Thu 20 Mar 2008
From the Star Ledger:
Few pick Jersey as their new home
If you followed the money last year, chances are you found yourself in Texas.
According to the U.S. Census Bureau, which today releases its annual county-by-county population estimates for the nation, oil-rich Texas was home to the highest total population gain, adding nearly a half-million new residents to its rolls. As gas prices soared between July 2006 and July 2007, Texas boomed.
“With the energy economy, a lot of money was flowing in,” said James Hughes, dean of the Bloustein School of Public Policy and Planning at Rutgers University. “Texas is headquarters to Exxon Mobil — all those dollars were playing a part,” in luring new workers to the Lone Star state.
New Jersey, on the other hand, continued its pattern of sluggish population gains. As a whole, the nation is growing at a rate five times faster than the Garden State, which ranked 43rd in rate of growth last year, with an overall gain of fewer than 20,000 people.
“It’s been a long time since we made significant gains,” Hughes said. “New Jersey has been lagging the nation since the second half of the 1970s. Between 1950 and 1970, we were growing faster than the nation because people from New York and Philadelphia were suburbanizing into New Jersey. Now we’re a mature, highly developed state.”
Only two New Jersey counties are expanding at a rate higher than the national average of 1 percent: Gloucester experienced a 1.58 percent one-year gain and Somerset 1.09 percent. Middlesex had the highest absolute growth with a net gain of 5,258 new residents last year.
“We’re seeing stronger growth down in Gloucester because it is accessible to Philadelphia and housing costs are relatively cheap,” Hughes said. “Middlesex is in the middle of the state and is highly accessible for jobs, plus there’s been a lot of revitalization going on there, so it’s not surprising.”
Hughes accounts for Somerset’s gains, in part, to a rise in age-restricted communities, especially in Bridgewater and Franklin. The same holds for Ocean County.
“Ocean County was third in terms of rate of growth, for two reasons,” said Hughes, “the number of new age-restricted housing units, but also it’s an easy commute up the Parkway to Middlesex, or up I-95 to Trenton and Princeton. Plus, housing is cheaper.”
…
Five New Jersey counties experienced population declines last year, according to the Census: Burlington, Essex, Hudson and Union all showed a rate of loss of less than 1 percent, with only Cape May County registering a minus 1.22 percent loss of residents.
…
Hughes does not expect the population rates to change much in the coming years, although retiring Baby Boomers will probably be leaving the state in greater numbers.“Demographic trends are deeply embedded and rarely show sharp changes,” he said. “They take a long time to appear.”
From the Star Ledger:
Drop in jobs worries N.J.
New Jersey employers continued to cut jobs in February, adding more evidence the economic tur moil spreading across the country is hitting the state’s labor market.
The February cuts — amount ing to 1,700 — was less dire than January’s revised 8,600 job loss, the State Department of Labor and Workforce Development reported yesterday.
But other signs were more omi nous.
New Jersey’s jobless rate edged up to 4.8 percent, and now matches the nation’s. This ends a long winning streak for the state’s jobless rate, which was lower than the U.S. rate since October 2006 .
Excluding government jobs, New Jersey shed 10,400 private-sec tor positions during the first two months of 2008, more than erasing the 4,700 private-sector jobs created in all of last year.
Philip Kirschner, president of the New Jersey Business & Indus try Association, said the loss of those jobs “is a significant blow.”
…
Rutgers economist James Hughes said the economy likely peaked in December and entered a recession in January.
“This is not a good start for the year,” he said. “I think we will see a consistent pattern of job losses through most of 2008.”
From MarketWatch:
Credit Suisse faces first-quarter loss
Credit Suisse warned Thursday that it may report a first-quarter loss due to deteriorating market conditions in March, and it pared 789 million Swiss francs ($799 million) from its 2007 profit after its traders intentionally mispriced assets.
The Swiss banking giant said it’ll take an overall write-down of 2.86 billion francs following an investigation of pricing by several traders that was announced in February. Of those write-downs, 1.18 billion francs related to the fourth quarter, leading to the profit restatement, and 1.68 billion francs relate to the first quarter of 2008.
From the WSJ:
A More Honest Socialism
March 20, 2008
How do you turn $5.9 billion into $200 billion overnight? By magic. Political magic in the case of Fannie Mae and Freddie Mac — due to their status as publicly traded private companies back-stopped by taxpayer guarantees.
Yesterday, Fannie and Freddie announced, alongside their chief regulator Jim Lockhart, that they would be leveraging up their businesses in the name of riding to the rescue of the mortgage-backed securities market. Here’s how the wizardry works: Mr. Lockhart, the Director of the Office of Federal Housing Enterprise Oversight, agreed to cut the amount of capital Fannie and Freddie are required to maintain by a combined $5.9 billion and to allow them to increase their leverage to 33-1 from about 30-1. That means Fan and Fred can borrow up to $33 for every dollar in freed-up capital, and presto — the two mortgage giants get $200 billion or so to spend buying up mortgages or mortgage-backed securities.
There is a catch. In exchange for this freedom, Fan and Fred have promised to raise “significant” new capital over the next year. We’re told it’s on the order of $10 billion each. That’s the good news. The bad news is that the companies can leverage any new capital right alongside the old, meaning that the total increase in business — and risk — could be well above the $200 billion set by Mr. Lockhart.
Let’s put some of these numbers into context. J.P. Morgan Chase is leveraged about 12-1 against its Tier 1 capital base. Investment banks are usually more highly leveraged than commercial banks, and Bear Stearns, formerly the industry leader in this category, was leveraged at 34-1 at the end of 2007. You know how that turned out.
…
Yesterday’s capital expansion merely lets the companies continue their double lives as profit-making companies backed by taxpayer guarantees — and to do so by taking even greater risk at a very risky time. No wonder their stock prices are up by more than a third in a week (see nearby). If the politicians really want to double-down on Fan and Fred, the honest way to do it is to provide them the taxpayer money up front.
From Bloomberg:
Bernanke’s Own Home on Capitol Hill Shows Housing Boom and Bust
The U.S. housing recession has arrived literally on the doorstep of Federal Reserve Chairman Ben S. Bernanke.
Bernanke lives in Washington’s Capitol Hill area in a four- bedroom, 2,600-square-foot house he bought new in May 2004 for $839,000. Almost four years later, it may not be worth any more, according to real estate records and local agents.
Bernanke’s timing wasn’t the best — values in the area peaked a year later — and he is hardly alone among Americans living in an investment that’s turned cold. His situation shows that the slump that began with distress in the subprime market is now engulfing wealthier neighborhoods, including some in the nation’s capital.
“Even though he’s the Fed chairman, he’s going to get hit — but I think lot of people will in Washington,” said William Wheaton, an economist at the Massachusetts Institute of Technology. The value of Bernanke’s home “probably went up to $1.1 million and it’s probably back down to $840,000,” because prices in Washington just a couple years ago “got out of control,” Wheaton said.
From Bloomberg:
OECD Sees No Growth in U.S. in 2nd Quarter, Slowdown in Europe
The U.S. economy will fail to grow for the first quarter since 2001 in the three months ending in June, the Organization for Economic Cooperation and Development predicted.
The stagnation will come after an expansion of 0.1 percent this quarter from the last three months of 2007, the Paris-based agency predicted today. It would be the first time since the third quarter of 2001 that the U.S. economy hasn’t grown.
“The U.S. economy is now essentially moving sideways, if not contracting outright,” Jorgen Elmeskov, acting head of the OECD’s economics department, said in a note sent to reporters today. “It may be premature to declare a recession, but with the pace of activity so far below potential, economic slack is widening rapidly.”
The U.S. lost jobs in two consecutive months while retail sales and industrial production are declining. The Federal Reserve has cut its main lending rate six times since August, when the collapse of U.S. subprime mortgages started to infect markets around the world.
did we have gov. job growth?
Of course we did, +400.
Which leads me into..
Taxpayers on hook for state pensions
New Jersey taxpayers are not much closer to paying off the billions they owe former government employees despite Governor Corzine’s recent attempts to address the state’s growing unfunded pension liability.
A report released by the state Wednesday shows the gap between the value of the state and local employees’ pension fund and what the former employees are owed is still widening.
That means the state — unless tax revenue increases dramatically — will have to continue to dedicate millions that could otherwise be spent on education, tax relief or other areas to cover the growing gap.
…
The actuarial report released Wednesday lists the value of the Public Employees Retirement System pension fund at $28.7 billion as of June 30, 2007. The fund’s liability to employees was estimated to be $37.8 billion.
The unfunded liability is more than $1 billion larger than the $7.7 billion gap estimated for June 30, 2006.
grim (4)-
Bergabe as homedebtor. I will use him as an example with my most recalcitrant clients. Even the Fed chair can have negative equity.
2007 Population Growth +20,000
2007 Building Permits (Units) +25,828
From Bloomberg:
Citigroup Plans to Cut More Than 5% of Securities Employees
Citigroup Inc., the biggest U.S. bank by assets, plans to cut more than 5 percent of staff in the securities unit to rein back expenses after U.S. subprime- mortgage related losses.
“Each year we identify the bottom 5 percent of performers in the institutional clients group, and some number of these people leave the firm,” London-based spokesman Adam Castellani said in an interview today. “This year we will have a larger number of reductions as we continue to strengthen the business and lower our expense base.”
Citigroup plans to fire 2,000 investment bankers and traders by the end of the month, the New York Times reported earlier today, citing unidentified people close to the situation. Castellani would not confirm nor deny the report.
From MarketWatch:
Bankrate: Fixed mortgage rates fall in latest week
Fixed mortgage rates slid in the past week, according to Bankrate Inc.’s survey released Thursday. The average conforming 30-year fixed mortgage rate fell to 5.98% from 6.39% a week ago, and the average 15-year fixed mortgage also slipped to 5.46% from 5.85%. The average rate on 30-year jumbo loans inched lower to 7.43%. Adjustable mortgage rates rose for the second consecutive week, with the average 5/1 ARM jumping to 6.44% from 6.21%.
“Each year we identify the bottom 5 percent of performers” man I love corporate bs speak.
Tell your kids that if they want to live in NJ, they better become a teacher or a cop.
The “Hope Now” program
“When I try to call….I feel I’m getting the runaround first of all, and then we keep going back to the beginning every time.”
http://money.cnn.com/2008/03/19/real_estate/borrowers_cruz/index.htm?cnn=yes
BIG (14)-
I’ve already told my kids not to plan on living here. The day my youngest finishes HS, we’re gone, too.
rebar (15)-
The purpose of programs like Hope No is not to help homeowners. It’s to keep people trapped in their homes as long as possible and squeeze as much out of them as can be squeezed in that period of time.
Hope No’s perfect prospect is an underwater owner who is both honest and dumb. They can use that person’s desire to do the right thing to wring out thousands in payments that would never be made by a shadier, smarter borrower…who would- after realizing Hope No’s program simply lures the borrower into throwing good money after bad- immediately walk away.
From CNBC:
Rich Also Ensnared in Mortgage Crisis
They took out adjustable-rate mortgages at the peak of the housing bubble to buy homes they would otherwise not be able to afford. Or they refinanced existing mortgages to take cash out.
And now, two or three years later, the day of reckoning is here.
These are not lower- and middle-income borrowers, but more affluent consumers with annual incomes of $100,000 or more who are increasingly being ensnared in the home mortgage crisis.
People in all income categories “are facing the shock of new payments that can be twice as much as previous ones,” said Susan M. Wachter, professor of business and a real estate specialist at the Wharton School of the University of Pennsylvania.
Nor will falling interest rates help most of these homeowners, as their low initial payments skyrocket and the worth of their homes erodes, said Allen Fishbein, director of housing and credit policy at the Consumer Federation of America.
Clot,
I was on the phone with a local reporter a few days back. I told her that the best thing an underwater borrower could do was just walk away.
I wonder why my quote never hit the newsprint.
I want to move to upstate NY eventually. My wife and I intend on buying property up there in the future. Right now we are working on paying off our mortgage as quickly as possible. extra principal payments every month.
Barney Frank wants to give Bernanke a cape and leotard..
Fed should be super regulator, Frank says
The Federal Reserve should be authorized to regulate and supervise all credit-creating institutions to assess their risk in exchange for giving them access to the Fed as lender of last resort, Rep. Barney Frank, D-Mass., said Thursday. Frank, chairman of the House Financial Services Committee, said the Fed should monitor “the health of the entire financial sector and act when necessary to limit risky practices.” The complex federal and state regulatory regime over the financial sector should be re-examined, including a reassessment of requirements on capital, margins and leverage, he said.
“Do it yourself bailout”
1) Don’t pay your mortgage.
2) Bank your mortgage payment. (To be able to cover the transaction costs associated with renting/moving)
3) Repeat steps 1 and 2 until you are evicted.
4) Rent.
You could probably string out 6-7 months of no-cost living easily. Given a PITI of $3,000, you could easily save up $18,000 in cash. The cash should be sufficient to cover your moving and transaction costs (security, etc). Use the remainder to pay off additional debt and to build a security cushion.
Would you be able to rent if the credit check showed you are late on your mortgage? Just wondering.
grim (19)-
It’s even better to stay in your house as long as possible, while not paying the mortgage. Keep the power, gas and water bills current…then, play the game with your lender.
Call the lender frequently, make promises, stave off the NOD and lis pendens…then, use the backlog of foreclosures in most NJ counties and the adjournment process to wring out 12-18 months of payment-free living.
I know three people who received NODs last April, lis pendens toward the end of October…and none of the three have faced a sheriff sale yet. My friends in the Somerset Co clerk’s office inform me that a foreclosure could take over a year in the current environment.
2007 Population Growth +20,000
2007 Building Permits (Units) +25,828
Grim, I think you are right that New supply is not dampened much. Unless you are in Somerset county which reduced it by half compared to 1980’s. I think there is lot of new supply now just hitting the market with Active Adult communities. I doubt they can sell those units till Boomers sell their suburban house.
Anyone knows how those active adult communities are doing? I don’t see much sell transactions there either.
Next, you’ll see lenders offering to rent houses to the former owners, post-foreclosure.
Better to keep someone in a house than to hold it vacant.
Clot,
You see Gartman on Fast Money last night? Commodities are reshuffling. I sell stopped out of gold. I guess bide my time until I get in again.
HE (23)-
Landlords don’t have much of a choice now. Much of the rental pool in this area consists of tapped-out former homeowners.
Often, landlords will demand 6-8 months of postdated checks, extra deposit (even though more than a 1/5 month deposit is illegal) or other binders to guarantee performance. Sometimes, the simple solution is to jack up the monthly rent, and hope for the best.
You could always do what the previous owner of my house did:
1. Inherit house free and clear
2. Take out home equity loan
3. buy new car and other misc junk
4. dont pay mortgage
5. dont pay utilities
6. never clean your house
7. abandon house with everything still in it
Interesting time going through 2 generations of family possessions…
Another $800k home in my town (Pequannock Twp) is on the foreclosure list…
ARM for $760k isn’t being paid back..
-R
Barney Frank: What a douchebag!!!
HE (27)-
Yeah. Looks like all the commodities are taking a breather. The real story behind it, though, is that much of the gold selling is forced selling. Anybody who has to de-lever has to dump gold…whether they want to or not.
Systemic margin calls are such a byatch.
12557WMH1 6CIT GROUP INC MTN 03/02 5.050 03/15/10 18.945(W) 78.000
Never would guess CIT which is an investment grede bond would be paying 19%.
(28)-
That’s 1.5 month deposit…
Clot,
I’ve had success with having clients offer to prepay a number of months rent. Let me tell you, I saw a 4x check result in a complete 180.
This tactic works well when trying to negotiate a lower rent as well.
Of course, if you don’t have the cash you can’t play this game.
Nothing to do with time value of money either, its just that the check usually has alot of zeros on it, persuasive zeros.
grim (36)-
Funny…landlords understand the concept of “skin in the game” better than Harvard MBA mortgage bankers.
Delinquencies on home loans pooled into securities from ‘05-’07 keep rising, Standard & Poor’s (NYSE:MHP) said. On ‘05 subprime securities, 35.6% of balances were late, up 4% vs. Jan. Securities packaged in ‘07 already have a 24.4% delinquency rate, up 10% vs. Jan. Late payments for ‘07 jumbo loans shot up 15% vs. Jan. Delinquencies for home-equity loans and Alt-A mortgages also rose.
Oh, I love this one. Which is worse, pollution or the stigma of pollution?
Clearly, the stigma of pollution is worse than the pollution itself. So given the choice of cleaning it up, or simply ignoring it, “ignore it” wins.
It’s OK to live next to a superfund site, just don’t call it one.
Locals oppose naming of new Superfund site in NJ
Officials in Gibbsboro are protesting the designation of a federal Superfund environmental site.
The U.S. Environmental Protection Agency announced the designation for 60 acres that center on a former Sherwin-Williams paint plant.
The designation allows the EPA to clean up the badly contaminated site and to compel those responsible to either pay for the work or do it themselves.
But Mayor Edward Campbell says it carries a stigma for the community. He also says the area is too large and Sherwin-Williams has been cleaning up the mess.
An EPA spokeswoman says Sherwin-Williams is moving too slowly.
Anybody else out there think it’s funny that as the entire world de-levers, Fannie and Freddie are now running toward the fire? Counterintuitive plays are great…when they’re made by people like Buffett and Wilbur Ross. But, when the plays are made by two sick GSEs that hemmorrhage billions every quarter, what conclusion can be drawn?
Someone please present a credible argument that Fannie/Freddie are not the gubmint’s designated garbage bins for bad mortgage paper. Everything about this reeks of bailout, then silent bankruptcy.
#34 Clot,
That would have been great to know a month ago. I just paid 2 months deposit and the landlord almost fainted when I asked what interest bearing account it was going to be deposited in. Once he realized that he has been getting away with murder with the last renters, he ask me for a bank recommendation. Unreal.
Although I can’t complain too much, my rent is far cheaper than the avg for my neighborhood in Philly. And a HELL of a lot cheaper per square foot vs buying.
2ndary (41)-
Over 1.5 months’ deposit may not be illegal in PA. I was only referencing NJ law in that post.
Ahh, that actually makes sense. The other big difference in PA is the landlord pays the Realtor to find Renters, not the other way around like NJ.
From CNBC:
Jobless Claims Up 22,000, More Than Expected
The number of US workers applying for unemployment benefits climbed 22,000 last week to 378,000, government data showed on Thursday, but part of the larger-than-expected increase may have been due to layoffs caused by an auto industry strike.
Economists polled by Reuters had forecast initial jobless claims would increase to 360,000 in the week ending March 15, compared with a revised 356,000 the prior week. This initially had been estimated at 353,000 claims.
The four-week moving average of initial claims, which gives a better underlying signal on the state of the labor market, rose to 365,250, the highest level since October 2005 in the aftermath of Hurricane Katrina.
The number of workers remaining on jobless benefits increased 32,000 to 2.865 million in the week ending March 8, the most recent week for which the data was available, notching the highest reading since August 2004.
In NYC a lot of landlords are devout Jews, since the law requires interest to be paid on a deposit and since a practicing Jewish person can’t charge a practicing Jewish person interest a lot of my friends with Jewish names who have not seen a temple since they were 13 claim they are practicing so they don’t have to give a deposit. It works all the time.
Secondary Market Says:
March 20th, 2008 at 9:02 am
#34 Clot,
That would have been great to know a month ago. I just paid 2 months deposit and the landlord almost fainted when I asked what interest bearing account it was going to be deposited in. Once he realized that he has been getting away with murder with the last renters, he ask me for a bank recommendation. Unreal.
Although I can’t complain too much, my rent is far cheaper than the avg for my neighborhood in Philly. And a HELL of a lot cheaper per square foot vs buying.
#45,
Not a bad Idea. Although, I’d have to drop the Italian vowels in my last name to shorten it.
The problem from a legally-knowledgeable landlord’s perspective with the prepayment in advance of several months rent, or an extra big deposit, is that it is illegal in NJ for the landlord to require that, and the result will be that if the landlord takes it and there is a later landlord-tenant dispute, the landlord loses some of the already too weak rights that landlords have. It is therefore dangerous for the landlord to take it, and for that reason, I as a landlord won’t take that risk and will just pass on taking those tenants. But few landlords are aware of those legal details (until it is too late).
#12 grom According to Squack Box this morning, the Fed’s moves are working
http://www.rentlaw.com/dep/njdeposit.htm
Over 1.5 rent deposit is illegal in NJ.
On PA you can charge 2 months on a new tennant for first year, after first year landlord has to reduce deposit to one year. Section 250.511a. Escrow funds limited
(a) No landlord may require a sum in excess of two months’ rent to be deposited in escrow for the payment of damages to the leasehold premises and/or default in rent thereof during the first year of any lease.
(b) During the second and subsequent years of the lease or during any renewal of the original lease the amount require to be deposited may not exceed one month’s rent.
(c) If, during the third or subsequent year of a lease, or during any renewal after the expiration of two years of tenancy, the landlord requires the one month’s rent escrow provided herein, upon termination of the lease, or on surrender and acceptance of the leasehold premises, the escrow funds together with interest shall be returned to the tenant in accordance with sections 511.2 and 5127.
(d) Whenever a tenant has been in possession of premises for a period of five years or greater, any increase or increases in rent shall not require a concomitant increase in any security deposit.
(e) This section applies only to the rental of residential property.
(f) Any attempted waiver of this section by a tenant by a contract or otherwise shall be void and unenforceable.
8 68 P.S. §250.511e.
# 20 How 20th century.
# 22 How 21st century.
This sold for $285K, and had only been on the market for a little more than a month.
How the hoo did this happen?
# 24 I understand how it can make economic sense to make such a calculated move but there is something deeply disturbing about people who take on too much debt and than game the system to their further advantage.
#52 I think they way over paid. ANd its in Sayerville. See if it actually closes.
http://nymag.com/daily/intel/2008/03/jimmy_cayne_closes_on_sweet_pl.html
#53s hore: I understand, and I agree, or used to agree.
But the sad reality today is in many cases one would appear to be a moron for doing, or trying to so the right thing.
Only bad behavior appears to be rewarded today.
“Sluggish population growth in NJ”
This is depressing. Pretorius, maybe you can post last year’s bonus numbers again to cheer me up.
Owner purchased that Sayreville property for $289k on 4/20/2007.
# 56 And the more we run in to backstop bad decisions on Wall Street, etc. the less likely it is that people or institutions will do the right thing in the future.
“The Swiss banking giant said it’ll take an overall write-down of 2.86 billion francs ”
That CAN’T be true!! bi and S&P said there would be no more writedowns!
From MarketWatch
SUBPRIME TODAY
Credit Suisse faces first-quarter loss
Allianz sees first-quarter mark-downs; outlook cautious
Citigroup to cut 2,000 more jobs by the end of March: New York Times
Bankrate: Fixed mortgage rates fall in latest week
Little room for economic stimulus in Europe, Japan: OECD
Harbinger, Greenlight, Tremblant profited by betting against Bear
Three banks end federal loans to students
Congress delves into Bear rescue
Dimon offers Bear Stearns bankers stock, cash to stay
Details to headlines at link above
it’s not just the oil money driving people to Texas. I’ve got a geologist friend who works for shell in houston. she’s single but bought a massive mcmansion with a sweet pool for about $300k. If you make low six figures in Houston you are rolling
I thought AC was hoppin’?
Bally’s AC lays off 50 workers
Bally’s Atlantic City has laid off more than 50 cashiers and slot attendants due to slowing business at the casino.
Sounds about right, grim … thanks! I know the owners. In January, they suddenly decided on moving to Arizona, even though they don’t have job offers there (and even more baffling, one of them is a public school teacher).
If they stayed around long enough to have had kids, they’d have sent them to Catholic schools, and/or used the money they made from a sale a few years down the line (ha!) to move to East Brunswick.
The house is in a sterile suburban development, and it was quite nice. It’s not far from the Parkway or the house Jon Bon Jovi grew up in (remember how it was the prize in an MTV contest more than 20 years ago?). However, their back porch was about 100 yards away from some huge electrical towers.
Only two New Jersey counties are expanding at a rate higher than the national average of 1 percent: Gloucester experienced a 1.58 percent one-year gain and Somerset 1.09 percent. Middlesex had the highest absolute growth with a net gain of 5,258 new residents last year.
“Middlesex is in the middle of the state and is highly accessible for jobs, plus there’s been a lot of revitalization going on there, so it’s not surprising.”
Every county in NJ, with the exception of Salem County, experienced negative internal migration. More American’s left those counties than moved into those counties.
In Middlesex County, about 7,000 residents left the county in 2007. This was offset by about 7,000 immigrants (foreigners) that moved in (about net zero). The population growth in Middlesex County was driven by births. Last time I checked, babies didn’t care about jobs or revitalization.
Apparently my PPT theory re the Bear puts is wrong, apparently the SEC IS investigating it:
http://online.wsj.com/article/SB120597050222250293.html?mod=googlenews_wsj
“Citigroup plans to fire 2,000 investment bankers and traders by the end of the month”
All of them in California, of course.
“Clotpoll Says: March 20th, 2008 at 8:19 am
rebar (15)-
The purpose of programs like Hope No is not to help homeowners. It’s to keep people trapped in their homes as long as possible and squeeze as much out of them as can be squeezed in that period of time.”
This is simply, literally true, and it’s absolutely disgusting.
Looks like Security Capital wants to go to court. Merrill filed suit to pressure SCA (and subsidiary XL Capital) into meeting it’s swaps contracts obligations. Those obligations protect some $3b in CDOs. Security Capital says the contracts were terminated.
Damn that counterparty risk.
Speaking of counterparty, isn’t it time for the Gold Coast get-together?
“All of them in California, of course.”
Nobody gets fired in NYC, its where are all the smart and wealthy people live
“People in all income categories “are facing the shock of new payments that can be twice as much as previous ones,” said Susan M. Wachter, professor of business and a real estate specialist at Wharton”
She tag-teamed my corporations course. Nice lady.
From MarketWatch:
U.S. leading indicators fall for fifth straight month
The U.S. economy may be “grinding to a halt,” the Conference Board said Thursday, reporting that the index of leading economic indicators fell 0.3% in February, the fifth straight decline. The coincident indicators - the best overview of the current economy - have been flat for three straight months, the private research group said. “Growth will be weak this spring,” said Ken Goldstein, labor economist for the Conference Board. “A small contraction in economic activity cannot be ruled out.” Five of the 10 leading indicators fell in February. Over the past six months, the leading index is down 1.5%, with two indicators rising.
New installment of Roubini is on the stands!
More fun reading.
“This plan also include a formal nationalization Fannie and Freddie as the ongoing farce of pretending that these insolvent institutions are private sector firms is being revealed: at market value these institutions are effectively insolvent and government decision to increase limits for non-conforming loans, to increase caps on their portfolios and to reduce their “excess” capital are now revealing that these are not private institutions: they are rather effectively public institutions that are – in spite of their massive problems – being used to bail out the mortgage markets. So lets end the farce of deluding ourselves that these are private firms: if these bankrupt institutions need to be used for public policy purposes – as they may need to – let us formally nationalize Fannie and Freddie – and put transparently on the public sector balance sheet the costs of bailing out the mortgage market.”
More at - http://www.rgemonitor.com/blog/roubini/250488/
“Barney Frank wants to give Bernanke a cape and leotard..”
Yeah. A POS cape.
From MarketWatch:
Philly manufacturing activity stays weak in March
Manufacturing in the Philadelphia region remained weak in March, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed diffusion index rose to negative 17.4 in March from negative 24.0 in February. Readings below zero indicate contraction. The slight improvement was in line with expectations. Economists were expecting the index to improve to negative 18.0.
22 grim
Honest to G+d, that DIY bailout procedure should be printed in every self-help and personal finance book, magazine or leaflet in America. I’m tempted to print a few thousand copies myself and staple them to every telephone pole in NNJ.
Let’s start a campaign.
#52 and #64
This sold for $285K, and had only been on the market for a little more than a month.
How the hoo did this happen?
I know someone that lives in that townhouse complex. Paid $260,000 for it in June 2007. Also like you mentioned GIANT electrical towers right next to it.
Still can’t believe Sayreville made one of “The top 50 places to live in the USA” in 2007, blecht…
Spitzer is like the mortgage industry, he thought he was the one doing the screwing but in the end he was the one who got screwed.
#68 njpatient:But of course!!
“Anyone knows how those active adult communities are doing? I don’t see much sell transactions there either.”
Dunno about those, but the senior living complex in Westfield that opened in the fall couldn’t get anyone to live there for free.
Funniest part about the person that bought the Townhouse really said “Ka-Ching!” after hearing the news about Sayreville being a top 50 city.
I decided to keep quiet…
Hovnanian is still attempting to sale/leaseback their active adult model homes in an attempt to raise cash.
Buy it now, and lease it to Hovnanian who will use it as a model home for the next two years, after which, you are free to move in.
Today I shall limit myself to pointing out that clot is repeatedly correct.
“The real story behind it, though, is that much of the gold selling is forced selling. Anybody who has to de-lever has to dump gold…whether they want to or not.”
As Defense Secretary Rumsfeld would say, “we have to de-lever with the assets people want to buy, not the assets we want to sell.”
Super chart of the Philly Fed from Calculated Risk:
http://bp3.blogger.com/_pMscxxELHEg/R-JvQdDCIFI/AAAAAAAABuo/ONKb3ZpcgwA/s1600-h/PhillyFedFeb08.jpg
Worth taking a look at, since half our state is included in the Philly Fed Index.
(Note, not yet updated with the March numbers)
From Bloomberg:
Philadelphia Index Shows Fourth Month of Contraction
Manufacturing in the Philadelphia region contracted in March for the fourth month in a row, as measures of new orders and shipments reflected weak demand.
The Federal Reserve Bank of Philadelphia’s general economic index rose to minus 17.4, a bigger increase than economists had forecast, from minus 24 in February, the bank said today. Readings less than zero signal contraction. The last time the index showed negative readings for four consecutive months was in 2003.
The biggest housing slump in a generation, compounded by tighter credit and mounting financial losses, is spilling over to other industries and pushing the broader economy toward a recession. The Fed, noting the outlook had “weakened further,” cut interest rates this week and said it would act “as needed” to promote growth.
“The manufacturing sector continues to struggle against strong headwinds from reductions in housing and building materials output, combined with downward pressure on motor vehicles,” Nigel Gault, chief U.S. economist at Global Insight Inc., a Lexington, Massachusetts-based research firm, said before the report. “Manufacturing is expected to exert a negative drag on growth in early 2008.”
40 clot
right again
“Someone please present a credible argument that Fannie/Freddie are not the gubmint’s designated garbage bins for bad mortgage paper. Everything about this reeks of bailout, then silent bankruptcy.”
“Anybody else out there think it’s funny that as the entire world de-levers, Fannie and Freddie are now running toward the fire?”
I’m hysterical.
It’s a “hair of the dog” monetary policy as well. All of these clowns running the current circus must have learned that if you go through the wrong door, the only way out is to go back through the same door. Hence, the answer to problems created by low rates is … low rates. The answer to problems created by over-leveraging is … increased leveraging. The answer to financial institutions who behave as if actions have no consequences is to … attempt to ensure that their actions have no consequences.
Lor’ blimey, but I’m in a foul mood today.
Speaking of if a complex is doing well. When i was renting in Scotch Plains they built this UGLY set of condos on the Clark border. 2 bed 2 bath at 1000 Sq Ft for $315,000 (way too much) and 2 bed 2 bath at 1200 Sq Ft for $340,000 (still way too much). I can’t remember the name but here’s a link. Anyone know if it’s doing well and what they’re selling for.
Ooops. Sorry the 2 bath might only be for $340,000. What a rip.
college tuition bubble unraveling (from WSJ)?
Three Banks End
Federal Loans
To Students
By ROBERT TOMSHO
March 20, 2008
Three big banks have dropped out of the federal student-loan program for the coming academic year, adding uncertainty to the financial-aid arena at a time when students are poised to receive admissions notices and begin to line up borrowing.
Believed to be the first large banks to exit the federal program during the current credit crunch, the institutions are HSBC Bank USA, a U.S. unit of London-based HSBC Holdings PLC; M&T Bank Corp. of Buffalo, N.Y.; and TCF Financial Corp., Wayzata, Minn. The three rank among the 50 largest providers of such federal student loans, lending a combined total of more than $560 million of the $119.2 billion made in loans in the 2006 federal fiscal year, the last tally available.
NEW YORK (AP) — The financial crisis is over and investors should take advantage of the “once-in-a-generation opportunity” to buy banking stocks, an analyst said Thursday.
“This comment sounds ridiculous given the conviction on the part of most commentators that the worst is yet to come,” Punk, Ziegel & Co. analyst Richard Bove said in a client note. “However, I do, in fact, believe that the crisis is over.”
More negative news will come, but it will be “meaningless,” and while the financial crisis is over, “problems facing the economy are not,” he said.
“An environment has been created that will pump profits into the American banking system,” he said. “Investors are so focused on the potential for loan losses and the flawed valuations created by an obscenely invalid accounting rule supported by a soporific Securities and Exchange Commission that they are missing this fact.”
“The number of US workers applying for unemployment benefits climbed 22,000 last week to 378,000″
Rough week in California…
***********************************************************************
Bear Stearns is not responsible for any recommendation, solicitation,
offer or agreement or any information about any transaction, customer
account or account activity contained in this communication.
***********************************************************************
Street doesn’t seem to happy with CIT today..
#90 John: If Mr. Bove from Punk Ziegel says its over, than it must be true. What more confirmation do we need?
“The real story behind it, though, is that much of the gold selling is forced selling. Anybody who has to de-lever has to dump gold…whether they want to or not.”
I agree they’re dumping the positions that made them money to cover the loosing positions. At least that’s what Peter Schiff said last night on his weekly radio broadcast. It does make sense though.
I have just called EuroPac and bought some more…I hope I’m right.
BC, any thoughts?
In 2004, I moved from Austin, TX to NJ since my wife could also have a 6figure job here. We ended up leasing here and renting out TX home since we couldn’t sell it at that time. The prices were 10%-15% below 2001 prices in Austin area. But waiting out 3 years, it appreciated and last Jan we sold it with some profit. Had we waited one more year, I am sure we would have had 50K more money on it.
Austin is a great place and I’d love to go back. But in Austin and TX in general it is limited to find good paying jobs as norm here. There are exceptions of course, but it is a cyclical process. Before 2001 there was a move to south for better prices/life, and with the .com bubble and major correction many people had to come back to the coastal areas for better jobs.
I think we are in a similar cycle. Folks going to TX will have sun, nice weather, big houses etc, but they will be exposed to a more risky employment situation when the oil money runs out its coarse. I’d give 2-3 years time to weather this storm. After that, NYC area would be much more attractive.
That said, I wish I have moved out of the NYC area. Life is much better in TX and FL.
“This comment sounds ridiculous given the conviction on the part of most commentators that the worst is yet to come,” Punk, Ziegel & Co. analyst Richard Bove said in a client note.
Well, at least he’s right about that.
From MarketWatch
Economy ‘grinding to halt,’ leading data say
Leading indicators fall 0.3%, fifth straight decline
…
The leading indicators are designed to forecast economic activity six to nine months ahead. The last time the leading index fell for five straight months was in early 2001, at the beginning of the last recession.
——————
The Great Unwind has begun, Citigroup warns
Avoid leveraged companies, countries and consumers, bank’s strategists say
As markets and economies de-leverage across the globe, investors should avoid companies and countries that have grown to rely too much on borrowed money, they said.
Grim,
I think I’m in invisible moderation due to two links in one post?
Usually it shows up to the poster… I see nothing yet it won’t allow me to repost as I get an error telling me I’ve “already said that”.
countries that have grown to rely too much on borrowed money, they said.
Just come out and say it already…
No, really, the fourth time is a charm.
IKB Seeks Fourth Bailout After Subprime Loss Widens
IKB Deutsche Industriebank AG, the first German casualty of the collapse of the U.S. subprime- mortgage market, forecast a wider loss and said it will need a fourth government bailout.
IKB fell to the lowest in at least 11 years in German trading after saying the loss will be about 800 million euros ($1.2 billion), the Dusseldorf-based lender said today. KfW Group, the state-owned development bank that controls IKB, will inject another 450 million euros to shore up the lender.
IKB was the first German bank hit by contagion from the U.S. subprime market last year after its finance affiliate couldn’t raise funding. The German bank has received emergency aid totaling 9 billion euros. IKB before forecast a loss of 550 million euros.
“The markets have continued to worsen” and each month “is reducing the chances of IKB coming unscathed out of this,” said Robert Mazzuoli, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, who recommends selling the shares.
Lot of similar opinion mentioned by many here.
http://rosemanblog.sovereignsociety.com/
I’m buying gold for my investors on the current dip and hope you’ll do the same. Deflation or inflation, I’m still expecting gold to top at least $2,000 an ounce in this bull market. And don’t worry; the current correction is perfectly normal after a huge advance from $675 an ounce last August to $1,035 this week. Use this correction to build or add to your gold bullion or gold ETF positions.
#96: money is moving out of gold because it can make more in other places, why in that environment would you buy it? Keep in mind the hedgies! You can make more in the up,down bear market or the bull market whichever you believe we are in than you will make buying gold now, right?
#104: You are nuts! Talking about underwater…
#96: money is moving out of gold because it can make more in other places, why in that environment would you buy it? Keep in mind the hedgies! You can make more in the up,down bear market or the bull market whichever you believe we are in than you will make buying gold now, right?
Shut up stupid!
“I understand how it can make economic sense to make such a calculated move but there is something deeply disturbing about people who take on too much debt and than game the system to their further advantage.”
Shore - In part, I agree, but in each case the lender entered into a contract with these people that implicitly allowed this result. If they didn’t want this result, they could have contracted around it. So the question is, WHY did they not contract around it? IMO, they did not do so because “prices always rise”, and they assumed that a walkaway would be a good thing for the lender, not a bad thing. In short, I’m not even sure that “gaming the system” is a phrase that applies here.
Furthermore, the banks will all be walking away from their debts, which will be paid off by me, the Little Patients and the Little Patients’ Little Patients.
Yet another result of the walkaway is that something happens that the entire economy needs desperately to happen: real estate prices fall.
So, while I wouldn’t mind if the speculators and bidder-uppers and flippers and Suzanne-researched-thisers and generalized all-around maroons who are partially to blame for the entire mess suffered, I think that in general the walkaway is a very good thing, and I hope it happens lots and lots and lots and lots.
#105: Are you kidding me? That’s fine, lose your shirt and your tight briefs too and then I may accept your apology. And take a hint, when someone offers some advice you don’t have to insult them, you can just not take it.
Citigroup cuts 2,000 banking, trading jobs
The New York Times earlier reported the 2,000 job cuts. It said most will be in New York and London, with some in other European markets and Asia, and that traders are more at risk in light of market conditions.
…
Bill Hackney, who oversees about $8.9 billion at Atlanta Capital Management Co. said “Employment at large financial services firms like Citigroup could easily shrink 10 to 15 percent in the next five years.”
…
Adam Castellani, a Citigroup spokesman, said the bank expects a larger-than-usual number of job cuts in its institutional clients group. This group includes investment banking and trading, as well as alternative investments, which offers hedge fund and private equity services.
What will NJ do when it can’t use Manhattan as a crutch?
“Speaking of counterparty, isn’t it time for the Gold Coast get-together”
Yes.
Yes it is.
#108 shhhhh. Don’t tell pret.
“Citigroup cuts 2,000 banking, trading jobs
The New York Times earlier reported the 2,000 job cuts. It said most will be in New York and London”
They must mean upstate New York. Like maybe Buffalo. Or something.
Tim Russert will be very sad, because he’s really blue collar and understands.
75 Nj patinet / grim,
Why dont we start a web site, call it something like middle class bailout: HOW TO. and then give the details of how to essentially make money off of being upside down by defaulting on your home loan. There will of course be small joining fee, say $20. It could be a tidy sum that comes out of it.
#110,#111: HAHAHAHAHAHAHA you guys are so funny!
countries that have grown to rely too much on borrowed money, they said.
Just come out and say it already…
Grim,
you sound like a shrink. Admitting the problem is indeed the first step.
njPatient(60) said:
“That CAN’T be true!! bi and S&P said there would be no more writedowns!”
Awesome. I like the add of S&P. Quite clever.
As for the gold drop, I hope you all know what you are doing (hedge).
My plane from Minneapolis to EWR was delayed 4 hours last night. Took almost an hour to get to my car in P1 (where it costs $1 per hour to park) due to the inefficiency of the airtrain. Was supposed to be home by 11pm and pulled in my driveway at 3am. Of course , there were 2 red coats at each station to describe how to ride the airtrain.
I love the government!
interesting read:
Two 400+ Point Days in Two-Weeks: Why this is Horrible News for Housing. Volcker and Protecting your Mac
http://www.doctorhousingbubble.com/
kodiak (47)-
A landlord’s best friend is- and always will be- an aluminum baseball bat.
My brother is a landlord, and he refers to his as his “assistant”. It comes in handy for what he like to call “Oklahoma evictions”.
You can just imagine.
#96MM..I listen to Peter as well, he is opening new offices and appears to be gaining quite a following…haven’t seen him on the cnbc route lately
Shore (53)-
There is also something deeply disturbing about banks who act as an accessory to mortgage fraud and allow lifelong deadbeats to buy houses and have no skin in the game.
These banks and borrowers complete a circuit of idiocy and fraud. They deserve each other…and whatever outcome occurs.
House Hunter,
While Citi Bear, Merill, cut trading jobs caus eall the bad investment advice they gave out and lost billions for their clients, Peter keeps gaining clients cause his clents are making money and until last week were at 52 week highs.
That’s how free markets work.That’s capitalism. Europac doesn’t need to hit the discount window.
#117 clot, a friend of my husband’s had a rental in Trenton. The guy stopped paying is rent, every time he called he was told “I will have it next week”. He finally went down to collect in person and they guy actually punched him in the face…it took a almost a year to get the “renter” out…
Clot,
The best story ever was this guy that went to sell his country house in upstate NY or Vermont I think. It sat on the market for a decent amount of time and then he left it off the market for the winter. When the realtor came back to visit it in the spring there were people living there! She tried to get in and they had changed the locks and would not let anyone in, even the owner. The local police would not help him and he even sued to get them out. These people were master manipulators and they kept getting the case thrown out or delayed, all while living free and clear. The owner even got in trouble when he turned off the power and water to the place! Last I heard they were still living there and the owner was SOL. They interviewed one of the squatters (man and wife) on his job as a local bus driver and he basically said “yeah we like the place and don’t want to leave”
This owner could have used your brother’s “Oklahoma Eviction”
if anyone was curious as to what one of the main drivers of oil prices going up is…. there is more at the like if caught anyone curiosity
You arrive at that conclusion after listening to Royal Dutch Shell’s strategy presentation in which the company this week finally allowed investors to have a look at the gauge on its fuel tank.Reserves on their own don’t matter. What matters is the cost of getting the reserves. Shell’s investment per barrel of oil and gas has increased fourfold in just three years, a period during which the oil multinational’s output has not increased. The company displayed another chart showing the average spending of the big oil companies. Per barrel of hydrocarbons, spending rates were pretty static during the 1990s at between $5 (U.S.) and $6 a barrel. In 2003, the rate of investment began to escalate and is now shooting higher, rising at an alarming pace. Last year, the average investment per barrel was just shy of $15.
http://www.theglobeandmail.com/servlet/story/LAC.20080320.IBEUROPE20/TPStory/Business
Kettle1,
Then how do you explain their record profits?
Note to Benny:
CIT needs a bailout.
# 119
Agreed. The pump was primed for disaster when the banks started making money off of originating fees and had no need to worry about the long-term ability of borrowers to repay.
JLB (103)-
Please share some of your picks with us, then.
Can’t wait for this…
vodka (112)-
Who said the posters here weren’t entrepreneurial?
anyone hear about CIT? They halted trading on NYSE.
Hunter (121)-
All that could’ve been avoided, had your friend had a proper bat and some understanding of instant eviction techniques.
Mike (122)-
“This owner could have used your brother’s “Oklahoma Eviction”.
My brother didn’t think up stuff like this because he is a mean or greedy person. Stories like yours happen- all the time. In a state like the PRNJ, the courts actually do side with criminals and deadbeats. There is only one way to level the playing field…and it’s named Easton or Louisville.
stu,
profits are indeed large, but that is not the point. Look at what it costs just to get 1 barrel of oil out of the ground. 4 years ago it cost an average of $3 and now 4/5 years later it cost about 2.5X as much to get 1 barrel out of the ground ($15). This increase in extraction costs is only going to continue increasing.
JLB,
Please advise us and myself exactly where to put say $75K.
by the way, I’m still owed 7 rents from March 1st. This is getting ugly now. Is this an industry problem as no one I know will admit this?
thought this might be appropriate
http://www.ibdeditorials.com/IMAGES/CARTOONS/toon010708.gif
Kettle,
You are spot on, days of easy oil are gone.
make money,
When you get a pink slip it does not matter if you rent or own, you aint paying your biggest bills if you don’t have the scratch. It might be time for a little of Clot’s brother’s Oklahoma magic.
Mike,
They’re not all fired but all are crying poverty. talking about I’ll bouble up next month. You know what that means?
MM
Make
I don’t even want to know what the odds are for a LL getting his money back once a renter gets behind over two months. I doubt they are good!
Start asking for collateral. Title to their car, first born child, etc. Payable back when they are current on the rent.
CIT?
http://www.bloomberg.com/apps/news?pid=20601103&sid=a7abUZAKLlhA&refer=us
#127: okay, buy tons of gold so you can make a pittance on the possible minute swing (and be prepared to actively trade it) and definitely get a good chunk of corn and wheat (I heard they are planning to use it for ethanol)…oh but those are just ideas that you just can’t wait for from make money’s “stupid” poster
JJ: I don’t know specifics, but just reading the headlines means that CIT has been shut out of the CP market. As a result, they need to draw on banklines to plug gaps in day-to-day funding. As a financial company, it really gums up the works, but the bank lines are there to be used in these instances, so there you go….
#140: oh and a disclaimer that you shouldn’t take financial advice from me or anyone else on this board without checking with your financial advisor because there is a chance you could or will lose money
I don’t normally promote firearms use.
But isn’t there some obscure law about firearms for self-protection in your own home? If you’re on your own property, and somehow end up locked out of your front door, necessitating entering through one of your own windows, and you happen to be immediately attacked by stangers while inside your own home…can’t you just shoot ‘em?
What’s with the baseball bat? You losers.
Flew out to STP with a sales rep from CIT sitting in adjacent seat. She said CIT was in pretty big trouble. She didn’t go into details, but it sounded like she was already looking for other opportunities.
Don’t know if this is a repost:
America’s Money: In their own words
Everyday folks tell their stories about hard economic times.
http://money.cnn.com/galleries/2008/news/0803/gallery.real_stories/index.html
Some sad stories, but this line killed me:
We have dramatically cut back our furniture buying, clothes shopping and going out to dinner and hope to see an end in sight soon.
Furniture buying?
I love Depew, from yesterday:
2. Process vs. Event
As tempting as it is to want to believe, this is not a Bear Stearns (BSC) event the Federal Reserve has managed to suddenly solve. Instead, it is a long-term process that will unfold slowly, over time, and ultimately work its way through the system as debt is destroyed, savings increases and attitudes toward consumption and risk shift.
So, while Citigroup (C), Goldman Sachs (GS), JP Morgan (JPM), Lehman (LEH) and the rest of the banking industry continues to horde capital to protect their balance sheets from additional losses on subprime debt, counter-party risk from weaker institutions unable to access credit and an increase in non-performing loans, the ripple effect of the debt crisis finds new, previously unimagined ways to hamper the ability of the Fed to force-feed more credit into the system. Corporate and personal credit lines are the latest perverse wrinkles in the debt crisis.
According to Bloomberg, corporate borrowers from Sprint Nextel (S) to Porsche Automobil
Holding SE (POR3 GR) to MGIC Investment Corp. (MGIC) are drawing on credit lines, a move that may force banks to raise as much as $40 billion in additional capital to protect their balance sheets.
Meanwhile, the 10 largest U.S. banks have the lowest capital levels in at least 17 years, according to Credit Suisse Group. Consequently, companies tapping credit lines will further pressure new lending, exacerbating the credit crunch and making it still more difficult for the Federal Reserve to feed new credit into the economy.
Again, it is critical to understand that this is not an event, but a process. The U.S. economy is dependent on credit consumption. Currently, only those who do not need credit are able to obtain it. Those who need it face increasingly tight lending standards.
http://www.minyanville.com/articles/GS-S-dollar-euro-C-jpm/index/a/16331
Even better from today:
1. Fitch: “It’s Not Getting Better, It’s Getting Worse”
No one is really paying much attention to it yet, but in a conference call update this morning Fitch Ratings said it expects subprime mortgage losses to increase and that things are not, in fact, getting better. They are accelerating.
The following slide from the call was particularly interesting since it’s both counterintuitive and indicative of deterioration, not improvement in the subprime mortgage situation. The slide shows the roll rate from current loans to delinquent loans, where loans that have been performing roll into delinquency.
http://www.minyanville.com/articles/fitch-baltic-dry-fdx-loan/index/a/16353
From Reuters:
Leading index shows US economy in recession, ECRI says
The United States is “unambiguously” in a recession, a New York-based forecasting group said on Thursday, citing a nine-month decline in its weekly measure of the economy.
The Economic Cycle Research Institute, which correctly predicted the 2001 recession at a time when many on Wall Street still maintained a rosy outlook, said their numbers indicate the economic contraction is already under way.
Extending its weakening trend, the firm’s Weekly Leading Index fell to 130.8 in the week of March 14 from 132.1 in the prior week, revised down from 132.2.
“It is exhibiting a pronounced, pervasive and persistent decline that is unambiguously recessionary,” said Lakshman Achuthan, managing director at ECRI.
#134 Kettle1
That’s exactly how I feel everytime I get paid.. Change anyone???
Trying to understand lot of this Financial stuff. Anyway, reading wikipedia on Credit Default Swap. If anyone interested, read section on criticism.
http://en.wikipedia.org/wiki/Credit_default_swap
Warren Buffett famously described derivatives bought speculatively as “financial weapons of mass destruction.
he said “Unless derivatives contracts are collateralized or guaranteed, their ultimate value also depends on the creditworthiness of the counterparties to them. In the meantime, though, before a contract is settled, the counterparties record profits and losses -often huge in amount- in their current earnings statements without so much as a penny changing hands. The range of derivatives contracts is limited only by the imagination of man (or sometimes, so it seems, madmen).”
The market for credit derivatives is now so large, in many instances the amount of credit derivatives outstanding for an individual name are vastly greater than the bonds outstanding. For instance, company X may have $1 billion of outstanding debt and $10 billion of CDS contracts outstanding. If such a company were to default, and recovery is 40 cents on the dollar, then the loss to investors holding the bonds would be $600 million. However the loss to credit default swap sellers would be $6 billion. In addition to spreading risk, credit derivatives, in this case, also amplify it considerably.
Many people wonder why indices like the Dow Jones Industrial Average and S&P 500 seem to go up endlessly. Part of the reason is that big institutional investors no longer sell companies they feel are about to fail, no matter how obvious that impending failure may be. The securities issued by such companies may retain significant paper value up until almost the very end. Instead of selling, investors can buy “insurance” in the form of derivatives and keep holding their investments. This distorts the value of traditional market indices because the decision to remove a failing company from the index can be made well before the paper value drops to zero. This saves the value of the index. It creates the false impression that the index always rises.
142 JLB
“money is moving out of gold because it can make more in other places”
I still didn’t see your list of which “other places” you’d recommend. I take it you don’t know of any?
We have dramatically cut back our furniture buying, clothes shopping and going out to dinner and hope to see an end in sight soon.
Furniture buying?
Filling up a McMansion isn’t easy
Government should step in and strictly regulate the derivative market.
Derivatives make the economy a non-zero sum game which has implicit volatility creating disequilibrium
Somewhat OT, but IMO indicative of something unnerving - I’ve been having tons of calls with execs whose parachutes are opening and the first question out of all of their mouths, irrespective of how many millions they’re getting, is “what happens to my healthcare?”
#152 rent: ANd who exactly is out buying furniture everyday?
So, the wife and i have been talking, and are starting to lean towards buying a home in upstate NY or PA. Someplace that we can still use it but live in a rental in NJ. The idea is, that like many people on this board we are sort of stuck in NJ for family reasons. If not for the family obligations we would already be gone. But look at first run scenarios, the model of us renting a place in NJ and owning what would essentially be a weekend house for now and possibly a primary residence in the intermediate future, seems to be one of the better ones. we still have a solid year before we make any solid decisions though…
#154,#151: you must be a headhunter because otherwise I can’t even imagine what “executives” you would be taking calls from. As for places to make money take a look at stocks, a little birdy told me there are some good deals out there (but call your financial advisor first, you of all people) or you could buy a house but that might be a little outside your comfort zone
#152 rent: ANd who exactly is out buying furniture everyday?
People who can only afford to buy one piece at a time. Paying a mortgage, property taxes & utilities on a McMansion ain’t cheap.
Kettle,
Let me recommend a great area upstate…….Rhinebeck and Red Hook. Great areas with lots to do and see and decent places to eat out. Wife’s cousin went to Bard College up there and we fell in love with the area while going to visit her over the years. I look at land to build on all the time. I am waiting for the land to crash a bit as over the past 5 years it has exploded in value. In about another 2-3 years I will buy 10 or 20 acres and start the summer house planning.
schabadoo #145 -
I didn’t find any of the stories THAT tragic.
Kid is bancrupting her family by going to a fancy college.
Young couples who thought the good times would last forever.
People complaining about being “only” lower middle class.
One woman happy because she had a HELOC and 401k to drain.
This quote was rich:
“We have two kids we are TRYING to keep in private school. [Like] most working couples, we want the best education for our children, because not just “the rich” deserve private school. ”
I never thought private school was so much a right as a function of money.
Most of the stories are pretty typical, and indicative of an expectation of a pretty high lifestyle.
I’ll reserve my sympathy for those who have suffered tragic losses and illnesses that wiped them out. Or the guy who paid into a pension plan for 40 years only to have the company suck it dry and leave him hanging. Not the people entitled to an upper class lifestyle on a working class budget.
can someone tell me why is the market up today?
157 JLB
“stocks”.
There’s a truly excellent recommendation!
Bank it!
How do you feel about “bonds” in this market??
160 ’soosh
“I’ll reserve my sympathy for those who have suffered tragic losses and illnesses that wiped them out. Or the guy who paid into a pension plan for 40 years only to have the company suck it dry and leave him hanging. Not the people entitled to an upper class lifestyle on a working class budget.”
Bang on.
157 JLB
“you must be a headhunter because otherwise I can’t even imagine what “executives” you would be taking calls from.”
You suffer from a lack of imagination.
can someone tell me why is the market up today?
Was windy in Jersey this morning, does it every time.
(As good a reason as any other pundit could muster)
JLB,
I’ve met NJP in person, while he is a headhunter, he is the kind that wears a hood and carries an axe.
Waldwick
SLD 56 WALDWICK AVE $425,000 5/20/2005
SLD 56 WALDWICK AVE $375,000 3/19/2008
#160
“We have two kids we are TRYING to keep in private school. [Like] most working couples, we want the best education for our children, because not just “the rich” deserve private school. ”
here we have the attitude that is the most nefarious mainstream belief in America right now. that everyone deserves a life of luxury for which a select few must pay
The right to bear arms and protect your own home laws are so strong that the nut on LI who got only 2-4 years for shooting the kid in the face with an unlicensed loaded shotgun, while his son on the front lawn with a unlicensed loaded handgun out only got convicted because he shot the kid in the face in the apron of the driveway. It seems the driveway and sidewalk in front of your house are places where a “reasonable” person not looking to cause harm should be able to walk across without getting a double barrel shot to the face. In addition, the group of kids or “mob” as his attorneys called them never actually rang their bell or even went on their steps they were mainly on the sidewalk and driveway. In additon the mob was yelling for the son to come out not the father and the father or mother never called 911. Even crazier the nut had a handgun but decided that was not enough firepower so he gave that to his son and got a shotgun. Even crazier the kid he shot was along for the ride, as his son was pointing the handgun at them the father waived the shot gun by the kids face and when he went to push it away he shot him in the face. In total for two unlicensed guns and blowing a 17 year olds head off he got 2-4 years under the right to bear arms and protect his family. He still complained that was excessive. So if you are shooting someone at home who is trespassing or a criminal the bar is pretty high to get charged with something. However, if you see the pennysaver or newspaper boy dropping off a paper in your driveway he is off limits but if he rings your doorbell give him a face full of buckshot.
Pat Says:
March 20th, 2008 at 1:18 pm
I don’t normally promote firearms use.
But isn’t there some obscure law about firearms for self-protection in your own home? If you’re on your own property, and somehow end up locked out of your front door, necessitating entering through one of your own windows, and you happen to be immediately attacked by stangers while inside your own home…can’t you just shoot ‘em?
What’s with the baseball bat? You losers.
From the Financial Times (UK). Porkies are lies by the way. (Cockney slang - Lies = Pork Pies = Porkies).
http://ftalphaville.ft.com/blog/2008/03/20/11751/sixteen-of-the-biggest-fattest-porkies/
“Sixteen of the biggest, fattest porkies
Of course there are zillions more equally juicy lies floating around out there, but we reckon Peter Tasker, a Tokyo-based analyst and occasional author, has come up with some choice specimens - and just in time for a lighthearted, two-minute Easter read:
The top 16 big, fat lies de nos jours
1. Derivatives reduce volatility
2. The BRIC economies are decoupling
3. Inflation is 2 per cent
4. Greenspan was a maestro
5. The Chinese won’t let their market fall in Olympics year
6. (Junichiro) Koizumi reformed Japan
7. The Americans are devoted to free market solutions
8. The Swiss are prudent
9. The French are brilliant derivatives traders
10. The UK is suffering a housing shortage
11. Private equity funds add value to the companies they buy
12. The cap rate for real estate should be the government bond yield
13. Alastair Darling is in charge of the situation
14. Ben Bernanke is in charge of the situation
15. The G8 is in charge of the situation
16. Anyone is in charge of the situation”
“can someone tell me why is the market up today?”
Because:
(1) a number of entities are in such bad liquidity trouble that they are forced to sell high priced commodities such as gold or oil, not because they want to but because it is the only thing they’ve got for which they can get a goood price and achieve liquidity, which causes:
(2) oil and gold prices to fall. Rising oil and gold prices are indicative of what is referred to as a “flight to quality”, which is also known as a sign that investors believe that the economy in general is what is referred to as “f*cked”. Rising gold prices are also indicative of inflation, and rising oil prices also _cause_ inflation, which ain’t good (despite what Bergabe may say), and both are also associated with the debasement of the American Dollar. For these reasons, the drop in gold and oil prices is being read as being _good_ for the market as opposed to being _bad_, by people who didn’t read paragraph (1). Therefore:
(3) WHEEEEEEEEE!!!!
Grim - In moderation. NO IDEA why.
NJ Patient is an HR attorney
Kettle1, depends how far upstate NY you want to go. Friends of mine used to own a place way up Rt. 17 in Walton NY. The place was on 18 wooded acres with a pond, and it was dirt cheap. However beware besides the driving distance you will need to learn how to survive the local townies, think of the Chevy Chase movie Funny Farm.
JLB (140)-
You are a moron, a troll and not entertaining in the least.
bi and Duck were good for laughs. You, on the other hand, are a Mitchell-sized annoyance.
grim Says:
March 20th, 2008 at 2:10 pm
can someone tell me why is the market up today?
Was windy in Jersey this morning, does it every time.
Damn! Knew i should have checked the weather channel.
170 - patient-
Thank you! WHEEEEEE!!
“lisoosh Says:
March 20th, 2008 at 2:22 pm
Grim - In moderation. NO IDEA why.”
Because you SWEAR like a SAILOR.
Patient - Moi?
Employment Declines, People moving to other states, Housing bubbles, record foreclosures, etc.
All stuff I mentioned a little over 3+ years ago except about 1.5 years ago I started mentioning forclosure records.
I’m not gloating over being right but its really weird when the stuff you talked about several years ago becomes todays headlines. Kind of freaked myself out.
I wonder if this is how Grim feels? I would be at Pfizer in the cafeteria talking to a few people about some of these items that are the talk today. I have to ask them if they thought I was nuts back then. I know the answer today but I think now they would give me an honest answer about when I talked about this back then.
BTW saw Diesel at $4.07 a gallon. Regular at $3.22. Ridiculous.
As for the Mayor that stood up and said property taxes are NJ highest priority. I think you found your next Gov.
Patient - Anyway, how did you know? OK, Brit women. Got it.
jlb (157)-
“As for places to make money take a look at stocks…”
Thanks for narrowing it down for us, pal.
Congrats. You could be the biggest idiot to ever post here.
As for the Mayor that stood up and said property taxes are NJ highest priority. I think you found your next Gov.
Takes way more pandering than that to get elected in this state.
House I have watched for years. In 2 years on the market they have dropped their price around 3%. Oh dear. Looks like year #3 is coming on strong.
I’m not gloating
Maybe my recollection is wrong, but aren’t you fighting with some HOA in some small town in NC?
I wouldn’t wish that on my worst enemy.
#156 kettle1
I have a nice little cabin on 2 acres in the Catskills that we picked up in a tax sale. We plan to have Mrs PGC and the kids up there for most of the summer, with me driving up Fri night and back to work Monday morning. It is 20mins from Woodbury Commons, so you can make the city in 2Hrs.
Once I get the solar set up it will be a nice little fallback plan. If all else fails I think I could be self sufficent within a year.
There are some dirt cheap forclosures in your neck of the woods Mitchell, perhaps you would care to comment?
http://www.tenmanagement.com/listings/property-list.do
#145 schabadoo
Suzzanne Cromwell complaining about her $250 commute to work. For kicks I looked at Mapquest to see how far Belmont(work) is from Lowell(home). Wow…it’s a whopping 24 miles. $250 a month for 48 daily miles? Give me a break. She must be driving a big SUV.
I do 90 miles daily in my Corolla and my monthly gas bill is not even close to $250.
CIT blowup will not help the NJ RE market.
#169
John– the sentence was especially dubious given that it was less than what was offered to White in plea bargaining pre-trial. White chose to stand trial and was convicted and yet he somehow came out ahead.
#187
Regardless of that, is $250 so high as to complain about it?
#188 Frank Nothing will help the NJ RE amrket;its dead, in case you were wondering.
In other words, the Fed will be lending banks highly liquid Treasury securities in exchange for less liquid assets. Banks will now be able to use a wider range of collateral than previously announced. The first auction will take place on March 27.
schabadoo Says:
March 20th, 2008 at 2:53 pm
#187
Regardless of that, is $250 so high as to complain about it?
It’s obviously a problem for them if she is considering leaving her job because the commute is too expensive. Gas really wasn’t that much cheaper 2 years ago…was it???
#186 LOL - Sean keep telling me how my life is so lousy somehow living in NC.
Great Income, Mc Mansion for a mere 257K in 2005 no less now worth 325K and still going up in my area, Mortgage smaller than a car payment, Top nation rated schools in my location, Property taxes that I don’t even think about them, Drinkable Drug Free water, Nice Weather, Better Commute, Pothole free roads, Toll Free roads, I can go on. I can even bank money if I were unemployed things are so cheap for me now.
I don’t know why your such and angry person but your the type of person I’m glad to have moved away from. Now go cut people off on the parkway and give them the finger you’ll feel better.
The FED has just chosen to loan money to banks with lollipops as collateral.
Moral Hazard? I’d rather see the FED gamble my tax dollars on MegaMillions. Better chance of obtaining a return.
From todays Obama speech:
“When you’re spending over $50 to fill up your car because the price of oil is four times what it was before Iraq, you’re paying a price for this war,” Obama said. “When Iraq is costing each household about $100 a month, you’re paying a price for this war.”
http://news.yahoo.com/s/ap/20080320/ap_on_el_pr/obama_iraq
He’s as bad as Cheney connecting Osama to Saddam.
jlb (157)-
“As for places to make money take a look at stocks…”
Thanks for narrowing it down for us, pal.
Congrats. You could be the biggest idiot to ever post here.
Wow Clot, you may be right. And to think of the long list of morons that posted over the years.
Can we actually compile a list. Something like top ten idiots!
Can I have spot 9 or 10?
#196 But people will eat that kid of stuff up.
He’s playing to the common people and its a smart move true or not.
#199 Whatever spot you give to Stu can I have the other?
#198 -
idiots are not allowed to compile a list of idiots
Barack Obama blamed the Iraq war for higher oil prices and skyrocketing debt Thursday as he sought to tie the unpopular war to the slumping economy in working-class West Virginia.
I’m missing the similarity to Cheney’s baldfaced lie.
It’s certainly not as deceptive as standing on the deck of an aircraft carrier and proclaiming the mission is accomplished.
3753 American Troops Killed Since “Mission Accomplished”
As we talk about the Manhattan compensation base and its effect on housing prices in NNJ (or, at least, in NNJ near Manhattan (or, at least, in NNJ near Manhattan provided that the foregoing is defined exclusively as Hoboken, Weehawken and part, but not all, of Jersey City)), its important to remember that annual bonus is not always the most important part of compensation.
Apropos of that, this:
“NEW YORK, March 20 /PRNewswire/ — Senior executives in the financial services industry, along with the rank and file, are sharing the pain with stockholders as market prices decline and accumulated values evaporate. A survey conducted by executive compensation consultants Steven Hall & Partners reveals that over 50 percent of the Fortune 500 financial services and insurance companies have stock options that are underwater. Just two years ago, the number was 10 percent. Stock options are underwater when the current stock price is below the exercise price of the option.
Thirty-three of the 60 (55%) financial services and insurance companies in the Fortune 500 currently have underwater options.”
For the tinfoil hat crew..
http://www.freedom-to-tinker.com/?p=1266
Is it bald-faced or bold-faced? I always thought the latter.
red (201)-
What if it were a list of bigger idiots?
“He’s as bad as Cheney connecting Osama to Saddam.”
or McCain connecting Osama to Iran.
Perhaps it was a bald-headed lie?
bald-faced lie
An idiom that means, ostensibly, an untruth with no hair on its face, and refers to a particularly egregious lie. As amusing as this mental image is, it’s incorrect. Well, I shouldn’t say that–after all, usage determines meaning–but it’s not the original intent of the phrase. The original phrase was “bold-faced lie.” As in, boldface type.
Or Bush connecting his policy making to Jesus.
206 sybarite
bald-faced
HeHe
Re Obama and oil
No politician regardless of how sincere they may or may not be cannot discuss the real problem.
How do you think it will be received when a leading politician makes public statements that our energy demands are greater then the energy supply and that we can only expect the situation to become worse over time?
There are solutions, but the corporate task master that actually run the government would put a stop to it in short order. An apollo style program to switch the US no a none oil based energy would drastically alter the business landscape and would include the death of some of the big boys, or at least a drastic reduction in their size. It also will not happen because it would actually require sacrifice and the general public will not willing make any sacrifice even for their own benefit. Bush might have been able to pull it off right after 9/11, but him and cheney are in the resource war model camp when it comes to oil.
The only other option to a politician is to blame it on someone else.
Okay Clot, Make Money and NJPatient: first off just your names make you sound like you might be interested in pooling your money (and let me get specific here) buy some healthcare stocks! Don’t say I never gave you any tips. Here is another one (thank you Mitchell) “Now go cut people off on the parkway and give them the finger you’ll feel better.”
DNC better drops Barack and let Hillary run. This Reverend Dr. Jeremiah Wright thing cannot go away even Republicans haven’t say anything yet.
Actually Mitchell,I was looking for a comment on forclosures, but since you asked I am happier than the guy you see on the Enzite commericals. Fact is I have been inquiring about Charlotte, Atlanta, and other areas down South. FYI, one of my mentors made a fortune developing property in Wilkes County, and a co-worker of mine recently invested in buying an empty lot in the Charlotte area.
I may one day invest in your neck of the woods but I have no desire to move there. If I end up relocating outside NYC Metro as lovely as the South is my heart lies in San Francico. So no thanks on the sales pitch, just post a reply on forclosures plz.
You know what I thought about it and I really am sorry about post #214, I mean I would be pissed off today too if I had bought gold at these prices, not bought a house and sucked as a realtor. So I forgive you guys for having a bad day and taking it out on us rational money savvy individuals that give good advice!
Want an investment tip. Open the first In-and-Out Burger franchise on the East Coast.
205 grim
disturbing.
so am i right patient?
220 kettle
about which?
my understanding of commodities from the standpoint of a retail investor is that they should be no more than 5% of an overall portfolio and are really only included in the mix to the extent they are non-correlated with other asset classes. commodities standing alone are a purely speculative play which really isn’t appropriate for most people. maybe this is considered old fashioned at this point..
218: Many, many people have attempted, but the owners are adamant against franchising.
Maybe that’s why that couple who just sold their Sayreville townhome are headed to Arizona…
Disclosure of the average cost basis of your position is now required for commodities related comments…
224 grim
0
heh.
patient
about you being an HR attorney, that or general corporate counsel
“schabadoo Says:
March 20th, 2008 at 3:23 pm
Barack Obama blamed the Iraq war for higher oil prices and skyrocketing debt Thursday as he sought to tie the unpopular war to the slumping economy in working-class West Virginia.
I’m missing the similarity to Cheney’s baldfaced lie.”
The war in Iraq has had little if anything to do with oil prices being where they are today. Complete pandering to dumb@sses.
Like I said before Democrats pander to the poor and uneducated through ridiculous economic promises/claims. The Republicans play I have a bigger Jesus d*ck than you do.
Both disgusting but both say a lot about how dumb the electorate is in this country.
True but you should Pity the Fool, Mr. T as his whole life savings was in GOLD.
sskep-tic Says:
March 20th, 2008 at 3:43 pm
my understanding of commodities from the standpoint of a retail investor is that they should be no more than 5% of an overall portfolio and are really only included in the mix to the extent they are non-correlated with other asset classes. commodities standing alone are a purely speculative play which really isn’t appropriate for most people. maybe this is considered old fashioned at this point..
#222: If you were responding to any of my posts, they were complete sarcasm aimed at the people on this board who tend to attack if you give them an opinion they don’t like (they like to shut people up rather than learn anything). I absolutely agree with your post and I would not be getting into commodities at this time (if you are in that is a different issue, not saying sell). What you said is not old fashioned but good common sense!
Currently 0
Actually if anything the Iraq war has a higher chance of lowering the cost of Oil as Iraq is forced to sell it quickly to help finance building the needed infrastructure blown up in the war.
226 kettle
In the ballpark. I’m not in-house, and what I do is all M&A (and in that context, dealing with the execs).
Can we just stop with the homeowner bailouts and get the WPA v2.0 ready?
So no, not an HR guy or GC, though may try that when I get old and tired.
227
One is a verifiable lie.
Example: 2+2=5
The other is an opinion open for debate.
Example: Bi isn’t the sharpest oil trader on the site
re (223) Grim, patience not until after the election and inagurartion.
Oh, wait, nevermind. The WPA v2.0 would mean people would actually need to work.
Nobody would go for that today.
Skip the work, mail the check direct.
“Actually if anything the Iraq war has a higher chance of lowering the cost of Oil as Iraq is forced to sell it quickly to help finance building the needed infrastructure blown up in the war.”
That totally makes sense except that the needed infrastructure that keeps getting blown up in the war includes the pipelines.
More importantly, it’s pretty easy to check whether or not the war has damaged Iraqi oil production. (Answer: it has).
“Disclosure of the average cost basis of your position is now required for commodities related comments…”
Gold Futures;
Bought- $342.80
Sold- $1007.40
Looking to load the boat when all the late comers have jumped overboard. Hopefully, around the 200 day moving average.
JLB,
You are a complete dolt. A clueless one to boot.
To Patient’s point…
An older article that predicts the ripple effects of the war, including oil prices.
http://tinyurl.com/yrao89
#239: BC Bob tell me what I am clueless about? Interesting that that you sold the Gold where you did, do you think make money should have bought it today? Clue me in!
WPA v2.0 might come in handy when we start looking for workers to dig the new trans-hudson tunnel.
DBA
POWERSHS DB MULTI SECTORPOWERSHS DB AGRICULTURE FUND 07-MAR-2008 75 $2,997.73
$2,275.54
+$722.19
Short Term Details
DBA
POWERSHS DB MULTI SECTORPOWERSHS DB AGRICULTURE FUND 07-MAR-2008 175 $6,994.71
$6,216.73
+$777.98
Short Term Details
DBA
POWERSHS DB MULTI SECTORPOWERSHS DB AGRICULTURE FUND 07-MAR-2008 0.824 $32.93
$29.88
+$3.05
Short Term Details
DBA
POWERSHS DB MULTI SECTORPOWERSHS DB AGRICULTURE FUND 07-MAR-2008 50 $1,998.48
$1,623.95
+$374.53
Short Term Details
GLD
STREETTRACKS GOLD TRUST 19-MAR-2008 5 $474.24
$483.30
-$9.06
Short Term Details
GLD
STREETTRACKS GOLD TRUST 19-MAR-2008 45 $4,266.41
$4,349.68
-$83.27
Short Term Details
GLD
STREETTRACKS GOLD TRUST 19-MAR-2008 400 $37,931.62
$35,025.17
+$2,906.45
L
BARCLAYS BANK IPATH ETN GSCI CRUDE OIL INDEX 23-JAN-2008 120 $6,106.35
$5,001.70
+$1,104.65
you know what really cracks me up on this board is all the random posters that show up to make a point. Dman where have you been? It is so funny that when a debate starts all of a sudden a new poster shows up…hmmmmm…is there a lack of integrity here?
BC Bob. If that trade is true, then nice job.
My gold has been in shorting Real estate. 80 to 150. Debate is out though on whether or not your home is a commodity.
JLB, I will commend you for selling at the right time, but the question went over your head. Take your time reading the question/post instead of rushing to post a response and you won’t get beat up so much.
Dman - that’s an excellent article. Note it was written in 12/02, and it’s interesting to see who was right and who was wrong among the folks making predictions (the usual suspects)
#244
Nice try, don’t try to deflect all the attention that your ingenious posts are getting. :)
Interesting..
Hedge funds leaving Bear may be cutting leverage
Grim,
I believe you had asked NJPatient whether JPM can buy the building even if the BSC deal doesn’t go through. Here’s an article that you would find interesting:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/20/cnpoison120.xml
S&P: CIT move to draw on U.S. bank lines won’t affect rating
2:11 p.m. 03/20/2008 By Sue Chang Provided by
SAN FRANCISCO (MarketWatch) — Standard & Poor’s Ratings Services said Thursday that CIT Group Inc. ’s (CIT) decision to fully use its U. S. credit lines will not affect its rating or outlook. The ratings agency had cut CIT’s counterparty credit ratings one notch to A-/A-2 and assigned a negative outlook on March 17. S&P’s comments follow CIT’s announcement earlier that it will use its $7. 3 billion U. S.
Now why did CIT crash today?
re: (249) Grim most of the Hedge funds who haven’t left bear already (as in last week when 17 Billion exited) are probably loaded up with lots of poop, like worthless Bear swaps for example.
The NYT Real Estate always runs this little graphics called “rate trends” showing 15 & 30 year fixed and 5/1 ARM rates. Today it would go make an excellent companion piece to Grim’s Sales/Inventory Overlay as the 30 year fixed (5.66%) has dipped below the 5/1 ARM (5.81%)
In another recent article, ( dont have a link at the moment) Internal saudi documents point to there production being at maximum. There are 2 main ways to pump oil, at a high rate or at a sustainable rate. if you pump oil above a certain rate you will deplete a field quickly and your total recovery of oil from the field will be lower. You can also pump at a slower sustainable rate determined by the oil fields geology. At this slower rate you can pump out a significantly higher % of the total oil in the field.
What is going on now is everyone is demanding that oil producers pump fast and furious to keep up with demand. They can do this for a while but it is a losing proposition. Newer tech suck as horizontal drilling while increasing oil production rates also decrease the total % recovered from the field.
This means that since the saudi’s have been pumping at very high rates for a while now, there is a high probability that they can never actually recover the amount of oil they have stated in their reserves.
So when you hear how saudi or anyones else is going to increase production at there is a good chance that they are doing so at the cost of a reduced total recovery.
Another quick thought. Oil fields are not underground caverns filled with liquid oil. Oil and gas fields are solid porous rock that contains oil/gas/water.
#246: what did I sell?
#248: sorry Dman, your right I shouldn’t try to distract these capable investors with my suggestions that there are random posters here…I wonder when Dwoman will show up (:
241 JLB
“BC Bob tell me what I am clueless about? Interesting that that you sold the Gold where you did”
I’m sure if you search this site for the phrase “tight stops” you’ll come up with an old post by BC Bob explaining how he stays safe in gold. Took me all of 10 seconds to find it.
“I wonder when Dwoman will show up”
JLB, if they gave out medals for wit, you’d get half a medal.
“you know what really cracks me up on this board is all the random posters that show up to make a point.”
JLB,
I have been a long time poster on this site. However, when I responded to your past crap, I took a step back and asked myself why? I decided to stay away rather than drag myself down to your deep, shallow depths.
Last post from me for awhile.
Stu,
It’s true, bought in 2003, sold in Sunday and Monday’s melt up. Itching like hell to get back. Waiting for the occupants of the last car to puke.
#216 If that is the case then I apologize for my comments.
Foreclosures are what they are in my opinion. The total number of foreclosures I find to be a misleading figure. To me it needs to be broken down further. In most cases I feel foreclosure is poor planning or unforeseen circumstances.
Its not an end all be all for how an area is doing financially unless all income areas have a large increase in foreclosure rates. To me its deeper it may signify a class of people that are not doing well in a paticular area. I believe you have to look at the foreclosure rate based upon income brackets to get a better idea where things are at and where they are going.
When I hear about trailers being in foreclosure I have to say really should someone even count it as a sign? Yes if you are in the trailer income bracket. Someone buying a trailer probably doesn’t have a high education, good paying or steady job, might also have some kind of financial issues to begin with. Foreclosed trailers to me are your low income people who most probably didn’t have it together to begin with and found a home in their price range providing they don’t get fired. The equivalent would be the foreclosures you see in bad parts of Camden or Trenton. Does anyone here track Camden’s low income housing foreclosure rate and consider this a sign of the times in NJ? I would think not. Lower income usually has poor vehicles with bad gas millage and no option to upgrade to something more fuel efficient. These people didn’t have $20.00 to rub together and a gas price double on someone with a 14mpg poor running constant problem car will lose their home. Might even cost them more to get to work than they make so they stop going. Foreclosures in this area to me are sometimes the same as someone who has their car repossessed for not making the payments. Its not like you can buy a cheaper home. Easiest to start over again since you started with the smallest dollar loss of housing.
Foreclosures in the townhouses area I consider that to be your single out of college class or decent education and career starter. This could mean No starter jobs. This area to me is a sign of poor growth.
Foreclosures in the single family home is your married couple looking to start a family. Probably college educated etc. Of course this depends on the single family house value and location too. This mean educated jobs are going away. This is the worst sign because this means dual income families cant make the ends meet. Some can survive on a single income but to lose the home at this level means the economy is bad in this area.
Foreclosures in the mansion homes is a sign of high paying jobs going bye bye.
The problem with all the above is the sub prime zero down buyers who bought homes who couldn’t afford them to begin with so the analogy is skewed by the people who were looking to get rich quick and bail before the subprime resets. So foreclosure numbers are useless until we remove the get rich quick people.
My comments were very generalized to keep from writing a novel.
“Sean Says:
March 20th, 2008 at 4:11 pm
JLB, I will commend you for selling at the right time”
“JLB Says:
March 20th, 2008 at 4:20 pm
#246: what did I sell?”
Sean, you’re gonna have to retract that commendation. But at least he’s honest!
#246: were you maybe directing your post to darling BC Bob who posted about his gold sale?
oh, and regaridb Iraq…The pentagon released a report before we went in that predicted the exact situation we are currently in. The current situation in Iraq is exactly where we any high level officer in the military knew we would be.
will look for link to the report
261 JLB
No - he thought you had done something commendable. He was mistaken.
Investments - My opinion.
To me forget gold, oil, etc.
Were running long term on buying farmland actually corn farms.
The land value has increased and the demand for alternative fuels is on the rise.
Ethanol anyone? But what do I know.
#256,#258: Okay everybody lets just try reading and then we don’t have to throw insults around. That’s great if BC Bob is safe in Gold and guess what he has done great then and I have never said that someone who got in early didn’t make a great buy. Also, when I was refering to random posters I was not referring to BC Bob but “Dman”.
NJPatient you never have anything valuable to add to a discussion. You parrot others or you say things that aren’t even close to realistic. Your insults of me actually amuse me like you are a clown.
Mitchell…..again….the souff is as screwed as the north…..Proof positive…look at the number of $500k homes for sale in Davidson, NC….compare that to two years ago….0-60 is two years…..nothing good is happening in charlotte..
#264
I don’t have the specifics, but I thought I remember seeing an analysis that showed that the net energy needed for enthanol wasn’t all that great. I’m sure kettle has more info.
PGC - the Catskills place sounds great.
Not everyone can contribute here….but then it is my strong opinion that the finest MBAs have screwed the pooch this time and all bets are off as far as the right answers go.
BCBob,
I made mine since August ;)
re: 41,
Question: are you saying that tennents are supposed to have their security deposits returned with interest when they move out?
re (260) njpatient - yes, perhaps I am the one who needs to slow down posting. Commendation retracted and I have given myself one demerit.
re: (254) kettle1 if you haven’t been there theoildrum had a great article last week about a new Halliburton run Saudi field that is about to come online. From all of the research posted on that site about the GWAR field and others, the best I can tell is that the Saudi’s are good liars about their capacity and reserves, so much so that they do not even really know anymore what they have left in the ground.
#272: Feel free to read the scroll and you will see the reason I am getting “beat up” is that I was criminal enough to suggest that people shouldn’t buy into gold today and for that opinion I was told “Shut up stupid” My posts are actually based on something other than castles in the sand.
re: (259) Mitchell thank you for generalizing, hold on while I fire up the flux capacitor so I can get back those precious few seconds of my life I spent reading that.
xxxxx!~ There all better. Now Mitchell please go away.
JLB, what did I say at 256 that was insulting?
“NJPatient you never have anything valuable to add to a discussion.”
I apologize for my failure to add value.
#266 I disagree. Zero down subrpime loans will effect all areas. All those Amway people who jumped into housing to get rich quick need to be erased before the smoke clears revealing what is really happening in what areas.
However we have job growth, low taxes, low insurance, more companies moving here. These are things you cant say about NJ.
Lets price out Davidson, NC 2 years ago the average home was worth 240K and today its worth 340K.
Heck lets see what Zillow says. Yes its not accurate but it can be used to determine trends.
http://www.zillow.com/Charts.htm?chartDuration=5years&zpid=6126013
The average price per square foot is up 12% from last year in Davidson, NC.
What could be effecting Davidson lately is the Bridge debate. If Davidson gets a bridge instead of the road that is currently there that opens up a lot of new waterfront to lake norman. However I think it will be rejected.
#274 yup Sean you are the person I thought you were to begin with. Please take you knock off viagra and find a girl? Or has the Spitzer incident cut you off for a while?
The Bare Necessities: A Generation
Tries to Imagine Life Without iPods
By STEPHEN MOORE
March 14, 2008; Page W11
A few weeks ago I gave a talk on the state of the economy to a group of college students — almost all Barack Obama enthusiasts — who were griping about how downright awful things are in America today. As they sipped their Starbucks lattes and adjusted their designer sunglasses, they recited their grievances: The country is awash in debt “that we will have to pay off”; the middle class in shrinking; the polar ice caps are melting; and college is too expensive.
I’ve been speaking to groups like this one for more than 20 years, but I have never confronted such universal pessimism from a young audience. Its members acted as if the hardships of modern life are making it nearly impossible for them to get out of bed in the morning. So I conducted a survey of these grim youngsters. How many of you, I asked, own a laptop? A cellphone? An iPod, a DVD player, a flat-screen digital TV? To every question somewhere between two-thirds and all of the hands in the room rose. But they didn’t even get my point. “Well, duh,” one of them scoffed, “who doesn’t have an iPod these days?” I was way too embarrassed to tell them that I, for one, don’t. They thought that living without these products would be like going back to prehistoric times.
They seemed clueless that as recently as the early 1980s only the richest people in the world had cellphones and the quality of these products left much to be desired. Watch a movie from 20 years ago and you will laugh out loud seeing big clunky black machines that weighed as much as a brick, gave crackly service and cost $4,200. Now cellphones are practically free — even disposable. And the cost of making calls has dropped dramatically too.
So why the long faces? Sen. Obama reminds them every day of how dreary things are. Here’s what Mr. “Audacity of Hope” told workers in Ohio last week: “Everywhere I go . . . you see people who have worked in a plant for 20 years, put their heart and soul into building profits for shareholders. Suddenly, the rug’s pulled out from under them; the job’s shipped overseas.” Not only that, he explains: “They don’t have health care. They don’t have a pension. They’re trying to compete with their teenage kids for a job paying $7 an hour at the local fast food joint.”
Times are tough in many old industrial areas of the country. And middle-class anxiety about the costs of health care and higher education is real. But new data from the Census Bureau reveal that Americans of all income groups have made enormous gains in their standard of living in recent decades. As late as 1970, air conditioning, color TVs, washing machines, dryers and microwaves were considered luxuries. Today the vast majority of even poor families have these things in their homes. Almost one in three “poor” families has not one but at least two cars.
Consumption in real per-capita terms has nearly doubled since 1970. The single largest increase in expenditures for low-income households over the past 20 years was for audio and visual entertainment systems — up 119%. In 2007 Americans spent an estimated $1 billion to change the tune of the ringer on their cellphones. Eating in restaurants used to be something the rich did regularly and the middle class did on special occasions. The average family now spends $2,700 a year dining out.
There’s a wonderful new video on Reason.tv called “Living Large.” In it, comedian Drew Carey goes to a lake in California where people are relaxing on $80,000 27-foot boats and goofing around on $25,000 jet skis that they have hitched to their $40,000 SUVs. Mr. Carey asks these boat owners what they do for a living. As it turns out, they aren’t hedge-fund managers. One is a gardener, another a truck driver, another an auto mechanic and another a cop.
When I was young my parents used to drill in me the moral imperative of eating everything on my plate, and they recited the (tall?) tale of how they even ate what would now be considered dog food during the darkest days of the Great Depression. The American Pet Products Manufacturers Association reports that Americans now spend $36 billion a year on their dogs, cats, turtles and so on, and one of the hottest-selling consumer items is “diet pet food.” We have become a nation of fat cats — literally. I have a friend whose daughter insisted that he spend $200 on eye surgery for their hamster. (I want to see that hamster read the eye chart!)
After my lecture, one young woman walked up to me on her way out and huffed: “What I favor is a radical redistribution of wealth in America.” I tried to tell her that America’s greatness is a result of our focus on creating wealth, not redistributing it. But it was too late — she was already tuning in to her iPod.
Mr. Moore is senior economics writer for The Wall Street Journal editorial page.
#273 JLB: many of the castels of sand here as you say, have turned out to be more like castels of stone.
#275: I really hate doing this but I have to agree with you that you didn’t insult me so I reserve that comment for the next time you do. This time, you right, me wrong.
The real reason Ben Bernanke is trying to prop up housing!
Own house down 260K in value. Is he under water?
Report: Bernanke’s own home down 260K in value
Good ole Steve Moore. Love his classic:
Bullish On Bush: How George Bush’s Ownership Society Will Make America Stronger
The real reason Ben Bernanke is trying to prop up housing!
Own house down 260K in value. Is he under water?
http://latimesblogs.latimes.com/laland/2008/03/report-bernanke.html
#278: I am going to be kind and assume you meant castles and since I am in a generous mood I will agree with your point too.
LMAO @ ‘redistribution of wealth in America’…one more reason McCain will take the white house.
NJPatient based on my poor commentary on your person I will actually ante up one of my favorite stock picks (with the understanding that if anyone invests they do so with risk and not at my advice)
NSRGY, check out when it touched its 52 week…
# 259 “In most cases I feel foreclosure is poor planning or unforeseen circumstances. ”
There is a Federal Bankruptcy judge named Ninfo who I have seen make this very point. As he says, although many people end up being pushed over the edge, say by the loss of a job or an illness, the thing that caused them to be in a position where such an event can do them in is their failure to plan and to keep their finances in good order.
Investment firms tap Fed for billions
http://news.yahoo.com/s/ap/20080320/ap_on_go_ot/fed_credit_crisis
grim:
Is there any way to search the old site? I just want to find a post I made mostly likely in December 2005 where I heard Tom Keane interview Bergabe and he talked about people using synthetic money market securities as de facto cash, and then levering the $hit out of it.
I just want to bask in the glory…
#283 Yes I did, its been a long day.
Google:
site:njrereport.com (search text)
no the nnjbubble….
anyway, I found this gem:
12/24/2005 03:18:00 PM
chicagofinance said…
“Chitownfinance, how do you see the trade imbalance, budget deficit and household debt playing out?”
Complete madness. It reflects a macroeconomic system that is clearly in a state of dis-equilibrium in the long-term.
With too many variables and structural impediments, any system can be held in a given range for short periods, but ultimately TIME wears you down and brings everything back to the mean (hence the theory of “mean reversion”).
That does not necessarily predict LOWER real estate prices, but as has been stated ad nauseum, long-term prices in line with incomes.
#271. yes.
What a doomsayer :(
11/29/2005 01:32:00 PM
chicagofinance said…
It is obvious to me that pain has yet to be inflicted.
Potential buyers are CHOOSING not to buy, but they still have the means. Pain occurs when people CANNOT buy.
Sellers are playing with “house money” and are merely CHOOSING to shave the size of their gains. Pain occurs when sellers sell at a loss, and MUST move to a smaller home in a less desirable area.
Have we seen carnage yet? Not at all.
Other factors: people we spooked by energy and the FED, but may be mistakenly emboldened by the seeming status quo.
The manner that this situation is unraveling is so unfortunate, because the potential bloodshed increases with every mirage that appears :(
what a gloomfest :(
1/03/2006 11:23:00 AM
chicagofinance said…
hejiranyc:
Metroplexual has the correct take on NJ. It is a deeply troubled state, and you don’t need to look that far for the evidence.
Look at the roads. Every person has basically taken their housing wealth and bought a BMW, Benz, Lexus, Audi or Acura. A depreciable asset.
The state economy was founded on pharma and telcom. Both these industries are in deep trouble (think Merck/Vioxx, and SBC of TX buying NJ icon AT&T).
Without writing a dissertation on the NYC market, the steps would basically following this pattern: NJ baby boomers cash out and move south, real estate cools, consumer spending goes down, recession hits, Wall Street is affected, banks downsize, non-NYers who moved to this area to work in the financial industry leave, - POOF.
Housing demand here is MUCH MORE elastic that you it appears on the surface.
I love NY to bits, but there are many people who live here for a job. If the job goes away, why stay? Family? Most people’s kids can’t afford to buy around here, so they have established their lives elsewhere.
There is a price to paid.
Why do you think Mr. Bednar calls himself “grim”?
chicago
Wow Chifi don’t you ever have anything positive to say?
My response to 275 (and I’m greatly amused that a WSJ editorial hack seems to be slamming consumerism):
It’s too easy to say that DVD players and cell phones are the problem - in my opinion, it is the presentation of a certain type of lifestyle as “normal” - pretty much what is mocked at the “Stuff White People Like” blog.
Think a beauty magazine that prefaces a pedicure feature with “calluses won’t do your Louboutins any favors.”
Think shelter magazines that drill the importance of having weekly cocktail parties in your whimsically decorated Manhattan apartment.
Speaking of Manhattan, think basically any TV show aimed at young adults. Where is the show about twentysomethings balancing love and career while still living with their parents in an uncool town?
The magazines infer that suburbs are not what to aspire toward. But if for whatever reason people wind up there, high-end cars, housing monstrosities and marble countertops will make them feel better about not being surrounded by culture and 24-hour Thai restaurants.
It’s one thing to “need” an iPod (after all, radio these days is terrible). It’s another to “need” to live a glamorous life (laden with all sorts of expensive trappings) in order to be “normal.”
Mock this post all you want, but women’s magazines and pop culture have quite a hold on young people.
OMG this has to be a joke. It truly takes the cake-
http://newyork.craigslist.org/que/abo/612540090.html
Lost - I think it has to be a joke. Funny thing - the washer/dryer (coin operated it seems) look American, but the house exterior looks more like London than Queens. As does the car (VW?) in front. In fact, the car looks to have a UK licence plate.
Totally a joke - look at the listing names - Mytur Bin & Isa Durti.
I’m thinking a Londoner - Brits use Indian/Paki as a term a lot.
Ron Paul is on Kudlow now, taking about bubbles and the Fed.
lisoosh
I saw the names. I think its hysterical.
Oh and I agree about the London looking home and the license plate.
I just think its funny that someone went through the trouble of doing this.
lost, lishoosh -
That doesn’t look like anything I’ve ever seen in this neighborhood.
I agree - not Queens, but London.
Totally OT, but I was in NJ a few weeks ago for the first time in years and I thought it looked really good. EWR was a breeze compared to the cattle call that is ATL, AND I had real pizza! Sigh.
JLB-Dolt (217)-
Go back and read some posts from, say, a year ago. Those of us who are gold bugs have been long for quite some time. We’re not some 27 y/o crackhead hedgies who’re late to the long and levered to the max. Hell, I’m averaged in so low on my miners, that the past few days represent yet another chance at loading up some more before the next moon shot.
And, that moon shot will inevitably occur as the last of the overleveraged, shaky longs is carried out on his shield.
Margin calls suck.
skep (222)-
That is the book play, but these are unusual times. Fiat currencies are rapidly destabilizing, so a prudent investor must- as BC says- move into the de facto currency, or risk ruin.
All disclaimers.
grim (224)-
Two largest mining positions:
AUY- $10 and change.
SLW- mid $12s
JLB-Dolt (229)-
“…aimed at the people on this board who tend to attack if you give them an opinion they don’t like (they like to shut people up rather than learn anything).”
I like learning a lot. I learn a lot here. What you’ve offered so far is so lame, it’s hard to believe it comes from an adult.
When you stop the pea-brained drivel and start saying something worthy of the bandwidth you’re sucking up, you’ll get some respect here.
JLB (273)-
“My posts are actually based on something other than castles in the sand.”
That’s an insult to Hendrix. Now you’re really crossing over the line.
Sean (274)-
I think Mitchell and jlb share the same three chromosomes.
Mitchell (276)-
This one moves you up another rung on the ladder of intellect:
“Yes its not accurate but it can be used to determine trends.”
Fun times watching Coach K nearly pass a hairball tonight.
Dook is going down…hard.
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