S&P Case-Shiller: Home Prices Down 16.6% in August

From Bloomberg:

August Home Prices in 20 U.S. Cities Fall 16.6% From Year Ago

House prices in 20 U.S. cities declined in the year ended in August at the fastest pace on record as more properties went into foreclosure before the credit crisis deepened this month.

The S&P/Case-Shiller home-price index dropped 16.6 percent in August from a year earlier, as forecast, after a 16.3 percent decline in July. The gauge has fallen every month since January 2007, and year-over-year records began in 2001.

The decrease in property values, which helped boost sales last month to the highest level of the year, will probably intensify in coming months as the latest tightening of credit markets threatens to dry up mortgage financing. Prolonged price declines may push even more houses into foreclosure, weakening consumer spending and the economy.

“House prices will remain on a downward trend for some time and until they are low enough to stimulate sufficient demand to clear the market,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, said before the report. “Prices will need to fall further.”

Home prices decreased 1 percent in August from the prior month after declining 0.9 percent in July, the report showed. The figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to- month.

From the IHT:

S&P: Home prices post 17 pct annual drop in August

A closely watched index shows home prices tumbled by the sharpest annual rate ever in August.

The Standard & Poor’s/Case-Shiller 20-city housing index released Tuesday dropped a record 16.6 percent in August from the year-ago month, the largest drop since its inception in 2000. The 10-city index plunged 17.7 percent, its biggest decline in its 21-year history.

Both indices have recorded year-over-year declines for 20 consecutive months.

Prices in the 20-city index have plummeted more than 20 percent since peaking in July 2006. The 10-city index has fallen nearly 22 percent since its peak in June 2006.

No city in the Case-Shiller 20-city index saw annual price gains in August — for the fifth straight month.

From CNBC:

US Home Prices Plunge Record 16.6% in August

Prices of U.S. single-family homes plunged a record 16.6 percent in August from a year earlier, according to the Standard & Poor’s/Case-Shiller Home Price Indices.

The composite index of 20 metropolitan areas fell 1.0 percent in August from July, S&P said in a statement on Tuesday.

S&P said its composite index of 10 metropolitan areas declined 1.1 percent in August from July for a 17.7 percent year-over-year drop, also a record.

From MarketWatch:

Home prices off record 16.6% in past year, Case-Shiller says

Home prices in 20 major U.S. cities dropped 1% in August compared with July and had fallen a record 16.6% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor’s. Prices have fallen in all 20 cities compared with a year ago. Only two of the 20 cities showed price gains in August: Boston and Cleveland. The largest declines in August were found in the San Francisco metro area, where prices fell 3.5%. In the past year, Phoenix and Las Vegas have had the largest declines, down nearly 31% in both cities.

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358 Responses to S&P Case-Shiller: Home Prices Down 16.6% in August

  1. Essex says:

    good Morning….today is the first day of the rest of your life. First.

  2. Shore Guy says:

    One more set of data to give the market a push over another cliff or data to give a reason for another short-lived rally?

  3. grim says:

    From the Courier Post:

    Assembly OKs bills to boost N.J. economy

    The Assembly passed nearly two dozen economy-related bills Monday, including measures to expand property tax help for senior citizens, ease certain business taxes and create a $50 million fund to help small businesses get financing they need.

    However, a $22.5 million measure aimed at helping primarily lower-income residents pay winter fuel bills, obtain food and avoid home foreclosures — a key piece of Gov. Jon S. Corzine’s economic relief plan — was not among them. Action on that was delayed so lawmakers can decide how to best get $9.5 million of legal aid money to people who need affordable lawyers. It should come up for an Assembly vote next month, said Assemblyman John Burzichelli, D-Gloucester, a bill sponsor.

    (emphasis added)

  4. grim says:

    From the Philly Inquirer:

    Predatory lending is an issue in N.J.

    Soon after the New Jersey legislature passed a tough law aimed at controlling predatory lending, State Sens. John Adler (D., Camden) and Gerald Cardinale (R., Bergen) teamed up to sponsor a bill that weakened it.

    Adler and Cardinale said they were responding to pressure from the lending industry, which argued that New Jersey’s anti-predatory lending law was so tough that it would have kept legitimate lenders out of the market.

    But now, as Adler runs for Congress, his Republican opponent is charging that he made those changes in 2004 because he was getting campaign cash from predatory lenders who wanted to continue to victimize vulnerable borrowers.

    “John Adler took campaign contributions from the subprime-mortgage special interests, and then returned the favor by doing their bidding in Trenton and watering down consumer protections that opened the floodgates for the subprime-mortgage crisis that’s helped to destroy our economy,” said Chris Myers, Adler’s GOP opponent in the Third District race.

    Adler says campaign cash had no effect on his actions and notes that some of the interests most harmed by predatory lending are supporting his campaign. Those interests include credit unions, community banks, builders and real estate firms.

    “We were hearing from the Department of Banking and Insurance, from the credit industry, that the [original] law we did to protect buyers from predatory lending was too restrictive and was shutting down credit in New Jersey completely for credit-worthy home buyers,” Adler said. “So we had to make a small tweak to the law to make sure that legitimate credit still flowed to buyers.”

    In the end, the Adler-Cardinale bill pulled a requirement that people who were getting the loans had to actually benefit from them, and it protected lenders in many situations from class-action suits. The final bill did help consumers by reducing the amount money lenders could charge borrowers. Often such fees are crippling to borrowers with marginal incomes.

  5. DL says:

    Grim, it’s a variant of the quote from Shakespere: First, we pay all the lawyers.

  6. BC Bob says:

    Rally Cap Tuesday; the margin clerks are on break.

  7. grim says:

    I’ll pull a John..

    DOW +1,000!

  8. BC Bob says:

    “Oct. 28 (Bloomberg) — Iceland’s central bank unexpectedly raised the benchmark interest rate to 18 percent, the highest in at least seven years, after the island reached an aid agreement with the International Monetary Fund.”

    “Policy makers raised the key rate by 6 percentage points, the Reykjavik-based bank said in a statement on its Web site today, taking the rate to the highest since the bank began targeting inflation in 2001. It will publish the reasons for today’s move at 11 a.m. local time.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=ay61s1zV3NCA&refer=home

  9. BC Bob says:

    “I’ll pull a John..”

    JB,

    I’ll pull a Grim. Dow is on the verge of a 20-25% bear market rally. Between now and 1st quarter 09′.

  10. grim says:

    From Reuters:

    GM, Chrysler request $10 billion in aid: sources

    General Motors Corp and Cerberus Capital Management have asked the U.S. government for roughly $10 billion in an unprecedented rescue package to support a merger between GM and Chrysler LLC, two sources with direct knowledge of the talks said on Monday.

    The government funding would include roughly $3 billion in exchange for preferred stock in the merged automaker, according to one of the sources, who was not authorized to discuss the matter publicly.

    The U.S. Treasury Department is considering a request for direct aid to facilitate the merger and a decision could come this week, sources familiar with the still-developing government response said earlier on Monday.

    An injection of $3 billion in equity to support a GM acquisition of Chrysler would be roughly equivalent to the current, depressed value of the top U.S. automaker.

    It would also give U.S. taxpayers a large stake in the turnaround of a struggling auto industry that employs over 350,000 American workers and is credited with supporting employment for another 4.5 million in related fields.

  11. Shore Guy says:

    “DOW +1,000”

    Grim,

    In this market, the key question is whether that is a prediction for the close, or a prediction for an intraday-rally before another plunge towards a negative close?

  12. Outofstater says:

    Someone explain this to me. GM and Cerberus are asking for $10 billion from us, the taxpayers, so GM can buy Chrysler. That’s bad enough, but the Chrysler employees who are let go with fewer than 10 yrs of service will get $50,000 cash, a $25,000 voucher for a new car and six months of paid health insurance. And that is the LEAST generous package. HUH??? They are asking us to buy new cars for the folks who have been churning out cr@p that no one want to buy?? Good morning, comrades, it’s a new day and I don’t like it.

  13. grim says:

    Appliances as a proxy for the housing market?

    From MarketWatch:

    Whirlpool to cut 5,000 jobs, cuts 2008 earnings view

    Whirlpool announced it was cutting 5,000 jobs as it closes a plant in Jackson, Tenn., cuts 500 salaried jobs in North America, and cuts 1,900 international jobs that are mostly in Europe.

  14. John says:

    rally hats on, 1% fed funds rate. Lets squeeze the FDIC passbook savings crowd like a pimple on a 16 year old fry cook.

    Once the ING, HSBC on-line money market crowd see the new rates when they get their next statement they will loosen up their pursestrings. Rally ON.

  15. John says:

    GM/Chrysler goes bankrupt the dominos will fall, between direct employees, supplier employees, dealers and financing folks it will put 2 million people unemployed. Plus a few hedge funds and unnamed BDs that wrote the credit default swaps bankrupt and the major banks that hold huge positions of chrysler bon

    Outofstater Says:
    October 28th, 2008 at 8:09 am
    Someone explain this to me. GM and Cerberus are asking for $10 billion from us, the taxpayers, so GM can buy Chrysler. That’s bad enough, but the Chrysler employees who are let go with fewer than 10 yrs of service will get $50,000 cash, a $25,000 voucher for a new car and six months of paid health insurance. And that is the LEAST generous package. HUH??? They are asking us to buy new cars for the folks who have been churning out cr@p that no one want to buy?? Good morning, comrades, it’s a new day and I don’t like it.

  16. John says:

    I cut off, for example chase holds a lot of gm and chrysler bonds off balance sheet as they are hedged via cds, GM is so big the people who wrote the cds on gm can’t pay out so chase would have to bring these back on balance sheet as worthless. Massive hit to stock price.

  17. Outofstater says:

    #15 You know what, John, at this point I just don’t care. Let them fail. Actions have consequences or they should, anyway. The freedom of capitalism also includes the freedom to fail. The car companies have been empty shells for decades. If they can’t make it in the marketplace, they should go away.

  18. grim says:

    From the Star Ledger:

    Avis cuts 700 jobs as car rentals slow

    Avis Budget Group this morning reduced its profit outlook for the year and said it will cut 700 jobs.

    The Parsippany car rental company said it expects to report a loss of $1 billion to $1.2 billion when it reports third-quarter results on Monday. The company also said it expects earnings and sales for the full year to be “significantly lower” than previous estimates, as more people reduce travel and rent fewer cars.

  19. HEHEHE says:

    Sorry, no rally until Nov 3. Just a Hiccup.

  20. Drew says:

    Any one know if Oritani Bank is sound?
    They have a 5 month @ 3.9% cd.

  21. Outofstater says:

    #16 Thanks John but I am so sick of all this tap dancing around the balance sheets. If the people who wrote the cds on GM can’t pay out then they can’t pay out. If the bonds are worthless, they are worthless. You might as well touch up your x-rays after a car accident and pretend that your bones really aren’t crushed — til you try to walk.

  22. grim says:

    They have a 5 month @ 3.9% cd.

    Here is a higher paying option:

    Hudson City – 4m 3.92%/4% apy.

    And if you want a longer term:

    Valley National – 9m/12m/18m 3.92%/4% apy.

  23. Drew says:

    Here is a higher paying option:

    Hudson City – 4m 3.92%/4% apy.

    And if you want a longer term:

    Valley National – 9m/12m/18m 3.92%/4% apy.

    Vally National doing ok?

  24. 3b says:

    #14 John:Once they get their next statement they will loosen up their pursestrings. Rally ON

    And than what?? ALl is well??

  25. BC Bob says:

    “And than what?? ALl is well??”

    3b,

    Then you short the rally. Give it time to play out first.

  26. Stu says:

    Markets will rally today, but not for 1000 points. 600 points is where I am betting. There is just too much pressure to sell on every bear market rally. Trading range will hold. Of course, over the next 3 trading days, everyone and their mother on the media side of Wall Street will be crossing their fingers and calling yesterday the new bottom.

    Trading range of 7.5 to 10 will hold for the next 6 months. I know the range is wide, but volatility is the name of the game when nearing market bottoms. Figure we’ll hang right around the 8750 mark with occasional pops up and down based on economic data.

    Of course, these are all complete guesses as I don’t believe in market timing or day trading.

  27. Clotpoll says:

    Case-Shiller: 18% decline.

  28. Clotpoll says:

    Short this idiot rally, just like the one-hour wonders that have come over the past few weeks. The Dow could open up 200 points and lose it by 11 AM. If it doesn’t, it’ll be gone by tomorrow.

    BC pegged it when he said Vi@gra lasts longer than a rally these days.

    The elements that are going to blow everything to smithereens aren’t in the Dow or Nas. They’re somewhere in Spain, Hungary or the Ukraine. We can’t control those, and we can’t guess or game when they might detonate. But, detonate they will.

  29. BC Bob says:

    Clot [29],

    It started with currencies, Yen carry, and will end with currencies. Enjoy the war.

  30. Cindy says:

    http://seekingalpha.com/article/102315-on-rescuing-homeowners-undergoing-foreclosure?source=email

    “On Rescuing Homeowners Undergoing Foreclosure”

    Markham Lee points out the obvious – Why are we trying to keep folks in homes that they are unable to pay for on a month- to month- basis – given their incomes?

    “Considering the factors that are driving foreclosures, how (pray tell) can you legislate, modify, etc., the problem away without giving out a straight out subsidy to enable people to afford things that are beyond their means?”

    “Simple: You can’t.”

    “The goal(s) of people who want to help those facing foreclosure shouldn’t be to help them stay in homes they can’t afford, it should be to mitigate the impact of the situation, and help them get into a sustainable living situation.”

  31. chicagofinance says:

    SG Says:
    October 28th, 2008 at 8:46 am
    Chinese Yuan the Worlds New Reserve Currency?

    Shail: you advocating for the kettle award?

  32. grim says:

    Case Shiller is ugly

  33. Sean says:

    re: #10 – Let’s make a deal down in DC and now it’s time to jettison the retirees.

    “The U.S. government is also being asked to provide support for the GM-Chrysler merger by taking over some $3 billion in pension obligations.”

    Colonel Klink is from Illionios is he not? There are allot of UAW plants there. Supposedly he is against the bailout of the automakers, sounds like a bait and switch to me.

    Next up are the monolines, by the time thery are done there will be about 2 cents left for mortgage refinance.

  34. Cindy says:

    At 32 – THIS is what we see here – THIS is what should happen.

    Let the folks with money buy the 40%-50% off foreclosures….

    The folks who lost their houses – RENT.

    Done deal…

  35. SG says:

    Shail: you advocating for the kettle award?

    In Long run yes. I would say US Govt should also diversify and get some Yuans. May be advocate merger of GM with Chinese Cherry. That’s better use of money compared to what King Henry is doing.

  36. Sean says:

    re; # 24 – What are we going to trade in so China can cash in their foreign reserves, will the Messaiah sell them Hawaii or something?

  37. BC Bob says:

    “Markham Lee points out the obvious – Why are we trying to keep folks in homes that they are unable to pay for on a month- to month- basis – given their incomes?”

    Cindy,

    Because they are attempting to prolong the inevitable. They are simply hoping to keep banks alive and praying that the destruction in home values will cease; Dead Man Walking.

    A better option would be to release the prisoners, get them back into a situation that they can actually afford and get them spending $ again. In a true market, price discovery would then be realized and the homes would be inhabited by those who had the means.

    Then again, in a true market all the IB’s would have been pulverized.

  38. SG says:

    From DB report earlier,

    For every additional 10% drop in Home prices,

    Household wealth drops by $2 trillion
    Consumer Spending reduces by 1% (wealth effect)
    Financial sector loss $50 – $100 billion (due to foreclosures)
    Tight credit conditions reduce GDP by 1/4 to 1/2%

    With Case-Shiller reporting 17% drop in 2008, you pretty much double above numbers. The housing is set to drop at least another 20% in 2009, so household wealth would be back to $8 trillion or so, down from $12 trillion. I am just happy to sit on sidelines and listen to all the music played by Gubmint.

  39. SG says:

    IBM sold their PC division to Lenovo, we can sell GM to someone in China. In reality, that would be better rescue package.

  40. Clotpoll says:

    BC (31)-

    Being able to price your Hungarian or Ukrainian mortgage in yen is my #1 candidate to be the ultimate detonator.

    Surreal. Bizarre. And true.

  41. BC Bob says:

    SG [40],

    Yes, it’s a bull market in wealth destruction.

  42. Clotpoll says:

    Cindy (36)-

    In your neck of the woods, we see the beginnings of a market comeback…because the markets have been allowed to clear and the fundamentals are bringing in buyers. All the sideshows, bailouts and gimmicks have been exposed to be no more than that.

    Why can’t anybody in charge see this?

  43. Essex says:

    41…Good point…(though with IBM it was notebooks) which was by all accounts a decent business….PC’s were a dismal failure for IBM from day one. Ironic, yes?

  44. Clotpoll says:

    BC (43)-

    Haven’t you heard? Wealth is sinful.

  45. Clotpoll says:

    BC (39)-

    Yeah, but then we wouldn’t get the eventual treat of doing the drive-thru at Goldman Sachs…or having a GS ATM card:

    “Then again, in a true market all the IB’s would have been pulverized.”

  46. Cindy says:

    (44) Clot – That is all I am saying – When the prices were allowed to drop…. We have a huge foreclosure rate plus 10% unemployment – But people adjust. They now rent, find a new job that may pay less…life goes on.

    The builders cut back as well and offered huge incentives to lower their inventory. Why ISN’T someone looking at our state? Sure, we have our problems too but at least our R/E solutions have been working.

  47. Clotpoll says:

    What kind of toasters will GS give away?

  48. Clotpoll says:

    Cindy (48)-

    Mr. Market always wins.

  49. Stu says:

    Clot…Surprised by the minimal damage in SRS at the open? Couldn’t help but notice the additional carnage in retail RE along route 22 west on my way to work this morning. At this point, there appears to be at least one vacant store in every strip location. As I turn my way onto Springfield/Liberty Ave, half of the commercial warehouses are completely vacant. The gator is sick of me pointing out every for lease or space available sign I notice on the road. I also like to point out the empty billboards as well.

  50. Cindy says:

    (50) Clot –
    “Mr. Market always wins.”

    Well then let’s get on with the show!

  51. Cindy says:

    Lower your prices New Jersey – Clot and Grim will sell your places for you…

  52. 3b says:

    #48 cindy: California’s RE solution will send freezing shivers down the backs of most NYC metro area home owners.

    I for on believe that much of this bailout for homeowners is just feel good talk.

    I believe Klink and Bergabe are perfecctly aware that what is happening in Cal must happen in many other areas of the country including the NYC metro area.

    Keeping the walking dead in hosues they cannot afford acccimplishes nothing. Having people buy homes that they can comfortably afford, and have cash left over to upgrade and improve those homes will put money back into the economy.

  53. grim says:

    From CNN/Money:

    Case-Shiller: Another record plunge in home prices

    Home prices fell in August for the 25th consecutive month and prices in 10 major markets plunged a record 17.7% year over year, according to a key index of real estate values released Tuesday.

    The S&P Case-Shiller Home Price 10-city index dropped 1.1% for the month. The 20-city index recorded a record year-over-year decline of 16.6% with a 1% fall in August.

    The indexes compare the sale prices of the same homes each year to determine price trends and are considered one of the most accurate home price gauges.

  54. Clotpoll says:

    Stu (51)-

    No surprise. Every time you pass those places, just remember they were financed pretty much the same way:

    – Non-recourse.

    – Based on assumptions of 90%+ occupancy.

    – Based on assumptions of high rents and no concessions to tenants.

    All the commercial RE guys are out there, whistling past the graveyard, proclaiming to the world that the underwriting quality in commercial RE was superior to residential over the past five years.

    Let’s see what their story is when they finally get the fact that Christmas has been cancelled.

    SRS has lots of room to run. We haven’t even gotten the first wave of foreclosures yet.

  55. Clotpoll says:

    In my area, I can’t even give away office space to a charity.

  56. Cindy says:

    (54)3b
    “Keeping the walking dead in houses they cannot afford accomplishes nothing. Having people buy homes that they can comfortably afford, and have cash left over to upgrade and improve those homes will put money back into the economy.”

    Absolutely –

    And they will have money for a meal out now and then, a Christmas present or two, etc., etc.

    Jobs – Oh ma gosh!

    It ALL begins with people living in houses they can afford on a month-to-month basis…

    Let’s get on with the show..

  57. Clotpoll says:

    Stu-

    SKF also unbelievably resilient this AM.

  58. kettle1 says:

    This baby is getting ready to go supercritical……. The IMF printing money is very very bad for us wage slaves……..

    IMF Nuclear Option: “Print Money”

    IMF may need to “print money” as crisis spreads.

    The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.

    The Fund is already close to committing a quarter of its $200bn (£130bn) reserve chest, with a loans to Iceland ($2bn), Ukraine ($16.5bn), and talks underway with Pakistan ($14.5bn), Hungary ($10bn), as well as Belarus and Serbia.

    Neil Schering, emerging market strategist at Capital Economics, said the IMF’s work in the great arc of countries from the Baltic states to Turkey is only just beginning. “When you tot up the countries across the region with external funding needs, you get to $500bn or $600bn very quickly, and that blows the IMF out of the water.

    The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA’ bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.

    The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world’s central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3269669/IMF-may-need-to-print-money-as-crisis-spreads.html

  59. Clotpoll says:

    vodka (60)-

    Makes Ben and his helicopter look quaint.

    We are all Zimbabweans.

  60. grim says:

    From MarketWatch:

    Recession could be a long one, says Volcker

    Former Federal Reserve Chairman Paul Volcker said Monday there “can’t be any doubt we’re in a recession” and that, while he did not know how deep the economic downturn would be, “I suspect it will be rather long before we get back to robust growth.”

    Volcker, who headed the Federal Reserve from 1979 to 1987 and is an advisor to presidential candidate Sen. Barack Obama, told members of the Urban Land Institute that after 30 years in government, he has “never seen anything as complicated and difficult” as the current economic and financial crisis.

    But he said he was not “suggesting at all” that the situation is comparable to the Great Depression of the 1930s.

    “We have had massive, massive government intervention in ways that are beyond my imagination,” he said. “Confidence ought to have returned [to the financial system] but confidence has not returned. We still have a clogging of the flow of credit. This is not a technical problem, but it’s a serious problem, one of confidence and trust.”

    “It’s shocking that major banks don’t really want to trade with one another for more than a day or two. And for all of you — who want to build our cities, our infrastructure and our homes — that means you’re facing a substantial squeeze,” Volcker said.

    “The government has put its resources behind all this, and people are still not confident. And that has to change,” he said.

  61. Rich says:

    16% from a year ago is not that bad. When it is all done, we will be 35-40% off the peek. Thats were we should be.

  62. rhymingrealtor says:

    This may have been asked before, but I have missed alot on this blog.

    In very simple terms, why would putting a floor under housing be important/help? Won’t that keep homes unaffordable? Did’nt we get into this mess because they were unaffordable, and to keep them selling funny mortgages were used? If you go to anytown USA and look up the median income and then the median house price – they don’t jive. Are they supposed to? In my town the median home is $350,000 and the median income is 70,000 ??
    So when M*ca*n says that’s one of the more inmportant points of his econnomic plan – I question why.

    Thanks
    KL

  63. Frank says:

    S&P/Case-Shiller for New York, NY for August was -0.2%. You call this a decline??? I call it a rounding error. Where’s the recession? I am still looking for it.

  64. Clotpoll says:

    grim (62)-

    Confidence? Why? The architects of all this are liars and thieves.

  65. Clotpoll says:

    Frank (65)-

    The biggest recession is between your ears.

    Do you have some sort of parasite sucking on your brain stem?

  66. grim says:

    From Bloomberg:

    Baltic Dry Index Drops Below 1,000 for First Time in Six Years

    The Baltic Dry Index, watched by banks including UBS AG as an economic indicator, fell below 1,000 for the first time in six years as credit turmoil curbed traders’ ability to buy cargoes and shipowners threatened to shun orders.

    The index, a measure of commodity shipping costs, fell 66 points, or 6.3 percent, to 982 points, the lowest since Aug. 8, 2002. The gauge has dropped 89 percent this year, driving down the combined market capitalization of the 12-member Bloomberg Dry Ships Index, led by Athens-based Diana Shipping Inc., to $5.5 billion from $32 billion a year ago.

    “The credit crunch has spilled over to trade,” Jon Windham, a Hong Kong-based analyst with Macquarie Bank Ltd., said in an interview yesterday. “People will start anchoring ships.”

  67. Frank says:

    “The architects of all this are liars and thieves.”

    Real-estate agents are thieves and liars.

  68. skep-tic says:

    so NYC case-schiller only down 6.9% YoY (see data link below). I think this means we are due for a substantial drop in the next 6-9 months.

    http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html

  69. kettle1 says:

    SL

    From last night about the Amero…..

    If we want to play this scenario game then it could work out in the following manner:

    1. The US defaults on all foreign debt.
    2. The US loses access to all foreign lending facilities as a result and the dollar becomes worthless.
    3. The US will need a currency that is accepted globally in order to conduct trade with. The options are a new currency that is accepted globally or conduct trade transactions in gold.
    4. The US will not go the gold route for many reasons. that leaves the US needing a new currency. but just creating dollar 2.o will not gain global acceptance.
    5. By forming a joint north american currency with canada and and mexico ( the Amero) the currency represents a massive about of labor and natural resources that cannot be ignored globally and will be accepted.
    6. The US may now access international trade markets with a respected currency and you see structural changes in the the “north american union” similar to what you saw in europe when the EU formed. this will be necessary in order to get all three countries (US CA Mex) on board with the idea. i.e. the US sells weapons and tech, canada sells natural resources, and mexico has cheap labor.

    not saying this is going to happen, but is one scenario. The core issue is that when the US defaults (like clot said its WHEN not if)it must find some way to trade again with a globally accepted currency. there are very few options and the Amero is one of them.

  70. 3b says:

    #65 Frank:Where’s the recession? I am still looking for it.

    You better hope it is not looking for you.

  71. Frank says:

    Make that anyone that charges 6% for few hours of work is a thief.

  72. Shore Guy says:

    “Home prices fell in August for the 25th consecutive month and prices in 10 major markets plunged a record 17.7% year over year, according to a key index of real estate values released Tuesday”

    So, if plunging home prices is at the root of this problem (if only because people lacked 20% down and any money in the bank to deal with life’s little ups and downs), how can any reasonable investor conclude that this is the time to bid-up share prices? Homeowner assets are down, debt is up, layoffs are growing, consumers are pulling back, and the economy is, what, 70% based on consumer spending?

    It appears to this uninformed citizen that the Dow is up because people want it to be up and want the bad news to end — not because thre is any underlying real positive news.

  73. Clotpoll says:

    Frank (69)-

    Most of that set are wearing orange and blue smocks now.

    Make me a latte.

  74. grim says:

    S&P/Case-Shiller for New York, NY for August was -0.2%. You call this a decline??? I call it a rounding error. Where’s the recession? I am still looking for it.

    Down 11% from peak and still falling.

  75. Clotpoll says:

    Frank-

    What’s your firm’s strategy today? Long croissants?

  76. Shore Guy says:

    “so NYC case-schiller only down 6.9% YoY”

    But this makes housing a good 10% less expensive than last year, for those with cash at the ready. Of course, those with ready cash may also see no particular reason to jump in since the trend is still downward, and those with cash did not get tha way making stupid decisions.

  77. Frank says:

    “I think this means we are due for a substantial drop in the next 6-9 months.”

    I don’t think so, I have seen many under-contract signs popping up around my neighborhood

  78. jamil says:

    say welcome to $40 oil. Even current prices pump at least $300B to the economy, much more than the stimulus packages.

    “Crude oil prices could possibly fall to as low as $40/barrel, and as crude continues to lose value it may soon be oversold, Deutsche Bank chief energy analyst Adam Sieminski told an audience at a Washington think-tank Monday. “Just as we overshot with $140/b oil, we could undershoot with oil at $40/b,” Sieminski told attendees at the Johns Hopkins SAIS Global Energy and Environment Initiative. Crude oil prices are down more than 50% since reaching an intraday record high of $147.27/b on July 11. NYMEX December oil futures Monday fell as low as $61.30/b earlier in the day, “

  79. 3b says:

    #70 skeptic: I agree. Much of what has happened to affect the NYC metro real estate market has occurred since this past August, and is not yet fully reflected in the real estate market here.

  80. Shore Guy says:

    “Down 11% from peak and still falling.”

    Taking into account inflation, this is, what, a %16-18% decline?

  81. grim says:

    Frank,

    Most of my clients are in the $1m+ range.

    They are all sidelined.

    I’ve just saved them each over $110,000.

    You don’t think I’m worth my commission?

  82. Frank says:

    “What’s your firm’s strategy today? Long croissants?”

    At least we charge less than 6% for some work, unlike you.

  83. Alrex1 says:

    Frank Says:
    October 28th, 2008 at 9:59 am
    S&P/Case-Shiller for New York, NY for August was -0.2%. You call this a decline??? I call it a rounding error. Where’s the recession? I am still looking for it.

    Franjk Has a point here. We did not see almost any drops in GOOD towns in NJ.

    not so good towns and really bad towns like Newark are dropping like a rock, but in better areas not so much.

    I am nto saying it will not happen here but so far it seems to be not moving.

    We also for some reason do not have thousands of foreclosures in better towns – may be 1-2.

    I think you can hope that this will happen, but so far I just do not see it, and quite clearly I do not understand how people can afford all thouse houses which still sell at high prices. But I guess it is NJ and everybody who buys a hosue here is rich.

  84. Clotpoll says:

    Frank (80)-

    “I have seen many under-contract signs popping up around my neighborhood”

    Any sale is a good sale, right?

    Is this what they say at your firm when they have to dump gold at fire-sale prices?

  85. grim says:

    What’s your firm’s strategy today? Long croissants?

    Long jelly, its really all about the spread.

  86. Shore Guy says:

    “You don’t think I’m worth my commission?”

    Isn’t that what Spitzer’s gal pal said?

  87. Cindy says:

    Frank, Frank, Frank…

    We need the real estate agents to sell the houses at a reasonable price so we can get on with the business of living our day-to-day lives instead of wondering (daily) what the next shoe to drop will be.

    So…It would be very helpful if those wishing to sell would drop their prices (those who have decided to stay should pull their listings)…AND it would be helpful if the foreclosures would be allowed to accelerate so those with money could buy them and rent them out.

    These are good things – and they require realtors.

  88. skep-tic says:

    re: the auto industry: yes, the people running these firms were dumb*sses. so were the union bosses. Then again, this industry is one of the crown jewels of our economy. once it goes, it will not be easily replaced. yes, there are lots of foreign countries that would love to get into the auto business, but is it really smart to increase the current account deficit by that much? U.S. definitely has an interest in maintaining a viable auto industry, but if we are going to save them, we should deunionize the operations and fire the top level management.

  89. Frank says:

    “Most of my clients are in the $1m+ range. ”

    That’s at least $50,000 to sell a house in few hours. That’s outrageous.

  90. Clotpoll says:

    Frank (85)-

    Based on some of the comments you make here, you’d be overpriced at 1%.

  91. 3b says:

    #80 Frank: Sure you are Frank Sure you are.

    I am still waiting for the proof that you were going to provide that house prices in your area have increased 10% since 2005.

    You did not provide it. You did make a lame attempt to provide me with a listing that had an ASKING price supposedly 10% above 2005, but you were not able to provide even one instance (closed sale price) that would support your assertion that prices in your neighborhood have increased 10% over 2005.

    Now we are to believe that there are under contract signs all over your neighborhood.

  92. Clotpoll says:

    Frank (92)-

    I’d guess you’re surrounded by people who can lose 50K in two seconds…

  93. Clotpoll says:

    grim (84)-

    I have a list of 1M+ for owner-occ and investments that’s as long as my arm.

    Sitting patiently on some very dry powder.

    Waiting for that phone call.

    Not time yet.

  94. Cindy says:

    (Alrex1) 86

    Unfortunately – Even though we have seen huge drops here – it does not affect all areas. Clot has said before – just wait – it will. But that isn’t what I have seen so far.

    The percentage of bad loans seems to be localized in certain areas. Unless one is faced with job loss, illness etc. they pretty much are staying put.

    Ooops – late for work!

  95. Alrex1 says:

    So…It would be very helpful if those wishing to sell would drop their prices (those who have decided to stay should pull their listings)…AND it would be helpful if the foreclosures would be allowed to accelerate so those with money could buy them and rent them out.

    To be viable as rental houses (positive cash flow) most houses listed in NJ wold have to drop their price by 50%.

    (not paper positive cash floe, but real life which should take into account rents, vacant time, maintainance, increasinf taxes).

  96. still_looking says:

    kettle, 71

    ugh…I’ve developed insomnia over this.

    Armageddonists aside, are we really doomed?

    Why would Canada and Mexico ever agree to this?

    Our country has been in ridiculous amounts of debt before (see I.O.U.S.A) and eventually recovered. Is it really that impossible for us to recover again?

    sl

  97. Shore Guy says:

    From Yahoo News, something that should make retailers cringe:

    “WASHINGTON – A private research group says consumer confidence in the U.S. economy plunged in October to its lowest in 41 years, as stock markets dropped sharply and companies began laying off workers.
    The Conference Board reported Tuesday that the consumer confidence index fell to 38, down from a revised 61.4 in September and significantly below analysts’ expectations of 52.
    That’s the lowest level for the index since the Conference Board began tracking consumer sentiment in 1967, and the third-steepest drop”

    snip

  98. 3b says:

    #86 alex; Well house prices fell before in North Jersey, after the last boom and bust.

    I ought to know, becasue I bought at the peak and sold 10 years later for less than I paid for it. And I live in a so called blue ribbon train town in “prestigious” Bergen County.

    So prices did drop than, and the landscape was not nearly as bad as it is today, so there is no reason to believe they will not continue to drop now.

    Plus much has happened in our area since August of this year, that is not yet reflected in the real estate market here.

    As far as foreclosures take a look at the Bergen Co sheriff’s website lots of foreclosures listed in many of the affluent BC towns.

  99. Clotpoll says:

    sl (99)-

    Debt number not the issue. It’s the insane leverage and worldwide spread of the toxic fallout.

  100. hirono says:

    RE: rhymingrealtor #64

    Don’t know about the lack of discussion on this board, but I have also questioned the notion that home prices must be kept high.
    If recent buyers and refi -ers cant afford payments now, with the exotic products of the recent past, how can they afford to pay for a plain jane vanilla 30 yr fixed? And if a work out of the mortgage is one in which the term is extended to 40yrs to keep the payments down how does that help?
    For instance if you bought that 3br 1 bath ranch in Creskill for $650K in 2004-2006 with an ARM or interest option loan and cant afford it and the term changes to 40yrs and payments remain “affordable” what happens when the homeowner wants or needs to sell in the next 3-10 years? The principal hasn’t changed, and hasn’t been dented with the previous payments or the new worked out payments the homeowner still needs to cover the principal to close the deal. Where does that come from? Also the tightening of underwriting shrinks the pool of potential buyers of the overpriced real estate, the same market segment that was a component in the bubble run up in prices.
    Affordability is key, and in my opinion home values are not supported incomes in many parts of Northern NJ (where I am familiar and have worked). Values can be supported by the loose lending standards that we have recently had, and look where that has gotten us.
    A politician takes no risk in saying that home values must be maintained, it must certainly be a strong argument to any one who has bought recently or refi -ed at high prices. But when one looks rationally at that proposition he’s see’s either an ignorant politician or one who counts on the ignorance of the electorate.

  101. 3b says:

    #97 cindy: All areas will be affected, no areas will be spared. T.he more marginal areas decline first, but it spreads, from the lower end up, and from the upper end down

  102. grim says:

    …and worldwide spread of the toxic fallout.

    Let me guess, melamine in the jelly?

  103. Alrex1 says:

    Unfortunately – Even though we have seen huge drops here – it does not affect all areas. Clot has said before – just wait – it will. But that isn’t what I have seen so far.

    The percentage of bad loans seems to be localized in certain areas. Unless one is faced with job loss, illness etc. they pretty much are staying put.

    I am ok with wating, As a matter of fact I am looking outside of NJ, since my job is not wall-street related.

    I am just pissed that all we hear is people talking about FK, BK, mortgage relieve, prices falling and crushing people, and yet sellers are completelly unwilling to lower their prices. IN NJ right now seller who is willing to price lower than competition sells within a week. What market slow down?? and by lower than competition I do nto mean low. 5% lower it seems that it is wall it takes.

    I am nto talking about 1mil+ homes – as thouse houses are for Rich people. I am talking middle class homes capes, splits, ranches in 300-500 range. Notice I am saying 300-500 and that is a problemm there is almost nothing below in ANY town with good schools.

    While I can probably afford 300K home, I just do nto want to buy 1922 cape-cod with 50+ years ols electric, windows, old roof, pluming no insulation, pretty wall paper on the walls. Since when dump costs 300K??

    Thats why I will probably move back west next year. Housing stock there is newer and Cheaper – 250K in Denver buys you a nice home built in 1970-80, in decent neighbourhood.

    On the east costs we pay Huge premium in Price and Taxes and for what???

  104. still_looking says:

    http://www.bloomberg.com/apps/news?pid=20601093&sid=abtqKTf7odIo&refer=home

    Clot, Italian place for you, link above.

    Can you explain it to me?… I guess I’m just lost in trying to understand it.

    sl

  105. skep-tic says:

    as 3b said above, situation in the NYC area has gotten significantly worse since August. a lot of jobs have been cut since then and any hope for decent bonuses has been lost. I feel pretty confident that there will be a lot more job losses coming at the start of 2009 as well. none of this has been priced in to local RE

  106. grim says:

    While I can probably afford 300K home, I just do nto want to buy 1922 cape-cod with 50+ years ols electric, windows, old roof, pluming no insulation, pretty wall paper on the walls. Since when dump costs 300K??

    Given your example, you are probably paying $250,000 for the dirt and only $50,000 for the dump. Can’t expect stainless and granite for 50 grand.

    Although I agree, there is much more value at the higher-end of the scale right now.

  107. mneer says:

    Fun with regression:

    If you bought jan 2000, NY met area at $200K and were lucky to sell in June 2006, assuming average rates of market appreciation, you would have sold at $436K, a 12.05% CAGR. Had that same rate of growth continued through Aug 2008, your home would be at about $559K. However, given the declines your mkt value home today is worth $385K, still a prety solid 7.67% GAGR. Now, assuming that the trend of the last year continues through the end of 2009, the market value of your home would be forecasted to be $339K, still a 5.35% CAGR through Jan 2000 (not adjusted for inflation). Therefore, if I were to bid on a reasonably priced home today, I would automatically reduce my ask by 12% to capture the future decline.

    The way the markets are as of late, this approach may be optimistic. Any guesses on when prices are expected to bottom out?

  108. BC Bob says:

    Frank,

    You dolt. If you were really part of a hedge fund, you wouldn’t be discussing the topic of outrageous fees. Go back to the mall and start counting the dead bodies.

  109. skep-tic says:

    “The median age of completed but unsold new homes hit a record 9.1 months in September, up from the record 8.9 months a week earlier. The inventory of completed but unsold homes is only down to 170,000 from a peak of 199,000 in January. It will take a long time to work off that surplus unless sales pick up.”

    http://norris.blogs.nytimes.com/

  110. Clotpoll says:

    sl (107)-

    Damn you. One of my favorite places on Earth!

    Langhe white truffles are little golf balls of pleasure. Sorta the gastronomic equivalent of dafunk (except in a nice way). You hunt them with trained dogs and pigs.

    A little 1 oz truffle, shaved over anything hot, can fill the room with the best smell you will ever experience. Pair that up with some top Barolo or Barbaresco…wooh!

    Little scared of moving the family into this part of Italy, though. They are much more exposed to other Euro countries (Fiat, Olivetti, etc). Turin is a great city, though…and we’d get Juventus for the soccer.

  111. Clotpoll says:

    grim (113)-

    Oh, yeah. That’s gonna do wonders for the REITs.

  112. grim says:

    Raw data from S&P

    S&P Case Shiller Data – August (XLS)

    NY Metro Area Commutable
    March 2005 – 192.17
    June 2006 – 215.83 (peak)
    August 2008 – 192.84 (current)

    Decline from peak – 10.65% (nominal)
    Decline from peak – 17.6% (real – approximate)

  113. skep-tic says:

    #109

    “Given your example, you are probably paying $250,000 for the dirt and only $50,000 for the dump. Can’t expect stainless and granite for 50 grand.”

    that is a good point, grim, but of course the other side of that is that the land is massively overvalued as well. It is similar to how companies’ stock prices were being propped up by the private equity boom. House prices could only go so low (particularly starter houses) because a builder could come in and do a tear down. Well builders seem basically crippled right now, so I think that support is non-existant. Plus, I think there is a bit of a backlash re: teardowns at this point at the regulatory level. I would imagine it is much harder to get the necessary permits right now given the number of newly built houses that are sitting empty and even half built houses that have been abandoned mid project.

  114. Clotpoll says:

    SKF, SRS turn positive.

  115. Stu says:

    Frank’s Hedge Fund opens new satellite office for your investing needs.

    http://farm1.static.flickr.com/211/498694244_c7fab1f585.jpg

  116. Victorian says:

    HOV circling the drain? Might be the first builder to go BK.

  117. Clotpoll says:

    skep (117)-

    Would interject that the close-to-NYC areas may come out of this spin with tear-downs on almost a Tokyo-like level.

    There’s a lot of functionally-obsolete stuff that absolutely must be replaced. The underlying values of the best locations (even when we reach a nadir) argue well for rebuilding…even if the replacement structures reflect a planned obsolescence.

    Not everyone can handle the transit village model. There will have to be an alternate choice, other than a dilapidated, obsolete POS.

  118. grim says:

    From MarketWatch:

    Home prices fall record 16.6% in past year

    Home prices in 20 major U.S. cities dropped 1% in August compared with July and fell a record 16.6% from the previous year, according to the Case-Shiller home price index, published Tuesday by Standard & Poor’s.

    Prices have now fallen 20.3% from their peak in June 2006.

    Prices are “clearly nowhere near bottom yet,” wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics, who expects prices to fall 30% from the peak.

    “The downturn in residential real estate prices continued, with very few bright spots in the data,” said David Blitzer, chairman of the index committee at S&P.
    The 1% drop in August “may be the beginning of a renewed acceleration in the depreciation of U.S. house prices,” wrote Harm Bandholz, an economist for UniCredit Markets.

    Credit conditions tightened significantly and foreclosures mounted in September and October.

  119. DL says:

    “Bank of England Sees Bank Asset Losses at $2.8 Trillion.”
    http://www.cnbc.com/id/27412764

    Don’t you love it when a plan comes together?

  120. meter says:

    “Once the ING, HSBC on-line money market crowd see the new rates when they get their next statement they will loosen up their pursestrings.”

    Any buy what exactly – equities? Are you high? They could make the interest rate 0 and I still wouldn’t “invest” in the market right now.

  121. Imus says:

    Sorry if this was already mentioned, but did you see the guy who purchased the $400,000 seat license for the 2 best Jets season tickets – a mortgage broker! Such a joke…

  122. DL says:

    Ref 106. “While I can probably afford 300K home, I just do not want to buy 1922 cape-cod with 50+ years ols electric, windows, old roof, pluming no insulation, pretty wall paper on the walls. Since when dump costs 300K??”

    What I can afford and what I’m willing to pay are vastly different. When I started gauging the market last year in S. Jersey, the ranchers in the developments we were considering were priced at 359k and the homes I liked at 399k. Today, those same ranchers are still sitting on the market priced between 285k and 309k. The 399k houses are now at 359k. By next fall when we are ready to buy, I believe we will be able to get that (original) 399k house for 300k.

  123. skep-tic says:

    #121

    clot– I agree that there is a lot of obsolete housing in top areas. Maybe I am not seeing the whole picture, but it seems to me that prices still reflect some sort of builder speculation premium. Doing a tear down will make sense to me when the only people doing them are real buyers, not speculating builders. At least in my area, the speculative building continued into this summer.

  124. ben says:

    “Franjk Has a point here. We did not see almost any drops in GOOD towns in NJ.

    not so good towns and really bad towns like Newark are dropping like a rock, but in better areas not so much.

    I am nto saying it will not happen here but so far it seems to be not moving.

    We also for some reason do not have thousands of foreclosures in better towns – may be 1-2.

    I think you can hope that this will happen, but so far I just do not see it, and quite clearly I do not understand how people can afford all thouse houses which still sell at high prices. But I guess it is NJ and everybody who buys a hosue here is rich.”

    Alrex1, delayed reaction. NJ foreclosures are outpacing the national average now. A lot of NJ’s income came from Wall St., which only figured out that the country is in a recession last month. Now that they are all losing their jobs, you can watch NJ real estate wave bye bye as well. In California, it was the real estate fallout that caused the pain, because they were all involved in real estate. They were hurting even before the recession. In NY/NJ, it’s the recession that causes the housing fallout.

  125. Clotpoll says:

    Once again, Vi@gra lasts longer than today’s Dow rally.

  126. grim says:

    not so good towns and really bad towns like Newark are dropping like a rock, but in better areas not so much.

    I am nto saying it will not happen here but so far it seems to be not moving.

    We also for some reason do not have thousands of foreclosures in better towns – may be 1-2.

    Clot said something to this effect two years back:

    You aren’t going to get an colonial in Ridgewood for $300k.

    Sorry.

    That doesn’t mean prices aren’t falling, they are, falling hard in areas. Don’t bother waiting for armageddon though, you aren’t going to see home prices at 60 or 70% off. Heck, I don’t even think 40% off is likely in this area.

    My number was 30% off peak, and I’m still sticking to it.

    Unfortunately, for many, even 30% off peak is expensive. Perhaps you need to lower your standards?

  127. 3b says:

    #109 grim: As far as Bergen County goes just from looking at the njmls I can see that there are lots of houses in the 300-350 asking price range in towns like Fair Lawn and New Milford.

    There are even quite a few under 300K. (They all need work/updating of course) Now these are not the so called prestige blue ribbon towns, but the schools are good (although Fair Lawn is a train town). These price levels are probably back to 2003 levels, probably even lower.

    In surrounding so called more desireable towns like River Edge and Glen Rock, similar houses are asking 100k and more.

    At some point the decline in the lesser towns afffects the so called more desireable towns, especially when the asking price differential is 100K or more.

  128. BC Bob says:

    Frank’s hedge fund was buying because WB was buying. I wonder if Frank’s HF bought Goldman at $115, also?

  129. PGC says:

    #130 grim

    I would push it slightly further to 35%

  130. 3b says:

    #130 grim: No but you could probably get this S/L in Ridgewood for a little under 400K right now.

    http://www.njmls.com/cf/details.cfm?mls_number=2823120&id=999999

  131. 3b says:

    #130 grim: With all the fall out, I would not rule out 40% drop in our area, not at all.

  132. Shore Guy says:

    “seat license ”

    What a scam. I can’t believe that anyone would fall for this. The seats cost what the seats cost but, to say the seats are only “x” but first you have to spend 45x to buy the right to buy the seat is insane. Unless the “seat license” is good for each and every event held in the stadium, concerts, etc., and includes the cost of the admission to each and every event, the seat license is but a way to hide the true cost of the tickets.

  133. Stu says:

    I truly think that the reason the prices haven’t dropped as rapidly in the train towns as they have in the ghettos is due to subprime vs. prime. The option arms are just starting to reset and already the delinquency rate in prime is double what it was last year from 2ish to 4ish. Considering that the economy is much worse now than it was last year at this time, I would expect the delinquency rate to easily increase from the 4s to the 6s. Now add in the impact that a 500K loan default is vs. a 200K loan default to the banks financial pages and look out below. There are no subprime loans in train towns. There are a lot of option arms though. Until these prime loans start resetting in large quantities (middle of 2009 through 2011), the disparity between the size of the drop in home values from West Camden to Westfield will remain.

  134. grim says:

    #133 – IMHO, if you had to buy today, that isn’t a bad choice.

    Current asking of $439k is down from the original list of $518k.

    At asking, with an $88k down payment, a couple would need a combined income of $125k to afford that (with a conservative DTI of 28%).

    Its a nice house in a nice town that is affordable for a couple with each half bringing in $65k a year.

    I’ll admit, its not cheap, but its better than anything we’ve seen over the past 3 years.

  135. Stu says:

    We built the new Giants/Jets football stadium before the bonds were even paid off on the old one. Did we really need a new stadium? I suppose it was the greedy team owners who saw the potential for greater revenue from luxury boxes with so much of the expense of the stadium construction having been paid for with your taxes. So you, the fan, have just subsidized the corporations again and your reward is to be financially restricted to watching the home games on TV. But the greedy owners won’t stop there. The NFL network will go the paid subscription format so what you used to pay to attend the game, you will be paying to watch it from your couch in your living room. (Thank you George) But go ahead and make believe these team owners care what the team does on the field. As long as there are butts in the seats and people paying to watch it on TV, they are happy. Now you know why the Knicks suck! If you want to see them put a better team on the floor, then boycott the games.

  136. BC Bob says:

    3b [133],

    Not bad. We’re on our way.

  137. Shore Guy says:

    Stu,

    The only reason the owners can do this is beacuse people have bought into the notion that these sports matter. I love sports and have my education because of sports; however, sports are a nice, but unimportant, diversion. They are of little importance to the world, other than those who get exercise participating in them. Stadia employ few people and, have, as some studies I recall say, about the same economic impact on a metro area as a k-mart. The dollars spent there would, in the absence of a sports team, be spent on some other entertainment activity. The fleecing of taxpayers for stadium construction is just plain wrong.

    As I type this I keep knocking a large college football bowl ring on the keyboard.

  138. Alrex1 says:

    Clot said something to this effect two years back:

    You aren’t going to get an colonial in Ridgewood for $300k.

    Sorry.

    That doesn’t mean prices aren’t falling, they are, falling hard in areas. Don’t bother waiting for armageddon though, you aren’t going to see home prices at 60 or 70% off. Heck, I don’t even think 40% off is likely in this area.

    My number was 30% off peak, and I’m still sticking to it.

    Unfortunately, for many, even 30% off peak is expensive. Perhaps you need to lower your standards?

    I just noticed that I have changed my log-in name….. I guess I had auto-fill forms option enabled.

    Generally – I am not looking at NYC commuters towns, and my standards are not that high. I am “lowering my standard” by deciding to move out of NJ, IF I can get a job elsewhere cheaper. (with this economy it might be fun trying).

    By the wey – I hope you are right and priced will drop a bit more in NJ finally. What I see so far that In bad areas we do have over 30% price drops (I looked at the house in 2006 in P-way it was listed at 319, now listed at 185K as bank owned – But the Roof of a house have caved in Since – just to get you an Idea what houses I have looked at)

    P.S 30% off peak would mean 400K in 2006 -280K at the bottom. It is not here yet. If it will get to this point – I will buy.

    BUT, I would argue that we will not see 30% drop on Starter homes. We will see 30% drops on upscale homes, 600K-800 plus.
    But competition for starter homes here are at all times high.

  139. grim says:

    From the Record:

    Bankruptcy hits home in region

    Companies that own three apartment buildings in Westwood and one in River Vale, all headed by developer James J. Bovino, have filed for bankruptcy reorganization, claiming debts of up to $40 million.

    The buildings — The Madison, Coventry Square, and Stanford Court in Westwood, and Village on the Green in River Vale — contain more than 270 apartments. The filing occurred last week in U.S. Bankruptcy Court in Newark.

    Bovino, who is listed as CEO and president of each of the four companies, was CEO of Town & Country Developers Inc., which was picked by Fort Lee in 2004 as the developer of the 16-acre Centuria tract in that borough.

    The company bought the site near the George Washington Bridge for $45 million in 2003, and planned to build a $1 billion complex of apartment units, retail space and offices.

    But the borough severed its relationship with the developer in June after it failed to pay $870,000 in back taxes and make other payments.

    Bovino, and his attorney in the bankruptcy, Michael F. Rehill of Westwood, could not be reached for comment Monday.

    The secured creditors say they are owed $39.3 million, according to the papers, which the four companies dispute. The secured creditors are Investors Savings Bank of Short Hills, which is owed $24 million; Amboy National Bank of Old Bridge, which is owed $10.8 million; and PRIF 11 Centuria Holdings of Fort Lee, which is owed $4.5 million.

  140. BC Bob says:

    “Amboy National Bank of Old Bridge, which is owed $10.8 million”

    JB,

    Didn’t Kara stick them also?

  141. 3b says:

    #138 grim: Agreed. And it is in Ridgewood, which has always been considered a very good town.

  142. grim says:

    Not only Kara but Solomon Dwek as well.

    Surprised they are still standing.

  143. skep-tic says:

    I agree that 30% off peak sounds reasonable, although I think it is more likely now to overshoot this than to undershoot. I am actually seeing a somewhat different phenomenon in CT– the massive price cuts are coming from the top down due to all of the spec mansions that have been built in the area. Now, I am obviously not in the market for one of these, but the cuts on these places are so huge right now due to the inventory overhang that I think there is a trickle down effect. Brand new mansions with high end finishes are being offered for less per square foot than POS capes that haven’t been renovated in 40 yrs.

  144. jamil says:

    These price drops are certainly not happening in the towns I have been following. 3% price drop from all time peak price is hardly encouraging.

    Anyway, since my 401k will be confiscated after the election and tax rates raised, maybe it is better not to own a house here. Escaping the country is easier that way.

  145. 3b says:

    #142 Alex:BUT, I would argue that we will not see 30% drop on Starter homes. We will see 30% drops on upscale homes, 600K-800 plus.
    But competition for starter homes here are at all times high.

    I disagree. To get from the so called starter home to the upscale homes, you will have to see prices come down across the board. If the starter homes become affordable than the move up bueyrs can move to the more upscale homes.

    There are many starter homes in my town that are just sitting, and have been for months, couple that with incredibly high property taxes,and they remain unafforable,and will have to come down much more.

  146. Shore Guy says:

    http://news.bbc.co.uk/2/hi/business/7693682.stm

    US new home prices at 2004 level

    New homes in the US changed hands at their lowest price in four years during September, official figures showed.

    The median price of a new single-family home was $218,400 (£141,870) according to the US Commerce department.

    Sales were up 2.7% on the previous month, beating economists’ predictions, although total sales for the month were 33% below last year’s figures.

    snip

  147. Stu says:

    Anecdotally, the gator and I have been looking at weekly listings in these train towns from the middle of 2004 through today. Over the last few months we have received listings for homes that would have easily priced 10 to 20% higher in 2004 and would have gone for more due to the bidding wars that were commonplace back then. When we bought our multi, we figured we saved about $75,000 due to the fact that it was an estate sale and the survivors were both in a rush to sell and didn’t really need the money. They were not greedy at all and neither party had to pay RE commissions. Today the house is probably worth very close to what we brought it for. Maybe a little more since we made a number of improvements. The point I’m trying to make is that prices are indeed coming down. If you have a 20% D/P, good credit, no contingencies and are willing to search the listings (couple of hours a day), you can score a home for 25% off the peak no problem in this train towns. You will not get the best nicest house on the block, but you will get a very serviceable home perfect if you are a little handy. I’m not talking about a handyman special either.

    Honestly, withing the last month, we have found 4 houses in Montclair that were priced well below anything comparable in the prior 4 years. Two were on a premier road, North Mountain Avenue. All were walking distance to the train and none were over 550K. Next year, these will be in the 425 to 475 range. Just watch.

  148. Shore Guy says:

    Time for an Icelandic CD?

  149. grim says:

    Brand new mansions with high end finishes are being offered for less per square foot than POS capes that haven’t been renovated in 40 yrs.

    Agree, much more value in the high-end right now.

  150. Stu says:

    Ridgewood listing is a perfect example. This home would have been high 500’s in 2004/5.

  151. 3b says:

    #147 skeptic: When I bought at the peak, during the last bubble, and than wanted to sell a couple of years later, the best offer I got at the time was over 30% off the peak price that we had paid.

    We did not want to take that kind of haircut and elected to stay, sold 10 years later for $2500 less than we paid for it.

    It is my belief that things are much worse now or will be than they were in the early 90’s,and as such I believe we will could definitely see more than 30% off peak prices.

    Also you have to consider peoples different circumstances, such as job change, divorce, some one inherits a house etc.

    Those kinds of situations I believe would make those sellers much more inclined (all things considered) to drop their prices even more.

  152. Shore Guy says:

    Huh? Pandering S.O.B.

    http://www.cnbc.com/id/27418473

    “Republican presidential candidate John McCain told CNBC that the government’s top priority in the financial crisis should be on buying bad mortgages to keep Americans in their homes.

    “The administration is not doing what I think they should do, and that’s go in and buy out these bad mortgages, give people mortgages they can afford, stabilize home values and start them back up again,” McCain said in a live interview with his vice presidential running mate, Sarah Palin.”

    snip

  153. Shore Guy says:

    Huh? Pandering S.O.B.

    http://www.cnbc.com/id/27418473

    “Republican presidential candidate John Mc-Ca-in told CNBC that the government’s top priority in the financial crisis should be on buying bad mortgages to keep Americans in their homes.

    “The administration is not doing what I think they should do, and that’s go in and buy out these bad mortgages, give people mortgages they can afford, stabilize home values and start them back up again,” Mc-Ca-in said in a live interview with his vice presidential running mate, Sarah Palin.”

    snip

  154. 3b says:

    #152 stu: Agreed. Although as per grim’s example, how many people earning a combined 125k salary have 88k to out down on a house today?

  155. 3b says:

    #155 Shore:and start them back up again.

    Oh yeah, that is exactly what we need, to start them back up again.

  156. Shore Guy says:

    “keep Americans in their homes”

    THEIR homes? If it is not paid for, it is NOT THEIRS.

  157. Stu says:

    Shore(154):

    I think it’s sad that after the Couric interview, SP is not allowed to work alone without a script. I have not witnessed the chosen one or JB together once. This post is not meant to start up an argument, I just find it painful to watch the original maverick babysit due to his poor vetting.

  158. yikes says:

    October 28th, 2008 at 8:10 am

    rally hats on, 1% fed funds rate. Lets squeeze the FDIC passbook savings crowd like a pimple on a 16 year old fry cook.

    Once the ING, HSBC on-line money market crowd see the new rates when they get their next statement they will loosen up their pursestrings. Rally ON.

    I already see the $200 interest at the end of every month. Have for quite some time.

    I don’t care. I’ll invest in this country when we quit bailing people out.

  159. Shore Guy says:

    So, Stu and Gator put down a good sized DP, they sink $ into their place and housing prices drop. They are now about even, despite their prudence and investing $ to improve the property. They get NOTHING from Uncle Sam. Some schmuck buys with $0 down, pulls cash out a few times and agrees to a mortgage that leaves him overextended. __ and HE gets the help of the USG. This is just freaking wrong.

  160. grim says:

    Honestly, withing the last month, we have found 4 houses in Montclair that were priced well below anything comparable in the prior 4 years. Two were on a premier road, North Mountain Avenue. All were walking distance to the train and none were over 550K. Next year, these will be in the 425 to 475 range. Just watch.

    Stu,

    1 Greenview Way in the Fairway section is very nice, asking is $899k, down from $950k. MLS# 2583163 5br/4.1ba.

    Purchased for $650k in 2002, but this place would have easily gone for over a million in 2005.

  161. Rich In NNJ says:

    Check out the spread between average asking and average sold price in 2008 for Jan 1 – Oct 27

    Bergen County SFH, Condo, Twnhs, Co-op
    Year AvgList$ AvgSold$ Med$ #Sold #U/C

    2004 $513,851 $500,762 $410,000 8,647 9,480
    2005 $585,525 $571,548 $470,000 8,817 9,494
    2006 $653,239 $606,138 $477,000 7,139 8,142
    2007 $642,088 $594,533 $475,000 6,958 7,701
    2008 $644,169 $580,831 $450,000 5,191 6,075

  162. Shore Guy says:

    “I have not witnessed the chosen one or JB together once. ”

    THat is because they hate each other.

    “babysit due to his poor vetting”

    Kathleen Parker would have us believe it is because he is smitten with her.

  163. Stu says:

    3b(155),

    “how many people earning a combined 125k salary have 88k to out down on a house today?”

    But they should. No one in NJ should even own a home without close to 88K in the bank for a rainy day.

    I guess looking at the silver lining in all this, W may have inadvertantly brought back the need to focus on good family values. Wasn’t that what he ran on back in 2000?

  164. 3b says:

    Below is an example in River Edge of a house that I am almost positive (grim or richnj) could confirm for sure, that sold for 360k, in 2006.

    The reason I remember is that I was shocked that this POS Colonial? on Kinderkamack Rd would sell for so much.

    Well now here it is with it’s asking price reduced to 250K, over 30% less than what it sold for. (short sale?) If it sells I would think the final sales price could be well under 200k.

    http://www.njmls.com/cf/search.cfm?&thrshld=true

  165. grim says:

    Check out the spread between average asking and average sold price in 2008 for Jan 1 – Oct 27

    Wide bid/ask spreads aren’t a sign of a healthy market.

  166. 3b says:

    #165 Stu:But they should. No one in NJ should even own a home without close to 88K in the bank for a rainy day.

    I agree, but the reality is they do not. In this example they would have to have the 88k to put down, plus another 88k in savings? I believe that te overwhelming majortiy of people in most middle class towns would not meet that standarrd.

  167. Shore Guy says:

    3b link does not work.

  168. Sean says:

    re: #71 Kettle1 – Did you read EJ’s latest select article over on iTulip?

    If you do not have access email me at seanm123@yahoo.com and I will send over a copy.

  169. skep-tic says:

    #162

    great data, thanks Rich.

    so if you are intent on buying, it seems reasonable to start bidding at 15% off ask, then probably end up 10-12% off

  170. Shore Guy says:

    bid ask,,

    It is interesting, one may argue as to whether prices have come down, they have certainly stopped advancing. Nonetheless, the asking prices clearly show that sellers are not yet been convinced that times have changed.

  171. Stu says:

    3B,

    The reality is true. Now you know why the high end homes are coming down in price more quickly than the low end homes. No one in the middle class can afford the high-end homes.

  172. daddyo says:

    If people in NJ really need $88K DP and $88K in the bank for a $430K house, I think housing prices have a lot lower to fall than 30%.

  173. kettle1 says:

    SL

    ugh…I’ve developed insomnia over this.
    dont, manage your money effectively and be awrae of potential turmoil. prepare as you see fit.

    Armageddonists aside, are we really doomed?
    This is not armageddon.

    Thinks will be messy and ugly for a bit but will settle down in time. What we settle to will be substantially different from where we are now, but people will still live their lives day to day.

    Why would Canada and Mexico ever agree to this?
    It would be very much in the interests of corporation but probably not in the interest of individual citizens. who runs the government now, citizens or corporations.

    Its still just speculation, but not entirely outside of the realm of possibility.

    Our country has been in ridiculous amounts of debt before (see I.O.U.S.A) and eventually recovered. Is it really that impossible for us to recover again?
    Historically we have never owed so much money to foreign nations. It is completely different to owe money to foreign interests as opposed to your own citizens. In WWII the US gov owed 120% of GDP but almost entirely to the US public. Now most of it is to foreign states.

    The measures that would be needed for us to recover are severe but possible. However, i cant think of any nation in history that has survived the level of debt the us has taken on.

  174. grim says:

    #162 deserves its own post really

  175. Shore Guy says:

    “are not yet been ”

    yeesh. must not post at traffic lights.

  176. Shore Guy says:

    “Historically we have never owed so much money to foreign nations.”

    AND, in the past, I do not believe that at the same time the USG was in such debt that such a largre percentage of citizens werew also overextended.

  177. yikes says:

    # BC Bob Says:
    October 28th, 2008 at 9:09 am

    Clot [29],

    It started with currencies, Yen carry, and will end with currencies. Enjoy the war.

    Why isn’t CNBC discussing this? Why aren’t they mentioning the carry trade and Wantanabe?

  178. Shore Guy says:

    “high end homes are coming down in price more quickly than the low end homes”

    I have been in a fair number of “high-end homes” over the years and it is amazing how many of them are just HUGE. That is it, just BIG. So many of them lack any scale to make them livable. Big they are, but soulless, so to speak. AND, very often poorly laid out with oddl;y-positioned “bonus rooms.” I would not be at all surprised to see many of the neighborhoods with HUGE high-end-houses turned into multi-family rentals.

    FOr Mrs. Shore and me, the sweet spot in home sizes is 3,000-3,500 sq. ft. It provides enough room to give everyone space, room for reasonable entertaining, and yet not so big that one starts feeling like a conference center or hotel lobby.

  179. 3b says:

    #161 shore:This is just freaking wrong.

    Exactly. That is why people need to bid acccordingly if they are out looking to buy next Spring. You need to bid lower as an insurance premium.

  180. 3b says:

    #172 shore:that sellers are not yet been convinced that times have changed.

    They will be.

  181. Shore Guy says:

    Is this how the Fed injects capital into the system?

    http://www.cnbc.com/id/27067581?slide=6

  182. Shore Guy says:

    “people need to bid acccordingly ”

    Or not bid at all. I wonder what percentage of people jumping in right now can sustain a 10-20% decline in current values.

  183. Shore Guy says:

    That link just takes one to the front page of the site. If you clear your cache and click it, you will see.

  184. 3b says:

    #171 shore: Sorry for whatever reason, the link is not working. It is njmls# 2834362.

    Perhaps grim or Rich can provide a link if they have time.

  185. BC Bob says:

    WASHINGTON (MarketWatch) — Wounded by the financial crisis, U.S. consumer confidence plunged in October, reaching an all-time low, the Conference Board reported Tuesday. The October consumer confidence index fell to 38 from an upwardly revised September reading of 61.4. Economists surveyed by MarketWatch had expected an October reading of 52. Expectations turned “significantly more pessimistic,” with the percentage of consumers expecting business conditions to worsen over the next six months rising to 36.6% from 21%, and those expecting fewer jobs rising to 41.5% from 26.9%.

  186. 3b says:

    #186 shore; Much as some people will say that a house is your home, and a place to live,and all the rest.

    I cannot imagine that anyone who say paid 500k for a house earlier year, only to find out now it is worth 450k can be feeling very good.

  187. still_looking says:

    177

    Thanks, Ket.

    I usually have a better outlook than lately — and can keep perspective. It’s just been a bad year for us, so it’s all magnified.

    Too much personal stuff that is just hammering us. It’ll get better. Eventually.

    Thanks for your explanation at 177.

    At 3 o’clock this morning, things were feeling really, well….for lack of a better word: grim.

    Now off to another soulless night in the misery pit known as my ER.

    If anyone is interested…. you can’t believe how many newly unemployed, uninsured, undocumented and unhealthy people I am seeing on a daily/nightly basis.

    And my ER is in a good zip code….

    sl

  188. NJGator says:

    Shore 163 – Maybe a more fair bailout would be to exclude anyone who put zero down or took a cash out of any amount. Not that I think there should be a bailout, but at least that would be slightly less egregious.

  189. Frank says:

    “Check out the spread between average asking and average sold price in 2008 for Jan 1 – Oct 27”

    Are you telling me that homes are still selling for $580,831 in Bergen County???
    WOW, where’s the recession??? According to Clotpoll they are worth $0.0 after RE commission.

  190. NJGator says:

    Rhymingrealtor – I got another peek at the beautiful Harrison Bridge Plaza condos from the train this morning. Wouldn’t ya know it, but that 0% down financing sign had a Countrywide logo on it. What a surprise!

  191. NJGator says:

    164 Grim – Love The Fairway! I would take a second job bagging groceries at Shoprite to pay the taxes to live there and be Stephen Colbert’s neighbor.

    My recent listings have shown homes on North Mountain, Highland and Upper Mountain Ave all below comps and 2006 assessment.

    The less glamourous multis that I have been seeing have been coming in priced at about 100k below assessment – even if they are on quality streets.

  192. SG says:


    Stocks: The Meltdown and the Media

    Could the volume—and tone—of TV, Web, and print coverage of the market’s gyrations actually be making things worse.

  193. Shore Guy says:

    “fair bailout”

    Perhaps one can offer assistance to people who reduced their principal to at least the level indicated by the am schedule for original mortgage they took out on the property.

  194. Rich In NNJ says:

    Frank (195),

    You’re either kidding or you really don’t have a clue.

  195. 3b says:

    #198 SG: Nobody complained when it was up, up,and away!!!So is the media’s job to cheer lead good news, down play bad news??

  196. 3b says:

    #20) Rich: regarding an earlier psot I made, can you check the sales history on this listing
    njmls# 2834362. Thanks as always.

  197. Shore Guy says:

    In talking with various folks abouth their business and the people whth whom they do business, I get the feeling that there are going to be a lot of holiday layoffs, so as to clear the decks before the start of the new fiscal year, for those on a 1/1-12-31 FY.

  198. jamil says:

    161 stu: “I think it’s sad that after the Couric interview, SP is not allowed to work alone without a script. ..I just find it painful to watch the original maverick babysit due to his poor vetting.”

    uh..Stu, as clueless as ever..
    where have you been?

    ABC News: http://tinyurl.com/5rckol

    “P-lin Now Much More Media-Accessible Than Bliden”
    “The Delaware lawmaker has not fielded questions from supporters since a Sept. 10…In the last two weeks, P-lin has fielded questions twice from the P-lin traveling press corps on board the campaign plane, and on Sunday night, P-lin took impromptu questions from reporters on the airport tarmac…P-lin has also become increasingly accessible to local and national media…Since the vice presidential debate, she’s participated in multiple interviews with local television stations across the country, and this week she gives interviews to CNN and NBC News”

    This was pretty much only wise decision from MC. At least she has a real track record and she did it her way..without family connection.

  199. yikes says:

    Finally FINALLY CNBC is growing a pair of balls. They are railing against the Chrysler/GM bailout. It’s like 4 guys against 1.

    What a disaster if this bailout happens. How foolish.

  200. Comrade Nom Deplume says:

    I found this policy position from the Messiah.

    Does anyone besides Stu and Schabadoo think that this is NOT a protectionist recipe that will cause multinational migration, crush exports, and cause price inflation domestically?

    Obama’s “REAL USA” Corporations Plan (Responsible, Accountable, Loyal USA Corporations) will reward companies that create quality jobs in America with tax incentives.

    Companies will be required to:

    * locate in the United States 90% of its production and employment for the sales of goods and services that are consumed here;

    * invest at least 50% of its R&D budget here in the U.S;
    * make sure their workers have access to affordable health care by providing a standardized and portable health insurance plan and pay at least 70% of the cost;

    * make sure their workers have retirement security by contributing at least 5% of payroll to a portable, multi-employer pension fund and operating a profit-sharing plan for all full time employees; and

    * limit management compensation to 50 times the lowest-paid full-time worker.

    Just curious what the assembled think. Personally, it will be great for my line of work, though awful for my portfolio and house value.

  201. BC Bob says:

    “You’re either kidding or you really don’t have a clue.”

    Rich,

    Stealing from NJP; Simple question, simple answer.

  202. Comrade Nom Deplume says:

    Grim, 206 in mod. Thx

  203. NJGator says:

    199 Shore – Still think people who put 0 down and just rented from the bank should not get bailed out. They need nothing to make them whole.

  204. Shore Guy says:

    Anyone picking up a few hundred shares at these depressed prices?

    http://www.cnbc.com/id/27407696

  205. Stu says:

    Sorry Jamil,

    It’s just not how I perceived it.

    Clueless? Nah! I think O ran a perfect campaign. I too would be shielding JB at this point. With an impending landslide victory, I would send JB, the master of flubs, on a long vacation.

    “At least she has a real track record”
    Anyone can buy votes Jamil. The people of this country are not as stupid as yourself.

    I see 3 things that killed McCane. One, the lack of vetting on SP and his (could call it elitist) attempt to replace HC voters through choosing SP. Two, making Joe the rabble-rouser plumber who asked a question of which he knew the answer to, at the center of his campaign since the 3rd debate. Another example of his lack of vetting once again. Three, it’s all about the economy and basing your entire campaign on continuing W’s tax cut (which has failed the lower and middle class for the past 8 years) while attempting to distance one’s self from W was a horrific error.

    But don’t worry Jamil, I’ll make sure some of my 250K get’s sent your way. Just don’t go carving a backwards B in your face anytime soon. I would stick with the letter O, so you can’t screw it up when looking in the mirror.

  206. NJkiwi says:

    Clot starting to look like a Ciali$ rebound rather than viagr@- slightly longer half life but its gonna come down.

  207. Shore Guy says:

    Gator,

    If someone bought at $500k, with nothing down, 30 yer mtg, 6.75 percent, they start off paying about $2800 a month in interest and $440 in principal. After 3 years, they have paid about $17k in principal.

    Now, if they had waited a year they would have a loan about $21000 smaller, day one and at the two year mark (third year of original mtg) they would be over $30k ahead.

    Zero down was insanity and the borrowers and lenders deserve to get burnt by it.

  208. kettle1 says:

    Chart of rich’s data from post 162 for the visual people

    http://maldream.blogspot.com/2008/10/sales-data-chart-for-bergen-county.html

  209. BC Bob says:

    “Remember the original Paulson plan before it morphed into plan B, then plan C? The original plan was going to waste $750 billion in taxpayer money buying “Top Rated” mortgage garbage at whatever price Paulson wanted to pay.”

    “We were told that taxpayers would make a profit on this. Of course anyone in their right mind knew that was nonsense but it did not stop every lout on CNBC from touting the fine benefits of the plan.”

    “Now most of the first $350 of the $750 bailout has been spent and we see what those “Top Rated” securities are worth: 18 to 30 cents on the dollar.”

    “Supposedly the original Paulson plan was needed because otherwise the stock market would crash. Well it crashed anyway, along with the global economy. So Paulson went with plan B (a hodgepodge of disjointed ideas) to fully embracing plan C, recapitalizing banks so they would have more money to lend.”

    “But a funny thing happened to plan C. Instead of buying mortgage backed securities, or lending, taxpayers are funding bank dividends and bank mergers.”

    http://globaleconomicanalysis.blogspot.com/

  210. Rich In NNJ says:

    3b (202),

    River Edge, 774 KINDERKAMACK RD

    SOLD: $330,000 8/31/2006

    Active $319,000 8/7/2008
    PCH $250,000 10/27/2008

    It’s not a short sale, they paid cash in 2006.

  211. kettle1 says:

    SL,

    Do ER’s do ride alongs like cops do? would be an interesting side of life to see.

  212. Shore Guy says:

    Ket,

    HIPPA would make that tough.

  213. Shore Guy says:

    Hipaa, even

  214. kettle1 says:

    Sean,

    sent you an e-mail

  215. kettle1 says:

    shore,

    I am too curious for my own good some times….

  216. Frank says:

    “You’re either kidding or you really don’t have a clue.”

    No, you don’t have a clue, for homes to be selling at $500K when affordability is at 250K things must be really good. Most homes in Bergen county are selling for 200% of the rent equivalent. The NJ bubble lives on and I don’t see the end of it.

  217. NJGator says:

    White House tells banks to stop hoarding money
    http://news.yahoo.com/s/ap/20081028/ap_on_bi_ge/financial_meltdown

  218. kettle1 says:

    man, its rough to be a banker….

    Top bankers could receive as much as $1 million. Even a bond trader just out of business school could see his or her bank account enriched by as much as $170,000 this Christmas. “The firms have had an extremely difficult year,” says Joan Zimmerman, a Wall Street career coach. “But they can’t afford to lose talent either.”

    http://www.time.com/time/business/article/0,8599,1853846,00.html

  219. Shore Guy says:

    Gator,

    Because governments have always been good at organizing economic activity.

  220. Stu says:

    Hmmmm,

    About a short year ago, didn’t the same government urge the banks to work with delinquent borrowers to make loan modifications since it would be better than having to take full ownership of the home?

    Why won’t they listen? :P

  221. kettle1 says:

    Evil Wall Street Exports Boomed With `Fools’ Born to Buy Debt

    http://www.bloomberg.com/apps/news?pid=20601109&sid=a0jln3.CSS6c&refer=home

    The bundling of consumer loans and home mortgages into packages of securities — a process known as securitization — was the biggest U.S. export business of the 21st century. More than $27 trillion of these securities have been sold since 2001, according to the Securities Industry Financial Markets Association, an industry trade group. That’s almost twice last year’s U.S. gross domestic product of $13.8 trillion.

    The growth over the past decade was made possible by overseas banks, which saw the profits U.S. financial institutions were making and coveted the made-in-America technology, much as consumers around the world craved other emblems of American ingenuity from Coca-Cola to Hollywood movies. Wall Street obliged, with disastrous results: two-thirds of a trillion dollars in bank losses, about 40 percent of them outside the U.S.

    “Securitization was based on the premise that a fool was born every minute,” Joseph Stiglitz, a professor of economics at Columbia University in New York, told a congressional committee on Oct. 21. “Globalization meant that there was a global landscape on which they could search for those fools — and they found them everywhere.”


    The strategy was detailed in Ocampo’s 282-page book “Securitization of Credit: Inside the New Technology of Finance,” which he co-wrote with McKinsey consultant James Rosenthal. Ocampo, who received an MBA from Harvard after graduating from the Massachusetts Institute of Technology, and Rosenthal, a Harvard Law School graduate, argued that banks could be more profitable if they used securitization.

  222. kettle1 says:

    http://www.bloomberg.com/apps/news?pid=20601109&sid=aVann0.cv9Tw&refer=home

    Five straight quarters of losses and a 70 percent slide in its stock this year haven’t stopped Merrill Lynch & Co. from allocating about $6.7 billion to pay bonuses.

  223. Outofstater says:

    #193 Hey sl – on behalf of all of us everywhere, thank you for being an ER doc! You see the worst of the worst on a daily basis but to me, you ARE the best of the best. You step into someone’s nightmare and do all you can to make it better and I bet you don’t even remember all the times you were the angel who saved someone’s life. So, THANK YOU!

  224. Frank says:

    “Top bankers could receive as much as $1 million.”

    Clotpoll,
    How many REO’s do you need to sell to make $1M? 1000?

  225. Frank says:

    “Merrill Lynch & Co. from allocating about $6.7 billion to pay bonuses.”

    The boom on Wall St. lives on.

  226. NJGator says:

    224 Shore – Or because the B*sh administration has been good at anything?

  227. Stu says:

    Remember how I told you all that my company was getting rid of our defined retirement benefit? Well it appears that they have done this retroactively. Although we should have earned this from our fiscal 2/2007 through 1/2008, the company has decided not to fund it (which is done every October for the prior year). It should have been 3% of my salary, instead it ended up being a sorry, but here’s $200 to shut you up. On the bright side, the letter claims that the executives won’t be getting their $200. I feel so much better now.

  228. Clotpoll says:

    BC (206)-

    Don’t get mad at Frank. He was probably distracted, trying to work some crosses vs the yen.

  229. Sean says:

    Kettle1 you should have it now.

    Quote from that article “soon we will re-learn what Bretton Woods was all about.”

    Scary stuff so I am loading up on more of the shiny stuff just in time for Halloween.

  230. kettle1 says:

    “An imbalance between rich and poor is the oldest and most fatal ailment of all republics,”

    -Lucius Mestrius Plutarchus (Plutarch), 1st-century Greek historian

  231. NJGator says:

    232 Stu – When we live at Shady Pines one day, that $200 will buy us one fine cup of coffee!

    At least we still have my pension…for now.

  232. Clotpoll says:

    Frank (229)-

    “Clotpoll,

    How many REO’s do you need to sell to make $1M? 1000?”

    Or, the one page list of everything you’re long right now.

  233. BC Bob says:

    Clot [233],

    Love to see his run. Reminds me of JPM getting their hands on Bear’s run. Field Day.

  234. kettle1 says:

    sean thanks.

    That pretty much my view. The global implications are fascinating though…..

  235. Sean says:

    re: #222 – Bush’s new press secretary Dana Perino knows more about what is under Bush desk in the Oval Office than how banks make money.

    http://bigheaddc.com/wp-content/uploads/2007/12/dana-perino.jpg

    The Fed just announced last Monday it would pay a higher interest rate on excess bank reserves than previously planned, so where is the incentive to lend?

  236. 3b says:

    #223 kettle:But they can’t afford to lose talent either.”

    Talent?? And who or where pray tell would they loose this talent to??

  237. SG says:

    From ML-implode.com

    http://ml-implode.com/viewnews/2008-10-27_NoHopeforHomeowners.html

    How about the dandy “Hope for Homeowners” program, a program designed to help more than 400,000 homeowners avoid foreclosure by making as much as $300 billion dollars available for the program. What a fantastic idea, it would seem at first glance. Of course, the Devil really is in the details.

    As of today, October 27, 2008 – nearly four weeks since the program was unveiled – a remarkable 79 people have applied for the program (Fox News 8-27-08).

    Yes, 79 homeowners have been accepted (Fox News 8-27-08).

    There are at least 77 banks participating in the program. I am not going to try to do that math in my head, but my best guess is that each of those banks has only helped about one homeowner avoid foreclosure each in that 27 day period.

  238. Sean says:

    re: #241 – I just had a similar argument and it seems all the IB bankers now want to become teachers in NJ.

  239. grim says:

    From Bloomberg:

    Credit Suisse Cuts 500 Investment Bank, Support Jobs

    Credit Suisse Group AG, Switzerland’s second-biggest bank, plans to eliminate 500 jobs in its securities unit and some support functions, adding to 1,565 cuts announced over the past year.

    The reductions are in response to “market conditions and projected staffing levels required to meet client needs,” said Karen Laureano-Rikardsen, a spokeswoman for the Zurich-based bank. The firm’s securities unit employed 21,300 people at the end of September.

  240. BC Bob says:

    Sean [240],

    Exactly. Let’s evaluate; receive a higher rate from the fed or lend in an environment of rising unemployment, cc defaults, foreclosures, declining home values and auto loan defaluts? HMMM? Better run this thru Bi’s Blackbox.

  241. grim says:

    From DealBreaker:

    Layoffs Watch ’08: No More Shake Shack For You

    Cuts are said to be going down in Credit Suisse capital markets circa now. No word on severance.

  242. 3b says:

    #215 Rich; Thanks. I see it sold in 06 for 330K, I thought it wsa 360k, (off by 30K), and now the asking price is down to 250K, so about a 25% reduction from the original 330k sale price. I cannot believe somebody paid cash for that thing.

  243. Clotpoll says:

    BOJ cutting rates. Quel surprise.

  244. grim says:

    Also from DB:

    Layoffs Watch ’08: BarcLehs

    Barclays Capital today “surprised” all of their IT contractors in the US (and quite a few permanent employees on both the Lehman and Barclays sides) with an end of shift termination notice, in typical Lehman fashion. Managers and vendors alike were forbidden to disclose this info in advance.

    Given that the most senior members of just about every IT team with any sort of production support responsibilities WERE contractors (web, server, database, messaging, networks) – it should be interesting to see how the ongoing Lehman integration efforts (and even just BAU activities) proceed after today.

  245. Clotpoll says:

    Mrs. Watanabe might be back at her computer pretty soon.

    If her husband removes the handcuffs.

  246. Clotpoll says:

    Sean (240)-

    But the White House told the banks to lend!

    This should take a place next to “bi said there’d be no more writedowns!”.

  247. kettle1 says:

    Baltic Exchange Dry Index (global shipping index)

    this is/was the canary in the coal mine. Shipping is the heart of globalization. The heart just stopped. BDI is now down 90%.

    The effects may take weeks to be felt but felt they will be even if they are not obvious.

    globalization just went into cardiac arest

  248. Clotpoll says:

    SG (242)-

    Hope for Homeowners? Yeah, right.

    Here’s hope: rent a Penske truck, hope all your shit fits into it, get out of town under cover of darkness and tell your relatives not to give your contacts to creditors.

    More placebo for the sheeple.

  249. Clotpoll says:

    grim (249)-

    That should leave Barclays in great shape when the selling panic reaches a crescendo.

  250. Shore Guy says:

    “On the bright side, the letter claims that the executives won’t be getting their $200. ”

    Indeed they are not getting $200. Instead, they are getting $15,500.

  251. kettle1 says:

    Shore

    Re HIPPA.

    I could always be a Pharma rep observing for product and process insight and development purposes.

  252. kettle1 says:

    clott,

    the current environment seems ideal for someone with few scruples. Buy a house as quickly as possible, play some shenanigans and dump any consumer debt into the house. live there for 2 years rent free saving all your cash. in the current and continuing deflationary environment you could clean up.

    would need a knowledgeable re-agent as a liaison though (cash commision up front of course) ;)

    wait, isnt that what the banks are doing?>

  253. Stu says:

    “Indeed they are not getting $200. Instead, they are getting $15,500.”

    If I was wasn’t atempting to hold on until severance, I might blow a whistle. I’m fairly certain that such a benefit can not be removed retroactively. The benefit was clearly stated in the employee handbook at the time I was supposed to be earning it.

  254. Jersey Jim says:

    I just saw an interesting piece on CNN. A ‘homeowner’ has chained herself to her house so she won’t be evicted. She has been in the house 19 years. It seems she took out an adjustable rate second mortgage for $300,000 for a business investment. The business failed. Where do these people come from?

    To Frank:
    I don’t even know you, but reading your posts here you must be a real nitwit.

  255. kettle1 says:

    clott

    258 is not a solicitation

  256. BC Bob says:

    “To Frank:
    I don’t even know you, but reading your posts here you must be a real nitwit.”

    [260],

    Mrs Wantanabe would clean his clock.

  257. zieba says:

    Hello Nom et al,
    Back from Amsterdam and Krakow (Poland).
    The first thing I saw when I got off a local jet was a five foot cardboard advertisement that read: “Do you want to have everything within reach?” bam! on the left of it was a drawing of a 20 story residential glass tower rising from a sprawling shopping/fitness center…

    There are no jobs in Poland that support the kind of income necessary to afford that type of property on a fixed loan. Local papers read “Finance gurus demand dovernment unfreeze markets” and everything is going down the drain lockstep with asian and us. Driving out of larger cities uncovers entire communities of empty houses, some greenery and a catchy name on a sign by the gate, this is most certainly a global sprawl phenomenon.

    I recently sold some RE at eight to ten times what my family acquired it at. I signed, sold and received funds for the last property just two weeks before the markets froze. Gotta love the guy who purchased a 50/sq meter apartment in a urine soaked building on a mortar dinged street for….drumroll please….USD 110K.

    And I heard the same shyt wherever I went “it’s differnet here!” “But, there will be a wonderful glass tower going up a block away, surely raising values”…. the “it’s different here” syndrome is something not exclusive to Bergen county.

    The dollars torrid appreciation has me edgy but comfortable I will be able to exchange another tranche of zlotys at 2.18 again. approx at 3.05 currently.

    Anyhow, back in the office today in glorious Englewood Cliffs and looking forward to a long winter of wonderful entertainment this blog provides.

    Carry on.

  258. kettle1 says:

    SAS,

    Is the world bank and IMF opening the champaign yet?

    It looks like oil could hit $10 and at that level Chavez and Putin are in deep $hit. Russia will shift to a totalitarian government but will stand. The real question is will chavez survive the drop? his power is based on handing oil and cash out to his supporters and he will have little cash and the oil will be almost worthless compared to the open market. so it looks like china is the only real competitor left.

    a few well placed inside operatives could easily weaken china’s stance with well placed civil unrest. Didnt you say you were going to china soon???? hmmmmmm

  259. zieba says:

    BTW as an addendum to my earlier post:

    I know a guy who works as a worker on an assembly line machining engines for everything from mowers to speedboats.

    Lower middle class income: 24K zlotys per year. 24/2.65 = 9.05K USD. His wife may make the same or a bit more as an office worker…I would peg their monthly take home at 4K zlotys = 4/2.65 = $1,500 per month.

    Granted, they won’t be living in the brand new glass tower, but the guy who bought my apartment could not have been better off else he would have been shopping in a different part of town.

    110K / 18K usd take home = 6.11 years pay
    for a one bedroom about the size of a Manhattan studio.

  260. kettle1 says:

    Non-Agency Mortgage Bonds Collapse

    http://www.bloomberg.com/apps/news?pid=20602007&sid=ayXMdrVk8rZs&refer=govt_bonds

    Subprime, Alt-A and prime-jumbo mortgage securities reached or approached record lows this month as forced asset sales contributed to the decline in values.

    Prices dropped to the “hi-teens to mid-20” cents on the dollar last week on the least protected types of originally AAA rated 2006 and 2007 bonds backed by Alt-A loans with five years of fixed rates, according to a RBS Greenwich Capital report yesterday. The bonds were at the high-20s to mid-30s in early September. “Super-senior” bonds fetched in the “mid-50s to mid-60s,” down from 60 to 70 cents, according to the report.

    Non-agency mortgage bond prices have also fallen along with optimism about the $700 billion U.S. financial-market rescue plan signed into law on Oct. 3, the report said. Enthusiasm dimmed because the program began with capital injections into banks, instead of mortgage-asset purchases, they wrote.

  261. PGC says:

    #249 grim

    I think we need a GTG to discuss this topic.

    I think LEH has been gutted and there is nothing left. The bones have been cleaned.

  262. Stu says:

    Market in rally mode. I luckily sold off 1/2 of my remaining SRS this morning at 190. I now own a mere pittance of what I used to. Clot…Did you bail at all?

  263. Victorian says:

    Take a look at EEV and FXP. Not for the fainthearted.

  264. skep-tic says:

    for those interested, westchester realtors posted their third quarter sales report yesterday. 3Q sales down 23% YoY; down 25% for the first 9 months YoY; but median prices down only 3% YoY. Inventory up only 4% YoY.

    http://74.54.5.80/wcbr/library/sales_statistics

  265. SG says:

    To all Indian friends on the Blog,

    HAPPY DIWALI and HAPPY NEW YEAR.

    http://en.wikipedia.org/wiki/Diwali

  266. lisoosh says:

    Why do I have a feeling the hoi polloi will be down at Wall Street waving pickforks before all this is over?

  267. kettle1 says:

    ooppps

    Short Squeeze Makes Volkswagen Overtake Exxon as World’s Most Valuable Company

    Volkswagen AG became the world’s biggest company by market value after Porsche SE announced plans to raise its stake in the German carmaker to 75 percent, triggering demand from short-sellers. Volkswagen rose as much as 485.01 euros, or 93 percent, to 1,005.01 euros and was up 55 percent as of 11:10 a.m. in Frankfurt trading.

    Goldman, Morgan Stanley shares fall on VW exposure talk

    Shares of Morgan Stanley and Goldman Sachs Group Inc tumbled on Tuesday on speculation the banks might be caught on the wrong side of a trade involving German automaker Volkswagen AG, traders said. Morgan Stanley shares were down 12 percent. Goldman slid 6.3 percent.

  268. yikes says:

    wow, our white house is stupid. let’s lend money to high risk losers!

    http://news.yahoo.com/s/ap/20081028/ap_on_bi_ge/financial_meltdown

    WASHINGTON – An impatient White House served notice Tuesday on banks and other financial companies receiving billions of dollars in federal help to quit hoarding the money and start making more loans.

    “What we’re trying to do is get banks to do what they are supposed to do, which is support the system that we have in America. And banks exist to lend money,” White House press secretary Dana Perino said.

    Though there are limits on how much Washington can pressure banks, she noted that banks are regulated by the federal government.

  269. yikes says:

    stu/bc/clot – when do you reload with SRS/SKF?

    when it touches 90/100 this week?

    You know it’s destined for 200 in another few weeks/months.

  270. kettle1 says:

    Firefighters better scramble to save letters of credit

    There’s been some low-bandwidth chatter lately about the plunge in the Baltic Dry Index, which is intended to track the price of shipping dry cargo along key routes. In the sort of “oh . . . wow . . . ” manner passing drivers remark on multiple collisions on the highway, it’s been noted that the BDI is down. A lot.

    I had followed shipping in past years, but had never seen a rate of change like that. So I called friends of mine in that world to get closer to the car wreck. I had wondered if the BDI was truly representative of real-world values, or if it was oversold in the way some credit default swap indices might be. Nope. Ships really are that cheap. As one broker told me: “I just chartered a Handymax to go to the US Gulf from India for $1,000 a day. So the BDI really is pretty accurate.”

    A Handymax vessel would typically displace about 40,000 deadweight tonnes. You would notice it if it dropped anchor near your dock. The cash operating costs are at least $1,500 to $2,000 a day. On top of that, figure another couple of thousand dollars a day for the capital costs. To put that in Presidential election language, what does that mean for hardworking, middle class, average, families who are sitting around the kitchen table playing by the rules? Why should they care that some Greek or Lebanese is under water, so to speak, on his ship?

    How about because what you need to stay middle class and average, or hardworking, is being carried on those ships? Those low charter rates indicate that not much is being shipped, apart from cargoes going from one corporate subsidiary to another, or from one highly creditworthy entity to another. It all goes back to that Lehman bankruptcy. Among the more serious casualties of that colossal failure of leadership was the letter of credit business.

    http://www.ft.com/cms/s/0/03ff3bb4-a48e-11dd-8104-000077b07658.html

  271. kettle1 says:

    Japan Will Ease Mark-to-Market Accounting Rules

    Japan will ease mark-to-market accounting rules that are forcing companies to book losses on illiquid holdings of securities as the global credit crunch pushes down asset values, Finance Minister Shoichi Nakagawa said. The government accepted a recommendation from the Accounting Standards Board of Japan to allow companies to calculate asset values themselves, Nakagawa said at a media briefing in Tokyo today.

    http://www.bloomberg.com/apps/news?pid=20601101&sid=aTEWPHFv5giE&refer=japan

  272. Comrade Nom Deplume says:

    [277] Kettle

    I have been noticing that, though not with as keen an eye.

    So, I should buy that big screen tv and fill my wine cellar now, because nothing is being shipped?

  273. Stu says:

    Yikes,

    I’m not a day trader, but if it’s below 100, I will probably have a position by then.

  274. Comrade Nom Deplume says:

    [279] Sean,

    I like the tenth man. I think I will be him.

  275. BC Bob says:

    yikes [275],

    I’m waiting patiently. See my post, #9.

  276. HEHEHE says:

    Personal opinion of a moron here but I would have to say SDS/SKF are looking attractive. How stupid could anybody be to buy on a rate cut that’s not going to have any impact?

  277. grim says:

    Gasoline crisis over, back to making hemis. No lesson to be learned here, move on.

    Chrysler to Drop First Hybrids, After October Debut

    Chrysler LLC, the third-largest U.S. automaker, said it will stop making its first gasoline-electric vehicles, which began sales this month, at the end of the year because the plant that builds them is closing.

  278. yikes says:

    thanks for the heads up, BC. i will go heavier than i did first time.

  279. Nicholas says:

    Grim wasn’t too far off on the +1000 call earlier today.

  280. grim says:

    Grim wasn’t too far off on the +1000 call earlier today.

    I pulled that number out of my backside, I deserve no credit. In fact, it was more of a joke than a forecast.

  281. kettle1 says:

    279 Nom,

    Thats an interesting question. The results of the drop in shipping will be complex.

    Supply is drying up just as demand is dropping off. My guess is that the end result is similar to this:

    Thailand seeks oil-for-rice deal with Iran

    stuck with product that is dropping in price and just as you end up selling it the supply will start to dry up. Its sort like a currency beggar-thy-neighbor run.

    For things that are readily available (plasma tv’s) wait to purchase as deflation is your friend. For things that are important to you (wine?) you may want to buy sooner rather then later as supply is likely to become constrained in an unexpected manner with little potential notice, and resupply is questionable for a while.

    in short:

    if its a necessity, buy

    if its a want, wait

    my 2.5 (deflated) cents

  282. chicagofinance says:

    skep-tic Says:
    October 28th, 2008 at 10:01 am
    so NYC case-schiller only down 6.9% YoY (see data link below). I think this means we are due for a substantial drop in the next 6-9 months.

    skep: another banker friend whacked…..

  283. kettle1 says:

    global implications of the shipping shut down….

    food production is going to slow down as farmers cannot make enough money and the shippers cannot afford to run their ships.

    unexpected consequences….

    where does it end? food riots and civil unrest in places like eqypt, sri lanka, china.

    per the UN about 30% of all countires are critical net food importers. countries that cannot feed their population for longer then a short period without imports;

    “”If the government sells now, prices will fall further,” said Mr Chookiat. “The government needs instead to fine-tune its rice marketing strategy, as Vietnam itself is expected to speed up selling its grain, as its exporters own no large warehouses, and more importantly they need cash to repay loans that carry interest rates as high as 22%.” However, Mr Chaiya said the government may sell rice from its stocks at a loss because it must empty warehouses before the next crop arrives.

    “Given the rice price slump, the government is suffering a loss of 2,000 baht per tonne (from the existing stockpile),” said Mr Chaiya. “The market mechanism alone is to blame for this loss.” Officials have pledged to buy more rice from farmers at assured prices even as the export price of white rice has dropped 36% since May. Between January and October, Thailand exported 8.7 million tonnes of rice, up 31% from the same period of last year when it sold 6.6 million tonnes.”

    http://www.bangkokpost.com/281008_Business/28Oct2008_biz34.php

    “Given the rice price slump, the government is suffering a loss of 2,000 baht per tonne (from the existing stockpile),” said Mr Chaiya. “The market mechanism alone is to blame for this loss.” Officials have pledged to buy more rice from farmers at assured prices even as the export price of white rice has dropped 36% since May. Between January and October, Thailand exported 8.7 million tonnes of rice, up 31% from the same period of last year when it sold 6.6 million tonnes.

  284. yikes says:

    new realtor is hot to get us a house. we’ve spoken on the phone a few times and in person and she knows we know our stuff.

    she sent a house for 549k. it’s nice (in pics at least). big. i have a question about the unbuilt land behind it that supposedly was bought by the community, whatever that means.)

    i told her via email that we’ll be interested when it falls to the 475k-500k range.

    owners bought for 465k in 2005. (this is in bucks, house less than 15 years old). i think it is funny they believe that in a down market, the house has gone up approx $85k in nearly 4 years.

    eager to hear her response.

  285. chicagofinance says:

    Another client just showed up….whacked trader that supported hedge fund operations. Studying to become a nurse!!???

  286. 3b says:

    #284 grim: It is probably because Chrysler knows that it will not be around by the end of the year;so why bother. Let GMChrysler build electric cars.

  287. skep-tic says:

    #289

    chifi– that is too bad. I want a cheap house but I do not take pleasure in people losing their jobs

  288. chicagofinance says:

    Stu Says:
    October 28th, 2008 at 11:44 am
    Today the house is probably worth very close to what we brought it for. Maybe a little more since we made a number of improvements.

    Stu: so it’s not worth what you paid for it….just keepin’ it real…I know you would want to be corrected….

  289. chicagofinance says:

    Shore Guy Says:
    October 28th, 2008 at 11:45 am
    Time for an Icelandic CD?

    Shore: Is there a new Bjork album?

  290. RayC says:

    http://www.nytimes.com/interactive/2008/10/28/business/20080624_HOUSING_GRAPHIC.html

    Great visual of YOY price declines by city compared to average. “Shocked” that the higher a city went up, the deeper it went down. If the Schiller graph looks this way in 2 years…

  291. 3b says:

    #285 HEHE:How stupid could anybody be to buy on a rate cut that’s not going to have any impact?

    Than when the rate cut is official, they will not be happy becasue having to cut to 1%, with more cuts behind that, shows how horrible things are.

    And the market ignored the Consumer sentiment index, and the dismal Case/Shiller report, only to focus on Wal-Marts prediction of increased sales.

    Yes increased sales, because alot of people who would never shop at Wal-Mart will now be shopping there. Casualties of the rapidly declining economy.

  292. chicagofinance says:

    kettle1 Says:
    October 28th, 2008 at 1:39 pm
    Five straight quarters of losses and a 70 percent slide in its stock this year haven’t stopped Merrill Lynch & Co. from allocating about $6.7 billion to pay bonuses.

    ket: you have to pay the thundering herd retention or they will walk…biggest asset of the first going forward…if the human capital walks out the door, then the forward looking enterprise value drops dramatically…

  293. NJGator says:

    297 Chifi – Actually hard to say. would be a lot easier to say if anything comparable were actually selling. I’ve just taken a quick look at the comp sales for this year as early prep for my next tax appeal,and I see lots and lots of Withdrawn and Expired. Not many multis in quality neighborhoods have moved this year. This should make our settlement talks interesting.

  294. chicagofinance says:

    3b Says:
    October 28th, 2008 at 1:56 pm
    #223 kettle:But they can’t afford to lose talent either.”
    Talent?? And who or where pray tell would they loose this talent to??

    3b: brokers going independent and setting up their own RIA’s…..

  295. Clotpoll says:

    Stu (270)

    Out of SKF today @ $181, back in at $160.

    Out of SRS a week ago, back in @ $168 today.

    The last 1/2 hour was a mite uncomfy, but I have no doubt the masters of finance will wake up tomorrow and commence the stupidity anew.

  296. kettle1 says:

    chifi

    serious question: where do they go? it isnt like their field is booming or likely to in the near future? At what point is a bonus no longer justified?

  297. DL says:

    At dinner with some friends tonight a woman told he story of her apartment here in Germany that she bought back in the 80s for 195,000DM. She moved to South Africa years ago and is now hoping to sell her investment for at least the same amount in euros that she paid for it but complained that similar apartments in her building were going for 55,000 euros (approx 110,000DM). The RE crash is global.

  298. Alrex1 says:

    grim Says:
    October 28th, 2008 at 4:15 pm
    Grim wasn’t too far off on the +1000 call earlier today.

    I pulled that number out of my backside, I deserve no credit. In fact, it was more of a joke than a forecast.

    I am starting to think the that mystic man which controls the market is actually reading Grims blog and Just doing what people say in here.

  299. Clotpoll says:

    yikes (277)-

    SRS/SKF moved above those levels when the short selling ban was in place.

    If they even move back into the 120’s- which I don’t think will happen- I’m going all in (all possible disclaimers).

    My guess is that tomorrow’s rate cut gets met with at the least, a ho-hum…and at worst, another selloff.

  300. HEHEHE says:

    “Studying to become a nurse!!???”

    Laugh all you want, it’s one of the few growth jobs in this country that pay relatively well. There’s going to be millions of baby boomers that are going to need their blood pressure checked and bottoms wiped. My sister-in-law in a nurse and has her choice of hours and can walk across the street to another hospital if her employer pisses her off. They are in demand all over the country.

  301. chicagofinance says:

    kettle1 Says:
    October 28th, 2008 at 4:42 pm
    chifi
    serious question: where do they go? it isnt like their field is booming or likely to in the near future? At what point is a bonus no longer justified?

    ket: you tell me…client is an investment banker…coverage area? regional banks….he is conventional old-school M&A. He is sitting pretty right now. They pay him for his Rolodex…period….he is going to be a rainmaker for the next 24 months. His bonus for 2008 will be larger than 2009. The only caveat is that it will be 100% stock and ISOs.

  302. 3b says:

    #303 chgo:brokers going independent and setting up their own RIA’s…..

    That IMO is going to happen anyway. the successfuel money mangers can and will leave and set up their own shops.

    The IB’s what is left of them no longer have that cachet, even GS has lost IMO most of its lustre.

  303. kettle1 says:

    HEHEH

    growth industries:

    Maybe i will have to follow in the family profession….. great grand daddy was an enforcer for the mafia in 1930’s brooklyn after being a respectable business man in the roaring 20’s. still have his engraved brass knuckles ;)

  304. sas says:

    wow. talk about a dead cat bounce today.

    major fluctuations.

    I wonder how close the % fluctuations resemble the lead up to the Great Depression?
    anyone have these sorts of charts?

    SAS

  305. sas says:

    nice pull back on metals.
    good time to pick up on a dip.

    hey..I said “dip”. Reminds me of omama…a total dip, who is a puppet and controls nothing.

    SAS

  306. kettle1 says:

    chifi,

    ket: you tell me…client is an investment banker…coverage area? regional banks….he is conventional old-school M&A. He is sitting pretty right now. They pay him for his Rolodex…period….he is going to be a rainmaker for the next 24 months. His bonus for 2008 will be larger than 2009. The only caveat is that it will be 100% stock and ISOs.

    is this gentleman the exception or the rule. There are always more little fish then big fish. While the big fish may have the weight to hang around do the little fish really have any options? I would imagine that your client is one of the big fish

  307. Clotpoll says:

    3b (311)-

    Speaking of smaller shops…here’s one that’s got some legs under it:

    http://tinyurl.com/5t9dkh

    I hear they have some former GS people. For the kind of year it’s been, their chart could be a helluva lot worse. They must be doing something right.

  308. sas says:

    songbird Mcstain.

    I’m calling it now, that SOB falls dead within 5 years. Not after the cancer hes had.

    everytime I hear someone has, “I’m cured on canver”, I always tell myself..for now..it always comes back 10x stronger, so enjoy while you can.

    SAS

  309. HEHEHE says:

    Kettle,

    If things keep going the way they are going you may have to hock the knucks for a meal.

  310. sas says:

    ok, off to walk my dog: Indiana Bones.

    SAS

  311. Sean says:

    Massive program driven rally last 2 hours today with the last minutes voulme jumping nearly 90%.

    Rumor mill says it was pension fund rebalancing.

    ——————————————

    Is this the real reason for today’s equity market gains?

    From an email currently circulating the City of London:

    Gut wrenching declines in US and global equity markets during October coupled with bond market outperformance will undoubtedly require MASSIVE monthly asset rebalancing by US pension funds –- rotating OUT of bonds and INTO stocks. This may have a profound “short-term” impact on performance of risk assets since the required rebalancing appears to eclipse even the large rotation after the 1987 stock market crash. As a very simple example, we asked our quant colleague (xxx) to analyze a balanced portfolio targeting 40% domestic bonds (SBBIG Index) and 60% equities.

    We assumed that the equity portion is comprised of 75% domestic stocks (MXUS Index) and 25% EAFE international equities (MXEA Index). The attached rebalancing calculations based on closing levels last Friday (Oct 24) suggest that US pension funds would need to reduce bond holdings by a WHOPPING -4.1% while increasing equity allocations by a corresponding +4.1%, all by the close of business at month-end on Halloween Friday (Oct 31).

    Price action could be bloody scary given terrifying poor liquidity in these markets. For historical perspective, the second largest monthly bond-stock rebalancing rotation was 3.4% in October 1987. Most importantly, US equities did manage to stage a +10.5% during the last four trading days of October 1987 while bonds struggled. As it turns out, that marked the bottom for US equities for the next month and probably helped stocks find some needed footing in 1987.

    Bottom line: BEWARE the potential bounce in risk assets due to bond-stock rotation this week. FX risk trades may also tend to recover a little lost ground.

    ——————————————
    And from elsewhere.

    Days with Greatest Percentage Gain
    Date % Change
    03/15/1933 15.34
    10/06/1931 14.87
    10/30/1929 12.34
    09/21/1932 11.36
    10/13/2008 11.08
    10/21/1987 10.15
    08/03/1932 9.52
    02/11/1932 9.47
    11/14/1929 9.36
    10 12/18/1931 9.35

  312. Qwerty says:

    SG @ 3:43pm — Happy Diwali.

    Joe Biden likes Indians, says convenience stores are filled with them:

    http://www.youtube.com/watch?v=OIT3jUrNTX0

  313. chicagofinance says:

    clot: What has that Morgan guy been saying on those conference calls?

  314. Clotpoll says:

    chi (322)-

    Haven’t gotten in on one in the past couple of weeks.

  315. stu says:

    Qwerty,

    JB is a jack-ass. It may be an improvement to get him out of the senate and into the roll of do nothing VP.

    You can point out flub after flub after flub, with JB, but it does not pale in comparison to MC’s choice of SP.

    Plus if you heard the joke McCane told about Chelsea C., it makes JB look palatable.

  316. stu says:

    ChiFi:

    “Stu: so it’s not worth what you paid for it….just keepin’ it real…I know you would want to be corrected….”

    Thanks for the correction :P

  317. sas says:

    “Retirement Fund for N.Y. State Workers Loses 20 Percent”
    http://tinyurl.com/5shfsx

  318. scribe says:

    Drew, #20

    From bankrate:

    ORITANI SAVINGS BANK
    TOWNSHIP OF WASHINGTON, New Jersey

    Bankrate.com. Star Rating: starstarstarstar

    translation: 4 stars

    5 is the best, 1 is the worst

    http://www.bankrate.com/brm/safesound/thrftmm.asp?fedid=2376

  319. scribe says:

    drew, #23

    Here’s the link to look up any bank on bankrate.com:

    http://www.bankrate.com/brm/safesound/select.asp?insttype=0

  320. sean says:

    re#323 Wall St bonus

    Potential future AG Andrew Cuomo is piling it on CNBC.

  321. sean says:

    Gotta love deflation flights to Jackson Hole or Vail are selling for about $370 round trip.

  322. stu says:

    I considered the Jackson Hole. Are there a lot of skiers among us. I’m always looking for a partner. I can get free rooms in Harrah’s Tahoe and in Reno.

  323. John says:

    Called the rally today and my intraday bottom I called is still holding. The RE crash and stock crash is old news to the cocktail crowd. Job lay-offs are a tough nut to swallow when your firm is “paying for talent” as you are laid off. Like it or not lots of firm have cut dead wood to the bone and unless they pay bonuses the talent will jump. Usually everyone dept has one or two guys who bring in most of the business or do most of work, you gotta pay for that.

  324. Shore Guy says:

    ” At what point is a bonus no longer justified?”

    Now. When the “talent” has been so wrong for so many years that they have nearly caused the whole house of cards to collapse and require Joe and Jane Mainstreet to pay to pull the “talent” out of hot water.

  325. bairen says:

    I’ve had a few friends and family members tell me in the last month they are seriously looking at leaving NJ, maybe even the US.

    Are we finally past the denial stage and are about to enter the next circle of hel?

  326. Clotpoll says:

    Shore (333)-

    I hate to be on the same side as Bernie Sanders, but I’m there.

    These people have brought us to the brink of ruin. Many of them are now being entrusted to clean up the mess from the toxic swill they invented and brewed. To my mind, they serve at our pleasure. Screw ’em if they can’t make it on salary alone for a couple of years.

    They need bonuses to keep ’em on the ranch? Screw ’em. They can walk. The deals, M&A, LBOs, etc are going to just about go to 0 before this is all over. If they walk, they’ll be walking into an orange smock.

  327. bairen says:

    #333 Shore Guy and Clot

    Was it Stan Musial who was told by the owner of the team “We could have finished last without you” after he asked for a raise when his team came in last?

    That’s the kind of attitude we should have in bonuses. Plus have them paid out over a multi year period.

  328. PGC says:

    Walmart Sales

    Pure anecdote I picked up. Walmart increase in sales are all at the start of the paycheck cycle. They then fall off a cliff until the next paycheck comes in.
    I was in Walmart on Saturday and it was very empty and I could not believe that Mobil1 oil had gone up 25% to $26 for a 5 quart jug.

  329. John says:

    In reno you HAVE to pay for talent.

  330. HEHEHE says:

    That protect the “talent” argument is complete bs. There’s plenty of “talent” unemployed on Wall Street. Where are we afraid these clowns are going to run off to if they don’t get a bonus? Coffee dates with their unemployed brethren? Yoga class? F ’em!

  331. HEHEHE says:

    Nom,

    Read an article the other day quoting your pal Marty Lipton as saying this downswing likely won’t be over until 2013.

  332. sean says:

    re: #337 PCG – Walmart reported purchases using credit cards were down double digits, and sales of diapers and baby food were up on the first of the month when people are flush.

    A few more months of this downward financial spiral and buying habits will change to shoplifting habits.

  333. Outofstater says:

    #341 I saw that too but that’s how it always used to be in my blue collar corner of NJ. Every payday, the fathers would bring the money home and the first thing the mothers did was go to Shop-Rite to load up on groceries so no matter what else happened, at least there would be food in the house.

  334. Clotpoll says:

    bairen (336)-

    It was Ralph Kiner.

  335. BC Bob says:

    Why shouldn’t Citi employees receive bonuses? They only lost $2.8B in the 3rd quarter and over $20B for the last 12 months. You have to have real talent to be able to blow thru that kind of dough.

    Remember, the majority of bonuses, paid out last year were in the form of RSU’s/Options. Not worth the paper that it’s written on.

  336. Clotpoll says:

    BC (344)-

    A building full of cokeheads and junkies couldn’t blow that much dough in the same amount of time.

  337. Outofstater says:

    #345 I think we’d have to defer to John’s expertise on that one. Don’t forget the hookers too.

  338. BC Bob says:

    Just bogus. The king of the shorts. Yet, when they are taken to the wood shed, the hypocrites offer toasters. Let’s increase the size of TARP.

    “Traders cited unconfirmed speculation that Goldman may have been affected by the jump in Volkswagen shares today after Porsche SE began buying the stock. Trading in Volkswagen, Europe’s largest carmaker, is under investigation by the German financial-markets regulator after Porsche triggered a fourfold increase in the shares over two days.”

    “There’s speculation that Goldman was involved in the Volkswagen trade,” said Michael Nasto, senior trader at U.S. Global Investors Inc., which manages $5 billion in San Antonio. “Fundamentally, there’s nothing else that we see that would be a reason why this stock is down.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a8AEtxjGc2hs&refer=home

  339. alia says:

    61, clot

    do i at least get a jelly donut?

    had some in-laws in zimbabwe. operative word being “had”… (they escaped soon after mugabe took power)

    141, shore,
    orange bowl? (it’s the only one i know, ’cause penn state played there when i was 9. go joepa!)

  340. alia says:

    clot, (61)

    does that come with a jelly donut?

  341. alia says:

    bah. delete last double post, grim? bah.

  342. chicagofinance says:

    bairen Says:
    October 28th, 2008 at 8:38 pm
    I’ve had a few friends and family members tell me in the last month they are seriously looking at leaving NJ, maybe even the US. Are we finally past the denial stage and are about to enter the next circle of hell?

    bairen-it-all: when the shoe shine guy says he’s moving to Canada, you know we have reached a bubble of anarchy….

  343. chicagofinance says:

    HEHEHE Says:
    October 28th, 2008 at 9:05 pm
    That protect the “talent” argument is complete bs. There’s plenty of “talent” unemployed on Wall Street. Where are we afraid these clowns are going to run off to if they don’t get a bonus? Coffee dates with their unemployed brethren? Yoga class? F ‘em!

    HEHEHE: the Red Bank Starbucks was a mope fest of suit & ties….they took most of the chairs….two guys said they were going to crash the Educators Convention at Harrah’s in AC today…whatever that means….

  344. bairen says:

    #343 Clot

    Thanks. Never would have thought of Kiner.

  345. bairen says:

    #353 chifi

    Maybe they want to trade trophy wife for tenured with benefits wife? :)

  346. RPatrick says:

    355-

    LOL could be both…

  347. bairen says:

    #356 Rpatrick,

    Maybe they got dumped by the trophy wife? As john says, when you run out of cash at the casino, they tell you to move away from the table

Comments are closed.