay.
I thought you were a Wrathful God™. That’s what we need more of.
‘I thought you were a Wrathful God™. That’s what we need more of.’
Only when I can’t find the shoes, the beer, the pleasing praises and the cake.
For verily:
‘And when we burned incense to the queen of heaven, and poured out drink offerings unto her, did we make her cakes to worship her, and pour out drink offerings unto her, without our men?’ (Jeremiah 44:19)
Furthermore:
‘There shall be pretty pink frosting upon the cake, and maybe a cute little plastic monkey perched amongst the rosy swirls, for I liketh that, because that is super darling’.
(Cosmopolitans II; IV)
Verily!
Visa Vis consumer indoctrination
Nice pun.
Our country was doing senseless-media Potlatch bong-hits…
“Before the arrival of the Europeans, gifts included storable food, canoes, and slaves among the very wealthy, but otherwise not income-generating assets such as resource rights. The influx of manufactured trade goods such as blankets and sheet copper into the Pacific Northwest caused inflation in the potlatch in the late eighteenth and earlier nineteenth centuries.”
http://en.wikipedia.org/wiki/Potlatch
Home Prices Post Record Decline
http://online.wsj.com/article/SB122519826778275869.html?mod=googlenews_wsj
Nothing new, as expected the prices are going down
Maria
Tuesday, October 28, 2008
Insane Valuation Case Study: Valero Energy
It is pretty easy to find ridiculously low stock valuations in today’s market, but here’s an example of the value present in the current bear market. Valero Energy (VLO) this morning reported third quarter earnings of $1.86 per share, well above estimates. The stock closed yesterday at $15 per share, which gives it a P/E ratio of 8 based solely on one quarter’s worth of earnings! Insane.”
Not when you can buy Japanese and Asian stocks with quarterly P/E ratios of 4. Buy Asia/short US. (Not recommending that trade)
Which Asian stocks are you (actually not) recommending, hoz?
i own valero stock. but i have fears for their prospects long term. gas consumption in the US will continue to trend down due to high prices, less exports evailable from mexico and venezuala, and the economy. Whereas in the past 6 years US refinery utilization was consistantly over 90%, going forward it will be less and margins will suffer.
Yeah, the “crack spread” will suffer.
Sorry, I just needed to make that joke.
Plenty of PE 8’s in 1974-75. PE 6’s too. Even some PE 2’s and 1’s. What are Valero’s prospects if oil continues to decline in perceived value? (Which I admit might not be forever.)
In the long run, oil (and by extension, gasoline) goes to infinity in price.
What’s not clear to me is which of the current crop of refiners will be able to maintain their sources of supply. Methinks there will be great competition amongst the refiners in the Houston / Louisiana area as inbound shipments are depleted over the coming decades, and the ones with the greatest financial resources will be able to muscle the others out as they compete for dwindling supplies.
The wild card? If Ahmadinajad or some other nut-case decides to lob a nuke at the U.S., the achilles heel is probably the Houston area. They would knock out so much oil and gas infrastructure (as well as the Strategic Petroleum Reserve) that it would bring the U.S. to its knees very quickly.
Got Star Wars?
AXA NZ freezes funds-5000 investors with $225m on ice
AXA New Zealand has suspended redemptions from three mortgage funds for 30 days because of uncertainty in the wake of the government’s deposit guarantee scheme, which covers banks and finance companies but not mortgage trust and mortgage funds.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10539700
======================================================
Memo to the guaranteeists:
If you are willing to extend your assurance that everything is insured by a big fat nothing, make sure you don’t forget all aspects of your economy, when giving away the store.
Anyone think the 7,800 intraday low was a bottom? For your harassment pleasure and ridicule I will tell you I own some DIA in the 79’s from that day. I now have outs at 75 and 92 (roughly 5% down or 15% up).
And if the exchanges collapse, you can always sell the cabin in the tundra you bought in 05 because we all know it is worth more today.
Hey WNYT says they are only going to get 12-24 inches of snow today!!!! I never said it was worth more, and compared to what I would have invested in, given my really keen sense of investing, it has held up a lot better
Plus I wouldn’t be able to ski at Gore or kayak around a pristine lake with my stock certificates…… Those folks counting on redeveloping Gore with condos had some really bad timing, even worse than mine….
But you’ll never admit it’s worth ALOT less. Look a little deeper in the pristine lake belief. They are dying lakes there. They are silting in and warming. 20 years it will be a swamp no different than Alpine or Woodland, both swamps. Take a look around in surrounding towns and you will see. Silting is a natural occurrence.
That’s true, I won’t admit is worth A LOT less. Not yet anyway. I also didn’t buy it as flipper or to make $$ on it. I know it may sound lame, but when we are up there and my 2 kids are getting along a playing outside with each other without killing one another, and there is no TV, it’s well worth what I paid. My daughter learned to swim there this Summer. My son and I play golf together there for the first time. Not sure how to value those things, lame as they may be. I am also not sure that in 20 years it will be a dead zone. Its spring fed and cold as …, off the beaten path and non-motorized so I suspect its life span may be a bit longer than some others. Not sure about silting, but 50-60% of it is surrounded by rocky mountains.
Plus once AMD comes in to the South, it will be a perfect little place for one on those folks coming up from TX or elsewhere
RE: They are dying lakes there. They are silting in and warming. 20 years it will be a swamp no different than Alpine or Woodland, both swamps. Take a look around in surrounding towns and you will see. Silting is a natural occurrence.
Exeter:
Fresh water shorefront buyers around New Engalnd have spent ultra $$$ for a pig in a poke.
Water quality in numerous lakes and ponds is fading fast because of too many failing septics; fertilizer run-off from all the lawns installed by flat-lander aristocrats; and Mil-foil which is an oxygen depleting form of aquatic weed which spreads like wildfire.
Meanwhile, I load my sea kayak on top of my car and go to whereever the water is cleanest and simply overnight at a state maintained remote campground for $18..
Mobility-The New Wealth
Every lake that is formed by constructing a dam will eventually fill with silt. The streams that feed into it have water in constant motion, so silt doesn’t have a chance to settle out. But when that water reaches the lake, its velocity drops to near zero, and the silt eventually falls to the bottom.
Are you saying that silt happens?
“Plus once AMD comes in to the South,”
Still buying that line I see.
‘Water quality in numerous lakes and ponds is fading fast because of too many failing septics; fertilizer run-off from all the lawns installed by flat-lander aristocrats; and Mil-foil which is an oxygen depleting form of aquatic weed which spreads like wildfire.’
That’s not just New England, hd. We get those exact same lovely conditions right here in Thurston co, WA state. And not just fresh water impacts, but the Puget Sound too. Good-bye salmon, orcas, shorebirds, good-bye, good-bye, it was nice to know you…
In the ever deepening chasms of what were once full reservoirs in California, are emerging smells that reek of sulfur, because plant life that had existed only underwater or close to it, was now dying from a lack of water, giving off the odor.
What’s left in our reservoirs are essentially “the dregs”.
RE: “the dregs”
Ah, sulfur…the smell of rotten eggs in the morning!
Salton Sea wafts over us, seasonally..
Sulphurrrrrrrrrrr, mmmmmmmmmmm
Aromatherapy #2.
SKEPTIC IS RIGHT… come on guys he is going to DIE in that house
so price does not matter to him
It WILL matter to his kids who will hate him for throwing away their inheritance on a mortgage, but its his call.
NYCdj, thanks for your concern, but I owe about $25,000 on that house. When I sold my last house in 2005, I took the proceeds and built my current residence and bought this place. I owe $100,000 on my main house and $45,000 on the cottage. The combined assessed values are 3+ x that and realistic values, even in these markets, is well above that. I can afford a big haircut (75% off current values) and still be OK. My timing wasn’t perfect, but I now own 2 homes, both of which I like a lot, and owe a grand total of $145,000. I knew I paid too much for the cottage, but someone paid me way too much for my other house,a nd the cottage was “cheap” so it was fair and worked for me ;-). I will GUARANTEE you that neither my kids nor I will ever regret buying that place, even if I lose the $100,000 I will have into it. When you are fleeing NYC and want a place in the Adirondacks, just look me up, I’ll help you out.
It’s not the kids’ money, and they can sit and spin on it. What a bunch of greedy a-holes the world has come to. I encourage my parents to enjoy their nest egg and not stress about how much is left ‘for the kids’.
my 2 cents. If everything, and I do mean everything, is already priced in, I think it may very well be the bottom . . . for ‘08 only. I don’t see how current quarter’s numbers will be any better and the FED/Treasury are about out of ammo. So I see something lower but not until 2009.
Drysdale, your “if” clause makes your assertion impossible to evaluate. I’ll see your 2 cents and raise you a nickel. No bottom at 7800, not even for 2008.
I think it might be an intermediate bottom, one that will set the lower boundary of a trading range that will last for several months.
IMO the final bottom - the Final Flush - is a year or so away.
I agree. Dow 1500 will be the bottom in about 5 years. Maybe 10 or 15. This will be much more painful for equity investors than anyone thinks. There has been no fear among individual investors , None. Everybody says one of two things: Can’t sell here it will come back - or - This is a great buying opportunity (Buffet). Until these philosophies fade entirely we will slowly ratchet lower. Much lower than anyone thinks. It Is Written…
>Dow 1500
That’s too high. I predict Dow 500 in 20 years.
Wow. Well, if that’s the case, America gets flushed down the toilet, along with the rest of the industrialized world. 97% drop from peak?
Can’t see that happening, but if it does, I’m hoping the skills I’ve learned from “Survivorman” will do me some good.
Uh, you know I was being sarcastic, right?
The deep chasm between and betwixt sarcasm?
ah, cougar, it’s sometimes hard to tell on this board with so many people who permanently think that the world of The Day After and Testament paints too rosy of a picture of what our future looks like
Forgive me.
I wasn’t joking.
Ah, good on ya press, stick to yer guns. I hope you’re totally wrong, but I’ll eat crow if need be in that apocalyptic near future. I’m more of the 7000 plateau myself for a few years until the deadwood gets out.
Who is “everybody”? I know a lot of people who have been reducing equities during the most recent month, or cashing in their chips entirely. I also know a few who haven’t been.
Combo, isn’t it worth buying an intermediate bottom as a dollar cost average kind of thing? (DCA seems to be a dirty word these days). One of these intermediate bottoms will actually turn out to be the real bottom in hindsight.
No. This is knifecatcher behavior. Wait until absolute panic sets in, when the mutual funds will have to dump their holdings in order to raise cash to meet redemption demands of frightened stock market lemmings.
We’re not there yet, IMO
What he said. I covered most of my shorts yesterday.
I will re-enter the short-market when it rallies on volume (coming up by year-end.)
FPSS, but isn’t January a typically bad time as well. YOY.?
So, just for shtz sake, why would anyone buy etc during Dec? Wondering.
“why would anyone buy during Dec?”
Look at Dec-Feb of 1974-75. Multiyear low in Dec. It’s not the RIGHT comparison (IMO we are 1929), but it’s a POSSIBLE comparison because it ended the most severe bear event in the investing history of most people then active.
It looks too contrived. Thus far, we’ve been witnessing out of the clear blue sky global deleveraging in all asset classes. The propellar heads haven’t yet priced the recession. They have yet to sum and plug earnings into price models and report findings etc. etc.
They’ve priced the pan!c. They haven’t priced the pain. Oh, the pain.
They’ve priced the pan!c. They haven’t priced the pain. Oh, the pain ??
Excellent point !!!
Investor Overreaction: Evidence That Its Basis Is Psychological
David N. Dreman and Eric A. Lufkin
Probably no subject in recent financial literature has generated more controversy than whether investors behave rationally in pricing stocks, or whether they overreact to market information, resulting in prices being too high or too low. Although the efficient market hypothesis states that, with minor exceptions, securities are rationally priced, repeated evidence has been presented of predictable over- and underreactions. This evidence is based primarily on consistently higher returns for out-of-favor stocks and below-average returns for favored issues. The existence of overreaction in the marketplace, if it can be proven, is important to both investment decisionmaking and theory, and in more acute cases can be the major cause of financial bubbles and panics.
We present evidence of overreaction by showing that important fundamentals upon which securities prices depend demonstrate little movement in the face of major changes to the returns of favored and unfavored stocks. We can find no explanation other than psychological influences to account for this finding. The paper also provides evidence that over- and underreaction may be a part of the same process.
The Journal of Psychology and Financial Markets Copyright © 2000 by
2000, Vol. 1, No. 1, 61–75
Caution 16 pg pdf
http://overreaction.behaviouralfinance.net/DremanLufkin2000.pdf
Some econgeeks are chartists, but psych 101 is my bag.
Value investing is basically “shorting overreaction”.
Psych is more useful than charts.
“…The corrections are sharp and, we suspect, violent. But they do not fully adjust prices to more realistic levels….”
from the conclusions to the cited paper
“Some econgeeks are chartists, but psych 101 is my bag.”
It’s a parallel world for Behaviorists.
7800 was the bottom just after 9/11. Just after the last of the techs bombed, and just before the current insanity began. I would guess that 7800 is a good place for the Dow pendulum to settle after it stops this wild swinging.
Problem is, the Dow is stuffed with Big Banks and Big Three. They have engineered their own destruction since 2001, and may not have the juice to bounce back to that Dow number. Would a more accurate guage of a bottom be the S&P just after 9/11?
“I would guess that 7800 is a good place for the Dow pendulum to settle after it stops this wild swinging. ”
if this crash is like what happened to the Nikki late 1989 then the DOW will stay there at 7800 forever. Some things are the same some are different, japan saves money USA does not, but both have aging populations, and looks like both USA and Japan will have interest rates below inflation.
I think Japan has production. I think that may be important.
Sell. Every. Rally. tmMormonTeaCo MMVIII
even rallies in silver?
The truth hurts, but you should probably do that as well for a while.
good, I like your openmindedness
“Sell. Every. Rally.”
Sounds right, but I’m chicken w/ shorts and have no long positions in stock. I could further reduce my AUD bonds though. Hedge fund train probably still coming to run them down further.
Well - I wussed out and closed out the DIA at 90.75. All of Exeter and NYCdj’s concerns over my financial ruin at the cottage worried my so I closed it out. That trade, plus the 2 week rental will cover the upcoming years worth of carrying costs (mtg+taxes+ins) so I can sleep better tonight. I am sure I left some $$ on the table but my timing usually bites (except for today). I was also concerned that President Obama was going to tax the heck out of me next year…. Now if I can just get my fake gold GLD to behave better…..
Had a longer post, but for the record, I chickened out at closed my position out at 90 and change.
Just viewed the video on CNN dot com about the FB in Sandy Eggo who chained herself to her POS house. What a tool, bunch of hand written signs blaming the banks, etc. . . . and the reporter, just as bad. Ask her why she hasn’t been making her payments for Christ’s sake!!!! But nooooo, it’s every American’s dream to own their own home, we’re entitled, we loooove this house, blah, blah, blah.
Boltcutters and JT are in order - in that order!
I’ve all but given up on this. It’s frustrating that absolutely none of the blame has gone to the greedy folks who knowingly bought houses they couldn’t afford.
And with all they get under existing law: “No recourse”, ability to BK and start over, and no income tax on forgiven mortgage debt, they STILL want more, and both candidates are promising to give it to them.
Maybe I should chain myself to my house with a sign!
‘Maybe I should chain myself to my house with a sign!’
What’ll your sign say, reuven?
‘I’m a rich, gay, grumpy Jew and by cracky, I’m damn proud of it’?
Hahahahahaha! *snort*
Okay, I’m off to get some coffee. (And don’t be piss*ed off reuven, I’m just teasing you, in a fond fashion.)
Mr. Drysdale,
Well… from the “Bigger than their egos” thread, the shrink ‘did’ say that CA’s are “particularly attached” to their real estate, didn’t he?
The all-time bomb though was Sam Simulian and his out of control wife threatening and beating a SD reporter for exposing their rent scam. The video was hilarious, she says on camera ( after hitting him in the face with a water bottle ) I “know” people down in Mexico that can “take care of you” as she prances back to the car to get a gun out of the glovebox. Truly freakin’ classic.
(And of course, her name is Eggo so we can make all sorts of jokes about “le’ go of my Eggo” and waffling…)
Now that made me LOL!
Sandy Eggo = San Diego
During an argument, she’s was told to shut up by a guy named Xavier Breath.
You must have missed the part where they said she was employed as a foreclosure counselor, teaching people how to stay in their homes. Truly disgusting.
I visited a truck of mine that I keep at a friend’s place because I’m not allowed to keep it at my apartment building (an older box truck where I cut out the side and put in a rear projection video screen, it’s really funny).
Anyways I find an index card on the ground. It looks like a self made quiz card stack to become a debt counselor, as the question on one side was When should you suggest someone file bankruptcy? and the answer on the other side was never, always suggest they talk to a lawyer but not mention bankruptcy.
Sign of the times.
Saw that too..do you realized that she refi the house to use the money for her business which is..”foreclosure prevention.”
Read on a broker blog..here is the cycle of mortgage brokers..first I was a McDonalds employee, then I became a mortgage broker selling subprime with my leased BMW, then I ran to FHA and downgraded to a ued aveo(gets good gas mileage), and now I can help you since my new title is “foreclosure prevention specialist.”
I give it 3-6 months before they will be asking, ” Do you want frie with that order?” and getting a renewal on the bus pass…
Here is the link:
http://www.10news.com/news/17817055/detail.html#
I saw it on the news but you beat me to the punch. Whoops, our mortgage jumped to $5800!!!!
I would pay $100 to taser her while you cut the chain.
The S&P/Case-Shiller home-price index dropped 16.6 percent in August from a year earlier…
Bloomberg
Here we go…..they turned the machines back on!
Last night PBS Newshour had another panel of “experts” bickering about how to save mortgage holders blah blah blah. They don’t have a transcript up yet. A paraphrase:
Expert 1: Head of a community housing group: “We have to renegotiate the mortgages to something the homeowners can afford.” [interestingly, the guy sounded centrist, not like a flaming liberal. I couldn't get a feel for his agenda.]
Expert 2: Newspaper reporter(?): “The government is being very slow to bail out homeowners because it’s not the government’s business to intervene in a private contract. But it’s looking more and more like they have to renegotiate. But re-negotiations should happen through voluntary action of the banks, to prevent the moral hazard of jingle mail.”
Expert 3: “I don’t want to see FB’s walk. I favor a 4-5 year lease program to prove the Fb is serious about paying back, then you re-negotiate.”
The discussion didn’t really solve anything, but I’m glad to see that they are still arguing about the mortgages, rather than doing blanket bailouts to all FB’s. Does anyone have a good link to the Credit Suisse mortgage reset graph? I’d like to refresh my memory on just how many of these “bad mortgages” were really re-fi’s.
These folks are heros in that they are offering hope to the FBs, and this hope will encourage the FBs to keep up with their payments rather than walking away and leaving the banks - and ultimately we taxpayers - stuck with the bill.
King,
This infatuation of yours, with people getting deep-sixed in real estate @ the last possible moment (to our benefit somehow?) is schadenfreude person-a-fried.
I like it.
My understanding [just confirmed at dictionary.com] is that “shadenfreude” is taking satisfaction at somebody else’s misfortune — i.e. ha ha your daughter broke her leg. True schadenfreude is nasty.
We’re taking satisfaction in somebody else’s just desserts. I don’t know what the word is for that.
(observes your array on the dessert tray)
“I’ll have a Napoleon, please.”
‘We’re taking satisfaction in somebody else’s just desserts. I don’t know what the word is for that.’
Well, I am positive the Germans have a word for that state, too. With 15 syllables and some umlauts.
I’ll ask my gran. She’ll criticize my life-style,(because there’s not enough character-strengthening hardship in it), tell me to sit up straight (she can’t even see me, this’ll be over the phone), disrespect the French in general and at length (she lives in Utarr and doesn’t even have any French people handy), and then finally she’ll tell me the word, whatever it is, and then I’ll tell you guys! And we’ll all know it! Awwright!
It is just a simple case of reality vs fantasy. I have a passion for observing and accepting reality and living my life accordingly. To see what happens to people with no clue just affirms that I am actually in tune with reality and it is not them. Simple satisfaction that goes with doing your best at a job (life). Pride.
I’m not taking satisfaction in anyone’s getting “deep sixed in real estate”, I’m just saying money flow has to be maintained and an orderly deline is needed or else we get a really big crash and the market freezes up and we are all screwed.
The more hope given to knifecatchers and FBs the better off everyone will be. If it’s not their money that should be sacrificed to the System then whose money should it be?
King,
The sad part of you calling for other people’s misfortune, is you are headed down the very same path…
When all these people realize they have been commuting 4hrs/day to pay against equity that now isn’t there some might turn into angry campers like Michael Douglas in Falling Down.
shift happens.
Topic: Credit Crunch Not Slowing Cosmetic Surgery
You would think that with the ever tightening credit crunch crisis cosmetic surgery would be the last thing on people’s minds but this doesn’t appear to be the case. In fact some say that it is even more important at a time when jobs are fewer and any advantage can mean the difference between receiving bad news and getting the job.
Generally if people want something they will find a way to get it, this may mean taking a personal loan or loading up the credit cards and this is certainly the way some pay for cosmetic surgery.
There will of course always be those who are largely unaffected by any financial crisis that effects the rest of us. We see stories in the tabloids and glossy magazines speaking of the latest celebrities to have gone under the surgeon’s knife and the results are usually startling although there are a few who take it that little bit too far.
Cosmetic surgery will never be something people “need” but is certainly something people have a psychological need for. To some, having a facelift can make a huge difference to their mental outlook and give them that little extra confidence they have been looking for. The majority of people opting for the above type of procedures are usually older and therefore more financially stable and able to spend money on these types of things.
If you are thinking of opting for cosmetic surgery and unable to afford it you should save you money rather than simply take out a loan. This way the surgery will mean all the more to you having been earned and can make an even bigger positive psychological impact.
The RNC/GOP pays for cosmetic surgery too.
Nice huh?
Rhinoplasty performed on elephants before they enter the 3-ring circus?
S.P.Q.A.
Don’t be ridiculous. Everyone knows rhinoplasty can only be performed on a rhinoceros!
Pachyderm happens.
Its like Fernando said: Its more important to look good than to feel good.
LOL!
“If you are thinking of opting for cosmetic surgery and unable to afford it you should save you money rather than simply take out a loan.”
Oh stop with the responsibility mumbo jumbo. Getting a loan you might not have to repay is much easier.
This morning on the radio one of the more prominent laser eye surgery doctors came on with a new commercial… if you have severe problems (and gave 3 or 4 situations), they would be willing to discount prices down to zero for those that cannot afford up until Christmas, and would be willing to do “pay what you can.” The reiterate it’s for serious cases. Possibly a PR move, but it looked good for them.
As the price one can expect to receive for being a “high-end girlfriend” comes down, so too will the demand for inputs into high-end girlfriend production go down.
On the upside, maybe the average joe will be able to afford HEG’s. Affordable HEG’s for everyone, I say!!!
I am in the business with a practice in LA, and the cosmetic side is way, way down (of course most docs are going to say they are doing great if asked face-to-face — it’s a very image-driven field). I would estimate surgery is 30-50% off on volume, with lower charge items off a bit less (skin care, injectibles). Some patients are pushing hard on price. Thankfully, I do a lot of reconstructive work, too, so I am fine finacially. Without that, times would be challenging.
loan0suction?
Cash0suction.
cashoinjection
‘cashoinjection’
I like this one best. It sounds, you know–vigorous.
CashOinjection reminds me of the Fed…I see Bernanke in a doctor outfit going:
“i don’t give a damn if he goes into hyperinflationary shock, 700billion cc more of cash, g’dman it!!”
I’m in the medical field as well (though dropped down to part time for now while I pursue other interests). If anything, I am seeing demand has been stable except for elective procedures, which are way down but luckily that doesn’t affect me.
Patients are coming in sicker and staying longer in the hospital because they are forgoing medicines or ignoring symptoms. We are also seeing a lot of social issues that complicate their recovery. They are also defaulting on their bills or deferring payments in higher numbers.
Makes me wonder what will happen to the medical field if/when they ’socialize’ it? Demand will go up even more, and the supply side will go down as medical wages stagnate, reimbursements go down, and the workload becomes ridiculous.
‘We are also seeing a lot of social issues that complicate their recovery.’
What do you mean?
More divorces and marital tension, more homelessness (especially for Alaska Natives relocating to Anchorage from the rural villages, only to find there isn’t a lot of work for their educational level), more isolation, more delinquent children, more drugs and alcohol, more legal issues and criminality, more relocations and disruptions of social networks…
The social issues just compound an already bad situation, when you are sick and poor…
supply side will go down as medical wages stagnate, reimbursements go down, and the workload becomes ridiculous
In other words, they will be in the same boat as everyone else. Or are all those Docs and Nurses gonna quit and become realtors?
In the last year I have had the misfortune to have incurred tens of thousands in medical bills, which included about half a dozen surgeries. What has continued to surprise me, was how little of that actually went to the surgeon.
The surgeon was only getting about 500-600 for a one hour surgery! My attorney gets 250/hour! And no matter how bad my attorney screws up, it ain’t going to kill me.
“What has continued to surprise me, was how little of that actually went to the surgeon.
The surgeon was only getting about 500-600 for a one hour surgery! My attorney gets 250/hour! And no matter how bad my attorney screws up, it ain’t going to kill me.”
Hear, hear. I had an emergency appendectomy on Christmas 4 years ago, and the bills totaled $50k. Of that, the surgeon only got like $2000 or so (he was drunk so shouldn’t have even been paid that much). The anesthesiologist made around the same. Over $40k went to the “hospital”.
Makes me wonder what will happen to the medical field if/when they ’socialize’ it? Can’t say about what will happen to the care providers, but, in your scenario, medical consumers who refrain from consuming for whatever reasons will have to pay for medical consumers who do consume for whatever reasons. Universal health care is financially feasable only when the vast majority of health care consumers are responsible.
You need to talk to ahansen.
Yes, that’s right. A bear jumped her a bit ago, didn’t it?
Ahansen! Are you there? How are you doing? good, I hope. How’s your doggies?
I know it sounds distasteful but she’s become a metaphor for this country, it seems.
I wonder if prices for cosmetic surgery procedures will come down.
I hope so; I would really like to fix my nose at a good price paying cash.
What do you guys think?
Should I wait for a bargain? Will bargains ever exist?
‘I hope so; I would really like to fix my nose at a good price paying cash.’
What’s wrong with your nose?
I would really like to fix my nose at a good price paying cash. Be careful not to spite your face just to get a good price.
RE: I wonder if prices for cosmetic surgery procedures will come down.
I hope so; I would really like to fix my nose at a good price paying cash.
What do you guys think?
Should I wait for a bargain? Will bargains ever exist
Do the whole Enchalada…boobs, face, nose whatever!
Put it on your BofA credit card and move to Austrailia.
Then wait until the Barney Frank Dog and Pony Show submits leglislation for the bail-out of all US expatriate cosmetic plastic surgery deadbeats with all former debts moved to the newly implemented US Federal Dept of Body Enhancement or FDBE.
You’ll be a new women free and clear!
Have you seen any drops in price?
Nah, just drops in buubs and axxes.
haha, couldn’t resist.
I would go to Buenos Aires for medical vacation. I have a source!.
Just hitting the wires, consumer confidence plummeted 23.4 to 38.0 in October, according to the Conference Board’s survey. This was worse than the expected reading of 52.0. It marks the lowest level on record, which dates back to 1967. A drop in confidence was expected given all the economic concerns and sharp drop in the stock market.
Just when you thought the bottom was in place!
They’ve priced the pan!c. They haven’t priced the pain. Oh, the pain. Bloomberg:
Household wealth has evaporated as the Standard & Poor’s 500 index verged on its worst one-month loss in 70 years, home equity shrank and job losses mounted. The dimming outlook signals consumer spending, which accounts for more than two-thirds of the economy, will deteriorate further, deepening the U.S. slump.
Good thing Governor Palin is doing all she can to prop up the luxury consumption sector! IMNHO, this story has major implications for future price movements in high end real estate markets (San Francisco, La Jolla, Rancho Santa Fe, Manhattan Island, Tiburon, Rancho Palos Verdes, etc).
Even America’s rich losing confidence
By Cotten Timberlake, Bloomberg News
Published October 21, 2008 at 12:05 a.m.
Confidence among U.S. buyers of luxury goods fell to the lowest level in at least four years, led by a drop in spending by the wealthiest Americans, according to researcher Unity Marketing.
The firm’s Luxury Consumption Index declined almost 11 points to 40.3 at the end of the third quarter, the Stevens, Pennsylvania-based luxury-market research firm said Monday. The measure stood at 51 at the end of the second quarter, the previous low for the four-year-old index.
…
“It defies conventional wisdom that the richest are immune,” Unity Marketing President Pam Danziger said in a telephone interview.
“This economic slowdown is hitting them right at dead-center of their wealth, which is in their stock portfolios and their homes.”
…
“Ultra-affluents,” with annual incomes of at least $250,000, cut spending by 20 percent in the first nine months of the year. Those with incomes of $100,000 to $249,999 reduced their spending 11 percent, Danziger said.
About 44 percent of the wealthiest said the value of their investments has decreased by 25 percent or more in the past year, and 31 percent said their homes’ values have dropped by 25 percent or more. Almost half said their financial situation is worse now than it was three months ago.
Luxury consumption has been declining since early 2007, losing more than half its value in that time. It stood at 100.2 at the end of the first quarter of 2007.
…
The index is based on an Oct. 3 to Oct. 8 survey of 1,161 consumers with an average income of $210,700. The measure uses a January 2004 base of 100.
COMEX gold is a form of debt. It involves one party promising to produce gold (money) to another at a future date. Like all forms of debt, a COMEX futures contract is only as good as the counterparty behind the contract. Right now, because of low margin requirements, sellers of gold futures only have enough gold to cover 10% of outstanding contracts stored in COMEX warehouses. Considering that the biggest sellers of gold futures contract are insolvent financial institutions, it is obvious that COMEX gold has enormous counterparty risks . If even a quarter of outstanding contracts asked for physical delivery, it would be enough to guarantee a default. Since a financial collapse actually creates the risk total default (insolvent banks can’t produce the gold or cash), COMEX gold fails miserably as a safe haven . This is why COMEX gold prices are falling, while physical gold is disappearing from the market place.
This is perhaps the most insightful view of the gold market that I have seen to date. It points out that the demand for COMEX “IOU’s” from big banks is what is falling in value and not the gold itself. The article goes on to predict that if people start taking physical delivery of gold you will see a dollar collapse and gold going 2000+
http://www.marketoracle.co.uk/Article6952.html
Excellent article, thanks. I keep thinking of making a big bet on physical gold, but I have a fear of buying gold bars (a 24K kilo for 24K what a coincidence) and it’s hard to get a stack of coins these days. Plus with those sums of money the government probably sticks its nose into the deal, somehow, at least to know about it so they can repossess it some day.
It’s probably best that you’ve decided to take one for the team, and do nothing along with everybody else.
Oh, that was good!
Really? I didn’t get it!
It’s just more evidence that the emporer_N is a hypocrite and a fanatic.
The good news for you lad, is that all your predictions will remain for everybody to see. I’ll be the first to tell you that you were right, but you’ll never admit you’re wrong. Naturally, if you say your religious gold stuff long enough, it might be come true and when it does, you’ll be oh-so-proud, regardless of the fact that you were wrong all the previous years, decades or centuries.
In a convoluted way, you are supporting an argument that I put forth last year; that the meteoric rise in the price of gold was not based on fundamentals, rather on leveraged speculation. Leveraged speculation balloned everything imaginable; houses, oil, copper, corn, stocks. Deleveraging is letting the air out of all the ballons, including the PMs. JMO.
I don’t think this taking physical delivery is going to materialize. The leveraged speculators were not playing with enough actual money, they were leveraged. Windfall profits was all they expected to take. They are getting crushed. I expect the man-on-the-street is about a few months behind the curve and will get summarily crushed as well for placing bets after the high rollers headed for the exits.
There is no shortage of gold. Go in any jewelry shop and ask the dealer if he is suffering from a shortage of PM. If this market plays out further down, the newbies who paid huge premiums for coins will be selling them back at painful discounts to melt. Again.
Where are we on Neil’s emoticycle?
Blue:
In the 19th century in our country, there was a predominantly religious group that held political sway for far too long for a very short time.
They were called the “Know-Nothings”
As in, you know nothing of what you speak.
Were they shortly displaced by the bellowing know-it-alls?
If you know it, flaunt it.
if you have no sway in your conviction you are as bad as a religious zealot– or worse, a “real estate always goes up” drone.
The difference being my convictions are based upon reality, not fantasy.
That conviction thing can lead to a high mortality rate, for cheerleader and followers.
I wasn’t planning on living forever.
Munching popcorn merrily.
Where are we on Neil’s emoticycle?
Panic.
We still have capitualation, despondency, and despair on the down side. I think capitualation will come early. I think panic will be a short emotion due to the brutality. 2009 is Capitualation. Starting… spring. Yes, counter-weather. But this is a big event.
Got Popcorn?
Neil
Last week we read how a merger between GM and Chrysler could lead to the elimination of 40k to 60k jobs.
Now, did anyone catch that recent bit about tthe Treasury pitching in $5B to grease a GM/Mopar merger?
http://www.nytimes.com/2008/10/28/business/28auto.html?hp
“People familiar with the discussions said the administration wanted to provide financial assistance to the deeply troubled Big Three Detroit automakers, possibly by using the Treasury Department’s wide-ranging authority under the $700 billion bailout program that Congress approved this month. Another option under consideration is to tap a $25 billion loan program that Congress just created to help the auto companies modernize their plants. A third option would involve going back to Congress, immediately after the Nov. 4 election, for authority to spend funds aimed specifically at the auto industry. But officials have not yet decided how much assistance to provide or how to structure any aid program.”
“G.M. and the parent of Chrysler, Cerberus Capital Management, are in talks to possibly merge the two companies, which are losing sales and hemorrhaging cash. People close to the talks said G.M. needs between $5 billion and $10 billion in assistance, mainly to cover G.M.’s own needs between now and the time of the merger.”
Chrysler only has 39,000 employees. I think they might be too small to succeed in todays global automobile market and they are definitely not too big to fail.
The only thing going for them is that Paulsons predecessor Snow is in charge of Cerebus these days. I think that makes Chrysler too well connected to fail.
39,000 employees… but how many robots? Automate it all! Take the human out of the loop.
Is there anything other than the Jeep brand that is worth saving @ Chrysler ??
RE: Is there anything other than the Jeep brand that is worth saving @ Chrysler ??
O’Bamie Boy & Michelle used to drive a 300C that of HEMI- 340HP territory.
Subsequently Greenie bashing had them trading for a hybrid Toyota Prius…
So much for a Chyrsler the the White House garage.
Where’s Lee Iacocca when you need him.
Where’s Lee Iacocca when you need him? Recently he wrote; “I’ll give you a sound bite: ‘Throw all the bums out!’”
Unfortunately the greater portion of Congressional incumbent-bums will be re-elected as per usual.
So they gotta make that 300C out of HEMP?
I wish these articles would occasionally mention the “do nothing at all” option. It’s often the best choice.
See my post which may come up soon…..it’s 10 billion now, and to be used in part to minimize layoffs (i.e. subsidize employment).
All but direct admission that your/my tax dollars are being/going to be used to save some high paying jobs??
http://www.cnbc.com/id/27409944
“But one of the conditions of the merger would be that GM-Chrysler would spare as many jobs as possible in order to win broad political support for the government funding needed to complete the deal, people familiar with the merger discussions said.”
Through taxes and public benefit cuts for those in low paying jobs.
Again.
W’s “Panic Now” speech apparently had a measurable effect.
latest news
Nov. natural gas falls 0.3% to $6.103/mln BTUs on Globex
ECONOMIC REPORT
U.S. consumer confidence plunges to record low
Job, economic worries worsen as financial crisis takes toll
By Ruth Mantell, MarketWatch
Last update: 10:09 a.m. EDT Oct. 28, 2008
WASHINGTON (MarketWatch) — Wounded by the financial crisis, U.S. consumer confidence plunged in October, reaching an all-time low in the series’ 41-year existence, the Conference Board reported Tuesday.
Despite falling gasoline prices, the October consumer confidence index fell to 38 from an upwardly revised September reading of 61.4. Economists surveyed by MarketWatch had expected an October reading of 52. See Economic Calendar.
I think that part of the reason why “falling” gas prices aren’t helping is because gas is still expensive. Sure, J6P can now fill up his monster truck with $75 instead of $120, but for ol’ Joe that is still a lot of money, especially since he’s either been laid off or had his hours cut back.
Joe&Jane royally screwed themselves again and really got backed into a corner when they sold/traded/gave away their monster truck/SUV and paid retail + financed + rolled the balance into their new fuel sipping econobox only to now watch gas come back down in price. Poor, poor Joe &Jane, when will they ever learn? Just don’t follow the herd.
And they were last sighted headed back to the dealership to trade in the econobox for the new Ford F-950 MegaTruck, cause gas is now cheap since it is < $3/gallon.
RE: when they sold/traded/gave away their monster truck/SUV and paid retail +
Local evening news did a blurb last night on the current travails of Big 3 dealers.
The interviewed sales fast-talker said a new 2008 stripper F-150 4×2 can current be had for $11k(!) or $8k off due to factory rebates and massive inventory discounting for guzzler hold-overs.
Adios trade values.
J6P’s underwater again.
“ol’ Joe that is still a lot of money, especially since he’s either been laid off or had his hours cut back.”
Exactly, Houses, and gas are down 40%, but you have no job,savings,and a maxed out CC….All’s well.
ECONOMIC REPORT
Home prices off record 16.6% in past year
By Rex Nutting, MarketWatch
Last update: 9:47 a.m. EDT Oct. 28, 2008
WASHINGTON (MarketWatch) — Home prices in 20 major U.S. cities dropped 1% in August compared with July and fell a record 16.6% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor’s.
This prospect sounds rather dire, even to my jaded ears.
EUROPE | VW, BP lift Europe stocks
Bank of England fears system breakdown
Mark-to-market losses for U.S. U.K. and euro-zone banks could be as high as $2.8 trillion, the Bank of England warned.
Insolvency is like death — it’s terminal.
Don’t listen to me. I’m nobody. Here is Doug Noland in the Asia Times, History’s biggest margin call:
Only today is it readily apparent what a mess the global pricing system had become. Think in terms of a net trillion-plus US dollars inflating the world each year, of which a large part was recycled through Chinese and Asian purchases of US securities (inflating domestic credit systems and demand in the process). Think in terms of rapidly inflating economies with several billion consumers (Brazil, Russia, India and China). Think in terms of the surge of inflation that forced thoughtful policymakers in economies such as Australia, New Zealand and elsewhere to significantly tighten monetary policy. Rising rates, however, only enticed more disruptive speculative finance flowing loosely from (low-yielding) credit systems including the US, Japan, and Switzerland.
Je*us effin’ Chri*t……I am not voting now, not that it mattered here anyways:
http://www.cnbc.com/id/27418473
Are you opposed to slavery?
I’m opposed to all forms of Slavery and especially to my OWN!
That’s why I’m happy NOT to be married or a HouseDebtor.
Got CASH
I’m in your camp! I rent, in both of the first two, and save the third.
I think any program to keep people in houses they cannot afford is defacto slavery.
Depends on if I’m the slave or not.
this is why mccain will lose.
i am a conservative/libertarian. i have voted republican in every election since i was 18.
i will not vote for john mccain and i am ashamed that i voted for bush.
That is my M/O also although I did not vote for Bush….IMO, All it took was a historical look at all his failures and half accomplishments even with a silver spoon cramed up his a$$ to recognize what kind of Pres. he was going to be…He was voted in to drive the Ideoligy not to lead the country…oops…”My Bad” on the neo’s…
Don’t be ashamed of making a mistake.
I hope you do vote though. A careful study of your choices for congress is a lot more significant in regards to domestic affairs than the choice of figurehead. Vote against those who voted for the bailout, they are bought and paid for agents of the banking system.
I disagree. Uniformed voting is worse than not voting at all. Thats why I hate all that “get out the vote” nonsense.
More people would vote if we had someone with a good reform platform…like “Off with their HEADS”
I quit voting Republican when Reagan supported huge budget deficits. Cutting taxes without first cutting expenditures is NOT conservative. It is irresponsible. And if the feds say borrow & spend is ok, why whine when Joe6pack does it?
I vote dem as a protest vote. Until the Reps return to being for responsible spending, military DISengagement & effective government, I will continue to support the party that at least doesn’t dump massive debt on future generations.
And don’t even get me started on “conservative christians”.
And if the feds say borrow & spend is ok, why whine when Joe6pack does it?
Who’s whining? They encourage it. It keeps GDP up and makes incumbents look good.
Enjoy the new regime, lol.
http://www.humanevents.com/search.php?author_name=Patrick J.+Buchanan
I’m with Blano on this one, McCain is an out of touch old geezer throwing everything out there (one crappy idea after another) hoping something sticks. I’m dissappointed that he is the best the GOP has to offer and may not vote for him either.
Now, why anyone would want that job, at this time, is beyond me.
Please, if nothing else, vote McCain in hopes of deadlock. Obama’s ideas are about as dreadful, and if he gets in they might just sail right through congress.
Early morning U.S. stock market rallies have a strong tendency anymore to morph into plunges. Whatever happened to that huge herd of bulls that were recently chanting, “The stock market always goes up, in the long run”?
Oh they’re probably still correct, but “long run” might not mean what they thought it did.
Failing a test is normally bad, so I assume failing a retest is much worse?
MARK HULBERT
Failing its retest
Commentary: The Dow’s Oct. 10 lows have been decisively broken
By Mark Hulbert, MarketWatch
Last update: 11:03 p.m. EDT Oct. 27, 2008
ANNANDALE, Va. (MarketWatch) — The stock market has failed its retest.
This has to be a big disappointment to the bulls. They had great hopes that the Oct. 10 closing low of the Dow Jones Industrial Average would hold, thereby driving a stake through the heart of the 2007-2008 bear market.
He’s talking about the closing lows, right? Because we haven’t yet tested the PPT protected Dow’s intraday. They are holding a vigil over than one. NASDAQ, MID, and RUT on the other hand are falling apart.
PAUL B. FARRELL
King Henry Paulson says: ‘Buy banks!’
But gurus say no: Cool Andy, Mad Jimmy, Genius John, Nervy Naomi
By Paul B. Farrell, MarketWatch
Last update: 8:06 p.m. EDT Oct. 27, 2008
ARROYO GRANDE, Calif. (MarketWatch) — “Considering how hard I work to make what I have, I don’t understand why I’m so dumb with money” said Andy Rooney on “60 Minutes.” His admission came after a segment about the mysterious $55 trillion of credit default swaps that are traded in a shadow banking system.
“The single dumbest thing I do is invest in the stock market,” Andy says. “It’s OK if you know what you’re doing, but I have no idea what I’m doing and I suspect I’m typical of a lot of Americans too. We know how to make money but we don’t know what to do once we get it.”
You’d have to be touched in the head to compete with a money-printing machine.
I would not touch banks with a million-foot pole. For one, we haven’t seen all the cucurachas yet, and secondly, the credit expansion gig is over for the time being.
There will be a time to buy banks but it’s so far out, my crystal ball gives no information.
How about a kilometer long Ukrainian?
“There will be a time to buy banks but it’s so far out, my crystal ball gives no information.”
Perhaps after banking sector perestroika and the adjustment thereto are complete? We are not there yet — in fact, we are not even past the denial stage over the need for perestroika.
Stocks carve out rebound after sharp selloff
Tuesday October 28, 10:56 am ET
Investors managed to take bad economic news with relative calm, holding on to most of its gains after the Conference Board said its index of consumer confidence fell to its lowest level in 41 years, with a reading of 38. That was well below the 51 analysts expected.
http://biz.yahoo.com/ap/081028/wall_street.html
You know times are bad, when this article turns out to be wrong in less than an hour after its written.
In the end, doesn’t it all boil down to a non-metallic version of Gresham’s Law?
Bad money(giveouts & guarantees) is en-route to a head-on collision with good money (savings), and as both moneys look the same, once you mix them together, is one distinguishable from the other?
People are beginning to notice…
In the metallic version of Gresham’s Law, the 1st instance of it happened during Ancient Rome, when technology reared it’s ugly head.
That technology was the ability to silver-wash (silver-plate) copper coins, in order to give them the appearance of looking like Denarius, the Silver coins of the realm, of which 25 of them were required in exchange for 1 Gold Aureus.
It took awhile for the silver-wash to wear off and expose the CDS scam lying underneath, just below the surface.
But once people noticed, eventually it took over 3,000 Denarii to equal just 1 Gold Aureus.
Why do you think people were mad about alchemy way back when, centuries after the fall of the Roman Empire?
It worked for Silver, sort of.
It would seem Comex delivery default a certainty. The December silver contract could actually bring down the house. Unless of course it is too big to fail, just to useless not to become irrelevant.
The issue is, that there isn’t any silver to take delivery of, which is what you do when you take delivery.
Silver, Volkswagen shares - could become very interesting.
No default likely, the Comex can make the contract liquidation only. Happened before, it will happen again.
It’s a win-win either way.
The rules abide and unobtainable metal needs to be found to honor contracts, or:
You break rules and adios futures market, and hello my little friend, physical rules.
It is a win-win for the floor members. If the floor is short, “liquidation only” - price goes down. If the floor members are long -deliver.
There was no silver for delivery to the Hunt Brothers either, the price of silver dropped $38. Liquidation only.
It takes a lot of balls to be in an illiquid market at expiration. Unpredictable movements are possible.
Mormon, There has been several articles on Kitco, silverseek etc that was outlining how to actually take delivery of your Comex option. I get one newsletter where he was selling his Silver Eagles that were $7 over spot to take delivery of 8 1000oz contracts. If even a few people did this in the last few months that would take even more leverage out of their house of cards. There was an article last month were just 2 banks shorted 4x the amount of all the comex holdings thus causing the first wave of sell-offs. It will indeed be interesting as those delivery calls come due. Also shortages now being reported in India, Dubai etc.. Interesting indeed.
My wife read somewhere that people are selling off physical positions and buying long paper wafer positions, positioning themselves into the poorhouse in pursuit of percentages, i.e. gambling.
Many in the global press are calling him “King Henry.” I’ll bet old buddies at Goldman are calling him “Savior” and will give him a nice “signing bonus” of at least $100 million if he rejoins Goldman, paralleling the 1% investment banking fees we used to get when I was with Morgan Stanley.
Imagine the confidence supporting his recommendations: He tops Uncle Warren’s $5 billion investment in Goldman by upping the ante to $125 billion in new capital for nine banks including $10 billion each to his old buddies at Goldman Sachs (GS 82.92, -9.96, -10.7%) and friends at Morgan Stanley (MS 10.73, -3.00, -21.8%) . Plus as much as $25 billion each to other members of Wall Street’s “Old Boys Club;” J. P. Morgan Chase (JPM 32.54, -1.46, -4.3%) , Citigroup (C 11.56, -0.17, -1.4%) , Wells Fargo (WFC 30.77, -0.06, -0.2%) , State Street (STT 35.09, -0.60, -1.7%) , Bank of New York Mellon (BK 26.35, -0.15, -0.6%) , plus Bank of America (BAC 20.03, -0.50, -2.4%) and its new subsidiary, Merrill Lynch.
I thought it was a funny coincidence that all the “recommendations” Farrell referenced in the above passage showed negative intra day price changes, some of them rather eye-popping in magnitude.
At some point in time people will realize better returns paying off high interest debt than investing in lowly geared markets.
Census Bureau vacancy data out for 3rd quarter. Little change from historically high vacancy rates for owner- and renter-occupied housing. Holding at all time highs.
Year-over-year housing units up 2,168,000; occupied up 1,431,000, split between additional owners and additional renters.
Vacant for sale or rent up 300,000, spilt between them.
Held off the market or vacant for unspecified reasons (REOs with no activity?) up 535,000.
Rented or sold and not yet occupied, and temporarily occupied by persons with usual residence elsewhere, both fell. Seasonal vacant (second homes) up 227,000.
Big question for the next five years or so:
Where oh where will all those vacancies go?
At this rate it will be BULLDOZED….Thats why nothing in the bailout would hire Jimmy Carter to set up say 100 Habitat for Humanity centers to make sure they are kept up, and can be resold or rented…
Mold and water wind damage , termites roaches, theft, means its not worth it to rehab.
————————————–
Where oh where will all those vacancies go?
If they had just let the free market take care of things, these homes would be quickly absorbed into the hands of individuals who could find a use for them. Instead they stand empty, as current owners of vacant properties wait expectantly for cargo drops of bailout monies to pay them above-market prices for their white elephant McMansions.
I’m not so sure Bear, this time there is far to many in places people don’t want to live…or cant because of no public transportation
My GF is a city girl never drove in her life…it would be a radical change for us to move out of NYC
It may come to that soon….
where will all those vacancies go ??
They will get bought up if the Lemmings in DC will just let the free market work…
It depends on the economy.
We’ve got, say, 5-8 million excess housing units to work off.
There will be inventory losses from the obsolete stock, due to newer better housing available at lower prices. How about building new, grade-separated bus-rapid transit lines through Midwest cities to spur the economy?
New supply is down, but will not go to zero because some of the vacant units are not where people want to live. At the current 1.4 million new households per year, it could be worked off in 4-8 years of rock bottom construction, 500,000 new units per year or less.
But what if depression conditions depress household formation, and people link up with roomates, stay with parents, move in with kids, etc. to save money?
Here, sheeple. Step right up and catch yerself a falling knife!
Wall Street Journal
* REAL ESTATE
* OCTOBER 28, 2008
Bargain Hunters Help Shrink Housing Glut
Despite Small Inventory Drop, Prices Continue to Decline; The Threat of Unlisted Homes
By JAMES R. HAGERTY
…
Barclays Capital estimates that banks and loan investors owned 826,200 foreclosed homes as of Sept. 1, up from 343,500 a year earlier. Barclays forecasts that this inventory will peak at around 1.3 million homes in mid-2010.
Ivy Zelman, chief executive of housing-research firm Zelman & Associates, says far more vacant homes are being held off the market than usual. In the second quarter, vacant homes that weren’t listed for sale totaled about 6.5 million, she estimates, using Census Bureau data. That’s about one million more than the typical level during the first half of this decade. If a million of those vacant homes were listed for sale, listings would rise about 23% from the current level. Some of these empty homes are in the foreclosure process, Ms. Zelman says.
Based on the S&P Case-Shiller national home-price index, prices on average already were down about 18% in this year’s second quarter from the peak two years before. Celia Chen, director of housing economics at Moody’s Economy.com, expects a further drop of about 14% before prices bottom out in the second half of 2009. Prices won’t bottom out everywhere at the same time, of course. Ms. Chen expects Florida’s recovery to lag behind that of the nation as a whole, partly because a backlog of foreclosures in courts there will take time to clear. In the Miami area, nearly 18% of home mortgages are overdue or in foreclosure, compared with a national average of 7%, according to Economy.com.
“Matt Geiger, who works in the Alachua County Tax Collector’s Office, figures they bought the house at about market value - it appraised for $345,000 - but still below the $360,000 to $370,000 that houses in the area were selling for a year or two ago, he said.”
“Geiger said because of concerns about the banking industry, they went ahead and locked in an interest rate of 6.125 percent ahead of time.”
“I would have liked lower, but that’s not a bad rate,” he said.
Now they are on the other side, needing to sell their old house. They’ve already come off their original asking price - from $238,000 to $234,000 - and within a range his Realtor said is doing better than higher-priced homes.
“We kind of stepped out on a little bit of faith and risk,” Geiger said. “I don’t think it’s a great time to sell, but we’re thinking positively.”
http://www.gainesville.com/article/20081028/NEWS/810281013/1002?Title=Right_time_to_buy_a_house_
I declare victory in the dumb quote contest! None of you will ever top this doozy… never ever ever.
“Karen Grider of Coldwell Banker/Ellison Realty and president of the Ocala/Marion County Association of Realtors, said the drop in prices in the Ocala area is slowing, and Realtors’ interest from buyers is up. She also said they are seeing people taking their money out of the stock market to invest in real estate.”
“If people want to get a good bargain, they’d better not wait,” she said. “I think we’ve seen the prices as low as they’re going to go.”
I stand corrected…
“The administration is not doing what I think they should do, and that’s go in and buy out these bad mortgages, give people mortgages they can afford, stabilize home values and start them back up again,” McCain said in a live interview with his vice presidential running mate, Sarah Palin.
Wouldn’t this policy amount to National Socialism?
Janus applauds the position.
you are right, Marcus. this is much worse.
The McCain family, who own seven homes, might benefit handsomely if this policy were adopted.
Wow. That does it for me. Maybe I should go look at some McMoldshacks in FL?
BWAHAHAH AHAHAHHAHAHHAH!!!
Everybody mambo, how low can you go?
Mambo only pawn in game of life.
Vozzie if you see this I know you will find it funny
Swedish lenders move to bolster defences
By Robert Anderson in Stockholm
Published: October 27 2008 09:30 | Last updated: October 27 2008 18:29
The global financial crisis hit Sweden on Monday when two of the country’s top banks moved to bolster their defences against market turbulence.
Swedbank, the country’s largest savings bank, announced a fully underwritten SKr12.4bn ($1.56bn) rights issue to increase its share equity by half. In response, its shares fell 13 per cent to close at SKr52….
Until recently, Swedish banks had been relatively immune from the global credit crisis because they had little subprime exposure, although they have been indirectly affected by higher funding costs, write-downs on their bond and credit portfolios and weaker trading and commission income. Now, though, the banks are suffering from short-term liquidity pressures and longer-term concerns over the slowdown in the Nordic economies and the Baltic states….”\
FT
Swedbank loaned to the Baltic Countries 150% of the Baltic GDP in Euros. The New York Times thought their problems were ‘Lehman’ related. Europe is toast.
“Europe is toast.”
Yes. This is true. It’s the leverage. They levered the globe and now it’s rolling away, downhill, with increasing momentum, about to crash.
30 year mortgages are at 7% and 15 year are at 6.625 today in my neck of the woods (VT)….the highest they’ve been in a long time. What happened to all that talk of bringing down rates? Just wait till the treasury bubble pops…..then rates are really gonna kick upwards fast.
I’m so glad me and the wife are hoarding cash these days. It’ll be nice to buy a place with cash and a small loan for cheap in a few years.
“I’m so glad me and the wife are hoarding cash these days.”
From the Associated Press:
“White House tells banks to stop hoarding money”
“An impatient White House served notice Tuesday on banks and other financial companies receiving billions of dollars in federal help to quit hoarding the money and start making more loans.
“What we’re trying to do is get banks to do what they are supposed to do, which is support the system that we have in America. And banks exist to lend money,” White House press secretary Dana Perino said.
Though there are limits on how much Washington can pressure banks, she noted that banks are regulated by the federal government.”
I see. The government gives them hundreds of millions of dollars, and the banks show them the finger. Sweet!
There’s another article out there saying that the banks will pay ~105B in bonuses this year. Maybe this is why they are holding on to it.
I just saw a clip on Good Morning (a sh*tty Fox affiliate show) where they had some Realtard on as a guest. She was presenting a top-five list of where you should move if you can. Places like Binghampton, Des Moines, Corpus Christi etc. The main selling point this woman kept pointing to was RISING PRICES. In other words, you should base where you buy a house on whether the RE bubble is still inflating.
Such is a simpleton’s logic. Only the best minds for the NAR!
Tell her to buy now in Prudhoe Bay, Alaska. Oil is a’boomin and prices are going up!
Binghamton???? Oh my word. Clueless.
They were on record a month or so ago as going down.
30 year mortgages are at 7% and 15 year are at 6.625 today in my neck of the woods (VT)….the highest they’ve been in a long time. Also interesting is they have swung almost 1 full percentage point in the course of a few weeks….very volatile.
What happened to all that talk of bringing down rates? Just wait till the treasury bubble pops…..then rates are really gonna kick upwards fast.
I’m so glad me and the wife are hoarding cash these days. It’ll be nice to buy a place with cash and a small loan for cheap in a few years.
2nd try….sorry if repost
RE: It’ll be nice to buy a place with cash and a small loan for cheap in a few years.
I can only say after perusing the real estate sections of the Burlington Free Press when visiting friends, that VT has to have the most dysfunctional ratio of cost of housing vs. local income levels in any market east of the Mississipi.
Yep. Lots of reasons for that, some of which have been around since before the run up.
The fun part is that most of the locals think the housing bubble has passed them by. I think that local housing prices need to come down $80K-$100K across the board to be realistic.
http://www.crestmontresearch.com/pdfs/Stock%20PE%20Report.pdf
a great graph of P/E ratios on pg 3 of this 12 pg. pdf
a bubble of incredible proportions.
Wow — it looks like PEs will have to fall by at least another (15/25)*100 = 60 percent before they bottom out. No wonder Cramer’s pick is cash anymore…
What have we been saying all along?
What are we, chopped liver?
If it is plainly obvious that the PE is going below 10, why does it take so painfully long to go there?
So P/E will fall for next ten years and the only way to make money is working a job, cutting household expenses and eliminating any interest payout on debt. This does not sound very exciting, but once people catch on that frugality is the only way to make money, people will go insane with that concept. People are wired to achieve at something - anything, and that will never change. We will have a frugality bubble.
Wouldn’t it be better for the U.S. economy to just get the stock market correction over with quickly, providing a platform off which rebuilding can occur, rather than going Japanese and dragging this out for twenty years or so?
Seems logical that it would, but the other question is, what is best for the politicians? I think that (the latter) is what will happen and what is best for the economy isn’t necessarily the same at all.
WHO was talking the other day about the Baltic Dry shipping index had collapsed???
NEW YORK, Oct 28 (Reuters) - Dry goods shipper Britannia Bulk Holdings Inc (DWT.N: Quote, Profile, Research, Stock Buzz) said on Tuesday it would post a third-quarter loss and that it is considering alternatives including liquidation or bankruptcy protection.
An unexpectedly sharp drop in dry bulk shipping demand and the subsequent decline in rates charged for shipping services caused “a significant net loss” for the quarter. In addition, the company paid more to retain shipping vessels than it received for chartering them to customers, Britannia said in a release.
The company, which transports goods in and out of the Baltic region, said that there was a “very high risk” of default for its loan facility with Lloyds TSB Bank Plc and Nordea Bank Denmark A/S.
The company is in discussions with lenders but said there can “be no assurance that a resolution of the issues surrounding the facility will be reached.”
“The company is considering its alternatives if it is unable to reach an accommodation with the lenders, including liquidation or protection under applicable bankruptcy or insolvency laws,” the company said in its statement.
FUEL HEDGE
An unexpected drop in fuel prices has also hurt Britannia.
In the third quarter, “the company entered into a bunker fuel hedge which is currently uncompetitive because it is hedged to prices which are significantly above the current market price of bunker fuel,” the company said, adding that the aggregate bunker fuel hedging losses for quarter “will be significant.”
Britannia has hired corporate advisory firm AlixPartners to advise on negotiations with lenders and trade counterparties, and to help it cut costs and conserve cash.
Shares of Britannia last traded at 96 cents, down 94 cents, on the New York Stock Exchange, before trading was halted. In composite trading, which was not halted, shares had fallen to 26 cents in afternoon trading. (Reporting by Chelsea Emery, editing by Matthew Lewis)
“The company, which transports goods in and out of the Baltic region, said that there was a “very high risk” of default for its loan facility with Lloyds TSB Bank Plc and Nordea Bank Denmark A/S.”
Finally…
I knew something was rotten in the state of Denmark.
Here we go, from my email:
Ladies: We don’t care about your score
Attention!
There Could be Big changes in your future. How would you like a 7,500 Unsecured Credt Line?
Imagine, you could be purchasing many of the items you’ve always wanted!
Wall Street Journal
* OCTOBER 28, 2008
The Buck Is Back
By JEFF D. OPDYKE, RAY A. SMITH and SARAH NASSAUER
[Iceland's Hotel Ranga] Hotel Ranga
At Iceland’s Hotel Ranga, the dollar goes further for spa treatments.
The dollar is king of the hill again — at least for now.
I plan to use old money overseas to buy properties there, not here.
My plan is working like a charm, so far.
RE: At Iceland’s Hotel Ranga, the dollar goes further for spa treatments.
Next hangout for the AIG Hedonist Fest!
Wall Street Journal
* BUSINESS
* OCTOBER 28, 2008
Much Bank Aid May Not Go to Loans
By DAVID ENRICH, ROBIN SIDEL and MICHAEL R. CRITTENDEN
The federal government’s bank-rescue plan will spread more than $15 billion among 10 regional banks, those companies announced Monday. But some banks acknowledged that perhaps only a small chunk of the money would be funneled into loans.
The fact the bailout had so little strings attached makes it very easy for banks to turn helicopter drops of cash into mattress money.
so, where is the freaking money going?
let me guess.
spa treatments? bonuses? incentive packages?
whatever best shores up the balance sheet and makes them look good to WS/investors.
One bank took 7B from us the taxpayer (aka the government) and used 5B to buy out its competitor. I believe it was a bank in Pittsburg.
PNC, buying National City.
Thank you Blano.
as expected, yen is falling off
Movement to Scrap 401(k)s Gains Traction
http://abcnews.go.com/Business/PersonalFinance/story?id=6122417&page=1
“Net Gains: Guaranteed Retirement Accounts Are Getting Attention in Washington”
Guaranteed retirement accounts = defined benefit plans = the kind that were scrapped by the “401(K) revolution”
Big question: Is there enough money in the system to guarantee everything on a whim?
Everything’s guaranteed these days — guaranteed to fail.
BWAHAHAHAHAHHAHAHHAHAHHHHHHHHHHHHHHHHHHHH!!!
The disturbing thing about these whimsical proposals to guarantee just about everything is that nobody mentions the costs involved, or that something else has to be foregone to summarily provide unfunded guarantees. Similar comments apply to proposals to “buy up all the bad mortgages” or to get homedebtors out of their “bad” ARMs and into l-t fixed mortgages. All of this stuff costs something to somebody else. I FIRMLY BELIEVE THERE IS A MACROECONOMIC BUDGET CONSTRAINT, WHETHER OR NOT THE PTB WANT TO EVER ADMIT IT.
Of course, there’s a macro budget constraint. That’s why “good macro” is basically micro.
It’s called future productivity of the population + judicious default on debt.
Ask Italy. Their central bankers have done this masterly for a long long time.
Credit transactions are in fact nothing but the exchange of present goods against future goods.
LvM
What’s the upper limit of what can reasonably be borrowed now (assuming it DOES get paid back)? Some measure of discounted future productivity I guess.
Credit transactions are in fact nothing but the exchange of present goods against future goods.
Wrong, as it ignores a time-tested aphorism: “A bird in hand is worth two in the bush.”
Under current market conditions, a bird in hand is worth maybe 100 or so in the bush.
I don’t interpret that statement to imply a 1:1 relationship in the trade-off. It could mean you have to give up >1 thing later to get 1 thing now (which we all know to be interest).
To extend from that, can we assume a certain rate of GDP growth for all future years, then discount all that growth to the present and say that if the U.S exceeds that amount in debt, it will likely default at some point?
“It could mean you have to give up >1 thing later to get 1 thing now (which we all know to be interest).”
Which I know to be the probability the contract is honored (interest was somewhere near 0 last I checked…).
Why don’t we just cut to the chase.
Give everyone $5,000,000 and make us all brain surgeons. We could all be rich and highly edumacated. Either that or we could all be borg.
That is similar to my suggestion of yesterday: Just multiply everybody’s income by five and hand them a lump sum payment. Since there is no macroeconomic budget constraint, I see no problem with this plan.
But with everybody rich, where oh where would we find anyone to do the jobs (all of them) that Americans would not do then do? Import 180 million more servants? (read:slaves).
Change border control policy to keep out terrorists but let in able-bodied and willing laborers.
I would rather have the 5 mil and be bartender. Or maybe just a bar patron.
bbbbbbbbbbut….. you’re suppose to be responsible for your own retirement!!!!! Whatever happened to personal accountability and morals?!!!!!
I thought the plan was to privatize social security? Would private social security accounts be guaranteed under the newfangled plan?
Before I understood economics I was in favor of privatization… now imagine if Bush was successful and got his “Private” social security… he would have wiped out the retirement problem from the government and shifted it to the so-called “free market” which would have then immediately crashed wiping out everything and providing justification for even bigger government.
Everyone should have the same deal for retirement… save while you can, beg, or starve. Those who are not prudent have no more right to my wealth than those who are prudent.
Most people would have a beggar arrested if they attempted to steal from them, yet that same beggar, by voting, can steal from you with ease.
Of course, plump savers look mighty tasty to the starving hoards…
There is enough crap in this article to make me sick, and I only read the first page (so far).
Oh…….so now we’re all entitled to a guaranteed 3 percent rate of return over inflation AND a lifetime stream of income???
This is just getting more pathetic by the day.
We’ll take it Blano. You can send yours back to the US Treasury. Cool? Cool.
“The Social Security Administration would handle account management, and the Thrift Savings Plan — a well-regarded retirement plan for federal employees — would manage the money.”
Riiiight. Here’s how this “well-regarded” plan is performing right now:
http://www.tsp.gov/rates/monthly-current.html
Index funds are for suckers
Treasury predicts huge government borrowing needs
“The potential for deterioration in economic conditions given the contraction in credit may also affect budget conditions this year,” Ryan said in his remarks.
http://biz.yahoo.com/ap/081028/meltdown_treasury.html
I am assuming this statement means they will have to provide more funds to whoever they deem worthy? so, what happens when they run out of buyers?
The Fed will ride to the rescue with its bottomless printing press.
I know that the Fed is not supposed to buy debt directly from the Treasury, but dang it man, these are special times, during which rules can be rewritten!
FPSS –
I keep thinking about the point you raised this past weekend that finance is not economics. The thing that most bothers me about the way economics works in the classroom versus in the financial world is that the classroom gurus do not talk enough about deliberate mendacity which is routinely employed by the financial world’s porcine beauticians to persuade sheep to catch falling knives. How else are Wall Street types supposed to make money against the backdrop of a perpetually shrinking pie?
My dear old dadaladinsane earned his degree in finance @ Swiss university way back when…
I answer with an aphorism:
Many moons ago, I had an intern. Bright-eyed and bushy-tailed with a sparkling, shining new degree from an Ivy-league school.
I asked him whether you could make money off index-arb. He told me that his professor had told him, and I quote: “Nobody can make money off index-arb because it is impossible.”
So I told him that his first job was to take over “day-to-day operational control” of my index-arb operation. He made money alright. He got a real education too.
A smart former professor of mine loved to goad efficient market theorists by asking them what made the market so efficient…
It’s precisely the arbitrageurs and the speculators.
And liquidity comes from the market-makers.
I guess this explains why it might not be a great idea to sideline the shorts through an arbitrary change in the rules of the game?
Well, the “official” market-makers were exempt but good speculators are generally market-makers and arbitrageurs too.
The boundaries between all the three are kinda fluid (har-de-har, I made a funny!)
From an entire market perspective, efficiency comes from knowledge gained through transparency, simplicity and commoditization. These are the exact thing every successful organization attempts to avoid.
IMHO, the only real role of the government in private enterprise is regulation to maximize the above.
I thought the role of politicians was to help corporations scam their customers, then share in the spoils through the campaign contributions that are paid as a quid pro quo.
The power to regulate, if it exists at all, can and will be used to the advantage of some at the expense of others…. it doesn’t take long for the regulated industry to gain control of the regulators.
“The most serious financial problem for the Nazi State is not the danger of a breakdown of the currency and banking system, but the growing illiquidity of banks, insurance companies, saving institutions, etc. . . . Germany’s financial organizations are again in a situation where their assets which should be kept liquid have become ‘frozen’. . . . But the totalitarian State can tighten its control over the whole financial system and appropriate for itself all private funds which are essential for the further existence of a private economy. Yet the institutions which still exist as private enterprises are not allowed to go bankrupt. For an artificial belief in credits and financial obligations has to be maintained in open conflict with realities.”
From Gunter Reimann, The Vampire Economy: Doing Business Under Fascism (1939), p. 174, about German economic policy under Hitler.
From the Lewrockwellblog
Greenie’s looking more and more like Hjalmar Schacht, revisited.
Do you think the Japanese say “The market always goes back up, eventually”?
Nikkei 225 history
It’s off 82% since 1990.
There has never been a better time to buy Japanese stocks (except for maybe back in the 1960s…)
A prediction was made above for Dow at 1500.
If it followed the Nikkei at .82 off, we’d have a Dow of 2500. Imagine the oft-cited “fear” then.
I bought Japan stocks last night on the sell down - maybe more than I should have? It was scary to see normally sensible individuals throwing away stocks as if they were garbage. Some stocks were down 25% before the rally. It was a classic blowout. Huge volume and insane prices on just about everything- eventually we’ll have a market like that in the US markets.
401 K/O
What we are witnessing is a once in a lifetime Humpty Dumpty event. It was all based on the assumption Americans had the income to service their mortgages. These mortgages ended up on balance sheets of large banks around the globe where they were then used as collateral to lever additional assets. When Americans quit paying their mortgages the lever broke. Balance sheets unraveled and asset prices fell. All the king’s horses and all the king’s men cannot push asset prices up again.
It’s a wide-knuckle ride alright.
I agree with that - it’s just a pain waiting for the average citizen to realize it, price accordingly and get on with life.
White House to banks: Start lending money
http://biz.yahoo.com/ap/081028/financial_meltdown.html
DOW up 465 at 12:05 pm. PST. Do I hear 800? Anybody for 800?
Is this going to turn out to be another one of those “buy the rumor/sell the news” scenarios?
RE: Fed Action
I call it the “stay the hell away from this nonsense” scenario.
Most likely.
It looks like a coordinated spike. Look at the time it went off. Think back to oil’s peak. These are typically short duration, low volume events. If you assume there is deleveraging, it makes sense. Drive prices rapidly higher then slowly distribute on the way back down. It’s like a bunch of neighbors getting together and overpaying for one home hoping to sell theirs near the recent comp.
Yup.
“Breaking News: Dow skyrockets 800 points, pushing over 9,000 level, accelerating rally just before close, as investors hope for rate cut Wednesday.“
I want to see if there’s a huge sell-off before it closes.
DOW up 590 @12:23 pm. Anybody for 800? Or is it 250?
DOW rocketing up to 700 at 12:50 pm.
740 @ 3:56 eastern time. Can we make it 800? Go baby go!
DOW up 860 at 12:59 pm. TO THE MOON ALICE, TO THE MOOOOOOON!!!
Looks like we made 890…
Oh, the humanity. Oh, the pain, the pain. What a rush.
I need OXYGEN!!!
Help — this market has me so confused my head is about to explode!
BULLETIN
DOW INDUSTRIALS UP MORE THAN 600 POINTS AS CLOSING BELL APPROACHES
Michael Ashbaugh
THE TECHNICAL INDICATOR
A treacherous backdrop for bulls and bears
Focus: Japanese Yen, ALGT, FFIV, BRCM, EBS, LCC
By Michael Ashbaugh, MarketWatch
Last update: 12:44 p.m. EDT Oct. 28, 2008
Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscription newsletter. To get this column, including at least eight technical stock picks, every day, click here.
CINCINNATI (MarketWatch) — For two straight sessions, the major U.S. benchmarks have notched five-year closing lows.
So just on its face, that’s not bullish.
They are merely playing the last card in their hand, a 4 of clovers.
I disagree.
Most technical (= demand and supply) stuff screamed “big rally” yesterday. Just too many short-sellers at increasingly high prices.
Flush the shorts. Lather, rinse and repeat.
(*) Make that increasingly low prices.
Where do you get supply/demand indicators to make such a determination?
There are a lot of garbage firms that sell supply/demand analysis. It is easier just to watch the blocks trade. e.g. if a stock is going down but every large block over 100K shares is ticking up, there is hidden demand.
RE: todays rally
I think it was because last night Japan had a 19 yr blow out. A sympathetic rally from the US. If it weren’t for the time of the Year, I would have shorted the US stocks into the close. An old rule never short into a blizzard (in the olden days there was no guarantee you get get to cover crappy transportation). I hated todays volume, but I have never seen so much pessimism in my life, deflationist and end of the world scenarios and blah, blah blah. Aint gonna happen, the US is a muddler.
Nobody publishes such numbers. Otherwise, it would be all too obvious how to bet in the short-term.
Experience.
Thanks hoz.
FPSS, I didn’t mean to imply they were easy or summarized or anything else really. But you are getting raw data from somewhere. Not that I expect you to reveal all your secrets either, but data inputs aren’t coming from your cheerios.
Or, if they are, I’ll quit now b/c my cereal doesn’t tell me anything.
Fair is foul and foul is fair
Hover through the fog and filthy air.
Wall St recovers ground despite grim data
By Alistair Gray in New York
Published: October 28 2008 12:53 | Last updated: October 28 2008 18:50
Wall Street stocks on Tuesday recovered some of the heavy losses sustained in the previous two sessions as investors scoured for bargains in spite of a fresh glut of grim economic data.
Markets remained firmly in the black even after figures showed consumer confidence fell more than expected to a record low in October.
Like as the waves make towards the pebbled shore,
So do our minutes hasten to their end,
Each changing place with that which goes before
In sequent toil all forwards do contend.
Nativity, once in the main of light,
Crawls to maturity, wherewith, being crowned,
Crooked eclipses ‘gainst his glory fight
And Time that gave, doth now his gift confound.
Time doth transfix the flourish set on youth,
And delves the parallels in beauty’s brow,
Feeds on the rarities of natures truth,
And nothing stands but for his scythe to mow;
And yet, to times, in hope, my verse shall stand,
Praising thy worth, despite his cruel hand
Shakespeare
A double Bard post, enlightening, good to read it out loud with an english accent, and a sip of meade.
Dang — I want some meade to sip!
This is the new normal. I mean look, the idiots that got us unto this crap are still more or less running the show. The DJIA shoots almost 600 points in less than 5 hours? Make sense to me considering the people involved.
BTW, WS wants to pay these people bonuses because they are “the best” and “We don’t want to loose them.” I’ll take mediocre or even incompetent in this case. It’s at least honest.
Jeesh.
Roidy
“The DJIA shoots almost 600 points in less than 5 hours?”
I wonder how much of this is our tax dollars at work? Dident the treasury start buying stocks today?
At 1:55 pm est it was 8,302. At 4:00 pm est it was at 9,065. It increased 760 points in 2 hours. Volume was average. That’s probably a spike. It did pierce the Dow’s downward trendline, however. We’ll have to wait and see if this is the real thing or a false break.
This is almost certainly a dead cat bounce. Longer-term trends at this point still look terrible - witness today’s miserable consumer confidence index report, for instance.
It has been predicted that YOY sales of the Detroit Big Three will drop 33-35% this month. One report yesterday touted a 2.5% gain in home sales, but that was over September’s results; YOY sales were down 30+%.
Most ominous, however, is the sharply increasing volume of layoff activity that has occurred over the last month or so.
(As per the US Dept of Labor, http://www.bls.gov/news.release/mmls.nr0.htm)
“In September, employers took 2,269 mass layoff actions, seasonally adjusted, as measured by new filings for unemployment insurance bene-fits during the month, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Each action involved at least 50 persons from a single employer; the number of workers involved totaled 235,681, on a seasonally adjusted basis. The number of mass layoff events this September increased by 497 from the prior month, while the number of associated initial claims rose by 61,726. Layoff events reached their highest level since September 2001, a month that experi-enced substantial layoff activity due to the September 11 attacks. Mass layoff initial claims reached their highest level since September 2005, which was a month with high layoff activity due to Hurricane Katrina. The effects of Hurricanes Gustav and Ike contributed to the higher September 2008 layoff activity. In September, 603 mass layoff events were reported in the manufacturing sector, seasonally adjusted, result-ing in 81,414 initial claims. Over the month, mass layoff events in manufacturing increased by 4 and initial claims increased by 9,170. (See table 1.)”
The economic repercussions of this layoff activity obviously haven’t been sorted out yet in terms of the inevitable foreclosures, lost sales, etc that are bound to result - and most indications imply that layoffs are only going to increase next month.
Given information like this, I can’t understand how anybody is possibly prepared to call a bottom in the stock markets at this point.
I’ve looking thru the clasifieds and noticing that the jobs are drying up quite a bit around here. I cant quite figure what these people are going to do to survive? Where will the jobs come from?
Did the value of stocks rise by that amount, or the future value of the dollar fall by that amount?
Does it matter? What matters is the value of both, relative to all of our debts.
Anecdotal for a Tuesday as the Dow reaches a 700 pt gain.
I come to a local Peet’s coffee every few days to get outta my home office and do some work. Usually this place is packed just before and through the lunch hour, probably about 20 or 30 people or so.
Today I am the only person in here with a few individuals taking a house coffee to go. I can actually hear the background chamber music. No coffee grounds being ground, no triple half-caff-no-whip-choco-frappo-mocha-ccinos being made.
Maybe it’s a Tuesday effect, but it sure seems slow compared to usual.
LOL. In the time it took me to write that, the market gained 188 points!
(If an investor had bought 10,000 shares of xxx when sleepless began writing, he or she would have made….)
The cojones to buy 10,000 shares is far lower than the desire to buy them.
Plus, hindsight is 200-20.
Unloaded my DIA position at 90 + and am happy to close it out and wait and see…
Peet’s stock is holding its own these days. I guess a record decline in consumer confidence against the backdrop of a Wall Street collapse is a bullish indicator for gourmet coffee sales?
RE: Guarantees for just about everything
When the stock for a company such as Peet’s or Google is listed on a major U.S. exchange, does the listing automatically qualify the share price for plunge protection guarantees?
Every indicator is people are running scared. Panic buying which will lead to panic selling. No one is thinking (outside of the bears).
Always have. All indicators is that there is a shift to that.
As to coffee shops, I’m using up my gift cards *fast!* (I love coffee, people have given me a ton of gift cards lately as various types of thank you gifts.) But not the coca, half-caf, moca-frapo-late-triple-venti. Black coffee. I buy beans.
Although last Thursday the local Starbucks was packed! I think its the effect of closing two other Starbucks nearby… What restaurant isn’t struggling?
Got Popcorn?
Neil
I’ve got some brewing this minute as a matter of fact. You’ll take my Petes away from my cold dead body Bubba.
Look.. They are just trying to repeat the great depression faithfully!!!
I knew tuesday would be magnificent.
What happened on the close?
Well I guess somebody bugged the Fed meeting today. We’re gonna get that big rate cut. Whoopie!
I heard a rumour Fed’s gonna cut rate 225 points…
I’m so pleased the traders can make money and the consumer investor gets to suffa. Thanks for always turning the tables on the little people, we are all quite amused.
“…the traders can make money…”
Don’t you wish how much of the Fed’s below-market-rate special facility loans and $700 bn in bailout monies are getting plowed into stock market speculation instead of getting loaned out to consumers, the way they were supposed to be?
Don’t you wish you knew how much…
Most of it, obviously. Where do you think “hedge funds” borrow from?
They borrow from the “prime brokers” who in turn borrow from the Fed.
C’mon, professor, get your head out of the tower and into the dirt of the street facts.
Firstly, you should know that the secondary markets are “zero-sum”.
For someone making money, someone else must be losing exactly the same amount.
Yeah, and it’s pretty clear that the ones losing it are mutual funds and pension funds (a.k.a. institutional investors.) The sharpest minds don’t work for those jobs.
Is it really “zero-sum”? If I sold a stock and it then goes up did I lose any money or did someone else just gain? I lost opportunity, but so did everyone who didn’t own that stock.
Only in futures market is it a zero-sum game.
Sorry, d*mbass, the secondary market is purely zero-sum.
What you lost is as real as what someone else gained. Opportunity cost is not free. It costs the same as what the other guy made.
I’ll provide the missing link to help you out.
Your selling the stock is not “magical”. There is no god-given right to sell stocks to “someone”. Someone must be willing to take the opposite side of your transaction. That someone was a market-maker. And the market-maker isn’t doing this out the goodness of his heart. He is providing a “service” for a fee.
Everyone who didn’t own the stock don’t have the “automatic” right to own the stock. They must go to the market-makers to get that who will charge larger and larger premiums as the numbers of people demanding that stock get larger and larger.
Complicated? Probably.
Still zero-sum.
OUTSIDE THE BOX
Trust, yet verify
Commentary: Eight decades after great crash, confidence still the issue
By David Andelman, World Policy Journal
Last update: 1:59 p.m. EDT Oct. 28, 2008
(David A. Andelman is editor of the World Policy Journal. The opinions expressed are his own.)
NEW YORK (MarketWatch) — On Black Thursday, Oct. 24, 1929, Richard Whitney, chief floor broker for J. Pierpont Morgan, strode onto the trading floor of the New York Stock Exchange, where he would later serve as president, headed to the post where United States Steel was trading — which, like virtually every stock on the exchange, was in all but total freefall. He proclaimed in a stentorian voice: “I bid 205 for 10,000 steel.”
A gasp spread across the trading floor, especially as Whitney made the rounds of other posts, spreading the largesse — AT&T (T: Last: 27.61+3.22 +13.20% 4:02pm 10/28/2008), Anaconda Copper, General Electric (GE: Last: 19.49+1.76 +9.93% 4:02pm 10/28/2008) — a total of $130 million ($1.6 billion today) raised from a private pool of bankers who’d gathered in Morgan’s offices after the crash that followed the opening bell.
Trust is the foundation on which the global economic system is based. I’m not persuaded that we’ve come very far in that respect since 1929.
For a moment, the market stabilized. The Dow Jones Industrial Average , which had plunged to 272 from 381, rebounded to close at 299. Still, it was just a brief pause. By the next Tuesday, the Dow was back down to 230, bottoming at 41.22 on July 8, 1932. It was still in double digits when World War II began nearly a decade later. It took us nearly 22 years — to Sept. 5, 1951 — to return to the very 272 where the Dow had plunged on Black Thursday.
I’ve been busy with work, so I haven’t been able to post much.
Bad Andy, if you’re reading, I wanted to again thank you for staying on this blog despite what you’re going through. I have many thoughts about your situation, but I’ll keep it short: thank you for posting, thank you for being honest, thanks for not running away and thanks for being open-minded.
Japan Will Ease Mark-to-Market Accounting Rules, Nakagawa Says
The government accepted a recommendation from the Accounting Standards Board of Japan to allow companies to calculate asset values themselves, Nakagawa said at a media briefing in Tokyo today. Under the changes, management will be allowed to take into account measures including estimates of future cashflow, interest rates and values determined by exchanges, rather than the latest prices in illiquid markets.
Bloomberg
Well, i guess this will pave the way for everyone else to do the same. I thought investors were screaming for transparency?
Also, i hear the BOJ is going to cut interest rates by .25% why dont they just go to zero and get the suspence overwith.
OK, I go out for a hike and come back to the market’s 2nd largest ever spike.
Everyone’s wondering why, but I can tell you.
I used my Gold AMEX card for the first time today, just before I left, I bought a camera tripod. Looking back, it’s about when the market started going up.
Utah, it was me too.
I actually used my ATM card today.
It’s been forever.
It was unreal.
Now it all makes sense, I figured I was good for about 450…
Damn it girl, it was supposed to be beer that you bought!
“Bars on verge of bankruptcy, Lost in Utah quits drinking!!!”
Hops spring eternal…
I love modern thought. If something went up in value and then down in value, the only place for it to go is higher than its previous high. House prices start falling and people rush out to buy a house when prices fall because they will only go back to previous high levels. If antique autos or art were at extreme levels and prices fall now is the time to buy because they will only go higher then before. Stocks are dropping so they can only go back to their previous highs like in ‘87. Everybody figures that there is a ton of money sitting idle and the way to get to the top is jump in the game early. Well people, go ahead and jump to the head of the line and don’t ask serious questions about value and what constitutes value.
Even an animal has more common sense then most humans today.
It’s the paradigm of exponential growth.
Unfortunately, it has a basic flaw, even if the universe is expanding…
We haven’t hit peak dollar yet. Print baby, print!
From Yahoo News:
“falling housing prices have wiped out trillions of dollars of household wealth in recent months”
Is it so difficult to say instead that “rising house prices from 2000-2005 added trillions of dollars of phantom wealth to households, which has recently started disappearing”?
The moronic media keeps implying that somehow, real wealth has been destroyed. It pisses me off. What the hell was produced to generate all this “wealth” that just got wiped out?
Trillions of dollars of this “phantom wealth” caused by rising prices was cashed out and spent, and debt was left in the wake. Now the debt is being disposed of one default at a time. This debt isn’t phantom debt, this debt is painfully real. Ask the bankers.
“The moronic media keeps implying that somehow, real wealth has been destroyed.”
Real wealth has been destroyed. This destruction of trillions of dollars of equity and debt is as real as it can get.
‘What the hell was produced to generate all this “wealth” that just got wiped out?’
Subprime, Alt-A and prime option ARM mortgage loans.
“What was produced to generate all this wealth?”
We export bad debt and inflation.
We have a lot of that in supply, thankfully.
Renters Lament:
“rising house prices from 2000-2005 added trillions of dollars of phantom wealth to households, which has recently started disappearing”?
Rents skyrocketed in my area during that time and nobody rescued my white ass. No as a matter of fact renters around here will get reamed for another eight years. Thanks for the rant.
Lost in Utah,
Thought you might appreciate this article from the San Francisco Chronicle.
Utah one of world’s best spots for dinosaurs:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/24/TRD513LJ3J.DTL
Thanks, fun to read it from an outsider’s view.
Lots of bone in W. Colo. too. Some of it’s in a secret spot where I dumped it when I saw the BLM rangers coming…
You know if you print enough money eventually you get a bubble in PM’s.
That would be the Fed’s next approach, IMO, in conjunction with grains, fibers, lumber, plywood, sugar, coffee, cocoa if U catcha my drift. Hamburger, you’re on your own to roam.
Kill the buck; maintain strict Price Keeping Operations worldwide. Maintain the illusion a while longer.
“You know if you print enough money eventually you get a bubble in PM’s.”
Been there / done that. Doesn’t mean they cannot do it some more, though…
so when exactly are trading curbs imposed?
Only when it hurts the big boys and girls
SLV vs. SPY
Percentile moves over recent time
1 Day: +1.46 -3.19
1 Week: -7.98 -13.87
1 Month: -5.85 -8.96
3 Months: -26.67 -8.48
6 Months: -28.15 -11.08
1 Year: -36.29 -43.79
Makes real estate look good!
A Second Quick Boost From Government Could Spark Recovery
__________________________________________________
[Editor’s note: These comments by Mark Zandi, chief economist of Moody’s
Economy.com, are edited excerpts of testimony he gave before the U.S. House Committee
on Small Business on July 24, 2008.]
“…
Fiscal Bang for the Buck
One-year $ change in real GDP per $ reduction in federal tax revenue or increase in spending
Tax Cuts:
Nonrefundable Lump-Sum Tax Rebate 1.02
Refundable Lump-Sum Tax Rebate 1.26
Temporary Tax Cuts:
Payroll Tax Holiday 1.29
Across the Board Tax Cut 1.03
Accelerated Depreciation 0.27
Permanent Tax Cuts:
Extend Alternative Minimum Tax Patch 0.48
Make Bush Income Tax Cuts Permanent 0.29
Make Dividend and Capital Gains Tax Cuts Permanent 0.37
Cut Corporate Tax Rate 0.30
Spending Increases:
Extend Unemployment Insurance Benefits 1.64
Temporarily Increase Food Stamps 1.73
Issue General Aid to State Governments 1.36
Increase Infrastructure Spending 1.59
Source: Moody’s Economy.com
It is obvious, just give everybody a million dollars and let the Chinese worry about getting their Treasury investments paid back.
here’s a collapse you may be looking for.
XLSBX-The investment seeks to provide a high level of current income, consistent with preservation of capital. The fund invests at least 80% of net assets in a portfolio of interests in adjustable rate senior loans, the interest rates of which float or vary periodically based upon a benchmark indicator of prevailing interest rates (Senior Loans), to domestic or foreign corporations, partnerships and other entities that operate in a variety of industries and geographic regions (Borrowers). It is nondiversified.
This collpapse is why unsecured creditors feel “unsafe” at this juncture. A high level of income, with capital preservation.
we got a long way to fall on this one. current yield is 7.25%.
when its double digits, I’ll get interested. maybe.
funny thing about the highland funds…
they are all running to healthcare finance…
from secured floating rates, to healthcare finance…
pathetic….might as well throw me under the bus.
Bus driver backs up: “We missed one,” he said strikingly.
China Channel Firefox Add-on
Experience the censored Chinese internet at home!
http://chinachannel.hk/
The Firefox add-on China Channel offers internet users outside of China the ability to surf the web as if they were inside mainland China. Take an unforgetable virtual trip to China and experience the technical expertise of the Chinese Ministry of Information Industry (supported by western companies). It’s open source, free and easy.”
Can I post??? The Chinese need to know a few things about the instruction manuals in some of the stuff they’re exporting…
lower interest rates and a weaker dollar ( I assume the dollar will get weaker with lower interest rates ) make it that much harder to pay the debt borrowed from overseas. Still waiting for long rates to rise as foriegn lenders figure this out. Or I’m missing something ?
No I guess like the housing bubble these things move on their own time table caring little about what I think.
http://www.bauerfinancial.com/home.html
star ratings for banks, I use it when buying CD’s through a brokerage which cares very little about the quality of the bank CD’s it sells but if you ever plan to sell them before they are due then you as the buyer do care. Anything below 4 star takes a beating in the secondary market. And yes brokerages sell alot of crappy bank CD’s
My friend just got back from NYC, and they went down by Wall street, and said it was blockaded in front with full on machine gun toting guards. Is that par for the course down there, or recent development after the current downturn?
Forbes had an interesting quote this month:
(A. Gary Shlling, “Look Out Below”, 11/10/08 p. 51)
“If you’re an equity investor with a long-only portfolio, it’s not too late to take some money off the table. Remember 777–not the airliner but the low the S&P 500 hit in 2002. That’s 21% beneath where we are today, but if breached, than all the stock rise of the last six years will have been but a bear market rally, and the bear market that started in March 2000 will still be with us”
It’s just as many people have been saying here! There never was any “recovery”. Just a couple of bubbles.
It’s somehow bizarre to see the most dire forecasts made on the HBB a couple of years ago surpassed by reality today.
comment 501!
I’ll see your 501 and raise you one!
isn’t this a HBB record?