New Jersey among the weakest housing markets

From Forbes:

America’s 25 Weakest Housing Markets

There is another region where the worst may be to come: New York City-area metros. Housing values in Newark, N.J., could fall 26%.

Likewise, Edison, N.J., is also among the mid-sized metro areas expected to see the steepest drops this year. But the worst could be over by the end of 2009 for New York’s satellite cities.

Manhattan, now at the epicenter of the financial crisis, is noticeably absent from the top 25 weakest markets list. So far, the city has been isolated from the popping bubbles in the rest of the country.

Property prices were rising in Manhattan until early last year. Zandi believes Manhattan could be spared a steep drop. He expects a fall of around 20%. Even if big bankers lose their bonuses, “Manhattan is still supported by international demand,” he says.

That prediction may prove conservative. The value of new contracts signed have already dipped 15% to 20% in the fourth quarter, according to a Beige Book report from the U.S. Federal Reserve last month.

The report said much of the activity came from “desperate sellers,” so it may not be a fair gauge of where prices will go from here.

Of course, that depends on how many more sellers become desperate.

Keep in mind that Newark and Edison aren’t references to those towns, but the metropolitan divisions of the same name:

Newark-Union Metropolitan Division
Essex County
Hunterdon County
Morris County
Sussex County
Union County

Edison-New Brunswick Metropolitan Division
Middlesex County
Monmouth County
Ocean County
Somerset County

This entry was posted in Economics, Housing Bubble, New Jersey Real Estate. Bookmark the permalink.

287 Responses to New Jersey among the weakest housing markets

  1. Essex says:

    Foiiiiiiiiiiist.

  2. Essex says:

    Meh…..as long as you are not a seller….it aint an issue.

  3. grim says:

    Some details on the source of the data/analysis, from the link above.

    To find them, we asked Moody’s Economy.com to compile a list of the country’s real estate markets that are furthest from recovery. Moody’s looked at the country’s Census-defined metro areas–including metropolitan and micropolitan statistical areas–with populations over 500,000 and prepared forecasts through 2011. They then compared them with prices in the second quarter of 2008, the latest figures available, to calculate how far prices will likely fall before reaching bottom.

  4. BC Bob says:

    From previous thread.

    “Crude has become so cheap, it is being stored at sea to avoid selling it at current market prices.”

    Nicholas,

    That’s not the whole picture. The spreads have gone bonzo. Many are taking delivery, storing it, and selling the back months against the physical.

  5. comrade nom deplume says:

    Re: Porn bailout. I didn’t believe Frank at first, but . . .

    “It’s time for congress to rejuvenate the sexual appetite of America. The only way they can do this is by supporting the adult industry and doing it quickly.”

    Maybe I can get TARP funds to, well, you know.

  6. 3 New posts in one day, busy busy busy.

  7. grim says:

    From Hard News NJ:

    The Star-Ledger ends local sections

    The Star-Ledger of Newark announced in its editions today that it will no longer be publishing county sections of the daily newspaper, citing the need to save newsprint and money.

    The expected move, which begins in today’s editions, comes at a time when newspapers are struggling with a loss of advertising revenue, while the production of the newspaper continues to climb.

  8. grim says:

    Repost..

    From CNBC:

    Consumer Loan Late Payments at 28-Year High

    Soaring unemployment has caused more Americans to fall behind on loan payments than at any time since 1980, and delinquencies are likely to head higher, the American Bankers Association said on Wednesday.

    “It is not going to be a pretty picture in 2009,” James Chessen, the trade group’s chief economist for 18 years, said in an interview. “The dramatic loss of jobs will have a huge impact on the ability of people to meet their debt obligations. This is one of the toughest environments we have ever seen.”

    The quarterly ABA study of delinquent payments found the percentage of loans at least 30 days late rose to a seasonally adjusted 2.90 percent in the July-to-September period from 2.68 percent in the second quarter.

    Delinquencies on home equity lines of credit (HELOCs) and on indirect auto loans, which are made through dealerships, rose to the highest level on record, the ABA said. The ABA represents many of the largest U.S. banks and credit card companies.

  9. grim says:

    Disappointed to hear that our favorite reporter at the Star Ledger, Sam Ali, is no longer with the paper. Sam is, without a doubt, one of the top business/real estate reporters in NJ. The Ledger has lost a tremendous resource.

  10. HEHEHE says:

    “Consumer Loan Late Payments at 28-Year High”

    That $500 a person should handle that:)

  11. yikes says:

    Increased my position in precious metals from 3 to 5 percent today. The guess here is gold touches 1500 at some point in 2009.

    Gun? Check
    Physical gold? Check
    House? In 2 weeks. Just in time to plant mustard seeds in the garden!

  12. Old Stan says:

    Manhattan was supported by international demand when the world economy was booming, the Euro was at an all time high and Manhattan apartments were appreciating in the double digits.

    Now? Not so much.

  13. wallies says:

    Short anecdote:

    Stopped to fill up at a gas station in Morrisville, PA (where they still pump your gas because it is right across the river from Trenton) and the owner was super-friendly, probably because I was the only customer. Said he was from India and his other business was commercial real-estate. I said something to the effect of “Sorry to hear that” and he said that some Indian newspaper (like The Times of India) was looking to buy property in the area. He then proceeded to give me a free mango juice drink, imported from India. It was delicious.

    Could it be that some sort of reverse outsourcing will take place if the United States becomes the cheapest place to do business? The sharks are circling.

  14. grim says:

    From Bloomberg:

    Bed Bath & Beyond Cuts Annual Forecast as Net Falls

    Bed Bath & Beyond Inc., the largest U.S. home-furnishings retailer, said profit fell for the fifth straight quarter and lowered its annual forecast as customers flocked to liquidation sales held by bankrupt rival Linens n’ Things Inc.

    Bed Bath & Beyond, based in Union, New Jersey, today projected earnings of $1.50 to $1.56 a share for the year, compared with $2.10 a year earlier. In September, the company said annual profit would decline in the low double-digits to mid-teens on a percentage basis from 2007. The average estimate of 18 analysts surveyed by Bloomberg is $1.59.

    Linens ‘n Things has closed all of its U.S. and Canadian locations. Bankrupt retailer Mervyns LLC also chose to liquidate as the U.S. slipped deeper into a recession. Last year, Bed Bath & Beyond said it would initially lose sales during the Linens ‘n Things liquidation. Eventually the removal of its primary competitor will result in increased market share, the company said.

  15. jamil says:

    13 Old stan: Well, something is supporting Manhattan prices..

  16. Matthew says:

    Here comes the pain …

  17. RoadTripBoy says:

    Lisoosh –

    Did you ever get your recommendations for New Hope, PA? I’ve been there a number of times and I would recommend the Logan Inn if you can get a room there. It’s a small hotel in the heart of town, at the corner of Ferry and Main Streets. The hotel is a little pricy but the rooms are nicely appointed, the hotel has parking in the rear for guests, and it’s in a prime location–you won’t have to drive to access the main business area or restaurants. They also have a killer sunday brunch—at least they used to. Have fun there!

  18. lostinny says:

    19 RTB
    I was looking for a place in New Hope. Lisoosh, are you going too?

  19. Clotpoll says:

    lost (20)-

    If you stay at The Logan, there is a very nice place across the street that sells spiked dog collars.

  20. lostinny says:

    21 Clot
    It looks like it will be Porches on the Towpath for us. Close enough to stuff to do but we can get away from it if we like as well- and we can walk everywhere.
    I’ll only get the dog collars if they’re pvc.

  21. lostinny says:

    21 Clot
    BTW, keep it up and I’m going to show up at a gtg in full uniform.

  22. Confused In NJ says:

    Universal Healthcare & the Waistline Police.

    http://news.yahoo.com/s/csm/20090107/cm_csm/yhsieh;_ylt=ApmOIU1.e5v9RGRmmNpm_dGs0NUE

    If Obama combines his new Clintonesque Universal Healthcare, with the Plastic Surgeon who recently was accused of using Fat from his Liposuction Patients to fuel his car, he may be able to solve two big problems with one solution. Mandatory Liposuction, based upon waist size, to be recycled as a gasoline fuel alternative. Alabama & New York are the advance states with Fat Taxes.

  23. Clotpoll says:

    lost (22)-

    You can go over to Odette’s and have a belt in Jessica Savitch’s memory.

    Just don’t try to drive your car on the towpath. Bad things happen.

  24. lostinny says:

    25 Clot
    What do you know about Marsha Brown’s? We were thinking of dinner there on our anniversary.

  25. grim says:

    with the Plastic Surgeon who recently was accused of using Fat from his Liposuction Patients to fuel his car,

    Interestingly enough, we toyed around with this idea on the blog back in February…

    Shore Guy says:
    February 20, 2008 at 4:25 pm

    # 186 Given all of the fat people in this country, maybe we can make bio-diesel from fat liposuctioned from the overweight. Kill two birds with one stone.

    Then back in July, Ket put some hard numbers together..

    kettle1 says:
    July 18, 2008 at 1:31 pm

    No need to worry about gas prices!!!!

    Just provide government funded liposuction for all americans and then use the fat to make biodiesel!!!!

    US population is 300 million, 1/4 is 75 million.
    assume we can get 10 lbs/person minimum = 750 million lbs of fat

    SG(specific gravity) of human fat is about 0.9 and fat based biodiesel can give 1 gallon of biodiesel per gallon of fat. So right there we have 750*.9 = 675 million gallons of biodiesel.

    This would replace about 1.6% of the total US diesel consumption (40 billion gal/yr), not much but a start. AND!!!! its renewable. just keep eating those Twinkies and fries and every year the GOV can harvest another 10 pounds from you! Talk about recycling

  26. spam spam bacon spam says:

    how the $%^& does anybody get any work done around here when you post so much ??
    :)

    I’m like a freeking one-armed paper hanger all day and I gotta take a xanax just to get to sleep to do it all over the next day.

    And my husband works even longer.

    Anyway, I have a question.
    Thinking about taking a HELOC out. I owe less than 50K on my house and this building is gonna kill me, I think.

    I just hired an architect to work alongside the engineer in raising the roof. We need a use variance, so we have to get approval before closing.

    I could go in to the building “as is”, but then construction work being done after we move in would be a major disruption.

    If I stay in our old place after we close, it’s a *NUT* every month that I’m paying 1 rent and 1 mortgage. (I plan on being both places for 2 months, but I’d like to move in after that)

    What do you guys think?

    thoughts?

    SBA said no HELOCs to get my downpayment on the building, but they never said no HELOC to do upgrades… :)

  27. spam spam bacon spam says:

    halp. Grim, I’m in mod.

  28. spam spam bacon spam says:

    I don’t think you can go wrong in New Hope.
    Anywhere.

    That place is a bevy of “wow, we gotta come back here…”

    Find anyplace busy and small. Out of the way is even better.

    I’ve had awesome meals on card tables in New Hope.

    Then again, I had one client whoe INSISTED on holding his holiday party outside at Havana’s…

    In December.

    In the freezing cold.

    Dressed up.

    Fluckme… he did this to us TWICE…

    We watched the WARM people inside with desperate, woeful eyes…

    It sucks to drink with mittens on while your head bakes from the porta-heater and your frozen toes snapped off inside your high heels an hour ago…

    And then you get your obligatory $5.00 parking ticket, to boot…

  29. Pat says:

    wallies, it’s not because they’re right across from Trenton…it’s because the Mobil has to compete with the old man at the Getty by 7-11. They’re mostly still fs, those Gettys, in Pa.

    Was it Raj? Semi-Big belly, short hair.. or was it a guy in a turban? Raj is a good guy.

  30. jamil says:

    Stealing from (Russian) mafia is not such a great idea..

    “Sonja Kohn may be literally running for her life. The woman once known here as “Austria’s woman on Wall Street” has disappeared. Kohn collected more than $2 billion from rich investors in Russia and across Europe for Bernard Madoff through her firm, Bank Medici. Touting her connections, she promised investors entrée to bigger fish in the finance world, including Madoff. Some say it’s not out of the question that she’s hiding from Russian clients (do we dare say, perhaps, the Russian mob?) who trusted her with their cash and have had their wallets hit even harder by the Russian stock.”

  31. livinginpa says:

    #26 can’t go wrong with Marsha Brown. I’ve had consistently good meals there. Not your run of the mill menu. It’s a bit pricey, but the food and ambience is well worth it and they have a nice bar on the entry level (dining room is upstairs). Right next door is the Mansion Inn – it still operates as an Inn/B&B but it is also known for its food. Celebrated a special family b-day there. Food was outstanding.

  32. lostinny says:

    33 livinginpa
    Thanks for the info. We’re real big on Cajun/Creole food so it seems like the obvious choice. Although I have read mixed reviews. Do you know anything about Tastebud’s?

  33. Yikes says:

    http://news.yahoo.com/s/ap/20090107/ap_on_go_pr_wh/recession_stimulus

    it wont be long now before the knives come out for obbaammaa. i would guess by the end of summer, the sh*t will hit the fan.

  34. Outofstater says:

    Okay, I don’t want to ask Grim because I don’t want to butt in, so don’t tell him I asked and he’ll never know, but does anyone know what this blog might be costing him on a monthly basis? I don’t know enough about this stuff to even guess.

  35. big fan says:

    if there’s a gtg in new hope, we’ll be showing up. it’s only about a 15-minute drive.

  36. sas says:

    kettle,

    “decentralization”
    i don’t think you get my angle.
    this is a big topic, perhaps when I am up to it in the near future, i will explain more.

    too tired & my feet hurt right now.

    SAS

  37. Punch My Ticket says:

    Forget New Hope. Drive north along the river to Lumberville and go to the Black Bass. Best Sunday brunch anywhere. Anywhere!!!!!

  38. Barbara says:

    Grim,
    I just made a small donation in your Pay Pal. More to come in installments.
    Thanks

  39. livinginpa says:

    Lost, sorry no personal knowledge of Tastebuds. Punch, agree the Black Bass is great too.

  40. sas says:

    if you don’t think the black economy has permeated the courts & law enforcement & madoff is not insutionalization….

    man, better go back to playing tidlewinks with big bird.
    cause you have no idea about the real world.

    “Madoff Should Remain Free, Defense Lawyer Tells Judge”
    http://tinyurl.com/82tmg3

  41. bi says:

    Housing Projections are Repudiated by Rutgers Report

    Senator Christopher “Kip” Bateman (R-Somerset) called on the Corzine Administration and legislative Democrats to publicly admit that the proposed numbers of housing units to be mandated under their new subsidized housing law are based upon erroneous job projections.

    “The Governor and Democrat legislative leaders have based their COAH mandates on job growth numbers that nothing more than a fantasy,” said Bateman, whose call to delay implementation of the COAH law for six months was rebuffed by the Governor. “They have imposed expensive, onerous and unworkable dictates on communities throughout this State using inflated and phony numbers.”

    Bateman noted that COAH regulations proposed on October 20, 2008 (40 N.JR. 6116) project that there would be an annual increase in jobs of 58, 943 from 2004 to 2018. Yet actual job production in New Jersey has been much less than COAH’s projections according to a May, 2008 report by the Edward J. Bloustein School of Planning and Public Policy and the Sitar Company/Oncor International. According to the report, only 20, 300 new jobs were created in 2004, 22, 400 in 2005, 27, 200 in 2006, 3, 700 in 2007, while there was a loss of 10, 200 jobs in the first quarter of 2008.

    http://www.policy.rutgers.edu/reports/sitar/sitarmay08.pdf

    “The Democrats may think it is good to base their housing mandates on phantom job numbers, but municipalities throughout this State are being compelled to waste taxpayer money to plan for this growth that it will never occur,” said Bateman. “The COAH law and regulations are government bungling at its worst and taxpayers are footing the bill for it.”

    “As our State economy reels from six years of unrelenting tax increases and irresponsible government spending, we simply cannot afford an unfunded and ill-conceived housing mandate that uses fantasy figures that have no basis in reality,” said Bateman. “Democrats need to realize that their COAH law is strangling our economy and picking the pockets of our already over-burdened taxpayers.”

    Link to Post:
    http://www.senatenj.com/index.php/bateman/bateman-corzine-needs-to-get-real-on-phantom-coah-projections/1982

  42. sas says:

    what did I say?
    more shakeouts to come.

    “Satyam Accounting Scandal Erodes Confidence in India Equities”
    http://tinyurl.com/6watcn

  43. zieba says:

    Are you guys talking restaurants or inns? I don’t remember many names but I had a GREAT dinner in Martine’s, back when it was in that old salt store building, they’ve since moved and I haven’t been back.

    Are these places in the same category or lower/higher?

  44. scribe says:

    clot,

    If someone is a CPA, and he/she is capable of paying the mortgage, but doesn’t because he/she wants to move and is looking for a short sale ..

    will a bank actually go for that one?

    If someone has the ability to pay, will they pursue the person for the balance in NJ? Recourse or non-recourse state?

  45. reinvestor101 says:

    sas, please stop trying to be the bogeyman by attempting to scare the hell out of everyone. Tbis is just another isolated incident. On occasion, there will be people that pop up who’ve abused the financial markets, but this is the exception rather than the rule. There is no institutionalized fraud or a black economy. Stop trying to scare the bejesus out of everyone–we have enough problems.

    sas says:
    January 7, 2009 at 9:41 pm
    what did I say?
    more shakeouts to come.

    “Satyam Accounting Scandal Erodes Confidence in India Equities”
    http://tinyurl.com/6watcn

  46. spam spam bacon spam says:

    I just googled Black Bass in Lumberville…closed for renovations, re-open in spring 2009.

    I also like Cafe at Rosemont in Rosemont, Hunterdon…it’s not far from Lambertville/Milford. Eclectic food, a busy zoo, awesome.

    They have “eat global” on Wednesdays.
    This week is Russia.

    1st Course
    Borscht – Beet Soup
    Gribnaya Ikra – Mushroom Caviar
    2nd Course
    Tushonoye Myaso S Podlivkoi A Khrena – Beef Stew with Horseradish Sauce
    Kuritsa Tushonya S Chernoslivom – Chicken with Prunes
    Lapshoi I Makom – Noodles with Spinach Cheese & Poppy Seeds

    Dessert
    Smetannik – Sour Cream & Jam Pie
    Pryaniki – Russian Gingerbread

    $24 /pp They kill me. They’re so cheap.

  47. spam spam bacon spam says:

    Cafe at Rosemont linkie:
    http://www.cafeatrosemont.com/Default.htm

    Here’s upcoming eat globalies (is that a word?)
    January 14, 2009 Hawaii
    January 21, 2009 TBA
    January 28, 2009 Chinese New year
    February 4, 2009 French Alps
    February 11, 2009 Elizabethan Valentine’s Day

  48. spam spam bacon spam says:

    Grim, I’ve been modded.

    Sigh. I can’t know why. Mebbe its “cafe”

    Or Gribnaya Ikra.

    Whatever that is.

  49. PGC says:

    Satyam will have one big effect over here. There will be a few people sitting uncomfortably on H1-B visas praying that the company doesn’t go under and they get their two week notice to pack up and go home.

  50. Outofstater says:

    #43 Thanks pricedOut!

  51. Bubble Disciple says:

    Grim,

    Did the gsmls website move?
    My bookmark doesn’t work anymore.

  52. chicagofinance says:

    Matthew says:
    January 7, 2009 at 6:28 pm
    Here comes the pain …

    M: sounds like a Depeche Mode song….

  53. lisoosh says:

    #20 ish

    roadtrip, lost.

    New Hope? Case of mistaken identity, I wasn’t planning on going there and when I do, its generally just for the day, I’m down in that direction anyway.

  54. RoadTripBoy says:

    Lostinny – Sorry! I meant you for the New Hope Info. Saw your post re: Porches—tried to stay there a few times but they were always full. Enjoy.

  55. Curmudgeon says:

    Black Bass is a wonderful scene (I had a great birthday brunch for 24 there..) but “best brunch anywhere” is a bit of a stretch. I could give you about 10 personal examples but I’ll stick to one in that sector- Lacroix at the Rittenhouse Hotel in Philly. Unlimited good caviar, both a buffet and full menu, and then you get to join the chef in the kitchen where he offers you two or three personal specialties that he has prepared for that day. It was tops before Chef Lacroix retired- it’s still top 5 in my book.

  56. me@work says:

    hey typhoid grim,

    since I already did the “donate” thing already. You can book your doc visit and pick up the other “donation” if you like.

    I just got the ass-kicking of the week at work today. Again, piles of uninsured, medicaid, those about to lose their jobs, overdoses – got to intubate yet another one…and the terminally depressed.

    Welcome to hell.

    Patients coming in anywhere between 10-15 patients per hour

    I’m done at midnight. It’s 0338 and I’ve still got 5 more charts to finish.

    Kill me now.

    sl

  57. bairen vulture says:

    Wonder how many families on the edge will start to implode because of this.

    http://money.cnn.com/2009/01/07/news/economy/salary_cuts/index.htm

  58. still_looking says:

    bairen,

    It’s no joke. One patient last night was depressed because at her job they were eliminating paid vacations and sick time and decreasing salaries.

    She had a physical (as well as a mental problem) but her physical problem was preventing her from working (and earning money.)

    It’s just gonna get worse…. I’m glad to be home and just dreading my next shift.

    sl

  59. grim says:

    From CNBC:

    Monster Online Job Index Stumbles in Dec.

    A monthly gauge of online labor demand in the United States slid in December, suggesting job conditions worsened with the economy stuck in a recession, a private employment group said Thursday.

    Monster Worldwide, an online careers and recruiting firm, said its employment index fell to 131 points last month from 143 in November. The December reading is down 22 percent from 169 a year ago.

    Online job availability has fallen as employers have drastically pared payrolls to cut costs in the current business downturn, according to Monster.

    “Although some of the decline can be attributed to end-of-year seasonality…the latest results indicate that conditions in the labor market continue to deteriorate,” said Jesse Harriott, a senior vice president at Monster.

  60. bairen vulture says:

    #59 sl

    That’s rough. To lose paid sick and vacation time and take a pay cut is awful.
    Plus be too sick to work. That’s a perfect storm for that patient.

  61. Clotpoll says:

    lost (26)-

    Marsha Brown’s sucks big time. Looks like a cross between a bordello and a funeral home, too.

    In fact, the only good restaurant in New Hope is Triumph Brewery. Other than that, you’re better off going into Lambertville to eat.

  62. Clotpoll says:

    scribe (46)-

    By the time the short sale hits the mortgage company, they won’t be able to pay. Capiche?

    Profession makes no difference. In an environment where our best and brightest bankers can lose billions of dollars in one fell swoop, a professional designation only confers the status of higher-class idiot on somebody facing foreclosure.

    This is a recourse loan, and there is a possibility the lender might demand some sort of post-workout payment plan. From what I’ve seen, though, many people will declare BK rather than going this route. Or, they sign off on a payment plan, then BK later.

  63. Clotpoll says:

    Tard (47)-

    Direct quote from my pal at the SEC:

    “This is only the beginning of this stuff.”

  64. Clotpoll says:

    spam (48)-

    Rosemont? The home office of rude lesbi@n waitresses?

  65. PGC says:

    I love Irony. l clicked the following link.

    http://money.aol.com/investing/top-stocks-2009

    when it came up with:

    “We’re sorry! The Web page you are looking for could not be found.”

    I almost fell off the chair laughing.

  66. Clotpoll says:

    sl (59)-

    Tell her the coffee is for closers.

  67. Clotpoll says:

    PGC (66)-

    I’d bet the best performers are all inverse ETFs. Not exactly what they had in mind, I’m sure.

  68. Clotpoll says:

    Cranky Mike’s back on the SRS wagon! Good times:

    WEDNESDAY, JANUARY 7, 2009

    Mike Morgan’s Stock Trade Update – January 6, 2009
    We closed out the following trades on Tuesday – 1-6-09. We closed these at a loss in our New Model Portfolio to provide us with additional funds in order to move into several PUT and short positions as referenced below. We still believe TOL will fall below $16 and GS will fall below $65. We do not provide entry prices for non-clients.

    1 – Loss of 23.86% – Covered TOL at $22.00

    2 – Loss of 22.88% – Covered GS at $90.50

    3 – Entered position of SRS

    4 – Sold Calls on SRS position to lock in premium

    5 – Entered position of FXJFD – Call option on the FXP ETF

    You can view all of our current closed trades at http://www.morgan-florida.org/ClosedTrades

  69. grim says:

    Bank of England cuts to 1.5%

  70. grim says:

    From Bloomberg:

    No Recovery for Real Estate as Speculators Dominate Sales

    As the U.S. housing recession enters its fourth year, there’s no sign of a recovery because speculators account for most of the rise in sales.

    While the purchases are trimming the inventory of unsold properties, most of those bought by speculators will likely return to the market when prices rise again, hampering any recovery, said Nobel laureate economist Joseph Stiglitz and Yale University Professor Robert Shiller in interviews.

    “We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve,” said Stiglitz, a Columbia University professor of economics. “We could see a double-dip in the housing recession if that happens.”

  71. DL says:

    2006 price plus commission still seems to be the norm for the zip codes I’m searching. If we return to 2001 prices, I expect to see 40-50% reductions from current list prices before this is over. And I expect to buy from a bank instead of a private seller.

  72. grim says:

    Said it before, worth repeating.

    Keep in mind that when you are looking at properties online, you are looking at the properties that haven’t sold… and for good reason too.

    Looking at the most recent numbers from Bergen County. The difference between last asking price and sale price is hovering around 10% right now. We aren’t even talking about original list price. I’d wager a bet that current sales prices are nearer to 20% off original list price.

  73. Confused In NJ says:

    “O’s” Stimulus Speech Excerpt;

    “For every day we wait or point fingers or drag our feet, more Americans will lose their jobs,” Obama said. “More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.”

    The truely sad part about this excerpt from Obamas speech is that he knows we have already hit the point of “no reverse”.

  74. gary says:

    2006 price plus commission still seems to be the norm for the zip codes I’m searching.

    Amazing, isn’t it? There’s no doubt that if you’re going to buy real estate as an investment anywhere in the world, the NY/NJ area is the place to buy. I said over 2 years ago that prices in North Jersey would remain relatively flat to down around 5% and I was correct.

  75. BC Bob says:

    “I was correct.”

    Gary,

    You are fos. Also, I owe you a beer.

  76. Frank says:

    Mortgage Originator Activity from 1/7/09

    Coupon % of Total
    4% 58%
    4½% 32%
    5% 2%

  77. From marketwatch Walmart misses expectations on same store sales. Growth @ %1.7 vs %2.8 expected.
    Earnings were cut as well.
    That’s not making me feel better.

  78. grim says:

    Frank,

    What happened to that line around the block? You sure they weren’t waiting to return?

    From MW:

    Abercrombie & Fitch December same-store sales down 24%

  79. DL says:

    Not being a RE guy, I probably phrased #74 incorrectly. The point was that houses that appear to be in good to very good condition are still priced at bubble levels because they were 100% financed and sellers can not afford to lose a penny.

  80. gary says:

    BC Bob,

    Beer? I was hoping for Johnny Black on the rocks! ;)

  81. John says:

    I love you Barney Frank!!! Well in a manly way anyhow.

    U.S. House’s Frank Says TARP Funds Should Aid Muni-Bond Issuers

  82. grim says:

    Speaking of Black, I believe it is time for another drink-together. Post holidays, clear schedule, I expect no bitching or excuses.

  83. Everything's 'boken says:

    In, sent you a link to a Roach analysis. I can’t post it directly.

  84. grim says:

    From the WSJ:

    Commercial Property Loses Shelter

    Delinquencies on mortgages for hotels, shopping malls and office buildings were sharply higher in the fourth quarter, as the weaker economy hit landlords and threatens to cause losses for investors in the $3.4 trillion market.

    Commercial real estate has held up better than the housing market, but began to struggle at the end of last year. New data from Deutsche Bank show that delinquencies on commercial mortgages packaged and sold as bonds, which represent nearly a third of the commercial real-estate debt market, nearly doubled during the past three months, to about 1.2%.

  85. John says:

    DUH their two IT Outsoourcing compeititors Unisys and Bearing point were trading in the pennies while they were trading sky high. Made no sense three months ago, now it makes sense.

    PGC says:
    January 7, 2009 at 10:30 pm
    Satyam will have one big effect over here. There will be a few people sitting uncomfortably on H1-B visas praying that the company doesn’t go under and they get their two week notice to pack up and go home.

  86. Essex says:

    Satyam….Intereviewed with them way back when they first started….their local front man was a greasy ex IBMer….that was all I needed to see. Avoided then….watched them implode the first time back when Yahoo boards invited comments….with lots of hand wringing on the part of employees….and some truly strange comments. Let’s bring some jobs back home people.

  87. HEHEHE says:

    John,

    At what point is there too little TARP money chasing too many bailouts?

  88. grim says:

    From MarketWatch:

    U.S. weekly initial jobless claims fall 24,000 to 467,000

    US 4-week average claims down 27,000 to 525,750

    U.S. continuing jobless claims rise 101,000 to 4.61 million

    4-week avg continuing claims up 45,000 to 4.47 million

  89. HEHEHE says:

    You notice O’s speech timed to take the steam out of the upcoming sh*tty unemployment numbers. Might work for the bulls short term, long term…not so much.

  90. grim says:

    #90 – Pasting the text in, for posterity.

    Buyers rejoice: Manhattan home prices finally fall

    It took war, the worst financial crisis since the Great Depression and the collapse of some of New York’s famed investment banks, but Manhattan apartment prices are finally falling.

    After months of looking at half-million-dollar apartments the size of a walk-in closet back home in Pennsylvania, Michael Germano noticed prices suddenly became negotiable and brokers no longer scoffed at lower offers.

    “It probably started at the beginning of November, but things over the last three or four weeks have changed even more dramatically,” said Germano, 30, a Smith Barney financial adviser.

    “I pulled up one of the major New York brokerage firm’s websites and did a search. That same search a couple weeks ago returned about three pages of listings and the other night it returned six pages, and the prices have come down noticeably over a couple of weeks,” he said.

    Brokers and buyers say the financial crisis — most acutely symbolized in New York by the collapse of Lehman Brothers in September — has finally shaken up Manhattan.

    “I haven’t seen this kind of market since the ’70s,” said Marilyn Harra Kaye, president of MLBKaye International Realty, a broker in Manhattan for more than 25 years. New York City lost 10 percent of its population in the 1970s when the city’s finances almost collapsed.

    Prices of existing Manhattan apartments fell nearly 4 percent in the fourth quarter, according to Prudential Douglas Elliman’s quarterly report and those prices appear higher than they are in reality because of the months-long lag between when a deal is negotiated and when it closes.

    Average prices of units that are under contract but have not closed have fallen 20 percent since August 2008. Dottie Herman, chief executive of Prudential Douglas Elliman, sees a possible price decline of 20 percent to 25 percent afflicting the entire Manhattan market in the first quarter.

    Germano said he recently got a seller to reduce his price by one-third but is still looking for another deal.

    “I don’t know that anyone’s ever seen anything like this,” said broker Ray Schmitz of Coldwell Banker Previews International. “We had a temporary downturn after (the attacks of) 9/11 and then the panic passed and everything was business as usual.”

  91. Hobokenite says:

    Anecdote:

    I was in Union Square B&N a last night, and it seemed almost empty. Maybe not quite almost empty, but it was the least crowded I’ve ever seen it.

  92. grim says:

    December same store sales are absolutely horrible. Retailers already talking about double digit declines continuing into January.

  93. BC Bob says:

    “Retailers already talking about double digit declines continuing into January.”

    But, where’s the recession?

  94. grim says:

    BC,

    No recession here.

    Target -4.1%
    Barnes & Noble -7.7%
    Chicos -12.4%
    Saks -19.8%
    Kohls -1.4%
    JC Penney -8.1%
    Nordstrom -10.6%
    American Eagle -17%
    Dillards -5%
    Abercrombie & Fitch -24%
    Gap -14%
    BJs +1.6%
    Macys -4%
    Walmart +1.9%
    Zales -19.6%
    Limited Brands -10%
    William Sonoma -24.2%
    Sears -7.3%

  95. Macy’s closing 11 more stores…

  96. Barbara says:

    89. Essex
    speaking of Yahoo msg boards, anyone remember TheLion? LMAO

  97. Shore Guy says:

    Grim,

    Forget about into January, until back-to-school time, there is no compelling pressure on anyone to spend on clothing. Likewise, people may want to replace furnature, appliances, autos, etc., unless consumer products fai,l and MUST be replaced at that moment, there is likely a decreasing liklihood that most people will buy these items on credit. The number of people who can buy with cash is limited. I suspect that consumer spending will be more constrained than the consensus estimates — and it will shock policy makers who will contribute to the pull-back by considering tax/fee increases at a time that taxpayers/consumers feel unsettled about spending.

  98. Stu says:

    Grim,

    “Target -4.1%
    Barnes & Noble -7.7%
    Chicos -12.4%
    Saks -19.8%
    Kohls -1.4%
    JC Penney -8.1%
    Nordstrom -10.6%”

    It’s only the beginning. This was during Xmas when people are more willing to make purchases. Wait until the next quarter’s reports when there is no impetus (holiday) to make purchases. Unless of course, you think building bridges, tunnels and parks are an excuse to run out and buy a new pair of designer jeans.

  99. HEHEHE says:

    Fortunately Best Buy’s sales were saved by the location Frank frequesnts

  100. jamil says:

    Just to remind people that escaping US taxes to Costa Rica or elsewhere does not help them..

    “America’s Berlin Wall”

    “QUEUES of frustrated foreigners crowd many an American consulate around the world hoping to get into the United States. Less noticed are the heavily taxed American expatriates wanting to get out—by renouncing their citizenship..
    expatriates surrendering their citizenship with a net worth of $2m or more, or a high income, will have to act as if they have sold all their worldwide assets at a fair market price. If the unrealised gains on these assets exceed $600,000, capital-gains tax will apply. A study by the Congressional Budget Office guesses that the new law will progressively net the government up to $286m over five years. It is unclear, however, why people would suffer the consequences if they did not expect to save money in the long run by escaping American taxes.

    That expats want to leave at all is evidence of America’s odd tax system. Along with citizens of North Korea and a few other countries, Americans are taxed based on their citizenship, rather than where they live. So they usually pay twice—to their host country and the Internal Revenue Service.”

    http://www.economist.com/finance/displaystory.cfm?story_id=11554721

  101. grim says:

    Surprising that sales fell so sharply given the deep discounting going on. Margins were burned in hopes of making it up in volume, which clearly didn’t happen. Retailer earnings won’t be pretty.

  102. Stu says:

    “Retailer earnings won’t be pretty”

    Every year it’s the same thing. Everyone goes gaga over optimistic sales projections but ignores the earnings side of the equation.

    Walmart missed and is lowering projections. Need one see more?

  103. Stu says:

    Yes Clot. Just the beginning of the next ^VIX party. Now why the heck did Victorian cover?

  104. PGC says:

    One of the better things about working in Financial IT, is that Gvmt regulation will always create jobs.

    http://news.bbc.co.uk/2/hi/business/7816252.stm

    The banks will scramble to upgrade systems to cope.

    “They might need to be prepared for further costs as the proposals would cost more than £900m to implement over five years.”

    In the US, the upcoming “Knee-Jerk” hedge fund and derivative regulation will mean a big a scramble for systems that can cope. The last time we had this was for SOX and the Patr1ot Act.

    Better dig out my derivative pricing and risk management notes from 1998.

  105. kettle1 says:

    Shore 101

    and it will shock policy makers who will contribute to the pull-back by considering tax/fee increases at a time that taxpayers/consumers feel unsettled about spending.

    Policy makers refuse to consider any solution that entails pain. Until they realize that sometimes you have to have the rotten tooth pulled and its gonna hurt a lot before you feel better, then they will continue to make things worse.

    The government, at all levels is making the same mistakes they made during the 30’s. They believe they can alter the business cycle. the only real solution is an orderly liquidation of bad businesses, banks, and debt while supporting the peoples basic needs for medical care, food, and shelter, during the difficult periods.

    history does not repeat but it certainly rhymes!

  106. #105 – Agreed, but I was equally surprised by the performance of the discounters and club stores (read Walmart & BJ’s). If Walmart is missing expectations then people are not spending anywhere.

  107. grim says:

    Every year it’s the same thing. Everyone goes gaga over optimistic sales projections but ignores the earnings side of the equation.

    Stu,

    The American Consumer is now conditioned to expect massive discounting as an incentive to buy. After all, it isn’t a sale unless the doorman gets trampled to death. Camping out for a Wii or Elmo a few years back was cute. No cute anymore, all we have is ugly ugly ugly.

  108. Cindy says:

    http://www.dimensional.com/famafrench/2009/01/government-equity-capital-for-financial-firms.html

    Fama/French Forum
    Government Equity Capital for Financial Firms

    “Suppose no private buyer steps up to buy a failed bank, and suppose, for whatever reason, the Fed and the Treasury decide they want to injuect equity to allow the bank to meet its capital requirement. The FDIC approach can still be used to solve the debt overhang problem, so taxpayers get their money’s worth, that is, so equity financing ends up as equity financing rather than as a shift of taxpayer wealth to the bank’s holders. To achieve this goal, the FDIC can draw a line in the bank’s liability structure, with debt holders and stockholders below the line getting nothing. The line should be drawn so that the market value of the bank’s assets covers the liabilities above the line. (This is what the FDIC does when the new equity comes from a private investor.)

    When this prescription is followed, the bad news is that the failed bank has been nationalized ( I hate nationalization), but the good news is that nationalization is without a taxpayer subsidy to the bank’s debt holders. I supect the Fed and the Treasury think they avoid nationalization ( or at least perception of it) if they inject capital into a bank without solving the debt overhang problem. This is an illusion. The bank has been nationalized, but in a more expensive way. The additional expense is a subsidy to the old holders because of the debt overhang problem.

    The FDIC’s powers are written so that taxpayers should not have to pay when a bank goes bad. The logic is that the bank’s stockholders and its lower priority debt holders get the benefits when the bank does well so they should pay the costs when it does poorly. Stockholders and lower debt holders should be pushed out of the game until the value of the bank’s assets are sufficient to cover its remaining liabilities. My view is that this blueprint should be followed when the subsequent injuection of equity capital that a failed bank needs to survive comes from the public sector ( the Treasury and the Fed), as well as when it comes from the private sector. It produces all the benefits of a recapitalization without a taxpayer subsidy.”

  109. Stu says:

    Tosh: FYI

    “The tone in premarket trading has soured in the wake of a lowered earnings outlook from Wal-Mart (WMT). Wal-Mart expects fourth quarter earnings to range from $0.91 to $0.94 per share, which is below the consensus estimate of $1.06 per share. The company previously forecast earnings between $1.03 and $1.07 per share. Wal-Mart reported December same-store sales increased 1.7%. Shares of WMT are trading more than 6% lower at $52.00 in premarket action. Meanwhile, Costco (COST) reported December same-store sales declined 4.0%.”

  110. kettle1 says:

    Re Expat tax

    How does the IRS expect to enforce taxes on an expat if the expat is outside their jurisdiction? barring return to the US at some point it doesnt seem as though they have many options for coming after you, unless your host country would extradite you based on an IRS claim.

  111. Clotpoll says:

    Stu (108)-

    Maybe Vic still has one or two nerves whose synapses still fire properly.

  112. #114 – I didn’t see the Costco -%4 before, thanks.
    This is going to be a hard year in retail.

  113. Clotpoll says:

    PGC (109)-

    Why don’t you team up with a brokerage house and come up with a squared or cubed inverse RTF?

  114. jamil says:

    115 kettle: Re IRS enforcement.

    You can never visit the US again (or make a transit through the US). This alone is pretty significant threat, especially if your business might require it or you have family in the US.

    I doubt host countries would extradite you. Not sure if host countries can collect the money from you and send it to IRS (not sure if some tax treaties allow this, probably not).

  115. #120 – I really like that! Fungible and hard for customs/IRS to track. I hearby propose a new “watch-standard”.

  116. freedy says:

    if this keeps up, the fed will have more to worry about that expaits evading
    domestic taxes. they may be busy here in the US keeping the taxpayer revolt in check.

  117. re #121 – Odd, the original #120 post vanished… maybe for the best.

  118. jamil says:

    US is creating a perverse system which encourages successful US persons abroad to renounce their citizenship and never return to the US, while simultaneously encouraging poor uneducated illegals to moving in and giving all sort of freebies to them. I’m sure there is some logic here..

  119. grim says:

    #121 – deleted, don’t want to be stopped for a wrist check on my next flight.

    In many parts of the world a Rolex is considered a cash equivalent.

  120. DL says:

    Some countries have bilateral tax treaties with the U.S., many do not. Goal is to prevent double taxation. Generally, the rule is you always pay the IRS, and the host country can tax you the difference between the U.S. and host country tax rate. Marc Rich lived for years in Switzerland (which withholds taxes on interest income until you prove you paid your U.S. tax obligation on it) until he was pardoned.

  121. kettle1 says:

    grim, tosh

    if you want to play that game, then have a water bottle made out of platinum that looks like one of those stainless steel bottles. use it as your water bottle on the way to your destination then “lose” it.

    Heck even have some garish flashy logo’s painted on the bottle!

    better yet, you know that metallic suitcases? yep, make it out of platinum!

    TPTB will always lose against individuals who are really determined and willing to take risks

  122. kettle1 says:

    grim, tosh

    if you want to play that game, then have a water bottle made out of platinum that looks like one of those stainless steel bottles. use it as your water bottle on the way to your destination then “lose” it.

    Heck even have some garish flashy logo’s painted on the bottle!

    better yet, you know those metallic suitcases? yep, make it out of platinum!

    TPTB will always lose against individuals who are really determined and willing to take risks

  123. House Hunter says:

    lostinny I have been to Marsha Brown’s as well..it was great. It is in a renovated Church so upstairs has extremely high ceilings…gets a little loud

  124. grim says:

    Retailers blame the weather!

    They are starting to sound like the NAR.

  125. PGC says:

    #118 Clot,

    I’m not a quant, so I don’t invent the black box. I used to build them and make them work, these days I just make sure they run.

    To build the black box you need to understand the mechanics inside and what the box is trying to achieve. Otherwise you get some funny results coming out the front. A good example is the Program Trade model from the 87 crash, if a programmer had asked the question, “But when do you want it to stop selling?” the result might have been different.

  126. Stu says:

    “Retailers blame the weather!”

    One could argue that the financial ‘climate’ might have something to with it. Or perhaps, the economic ‘headwinds’?

  127. kettle1 says:

    stu,

    this is all just an economic microburst.

  128. jamil says:

    DL: “Generally, the rule is you always pay the IRS, and the host country can tax you the difference between the U.S. and host country tax rate.”

    It is the other way around..Host country taxes first and after that, the IRS taxes you the difference (if the host country taxes were lower than IRS taxes). In many cases (e.g. in high-tax countries) IRS gets nothing. Note that in some cases, you may even have to pay US state taxes (e.g. CA and PA are aggressively interpreting vague “intent to return” clause)

  129. comrade nom deplume says:

    [115] kettle, et al.

    The exit tax is actually a little more friendly than it seems; if the assets aren’t leaving the country, the tax is deferred. If anyone is thinking of this, I suggest we talk as there are a LOT of mines in those waters.

    Right now, I think the spike in expatriation (and there is a spike, trust me), is due to three factors: (1) Expats with portfolios that have taken a beating can get their $$$ out now while their gains (if any) are lower; (2) taxes on cap gains and HNWs are expected to go up, so leaving now is tax-advantaged; and (3) time to get out of dollar-denominated assets.

  130. John says:

    Daily Municipal Bond Commentary
    Last Updated: Thu Jan 8, 2009 – 09:31:07

    ——————————–
    The Daily Municipal Comment January 8, 2009 by Michael E. Lane
    The muni market continued its rally yesterday. Yields are down sharply even as municipals still are cheap on a relative basis to Treasuries. New issues continue to be placed without difficulty, including the week’s largest deal, over $1bil Empire State NY, which had a truncated retail order due to demand.

  131. comrade nom deplume says:

    [129]

    And crowded. Loud, crowded, but the food was good (not orgasmic or anything, but good and decent portions).

    Full disclosure: Went there nearly 2 years ago. Could be different now.

  132. jamil says:

    135: I think that if you renounce your citizenship, the tax applies immediately. I don’t think it matters if the assets stay in the US or not. That was the whole point in the legislation.

  133. Al says:

    grim says:
    January 8, 2009 at 8:53 am
    Surprising that sales fell so sharply given the deep discounting going on. Margins were burned in hopes of making it up in volume, which clearly didn’t happen. Retailer earnings won’t be pretty.

    Grim – regarding the Deals – I did not see ANY good deals untill after christmas.

    Next day after christmas theer were really good deals at the stores, but malls were empty.

    I think retailers got greedy, did not cut margin and as result lost on sales.

  134. grim says:

    CNBC Headline:

    Wal-Mart, Other Retailers Post Grim Holiday Sales

  135. grim says:

    From CNBC:

    More Pain for US Borrowers as China Hangs on to Cash

    China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers.

    The declining Chinese appetite for United States debt, apparent in a series of hints from Chinese policy makers over the last two weeks, with official statistics due for release in the next few days, comes at an inconvenient time.

    In the last five years, China has spent as much as one-seventh of its entire economic output buying foreign debt, mostly American. In September, it surpassed Japan as the largest overseas holder of Treasurys.

    But now Beijing is seeking to pay for its own $600 billion stimulus — just as tax revenue is falling sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and medium-size enterprises, many of which are struggling with lower exports, and to local governments to build new roads and other projects.

    “All the key drivers of China’s Treasury purchases are disappearing — there’s a waning appetite for dollars and a waning appetite for Treasurys, and that complicates the outlook for interest rates,” said Ben Simpfendorfer, an economist in the Hong Kong office of the Royal Bank of Scotland.

  136. John says:

    JPMorgan Chase & Co. is advertising 30-year mortgages as low as 4.75 percent on its Web site, Wells Fargo & Co. has an offer for 4.875 percent and Bank of America Corp. has rates at 5 percent. The offers are for borrowers with excellent credit who put 20 percent down.

  137. comrade nom deplume says:

    [138] Jamil

    I could debate this with you, but then I would have to bill you. Read the relevant sections of the HEART Act again.

  138. Cindy says:

    http://www.housingwire.com/2009/01/05/first-american-sub-rolls-out-arm-analytics-platform/

    First American Sub Rolls Out ARM Analysis Platform

    “The move into ARM auditing underscores where much of the mortgage business is headed these days: forensics and risk management work, designed to limit losses for servicers and their investors, or prevent unexpected losses in portfolio acquisition or other related instruments. “Industry wide, as much as $350 billion of unsecuritized ARMS are still held in portfolios,” said Scott Brinkley, executive vice president at First American Outsourcing and Technology Solutions.”

    I wonder if this will work…

  139. grim says:

    From MarketWatch:

    Cytec cuts 2008 outlook, slashes jobs as economy sinks

    The West Patterson, N.J., specialty chemicals and materials company said it would also lay off about 10% of its workforce, or 600 employees, due to the downturn in the global economy. “It is our view that the current economic environment will extend at least throughout 2009,” the company said in a statement.

  140. grim says:

    It is a good thing that West Paterson changed it’s name to Woodland Park. Those layoffs don’t really exist if that town doesn’t exist anymore.

  141. make money says:

    http://www.nytimes.com/2009/01/08/business/worldbusiness/08yuan.html?_r=3&hp=&pagewanted=all

    It looks like the Chinese had enough. I want to know who is going to buy our debt to finance all these bailouts and budget deficits.

    I really think that by the time O is done we could be on the verge on loosing our triple A rating.

  142. Frank says:

    It’s amazing to me that we have 15 million illegals in this country that have no problem getting and holding jobs, but few million Americans loose their jobs and the media make a big deal about it.

  143. make money says:

    John 143

    you need to pay a point for these rates. Nevertheless, it is cheap.

    But if the underlining asset is depreciating cheap financing means nothing.

    Look at the automotive industry they had 0% financiang for a very long time. We all know what happens to the value of your car once you leave the showroom. If I feel the same will happen to my house once I leave the closing table do I really care if rates are 4.75%?

    They longer it takes the gubmints to realize that they have to stop proping up housing and allow it to bottom the longer we’ll be in this recession.

    If they keep proping up dead companies then my friend we are looking at 2015 bottom and a major depression that we can tell our grandchildren about.

    We can tell stories of how it used to be with designer jeans, Plasma TVs, tales of WS bonuses, home equity loans, granite tops, vacations, new cars, manicure, pedicure, pet grooming, etc.

  144. jamil says:

    143: This is from Senate website:

    “Under this provision, high net-worth individuals would be treated as if they sold all of their property for its fair market value on the day before such individual expatriates or their residency would be terminated.

    I don’t think there is any doubt about this. The tax applies immediately.

  145. grim says:

    Christie running for Governor.

    No, don’t worry, not Whitman. Cali can have her.

  146. Al says:

    My Hair dresser said that Hair cuts are ressession prioof buisness – Her logic:

    “when people do not have a job, they go to a lot of interviews and they need to look their best, so they would get haircut more often.”

    I loved every word of it.

    Also my explanation of chocolate buisness being reassession proof:
    “when people do not have a job, they are unhappy, and being unhappy they eat more chocolate, so they are happier:”

    I bet I could explain why ANY buisness would be resession proof.

  147. grim says:

    Hot off the wires, Freddie and Fannie are extending foreclosure moratoriums.

  148. Al says:

    grim says:
    January 8, 2009 at 10:23 am
    Hot off the wires, Freddie and Fannie are extending foreclosure moratoriums.

    For 30 years???

  149. John says:

    Al get a job at the unemployement office.

  150. Stu says:

    SA:
    Housing: Where Is the Bottom?

    http://seekingalpha.com/article/113843-housing-where-is-the-bottom

    “It is generally agreed that housing is a significant contributor to the current economic crisis. Many have said that the credit bubble can not be deflated and the consumer can not return to spending until housing prices stabilize. Others have said that recovery will not be sustainable until the housing market bottoms. I have heard so many people offer opinions (watch CNBC) that the housing market will bottom in 2009 or 2010. A few have offered an opinion of a longer wait. I have not seen a comprehensive discussion of the factors involved in the housing shake-out, so here goes. I hope it’s not a case of “fools rush in where wise men fear to tread.””

    Very good read ya’all and nice new graphs!

  151. Clotpoll says:

    Two insolvent institutions suspend foreclosure of insolvent properties.

    Big whoop.

  152. Stu says:

    “Al get a job at the unemployement office.”

    My dad avoided Korean War by working in the recruitment office. He still had to do boot camp though.

  153. PGC says:

    This is how I would like to think I could handle news like this.

    Madoff and me: 1 victim’s story

    http://articles.moneycentral.msn.com/Investing/Extra/madoff-and-me-one-victim-s-story.aspx

  154. Sean says:

    What is everybody leaving the US today?

    Man I better get going, don’t want to miss that boat.

  155. grim says:

    Hot off the wires, Freddie and Fannie are extending foreclosure moratoriums.

    Scrap it, no big deal, extensions are only until the end of the month, roughly two weeks later than originally announced.

    From MarketWatch:

    Fannie Mae halts foreclosure, eviction until Jan. 31
    Freddie Mac halts foreclosures, evictions until Jan. 31

  156. John says:

    Buy 6% muni bonds and buy a $500 house in detroit, live off tax free income. Other than a gun and some firewood you are good to go.

  157. Stu says:

    “What is everybody leaving the US today?

    Man I better get going, don’t want to miss that boat.”

    Well according to Frank, there is plenty of room on the boats that are bringing all of the immigrants in. Mexico is not so bad!

  158. grim says:

    Although I can just see the headlines now.

    “Obama takes office, pace of foreclosures falls!”

    Tinfoil hat time?

  159. chicagofinance says:

    grim says:
    January 8, 2009 at 8:44 am
    BC,

    No recession here.

    Target -4.1%
    Barnes & Noble -7.7%
    Chicos -12.4%
    Saks -19.8%
    Kohls -1.4%
    JC Penney -8.1%
    Nordstrom -10.6%
    American Eagle -17%
    Dillards -5%
    Abercrombie & Fitch -24%
    Gap -14%
    BJs +1.6%
    Macys -4%
    Walmart +1.9%
    Zales -19.6%
    Limited Brands -10%
    William Sonoma -24.2%
    Sears -7.3%

    grim: to be clear, if you were at these stores, the only way to tell what was happening was to look at the cash registers, not the amount of people or the amount of stuff they were carrying…..

  160. BC Bob says:

    “Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers.”

    They don’t even have to sell, just walk away. Value paper?

  161. Sean says:

    If job losses continue to grow this year at the December 2008 rate reported by ADP yesterday the U.S. may see eight million jobs lost in 2009, we could see a few months of 1 million job losses.

    NY metro unemployment will reach 10% by end of 2009. I hope you have your Flat Screen TVs nailed down folks or at least go out and get a very large and loud dog.

    O’bama better aim his tax cuts at the small private business sector of the US or it will be shit sandwiches for everyone.

  162. atwork says:

    #144 mortgage rates

    my experience has been different. while the published rates indicate a point in necessary, when actually talking to a rep/broker there is no discussion of needing to pay a pt.

    in fact, I just locked 4.875 30 yr fixed refi. no points, little cost. no problems.

    caveat: must have 20% equity and credit score 720+

  163. Clotpoll says:

    Joseph Forte LLC charged with being a Ponzi scheme.

    Only 50mm. Chump change.

  164. Clotpoll says:

    sean (169)-

    I’m betting it’ll be shit sandwiches all around.

  165. jamil says:

    169 sean “O’bama better aim his tax cuts at the small private business sector of the US or it will be shit sandwiches for everyone.”

    Well, he publicly promised 600,000 government jobs. That’s a start and exactly what this country needs.

  166. Stu says:

    “I’m betting it’ll be shit sandwiches all around.”

    I’m thinking it will be a triple decker shit sandwich, only the FED will soon be out of toothpicks to hold the thing together.

  167. RentinginNJ says:

    Abercrombie & Fitch -24%

    Looks like daddy took away the credit card.

  168. John says:

    Special High Intensity Training is all we need to turn this around.

  169. grim says:

    Need to hit the gym to buff up a bit more.

    I want to look my best when Walker Evans Tosh comes around to snap a photo for the New New Deal scrapbook.

    Hanging on a rope, on the side of the Palisades, preparing the cliff face for the new George W. (Bush) bridge to Manhattan.

  170. Mike NJ says:

    #170,

    I just did the exact same thing with Wells Fargo, my current lender. Same rate and minimal cost to refi. The savings are big enough to almost pay for our car lease so I am pretty happy. That paired with the fact that my wife’s job just got moved from NYC to “work from home” saves us another couple hundred in commuting costs each month. Two of the only positives in all this dreg.

  171. kettle1 says:

    JPMorgan Chase & Co. is advertising 30-year mortgages as low as 4.75 percent on its Web site, Wells Fargo & Co. has an offer for 4.875 percent and Bank of America Corp. has rates at 5 percent. The offers are for borrowers with excellent credit who put 20 percent down.

    Given the current upheaval in the job market and the uncertainty throughout the market as to what jobs will be or stay in what location; I would argue that for a large % of those “excellent” borrowers, it is a bad time to buy. WHy buy when there is so much job uncertainty and when the housing bubble is only in the early stages of deflating?

  172. Doyle says:

    #179

    Mike, what is “minimal cost”? Say on a $300k refi?

  173. kettle1 says:

    make 149,

    what do you think the FED is for? Bergabe has a nice new vault all dusted off and ready for a giant stack of treasuries paid for with red hot cash, fresh off the press.

  174. Stu says:

    Mike,

    Would love to know the numbers as well.

  175. make money says:

    make 149,

    what do you think the FED is for? Bergabe has a nice new vault all dusted off and ready for a giant stack of treasuries paid for with red hot cash, fresh off the press.

    Kett,

    I can’t wait. Just thinking about my Perth Mint vacation makes he horny!

  176. grim says:

    Lots of big promises…

  177. #178 – :)
    I better get a decent wideangle for the Hassie then.

  178. Sean says:

    Mr. mortgage has a scathing writeup on new WAMU mortgage mods.

    Check out the Mod Example.

    Property Value: $800k

    Note amount: $1 million plus deferred interest

    New Mod amount: $1.053 million

    First TWO years rate/payment: 1% and $878

    Third year rate/payment: 3% and $2633

    Forth year rate/payment: 5% and $4389

    FIFTH YEAR PAYMENT – THE BULLET: ALL OUTSTANDING BALANCE DUE AND PAYABLE

    All rights to future predatory lending claims waived.

    http://mrmortgage.ml-implode.com/

  179. HEHEHE says:

    Grim,

    You should try chopping would and driving railroad spikes for a couple months. Then find a pair of overalls and run over them 30-40 times with your car before wearing them for the picture.

  180. kettle1 says:

    stu 158,

    that seeking alpha article makes most of us seem overly conservative is the general numbers are in the right ball park

  181. kettle1 says:

    stu 158,

    that seeking alpha article makes most of us seem overly conservative is the general numbers are in the right ball park.

    I will go so far as to say ( in my lay opinion) that housing will NOT recover to 06 highs

  182. House Hunter says:

    this could be a repeat post…heard this morning that CITI is requesting the gov’t allow bankrupty courts to write down mortages…slippery slope

  183. Sean says:

    Gim 187 in mod, re: mortgage mod madness.

  184. JBJB says:

    Christie files to run for NJ Gov:

    http://blog.nj.com/ledgerarchives/2009/01/text_of_christorpher_christie.html

    Key graph:

    “New Jersey is broken. New Jersey’s taxes have become so unaffordable that more families are leaving our state than moving here. Our state’s business tax climate is ranked 50th in the nation and has become so unattractive to employers that only government jobs are growing in New Jersey . Yet nothing in Trenton gets done to fix these problems.”

  185. make money says:

    http://www.youtube.com/watch?v=9h2x7R8pxUs

    If you want see real reporting where the anchor actually allows the person to express his ideas nowadays you have to go to Russia Today.

    Unbeliavable.

  186. John says:

    I love the plan, a tricked out car in every driveway, bucket of chicken in the kitched and some sticking it to the man with a nice cramdown of my subprime mortgage.

  187. John says:

    Frank, Sean, ChiFi – What the heck is going on in Munis and Corp bonds. Yields have dropped like a brick since New Years and Prices are straight up? Huge move in such a short time, given the rate cut was in mid december. Is this sustainable? Or is it as simple that we had a record amount of money in money markets at year end and cash can’t be kept for long at 1% taxable.

  188. Mike NJ says:

    #181, #183

    No problem guys. It will cost me around $2600 in total to refi. The average cost to refi a mtg was $3100 (read on Bankrate today) so I am happy. I went with my same lender (Wells) and from the looks of it the major fees were the new appraisal and the title fee. The rest were just misc junk fees. My mtg is a bit under $500K and so I am what is considered an “Agency Jumbo”. I was very happy with the 4.875 rate with no points. Rates may go down to 4.5 but I am saving ~$400 a month doing this so I am not about to wait around to save a few more dollars a month. I am putting the cost of the refi back into the principal and so total cost of of pocket is zero.

  189. chicagofinance says:

    My opinion…confluence of factors…..
    #1 New year and money manager’s slate is clean, going to work in the best places.
    #2 Assumption that O-man is going to bail every muni that moves, euphoria syndrome
    #3 Window dressing for 12/31 was undone

  190. Doyle says:

    Thanks Mike!

  191. John says:

    Re 199

    I agree with all of the above, but is it sticky? I jumped at 30 year NY muni bonds back in December when I got them for 78, they are around 85 now. As the Clash used to say should I stay or should I go?

    Plus I jumped in on Comerica, M&I, Cablevision and Amerprise at around 69-82 and they are around 88. Yields went from 13 to around 9, but still if I sell cap gains and where do I get replacement 9? Damm bid ask is still wide.

    Wondering if it is that time of year load up on the bonds first few days and sit back and wait till 2010.

    I guess the suprise 75bp in Dec was the start of all of this. Just a little confusing why people waited two weeks before jumping in head first.

  192. John says:

    Daryl Hannah’s character Darien said in the 1987 film “Wall Street,” “When you’ve had money and lost it, it can be much worse than never having had it at all.”

  193. John says:

    stock to watch cablevision, cvc opened flat, no big news today, market is down and all at once it is up 20%!!!, what up?

  194. grim says:

    Pulling together the December sales data now.

  195. make money says:

    stock to watch cablevision, cvc opened flat, no big news today, market is down and all at once it is up 20%!!!, what up?

    Did they Get Lebron James?

  196. BC Bob says:

    “Just a little confusing why people waited two weeks before jumping in head first.”

    John,

    Capital was held at year end for reserve ratio’s. That capital is now being put to work.

  197. John says:

    Thanks BC, I was the only person buying last two weeks of year and I was getting nervous.

  198. kettle1 says:

    Whitney: TARP funds go down the downgrade drain

    La lutte continue. Forget the short-lived buzz of $300bn in TARP stimulus, pain for the banks is far from over. Real deleveraging is only just beginning to gather speed; the world economy has yet to enter its worst months, and there are certainly more writedowns to come.

    Oppenheimer’s Meredith Whitney is – when it comes to banks’ capital positions – the analyst to turn to. And fortunately, she has a note out today:

    We now believe that, at a minimum, capital ratios will be meaningfully lower in the fourth quarter versus post TARP pro forma levels. Aside from the greater than $40 billion in writedowns and provisions we expect for the group of bank stocks under our coverage, and earnings pressure related to chronic negative operating leverage, we also expect capital strains to become apparent from ratings change pressures. Accordingly, we maintain our cautious stance on our group.

    http://ftalphaville.ft.com/blog/2009/01/07/50870/whitney-tarp-funds-go-down-the-downgrade-drain/?source=rss

  199. kettle1 says:

    European Central Bank deems Britain unworthy of euro

    The European Central Bank has deemed Britain unfit for monetary union even if it wants to join following the dramatic slide in sterling and the explosion in the UK budget deficit. “Great Britain does not meet the entry criteria for the euro,” said Lorenzo Bini Smaghi, the ECB’s board member in charge of international affairs

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4161945/ECB-deems-Britain-unworthy-of-euro.html

  200. kettle1 says:

    In an interview with Maria Bartiromo, economics professor Nouriel Roubini of New York University’s Stern School of Business said that credit losses will top $2 trillion, up from around $1 trillion today. Even if the government forks over the remaining $350 billion of its Troubled Asset Relief Program to banks, the capital will still be a drop in the bucket compared with the industry’s total losses. Given that, Roubini and others figure it’s only a matter of time before the government creates another bailout fund. “Banks don’t have enough money to bear the risk,” says Anil Kashyap, a University of Chicago Booth School of Business professor. “We’re going to need Tarp II and Tarp III.”

    http://www.businessweek.com/magazine/content/09_03/b4116020094458.htm?campaign_id=rss_daily

  201. Clotpoll says:

    Hey Chifi!-

    Remember our friends with the 1.2mm POS in Califon?

    Expired today. Gazillions of DOM, never a price reduction.

    They’d be lucky to get 800K right now.

  202. Doyle says:

    Grim: Sent you an e-mail.

  203. skep-tic says:

    #112

    “The American Consumer is now conditioned to expect massive discounting as an incentive to buy”

    aka deflation

  204. Shore Guy says:

    “JPMorgan Chase & Co. is advertising 30-year mortgages as low as 4.75 percent on its Web site, Wells Fargo & Co. has an offer for 4.875 percent and Bank of America Corp. has rates at 5 percent. The offers are for borrowers with excellent credit who put 20 percent down.”

  205. Shore Guy says:

    “JPMorgan Chase & Co. is advertising 30-year mortgages as low as 4.75 percent on its Web site, Wells Fargo & Co. has an offer for 4.875 percent and Bank of America Corp. has rates at 5 percent. The offers are for borrowers with excellent credit who put 20 percent down.”

  206. Shore Guy says:

    “JPMorgan Chase & Co. is advertising 30-year mortgages as low as 4.75 percent on its Web site, Wells Fargo & Co. has an offer for 4.875 percent and Bank of America Corp. has rates at 5 percent. The offers are for borrowers with excellent credit who put 20 percent down.”

    How long will it take before someone claims that these rates are discriminatory against those with poor credit?

  207. Nicholas says:

    My company, based in NJ, reported higher then expected revenue (+9%) and Higher then expected sales (+5%).

    They are still announcing layoffs, have yet decided if they are going to raid the pension fund, and have revoked merit based raises and bonuses this year. They are undecided if they are going to give regular raises/bonuses this year. They have already restructed the health benefits package pushing about 2k additional liability onto the employees.

    They have increased their cash position by about 400%. They are not likely to suspend 401k matching.

    I’m just sitting around and scratching my head trying to figure out why in the world they would do something like that and there is only two reasons that come to mind. Debt and deflation. It appears that they are trying to plan appropriately for the serviced debt that will come due this or next year and they are scared. Possibly they are trying to hedge deflation by holding onto as much cash as possible.

    Thoughts?

  208. BC Bob says:

    “the capital will still be a drop in the bucket compared with the industry’s total losses.”

    kettle [210],

    Add to that how much capital has been withdrawn, thru losses and deleveraging. $350B is a bucket of sand on the beach.

  209. james says:

    #194

    Christie has done a lot of good. He may have my vote. Hopefully, the loser public payroll employees and their respective unions dont squash his plans.

    Here is my public service announcement to NJ. The private sector has seen 0 (ZERO) growth over the past 10 years in NJ. Who the F ? do you think pays your BS pensions and salaries.

    Yours truly,

    The self employed

  210. Victorian says:

    Excellent Article about John Paulson –

    The Man who Made Too Much

    http://www.portfolio.com/executives/features/2009/01/07/John-Paulson-Profits-in-Downturn

  211. John says:

    BC you were a muni bond trader, have you ever seen such craziness? I bought this 10k bond on Dec 11th for $7,470 and it is now worth $8,700. Up 17% in under a month. Other than Barney Frank and Bill Gross talking up munis the world has not changed much in the last three weeks. It is nutso.

    NEW YORK ST DORM AUTH REVS PERSONAL 04.50000% 03/15/2034 10,000.0000

  212. james says:

    #215

    I am watching the rates as well. Im at 5.87, 6 months in, 30 year, currently with Citi. My target is 4.75%, however, 4.5% isnt as unrealistic as it was 3 weeks ago.

  213. Stu says:

    Alright mortgage refinance pros…

    Just ran my numbers on the Chase refinance rate calculator.

    My APR for my multifamily is 5.25 with 1 point.

    My APR for the same refi but listing my home as a single family is 4.757 (4.625 interest rate) with 1.125 point.

    Why is there such a premium to loan to a multi-family owner vs. single family owner?

    I remeber paying an extra 1/8 of a point in interest on my original loan, but this spread is crazy high.

    Any ideas?

  214. Clotpoll says:

    james (219)-

    You might as well be talking to a wall. The snake will continue to eat its own tail until it all goes to black.

    The fun will start when the different sectors of leeches turn on each other. Cops vs teachers vs fire vs janitors, etc.

  215. Clotpoll says:

    stu (223)-

    Due to the commercial (partial) nature of your 2-fam.

    Blowout spread, just like everywhere else.

  216. Clotpoll says:

    Lenders- as a category- have been scared to death of multi-fam for close to a year.

  217. skep-tic says:

    re: Kettle’s point above as to why buy now… after the carnage this fall I was optimistic that sellers would finally start to get it and more would try to price to trend rather than useless historical comps. After bidding on a couple of places in the last 6 weeks, I am now less optimistic. Denial remains predominant. At this point, I do not think it makes sense to approach any seller who is not confirmed to be motivated. Everyone else is a total waste of time and if you do strike a deal with them, you will get ripped off

  218. Clotpoll says:

    Would vote for Christie, just to see him take office and start mailing pink slips.

  219. Stu says:

    Clot…Thanks.

    Guess I need to wait for the 4% mortgage rate to make it worthwhile.

    Just another small business owner taking it up the butt as everyone else reaps the rewards.

  220. Sean says:

    re# 215 Shore Guy – Klink was advertising 4% rates yesterday as a cure all for housing, sure I know he is out of the picture for good in a few weeks but that is the “plan” they are going to drop rates and hope and pray folks like me who have the cash and the credit will buy.

  221. Shore Guy says:

    Nicholsa,

    Holding onto csh is a great idea but cancelling merit increases for those whose quality of work merits an increase will come back to bite them in the netherquarters. Those who are good enough to merit the increase are more likely to be the kind of employee able to find alternative in this environment and, if not, are the ones most likely to jump ship just as things start improving. Freeze or cut pay for the deadwood, or fire them, but to smack th good performers in the face is foolhardy.

  222. Shore Guy says:

    Sean,

    Heck, even percent on an asset that is going to drop in price on a loan where the interest is frontloaded is not enough to tempt this holder of cash.

  223. Shore Guy says:

    Sean,

    Heck, even 2 percent on an asset that is going to drop in price on a loan where the interest is frontloaded is not enough to tempt this holder of cash.

  224. John says:

    ‘Pimco’s view is simple: shake hands with the government; make them your partner by acknowledging that their checkbook represents the largest and most potent source of buying power in 2009 and beyond.’

    That guy Bill Gross stole my trading stategy!!

  225. Shore Guy says:

    reaps anyone into word games knows these letters can be rearranged to reflect what the government plans to bail-out the imprudent will do to the prudent.

  226. grim says:

    From Philly.com:

    SEC: Forte says he has no money to repay anyone

    ederal authorities charged Joseph S. Forte, a Broomall investment manager, with operating a multi-million-dollar Ponzi scheme since at least 1995.

    Civil charges were brought yesterday in federal court in Philadelphia by the Commodities Futures Trading Commission and by the Securities and Exchange Commission.

    Forte, 53, obtained an estimated $50 million from as many as 80 investors, reporting annual gains that ranged from 18.52 percent to 36.19 percent, the CFTC and the SEC said.

    He confessed to taking $10 million to $12 million for himself and used $15 million to $20 million of investors’ money to pay off other investors – the hallmark of a Ponzi scheme, the authorities said.

    Forte’s latest report to investors, on Sept. 30, claimed that his fund’s value was more than $154 million. The actual balance of his trading account was $146,814.

    Late last month, he told authorities that he does not have money to repay investors, the SEC complaint said. It is not clear what he did with the money.

  227. Nicholas says:

    Agree Shore,

    All of the engineers are sitting around stupified. I have the nagging feeling that they have us on the ropes though, with jobloss numbers so high.

    It would be a terrible time to go looking for another job.

  228. BC Bob says:

    “BC you were a muni bond trader, have you ever seen such craziness?”

    No, futures and fx.

    3b is muni’s.

  229. Shore Guy says:

    “I have the nagging feeling that they have us on the ropes though, with jobloss numbers so high.”

    Ahh, but at such time that things get better, watch out. Indeed, until then, they should watch out as well. Their moves against the top performers destroy loyalty and tend to prompt people into hidden but agressive behavior against their employer.

  230. George Bush says:

    Housing crisis will be solved easily with COAH:

    Wayne will build more than 1000 units next ten years to solve its housing crisis:

    http://www.northjersey.com/news/passaicpolitics/waynereorg010809.html

  231. Shore Guy says:

    “sometimes you have to have the rotten tooth pulled and its gonna hurt a lot before you feel better”

    At this point, because they failed to “pull teeth a long time ago,” we are looking at the equivalent of cutting off a leg. The only question now is whether we will act in time to make it below the knee instead of above; and, with any luck, it will not bi bilateral.

  232. Ben says:

    we aren’t cutting off a leg or pulling a tooth. Sure we have all these aches that we need to get fixed. The fed’s solution is to not fix any of the problems. It’s just to give the patient so much morphine so that he doesn’t realize he’s got problems anymore. There’s only so much morphine they have.

  233. Sean says:

    John – re: Muni’s

    Last week two of Pimco’s municipal bond funds postponed dividend payments, saying “continued severe market dislocations and further erosions in the municipal bond market have caused the values of the funds portfolio securities to decline”.

    Bill Gross is now out there today pimping muni bonds, something is definelty up and don’t think Arnold, Corzine or Paterson won’t send you an IOU instead of a check.

  234. Shore Guy says:

    http://www.yachtworld.com/

    A nice alternative to a vacation house. The fees to dock are less than taxes, and the view, even in a marina, is always nice.

  235. skep-tic says:

    BOSTON – Single-family home prices in Connecticut sank a record 16.2 percent in November….

    The 16.2 percent decline in prices represents the sharpest percentage drop since The Warren Group started tracking Connecticut’s housing market in 1988. The median price for single-family homes sold during the first 11 months of 2008 was $270,000, down 9.4 percent from $298,000 during the same period a year earlier….

    Single-family home sales continued a downward trend, posting the worst November sales pace since The Warren Group started collecting real estate statistics in the state more than 20 years ago. Home sales tumbled 26.6 percent to 1,546 from 2,105 in November 2007. Through November 2008, 23,064 homes have sold, a 24 percent decrease from the 30,339 units sold during the same months in 2007.

    http://www.myrecordjournal.com/site/tab1.cfm?newsid=20237170&BRD=2755&PAG=461&dept_id=592708&rfi=6

  236. John says:

    sean in those two funds he did some crazy leveraged stuff, he also stuck his foot in his mouth in Feb and said he was getting into muni bonds, from Feb to the bottom in muni bonds in mid december munis fell 18%, but bill borrowed money to invest in munis that fell in value, he actually contributed to munis fall in the 4th from his own unwinding and fed up shareholders redeeming shares. Now he is telling investors to buy munis straight up not in his fund, but the only question I had does he want us to buy so he has someone to sell too? But on the other hand he is the warren buffet of bonds. The man is a bond guru.

  237. BC Bob says:

    “and don’t think Arnold, Corzine or Paterson won’t send you an IOU instead of a check.”

    Sean,

    Bingo. The next bull market, IOU’s.

  238. chicagofinance says:

    Clotpoll says:
    January 8, 2009 at 1:03 pm
    Hey Chifi!- Remember our friends with the 1.2mm POS in Califon? Expired today. Gazillions of DOM, never a price reduction. They’d be lucky to get 800K right now.

    Lt. Dan….stupid is as stupid does….

  239. Sean says:

    John –

    Corzine, Patterson, Arnold and the rest of the Governors wrote a formal letter to O’bama asking for 1 Trillion Dollars. Does that not strike you as a kind of a Holy Crap kinda moment?

    Let’s see 1.2 trillion deficit for the 2009 in a 3 trillion dollar Federal budget, and O’Bama wants to spend another 1.3 Trillion on Stimulants and new bridges to nowhere and now the State Governments want another 1 Trillion in freshly printed greenbacks so they can make the rent.

    Kinda sounds like insolvency but we will just call it illiquidity for now.

    Does anyone here think the local, county and state governement are going to send you a check this year for anything whether it be a tax refund or I dunno interest payment think long and hard again.

    Also it’s tax time so file A.S.A.P and decrease your with holdings where possible because you will not be getting a check back.

  240. chicagofinance says:

    Nicholas says:
    January 8, 2009 at 1:09 pm
    I’m just sitting around and scratching my head trying to figure out why in the world they would do something like that and there is only two reasons that come to mind. Debt and deflation. It appears that they are trying to plan appropriately for the serviced debt that will come due this or next year and they are scared. Possibly they are trying to hedge deflation by holding onto as much cash as possible. Thoughts?

    Nic: It’s what you do….any company at this point has a freebie, why not use it? If publicly traded, you do not pay the propotionate price for negativity and will be given zero credit for upside, so you may as well sandbag everything to oblivion. Additionally, you seldom have a chance to clean house without retribution.

    If you plan to be there several more years, expect outsized results on the next upswing, as they are spitting out junk when the markets will not penalize them for it.

  241. Secondary Market says:

    @236 who says philly is inferior to nyc? its nice to know we have our own barry madoff!

  242. SG says:

    Radical cheap: $1,000 homes

    In places like Detroit and Cleveland, banks are unloading rundown homes for next to nothing. And they’re tremendous bargains, even after factoring in renovation costs.

  243. still_looking says:

    dow graph for the day looks like a set of crooked snaggly teeth…

    OTOH, it could be cuz I just woke up and can’t shake off the shit I saw yesterday…. ugh. where’s the coffee pot?

    sl

  244. Barbara says:

    I will vote for Christie without hesitation. He busted up some of the goon squad in my neck of the woods.

  245. Shore Guy says:

    “I’ll only get the dog collars if they’re pvc.”

    Clearly, I have missed some… off-topic posts whilst underwater at work

  246. grim says:

    And they’re tremendous bargains, even after factoring in renovation costs.

    I don’t agree. Why do the words “shackled to the deed” come to mind?

  247. grim says:

    From MarketWatch:

    Lawmakers close to deal letting judges alter mortgages

    Key Democratic lawmakers are close to reaching a deal with the banking industry over permitting bankruptcy judges the authority to eliminate some mortgage debt and help reduce foreclosures. According to a congressional aide familiar with the matter, key lawmakers have worked out a deal with the banking industry that would only allow bankruptcy judges the authority to modify mortgages that were set up prior to the enactment of the bill. Key House leaders, including House Judiciary Committee chairman John Conyers, D-Mich. and Sen. Richard Durbin, are working on the bankruptcy judge bill. Some lawmakers are seeking to have the bill attached to Obama’s stimulus package, which is likely to be approved by February. Other provisions under consideration would give borrowers more time for repayments, which would make their mortgages more affordable. Judges could also be permitted to replace variable interest rates with a more affordable rate. Both Conyers and Rep. Brad Miller, D-N.C., have introduced bankruptcy judge bills in the House. Sen. Durban has introduced a bill in the Senate.

  248. Sean says:

    re: #246 John I heard Gross loves CDS lots of exposure…….

    Also here is his Jan 09 newsletter.

    Quote// Municipalities with begging bowls now extended for over a trillion of Federal taxpayer dollars, based their budgets and their own handouts on the perpetual rise in home prices, the inevitable upward slope of sales taxes, and the never-ending increase in employment and personal income taxes.

    //UN-Quote

    http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2009/IO+Gross+Jan+09+Andrew+Mellon+vs+Bailout+Nation.htm

  249. Sean says:

    Grim #259 in Mod, re: Bill Gross.

  250. Hard Place says:

    #1 New year and money manager’s slate is clean, going to work in the best places.
    #2 Assumption that O-man is going to bail every muni that moves, euphoria syndrome
    #3 Window dressing for 12/31 was undone

    Chifi –

    #1 should be Fed buying. They already stated that they will open their BS to buying other assets. They are driving down credit spreads. That’s my opinion.

  251. Shore Guy says:

    Here we go, a trillion here and another there and then what? It sounds like instead of spending the cash, say to install 10,000,000 windmills that might actually pay for themselves, and lessen our need to rely on overseas energy sources, we are about to spend money to pave roads that would in the ordinary course of events get paved anyway. In the process, we put off making cuts that should have been made years ago and put ourselves in a position where we will not have any money available to finance energy upgrades in the future.

  252. grim says:

    Interesting piece out of LA, courtesy of CR. We talked about this topic on a number of occasions.

    Which way will rents be going?

    Some insight.

    From the LA Times:

    Housing downturn hits L.A.-area rents

    Christine Arce had been eyeing a loft in downtown Los Angeles for six months, but the $1,550 monthly listed rent was just out of reach.

    The fashion sales representative called back recently on a whim and found the property managers were offering just enough to bring her in — a $100 monthly reduction and the first month free. “I was totally surprised,” said Arce, 32.

    She may have been pleased, but for landlords her good fortune represents a grim new reality.

    After rising for several years, rents in the Los Angeles area are declining because of the economic recession and depressed home prices, researchers, real estate agents and property managers say.

    The lower local rents match a national trend, according to a report released Wednesday showing apartment rents fell in 54 out of 79 U.S. metropolitan areas in the fourth quarter of 2008. Softening rents add another obstacle to a housing market recovery, economists say, because tenants with low rent payments feel less urgency to buy a home.

    Nationwide, apartment rents eased 0.1% in the fourth quarter, the first drop since 2002, according to the analysis by research firm Reis Inc.

    Los Angeles apartment rents fell 0.7% in the fourth quarter, the first decline since 2001, although overall rents for the year were up slightly over 2007.

  253. Shore Guy says:

    If this cram-down provision goes through it will be GREAT for Mrs. Shore and me. All of a sudden millions of people will be eliminated as potential buyers because banks will up the standards so high. I would not be surprised to see 30% downpayments become the new minimum size to qualify, as well as a requirement that the total housing costs not exceed 25% of monthly income. I would also not be surprised to see banks cut back on the number of 30-year mortgages. Thoughts?

  254. grim says:

    From Reuters:

    Apartment rents show first decline in over 5 years

    Average rents for U.S. apartments fell in the fourth quarter, as a sharp economic downturn and rising unemployment left Americans unwilling to pay higher prices, according to data released on Wednesday.

    Rents fell 0.4 percent in the final quarter of 2008, the first decline since early 2003, the study by real estate research firm Reis Inc found.

    The vacancy rate rose to 6.6 percent, a level last seen in the first quarter of 2005, and up from 5.7 percent a year earlier.

    While few Americans typically move in the fourth quarter, as they face the onset of the northern hemisphere winter and several national holidays, the decline in rents shows that landlords are moving quickly to try to keep vacancies down, said Victor Calanog, director of research at Reis.

    “The quantity of rental apartments might not be suffering as much, but the price paid by households to occupy those rental units is buckling under the strain, with landlords lowering asking rents and raising the amount of concessions they are willing to provide,” Calanog said.

  255. comrade nom deplume says:

    [216] Shore,

    That argument is old; it is the same one that ACORN, Greenlining, ICP, NCRC, La Raza, etc. have screamed to regulators for years. When they went after subprime (for which they are patting themselves on the backs now), it wasn’t because the banks were making loans that they shouldn’t have made, it was because they charged more $$$ for them than for prime customers.

    Basically, the “poor” wanted the same deals that the “rich” got. Somehow it got morphed into a claim that they were duped into taking loans that they could never repay (though that claim was also present).

  256. grim says:

    From the WSJ:

    Rents Fall Across U.S., Biggest Drops in New York City, Miami

    Job losses took a heavy toll on the nation’s landlords last quarter, as rents fell across the country and vacancies jumped higher.

    New York City took the biggest hit, according to numbers to be released Wednesday by research firm Reis Inc. Rent growth declined by 1.9% in New York, even though the city still has the nation’s tightest rental market, with vacancies at just 2.3%.

    New York landlords have enjoyed big rent increases over the past few years, but that’s unlikely to continue in 2009. In the fourth quarter, three-quarters of multifamily buildings in the city exhibited negative rent growth, a big uptick from the past three quarters, when just 37% of properties saw negative rent growth, according to Victor Calanog, director of research at Reis. Today’s story in the WSJ —”Apartment Landlords Find What Goes Up, Does Come Down“— looks at how landlords are offering more incentives to keep apartments rented.

    The Big Apple stands out among the cities that saw the biggest rent drops because it hasn’t been inundated by a glut of foreclosed homes or condos that have been converted to rentals. That “shadow supply” helps explain, in part, the 1.8% drop in rental growth in Miami or the 1.6% decline in Ventura County, Calif. Altogether, 56 of the 79 markets tracked by Reis had negative rental growth last quarter.

  257. Tom says:

    grim,

    House buying is down and vacancies in the rental market are up?

    Where are all the people living? Anybody been seeing any strange lights in the night sky?

  258. Shore Guy says:

    Tom,

    The newly-launched move back home with the parents and other singles share a place instead of having individual apartments.

  259. Shore Guy says:

    “Basically, the ‘poor’ wanted the same deals that the ‘rich’ ”

    And I want the same deals Warren gets. It is funny, people want without doing what is necessary to have. Want to lose weight? No need to eat well and exercise, just use the bunn-o-matic, or the fatsoff, or whatever. Save to build wealth? Fools! Just buy a house and let ever-increasing values make yopu rich, rich, rich. Savings is so, 1960s.

  260. comrade nom deplume says:

    [264] Changes in two areas, with collateral effects.

    First, loan costs will go through the roof. More fees due to the increased need to vet borrowers.

    Second, more problems securitizing mortgages. Rating agencies won’t rate them, or will rate them lower, because of the inherent risk.

    The collateral effect is that loans stay on the bank’s balance sheets longer, or permanently. Probably not much effect right now since no one is securitizing or rating loans, but in the future, that business won’t come back. Another collateral effect is that rates will also go up some.

    One future business model: Securitizations for aged loans—the bank keeps the loans until the LTV improves, to say 30%, then it can securitize the loans because of the diminished threat of cram-down loss.

    Another possible (far less likely) model: Hybrid ARMs that start at a higher rate and adjust down or stay flat, but cannot adjust upward. This incentivizes the owner to stay in and keep paying, thus reducing the risk of default and cram down.

  261. grim says:

    New thread, move up!

  262. BC Bob says:

    “Where are all the people living?”

    Tom [268],

    http://everythinghurts.typepad.com/scrabblog/images/camping_tents.jpg

  263. Tom says:

    Shore,

    You were awfully quick to cast doubt on my UFO theory.

    Your alternative sounds reasonable. TOO reasonable maybe.

    Like, maybe you have a pool that makes you feel younger and you want to keep it all to yourself?

    :)

  264. Shore Guy says:

    Nom,

    Since the banks want to get those loans off their books and the more loans thay can originate, the more they can make from fees and points, if the aged-loans model comes to pass, I forsee banks not issuing loans unless the borrower can make a downpayment large enough to meet the “sell-off” threshold — that way it instantly (or close to, anyway) becomes a loan they can sell.

  265. Shore Guy says:

    Tom,

    Or a security badge that allows me into a “special” hanger at an unnamed Air FOrce base. Shhhhhh, and stay out of the pool, please.

  266. John says:

    There is legitimate concern as to the ultimate destination and outcome of our “bailout nation.” Realistically, quantitative easing, a two-trillion-dollar expansion of the Fed’s balance sheet, and the near certainty of future budget deficits approaching 6-7% of GDP should alert bond investors to once again become vigilant as was the case in the 1980s and 90s. Vigilantes we should be, but that is a battle to be fought in the Treasury market where low yields offer little reward and increasing risk. For now, our Ponzi-style economy and its policy remedies encourage bond investors to mimic Uncle Sam and its global compatriots. Buy what they buy, but get there first. Andrew Mellon would surely have disapproved. Liquidation was his game. Wimpy? Well, he’s gonna have to start paying for those burgers on Monday, even in a bailout nation.

    William H. Gross
    Managing Director

  267. John says:

    you know a trillion here, a trillion there, soon you are talking about real money

  268. John says:

    Jan. 8 (Bloomberg) — U.S. regulators sued an investment adviser and his Williamsville, New York-based firm, claiming they operated a Ponzi scheme targeting elderly investors and members of the Catholic community.

    Richard Piccoli, 82, and his company, Gen-See Capital Corp. placed “numerous advertisements” in Catholic publications, including some claiming “seniors and clergy are absolutely pleased” with the firm’s returns and lack of fees, the Securities and Exchange Commission said in a lawsuit at federal court in New York today.

    “Investors’ funds are not, however, invested in anything,” the SEC said in its complaint. “Instead, investor funds are misappropriated by defendants to pay off other investors and perpetuate their fraudulent scheme.”

  269. Tom says:

    Aha! I knew it wasn’t just a Megadeth song and a blurred out area on Google Earth!

    Speaking of conspiracies…

    I put together some charts a few days ago and it looks like the housing bubble started in 2000

    I didn’t put up the table of data, just the charts and the last one on that page is the most interesting.

    I used a formula that would come up with what would be an affordable home price based on median household income and the average interest 30yr fixed rate for that year.

    From 87-99 the difference was plus or minus a couple percent between that calculated value and NAR’s reported median house price. The biggest difference was 3.22% too expensive and the most affordable was when it was -9.58% in 1993.

    But we’re talking single digit percentages here.

    In 2000, the difference was 14.35%, in 2006 it was almost 58.13% more than what an “affordable” house should be.

    The formula I used was to take median income, subtract a percentage for taxes then decide that 25% is the most someone should spend on their mortgage payments. I also accounted for a 20% down payment. It’s not exact but working with medians, it seemed to be a good approximation of what lending standards used to be.

    Interest rates would have had to be around 2.5% in 2006 for someone getting a 30yr fixed with 20% down for the median household to consider purchasing a median priced house affordable.

    2000 to 2003 was around 11-15% too expensive, then in 2004, after another chart I had indicates when “everybody became subprime” the difference was 26.5%

  270. kettle1 says:

    oops

    1/8/09 Madoff Exposure Spreads to Labor Union Pension Funds

    CNBC has learned that one union, the Carpenters local in Syracuse, N.Y., has lost the majority of the $100 million to $150 million it had in pension money because of its dealings with Madoff, people close to the matter said.

    more…
    http://www.nbcphiladelphia.comnews/businessMadoff_Exposure_Spreads_to_Labor_Union_Pension_Funds.html

  271. skep-tic says:

    #258

    bankruptcy is a much better tool for dealing with these underwater mortgagees than wholesale bailouts/voiding contracts

  272. kettle1 says:

    looks like spain is set to implode in 2009,

    look at the growth in unemployment. They are expected to approach 20% this year

    http://www.abc.es/gestordocumental/uploads/economia/paro.gif

  273. Tom says:

    skep-tic,

    How is bankruptcy a better tool? That’s a long expensive process.

    Even the NJ Judiciary is trying to get loan modifications early on in the foreclosure process.

    Dragging it out doesn’t make things better.

  274. Clotpoll says:

    grim (258)-

    And when that bill becomes law, the housing industry dies forever.

    At that point, I’ll just be doing mop-up work.

  275. TriardtaR says:

    I think you are thinking like sukrat, but I think you should cover the other side of the topic in the post too…

  276. Enlargement says:

    I am amazed with it. It is a good thing for my research. Thanks

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