Tue 16 Dec 2008
From the Star Ledger:
Jersey execs bearish on economy
The mood of business executives in New Jersey is growing darker.
In a November survey of more than 100 businesses, more than 96 percent of executives said they believe the state is in an economic recession and only slightly more than one in three said it is likely they will expand their business in the next few years in the state.
The survey, conducted by the Rutgers University Bloustein School of Planning and Public Policy, was the basis of an economic policy forum held yesterday in Plainsboro and sponsored by the New Jersey Chamber of Commerce and Cushman & Wakefield that analyzed economic trends in the state and featured panel discussions among executives on how the state could improve the business climate here.
As in past surveys by the school, the usual culprits were blamed for the state’s economic woes: high taxes, both personal and corporate; the cost of living and housing; and local and state regulatory schemes. Despite the problems and recessionary times, however, the number of executives who indicated a long-term commitment to staying in New Jersey increased, with only about 5 percent expressing an intent to leave the state.
Still, the sentiment among executives has grown more bearish. When the survey last was completed a year ago, 61 percent of the executives rated the national economy as good or excellent. By this fall, virtually every respondent now rated it as only fair or poor, said Joseph Seneca, a Rutgers University professor.
Noting more than 2 million private sector jobs have been lost in the past year, Seneca’s colleague, Rutgers professor Jim Hughes, described the current climate as a “national economic train wreck. The worst is yet to come.”
first!
danger in paris
http://edition.cnn.com/2008/WORLD/europe/12/16/paris.department.store.explosives/
Ecsond!
FED to cut again…
http://finance.yahoo.com/news/Fed-ready-to-slash-rates-amid-apf-13841341.html
Fed Predictions?
Let’s make this interesting, parlay bets only.
I’m going with a 25 bps cut and the word “contained” appearing in the statement. I reserve the right to collect additional bonus points if the statement is issued in Japanese.
I’m going with the FED and the over-
translation: the FED will cut 50 and then some, can you take a little more off the top? Just watch the ears…
From MarketWatch:
Goldman: Q4 reflects ‘extraordinarily difficult’ conditions
Goldman Sachs Q4 loss $4.97 a share vs $7.01/share profit
Goldman Sachs Q4 negative net revenue of $1.58 bln
Goldman Sachs Q4 net loss $2.12 bln
Actually, Susan Lucci is very nice, she lives in Garden City right near her daughter, there are a bunch of snooty stores like whole foods etc. over there but she goes over to the Garden City Park (Blue Collar side of town) Pathmart and goes shopping and says hi to everyone, she goes all the time by herself. She also does a lot of charity work.
BMW ain’t what it used to be. Loads of them going down the line at the Newburgh Dealer auto auction, my 2006 five series I bought sight unseen is mint but I just use it as a train station car, BMW has way too much inventory with three year leases from 2005-2007 flooding back in with no buyers, it is going to be a problem as any old joe can get one. At least Porsches did not flood the market with cheap leases. Heck the Saturn dealer near me has CPO BMWS on the lot cheap.
Clotpoll Says:
December 15th, 2008 at 5:11 pm
Got any Susan Lucci dafunk stories?
Bloomberg reprints some of the Madoff-related emails they have received.
Madoff Case Spurs Pleas for Information From Clients, Relatives
Housing starts gruesome -18.9%.
Fed goes 50% and does not make a single change to their statement from their last meeting.
Lower housing starts is good, in fact why are they building any new houses at all if they can’t sell existing inventory?
NY Boatshow attendance down 30%.
No recession here.
A builder that doesn’t build is not a builder.
never did I hear this term…
“forensic accountants ”
How would Quincy feel about this?
Does it even matter how much they cut?
It’s not going to do anything, you can’t force borrowing.
11 John- greed and stupidity
http://www.calculatedriskblog.com/2008/12/cartoon-bernanke-on-quantitative-easing.html
Will Bernanke say “quantitative easing?”
Lower housing starts is good, in fact why are they building any new houses at all if they can’t sell existing inventory?
Unfortunately, homebuilding is a productive effort and is reflected in GDP, not to mention the workers employed and wages paid. This is very different from the resale of used homes, which creates very little.
So yes, fewer new homes will go far to reduce the oversupply, unfortunately, there is a big price that will be paid here.
Consumer prices fall %1.7…
tosh, exactly
Fed goes 50 bps, announces program of alternative market operations.
This sets up the final move to ZIRP by February at latest. The serious depression talk will then begin in earnest.
Pension fund busts will begin by March 1. Riots will begin in CA when the gubmint is shut down and Calpers begins missing payments.
Fed has a new lending program, they are going to stick the taxpayer with the entire mess of MBS at Face value.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a.JuIfw6KbnY
Any opinions?
The mortgage rates need to fall to ease the impact of the option arm and Alt-A loans that are to reset 2009 -2011.
If that is so, won’t they need to stay low for ….a few years?
tosh (15)-
I’d only borrow right now in order to buy more guns and ammo.
The Fed cuts 50%. The phrase “buy gold” does not appear in their statement.
Does it even matter how much they cut?
At this point? No.
They can’t keep the fed funds rate at the target. In fact, fed funds have been significantly below the target for some time now. Essentially, fed funds is already running close to zero.
http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm
It is clear that the Fed has no intention of defending the target rate it sets.
Overnight fed funds was 0.18% last night, it went as low as 0.11% on 12/10. Over the past month it has only been as high as 0.62%.
For all intents and purposes, the current fed funds rate is already under 0.25%.
I’m still looking at these listings.. both the ones I receive and those online and the prices are still not too far from peak. A 3/1 split in Paramus for example is only 5% difference from peak. I know, Spring of 2009 is going to be a bloodbath. (sarcasm still on)
I don’t know why these NJ business owners are so glum; our frigging governor is the former co-head of GOLDMAN SACHS!!!! Relax people we are in great hands. Nothing says “I know what I am doing” more than having GOLDMAN SACHS on your resume.
clot (24) -
i’d suggest that purchasing in bulk would further increase your leverage model.
This sets up the final move to ZIRP by February at latest. The serious depression talk will then begin in earnest.
Amen brother!
Cindy (23)-
Virtually all those loans are pegged to LIBOR. Only a select few are pegged to FFR or moving Treasury averages…and they are the crummiest and riskiest of the whole stinking lot.
And, as we’ve seen recently, ARM reset rates don’t matter. The problem borrowers default on the teaser rate. They couldn’t pay, even if the rates were 0%.
hehehe (28) -
i would say that having GS on your resume really only means that you are able to deal with slave labour
Moody’s busts GS debt to A1, outlook negative.
Pfft…
From MarketWatch:
Housing starts plunge 18.9% to record low
U.S. home builders threw in the towel in November, slashing construction of new homes far below the worst levels seen in 50 years, according to Commerce Department data released Tuesday.
New starts dropped an eye-popping 18.9% to a seasonally adjusted annual rate of 625,000, the lowest rate since the Commerce Department began keeping records in 1959.
According to similar records kept elsewhere, it’s the lowest pace of construction in the post-war period.
Starts were far lower than the 740,000 expected by economists surveyed by MarketWatch. The monthly percentage drop was the most since a 26% decline in March 1984.
Starts in September and October were revised lower. In October, starts were revised to a record-low annual rate of 771,000 from 791,000 previously.
Building permits, a separate, less-volatile measure of new construction, fell 15.6% in November to a seasonally adjusted annual rate of 616,000, also a record low. Permits for single-family homes, considered by many analysts to be the key number in the report, fell 12.3% to a seasonally adjusted annual rate of 412,000, a 27-year low.
Starts of single-family homes dropped 16.9% to an annual rate of 441,000, also a record low.
Housing starts have now fallen 47% in the past year. Building permits are down 48%.
grim (26)-
“It is clear that the Fed has no intention of defending the target rate it sets.”
The above sentence should be put into the 2008 time capsule.
(31) Clot - I was just feeling guilty about having my daughter lock in at 5.8% a year ago - remember?
On your #21 - I think what is more likely to happen…first… is that many states will follow what Nevada is doing - freeze “steps” built into their pay scales and stop cost of living raises. (We haven’t seen one of those for two years here.)
http://www.cnbc.com/id/28174840
I want 75bps and the Fed to start buying directly, so they can create liquity and take away liquity. I want the Fed to backstop State GO bonds to drive down interest there. I want GMAC to be a bank by March so they can issue 50 billion in FDIC bonds backstoped by the US and loan it all out to GM, Chrysler and Ford Financing in 3,4 and 5 year car loans and to suport Dealers. I want the Fed to take more toxic assets off balance sheets. In other words I want it all and I want it now.
Best Buy 3Q profit sinks, offers buyouts to most corporate staff
MINNEAPOLIS (AP) — Best Buy says its third-quarter profit sank and says it will offer buyout packages to nearly all its corporate employees in an effort to cut costs.
The nation’s biggest consumer electronics retailer also said Tuesday it plans to cut capital spending by 50 percent in 2009.
It says its profit fell 77 percent to $52 million, or 13 cents per share, in the three months ended Nov. 29. That’s down from $228 million, or 53 cents per share, a year ago.
Excluding a charge related to a decline in market value of its stake in U.K. company Carphone Warehouse, it says net income was 35 cents per share.
It says revenue rose 16 percent to $11.5 million from $9.93 billion last year.
Analysts polled by Thomson Reuters says analysts expected earnings of 24 cents per share.
Dec. 16 (Bloomberg) — Treasury 30-year bond yields fell to a record low as government reports showed inflation dropped by the most on record last month and the Federal Reserve was expected to cut borrowing rates to near zero percent.
The 10-year note’s yield dropped to 2.465 percent, the lowest level since the beginning of the Fed’s daily data in 1962, as investors sought the highest yields of the safest government securities. The Fed also may also say it’s considering unconventional methods such as buying long-term debt to keep interest rates low.
Cindy (36)-
I think freezes to pre-set pay scales and raises is a best-case scenario.
Just as an insolvent homeowner cannot pay a mortgage even at 0% interest, an insolvent pension fund cannot make payments of any type, at any rate.
So many pensions are hiding their absolute and imploding exposures to non-recourse commercial RE development that just a little more deterioration in that sector will finish them off. And, sadly, that further deterioration is nigh.
People are locking in a 2.9% taxable rate for 30 years!!
The 30-year bond’s yield fell two basis points to 2.93 percent after touching 2.922 percent, the lowest since regular sales of the security began in 1977. The five-year yield gained one basis point to 1.50 percent. The three-month bill rate was at 0.04 percent.
Johns right about the leasing phenomenon….another way for Americans to feel like high rollers….and something that even ’smart’ people think is the way to “buy” a car. My lord.
I wonder if it’s time to start the Predictions for 2009??
Can we bring up the thread with last year’s predictions?? OK….who had the Dow at 8600, the S&P at 860 and Fed Funds at 0%
And who predicted the collapse of several large financial companies, the takeover of several more, the calamity in the auto sector, and creation of a Congressional Relief for Asset Plan (CRAP) that would give away Billions of freshly printed dollars without revealing the recipients??
Anybody?? Bueller??
“Housing starts plunge 18.9% to record low”
More unemployment for Mexicans.
John (37)-
In other words, you’d like the snake to quit munching its tail and just go ahead and consume itself completely.
The really frightening thing is that there are hundreds of others who think just like you on Wall St and in DC.
And I’m pretty sure you guys are gonna get your way.
(40) Clot - Here is the most powerful union in our state. There is currently talk of housing non-violent offenders in Texas which would save the state some $5B a year…($21,000 vs. $44,000.)
http://www.politickerca.com/jeffmitchell/2791/california-prison-guard-union-drops-recall-effort-schwarzenegger
(40) also Clot - Heard this just the other day…There is talk of freezing state salaries for those with incomes over $140,000 a year. Of course, the special interest councils retired politicians work on fall just under that threshold.
Cindy (46)-
They should just do with the jailbirds what they do with the homeless in Santa Monica: buy them a one-way bus ticket out of the state.
The 21K cost now drops to the price of a bus ticket.
You don’t like it cause to fix the little guys problems you first have to fix the big guys problems, trickle down economics is a funny thing to explain to a person who is eating at KFC with a coupon on Christmas day
Clotpoll Says:
December 16th, 2008 at 9:01 am
John (37)-
In other words, you’d like the snake to quit munching its tail and just go ahead and consume itself completely.
(48) No doubt…A few bus tickets are in order. Our state is messed up! Lord help me, I love the place…
Soooo, we’ve seen the collapse of the mortgage insurers, a bunch of IB’s, a number of CBs, a few large US industrial manufacturers and numerous retail outlets. Who is next?
My bet is the states going bust; NY & Cali I’m looking at you, but I’m not sure if I’m missing someone/something big.
John (49)-
Right. You guys make a f*$%ing botchery of everything, rob us all blind…then help yourselves first when everything turns to shit.
Which also trickles down.
Trickle down economics is a funny thing to explain, because it doesn’t work.
November housing starts graph from CR:
http://3.bp.blogspot.com/_pMscxxELHEg/SUewySB4rsI/AAAAAAAAEBA/6olctpcMIHo/s1600-h/HousingStartsNov2008.jpg
Not pretty.
Serious question. Have read a lot about how hard it is to own guns in NJ. Is the reputation worse than the reality or is it more trouble than its worth?
Clot on fire today…
Trickle down works, the last stimulus checks that went to the poor paid for 110 dollar Asian nikes and $700 asian plazmas. A tax cut or break for the better off will let them keep their maid, lawn service, nanny, trainor, car detailer, nail salon, drycleaner and local restaruants and car dealers workers all humming along. That same check to a poorer person is just a Jap Plazma thrown in the cart at BJs. Of course this is assuming the rich continue spending like drunk sailors, if the rich start hoarding cash like the banks we are all in trouble.
Fed Predictions?
Tough call. Normally I would say 50 bps, but we could be facing deflation and the Fed is almost out of bullets. With the markets in a period of relative calm (as opposed to crashing as normal), I think you cut 25 bps today and save a 50 bps bullet for when the next shoe drops.
Statement will say inflation is contained as expected, but nonetheless the fed remain vigilant, it will extol the benefits lower fuel prices, it will point to tentative signs of improvements in the credit markets, it will also highlight the downside risks and make it clear that the fed is open to further easing and other actions necessary to consistent with promoting functioning markets.
JOhn the X factor in trickle down is how the rich are destroying themselves as we speak.
Another Montclair price reduction….with granite!
GSMLS ID: 2502220 - 224 Gates Ave
OLP: 945,000
LP: 799,000
http://newmls.gsmls.com/public/show_public_report_rpt.do?report=clientfull&Id=38934505_6166
Interestingly enough, this home successfully appealled their tax assessment this year. Original assessment was 945k. The new assessment is 800k. The entire assessment reduction was taken off the improvement, not the land. The breakdown for this house is now 665,200 for the land and only 134,800 for the improvement (formerly 279,900). The improvement value of this assessment is now below the 1989 assessment. How can that be? Shouldn’t the granite alone be worth 150k?
Watch CIT today, closer to being a bank and they will get a lot of cash to lend out!!
Gator (60):
I drive by that house everyday to work. What the pictures do not show is the house has no backyard and the road 25 feet behind the house.
$799,000 is still too high for this house.
327 gary: know, Spring of 2009 is going to be a bloodbath. (sarcasm still on)
It will be a bloodbath.
Goldman Sachs Cuts Jobs, Slashes Average Pay 45% to $363,654
#37 John You have gone from Wall St tough guy to Che Guevara
“Slashes Average Pay 45% to $363,654″
You call this a recession???
Give me this pay anyday. 98% of people in this country would love to make $363,654. The boom lives on.
Trickle down economics = BS excuse for continued tax cuts for the wealthy.
The only thing that trickles down will be urine down your pant leg when you’re forced into homelessness!
#51 toshiro:My bet is the states going bust; NY & Cali I’m looking at you, but I’m not sure if I’m missing someone/something big.
Are you forgetting the People’s Republic of NJ??
I have even designed a new flag;it is hanging on my office wall. It is a real conversation piece.
#12 Stu - my brother is working that show…i will try to get you an update
Re: Trickle-down economics
The past 8 years are proof that trickle-down economics doesn’t work. The wealthy got their massive tax cuts in 2001 and 2003. The economy is now tanking.
Before that, the Reagan tax cuts led to a recession in the ’80’s.
Before that, tax cuts for the wealthy in the ’20’s led to the Great Depression.
I don’t think it’s a coincidence.
3b [63],
It’s going on 2 years now that we’ve been having this discussion. :) It was Spring, 2007 then 2008, etc. Perhaps next year we’ll try again.
Give me this pay anyday. 98% of people in this country would love to make $363,654. The boom lives on.
I’m sure during the Great Depression, 98% of people in this country would have loved a wage 3 standard deviations above the mean too.
What does this prove? Joe Sixpack always wants a pony.
#71 gary True my brother very true.
However, look at what has happened in the last 2 years, Many of us herre predicted it would get bad, most of us probably did not expect it to get this bad, but it did.
Do you really believe that after all that has happened that real estate will not suffer dramatically.?
I have bored people to tears with my recollections of the last housing bust recession, which had house prices decline dramatically.
This housing bust/recession/financial meltdown is going to make that one look like a small burp.
Grim,
“The boom lives on.”
You would be wise, to completely ignore the troll.
Trickle down economics is just as sane as a proposal to build a skyscaper from the top down. Any structure is doomed if it doesn’t have a sound foundation.
——————————-
SC
I dont believe the tax cuts of the 20’s led to the depression. While it certainly didnt help the situation, industrial excess capacity was a big part of the problem. HMMM, china now has the same problem. uh-oh!
What does this prove?
It proves that many people still have well paying jobs. vs. the gloom and doom presented on this blog.
#74,
Stu, you can’t handle the truth so you have to call people names?
“Financials stand out as the morning’s strongest gainer. The sector is currently up 2.6% after Goldman Sachs (GS 69.63, +3.17) unveiled its latest quarterly results. Goldman reported a deeper-than-expected loss and had its credit rating downgraded to A1 by Moody’s. Moody’s also gave Goldman a negative outlook.”
Market is on stupid again!
Gary,
I agree with you, I thought we would see massive price reductions earlier. There may be no bloodbath. Maybe people will cling to their houses for 10 years to “get their price”. But its gonna be a long bloodletting. Because I am clinging to my money.
#68 - Are you forgetting the People’s Republic of NJ??
Nope, I’m just betting that Cali and NY (especially NYC) are in far worse shape the NJ.
I’m further betting that NYC’s financial problems have been masked by the boom, both from the real estate transfer taxes and Wall St. Now that they’re no longer there the rot will be exposed.
But Cali first I think.
I think I spotted an actual photo of our famous realtor turned hedge fund manager…
http://preview.tinyurl.com/Theboomliveson
3b (65)-
When the heat is on, all these WS guys show themselves to be the pussies we all suspected they were all along.
Stu (78)-
Time to take the actions that will pay off when the lemmings get spooked again and rush for the exits.
All Hype 62 - Even more ironic then that the town has left a land assessment of over 600k.
This is the Montclair settlement model. All reductions come off the house. If they take it off the land, they probably have some obligation to make adjustments for the neighbors. Our settlement was handled in the same way.
Ridiculous that a 3000SF 4BR, 3BA house built in 1968 with updates and central air is valued at only 130k. Our 1923 house that is smaller and lacking central air and the other amenities is valued significantly higher than that.
NY Boatshow attendance down 30%.
No recession here.
Attendance is one thing. I want to know the sales numbers. These days I’m seeing more yaght fires then yaght sales.
From the Best Buy (from Stu’s article @ #38)press release:
“We believe that there has been a dramatic and potentially long-lasting change in consumer behavior as people adjust to the new realities of the marketplace”
If they’re correct, and I think they are, it doesn’t matter what the Fed does. Things are going to get very very ugly.
Check this guy out…. I think he has 1 up’d madoff. Swindled with glaciers!!!!
http://www.globefund.com/servlet/story/GFGAM.20081212.RSPORK12/GFStory/
The founder of Sextant Capital Management Inc. vowed yesterday to fight allegations that his firm juiced hedge fund returns by investing illegally in Icelandic glaciers.
“Significant performance fees, in excess of $3-million have flowed out of the Sextant fund, based entirely on its purported rate of return. Fees for the month of November, 2008, alone were assessed at over $1.5-million,” according to the allegations.
The penalties for violating this section of the securities law include a possible fine of up to $1-million.
——-
Sweet, he books 3 million in fee’s and only has to pay a 1 million penalty?
gatror 84
Ridiculous that a 3000SF 4BR, 3BA house built in 1968 with updates and central air is valued at only 130k. Our 1923 house that is smaller and lacking central air and the other amenities is valued significantly higher than that.
Time for a second tax challenge?
I am just a freedom fighter for us middle class people just planing some mustard seeds to help the masses. God Bless the UAW!!
“God Bless the UAW!!”
I just threw up in my mouth
BOSTON (MarketWatch) — Keefe, Bruyette & Woods on Tuesday forecast price depreciation of roughly 5% on new U.S. homes and losses of between 5% and 10% on existing homes for 2009, but expects prices to bottom by spring. “While we expect the current environment of limited liquidity and continued credit deterioration to persist into 2009, we expect both home prices and asset prices to bottom in 2009,” KBW analysts wrote in a report. “We expect credit losses to stabilize once home prices stabilize.”
The past 8 years are proof that trickle-down economics doesn’t work. The wealthy got their massive tax cuts in 2001 and 2003. The economy is now tanking.
The rich pay a larger share than ever.
Total Income Tax Shares, (Percent of federal income tax paid by each group)
Year Top 5% Top 10% Bottom 50%
1980 36.84% 49.28% 7.05%
1985 38.78% 51.46% 7.17%
1990 43.64% 55.36% 5.81%
1995 48.91% 60.75% 4.61%
2000 56.47% 67.33% 3.91%
2005 59.67% 70.30% 3.07%
2006 60.14% 70.79% 2.99%
http://www.taxfoundation.org/taxdata/show/23408.html
“I am just a freedom fighter for us middle class people just planing some mustard seeds to help the masses.”
What middle class?
I’m beginning to think that the middle-class is just the second ring in the three ring circus.
Goldman Sachs Cuts Jobs, Slashes Average Pay 45%
The more I read that the better it gets.
Too bad I not in the city, otherwise I’d take a walk over to 20 Pine and see how negotiable some of those prices are.
Funny, people wearing AIG logos were spit on recently but I was in line to buy some real Italian Delli stuff and a visiting GM worker from the midwest was in front of me with his save GM and UAW button and jacket. The women in front of me and the delli guy both wished him good luck and said they hope GM gets a bail out and he does not lose his job, meanwhile wear and AIG hat and you might get spit on. You people type on keyboards and push paper and do not make a real product for your six figure salaries, the GM workers who are real americans make an actual product, God Bless them they are true american heros.
Clot (48) -
Or just transport them to Australia! Worked for the Brits…
#23
“The mortgage rates need to fall to ease the impact of the option arm and Alt-A loans that are to reset 2009 -2011.”
that is a good point. I am envisioning 0% equity refinancing at sub-5% (with purchase loans on same terms) being made available via FHA starting in 2009. Millions of people will still get foreclosed, but it will mitigate the damage.
John,
“we expect both home prices and asset prices to bottom in 2009,”
Remember this line. I will repeat it to you in 2010.
Kettle 88 - Already working on it. This year I am making Stu get more involved. He is the master negotiator, I am merely the information hound.
#27
“I’m still looking at these listings.. both the ones I receive and those online and the prices are still not too far from peak. A 3/1 split in Paramus for example is only 5% difference from peak. I know, Spring of 2009 is going to be a bloodbath. (sarcasm still on)”
Gary– I get the same sort of listings and they are a joke. Most of these people have been trying to sell for 2 yrs now. Asking price is not the market
[55] DL
NJ is bad, tho not as bad as Mass. To own and buy ammo, you get an f.i.d. card. To actually buy the hardware, you must get a permit to do so. Apply at police station and wait for months until they get to it.
If you are out of state, buy there. But be careful to buy only what is permitted in NJ (which is next to nothing as it turns out).
NJ will ask you to register your hogleg, but that is voluntary—don’t do it as they may change the banned list and come looking for you.
I can’t tell you to buy something that is quite normal elsewhere but runs afoul of the bizarre NJ laws, but know that no one will know if you bring the piece that can accept banana clips into the state from outside unless you get stopped or actually use it in NJ.
Bottom line is that NJ is bad, but not the worst and not impossible if you actively assert your rights.
Stu Says:
Why, I don’t think housing will bottom in 2009, I just posted the KBW Research. Even when housing turns around until it is increasing greater than inflation each year it has not really turned around and that should be around 2015.
December 16th, 2008 at 10:30 am
John,
“we expect both home prices and asset prices to bottom in 2009,”
Remember this line. I will repeat it to you in 2010.
John….putting a bolt on a car frame does not constitute a ‘hero’….perhaps hero is the most abused term of the 21st century.
Which of these headlines does not seem to make any sense, given the others? I just copied them in order from the CNBC front page:
Fed Moving In Uncharted Territory With Rate Cuts
Goldman Posts $2.1 Billion Loss, But Shares Rise
Consumer Prices Take Another Record Plunge
Housing Starts, Permits Plummet to Record Low
Bank of America Stock Could Fall to $9: Analyst
Waters(92),
“The rich pay a larger share than ever.”
And rightfully so!
Did you know the word “phoney” has its roots in an 19th-century scam called the fawney-rig, in which a con man takes a cheap brass ring, pretends it’s gold and sells it to a sucker for more than it’s worth?
This is the premise behind the Fed buying toxic assets.
These are jobs that people have that are subject to market forces like everything else. We need to stop throwing money at the problem.
Another $380 million goes poof.
Dreier’s Firm Will Seek Bankruptcy Protection, Receiver Says
reier, the law firm whose founder is in prison for cheating hedge funds out of more than $100 million, will seek bankruptcy protection, its receiver says.
Marc Dreier, who is being held on federal criminal charges, may seek protection too, said the receiver, lawyer Mark Pomerantz, who was appointed to run the firm. In a Dec. 11 letter to U.S. District Judge Miriam Cedarbaum in Manhattan that was publicly filed yesterday, Pomerantz alerted the judge to the anticipated bankruptcy filings.
“I have advised counsel for the SEC and counsel for Mr. Dreier of my intention to seek bankruptcy protection, and I believe that Mr. Dreier himself will file a personal petition for bankruptcy in the near future,” Pomerantz wrote.
Prosecutors said Dreier, 58, a graduate of Harvard Law School and Yale College, convinced two unidentified hedge funds to give him more than $100 million by claiming, falsely, that he was selling at a discount notes issued by New York developer Sheldon Solow. Dreier hasn’t responded to the charges. At a court hearing on Dec. 11, prosecutors said they believe Dreier stole $380 million.
Shore Guy (104):
“Bank of America Stock Could Fall to $9: Analyst”
That is a dumb chart, the poor of the 1980s are the rich of the 1990s and 2000s. You are comparing people versus them selves, the poor of today will be the rick of the 2010s and 2020s, we all start at the bottom and work our way up.
waters Says:
December 16th, 2008 at 10:22 am
The past 8 years are proof that trickle-down economics doesn’t work. The wealthy got their massive tax cuts in 2001 and 2003. The economy is now tanking.
The rich pay a larger share than ever.
What do you do for a living?
Essex Says:
December 16th, 2008 at 10:35 am
John….putting a bolt on a car frame does not constitute a ‘hero’….perhaps hero is the most abused term of the 21st century.
#66
“GS Slashes Average Pay 45% to $363,654″
this is an average. take out the outliers and your run of the mill associate or VP is suddenly not much better paid than many professionals in other industries. this is a huge blow to the people in these positions, many of whom live extravagantly
John (110):
I agree wholeheartedly. That chart revealed absolutely nothing to support his argument. If anything, Waters seems to think that we should all pay the same tax rate. I suppose he wants McDonald’s to become self service?
John (110):
I agree wholeheartedly. That chart revealed absolutely nothing to support his argument. If anything, Waters seems to think that we should all pay the same tax rate. I suppose he wants MickeyDee’s to become self service?
I just got the news:
I got my loan.
go me.
rah.
A few weeks ago I mentioned that a friend of a friend put his house up in the Northern end of Glen Ridge for 24% above the early 2001 purchase price. I just got word that they got 3 offers at asking price and took the one without a contingency.
3B: You said this house would rot on the market with all the other listings. In your defense, you thought I meant Glen Rock and not Glen Ridge and I agree that anything can happen in the next 3 months. This could obviously fall out of bed. The taxes on this house are $19k!!! I just wanted to give everyone the update.
Dec. 16 (Bloomberg) — An Israeli tourist bus plunged into a ravine in the Negev Desert today, killing at least 20 people and injuring another 30, a spokesman for the emergency medical service Magen David Adom said.
On another note, although there were only 50 people on bus there has already been 175 people claiming to have been passengers on the bus and all 175 are suing.
There’s no way in hell this is applicable company wide at GS. I feel like this is just a construed figure made to appease the masses.
“I agree wholeheartedly. That chart revealed absolutely nothing to support his argument. If anything, Waters seems to think that we should all pay the same tax rate. I suppose he wants MickeyDee’s to become self service?”
Maybe you misunderstood my argument. My argument is that the so called “massive tax cuts for the rich” have not decreased the tax share paid by the rich. In other words, the “massive tax cuts” are way overrated. And yeah, that data kind of supports that.
#76 Frank:It proves that many people still have well paying jobs. vs. the gloom and doom presented on this blog.
Yeah but how many of those are out buying houses now? How many of those already have a house,and do not need or want to purchase another?.
How many of those who own a house are now underwater?
How many of those may not be able to hold onto the house they have, or the high paying job, and on and on.
How dense are you?
Re: (64)
lets have a cookie sale for the goldman guys….
#79 Ray CMaybe people will cling to their houses for 10 years to “get their price”.
Yeah, maybe for those who can. But what about all of the people who have to, need to or want to sell.
How about death, divorce, job ghanges/loss, inheritances,old age,and on and on.
Will all of these people wait 10 years? They did not during the last housing bust?
In case any of your cheapos are breaking out the wallet to take your wife out to dinner,
Top New (Or Revamped) NYC Restaurants of 2008
1. Bar Boulud
2. Corton
3. The New Momofukus: Ko, Bakery & Milk Bar
4. Tom: Tuesday Dinner
5. Convivio
6. Allegretti
7. Matsugen
8. Tie: Wine Bars at Adour, Terroir; Cocktails at Bar Milano
9. Irving Mill
10. Commerce
comp for a lot of people will never be as high as it was during the past few years. my question is how many people bought houses during the last few years based on the assumption that they would continue to make the same or more? I can see the kind of distress resulting from this becoming much more substantial than job losses because it could be more widespread
I have already seen one example in a short sale I looked at that was owned by a mortgage broker/realtor couple. I’m sure they were rolling in dough in 2005, but will probably never make close to that again. Didn’t stop them from buying the maximum they could afford in 20045, however
#98 Stu:we expect both home prices and asset prices to bottom in 2009,”
Too bad they do not explain how that will occur during a recession. So unemployment will continue to rise into 2009. (For our area the Wall St job machine is dead for the next several years), and yet somehow prices will bottom in 2009??
Prices cannot bottom, until we are out of the recession, and we are not coming out of it in 2009.
A few weeks ago I mentioned that a friend of a friend put his house up in the Northern end of Glen Ridge for 24% above the early 2001 purchase price. I just got word that they got 3 offers at asking price and took the one without a contingency.
24% above the 2001 purchase price? Cheap.
Period.
According to the S&P Case Shiller Tiered HPI for the NY Commuter Area, focusing on the $500k+ group, 24% above a 2001 purchase price would still be significantly below the current HPI.
24% above the 2001 purchase price means it was priced somewhere around 2004 levels. Which, coincidentally are what we are seeing today.
“And yeah, that data kind of supports that.”
Too many variables at play to try to use those tax revenue charts to make any reasonable statements. Maybe the tax cuts on the wealthy resulted in more investment income during a bull market resulting in more income and more taxes being paid by the wealthy? Or, just as likely as the tax cuts for the wealthy resulting in less govt. spending dollars for the lower income groups resulting in less tax revenues coming in from that group also making the percentages go top heavy.
119…raises hand.
#125
Grim: agreed. My point was that we were headed in the right direction, slowly, but were going. I thought this was a clean house, priced aggressively and would move quickly, and it did.
3b says, “How dense are you?”
Knocking sense into Frank is like arguing with a drunk. Only the drunk has a legitimate excuse.
“I thought this was a clean house, priced aggressively and would move quickly, and it did.”
It didn’t yet. Let’s see if the buyer gets the loan first.
#115 doyle: It may close, or it may still rot on the market, who knows.
But anybody who paid full price for the house in this environment cannto be IMO too smart, unless money is absolutely of no concern.
Ther was a house that closed in my town in May of 2008, fastforwrd to now,and there is the exact same house down the block with significant updates as opposed to the one that closed in May, listed for 100k less. That IMO has to hurt.
Stu: true. Which I attempted to caveat in my first post.
#122 - comp for a lot of people will never be as high as it was during the past few years. my question is how many people bought houses during the last few years based on the assumption that they would continue to make the same or more
I’ve been thinking the same thing. I’d wager most of them were not considering declining wages going forward. Add to that most of them were counting on MEW for retirement/a little extra cash when needed and we have some very serious problems which the Fed can’t cure.
3122 skeptic:my question is how many people bought houses during the last few years based on the assumption that they would continue to make the same or more?
Alot, many though the party would go on forever, and made decesions predicated on the belief that they would continue to earn the same income or more.
#119,
Guess what?? Most people are struggling on a daily basis, so I don’t feel bad about anyone making 300K+. Maybe Goldman employees need to fly first class instead of private plane. Weeeeeeee
How dense are you?
#3b
It may or may not close, not disagreeing.
Disagree: people buy for all sorts of reasons, if they’re buying within their means and not leaving for a long time then they’ll be fine. I agree they should wait if they can.
But anybody who paid full price for the house in this environment cannto be IMO too smart, unless money is absolutely of no concern.
This is a silly statement based on the assumption that every asking price is overpriced, which simply isn’t the case. Sure, many are, but you would be doing yourself a disservice if you make broad generalizations that every ask is x% too high.
This is one of those “price of everything, value of nothing” scenarios.
#129,
Stu, you can’t handle the truth, so you are trying just about anything.
#136 Doyle: Understood, I did not fully read your original post (24% above 01 prices),which as grim pointed out translates to 2004 price levels.
Shore 104,
makes sense if you consider GS is a gold bank and is taking delivery of physical. If they can weather the short term they could make a killing in the near future. although JPM seems to the master at that game. It also doesnt hurt to have your buddies running the show.
“According to the S&P Case Shiller Tiered HPI for the NY Commuter Area, focusing on the $500k+ group, 24% above a 2001 purchase price would still be significantly below the current HPI.
24% above the 2001 purchase price means it was priced somewhere around 2004 levels. Which, coincidentally are what we are seeing today.”
Agree that a nice house priced at 2004 level will sell right now, especially if it is in the 500-700k range.
I think there are 2 reasons for this. 1 is that there is a degree of pant up demand. If your typical buyers for houses in this price range are dual income professionals, making low 6 figures combined, now these houses are reasonably affordable, whereas when they were 20% higher, they were a stretch (which many people bridged with a sketchy loan).
The other contributing factor is the higher conforming loan limit. I am curious to see what happens to this segment of the market next year when the conforming limit is lowered to 625k from 729k.
I still think 2004 prices are not sustainable long term, but it is understandable to me why some people are being drawn into the market right now, especially in that 500-700 category
#137 grim: Undestood. I noted that I had not paid attention to the fact that the price was 24% above 2001 levels. Mea culpa.
Taking the day off and perusing through the GSMLS. I’m actually starting to feel sorry for how disillusioned some of these sellers are at the moment. For some of the towns I have been keeping tabs on, I see some houses that have been on the market for a year or maybe even two years. Same exact house, with only moderate discounts from their original ask. If they were not so stubborn or so out of touch with reality, they would have made the price cut much earlier and deeper to generate a little price competition. Must reiterate that in a falling market, you have to be first to cut to get the buyers. Draggin your feet only works to your advantage in a rising market. 2009 and 2010 are not going to be pretty and expect nothing for at least 3-5 years after. So unless you really want to hold another 5-10 years to get the 2005/6 price, be my guest. I’ve been waiting since 2004 to buy. Four years, two kids and counting. I’m now getting back to 2004 prices, if we get pre-2002 I’m all in.
yeah, but john, do you have photo evidence to back any of this up? that’s where i have the edge on you.
so looks like our realtor is ready to put in the offer tonight/tomorrow for 525k. they are asking 600k.
our agent is aware that the short sale they are going after was asking 600k, and they have an offer in for 550k. that has been accepted, they just have to decide if they want it or not.
now if you have a place locked up at 550k, you got a “50k haircut.” would you be more/less inclined to sell your place for 525k, which would be a “75k haircut?”
i can’t imagine that this would be a dealbreaker. if they counter, our max is 535k. anything over and no pool :(
so we aren’t going over.
hard Place,
we constantly debate when and at what rate the drop in prices really starts to show up. But we have to keep in mind that housing is fairly illiquid.
Most recent buyers cannot sell their home even if they want to becuase they are underwater. Even if they are not, many people will have a tough time trying to qualify for even a similar mortgage to what they are trying to sell.
I think what we are currently seeing is that a large percentage of people are trapped. Short of walking away from the house, owners cannot sell because many cannot qualify for a new mortgage, or they are upside down and dont have a check to bring to the table.
On top of that add the emotional factor. How many people want to admit the degree of financial bull they have stepped in. how many people can even afford the transactional costs even if they can sell and potentially qualify for a new mortgage.
Still another factor is employment. Even if all the other factors align how many people want to risk such a move when there is so much much uncertainty in the job market?
The process of deflating the housing bubble will likely take a decade, its a glacial pace.
Arena Football cancelled their 2009 season.
http://biz.yahoo.com/ap/081216/fba_bye_bye_afl.html?.v=1
Is NASCAR next?
I would be curious to hear people’s thoughts on the dropping of the conforming loan limit from 729k to 625k next year. I actually think it is going to have a very significant impact on the NYC suburbs, but maybe I am overestimating its impact. This just seems to me to be a very critical segment of the suburban market (e.g., median house price in Westchester falls in this range).
One of my sisters finally admitted that they are out at least 100,000$ for the house they have bought. They are now thinking of not making any more mortgage payments and walking before an eviction.
At this point they don’t care about buying a new house since the market wont recover for a few years anyway.
Oddly strange since I couldn’t get them to admit that they had lost gobs of cash six months ago.
Skep,
I have noticed that FHA and VA are making 50+ percent of the loans around my area. If the conforming loan limit is changed then it will have a very significant impact on sales above the conforming limit.
data shows comp stagnating nationally (from WSJ):
*******
Earlier this month, the consulting firm polled 640 U.S. employers representing nearly 13.5 million workers. While 25% said they’re still considering further changes to their base salary spending for 2009, twice as many, or 50%, of employers polled said they’ve already slashed their budgets.
There’s a slight silver lining for rank-and-file workers in comparison with executives at firms that say they’ve reduced or may reduce the raise pool. The average annual merit increase for blue-collar workers is projected to be 2.6% with 2.5% for white collar workers, versus 2.2% for executives.
Still, both groups of employees will see their incomes grow by the smallest amount since Hewitt began tracking the data in 1976. It’s also below the 3.1% level employers reported offering in 2001 following the Sept. 11 attacks.
“Three percent has always been this psychological threshold that companies have never been willing to cross before,” says Mr. Abosch. “Now it looks like they’ve blown that away. This is really dramatic.”
************
Doubt it, on million dollar homes in a down market no-one is taking out very large mortgages anymore. I think anymortgage over 400K scares people.
skep-tic Says:
December 16th, 2008 at 11:35 am
I would be curious to hear people’s thoughts on the dropping of the conforming loan limit from 729k to 625k next year. I actually think it is going to have a very significant impact on the NYC suburbs, but maybe I am overestimating its impact. This just seems to me to be a very critical segment of the suburban market (e.g., median house price in Westchester falls in this range).
Frank,
I just want to help you out:
Which Survival Food is Best?
http://bulk-survival-food.com/survival-food-options
I think rather than go less than 3% they should do zero % and give a cash bonus equivlent to last year’s raise. Long run better for employer short run better for employee. Given 1.5% is just and insult, I would rather have nothing and a bonus.
Nicholas (148)-
Walking away is the dumbest possible thing to do. They should go the short sale route.
If they play it right, they can stay for a good while and mitigate both their loss and the bank’s.
He (152)-
Don’t bother. When Frank taps out, it will be straight to Friskies and dumpster diving.
#145 kettle; I agree with much of what you say. Howver, ther are many sellere or woudl eb sellers out there who do nto fall into that category.
If you bought 10, 20, 30, years or more ago, and want to sell, I believe you will.
I cannot see these people waiting around for 10 years to get their so called price that no longer exists. I saw it last time around as well.
Sorry for the long post:
New $3 Trillion Bailout Is Coming to the Masses
Pollster Frank Luntz asked a large audience at a conference in Washington last week to raise their hands if they had received a government bailout. While they chuckled and rested their hands on their laps, Luntz made an important observation. Bailout money is snowing down in an unprecedented blizzard, and if the moves fail to stimulate the economy, there will be a lot of angry voters Perhaps the same realization moved President-elect Barack 0bama’s economic advisers to begin considering a bailout for the masses If Luntz asks the same question a few months from now, everyone may well lift their hand.
Bloomberg News last week reported that the chairman- designate of the National Economic Council, Lawrence Summers, had been conferring with conservative icon and Columbia Business School Dean Glenn Hubbard about a housing plan Hubbard designed with Columbia colleague Christopher Mayer. 0bama’s economic advisers appear to have embraced the proposal, which is already “on a fast track at the Treasury,” according to the story. The Hubbard-Mayer plan calls for the government to revive the moribund housing market by providing just about everybody with access to a 30-year fixed-rate mortgage with a 4.5 percent interest rate. That’s almost a full percentage point lower than the average national rate of 5.47 percent currently.
Buyers could borrow as much as 95 percent of the value of the home they purchase. The plan might extend to those with existing mortgages, allowing them to refinance and get the same terms. When either type of deal is complete, the lender will place the loan with Fannie Mae or Freddie Mac. Anyone refinancing with positive equity in their home would be relatively easy to accommodate. For those with negative equity — meaning the dollar amount of their mortgage exceeds the value of their house — Hubbard and Mayer recommend that homeowners and lenders split the loss evenly and start over with a clean mortgage reset to reflect the property’s current market value.
With some forecasts for fourth-quarter gross domestic product growth inching toward negative 8 percent at an annualized rate, drastic policy measures are becoming increasingly palatable. This mortgage plan is radical, and might just be powerful enough to help turn this troubled economy around. The bottom line: if you have a mortgage, this plan would put extra money in your pocket Imagine, for example, that you have a $500,000 mortgage with a 30-year fixed-rate loan carrying an interest rate of 6.1 percent, the average rate for a fixed 30-year mortgage issued this year. Lowering the interest rate to 4.5 percent would reduce monthly payments by about $500 monthly. Someone with a mortgage of $150,000 would save about $150 a month.
These monthly payments changes are different from tax rebates because they would last for many years. For that reason, consumers would be fairly likely to increase their spending. After all, if your monthly housing expenses just dropped by $400, then adding a new car payment of $300 a month might seem a lot less frightening, even in these difficult times. These subsidized mortgages should increase the number of home buyers and help push property values back up. There are a lot of problems in the economy, but they all began in the housing sector and it seems likely that staunching the bleeding there is a prerequisite for achieving financial stability. Make no mistake, this remedy will be costly.
Last week’s report suggests that the 0bama team may be wary of allowing everyone access to this plan, since it costs so much — $3 trillion by one recent estimate. One constraint being discussed is to disallow refinancing, limiting the program to home buyers. The restriction will be impossible to impose, however. All that you would need to do to qualify for the 4.5 percent rate would be to find a “bailout buddy” and agree to purchase each others’ homes with the new low-rate loan. You could then either swap the homes back, or agree to rent the homes to each other for the same fee.
Also, the program will have the largest possible effect on home prices, a key target of the policy, only if borrowers expect it to last a long time. After all, if the person you sell your house to in the future has to borrow at a high interest rate to finance the purchase, then he will offer a lower price. That realization should affect the price you are willing to pay today. Thus, the cost will be steep for two reasons. It will be tough to limit the new mortgage to home buyers, and the program will have to be sustained for a long time. In the past, steep costs would have killed such a bill. But in today’s environment, it has almost become a political necessity to give voters their bailout too. Ladies and gentlemen, grab your bailout buddy, help is on the way.
http://www.bloomberg.com/apps/news?pid=20601039&sid=a.YJmSfnHD9o&refer=columnist_hassett
Also price is irrelavant to the trade up crowd. Lets say a couple got married in 1998 at the age of 28 and bought a POS cape for 200K, now with 3 kids and at 39 years of age they want to trade up to a house that at the peak was one million but is now 600K. They are going to do it, the bigger house is 400K off peak and their junk house is 200K off peak. Plus you need a bigger house in your 40’s and 50’s while you are still making a good salary and all the kids are at home.
3b 156,
i am not saying everyone is out of the market, just pointing out the numerous barriers to entry of the market. Shifts in such a market tend to be very slow.
Seneca: I am no huge fan of Oppenheimer, but they have several funds that work OK. I am kind of surprised that you were steered to that fund under the prevailing market conditions of the last 18 months and your expectations.
If it is of any solace, some of the people responsible are paying the price…
DECEMBER 16, 2008, 12:02 A.M. ET OppenheimerFunds Officer Steps Down
Overseer of Leveraged-Betting Strategy Leaves
With Firm’s Flagship Down 82%
By DIYA GULLAPALLI
The OppenheimerFunds Inc. executive who oversaw big leveraged bets that backfired has left the company.
Senior Vice President Angelo Manioudakis, who headed the firm’s Core Plus team, resigned Friday. The team managed more than $16 billion in individual-investor-oriented fund assets. Under Mr. Manioudakis, investments in the likes of mortgage-backed securities and credit-default swaps went awry.
Those woes fueled an 82% drop at its flagship junk-bond mutual fund, Oppenheimer Champion Income, one of the worst showings among the roughly 150 U.S. junk funds that invest in high yield, or below-investment-grade, bonds. The average junk-bond fund is down 32% in 2008.
The situation is a rare black mark for OppenheimerFunds, a unit of Massachusetts Mutual Life Insurance Co. that recently had $195 billion in assets. OppenheimerFunds is no longer part of Oppenheimer & Co. But OppenheimerFunds owns Tremont Capital Management, an investment-management firm that put hundreds of millions of investors’ dollars into funds overseen by Bernard Madoff, who, authorities said, admitted to carrying out a $50 billion Ponzi scheme.
Mr. Manioudakis, 42 years old, couldn’t be reached for comment. He joined OppenheimerFunds in 2002 and was previously with a unit of Morgan Stanley Investment Management.
The firm earlier this month said it is bringing in Geoffrey Craddock as new director of risk management and asset allocation. Mr. Craddock, who formerly headed market risk management at Canadian bank CIBC, will monitor risk for OppenheimerFunds’ stock and bond offerings.
For Core Plus, Jerry Webman, director of fixed income at OppenheimerFunds, will temporarily take over as team leader.
Mr. Webman, 59, acknowledges it’s “been a disappointing performance year” for the team’s funds. Several have declined sharply relative to peers. At Oppenheimer Champion Income, assets have fallen more than 70% to about $625 million from a peak in May, largely due to declines in the fund’s holdings.
OppenheimerFunds put $150 million in the fund last month to help boost liquidity.
The Champion Income fund was a relatively orthodox junk-bond offering until late 2006, when Mr. Manioudakis’s team took over. Since then, the fund gambled more with derivatives.
One problem bet involved total-return swaps, which are basically agreements between parties to exchange cash flows in the future based on how a set of securities performs. In this case, the fund was betting that top-rated commercial mortgage-backed securities would rally this year. They didn’t.
The fund began employing many of those swaps last year. This seemed like a good way to diversify away from the junk-bond market, which in 2007 had started to wobble as the credit crunch commenced. By December 2007, the swaps had appreciated $7.7 million.
But the trade has gone south in recent months, as the market for office buildings and other commercial properties has deteriorated amid the slowing economy. The swaps were down $47 million by September, which is the latest data available.
The bet “backfired in unprecedented ways” as “what had been the most liquid part of the market turned out to be the most illiquid,” Mr. Webman says.
Credit-default swaps, or CDSs, have hurt the fund, too, declining $238 million through September. CDSs are basically insurance contracts that protect investors against bond and loan defaults. In exchange for being on the hook to pay out for such issues, CDS sellers receive a stream of interest payments.
Selling CDSs can be a particularly risky proposition when insuring companies that are already struggling with credit problems. Indeed, through September the fund was selling CDSs on troubled companies including Lehman Brothers Holdings Inc., American International Group Inc., General Motors Corp. and newspaper company Tribune Co. Many of those firms have collapsed, filed for bankruptcy or otherwise have problems.
Funds’ Derivative Bets
Federal investment rules permit mutual funds to invest in derivatives, and they have done so in recent years to boost returns. However, regulators have worried about the risks these investments can pose for investors. One concern is how swaps can add leverage because they allow a fund to bet on more securities than they actually hold in the portfolio. That can exacerbate losses when a fund’s holdings are sinking.
On top of that, the Champion Income fund increased its stake in many mortgage bonds that have fallen this year.
Mortgage securities tied to Washington Mutual Inc. with a $9 million principal value were valued at only $3 million at the end of September, the last fund reporting date. A set of five Freddie Mac mortgage-backed securities with a combined principal amount of $20 million were valued at just $2.5 million. Prospects for the mortgage market have dimmed since September, as defaults have been rising.
Further, the fund erred with corporate bonds for struggling Wall Street houses. The fund bought Lehman bonds between June and September with $29 million in principal value. Lehman filed for Chapter 11 bankruptcy-court protection in mid-September, and those bonds fell to just $144,000. It also added Morgan Stanley bonds with $13 million in principal during that period; they were valued at $8.3 million by the end of September.
Strategic Logic
Mr. Webman says the firm had focused on bank bonds because “we believed the financial crisis would allow banks to rebuild their balance sheets over time.”
The fund spread pain beyond its own immediate investors. More than 10% of the fund also was recently held by other OppenheimerFunds offerings. This includes several funds of funds that bundle various products from the firm and at least one target-date retirement offering.
One of the hardest hit has been the $290 million Oppenheimer Conservative Investor Fund, which had 4% in the Champion Income fund through November. It is down almost 40% this year, making it one of the worst-performing conservative allocation funds followed by fund tracker Morningstar Inc.
AIG gets 50% hair cut on “assets”
AIG Sells $39.3 billion in Mortgage-Backed Securities to Fed Vehicle for $19.8 billion
American International Group Inc. sold residential mortgage-backed securities with a face value of $39.3 billion to a government-funded facility as the U.S. seeks to limit losses at companies that did business with the insurer.
http://www.bloomberg.com/apps/news?pid=20601087&sid=awDt4bUFx2RM
posted yet?
Alt-A Mortgages Deteriorating More Rapidly than Expected
Citing “a rapid deterioration of U.S. Alt-A RMBS performance,” Fitch Ratings again took the hatchet to its previous assumptions for Alt-A mortgages on Monday morning, revising its surveillance methodology and updating loss projections for all U.S. Alt-A RMBS. Fitch said it now expects losses on all Alt-A collateral to far exceed the estimates of its ‘moderate stress’ scenario in its late ratings update earlier this year.
http://www.housingwire.com/2008/12/15/fitch-alt-a-mortgages-deteriorating-more-rapidly-than-expected/
#157 kettle: So now maybe everybody gets the 4.50%.
Maybe if we wait we get 3.50%
Clotpoll,
Have you contacted all Madoff employees asking them to list their homes with you yet?
Quite honestly a bailout would be a dream for fairly recent homeowners like me. I am lucky enough so that for the most part my house is still worth approximately what I paid for it two years ago. As long as the status quo remains then I am fine. However as we all know a reduction on my mortgage form 6.125% to 4.5% would really be a huge perk. There are many, many buyers that got in at 2005, 2006 and 2007 prices that would be helped immensely by such a move. I already have my “house swap” partner lined up on my block as well.
Kettle1 (157):
On the surface, the 4.5% interest plan sounds great. On the other hand, how the hell are we going to pay the additional 3 trillion back?
At some point, we are just going to have to take our medicine.
Not directly NJ related since AP’s HQ is in Allentown but:
Air Products announces 1,300 layoffs
7% of their 21000 workforce.
http://www.mcall.com/news/local/all-airproducts1216-cnap,0,6200832.story
3b,
i am holding out for a negative interest rate!!!!
————————-
this will suck for all of us!
Primary care doctors struggling to survive
The morning’s last patient, a disabled woman on Medicare, trails her doctor into her office and confides that she doesn’t have money for lunch. Tanyech Walford pulls out her billfold and hands her $3. It’s money the doctor really doesn’t have. “I tell patients I’m broke, and they just chuckle,” she said. “They don’t believe me.” Walford’s fashionable medical suite in a sleek black-paneled building in Beverly Hills was hiding a grittier reality: She spent much of her lunch hour that day in her office opening mail — hoping to find payment checks to help fill the gap between her expenses and her revenue. She hadn’t drawn a paycheck for herself since February. On top of that, her practice has cost her $40,000 in personal savings and left her with $15,000 in credit card debt. Walford, 39, also owes $80,000 in medical school loans. She shops at Ross and other discount retailers, and rarely eats out or takes time off. “I’m totally stressed out,” Walford said. “How can I take care of my patients when I’m that stressed?”
Walford is not alone in her struggle. Relatively low earnings, rising overhead and overwhelming patient loads are sending veteran primary care physicians into early retirement and driving medical students into better-paying specialties, creating what the New England Journal of Medicine recently called a crisis.
http://www.latimes.com/business/la-fi-doctors15-2008dec15,0,4293105.story?page=1
OK why is GM stock trading at $4.75 They are talking about a pre-packaged US sponsored bankruptcy where bondholders may get 25 cents on the dollar which is why GM bonds are trading at 15-35 cents on the dollar. But for a bondholder to take 25 cents you would have to wipe out the shareholders.
Stu 166
“take our medicine”
I agree. But in the interim we can and will play all sorts of shell games to continue running up US debt.
The more pertinent question is when do foriegners stop financing US debt. Because that is when we will face the specter of hyperinflation.
if you look at the recent charts of Agency Debt it looks like foriegners are starting to become wary of US debt.
http://www.jsmineset.com/wp-content/uploads/2008/12/custodials-for-12-11-2008.pdf
I would be a little surprised if we peaked out this quickly though…. time will tell
I have noticed that FHA and VA are making 50+ percent of the loans around my area. If the conforming loan limit is changed then it will have a very significant impact on sales above the conforming limit.
Don’t forget about FHA down payment requirements moving to 3.5% in 2009, up from 3% flat.
Will it make a big difference? No, but this is a negative impact nonetheless. If buyers are having a hard time coming up with 3% today, they’ll have a harder time coming up with an additional 0.5% tomorrow.
# John Says:
December 16th, 2008 at 9:24 am
Trickle down works, the last stimulus checks that went to the poor paid for 110 dollar Asian nikes and $700 asian plazmas. A tax cut or break for the better off will let them keep their maid, lawn service, nanny, trainor, car detailer, nail salon, drycleaner and local restaruants and car dealers workers all humming along. That same check to a poorer person is just a Jap Plazma thrown in the cart at BJs. Of course this is assuming the rich continue spending like drunk sailors, if the rich start hoarding cash like the banks we are all in trouble.
so basically, you want the poor people to keep spending money they dont have, or to extend themselves with credit.
why? the right way to do it - assuming they dont wnat to be be ‘poor’ is to save and get ahead. you dont get anywhere in life by buying expensive TVs and nikes.
you have it backward, John.
# Frank Says:
December 16th, 2008 at 9:52 am
What does this prove?
It proves that many people still have well paying jobs. vs. the gloom and doom presented on this blog.
thanks for the comic relief, clown. what is the median income in NY? NJ? Cali? man, you’re clueless. good to know there are people out there dumber than reinvestor.
John– I disagree about mortgage amounts. 500-700k is a starter home in many NYC suburbs. These are not for the most part move up buyers. making it substantially more expensive for people in this segment to buy I think will have significant effects on the overall suburban market because it will prevent the move up buyers (the $1-2MM crowd) from doing so.
FHA downpayments going up are even worse than they sound because previously you could use 0.75 of the 3% down to pay for closing costs. Now you have to put down 3.5% and none of that can be used for closing costs. It doesn’t sound like much of a difference, but compared to the lending environment that preceded this, it is a big change
#173,
If things are so bad in this country why don’t you move to let’s say Cuba or Iran, I hear things are wonderful there.
I think there will be a lot more move-down buyers than move-up buyers over the coming years.
For every buyer there is a seller
tu Says:
December 16th, 2008 at 12:58 pm
I think there will be a lot more move-down buyers than move-up buyers over the coming years.
Yikes:
Join me in Cuba. I’ll save a hammock for you.
“For every buyer there is a seller”
Unfortunately, there is only 1 buyer for each 100 sellers.
111. John, I am a Dog Whisperer.
#174 skeptic: 500-700k is a starter home in many NYC suburbs.
It was a starter home price in many NYC suburbs
#171 grim:If buyers are having a hard time coming up with 3% today, they’ll have a harder time coming up with an additional 0.5% tomorrow.
True, but pathetic.
For every actual sale, not house up for sale. BTW I have seen some homes for sale where owner will finance with 20% down and good credit. Have not seen that in a long while. Interesting, which means if you want to trade up you will need to save up another 20% without cashing a cent out of your current house. Cool.
I guess they will tell you anything if you lick their nuts.
Essex Says:
December 16th, 2008 at 1:02 pm
111. John, I am a Dog Whisperer.
ket, 168
That doc isn’t alone. Many of the primary care docs (PMDs) - internal medicine, family practice, pediatricians are really struggling.
I see it firsthand.
After they are “released” from their primary care docs, guess who becomes their default PMD??
Me. The ER doc who deliberately avoided primary care cuz it ain’t my cup of tea.
I spend atleast 5 mins/patient counseling on routine screenings, Paps, colonoscopies, routine tests etc.
Then I spend another 5 mins/pt guiding them where to go for low cost/no cost medical dental and mental care.
Liz Pulliam Weston’s “guide for the uninsured” has been printed, collated and stapled for my everyday use.
Me? I’m F*cked as everyone else. We haven’t even yet calculated our “giveaway” (write off loss as unpaid) but I’m willing to bet it’s up.
I heard a colleague commenting on the sharp rise in self pay, charity care and medicaid he was seeing.
How many of you are willing to work for free on 30% of your labor?
I can’t wait to see the hospital’s upcoming loss. They are still pissing away a six digit figure on “Press Ganey” survey’s for “patient satisfaction” yearly.
I’m ready to put my work boots back on and start installing appliances again like I used to.
sl
185. Kind of like minor celebrities drinking in the Hamptons?
Forgot to add…
At least then I can chew gum, swear, spit and scratch any body part wantonly.
And I’d feel less dirty when I got home.
sl
George Lucas is cashing in further with a new musical offering culled from the films. The BBC reports:
In Star Wars: A Musical Journey, the Royal Philharmonic Orchestra will play a live score as excerpts from the six films are shown on a cinema screen. The show has been put together by director George Lucas’ company Lucasfilm and composer John Williams. It will premiere at the O2 arena in London in April before a European tour.
It will not be a traditional musical with actors playing characters from the films, but will feature live narrators. The six Star Wars films have been edited down to two hours for the show, and Williams has “painstakingly rewritten” the music he wrote for the movies, a statement said.
FHA is the closest thing out there to bubble financing. to the extent you diminish the impact of FHA by raising downpayment, creditworthiness or by lowering max mortgage amount, it seems to me you erode support for any bubble-like prices that persist in the starter home market. suddenly, that 700k cape looks a lot more expensive when you need to put minimum 70k down and have a credit score above 700, whereas before you only had to put down 21k and could have a much lower credit score
Airproducts going down will make a lot of tri-state moms happy!!!! Burn Baby Burn. Lots of Moms sent their kids to Leihigh and got recruired to that gas place and they never came home after college.
WHERE IS MY RATE CUT!!!!!
“that 700k cape looks a lot more expensive when you need to put minimum 70k down and have a credit score above 700, whereas before you only had to put down 21k and could have a much lower credit score”
I don’t understand how people have bad credit scores. I checked mine for the first time in my life yesterday. I’m a student making 25k a year. I rent, pay my car insurance, utilities, phone, food, etc… I have my CC automatically paid off from my bank account each month. I have 5k student loans are deferred until I graduate. The score was 760. I’m sure it would be higher if I just went a paid off the student loans tomorrow, which I could easily do. I don’t understand how people with an income 4 times the size of my student stipend cannot pay their bills on time. The real insult is that I manage to save more money each year than the people I know making 100k.
On the surface, the 4.5% interest plan sounds great. On the other hand, how the hell are we going to pay the additional 3 trillion back?
At some point, we are just going to have to take our medicine.
We will pay it back with debased printed dollars.
We will do our best to put an inflationary floor under asset prices.
In the near term, the gubmint can stimulate at will as inflation is in check. Foreign banks will need to decide if it is better to take a controlled “write-down” on U.S. debt via a debased dollar or run for the exits and send the world economy into a depression. Either way they lose, but in the near term, most foreign debt holders are not decoupled enough to simply give the U.S. the finger. They will probably play along, while planning a long term exit strategy that breaks their reliance on the U.S.
This will still involve pain, but will hurt less than an outright deflationary depression.
Ben (193) -
sound financial management isn’t packaged with all humans.
otherwise, why would we have late fees or bankruptcy ;)
[103] Essex,
True dat. There is a show little nom used to watch called “Higgleytown Heroes.” Everyone was a hero because they did their jobs. Even the trash collectors and postmen were heroes. Guess that makes me a hero too.
[105] Stu,
With all the losses that will be deducted this year, both for 2008 and for restatements going back (and lets not talk about 2009 and NOL carryforwards), you are going to see the equivalent of a tax strike by the rich. The effect would be as if a sizeable percentage of the top 10% decided to go on strike.
In fact, I predict a flood of changes to how wealth is structured and managed, such that the truly wealthy will actually pay LESS in taxes as a percentage of wealth because post-tax returns will be neglible, and folks will look to squeeze gain out of tax savings. For example, we all say that property is gonna blow off big time, no money to be made there. Really? Landlord buys a rental and rents it out. He takes depreciation on his building to offset his cash income. Effect is as if he sold it on an installment sale basis and paid no tax on the installments. Years later, after bldg is fully depreciated, he sells at a putative loss. But he really did not lose because he took out a portion of gain through depreciation deductions (to be fair, if the house sold at a profit, the deductions are recaptured). Thus, he has cashed out the value, in installments, tax free. You know this because you are doing it. But is that fair? Shouldn’t we disallow your depreciation deduction?
As things stand, the HENRYs that count their wealth in the form of a w-2 or 1099 will get socked. Meanwhile a small landlord in Montclair has discovered a tax shelter. Was this what you had in mind?
[186] sl
Wish I knew your prior pasttime. Coulda saved the installation fee on the dishwasher.
[170] Kettle1 says “The more pertinent question is when do foriegners stop financing US debt. Because that is when we will face the specter of hyperinflation.”
I’m no economist but would think the opposite. If foreigners sell our paper, bond prices tank, rates rise thereby tightening credit, slowing our economy and bringing downward pressure on prices, no?
tax gurus all,
I know I gotta ask my accountant, but figured I start a bit of research here.
I’ve got a lot of short term gains (STGs) to declare for ‘08.
I have a large smelly wet dog in my portfolio.
Do I sell off (loss) some of my dog - he’s really stinking up my otherwise well behaved portfolio.
[can I use it to offset STGs?]
Thanks in advance.
sl
Nom, willing to part with the name of that really nice red wine?
thanks,
sl
Fed might cut full % point and talk about quantitative easing. Dow closes up 300 points.
me and dad’s repertoire consisted of washers, dryers, wall ovens, cooktops, window and thru-the-wall ACs, outdoor grills (natural gas) dishwashers, ice-maker hookups.
I miss that job.
sl
“Meanwhile a small landlord in Montclair has discovered a tax shelter. Was this what you had in mind?”
Well, to some extent, yes. The tax shelter works a lot better though, when the rents manage to cover the carrying costs and the mortgage ;) There was no way I would have leveraged myself to get into a single family in Montclair was the largest contributing factor. I also really wanted to have a vegetable garden.
At the minimum, having the ability to write off lawnmowers, snowblowers, car usage, home office, barbecue, etc., doesn’t hurt much either.
I could only imagine what my tax rate would be without my multi, considering AMT and all.
Gold is up to 841. Hmmmmm.
VETO
If foriegners stop buying US debt, then the only way left to raise money is to print it. The amount of printing needed to replace the missing foreign investors would be massive and would likely trigger hyperinflation given the amount of money that the US needs just to maintain its debt.
Of course the way to avoid hyperinflation is to find a way to re-value (devalue) in such a way that you do not end up collapsing the dollar similar to what happened to the Wiemar republic.
That is probably why bergabe wants to be able to issue FED Debt. Once you have 2 different classes of debt you can finagle the values of the 2 in such a way as to downgrade and devalue one of the sets.
It is currently illegal for the FED to issue debt and that would have to be authorized by congress.
hmm, sounds like a job for a sneaky rider on a popular bailout bill. Will we see that as a rider on 0bama’s bailout package? i would bet $1 on it
Stu,
Once foriegners start backing off US debt, metals start looking much more attractive
“sound financial management isn’t packaged with all humans.”
yeah, but in this day and age of computers, with the click of a few buttons in January, you can make sure your payments are on time for the next few years with automatic payments. I fail to see how setting up automatic payments on my CC gives me a credit score of 760. The effort took 2 seconds out of my life. If that’s all people need to do to get an FHA approved loan to buy a house, then we’ve learned nothing from the housing bubble.
Fed might cut full % point and talk about quantitative easing. Dow closes up 300 points.
But what will it cost to bring back DOW 14K?
“Once foriegners start backing off US debt, metals start looking much more attractive”
Exactly Kettle1.
My bullionvault account is open, but not yet funded. Would like to get an opportunity closer to 700 per oz.
“I fail to see how setting up automatic payments on my CC gives me a credit score of 760.”
Ben: setting up the auto payments doesn’t get you to 760, having the cash in the acct to cover the payments does though.
Ben,
Sure, with a 760 you might qualify, but for what amount? You may have passed the gatekeeper, but that doesn’t mean you’re qualified at every amount. You stated that you make $25k per year. Even if we fit you into a loan with a very aggressive DTI (say 50%), at best you are looking at a lender extending $50k to you.
where is my 75bps.
#208 - But what will it cost to bring back DOW 14K?
Around $38 if you know where to shop
Last call, final bets.
kettle1 says: “If foreigners stop buying US debt, then the only way left to raise money is to print it.”
just learned something new there.
thank you,
50 bps
50bps
#212 John:where is my 75bps.
Lets make it 100bps and be done with it.
25
sl
50bps
.75 cut prediction
kettle1 says: “If foreigners stop buying US debt, then the only way left to raise money is to print it.”
Or raise geopolitical risk worldwide so high that US Treasuries again look like a safe haven.
.75 - Hyperinflation is coming!
Whats the lag?
Grim,
to me and my student stipend, sure. I know someone who has a single year of stable employment that qualified for 250k at 5.5% making 50k a year. Furthermore, regardless of what I would qualify for, the 3% down is nonsense. The whole point of the downpayment was for the lender to shield itself from the risk of default. A few thousand is anything but a safety net for the lender. It just amazes me that these types of loans are still offered given the fact that they are strikingly similar to the loans that got us into trouble in the first place.
fiddy……fo sho.
25 bps
i’ll go out on a limb with a 75 bps cut.
along wit a bailout loan program for the car makers.
“Ben: setting up the auto payments doesn’t get you to 760, having the cash in the acct to cover the payments does though.”
yeah well, at 25k a year, if I can have the cash to make the payments, anyone can. All they have to do is stop blowing 100 dollars every weekend at Ruth’s Chris.
Breaking news
Bernanke chokes himself while having lunch. No rate cut today.
What, did Benny trip on the way over to the fax machine?
latest news FOMC cuts fed funds rate to range of 0% to 0.25%
FOMC cuts rate 0.75 percentage point to 0.25%, use all tools
By Greg Robb
Now I want a .25 RATE CUT!!!!!!!!!
What, did Benny trip on the way over to the fax machine?
journalist throwing a boot at Ben has cause dthe delay.
still_looking,
my father is a prenatal care doctor. Over the years, he’s billed out millions of dollars that never got paid. The amount of charity care a lot of doctors do is beyond ridiculous.
ha!
223 pm - Some guy just yelled on CNBC, “Oh my god, look at the Euro!”
Erin Burnett stopped what she was saying and looked up. Everyone was quiet.
Ben has one blank round left in the gun. 2009 is going to be really bad.
Unless you are John or Frank…
2009 BULL MARKET!!!! God Bless BEN AND THE UAW!!!!!!!!!!!
Release Date: December 16, 2008
For immediate release
The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.
Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.
Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.
The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.
The focus of the Committee’s policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve’s balance sheet at a high level. As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities. Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.
In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco. The Board also established interest rates on required and excess reserve balances of 1/4 percent.
240 in mod grim has the FMOC statement, The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.
Veto,
Glad i could help, but remember to take anything i say with a kilo of salt. i am just an interweb yahoo.
regarding: If foreigners sell our paper, bond prices tank, rates rise thereby tightening credit, slowing our economy and bringing downward pressure on prices, no?
that is the governments worst nightmare. Right now the government is borrowing money essential at 0% interest. As foriegners shun US debt as the agency debt charts imply, then they will have to start jacking up rates on treasuries.
The gov can afford to borrow 3 trillion for 0bama’s bailout plan if treasuries are at 0%, but if we see rates start to approach 4,5% then they are in deep $hit. The problem would be that the debt maintenance on those rates couldn’t be readily covered given how much debt they already carry.
Recent charts also suggest a treasury bubble is rapidly inflating. The bursting of that bubble will have a devastating economic impact on the US governments ability to borrow money.
That is when we get to see the banks dirty laundry, because that is when the bailout and the hush money stops.
http://www.federalreserve.gov/newsevents/press/monetary/20081216b.htm
Don’t worry the initial move up is a feignt. Once it sinks in what the FED has done and what it means for the outlook going forward you’re going to see these markets crash.
Al 223
Great call buddy. Buy some real stuff cause hyperinflation is around the corner.
Unless there is huge geo political risk like India and Pakistan get into it with China backing Pakistan and Russian forces occupy Georgia again then I don’t see how the dollar could be used or viewed as safe haven.
Got Gold!
I usually ignore, but F the UAW.
re: #242 kettle1 -”Recent charts also suggest a treasury bubble is rapidly inflating. The bursting of that bubble will have a devastating economic impact on the US governments ability to borrow money.”
Sure, but right now the flight is to safety, if you have say a $100 million dollars where would you keep it, in greenbacks under the mattress or in an insolvent bank as bits and bytes?
The best bank guarantee you get is 250k from the FDIC, all that loot that is now parked in Treasuries is going to stay there for the long haul, there are allot of banks going under and the FDIC should be broke pretty soon.
If I were offered a buy-out right now I would take it and spend the next two years living in a cabana on a beach, sitting on my pot of gold!
Only 25bs left….
When do we hit it? in the 1st or 2nd qrtr of `09?
hmm, sounds like a job for a sneaky rider on a popular bailout bill. Will we see that as a rider on 0bama’s bailout package? i would bet $1 on it
Kettle
I’m with you!
#225
“The whole point of the downpayment was for the lender to shield itself from the risk of default. A few thousand is anything but a safety net for the lender.”
actually, the main point of the downpayment is to make sure the lender remains fully secured. to the extent the value of the collateral dips below the value of the note, the lender is unsecured. the security itself guards against default, not any equity the owner has
#239 John: A Bull market??? You have got to be kidding??
After the initial false euphoria wears off, the reality will sink in as to just how screwed we are.
but your broader point still stands. 3% is a very slim cushion for the lender
It is intriguing how the bad news is always priced into the markets, but “good” news is not.
I mean, who didn’t know that Fed was going to cut 75 bps today? The bond market is signaling depression, and equities are booming. I would go with the bond market any day of the week.
#240 allhype:Unless you are John or Frank…
Which would make you either in denial, or clueless, or both.
Next meeting I want and expect my 25bps, I will worry later as ZERO is my HERO>
toshiro_mifune Says:
December 16th, 2008 at 2:37 pm
Only 25bs left….
When do we hit it? in the 1st or 2nd qrtr of `09?
I’ll repeat what I said earlier in the day:
#26 grim Says:
December 16th, 2008 at 8:40 am
Does it even matter how much they cut?
At this point? No.
They can’t keep the fed funds rate at the target. In fact, fed funds have been significantly below the target for some time now. Essentially, fed funds is already running close to zero.
http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm
It is clear that the Fed has no intention of defending the target rate it sets.
Overnight fed funds was 0.18% last night, it went as low as 0.11% on 12/10. Over the past month it has only been as high as 0.62%.
For all intents and purposes, the current fed funds rate is already under 0.25%.
We will get the world to loan us money at zero percent to bail out our auto makers, banks, insurance companies and Fannie, Freddie and AIG to along with infrastructure. All this bailing out will cause tons of inflation in 2010-2012 but by then our bull market will be rolling along and the foreigners who bought 30 year bonds at 1% will be pounding sand for the next 25 years with their locked in rate.
How many bps have they cut since Aug `07, 500bps?
I will worry later as ZERO is my HERO
And when zero doesn’t work either, then what?
You can’t force borrowing.
What happened to the rally?
Please don’t tell me realization has set in so soon.
This snippet is scary..
In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.
We talking Japanese time scales here Ben?
#259 John (lord of da-nile) Explain to us again how this bull market is going to work??
Grim 263
BC predicted Japan since September.
#263 - We talking Japanese time scales here Ben?
You know he is. He’ll go to his grave viewing this as a liquidity crisis rather than a failure of central banking.
We get to spend the next 10-15+ yrs learning that the Austrians were right.
Free money lent to US will boost our market. The mustard seeds have been planted and it is always darkest before the dawn.
The final rate cut must and should say we are not raising rates for a long time, otherwise you spook the long term market. However, Ben is telling everyone to go long but he ain’t going to toss the ball. People are jumping into 30 year bonds paying peanuts and Ben in a year or so may shoot rates up and the bondholders will either sell for a big discount off face or earn peanuts for 28 years to maturity. I think the Feds will back stop munis otherwise how can the states do infrastructure projects and he needs to fix corporate bonds so firms can access cash cheap, things like rescap, gmac and CIT will get the cash flowing to midtier non banks once they get FDIC cheap bond money. This plan is coming together and all we need to do is put our finger down so Ben can tie the bow. The one thing Ben can’t figure out is how to keep housing inflated, well neither can I. But who cares, gives us jobs and our 401Ks back and we won’t notice our home values.
This is a liquidity crisis, I have neighbors who know I work in the city asking me what to do with their money lately. In the past they just spent it or put it in stocks. Now they are cutting back on spending and saving and it keeps piling up and they are looking for places where to put it. Pretty shocking, 45 year old people never heard of bankrate.com or know the dates they put CD rates in paper. They don’t know what a muni or investment grade bond or how a T-bill or savings bond works. They have cash piling up in savings and they want to stockpile it in a safe way. Their whole life was spend it or put it in stock market. They are building ammo for the next bull market.
#267 John: That is a la-la scenario, and I would have thought you would know better than that.
grim
Or raise geopolitical risk worldwide so high that US Treasuries again look like a safe haven.
Well, then we having something to sell, and can keep the big 3 in business building tanks and planes for the rest of the world ( and ourselves)
————-
Besides the fallout form an india/pakistan nuclear exchange wont threaten the US
it actually could cause Satcom problems
we are the #1 arms dealer in the world
Yeah, it’s all a liquidity crises. The country is effectively insolvent but it’s all a liquidity problem.
Recession or not, I just want a seat on my train to work.
You laugh but back in 1991 people cut back, the average car was 7 years old, but people can’t stop buying big ticket items forever, eventually the car, washer, fridge is on its last legs. My friends who have good jobs are saving like never before as they fear they will get laid off, they are keeping old cars, skipping vacations etc. When the recession ends and the storm has passed they will ditch the ten year old car and go to disney world. Happened in 1993, Happened in 2004 and will happen in 2010.
HEHEHE
every time i hear about out “liquidity” crisis, i want to beat my head against the wall.
Financial Select Sector ETF rises 7.3%
sl, search on tax-loss harvesting. Compare newsletters from 05/06 to current commentary for focus and color.
#268 John:They are building ammo for the next bull market.
Yes they are John, yes they are;assuming they all still have jobs.
From the Star Ledger:
N.J. revenue dips $200M below projections
New Jersey revenues tanked again last month as the economy continues to take a heavy toll on state budget coffers.
A new report released today brings even more more bad news to Gov. Jon Corzine as he prepares his spending plan for the fiscal year that begins July 1. The governor is also looking to slice spending from the current budget year.
State Treasurer David Rousseau reported that November revenues came in more than $200 million below what the Corzine administration projected in June. They were $211 million below projections in October.
For the first five months of the fiscal year, tax collections are $459 million — or 4.2 percent — below what was estimated.
Last month, Corzine administration officials said the current budget had a $1.2 billion deficit. The governor’s office also predicts a shortfall of up to $5 billion for the next budget year. Those numbers could grow with the latest report.
Wells Fargo lowers prime rate to 3.25%
Financial Select Sector ETF rises 7.3%
Great John, so now we’re only down 70% from last year.
Party time.
3273 John:Happened in 1993, Happened in 2004 and will happen in 2010.
So the woest recsssion in more than agneration, and yout hink its all good in a year.
Please do not give your neighbors any financial advice.
Bernanke pushing the FED Rate to .25 was a clear signal that the economic problems are so dire, they have no practical solution. The entire Global Financial Process was predominantly a Super Ponzi Scheme which is now unraveling.
Gold approaching $860.
Did I say approaching?
Funny how even when faced with the facts, some still say they don’t prove anything or are meaningless. It’s a denial akin to the person still hoping to sell their POS cape for $700K.
Waters @ 10:22am
The rich pay a larger share than ever.
Total Income Tax Shares, (Percent of federal income tax paid by each group)
Year Top 5% Top 10% Bottom 50%
1980 36.84% 49.28% 7.05%
1985 38.78% 51.46% 7.17%
1990 43.64% 55.36% 5.81%
1995 48.91% 60.75% 4.61%
2000 56.47% 67.33% 3.91%
2005 59.67% 70.30% 3.07%
2006 60.14% 70.79% 2.99%
http://www.taxfoundation.org/taxdata/show/23408.html
Qwerty,
All it means is that the rich got richer! It also shows that Clinton’s tax increase had less of an impact than Bush’s tax cut.
There is so much missing from this data that to draw any kind of conclusion of the impact of tax rates is simply preposterous.
Anyone can find data to meet their needs. This post, for instance, has twice as many words as yours. I guess that makes me twice as smart. Should I go on?
stocks are something in a 401k that you do a hail mary and hope they are there when you retire and housing is another hail mary thing. Both you just chip in each month and hope someday they are worth something. After tax money is all money markets, CDs, Bonds etc. most of my friends cutting back and pay down debt. They did not lose their jobs, but by not spending and paying down debt they are killing the job market. 1,000 a month extra towards your mortgage instead of on shoe shines, starbucks, leased cars and nail salons causes a lot of lost jobs.
Market is finding any reason to go up. Shorts are not having a good time for the last month or so.
a 400 point up day with a 75bp rate cut and you guys are still not happy, cheer up. BTW going to a party at the RITZ Carlton this week, nice to see people spending money. I almost feel like going to Uncle Jacks and ordering the KOBE and lighting cigars with $20 dollar bills but that would be a 4,000 point rally and not just 400 points.
Kellner: Low rates don’t matter if banks aren’t lending
The Federal Reserve has gone as low as it can go with interest rates, says MarketWatch chief economist Dr. Irwin Kellner, but “until confidence returns to the banking system, you can have interest rates at zero and it doesn’t really matter” if banks aren’t lending to individuals, businesses or each other. Also, “We’re quite a ways from any change in interest rates, but I will say this: A year from now we’re going to be more worried about inflation because of all the liquidity the Fed has put into the system,” says Kellner.
I’m surprised the market even rallies on these cuts. Each subsequent cut has resulted in a lower market. Enjoy your kobe beef.
The rich do pay a larger share than ever. Could that be because since 1980, the rich got a lot richer, and the poor got a lot poorer?
In 1980, if the top compensation was, what $10 million, and a bus driver made $25,000 (who knows). 2006, what was the top compensation? 1 Billion, 5 Billion? Our bus driver’s make what, let’s get crazy, $50,000?
“Market is finding any reason to go up. Shorts are not having a good time for the last month or so.”
Bear market rally. You’ll see. Just gotta be patient.
RayC:
Exactly!!! Our wage has declined while that of the upper 5% has increased. You don’t see that on the Water’s chart do ya?
Who will be left in existing MBS pools when all the high quality borrowers refi into cheaper loans and prepay? What do default rates look like when a pool is gutted of its best loans?
Makes for an interesting discussion.
#289John: a 400 point up day with a 75bp rate cut and you guys are still not happy,
That is exactly the point John, if you understood, this should not make you happy.
In fact it should make you very,very worried..
#295,
I can’t wait, it would make me rich.
#157,
“When Frank taps out”
Clotpoll, I think you are going down first with your SRS purchases. HeeeeeHeeeeeee
#282 confused: Yes, exactly. Can you please try to explain that to John?
Stu,
That’s all today is, bulls attempting to make a quick buck by blowing through some stop limits. Once that dies down its over.
Essentially what Bergabe et al has essentially said with their move today is all that talk about a Second Great Depression is true!
I agree. All news gets worse and worse. People are paying way too much attention to the market price and not the fundamentals. They will all get burned!
And its a market price based on the bs “earnings” that were during a fictional “economic boom”.
The first VP I worked for on wall street in the 1980s got let go after the crash and is a NY City bus driver. How do I know the poor from 1980 is now rich and the rich of 1980 is not poor, that is why schiller uses the same homes sold over time, otherwise it is meaningless.
RayC Says:
December 16th, 2008 at 3:38 pm
The rich do pay a larger share than ever. Could that be because since 1980, the rich got a lot richer, and the poor got a lot poorer?
In 1980, if the top compensation was, what $10 million, and a bus driver made $25,000 (who knows). 2006, what was the top compensation? 1 Billion, 5 Billion? Our bus driver’s make what, let’s get crazy, $50,000?
Yup! And everyone thinks we are going to get back there. Meanwhile, almost everyone I know is taking pay cuts.
From MarketWatch:
Fed sees economic weakness in Q4 and Q1: official
Fed official says econ. outlook similar to private sector
Fed sees slow recovery after mid-year 2009: official
Fed policy to lower credit spreads in debt markets: official
Deflation is not major threat, Fed official says
Fed action not same as Japan quantitative easing: official
Fed not trying to target mortgage rates: official
RE: 300
Frank,
We’re all f@cked, we just don’t know it yet. This includes you. It’s not like subset of the population will go down without swinging.
I knew the BMW driving janitors from Newark, and their Bentley driving bankers, would be the death of my mojo someday. That day is today.
Clot has SRS you have peak propety; advantage Clot.
The next leg down should be decent.
Churn, scalp and book profits,
t
That last point was interesting..
Fed not trying to target mortgage rates: official
Fed action not same as Japan quantitative easing
Yes, the Fed is doing it with dollars, not yen. Entirely different.
John,
I suppose you can’t know if the rich from 1980 are poor in 2006, or vica versa. Do you know why that might matter to this particular discussion though?
If you look at today’s biggest gainers - it is the worst sectors - CRE and Insurers. They are definitely try to blow the shorts out.
I have no idea who “they” is.
amusing comment from another blog:
Wall Street activity right now is just one last sheep fleecing, that without ‘Bail Out’ bucks would have ended months ago. Fresh money must be sucked in (from rubes) so that the smart players can cash out.
Someone should scotch-tape a note to the door of the NY Stock exchange, reading:
When you’re done please lock up. Don’t worry about the lights. There’s a Con Ed guy on the way over who will take care of that. Seems the bill wasn’t paid.
Geriatric throwdown, last geezer left with his dentures intact wins.
http://businesssheet.alleyinsider.com/2008/12/superrich-madoff-investors-fight-at-trump-palm-beach-party
#305 grim:Fed action not same as Japan quantitative easing: official
Too bad they can’t tell us why it is not the same.
#307 grim:That last point was interesting..
Fed not trying to target mortgage rates: official
Any thoughts on why they would say that?
What’s this going to do to retiree’s or people near retirement in money market funds?
In 1980, if the top compensation was, what $10 million, and a bus driver made $25,000 (who knows). 2006, what was the top compensation? 1 Billion, 5 Billion? Our bus driver’s make what, let’s get crazy, $50,000?
NOT NJ DRIVER!!!
One individual was paid for 14 pay periods after termination at the employee’s request.
Two individuals were paid 21 and 24 pay periods after termination.
The audit report says that, according to the contract, school bus drivers are paid 6 hours of overtime each month in order to charge their cell phones.
One bus driver in the 2005-06 school year earned $73,125 in overtime, which accounted for 237% of the driver’s base pay. In other words, the driver earned over $100,000 in wages that year.
A bus driver in the 2004-05 school year earned $61,456 in overtime, 217% of base salary.
One bus driver in the 2005-06 school year earned $51,725 in overtime, 204% of base salary
Source: http://www.njassemblyrepublicans.com/gov_waste.php?pgID=4
My favorite one from this trip:
$2,268 to the Sheraton Edison Hotel back in February 2005, which paid the tab for students and two teachers. According to the audit report, no agenda was found and they were unable to determine the purpose or necessity of the trip.
I bet I could find an agenda… With all the teacher’s sex scandals…
The Fed promises to be different. Unlike in Japan, the Fed really does want to create inflationary fears to “stimulate” a flight to the retailers. You won’t see the Fed allowing the dollar to appreciate over the next 15 years as the yen did after the Japanese bust.
It’s what you get from economists who seriously follow demand-side models.
After 20 years of an economy being dragged down by a lack of saving (in the US), the Fed is engineering new strategies to punish potential savers.
Ahaha! Love it! From MarketWatch:
Paulson: We didn’t float plan to offer 4.5% new mortgages
I used to think that it would be fun to buy an entire block in North Philadelphia for short money, bulldoze it, build a huge Israeli-style wall around it for security, put in a few ultra lux residences with amenities and grounds, and have my own private compound for me and my friends. Only downside was commuting, but PA gun laws would make it somewhat safer.
Now with Detroit in a death spiral, we can get an entire city cheap.
(CNN) — The Detroit Free Press and Detroit News will become the first major metropolitan newspapers in the U.S. to end daily home delivery, the papers announced Tuesday. The Detroit News will still be available on newsstands daily, newspaper officials said Tuesday.
“We’re fighting for our survival,” said David Hunke, publisher of the Free Press and CEO of the Detroit Media Partnership, a joint operating agreement between the two papers. . . .
Beginning sometime in the first three months of 2009, the two newspapers will provide home delivery on Thursdays, Fridays and Sundays only, Hunke said during a news conference in Detroit, Michigan. Papers will be on newsstands every day, and the papers’ online offerings will be expanded, he said. . . .
Costs for paper, ink and fuel to deliver papers were forcing the papers into cuts in newsroom talent that would damage their abilities to report the news, Hunke said. Paying for delivery vehicles to cover 300,000 miles nightly, he said, did not make economic sense at a time when 63 percent of readers have broadband Internet access.
As for those without computers and broadband access at home, “this isn’t necessarily gonna be the best news for them,” Hunke said.
Just got off the phone with a broker who says he can get me into a 5% refi easily, and may be able to better that. Would save me nearly 3 grand a year in interest. Booya!
“Paulson: We didn’t float plan to offer 4.5% new mortgages”
I thought he made a speech mentioning it when the market was tanking a few weeks ago.
comrade nom deplume Says:
December 16th, 2008 at 4:33 pm
Just got off the phone with a broker who says he can get me into a 5% refi easily, and may be able to better that. Would save me nearly 3 grand a year in interest. Booya!
Noted… Thanks for letting us know… Please look for our letter in you mail-box…
You Local Township Real Estate Tax Committee.
Kinda sad that Benny set the fed funds rate at a range with a lower bound of zero.
Doesn’t that mean no more cuts?
#319
You can get a house in Detroit for free. Just make sure to brush up on zombie defense tactics before you move.
Comrade,
Just got off the phone with my broker as well. 5% for my conforming jumbo loan. Same savings here! Show me the money!
[324] skep,
Right. Think I should go full auto?
Anyone,
I’m looking to refi a few investment properties. They were bought in the early 90s and have plenty of equity still, no money taken out. I still don’t want to take money out, just want to lower monthly payments. What kind of fees can expect in this climate?
From Bloomberg:
Fed Shifts Focus to Type, Quantity of Assets, Official Says
The Federal Open Market Committee’s new benchmark for monetary policy will be the size of the balance sheet and type of assets it acquires, a senior Fed official said today in a conference call with reporters.
The official said the main focus of policy discussions will now be the size of the balance sheet, and possibly buying assets in markets where policy makers would like to lower yields. The official indicated that the FOMC would now be involved collaboratively in all policy decisions that grow the central bank’s balance sheet.
The Fed cut the main U.S. interest rate to as low as zero today and said it will buy debt as the next step in combating the longest recession in a quarter century. Today’s press call set a new precedent for transparency, ending decades of reluctance by officials to explain their moves beyond the Fed statement.
The official said the FOMC didn’t see deflation as an immediate risk, and added that the current policies of the U.S. central bank are distinct from Japanese-style quantitative easing in that the U.S. central bank is instead focusing on assets.
nom– that and trade the audi for an aztec and you should be fine
Not everyone can refinance, lots of people have under 100K, in fact the non cash out crowd in a 30 year mortgage on a house bought over ten years ago typically has less than 100K mortgage and they can’t refinance as most places won’t do it for under 100K.
The aztec is a cool car, I love that tent feature.
clot, please accept my deepest condolence for your loss on SRS:
http://finance.yahoo.com/echarts?s=SRS#chart6:symbol=srs;range=5d;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
#330 - they can’t refinance as most places won’t do it for under 100K.
Stop talking out your a**, John. Most places have no problem doing under $100k.
From MarketWatch:
Hovnanian reports fourth-quarter loss
Hovnanian Enterprises Inc. was the latest major home builder to post a quarterly loss on Tuesday while a separate report said U.S. housing starts plunged to record lows in November as the residential real estate bust persists.
…
Hovnanian after the closing bell said fiscal fourth-quarter after-tax losses available to common stockholders were $450.5 million, or $5.79 per common share, compared with a net loss of $469.3 million, or $7.42 per common share, a year earlier.
Analysts polled by Thomson Financial had forecast a loss of $1.67 a share, on average.
Revenue dropped 48% to $721.4 million in the latest fiscal quarter, Hovnanian also reported.
…
Charges and impairments from things like the falling value of land owned by Hovnanian totaled $319.9 million in the fiscal fourth quarter. Excluding those hits, the pre-tax loss was $136.6 million for the three month period ended Oct. 31.
The backlog of contracts at the end of October, excluding unconsolidated joint ventures, was 1,907 homes with a sales value of $646.2 million, down 68% from a year ago, Hovnanian said.
“Since mid-September, the housing market has deteriorated in lock-step with the widening financial crisis and declines in broader economic conditions,” Ara Hovnanian, chief executive, of the homebuilder, said in a statement. “Despite the headwinds we faced, we ended the year with $838 million in cash, slightly above the guidance we gave earlier in the fall before conditions worsened.”
The new American foreign policy:
Beggar thy neighbor.
I’d go back through the text of some of O’s speeches to see if that’s an idea he’s down with…but I’m gonna just take a WAG and say it’s not.
Beware if others exceed our skills in playing this game. Seems to me like we’ve just played our last card.
Today, Bergabe sealed and confirmed our ultimate doom. The blindfolds are on, and the gun- five chambers loaded- is on the table.
The confirmation came when Klink- for the umpteenth time- told the money honey (straight-faced) that “sufficient assets are in place to meet the challenge” and that “I expect no more major financial institution failures”. Check his track record on the pronouncements like these that he’s made over the past two years; it’s not good. In fact, he’s been wrong 100% of the time.
So, Frank, you ask me about my SRS? How about this: I bought some more. And I will continue to add to this position until waves of buyers start walking through my doors (which they’re not) or I’m carried out on my shield (doubtful).
Bonds have priced for a depression, and stocks are enjoying a fool’s rally. Even if I’m totally wrong, I’ll take my medicine. I even sorta halfway hope I AM wrong. It’s tiresome dealing with all the misery I see on a daily basis. It’s be nice to go back to those shiny, happy days of hopeful buyers and sellers tossing around cheap, easy money with nary a care.
However, the gubmint’s desire to deliver us a guaranteed and unlimited future of sunshiny days without consequence will lead us into the ninth circle of financial hell.
yikes (239)-
Looks like Jay-Z will be sportin’ Euros again in his next video:
‘Some guy just yelled on CNBC, “Oh my god, look at the Euro!”’
Don’t worry. I have no doubt that even the Euro-dopes will wh@re themselves down to an appropriate level eventually.
John (259)-
You really work on Wall St?
I wouldn’t entrust you with a lemonade stand.
Clot:
Don’t bother with him. I went through the same thing with Bi. I made over 200% as nearly everyone else lost 40% in their 401Ks. You know the score. I haven’t bought anymore SRS yet since I need the indexes to go a bit higher, which they might with the auto bailout. My FXP is getting burned as well, but these two are my only short positions and they are small. Went back long in my 401K at 8300 on the DOW as a bit of a hedge against my small shorts so I’m happy. I look forward to bailing out of the 401K again soon. Seems like the morons here don’t understand the power of a bear market rally…
November 1929 - April 1930: +48%
June 1930 - September 1930: +12%
December 1930 - February 1931: +21%
May 1931 - June 1931: +27%
October 1932 - November 1931: +35%
July 1932 - September 1932: +72%
This one has been about 20%. No big deal!
“Today’s Fed rate cut is one step closer to zero percent for interest rates. The U.S. budget deficit combined with falling interest rates is a negative for the dollar. It makes selling the dollar the path of last resistance,” Laidi said.
John (276)-
You are a classic case of a man born in the wrong era.
Mussolini should’ve had you as his finance minister.
339 was to #267.
3b (269)-
The scary thing is, both you know and I know that the John mentality has infected everyone all the way up the chain. Bergabe probably entertains people in his office with broken-down Yugo and dafunk jokes.
That’s why I continue to get shorter and shorter the more I see this drivel spouted everywhere. Hell, there’s nowhere I can go to avoid it…even at Xmas parties, there’s 2-3 yahoos bleating like Krudlow.
Frank (272)-
Try riding between the cars. Nice breeze.
John (287)-
Obviously, you took microeconomics at the prestigious University of Jupiter:
“1,000 a month extra towards your mortgage instead of on shoe shines, starbucks, leased cars and nail salons causes a lot of lost jobs.”
Please expound further on the direct correlation between personal savings/debt retirement and job creation.
grim (295)-
There you go again…
vic (310)-
They will blow out the latecomer/no-conviction shorts.
After that, they hit the Maginot Line of diehards like me.
Don’t know how many cuts will be in NJ, but BMS has locations here.
From the Wall Street Journal:
Bristol-Myers Sets More Job Cuts
Bristol-Myers Squibb Co. said Tuesday it will cut another 10% of its work force on top of the 10%, or 4,300 jobs, it had already set out to eliminate last year.
The New York-based drug maker said it expects to have cut 800 positions by the end of the month as part of the latest round of cuts and expects to complete the cuts by 2010. As of November, Bristol-Myers had 37,000 workers world-wide.
The latest round of cuts will be broad and global, including both researchers and sales employees, the company said. Bristol-Myers’s goal is to reduce its costs by $2.5 billion by 2012, according to spokeswoman Sonia Choi. The cuts are “designed to help us address the challenges and uncertainties our company is facing in the short and long term,” she said.
Sean (312)-
I think it’s time to re-read some Fitzgerald over New Year’s…
Barb (327)-
Commercial refi’s?
They will rip your guts out your navel and show them to you.
tosh (332)-
Funny, how these guys just make shit up and say it like it’s the truth or something.
They should call it “Paulsoning”.
Clotpoll Says:
December 16th, 2008 at 6:30 pm
tosh (332)- Funny, how these guys just make shit up and say it like it’s the truth or something. They should call it “Paulsoning”.
It’s called “Madoffing”….
I think that it’s a whole new, rigged game. Why take the other side of the trade when the government will guarantee big business’ losses?
Funny how this crew called the other guy a socialist.
They should have a reality fight show where they take the wives of guys bilked by Madoff and have them c@tfight the wives of Madoff’s “agents”.
Good, clean family fun.
“The Real Housewives of C@tfight Alley”
351….More like “Yenta Cage Match”
No 4.5% from Paulson?
Two co-workers came to me today wanting to refi their 6+ % mortgages with Wells Fargo, I told them to hold on since the 4.5% would be coming.
I am now a freaking liar, thanks Hank!
clot/agents … we’re putting in our offer and reading up on it all now.
any thoughts on getting the seller to pay both agent feels (all 6%)?
what is common these days?
We’re meeting with our agent tomorrow to put the offer together. we still have nothing signed (official) with the agent who has helped us a bit with this. should we?
any last minute tips/advice?
Shiff going at it with Kudlow and the flying monkeys on CNBC right now.
Good stuff, while everything settles I am busy looking for a nice cheap Cabana in South America to spend the next few years.
spam(115)
oh… spam… congrats!
Oh, ty
#341 clot: So true. And what makes it scary is he thinks he knows what he is talking about.
He is not even entertaining any more. He is like some 45 or 50 year old guy in a bar telling the same tired old krap over and over again. He truly is a legned in his own mind.
He is not even entertaining any more. He is like some 45 or 50 year old guy in a bar telling the same tired old krap over and over again. He truly is a legned in his own mind.
LOL!!! So true!
Hey now…let’s not bash 40 somethings……I mean….you know….John has his moments….but I really think his anti-3ism is horrible.
this makes complete sense. here’s my only question: Obama’s got paul volcker and basically 10 other bright guys on the case night and day trying to solve this problem.
i know that the unwind will be ugly, but im starting to think there will be less of a doomsday scenario because they’ll just yank whatever strings necessary to get the foreigners on board to help us.
probably too naive of me. but i think there’s still a sh*tload of pain to go, some riots, food issues, etc, and it’ll last awhile.
i just dont know about superinflatiom/zimbawbe, using gold at a grocery store, etc.
high voltage power lines. anyone live near one? what if you live up the hill from one, and can see it from parts of your yard in the winter (but when the trees are in bloom in the spring/summer, no).
we’ve done as much research as possible, and basically at the stage where we want someone to come with the hand meter to test for levels of EMFs. hopefully, an inspector will test for this, because PECO wont. they say we are fine (800ish feet, or 2.5 football fields).
#361 Essex Not bashing 40 somethings, I am one myself. I however, got rid of my Members Only jacket years ago.
New Jersey Budget Deficit Worsens as Recession Takes Hold
TRENTON, N.J. (AP) — It’s been another dismal month for revenue collection in New Jersey.
The state Treasurer reports revenue collection was $200 million below projections for November, worsening the state’s already grim budget picture.
It’s the second month in a row that tax revenue fell significantly. In October, the Treasurer’s Office reported a $211 million revenue shortfall.
Income tax receipts, corporate business and sales tax revenues are all lower than projected.
New Jersey’s fiscal year shortfall is now estimated at $1.2 billion.
The state Constitution requires a balanced budget, which means that the state can’t spend more than it brings in, and more cuts to the current year’s budget appear likely.
So when will they drop the auto rescue into the mix? Wait until this bs rate cut pop gets exposed for the bs that it is?
I have to step in here and defend my Bronx boy John. His investment strategy is to buy “distressed” bonds and hold them. I don’t hear too many here speaking about this strategy, which should be working just fine for John right now.
For the peanut galley who never worked in Investment banking, most of the folks that work in the industry cannot day trade because the rules are strict and their accounts are actually watched unlike Madoff. They need to buy and hold for at least a month and can only sell earlier if they are 15% down or more, and only if the stock is on the no trade list. Not the best way to make a buck.
3b you should know better than to blast one of our own from the Bronx. Sheesh, there are no more Bronx bars other than one or tow I know of up off McClean ave to hang out and tell stories like John’s. No matter where you go in the burbs or the city good story tellers are hard to come by.
As Grim said yesterday there should be a book in the works on John’s life, so don’t chase away one of our own. After all he has been here spilling his guts without a single Vodka and Cranberry, and his anecdotal stories may not always add up but few here had led such a colorful life.
Rock on John.
congrats spam! (115)
You seem, uh, excited..
How bad was it? Did they make it really difficult?
sl
“Paterson: End Municipal Aid to NYC, Cut School Aid”
http://tinyurl.com/5d8qvc
I’d let that blind man take me all the way….I hear he packs thunder.
seems like it would be pretty easy to assign names to passwords or at least confirm emails?
Until that happens, anyone posting on here as me is not.
bye
like i’ve said before on these boards:
“so, when does the health care system collapse?”
I don’t think it will collapse, but it will be bumpy.
SAS
(367) SL:
thanks! :)
It was like removing impacted stool?
Maybe not. I’ve never had to… ah nevermind.
It was nervewracking. I ate all my fingernails off. !!%^&
One thing I did was prepare all the “me and the business” documents ahead of time and sent them to the bank, back in June. I bought a 1″ binder and made tabbed sections for each document and its related proofs. I filled it.
So, when we finally found a building, the bank already had received our tax returns, etc, and all we had to do was create updated sales projections and provide the building specific info.
I hate sales projections. I might as well just pi** in the wind for all I can foretell … so those are hard and I had to concentrate to make it good. :)
Apparently, there we 3 people involved in getting the loan thru.
The asst who came to my office for several hours and prepared the package for the bank officers, the VP who submitted the proposal with his recommendation (to approve) to hos “boss” who actually stamped it “approved” with his official jeebus stamp.
I gave them EVERYTHING. These people know how much I pay for toiletpaper.
yikes,
my other half says worry about ELF, not EMF?
http://en.wikipedia.org/wiki/High_tension_line#Health_concerns
spam - ok, but what is the safe distance to live away from them?
yikes, you can buy a meter, or I could loan you one.
http://www.trifield.com/
waters: 92 Qwerty 285:
Here is a graph showing the percentage of Total Adjusted Gross Income by year for the top 5, 10 and bottom 50%. Oddly the data comes from the same link you quoted Waters. Notice how the Top 10% go from earning just under a third of total AGI in a year to nearly half while the bottom 50% go from 17% to only 12%. 10% of people earn a combined 47% of the money in this country. As it was stated above the rich have gotten richer and the poor have gotten poorer.
Top 5% Top 10% Bottom 50%
1980 21.01 32.13 17.58
1985 22.67 33.77 17.26
1990 27.62 38.77 15.03
1995 28.81 40.61 14.54
2000 35.3 46.01 12.99
2005 35.75 46.44 12.82
2006 36.66 47.32 12.51
galgon @ 376
“As it was stated above the rich have gotten richer and the poor have gotten poorer”
good post. but one thing that gets over looked.
Rich people kids stay rich. poor people’s kids stay poor. middle class kids stay middle class.
yes, there are exceptions, over overall the mobility is next to zero.
I think Mexico & Turkey may be worse that the US.
SAS
grim 318
Paulson also went onto say that he has said from the beginning house prices need to fall. I thought he was trying to prop up prices what gives?
yikes,
http://www.greenfacts.org/en/power-lines/
From what I just read at that link, it depends on the frequency, etc…
http://www.trulia.com/voices/Home_Buying/high_tension_lines_over_homes_issues_-15223–
read answer from Rafi in this thread: he has links and can probably test for you?
thanks, sean. do you really own one? just curious on what your take is on ’safe distance?’ do you use yours?
we have read about how you dont want to be west due to wind (or something like that) and a ton of stuff. we’re not worried, but seeing as this is a house purchase, we’d like to take all precautions
#360 sean: I have spent my whole career on the “street”. And I am still there. And I have seen alot over the years.
My issue with John lately is he is posting a bunch of crap and I believe deep down he knows it. The more thoughtful on the “street” and ther are more than you might be think are totally dismayed, and know this situation is bad, real bad.
Having John trying to paint it as somehow good, is simply wrong in my opinion.
I love good story tellers, only if I believe the stories to be true. I have lots of them (all true) myself. I think John is making alot of them up lately as he goes along.
I love a good story teller, not a BS artists;those I can spot a mile away, which is another gift of being Bronx born and bred.
http://www.nydailynews.com/ny_local/2008/12/16/2008-12-16_gov_david_paterson_unveils_dire_new_york.html
man, wonder if pret will show up to say that NY is immune.
that guy’s a legend around here.
Ehm…..holy $hit….
http://news.yahoo.com/s/ap/20081217/ap_on_fe_st/odd_hitler_cake
Anecdotal evidence the recession is getting worse…
I have a friend who works for a company that is a B2B supplier of products that are consumed during manufacturing processes. They supply major corporations across the country in a broad array of sectors: metals, food, beverage, etc. He told me recently that demand for their products was quite strong through Q3. However, since the beginning of Q4 their demand has dropped off considerably and continues to do so each week. As more companies are closing up shop or shutting down for weeks at a time their demand continues to decline. He said they had by far the worst Thanksgiving in years with many more companies than usual deciding to close the whole week and the demand did not return afterwords as he would have hoped.
Now he is currently looking staring down worst December in at least 6 years if not more. While that might not sound too bad, they have steadily grown their business over those years through acquisitions and building new plants.
The Bottom line is that for a large portion of manufacturing companies Q4 numbers are going to look A LOT worse than Q3.
Here I am thinking how I can increase my deductions by last minute charities, etc.. and what do I see -
http://bloomberg.com/apps/news?pid=20601087&sid=aznONFlyupOI&refer=home
Yikes, my email is seanm123@yahoo.com if you want info the EPA won’t give youm Best bet is to test first and worry no more,usually the magnetic field produced by Very high voltage does not extend as far as you mentioned, your alarm clock or cell phone could be more dangerous.
Test first, a cheap meter is 150 bucks.
spam 372
hmmm impacted stool, chewing off fingernails??
definitely not two phrases that should ever be in the same sentence…
In case anyone is interested: I always double glove….always.
Gawd did that sound awful!! Glad you survived it!!
sl
yikes (355)-
The seller does pay the entire commission. If you want to have some fun, ask the seller to pay 2-3 points toward your prepaids, discount points and/or closing costs.
Good luck.
Clot: the other night owl~!
sl
sean (356)-
Saw that. Schiff mopped the floor with them…hilarious!
The scary part was when Krudlow (of all people!) dropped the Argentina bomb at the end of the conversation.
For once, I can say I think Krudlow is totally right.
HE (365)-
Timing is everything. Why do the bailout now, when they’re going to get a few days’ mileage out of Bergabe’s atomic money bomb?
sean (366)-
I like Storyteller John.
It’s just Monetary Policy John that scares me to death. Because I know there are 10,000 powerful people in DC and on WS who actually think exactly the same.
spam (372)-
“I hate sales projections.”
Evidently, so does GE.
Congrats!
chi (382)-
Yep, these are my neighbors.
Somebody should check that kid’s scalp.
sl (388)-
Gave double platelets today at SMC (1.5 hrs on the TRIMA). Kicked my ass. Came home, ate, passed out early…and now, I’m wide awake.
egads…good for you! hubby and MIL all donate blood…
no one wants my FIL’s though.
Too afraid they’d end up as werewolves.
sl
Clotpoll - I like Monetary Policy John because by reading him I can know what those 10,000 powerful people in DC and on WS are thinking.
but - even if the mustard seed grows - then you what you’ve got is a *mustard* plant.
At my dad’s (extremely down-market) rod and gun club in Eastern CT, they have are going to have to skip their game dinner this year, because their source of venison (road kill)(the gun members volunteer to pick up and butcher; most goes to the food banks; the club keeps some for its fundraiser) has dried up. people are still hitting deer, but the carcasses are disappearing right away; people are grabbing them to take home themselves.
Way out west there was this fella I wanna tell ya about. Goes by the name of Jeff Lebowski. At least that was the handle his loving parents gave him, but he never had much use for it himself. See, this Lebowski, he called himself “The Dude”. Now, “Dude” - there’s a name no man would self-apply where I come from. But then there was a lot about the Dude that didn’t make a whole lot of sense. And a lot about where he lived, likewise. But then again, maybe that’s why I found the place so darned interestin’. See, they call Los Angeles the “City Of Angels”; but I didn’t find it to be that, exactly. But I’ll allow it as there are some nice folks there. ‘Course I ain’t never been to London, and I ain’t never seen France. And I ain’t never seen no queen in her damned undies, so the feller says. But I’ll tell you what - after seeing Los Angeles, and this here story I’m about to unfold, well, I guess I seen somethin’ every bit as stupefyin’ as you’d seen in any of them other places. And in English, too. So I can die with a smile on my face, without feelin’ like the good Lord gypped me. Now this here story I’m about to unfold took place in the early ’90s - just about the time of our conflict with Sad’m and the I-raqis. I only mention it because sometimes there’s a man… I won’t say a hero, ’cause, what’s a hero? Sometimes, there’s a man. And I’m talkin’ about the Dude here - the Dude from Los Angeles. Sometimes, there’s a man, well, he’s the man for his time and place. He fits right in there. And that’s the Dude. The Dude, from Los Angeles. And even if he’s a lazy man - and the Dude was most certainly that. Quite possibly the laziest in all of Los Angeles County, which would place him high in the runnin’ for laziest worldwide. Sometimes there’s a man, sometimes, there’s a man. Well, I lost my train of thought here. But… aw, hell. I’ve done introduced it enough.
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