Wed 28 Jan 2009
(This is a repost of a piece I posted in August of 2006)
Decided to spend some time going through the tax records to see if I could determine how condos were affected during the last real estate crash. I’m sure many of you have spent time working with these systems to get an idea of prior sales or to snoop on neighbors.
These sales records represent a history of the real estate market over time. However, trying to clearly illustrate how the market reacted over time using these sales is not easy. Homes are not identical and sales are infrequent. In order to track the market you would need to find a number of comparable homes that have sold multiple times over the period.
Condos and Townhomes are better candidates for this type of analysis. Units are relatively similar, and large scale developments offer numerous sales data points over time.
I pulled the tax records for a handful of large-scale developments that were built during the last real estate boom to see what I could find. The first development that I took a look at is located in Clifton. Selected this one because I remember it being built in the mid to late 80’s. I’ve grouped these together by street and assessment value.
The next development is also in Clifton. At this point I was trying my hardest to try to think of any large-scale development I remember being built at that time. I was hoping that this building would have offered as many datapoints as the complex above, but unfortunately it did not. Interesting nonetheless.
At this point I had racked my brain trying to remember the names and streets of condo developments. I spent some time flying around with google maps trying to pick out large-scale condo developments that fit the timeframe. Just when I was about to give up, this one popped into mind. This is very large scale development in West Windsor called Canal Point. This was built during the peak of the last bubble. I believe this complex saw auctions in the early 90’s.
There are a few points to take away from this:
1) Prices can fall dramatically. We’re not talking about a stagnant market where real values are eroded over time by inflation, but large nominal price declines. None of these numbers are inflation adjusted. Can you imagine buying a condo for $130,000 and it being worth $93,000 ten years later? Real estate goes down too.
2) Don’t be lulled into a false sense of security because you are planning on staying for 10 years. In many of these cases, the market declined steadily for ten years before hitting bottom. It took another bubble for them to break even.
3) There have been a number of comments lately stating that owners will simply take their properties off the market during a downturn, they just won’t sell. That simply isn’t the case. Many of these owners sold at substantial losses.
Caveat Emptor!
Grim
First!
I don’t think you can compare these current times to anything, as the market is gone. Now, the only buyer is the government.
From Bloomberg:
Fannie Mae Foreclosure Sale at 50 Cents on $1 Shows Price Reset
With a sharp nod, Robert Parkin bids $500,000 at the auction of a brick colonial house in Upper Marlboro, Maryland, that the builder once valued at $1.1 million.
Just think how many owners will take their properties off the market and rent it out at a monthly loss.
Double whammy time. Declining value and burning money every month.
I think they are committing “finacide” (financial suicide).
NJ slapped on the wrist by the BLS for “adjusting” the unemployment numbers.
From the Record:
Do the numbers work out?
A disagreement between federal and New Jersey officials over the way the state’s monthly job figures are estimated has raised questions about their accuracy.
The issue came to light last week when the state, following a federal directive, revised its November figures, tripling the previously reported job loss from 6,200 to 19,600.
December figures showed a loss of 15,200 jobs.
New Jersey was one of about 20 states ordered to revise its methods based on federal concerns that the jobless numbers they were reporting were considerably lower than the federal figures.
Six states — Massachusetts, Michigan, Nevada, New Jersey, New York and Oregon — each posted over-the-month gains of a full percentage point in their unemployment rates in December.
In both the November revision and the December estimate, the state followed a federal method that limited its use of information to calculate the state’s employment level, which is perhaps the most important economic metric used to evaluate the health of the state’s economy.
…
Patrick O’Keefe, director of economic research at Roseland-based J.H. Cohn Accounting, said he was “flummoxed” by the state’s note. He added that the use of “surreptitiously adjusted” data “diminishes the credibility” of the figures for economists and policy makers who rely on them.
O’Keefe said he now doesn’t know whether or not to believe the figures that showed for much of the year that New Jersey lost proportionately fewer jobs than the nation.
BLS ordered the change after it discovered a growing difference between their estimate of the national job loss and the sum of the job losses calculated by the 50 states. The states included California and New York.
From Bloomberg:
Pfizer’s Buy of Wyeth Threatens New Jersey Town’s Jobs, Deli
Pfizer Inc.’s agreement to buy Wyeth has Main Street in Madison, New Jersey, toting up potential damage.
The 19,500 firings Pfizer plans after the acquisition may wipe out the 960 jobs at Wyeth’s headquarters. Financial industry bankruptcies and buyouts already are pinching the economy of the commuter town 15 miles west of Manhattan. Wyeth, based in Madison since 1993, is the town’s second-biggest private employer.
“I hear it all the time from clients — I just lost a job or my husband just lost a job,” Jon Elliott, a jeweler in downtown Madison, a mile from Wyeth’s gated corporate campus, said after the $68 billion acquisition was announced. “On Main Street, people are crying the blues because we’re not getting anyone walking through the doors.”
Pfizer will cut 15 percent of the merged drugmakers’ 129,500 employees to save $4 billion, Chief Executive Officer Jeffrey Kindler said at a news conference announcing the deal two days ago. That may not be enough, Seamus Fernandez, a Leerink Swann & Co. analyst in Boston, wrote in a note to clients. The purchase will disappoint investors unless Pfizer chops $6 billion by 2013, Fernandez said.
CNN Money
Snag a great deal on a short sale
man, i remember this aug 06 piece like it was yesterday. time sure flys and alot of water under that bridge.
SAS
i wonder what became of this story of fat pensions bleeding NJ?
http://tinyurl.com/c5zltf
[2],
I agree. Back in the 80’s, you were required to put down 20% or pay pmi. There were no i/o, neg amort, piggyback’s, etc.. In addition to this, toxic crap was not stamped AAA and sold off to the rest of the world. Yes, this baby is unique.
Grim - are you going to post the condo data I sent you last night?
this post is perfect timing and exactly the news i wanted to read.
i was ready to pull the trigger on a piece of land yesterday but got a serious case of cold feet.
sure philly is different to some regard but i’m afraid the city is about 6-9 months behind national numbers so if i decide to build on said lot, my home won’t comp out at 80LTV. and the bigger fear is even if it does hit the 80ltv post construction it’ll be thousands less in coming years. (i actually really like my rental and its quite adequate even with a baby on the way)
i think i just need to unsubscribe to the auto listings my realtor is sending and walk away from the idea.
STIMULUS! STIMULUS!! STIMULUS!!!
The voting/rubber stamping begins today.
hey grim,
thanks for the post yesterday regarding the percent of price decline since the height of 2006. In trying to figure a home price for 2006, is it so off the mark to actually use zillow? Over this year, what is the next expected downturn in the upper tier? should we expect this next wave to be a little harsher in the NJ metro areas? thanks
HE (13)-
The entry of our future generations into compulsory debt servitude begins today.
And, the daylight bank robbery goes parabolic.
lennie (14)-
Sure. Go ahead and use an algorithm that didn’t work from Day 1.
You can’t come out any worse than the gubmint.
New thing I say 20x a day:
Garbage in; garbage out.
Prez (15)-
(snip)
That campaign cost over 1 bn, and I don’t think much of it came out of O’s pocket.
The party’s over, and the bill is due. Don’t think for a second these backers aren’t demanding value for money.
And, they’re not on the same side as you and I.
Can someone with GSMLS access please let me know the SP for 19 Lorraine in Madison? If it hasn’t closed yet, what is the estimated close date?
Thanks.
From MarketWatch:
Mortgage applications dropped 38.8% last week
Applications filed for mortgages last week fell a seasonally adjusted 38.8% compared with the prior week, the Mortgage Bankers Association reported Wednesday.
Application volume was down 40.4% compared with the same week in 2008, according to the Washington-based MBA’s weekly survey. The survey covers about half of all U.S. retail residential mortgage applications.
The week-to-week drop in applications was primarily due to a decline in refinance activity: Refinancing applications sank 48% for the week ended Jan. 23, compared with the previous week.
Filings for mortgages to purchase homes were down a seasonally adjusted 2.9% compared with the Jan. 16 week. Survey results were adjusted to account for the shortened week, due to the Martin Luther King Jr. holiday.
Can someone with GSMLS access please let me know the SP for 19 Lorraine in Madison? If it hasn’t closed yet, what is the estimated close date?
Not closed yet, 2/28.
Well, the following 10 years after the last crash enjoyed a big increase
Address Assesment Last Sale
7 EVERGREEN COURT (2) $504,900 Jul-96 $265,450
7 EVERGREEN DR(C0041) (2) $118,900 3-Feb $220,000
7 EVERGREEN DR(C0042) (2) $118,900 Dec-98 $0
7 EVERGREEN DR(C0043) (2) $118,900 Apr-90 $133,500
7 EVERGREEN DR(C0044) (2) $118,600 Feb-96 $111,500
7 EVERGREEN DR(C0045) (2) $118,800 Mar-89 $150,000
7 EVERGREEN DR(C0046) (2) $118,800 6-Apr $350,000
7 EVERGREEN DR(C0047) (2) $118,600 4-Nov $285,000
7 EVERGREEN DR(C0048) (2) $118,800 00/00 $0
From Bloomberg:
Wall Street Bonuses Plummeted 44 Percent in 2008, DiNapoli Says
Cash bonuses paid to New York City employees of Wall Street firms declined 44 percent last year amid record losses in the securities industry, state Comptroller Thomas DiNapoli reported today.
Financial firms disbursed $18.4 billion in 2008 compared with $32.9 billion the previous year, DiNapoli’s office calculated, basing its estimate mainly on personal income-tax collections. While the decline represents the most ever in total dollars, the bonus pool remained the sixth-largest ever, the comptroller said in a yearly report.
Clot,
I just wish I had more cash to short with.
Well, the following 10 years after the last crash enjoyed a big increase
You got it George.
I’m here to make sure you guys make smart real estate moves, not dumb ones.
But it’s not quite time to make the wholesale call to buy yet. Given a specific situation, it could make sense, but not a good move across the board.
For many, the best place for your boots today is near a warm crackling fire.
http://online.wsj.com/public/resources/documents/JOBLESSDATA08.html
Unemployment Rises in Every State
WSJ - Connor Dougherty
Some figures per state - New Jersey appears to be right at the national average.
Grim 24 - That’s about $18.4b more than deserved.
“Financial firms disbursed $18.4 billion in 2008″
You call this a recession? Give me a break.
Can anyone with MLS access please fill me in on any relevant information for the following two numbers?
In Westwood: 2834536 (Pine St.)
In Hillsdale: 2828593 (address appreciated on this one).
How long listed, any well-known problems, etc.
Thanks.
Roubini on CNBC from Davos
“If the assets are bought at market value, it shows the banks are insolvent”
We should make all companies insolvent, the employees would be rich.
AIG Said to Offer $1 Billion in Retention Payments to Employees
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=auhzcUg60VZA
recession??? Give me 2 of them.
“the bonus pool remained the sixth-largest ever”
Frank:
I love how you like to write about how good it is to work in the financial world.
You are a real scumbag.
aig is a disgrace, the looting just continues,,, BO,, will not stop it.
anybody got the blls for skf,, srs, sds,
“Well, the following 10 years after the last crash enjoyed a big increase”
[23],
Come to think of it, nobody should complain about their stocks down 50%, After all, since 1933, stocks are up an avg 10%, yoy.
AH [34],
Just a troll. Nobody could possibly be this dense.
A few miles north, worth posting.
From LoHud:
IBM cuts about 700 jobs at Dutchess plants
Armonk-based IBM Corp. confirmed yesterday that it is cutting jobs in its Systems and Technology Group in North America, including in East Fishkill and Poughkeepsie in Dutchess County.
Up to 700 IBM employees were laid off yesterday, according to several employees at the East Fishkill plant who spoke with the Poughkeepsie Journal.
Reports also have indicated that job cuts have occurred at IBM’s Poughkeepsie plant.
In today’s daily listings, 2 Montclair homes listed significantly below assessment:
114 Wildwood (GSMLS 2637736)
Tax Assessed: $654,900 (Annual taxes: $15,070)
LP: $495,000
196 Park (GSMLS 2587323)
Tax Assessed: $870,000 (Annual taxes: $20,019)
OLP: $849,000 DOM: 114
LP: $739,000
#34,
Anyone that get a piece of the $18.4 billion is a scumbag plus all the RE agents.
#17 clot
i know how ridiculous zillow is…but i thought using it to see last purchase price and determine then what current prices should be might not be so far off. Many of the homes we are looking at seem to fall in that category…i thought if a home was purchased in 2004-2006 for $430, shouldn’t it be going for the same price this year?
i’d be interested to hear more about the ‘top tier’ discussion and this group only down 9.6 percent. Grim, you alluded to the idea that these may not have risen as high in price during the boom and realtors are still keying in on this to say ‘this area has stabilized’. they are in part correct based on the modest top tier drop.
In Westwood: 2834536 (Pine St.)
I’m showing this one as 399 4th Ave. 172 days on market, originally listed at $369k, reduced to $349k.
In Hillsdale: 2828593 (address appreciated on this one).
333 Liberty. Expired at 197 days on market. Came on at $399,950, reduced to $379,950.
Just goes to prove that houses are NOT investments and should never be treated as such in making the buying decision. If we could beat this into the minds of everyone, everywhere, the world would be a saner place.
Anyone who sacrifices retirement/college or other forms of long-term savings because of a house purchase is basically setting themselves up for a fall.
From MarketWatch:
Wells says Wachovia had $11.2 billion fourth quarter loss
Wells Fargo, now the second largest bank in the country based on market value, said on Wednesday that its recently acquired Wachovia Corp posted losses of $11.2 billion in the fourth quarter.
“i wonder what became of this story of fat pensions bleeding NJ?”
After only 20 years of working, these people are getting 200K+, nice. you call this a recession? NJ is the richest place on the planet.
don’t worry tax rates will be 15, 28, 31, 36 and 39.6% come 2011, I will get the bankers then!!!! For now party on since they paid for my campaign
NJ is the richest place on the planet.
You need to get out more.
Good luck to those shorting financials today. Hope you’re playing with house money.
From Bloomberg:
IMF Sees $2.2 Trillion in Bank Losses, Global Growth Slowing
The global economy will slow close to a halt this year as more than $2 trillion of bad assets in the U.S. help sink economies from Russia to the U.K., the International Monetary Fund said.
Bank losses worldwide from toxic U.S. assets may reach $2.2 trillion, the IMF said in a report released today, more than the $1.4 trillion that the fund predicted in October. World growth will be 0.5 percent this year, the weakest postwar pace, the fund said in a separate report.
The reports signal that writedowns and losses at banks totaling $1.1 trillion so far are only half of what’s to come and that already contracting economies may worsen. Advanced and developing countries need to be “even more supportive” of demand than they already have been, with lower interest rates and fiscal stimulus, the lender said.
“Unless stronger financial strains and uncertainties are forcefully addressed, the pernicious feedback loop between real activity and financial markets will intensify, leading to even more toxic effects on global growth,” the IMF said.
The IMF’s latest forecast revises its estimate of world growth down from 2.2 percent in November.
U.S. gross domestic product will contract 1.6 percent, Japan’s will shrink 2.6 percent and the euro area will decline 2 percent in 2009, the IMF said. The fund in November foresaw a 0.7 percent U.S. contraction, with declines of 0.2 percent in Japan and 0.5 percent in the euro zone.
“Wells says Wachovia had $11.2 billion fourth quarter loss”
Why create a bad bank? The street is full of bad banks. Maybe a better idea is to develop a good bank?
Friend of my is complaining that taxes in Ocean Beach, NJ doubled this year. But home prices went up 6 folds in this town and tiny house sells for $1.2M. Weeeee I can’t afford taxes on my million $ house. Weeeeee. Foreclose, foreclose.
#40 I work at a ‘TARP’ company and got a bonus this year (which i didn’t ask for). Would you consider me scum?
“NJ is the richest place on the planet.”
“You need to get out more.”
At least get his head out of his #ss. That’s called a start.
(51) Good one BC…
Maybe the good bank could pay decent interest on CD’s and encourage deposits?
Government run “Bad Banks”, massive bailouts of every financial institution, billions more in stimulus packages.
What if we had an election and nothing changed?
Ok, this will likely elicit some mockery but I have to ask. I’ve searched city-data and not found a lot of good information. Hillside, in Union County. Not looking to buy there but a family member might work there, in a public school. Daytime, obviously. Safe? I’ve only driven through parts of Hillside (bordering Union) and it seems nice but the few tidbits I’ve read on nj.com forums and city-data make it sound ghetto. It didn’t look ghetto to me. Thoughts?
I wonder what the flight of Wyeth from Madison will do to tax base here. I’ve always thought madison’s property tax rates were somewhat reasonable and I’m curious to see what effect Wyeth’s loss has on them.
W8TING says:
January 28, 2009 at 9:23 am
#40 I work at a ‘TARP’ company and got a bonus this year (which i didn’t ask for). Would you consider me scum?
________________________________________
If your division lost money, yes. You are a leech.
Hi Sync,
I grew up there and own property there. Shoot me an email through frim if you have specific questions.
59, GRIM, that is
sync - don’t know Hillside at all, but on c/d forums if it’s not a “top town” it’s a ghetto. I’ve noticed a tendancy towards hyperbole in the state.
W8 (54)-
If they hadn’t paid you that bonus, you’d have quit.
Right?
Right?
Syb #59 - No, nothing specific at this point. Just feeling it out.
lisoosh #61 - yeah. I’ve noticed. Thanks :)
Cindy (54)-
Doing business that way doesn’t pay for four-legged commodes.
Hard times take the wind out of home sales
“The average Staten Island homeowner is saying, ‘Why should I keep lowering my price? Why should I give it away? I’ll wait and see,’” said John Picciurro from VIP Realty in Great Kills.
If they can afford to wait, that is.
Many Realtors are finding that the only sales they’re making these days are for families desperate to move out of their homes. In some cases, a new job or a divorce is forcing them to move. In other cases, people just can’t afford their houses anymore.
“I would say 90 percent of what I’m doing these days are short sells,” said Anthony Guglieri of Prime Time Real Estate, based in Richmond.
Short sells are when a bank agrees to buy a property from a homeowner at a discounted price so the homeowner can avoid foreclosure. In those instances, homeowners usually fall short of the balance they owe on their loans.
“People who can afford to sit on the sidelines and wait a little longer are doing it,” Guglieri said. “Others are just handing over the keys and walking away. People are upside down and all across the board. It’s a real disaster.”
grim (55)-
The best minstrel show of all time.
W8TING:
Let me say one more thing. I have reached the end of my rope with all of these bailouts, TARP, CRAP, whatever you want to call it. Time for there to be winners and losers. We have become a country where everyone gets a prize, even those who lose get little trophies because they tried hard. It has not been my fault for all of this mess, I am pissed to all hell that I am going ot bear the brunt of it. So if another 100,000 bankers have to lose their job, so be it.
End of rant…
Re: Hillside
Just remember that it doesn’t only border Union; the other sides border Irvington, Elizabeth, and Newark.
All Hype #58,
He didn’t ask for it. Don’t you read?
NJEA is recession proof,except the people who pay these bills cannot afford any more increases:
http://www.nj.com/news/index.ssf/2009/01/roxbury_teachers_get_close_to.html
The home you save could be your own
Luis Molina is not a lawyer and he has never played one on TV.
But that didn’t stop him from putting on his best suit, marching into a Miami courtroom this month and going up against an attorney with 30 years of experience to stop a foreclosure proceeding against his family’s home. Molina did such a good job of representing himself that the judge in the case thought he was a lawyer and punctuated his ruling in Molina’s favor by tearing up the other side’s motion for summary judgment and throwing it over his shoulder.
As John might say, “The congress is offering more stimulus than a busload of hookers at a fraternity party.” Of course, one has to worry about what kind of illnesses get spread from both those types of stimulus.
As John might say, “The congress is offering more stimulus than a busload of hookers at a fraternity party.” Of course, one has to worry about what kind of illnesses get spread from both those types of stimulus.
#62 With unemployment expected to rise to 9-10% this year? hell no i wouldn’t quit my job.
Syb #68,
Right. Elizabeth’s another one that confuses me. I’ve actually seen much of it and … I’m underwhelmed. It also doesn’t strike me as ghetto. And yet, if you read about it on forums, omfg. It’s like a warzone lol.
But back to Hillside.
He didn’t ask for it. Don’t you read?
….
I didn’t read that he had a gun to his head to take it either….
One more thing about Hillside; the local politics there are sickening. The school board and town council have constant battles, and I don’t perceive much stability there.
There is some level of crime there. I would say it’s safer than Irvington and Newark, but it might get substantially worse.
I would recommend your family remember research the struggles between the school administration and the local government before accepting a position there.
All Hype #76,
My bonus, if it comes, will be a direct deposit. I wouldn’t even know how to return it. Besides, I got a car loan I’m itchin’ to pay off so why would I? LOL.
You can call him a leach all you want but the course of action you’re suggesting (that he return the money) would make him a class-A retard. A retard is worse than a leach. Way worse.
Bonus also paid by TARP but with the caveat that my division did make money and that the bonus is lower than what was projected.
Foreclosure Auction of Over 350 Homes Storms Through Northeast
Valued from $14,000 to over $800,000, Homes Will Be Auctioned January 27th-31st in Connecticut, Massachusetts, New Jersey, and Rhode Island
Properties are sold “as-is” and buyers should inspect homes prior to auction. Homes may be viewed during the open house on January 24th and 25th from 1:00pm-3:00pm or by contacting listing agents for an appointment. Property details and additional information may be found at hudsonandmarshall.com or by calling 866-539-4172.
January 29th - Cherry Hill, NJ (24 homes) at 7:00pm - Mt. Laurel Marriott
January 31st - Newark, NJ (121 homes) at 1:00pm - Sheraton Newark Airport Hotel
Hi, grim –
Thanks for the quick info on those houses. Is the Hillsdale house still on the market, or has it come off the market? This listing agent seems to have a habit of not removiing the listings from MLS promptly. My friend who’s looking has already been burned trying to see one of her listings that was pulled. Thanks.
Syb #77,
What’s the cause of all the tension?
syncmaster:
We each have our own opinions. I am just fed up with the whole bailout of the banks.
Now, let’s sky the markets today!
According to the AG of NY, TARP Bonuses are fraudulent conveyances, you are all criminals now, lets see how far Cuomo takes this, after all he is after John Thain and he did not get the Senate job and Cuomo may running for Governor next. Nothing like a bunch of Wall St types doing a perp walk splashed all over the Post and Daily News to
get the main street folks voting.
“Specifically, corporate expenditures and payments, made in the absence of fair consideration of undercapitalized firms, may well violate NY Debtor and Creditor Law 274, which deems such payments illegal fraudulent conveyances,” Cuomo’s letter said.
The letter said that “obviously, we will have grave concerns if your expected bonus pool has increased in any way as a result of your receipt or expected receipt of taxpayer funds from the Troubled Asset Relief Program.”
Accuracy of Valuations??
Divert Public Funds??
aka. Fraud
“Report: Cost of Yankee Stadium Parks Rises”
http://tinyurl.com/c68hoy
-The cost of replacing the parks that were demolished to make room for the new Yankee Stadium has skyrocketed to $195 million.
-New York City’s Independent Budget Office says that is almost $79 million over the 2005 estimate.
82
The usual; school board thinks it should be wielding more power than it does.
Found this for some insight into the town:
http://www.thehillsider.com/
“lets see how far Cuomo takes this”
someone has to send Cuomo out on the surface to look like policy & laws are being held.
however, the there will be people who make sure Cumo won’t totally succeed in doing this, cause then the Fraud would stop, and nobody want that. Even, Cuomo himself, or someone will pull a skeleton out of his “file”.
ala. Spitzer call girl
SAS
W8TING says:
January 28, 2009 at 9:38 am
“#62 With unemployment expected to rise to 9-10% this year? hell no i wouldn’t quit my job.”
Which is why the concept of bonus as “required to retain talent” is somewhat passe.
80-took a quick look through. Are these homes that anyone would really want? even so cheap its ridiculous? I’ve been in a few of these near me–western Morris, eastern Hunterdon. find and buy the land instead and build.
Syb #86 - thanks! Appreciate it.
“Which is why the concept of bonus as “required to retain talent” is somewhat passe.”
Add to that, the fact that at a good number of firms the people being given bonuses to stay are the same ones who drove us over the edge in the first place. “Your Honor, you just can’t sentence my client to prison. Sure he killed both his parents but now he is an orphan. You just can’t throw an orphan into jail.”
man, what on earth was i thinking for turning on the Today show on the plasma in the office??
i just wanted to see a local weather forcast, and i get this nit wit crap.
man, maybe we all to burn in hell afterall.
what an awful, feeble minded show.
SAS
Fed moves to help distressed homeowners
WASHINGTON (AP) — With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes.
Under the program, the Fed has a number of options to provide relief, including lowering the amount the homeowner owes on the mortgage, reducing the interest rate or lengthening the term of the loan.
It’s unclear how many homeowners would benefit. However, the relief plan would apply to the billions of dollars of mortgage assets the Fed is holding on its books because of last year’s bailouts of Bear Stearns and insurer American International Group.
In general, a borrower must be at least 60 days delinquent to qualify for help, although the Fed has leeway to make some exceptions. A 2008 law that set up the $700 billion bailout fund instructed the Fed to take such foreclosure relief action.
“1. Under TARP, Neither a Borrower Nor a Lender Be
Apparently those U.S. banks funded by the Troubled Asset Relief Program (TARP) are actually lending less than those without access to the program. Treasury, the sugar daddy in charge of this program, isn’t going to like this news, which just goes to demonstrate the unyielding truth of the ancient saying, “pimpin’ ain’t easy.”
http://www.minyanville.com/articles/cof-FITB-KEY-tarp-godfather-solazzo/index/a/20813
“With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes.”
“With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes.”
“With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes.”
“In general, a borrower must be at least 60 days delinquent to qualify for help, although the Fed has leeway to make some exceptions”
SG [93],
Why not incentivize all to skip the next 2 months payment?
“there is no way in hell anyone would work in investment banking for the base salary we get, and if you don’t pay people a decent amount they would all leave and there would be no such thing as investment banking.”
response to this comment from a previous thread… I know many people believe this but it is just not true. If banks all just paid base salaries plus small bonuses, people would take it. The really rich people might leave or they might not (if they don’t need/want to work why haven’t they left already?). Everyone else would really not have a choice. Look, people in law firms work on the same deals and pull the same hours and this is our pay structure. Same with accountants. Bankers’ old argument was that they are risking their own capital so they deserve bigger upside. Well, many banks are not really risking their own capital anymore (to the extent they ever really were) so basically they are just advisors at this point and maybe they should get comfortable being paid as such.
“With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes.”
In WHOSE homes? If they have not paid it off, it is the bank’s house. If they cannot pay the cost of the loan — in essence, rent to own from the bank — they should have no expectation of being allowed to stay in the home. Adults need to be treated like adults; when they make poor economic choices in an capitalistic society they need to feel the pain from making those choices. If they do not, the system fails.
I do not want people ending up in the street or going hungry. We can do things to prevent that, but we cannot prevent every person who made bad decisions from feeling the pain that resulted from those poor decisions. These well-meaning attempts to help people “stay in ‘their homes’” will only delay us from taking corrective action and will drive up the costs.
he [94],
Banks are lending, just not those stuck in a deep black hole. Bury them and move on.
when you buy a firm or invest in a firm you have to pay for talent. Otherwise you are just buying a few leased offices and some used furniture, the 10% of the company who actually make things happen will walk as they are marketable no matter that we are in a recession and the other 90% of deadwood will stay. That said, why the heck are they giving bonuses to so many people? It should just be stars.
“Well, many banks are not really risking their own capital anymore (to the extent they ever really were) so basically they are just advisors at this point and maybe they should get comfortable being paid as such.”
Skep,
Good point. In addition to this, you can hire someone from Wal-Mart to give out toasters.
““With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes.”
you mean, the Federal Reserve is trying to squeeze that stupid sap underwater homeowner for all the money they can before the sap homeowner eventually throws in the towel, folds, and walks away.
you can only put off the inevitable for so long.
SAS
SAS
If the government wants to help, lets have it give buckets of cash to those who have no debt, who paid off their mortgages well ahead or schedule, and who have accumulated at least a few-hundred-thousand dollars in cash and other non-real-estate assets. THe ones who did this clearly have proven themselves capable of wisely managing money. The government could require that the money go to purchasing homes for rental purposes only and place a limit on rents for some period. This would both suck up excess inventory, provide housing for needed families, and incentivize prudence.
Credit Weakness Spreads from Subprime to Alt A to Jumbo
http://www.ritholtz.com/blog/2009/01/credit-weakness-spreads-from-subprime-to-alt-a-to-jumbo/
i’d be interested to hear more about the ‘top tier’ discussion and this group only down 9.6 percent. Grim, you alluded to the idea that these may not have risen as high in price during the boom and realtors are still keying in on this to say ‘this area has stabilized’
The high end did not go up as much and started to decline earlier. This isn’t unique to NJ. This phenomenon was seen in most bubble markets.
It’s interesting that realtors are using this to make claims that the market is stabilizing. In ‘06/early ‘07, when the mainstream media/Joe Sixpack first caught wind that maybe housing doesn’t always go up, realtors® dismissed these concerns by claiming that the weakness was only in the upper end and those of us buying regular houses should buy right away lest we be priced out forever.
Yikes - much of what your friend said bothers me.
“I’m under the impression that Wachovia didn’t take bail out money; but even if they did, as I understand it, that wasn’t free money anyway, but was exchanged for preferred stock and similar. So it was really an investment in the banks as opposed to a handout. Banks got money from the government because the lack of confidence in the markets prevents lending by other typical sources.”
Wasn’t free money but really an investment not a handout? So what? Why does that guarantee a huge payout? If taxpayers are shareholders they have the right to expect the money “invested” is used wisely. And if the money “invested” was supposed to stimulate lending but instead went on employee payouts then that constitutes fraud.
“Plus what we call “bonuses” aren’t really for exemplary performance, they’re just a way to have variable compensation…there is no way in hell anyone would work in investment banking for the base salary we get, and if you don’t pay people a decent amount they would all leave and there would be no such thing as investment banking.”
I’m pretty sure IB’s could attract plenty of smart people by paying them 2x what most other industries get rather than 10x. And if all the IB employees leave, where would they go? Just a whole lot of entitlement here from supposed “Masters of the Universe”. People gotta eat. To eat they have to work. It’s surprising what people will work for when there is no other option.
“People work between 55 hours and 100 hours a week (not even close to an exaggeration) and are usually ridiculously smart and hard working.”
Boo hoo. Doctors work longer hours for far less pay and most of them are ridiculously smart and hard working. There are low-income people working two miserable minimum wage jobs who put in just as many hours for what this yahoo spends on a steak dinner at Peter Lugers.
“Furthermore, the problems with the banks lie in probably 10% of the former employees, so the other 90% of us don’t deserve to get fucked. The money that Wachovia had but didn’t use to pay us bonuses went to Wells Fargo. Most banks paid around 50% of typical bonuses. So overall, we at wachovia got screwed.”
Wachovia should have gone out of business. Guy is lucky to have a job.
Life isn’t fair. I’m pretty sure that the guys at Caterpillar worked hard and didn’t deserve to get laid off. Same with the guys at Sprint, or the guys at Wyeth (many of whom are also ridiculously smart), or the guys at Home Depot or any of the other companies who are cutting staff.
The point isn’t that people don’t deserve compensation for their efforts.
The point is that when your industry is “special” and the taxpayers money is being thrown at it in order to protect it from its own failings and preventing it from collapsing stop whining.
Be grateful for having a job, be grateful for a bonus at all. Most of all, when you still do have a job, still got a bonus, be smart and shut up about it.
Great days in securities fraud
Mark-to-market. Mark-to-mystery. Now, Mark-to-Madoff.
The Obama administration is close to deciding on a plan to purchase bad — or non-performing and illiquid — assets from banks, according to industy (sic) sources. The plan could be announced early next week.
The so-called “bad bank” plan, would address the key problem of how to price the assets by using a model-pricing mechanism. The model would take account of the government’s ability to hold onto assets, even to maturity, and pay for the (sic) them with cheap funding.
Result: the government might end up paying more
than current market prices for the securities.
http://nakedshorts.typepad.com/nakedshorts/2009/01/great-days-in-securities-fraud.html
I like how he chose the word MIGHT. Like there’s any doubt they are going to be paying more than they’re worth.
“The so-called “bad bank” plan, would address the key problem of how to price the assets by using a model-pricing mechanism. The model would take account of the government’s ability to hold onto assets, even to maturity, and pay for the (sic) them with cheap funding.”
he,
LMAO.
Model pricing? Open up the doors, the street is full of out of work financial engineers. The blackbox got us into this muck. Now the new assumptions will bury us upside down.
Same as it ever was.
Grim - post in mod.
Sync,
I work off and on in elizabeth and travel through hillside on a regular basis. ( so take my opinion with a Kg of NaCl).
It isnt ghetto, but i would classify it as lower income urban. with the associated issue that may go with that ( not judging, just describing)
“and pay for the (sic) them with cheap funding.””
- Lets see for how long the funding remains cheap.
Swedish banking rescue
They say it initially cost 4% of GDP and they recouped 0-2%.
http://en.wikipedia.org/wiki/Swedish_banking_rescue
US current GDP is $14T. So are we talking $7T? We’ll only be out about $0-$3.5T?:) I am sure they’ll be playing up the $0 end:)
grim 23,
Wall Street Bonuses Plummeted 44 Percent in 2008, DiNapoli Says
it must be all those solvent firms. The TARP firms are still paying handsome bonuses.
sas (92)-
Narcotics for the sheep.
I’m pretty sure Matt Lauer is Beelzebub.
anybody else hearing from acquaintances or friends about getting laid off?
I’ve heard about three that have come out of nowhere in the past few days. sketchy stuff.
these are smart, educated, hard-workers, too … not the proverbial “fat”
BTW, Vanguard closed their Treasury MM Fund to new investors, citing yields are too low to justify the expense. Good times.
BC,
what really gets me is that some how people seem to think that these so called assets that are worth pennies on the dollar at best now, will somehow magically be worth more at maturity. the underlying fundamental that their value is based on are gone, they are toast.
It seems to be a classic case of
“If you cant dazzle them with brilliance, baffle them with bull$hit”
oh and hurray, my books arrived last night. time to start reading!
Weeeeeee, I lost my Wall St. job and now I am depressed. Weeeeeeeeeee
It’s the Economy, Girlfriend
http://www.nytimes.com/2009/01/28/nyregion/28daba.html?_r=2
“these are smart, educated, hard-workers, too … not the proverbial “fat””
Yikes - Haven’t you heard Dennis Kneale? This will make the companies stronger. Buy now or be priced out!
I am sorry that should be $700B. So we are only going to be out $350B? Good luck with that!
anybody else hearing from acquaintances or friends about getting laid off?
Yes, all of them from outside the financial sphere.
“what really gets me is that some how people seem to think that these so called assets that are worth pennies on the dollar at best now, will somehow magically be worth more at maturity. the underlying fundamental that their value is based on are gone, they are toast.”
Come on Kettle, all those people in or near foreclosure just need a little time for things to turn around:)
Longer working hours on Wall St….
US Treasury asks bond market to cut early closings
http://www.reuters.com/article/marketsNews/idUSN2744594720090127
HEHE
We are already out about 8 trillion. another 3 would get us pretty close to a loss equal to GDP.
Yikes,
Yes have seen a few friends laid off. the head count is just starting
Managed to get some excerpts from David Rosenberg’s “D” note.
” Depressions are basically long recessions - they can last anywhere from three to seven years, while historically cyclical recessions last 18 months - and tend to follow years of leveraged prosperity of Gatsby-like proportions. Considering that in this most recent leveraged cycle from 2002-07, we reached a point where a record 40% of corporate profits were derived from financial activities, where household debt relative to income and assets surged to unprecedented levels and the personal savings rate briefly went negative at the height of the housing bubble, it is safe to say the down-cycle we are currently experiencing did indeed follow a classic elongated period of leveraged prosperity. It is now reverting to the mean.
And with regards to reverting to the mean, Rosenberg provides some rather scary numbers:
* $6 trillion - The amount of private sector debt that needs to be eliminated (Based on ML data that total private sector credit market debt relative to national income is still near a record-high of 140 per cent vs a long-run norm of 80 per cent).
* $1 trillion - The amount of excess capacity in the US economy.
* $13 trillion - the cumulative loss of household net worth at the end of 2008.
* 70% - The US’s share of global consumer spending/GDP, which Rosenberg predicts will now revert to its long-run average of 64 per cent.
”
http://seekingalpha.com/article/116992-the-upside-down-logic-of-obama-s-stimulus-and-merrill-s-depression-call
BC (110)-
Great. The failed quants go from working for one group of crooks to a new group of crooks.
Fcuk the expat taxes and all the other garbage. If I cash out everything, load up the truck and drive south until I can’t anymore, I’ll get out with everything.
This country has turned into a giant, festering dumpster.
Boeing cuts 10K jobs. Orders for planes being cancelled left and right.
We must have hit the 100,000 cut mark with all the mass layoff notices this week. With 2 and a half days left this week, will we make it to 150,000?
HEHEHE
Sry i forgot that that CHC in bergen county really is worth 1.5 million even if it requires 6:1 loan to income ratio and the fluffer jobs on wallstreet have suddenly evaporated.
Clot
Boeing will be going to the TARP within 6 months. Bet on it.
grim says:
January 28, 2009 at 10:47 am
a”nybody else hearing from acquaintances or friends about getting laid off?
Yes, all of them from outside the financial sphere.”
Guess their industries weren’t “TARPED”.
kettle [119],
Merrill has provided us with a market price, .05.
Hype (132)-
They’ll have to get in line behind commercial RE.
BTW, Pelosi’s husband is in commercial RE. Be afraid.
Guess their industries weren’t “TARPED”.
Sadly, it does seem that this is the case.
BC (134)-
TPTB doesn’t like that price. A new one will have to be engineered.
This is pretty cool. The entire GDP of a nation, thrown behind perpetration of a fraud.
I love the smell of a bad bank in the morning. Maybe in the bad bank the tellers could dress in a S&M theme. I would hate to see what the substantial penalty for early withdrawl would be in a bad bank.
We must TARP commercial RE. Going to the mall to buy crap we don’t need is a God-given American right.
CLot,
Maybe we start a convoy, such a road trip sounds like a better idea each day. Get a few Hemtt’s or 2 1/12 tons and your on your way
a hemtt (pronounced Hemit)
http://tinyurl.com/cezvst
Time to start calling this the Bush Depression. I am sure he would like the credit for doing to the economy what he did for civil liberties.
These are the endtimes.
BTW there are no lay-offs, just some right-sizing of employees along with some hiring chills.
Tech folks here might be interested in this piece.
Microsoft to Layoff Some H-1B Holders
Zack says:
January 27, 2009 at 3:15 pm
I own a S corp, mainly involved in IT consulting. What is a reasonable amout to pay for tax preparation? I am paying my tax preparer roughly $1200/yr to do my perosnal and S corp taxes including al the quarteryly filings. IS $1200 a reasonable amount or am I overpaying?
Zack: Carol with whom I work said this charge is reasonable, especially if the tax preparer is handling payroll. If so, it is borderline a value price.
http://tinyurl.com/cv8uor
I graphed what S&P CS Metro NY might look like assuming Grim’s (and others) call for 35% peak to trough correction…
Any ideas if something like this is expected or will we see the 35% much sooner than Jan 2012?
(chart is on pg 6, light blue is predicted ny, dark blue is actual ny, black is cs 10 city comp actual, light orange is predict ny yoy, dark orange is actual ny yoy)
grim says:
January 28, 2009 at 10:47 am
anybody else hearing from acquaintances or friends about getting laid off?
Yes, all of them from outside the financial sphere.
exactly. one guy lost his job and his house and is freelancing … and working at best buy on friday and saturday to supplement his income.
what’s scary is that nobody knows if this will be a 6-month, 1-year, 2-year or 3-year thing.
i know we’ll all frugal, but who the hell has the $ to get through 2-years if jobs are being lost? obviously nobody is going to get their family become destitute, so you’ll want to help, but …
vodka (140)-
I’d like to drive from Laredo to Santiago in that. I’d be the man.
clot:
I burn the midnight oil for you and no response?
chicagofinance says:
January 27, 2009 at 10:58 pm
Footage of Branchburg NJ in April 2009:
http://www.youtube.com/watch?v=miIPEOExM8U&feature=PlayList&p=4C77EA373B23EB5F&index=76
chi (149)-
Sorry. Have to watch it at home. Computer here has no speaker.
Thanks to you, I’m sure. :)
#120
“It’s the Economy, Girlfriend”
these people should be sterilized
Nice Comerica bank declared a $12.63 dividend on their prf share today. Nice use of tarp money
As part of the U.S. Treasury Department’s Capital Purchase Program, the Board of Directors of Comerica Incorporated today also declared a quarterly cash dividend for Fixed Rate Cumulative Perpetual Preferred Stock, Series F, of $12.63888889 per share. The dividend is payable February 17, 2009 to such preferred stock shareholders of record on January 31, 2009.
Veto, Nice chart
What happens if we hit 60+%????
Essex man, stop trolling and don’t post under multiple names.
Man where is the fun in that….?
Clot,
I am not saying they won’t throw Commercial RE a bone but I don’t see them much lower on the list. Who they going to stock the malls with?
clot 148,
they are very easy to drive, you ust have to be careful not to run stuff over. you wont rear end a car, you will run right over it like a speed bump……
“anybody else hearing from acquaintances or friends about getting laid off?”
i know someone who lost a job and a health insurance company, and i know 2 people in education (1 at university, 1 at public edu), both are sweating as they fear the ax.
SAS
I can’t believe a looked at a Frank link but #120 is awsome:
“Once it was seen as a blessing in certain circles to have a wealthy, powerful partner who would leave you alone with the credit card while he was busy brokering deals. Now, many Wall Street wives, girlfriends and, increasingly, exes, are living the curse of cutbacks in nanny hours and reservations at Masa or Megu. And that credit card? Canceled.”
“Another, though, seemed chagrined, after her boyfriend told her to “grow up” and stop “complaining about vacations and dinner” since he had to “fire 20 people by the end of the week.””
My heart bleeds.
With apologies to Nirvana:
TARP Me
TARP me
TARP me, my friend
TARP me
TARP me again
am i the only one .IIIII [3x]
am i the Only one…
Hate me
Do it and do it again
Waste me
TARP me, my friend
am i the only one .IIIII [3x]
am ithe Only one…
My favorite inside source
I’ll kiss your open sores
I appreciate your concern
You’re gonna stink and burn
TARP me
TARP me, my friend
TARP me
TARP me, again
am i the only one ?, IIIII [3x]
am i the Only one?…
FAX me! (FAX me!)[9x]
FAX me!
How did TARP become FAX???
My non-profit employer will be laying off.
So far they have had execs take a 5% pay cut and are planning to have furloughs and close the building.
They said they will still cut but hope some people will retire instead (i know one who is considering this).
HE (156)-
Demand for the stuff at the malls?
Why do you give these guys credit for logical thinking or understanding cause-and-effect?
The bailout is not to help legitimate enterprises survive. It is to hand massive amounts of money over to thieves, while promulgating the guise of legitimacy.
oh yeah..
and i know a shit load of bankers & wall st^ers whom lost their job.
and one mans misery is another mans joy.
ha ha ha…Lemon brothers!
like i said yesterday, McDs is still doing well.
and Mr. Banker, you can even use me as a reference on that paper app.
SAS
Who they going to stock the malls with?
The fast food industry should get a bailout.
At least they manufacture a product whose price is in-line with quality.
Instrumental to national security and a major employer of the American workforce.
From the blog linked in #120. Of course those guys deserve to be well paid - they work so hard, care so much, NEED to be protected.:
“M&A is back!!!!! Pfizer is taking out Wyeth for $68bn and bankers everywhere are giving each other exploding fist bumps for the coup they pulled off in this market. Sure, there will be thousands of lay-offs at the combined drug company, but who cares, you don’t date drug salesmen! The big swinging I-banking d*cks are feeling 2006 c0cky again (I bet your FBF probably wore his favorite white collared dress shirt from Pink today), so make sure you get taken out to Masa while the getting is good. Trust me, this isn’t going to last and you will be relegated to Aki Sushi 3 again once your FBF realizes his bank is probably still going bankrupt anyway.”
God help us all if Sheila Bair gets to run the Bad Bank.
and my buddy who is a bankrucy lawyer and his crumb bum friends are maken some good jack and chomping at the bit.
That SOB was happier than a pig in dung he took me out for a steak dinner at Wolfgangs on the eastside.
What recession for him?
and for you, Lemon brothers? nada!
SAS
prime jumbo defaults rise sharpy (from the WSJ):
“About 6.9% of prime “jumbo” loans were at least 90 days delinquent in December, according to LPS Applied Analytics, a mortgage-data research firm. The rate was up sharply from 2.6% a year earlier. In comparison, delinquencies of non-jumbo prime loans that qualify for backing by government agencies climbed to 2.1% from 0.8% in December 2007.
[snip]
“From 2002 to 2006, banks originated an average of $557 billion a year in jumbo loans, according to Inside Mortgage Finance, a trade publication. About 40% of the total was sold to investors as securities.
Three lenders accounted for nearly half of all jumbo loans made in the first nine months of 2008. The top two originators, Chase Home Finance and Washington Mutual, both part of J.P. Morgan Chase & Co., made more than 25% of all jumbo loans, while Bank of America Corp. and Wells Fargo & Co. each accounted for 11% of the jumbo market.
[snip-- below is major source of distress for tri state prices]
“Jumbo loans shriveled when credit markets seized up in July 2007, and originations slid 71% to $87 billion in the first nine months of 2008, down from $303 billion a year earlier. Only 7% of the loans made last year were securitized, according to Inside Mortgage Finance.
[snip]
“Conforming-loan limits top out at $625,000 in the highest-cost housing markets. To buy a more expensive home, buyers must put up larger down payments — between 30% and 40% — and pay higher mortgage rates. Rates on 30-year fixed jumbo mortgages stood at 6.87% last week, compared to 5.34% for conforming mortgages, a difference of 1.53 percentage points, according to HSH Associates, a financial publisher.
[snip]
“Nearly 25% of prime jumbo mortgages exceeded the value of the homes they backed in September, according to Credit Suisse. That figure would increase to 42% given home-price declines of 15% over the next two years.”
From WSJ via CalculatedRisk;The jumbos are starting to fail;
from the article - About 6.9% of prime “jumbo” loans were at least 90 days delinquent in December…
Bottom nowhere in sight, accelerating 32 per sec, per sec…
Nuts, beaten to the scoop by skep….
Boeing cuts 10K jobs. Orders for planes being cancelled left and right.
Quick, pass a law requiring all CEOs to fly on private jets. Perhaps a tax credit to companies that buy jets would help?
clot hehe
malls? what would people buy at malls. Most people it seems are starting to hunker down and focusing on buying necessities and well made durable goods based on need not want.
TARP isnt going to change that. The people as a whole have smelled blood in the water regardless of whether or not they realize that it is their own blood they are smelling.
They are now reacting to that faint red tint and a few trillion from tarp will not change that.
As both BC and myself have said, the only chance that TPTB have at restarting consumerism is to use the trillions in bailout to payoff all consumer debts en mass. That would only cost about 5 trillion or so and then everyone is solvent again!
Tosh,
want to try and calculate the terminal velocity of the US economy?
Clot,
so at what point do you dump SRS?
Mortgage Q- can you refi if you are currently paying PMI?
Grim good data and info as always…Thanks
Grim=Sensai
sensei
i think we’ve been down this road before, but do most people have a cash “emergency” stash of 6 months? one year?
So if you’ve got 60k in cash sitting around for emergencies, do you dip into it if the market plummets down 6500 or 7000?
i just wish someone had a clue as to how long this would last. i used to think 2011 would see a rebound, but now i wonder if it might be 12 or 13.
Obama’s up, hpefully he will not tank the market.
The “It’s the Economy, Girlfriend” article made me want to gag about a dozen times. Any guy who falls for this type of woman deserves exactly what he gets. It must be boom times for divorce lawyers.
‘What happens if we hit 60+%????’
kettle, i hope we dont see that. even if the declines pick up speed, it looks like it will take years to get there, unless we somehow start seeing a freefall in prices.
Shocking to think that bottom might not be until 2015 or 2016 under an extreme scenario like that. Look at the mess after 20% decline, I wouldnt want to imagine the damage to banks and economy if we see 60% decline in RE…
HE (175)-
Dump? Just another chance to average lower. Also to pick up some more shiny.
You think any of this bailout crap is going to work? All the gubmint is doing is locking in the guarantee of a real-life Mad Max denouement.
Yikes,
a RE rebound or overall market rebound?
RE will not rebound for at least 10 years and will not return to 06 highs, look at japan as an example if you think i am full of it.
The market could potentially see the same end result, as the last 10+ years were driven on consumer credit, which will not return for at least 1 generation or so, until those burned by this experience begin to die off.
re: the “infrastructure” stimulus:
“Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects.”
#180
“Any guy who falls for this type of woman deserves exactly what he gets.”
luckily most of them date guys who are just as awful
Clot,
Of course I don’t think it’s going to work. I am in long and strong. Just know the longs tend to go parabolic everytime these clowns announce some new plan when every other plan they’ve announced has failed massively.
Just so you know, it does effect even the “good” towns. Check out the reference to Summit, NJ in this article about the job market and its upheavals.
http://www.cnn.com/2009/LIVING/01/28/jobloss.hard.times/index.html
“Dr. Rosalind Dorlen is a clinical psychologist in Summit, New Jersey, an area she calls a “Wall Street ghetto” where formerly high-flying executives are out of work.
“Here, the people earn millions of dollars with bonuses that are astronomical,” said Dorlen, who is also a spokeswoman for the American Psychological Association. “There is a demoralizing aspect to having a huge salary and a huge bonus and then having to look for a job that is going to pay much, much less.”
She added, “What I’m hearing is a terrible sense of betrayal, anxiety and people experiencing lots of stress.” That, in turn, can lead to an increase in unhealthy coping behaviors, such as an uptick in alcohol consumption, unhealthy eating and worse sleeping habits.
“
“That, in turn, can lead to an increase in unhealthy coping behaviors, such as an uptick in alcohol consumption”
Is there an alcohol ETF?
60K emergency fund? Most people don’t have that much in their 401K, checking and savings combined.
The risk is we over simulate and get inflation, if so equities and housing will come back and savings will get creamed.
We need some bank viagra to get the mojo in RE flowing again.
they have a sin index eft
Do bankers at bad banks eschew suits and ties and wear combat boots, leather jackets, nose rings and punk-style hair?
BC,
http://markets.kiplinger.com/kiplinger?Page=QUOTE&Ticker=VICEX
shore,
an i get a job there? sounds like a fun dress code!
want to stimulate the real estate market? Have a three year forgiveness period of capital gains on any properties, commercial, rental or residential, bought in that time period. Grandfather it in so that benefit can be willed to loved ones.
5 or 40 years, when that property sells, no capital gains tax.
lennie, #14
Here’s the method I used to get past sales.
Go to data universe’s assement & the sales pages
http://www.app.com/section/DATA
http://www.mycentraljersey.com/section/datauniverse01
search the street of the house you’re interested in. only type in a street name (might need to do county/city/town). Then sort the columns by price, date, whatever. Copy/paste the data you want for the homes that are comps to yours… i.e. don’t add the colonial when you’re looking at capes.
Put the info into excel & see how things measure up.
Here’s mine, colors indicate prior sales.
http://img.photobucket.com/albums/v89/fucttape/untitled11111.jpg
& I found this image Grim posted back in the day to use as perspective, along with the blue colored condo chart he posted.
http://img.photobucket.com/albums/v89/fucttape/untitled1112.jpg
I also agree with the immersion. Go to as many open houses as you can just to learn about houses. Learn the neighborhood thru all 4 seasons, weekdays & weekends, take a walk during the day or just sit in your car at night to listen for the traffic or airplanes.
& most important, ONLY contact the selling realtor when you’re ready to walk thru the door for a closer look.
Good luck!
….
Pfizer and the Credit Crunch
http://pipeline.corante.com/archives/2009/01/27/pfizer_and_the_credit_crunch.php
unmod
Bad banker to loan applicant: Yo, Mr. Jones. You can’t have the loan. But, if you pay me 100 bucks, you CAN keep your teeth.
““There is a demoralizing aspect to having a huge salary and a huge bonus and then having to look for a job that is going to pay much, much less.”
yeah, its called life baby!
now, clean up your soiled pants and put on your thinking cap and pull up your boots straps on.
last I checked, the IDF didn’t blockade Summitm NJ of all good and services and then throw white phosphorus on your head?
btw: IDF has double agents w/in Hamas.
but i will save that story for another day.
SAS
Re: Comments on Elizabeth
Andecotal on Elizabeth: My wife had to pickup a friend in Elizabeth and passed by the High School when the kids were being let out. They literally threw rocks at the car while she was driving by.
On the other hand, the downtown reminds me of Astoria in Queens, it has some nice little restaurants, and cafes, a few bargain clothing stores, etc. Unfortunately, its a much smaller downtown section, maybe 7 blocks at most.
I don’t understand why NJ is so down on commerce. If you want a town to thrive, why not setup real estate so that you can have little businesses running through the township for a good stretch, and get people walking through the entire town. Does suburban living mean no more walking?
“There is a demoralizing aspect to having a huge salary and a huge bonus and then having to look for a job that is going to pay much, much less.”
where was this boo hoos when the middle aged manucator operator lost their job?
they were told, “hey adapt”, “globalization”, “your a dieing breed”, “cheap china goods are good for the consumer”
where was their god damn bail out?
hey wall st… up your nose~
SAS
“want to stimulate the real estate market? Have a three year forgiveness period of capital gains on any properties, commercial, rental or residential, bought in that time period.”
Barbara,
Nobody is worried about capital gains tax in this environment. Better idea, you automatically receive free gap insurance upon closing. Protect you on the downside. Why can’t the wizards structure a new product, residential re puts?
& I found this image Grim posted back in the day to use as perspective, along with the blue colored condo chart he posted.
http://img.photobucket.com/albums/v89/fucttape/untitled1112.jpg
I’ve spent hours looking for that thing.
hey Clot,
its lunch time.
this one is on me, lets go…
:)
SAS
202. BcBob I like that idea too but I don’t agree that no capital gains wouldn’t get some people’s attention. I’d love to go in and buy, set up a trust for my kids knowing that in 30 yrs, 20+ % of the gains won’t be looted. I invest long term, never was flipper with stocks or real estate. There are others like me.
Barbara,
I get it. I thought you were touting a 3 year plan.
SAS,
Come on now WP isnt so bad, really its just a smoke screen and thats it. It might be a little bit irritating to skin or lungs, but its your fault for being in the smoke screen anyway….
Sarcasm off
3 yrs for the economy as a whole, generational or retirement for the individual buyers.
Barb (194)-
Will never happen. Gubmint’s aim is to impoverish individuals and destroy personal wealth.
I guess you get special treatment from Wells when you are rich. Does this work like the “Friend of Angelo” program?
Why aren’t they this generous with writing off mortgage debt?
From Bloomberg:
Wells Fargo Says Clients Hurt by Madoff Cost Bank $294 Million
Wells Fargo & Co. wrote off $294 million because Bernard Madoff’s alleged Ponzi scheme wiped out some of its customers and left them unable to pay their loans, said Chief Financial Officer Howard Atkins.
“This is not our exposure to Madoff, this is our exposure to customers of ours who had investments in Madoff,” Atkins said today in an interview after the company announced fourth- quarter results, which included the pretax charge tied to Madoff. “They’ve gone from being wealthy to not having any money,” Atkins said. He didn’t say how many were involved.
sas (203)-
I don’t eat lunch, but thanks.
grim (209)-
Boo f-in hoo.
Lee (199)-
“I don’t understand why NJ is so down on commerce.”
NJ is great with this kind of business. As long as the state can tax it for all it’s worth.
After they’ve extracted all the tribute they can pull, is NJ still interested? Not so much.
GM laying off 1600 already laid off workers. From MarketWatch:
GM to end jobs bank benefit next week
General Motors Corp. said Wednesday that, under the terms of its recent federal bailout, this week will mark the last for its jobs bank, a program that pays laid-off union workers their full salary even when they’re not on the assembly lines.
The jobs bank, despite covering only 1,600 workers, has emerged as a symbol of excessive union benefits at a time when the Detroit-based automaker is drowning in losses and struggling to survive the historic industry downturn.
Funny, no one is making fun of my buy bank bonds call as uncle sam is bailing them out and are flat-leaving the common shareholders, that 14% ten year comerica bond I bought is looking nice now. I still am kicking myself for not longing longing bank bonds in Tarp while shorting the stocks. Shorting SOV, NCC, MI and C while buying their bonds at 14% would have been a dream come true.
NEW YORK (Reuters) - Sovereign Bancorp Inc shareholders on Wednesday voted to approve the takeover of the largest U.S. savings and loan by Spain’s Banco Santander SA .
Ninety-six percent of Sovereign shareholders who voted were in favor of the roughly $1.6 billion merger, which is expected to close on Friday. Santander shareholders on Monday approved a capital increase to finance the purchase.
Shareholders of Philadelphia-based Sovereign are expected to receive 0.3206 of a Santander American depositary share for each of their shares. They may also receive ordinary Santander shares.
Yikes:
Please email this one one word to your Wachovia friend’s explanation of why he/she deserves a bonus (or a job even…)
FAIL.
I enjoyed that article yesterday on SoJo employment. I see it as a canary in the coal mine for the rest of the state. South Jersey never had any industry, just gubmint employees (mostly educational), Phila Naval Yard (closed) and sprawling retail. Growing up there we called it the “park and shop.” This is what the rest of the state will look like, gov employees swapping tax revenues.
Clott,
here you go, only $88K and has 100,000lb cargo capacity including trailer
Clot et al,
Any idea what the market is expecting come 2:15? I may want to open short positions but I don’t know what the “over under” is.
for link…
the hemtt
http://www.armyjeeps.net/vehicle1.htm
Shore Guy says:
January 28, 2009 at 11:16 am
With apologies to Nirvana:
shore: I LOVE THIS!
Bond of day only implies a 32% chance BAC will be out of existence before maturity.
BANK AMER CORP SUB INTNTS BE 5.25000% 02/15/2030 CALL
Price (Ask) 68.075
Yield to Worst (Ask) 8.544%
cooper says:
Mortgage Q- can you refi if you are currently paying PMI?
Why not? You are paying off an old loan with a new one. If the new mortgage exceeds 80% of the current appraised value of your home, you will take out a new PMI policy on the new loan.
“The jobs bank”
JB [213],
Is that a tranche or a derivative of a bad bank?
If we are going to create a “bad bank” anyway, perhaps this bad bank should have a “bad mortgage origination division”.
Rather than the Fed attempting (with mixed success) to drive down mortgage interest rates indirectly through purchasing mortgage back securities & long dated treasuries in the open market, the “bad bank” could administratively set a target 30 yr. fixed mortgage consistent with housing price stability.
Why pretend there is still a free market?
#217 - Which thread was it in? I must have missed the article.
226. Now I can;t remember if it was yesterday or the day before. Grim posted it as a thread
I lived near Canal Point back in the ’80s. I moved to PA in ‘89, and thank Ghod for that!
Canal Point was an odd mix of good and bad. The good: pretty nice condos *very* close to Princeton NJ; next to Raritan Canal State Park; convenient to shopping. The bad: convenient to shopping meant “practically trapped behind gobs of commercial real estate along Route 1″, terrible traffic.
Renting [225],
We have already created a bad bank, the fed.
#227 - Found it, thanks!
We killed off another magazine today.
RIP Domino
231. Gator
its my fault. I abuse B&Ns magazine section buy reading all my favs then leave without buying. I do buy an overpriced latte, however
216. Yikes:
Please email this one one word to your Wachovia friend’s explanation of why he/she deserves a bonus (or a job even…)
There are many of us that work at financial firms in expense divisions - IT/Legal/Compliance/Operations/etc.
Some also worked 80+ hours per week with the expectation of a bonus. Should they receive a bonus? I think so. Will they get it? Yes - but probably not what they hoped for.
gator, is the ‘tax assessed’ # easy to obtain? i’d love to find out what our new place was assessed for last year.
buy = by
Yikes - I only know where to find it online in NJ. Sorry!
Barbara - We forgive you. It’s the advertisers and the economy that killed it.
Not surprising that a shopping magazine for the home will not survive this economy.
[128] clot,
If you cash out everything, you don’t pay the expat tax. It is only on unrealized gains, and you just realized them.
If you drive south until you can’t anymore, you get to Tierra del Fuego. Then you would be in either Chile or Argentina, and in a really sucky part, no less.
I, for one, am working on a plan to “expatriate in place.” At some point, it will mean engaging in tax evasion, but the idea is to push off the realization event so far into the future that by the time you have a realization event, the country would have crumbled and there is no enforcement.
BTW, the compound idea is a part of that. The only downside is that it represents an asset that can be reached and taxed.
#223 X-Under
thx for ur answer, I didn’t phrase it correctly- let’s say you bought in early 06 ( I know ur f-ed anyway), borrowed %100 and are underwater- is there a line at which the bank will not refi due to lack of equity/negative equity (holding PMI)?
Who likes Arizona? I’m betting the house on the coin toss, can’t fix that… I hope
RE: 233
I’m with Yikes on this one. Nice try at tearing us up though.
What you fail to mention is that your base salary, sans bonus, is probably head and shoulders above that of your expense-division peers in other industries. Where is their outlandish bonus each year?
You deserve to get paid market rate for your professional services. What you’ve grown to expect however is the looting-the-country-and-spread-the-wealth rate.
Frankly, the only reason why expense divisions receive a bonus is to keep them complacent while the BSD’s (that’s big swinging dyks) at top rob everyone blind.
Collectively, your employer screwed up. Therefore, FAIL for you and FAIL for the remaining departments at whatever carcass of a company youre currently employed at.
You guys are a farking liability at this point. So stop your effin whining, we all have car loans to pay off.
cooper
Arizona = bad,
Serious water supply issues and only going to get go down hill, their aquifers are toast and the colorodo is tapped out
CFA on track to become meaningless?
From Bloomberg:
CFA Pass Rate Fell For First Exam, Institute Reports
From Investment News:
Merrill lays off hundreds of short-tenured advisers
Merrill Lynch & Co. Inc. yesterday gave pink slips to hundreds of financial advisers in its wealth management unit who were hired within the last two years, according to Selena Morris, a spokeswoman for the former Wall Street giant.
…
About six weeks ago, Merrill began to lay off close to 400 advisers in its training program amid industry criticism that Bank of America was overlooking the value of keeping up-and-coming brokers (InvestmentNews, Dec. 17).
cooper says:
January 28, 2009 at 1:33 pm
#223 X-Under
thx for ur answer, I didn’t phrase it correctly- let’s say you bought in early 06 ( I know ur f-ed anyway), borrowed %100 and are underwater- is there a line at which the bank will not refi due to lack of equity/negative equity (holding PMI)?
The bank will appraise your house and approve up to a certain % of that value. In NJ at my bank that’s now a max of 90%. It was 95% a year ago. If you can pay off your loan with what 90% of the value is, you’re good. If not, you need to bring a check to closing to pay the difference. Since you owe more than it will appraise for you will have to make up the difference with your own money.
“Some also worked 80+ hours per week with the expectation of a bonus.”
[233],
Some work 80 hrs a week on commission. If they sold nothing, do they deserve a bonus?
240-
1. “What you fail to mention is that your base salary, sans bonus, is probably head and shoulders above that of your expense-division peers in other industries.”
Underlying assumption “probably” isn’t true without the bonus.
2. “You deserve to get paid market rate for your professional services.”
Couldn’t agree with you more.
3. “What you’ve grown to expect however is the looting-the-country-and-spread-the-wealth rate.”
Another assumption on “expectations”. Not ALL IBs accepted TARP…
“Frankly, the only reason why expense divisions receive a bonus is to keep them complacent while the BSD’s (that’s big swinging dyks) at top rob everyone blind.”
Disagree - see 2.
3. “So stop your effin whining, we all have car loans to pay off.”
Who’s whining?
245 - Agree BC.
Have you guys seen this CNN Money article about statements made by CEO’s about the health of their company?
Sorry if it has already been posted. There are about 13 citations here about frauding executives.
Why Wall Stree could go to jail:
http://money.cnn.com/galleries/2008/fortune/0812/gallery.parloff_quotes.fortune/3.html
“If we believe the [Bear Stearns internal report is] ANYWHERE CLOSE to accurate, I think we should close the funds now…. If [the report] is correct, then the entire subprime market is toast.” — Tannin in internal e-mail to Cioffi on April 22, 2007
“So from a structural point of view, from an asset point of view, from a surveillance point of view, we’re very comfortable with exactly where we are.” — Tannin to investors on April 25, 2007
Time to Armageddon: Two months
After two funds collapsed, portfolio managers Ralph Cioffi and Matt Tannin were charged by Brooklyn federal prosecutors with securities fraud. They have pleaded not guilty
#233-is this re re?
“There are many of us that work at financial firms in expense divisions - IT/Legal/Compliance/Operations/etc.”
Congratulations. What’s your point?
Moving on…
“Some also worked 80+ hours per week”
WAAAAA WAAAAAA
“with the expectation of a bonus.”
LMAO, you should have violins playing in the back round
“Should they receive a bonus? I think so. Will they get it? Yes - but probably not what they hoped for.”
But not what they hoped for? Are you kidding? So in your world if you put in the time, regardless of the outcome, you deserve a bonus? Solely based on your expectations and time invested people should be rewarded… Good plan A**FARMER!
Let me guess, your looking for MORE bailouts…
your suggested new handle’s-NotBlindJustStupid
Meatbaton
PastramiCurtain
going to anger management now thx Jerk*FF
where’s my F-ING x@nax!
BC - I assume that was rhetorical.
If a corporate attorney worked those same hours to dismiss a multi-million dollar suit, should they get some bonus?
plume (238)-
Ergo, I will take my chances in Tierra del Fuego. Which is beautiful, BTW.
“The only downside is that it [Plume's slice of Branch Davidian heaven] represents an asset that can be reached and taxed.”
good news. congrats teachers.
and i don’t wanna hear some of you yap your yaps about teachers being overpaid.
they work hard, and have to put up with your stupid johnny & your false sense of superiority.
if you wanna yap about something, yap about the Hg contaning Pepsi you just drank.
“Roxbury teachers get nearly 20 percent raise”
http://tinyurl.com/cd9dwl
-The school board in the Morris County community has approved a four-year contract that will increase salaries by nearly 20 percent.
-The new base salary for Roxbury teachers is $40,417, up $917 boost from $39,500.
LMAO - 249 - wasn’t speaking for myself. I work in IT supporting attorney’s that put in those hours. I am not expecting a bonus but I would hope that they get one.
my firm also did not accept any TARP funds in case you missed that comment
my firm also did not accept any TARP funds in case you missed that comment
“Senator Warns White House Will ‘Create Crisis’ and ‘Panic’ to Push Stimulus”
http://tinyurl.com/bvpjoa
Also have a few suggestions for your new handle, Cooper
“and i don’t wanna hear some of you yap your yaps about teachers being overpaid.
they work hard, and have to put up with your stupid johnny & your false sense of superiority.”
I’m a teacher myself, at a certain big state university in this state…
The sad reality is, teachers do have to put up with a lot bull crap. But the other sad reality is, teachers aren’t doing their jobs. It’s evident in all types of standardized tests and student performance measured at the national level and global level. It’s pointless to play sides against each other. Both parents and teachers are the problem, as is the system as a whole. The thing that a lot people overlook is that today’s fresh batch of teachers is the stupid Johnny that you were complaining about 4 years ago. Without any reform on all ends, our teachers will get worse and their students will as well and it is a never ending spiral. Don’t believe me? We’ve steadily been doing in for the past 30 years and we’ve gone from 1st place to 25th place. But don’t worry, we form a “National Honors Society” to tell everyone that our children are learning.
My firm didn’t accept TARP either, what’s your point?
You firm however would have collapsed had TARP not been offered to its peers. I don’t think many here will dispute that since it’s all confidence game.
Keep pecking at the keyboard just like the rest of us mmm’kay? I don’t think this is the proper venue to rationalize ill gotten gains that my kids will have to pay for in some form.
sas (256)-
O and his crew will get their way. When the money is stolen and gone, we will then enter a severe depression.
Got ammo?
255- I did miss that- I vented and feel drained. Its not that I have anything against IT guys but those comments, going to cry it out-
over
you guys are funny, some firms did just fine last year thank you very much. Unless you personally contacted the GA, BOD, CEO, CFO, CRO or COO to express your concerns last year and provide advice on how the company could sucessfully avoid this financial crisis you gotta take it like a man, just cause you sat in your office till 8pm every night while rome burned you should not collect cash. 300,000 employees at Citi and how many called their financial hot line to report their concerns?
SAS,
dont worry so much about the Hg as the benzene. then benzoic acid in sodas turns into benzene a known carcinogen and somewhat nasty chemical. most sodas will test positive for it if tested.
Ot: benzene was used as a household cleaner in the late 1800’s and early 1900’s as it smelled nice and was a great solvent. oops
From the FOMC:
Press Release
Federal Reserve Press Release
Release Date: January 28, 2009
For immediate release
The Federal Open Market Committee decided today to keep its target range for the federal funds rate at 0 to 1/4 percent. The Committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.
Information received since the Committee met in December suggests that the economy has weakened further. Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending. Furthermore, global demand appears to be slowing significantly. Conditions in some financial markets have improved, in part reflecting government efforts to provide liquidity and strengthen financial institutions; nevertheless, credit conditions for households and firms remain extremely tight. The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant.
In light of the declines in the prices of energy and other commodities in recent months and the prospects for considerable economic slack, the Committee expects that inflation pressures will remain subdued in coming quarters. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.
The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. The focus of the Committee’s policy is to support the functioning of financial markets and stimulate the economy through open market operations and other measures that are likely to keep the size of the Federal Reserve’s balance sheet at a high level. The Federal Reserve continues to purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand the quantity of such purchases and the duration of the purchase program as conditions warrant. The Committee also is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets. The Federal Reserve will be implementing the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Committee will continue to monitor carefully the size and composition of the Federal Reserve’s balance sheet in light of evolving financial market developments and to assess whether expansions of or modifications to lending facilities would serve to further support credit markets and economic activity and help to preserve price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Dennis P. Lockhart; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred to expand the monetary base at this time by purchasing U.S. Treasury securities rather than through targeted credit programs.
then benzoic = the benzoic
Ben (258)-
If we weren’t a society of morons, Washington would already be burned to the ground.
“If a corporate attorney worked those same hours to dismiss a multi-million dollar suit, should they get some bonus?”
blind,
Should the opposing attorney, who’s working on on a 30% contingent fee, receive a bonus?
Nicolas (248)
I was mentioning that when they were first doing that back in 2007. They had to be out of their minds. At the minimum they didn’t consult their attorneys. You make nebulous statements, not black and white one’s that you know you are going to need to refute a week later.
The Fed should do something really bold, like taking the FFR negative.
Hey, does it really matter anymore? We’re just rearranging the Titanic’s deck chairs at this point.
“The Federal Open Market Committee decided today to keep its target range for the federal funds rate at 0 to 1/4 percent.”
BC - yes - if they won the case and received a settlement.
god bless america and free market capitalism, the mustard seeds are planted and growing, Fed said recession over by fall!!!!! I guess that means getting your whole 16.5K 401K match in by Labor Day and big bonuses come 2010!!!!!!!!! Better order my 2011 Porsche today before they are all gone.
“Hey, does it really matter anymore? We’re just rearranging the Titanic’s deck chairs at this point.”
now that’s funny
John (271)-
Where are you having them install the machine gun?
“Hey, does it really matter anymore? We’re just rearranging the Titanic’s deck chairs at this point.”
I like that! Good one.
“BC - yes - if they won the case and received a settlement.”
blind,
That wasn’t my question, don’t twist it. If the attorney, on a 30% contingent fee, loses the case, does he/she deserve a bonus?
Bankers’ Worst Nightmare Materialize
“Bankers’ worst nightmare is the unemployment rate climbing toward 10%, a level at which credit losses could balloon unpredictably because of high defaults among people with previously strong credit histories…”
http://globaleconomicanalysis.blogspot.com/
Don’t know but going to trading floor for a meeting, at least they will be smiling today so I don’t need a gun.
Clotpoll says:
January 28, 2009 at 2:24 pm
John (271)-
Where are you having them install the machine gun?
John,
Didn’t they say it would be over in the Fall of 2008?
“Should they receive a bonus? I think so. Will they get it? Yes - but probably not what they hoped for.”
…..
This is the same mentality giving little trophies to all kids who play little league, even if they come in last place. In the financial world, you can bankrupt a company, get TARP funds and get a bonus just because you went to work every day to lose more money.
Funny thing, in every church I have ever been in, there is no painting of Jesus holding a big stack of Benjamins with the quote, “Only thy bankers deserve to be paid no matter what thy profit may be made”.
275 - BC - No
Ben & Kettle,
check out the reading about the edu systems by bloke i know…John Taylor Gatto.
SAS
Just heard someone on Bloomberg say that we should use the remaining tarp funds, $350 billion, to capitalize a “bad bank” and allow it to use 10x leverage to purchase bad assets.
Said we could get trillions in bad debt of balance sheets.
God help us all.
SG [#80] Hudson Foreclosure Auction link
Thanks for the link. I looked up the history on a few of the Union County properties and based on the amount of time the banks have been holding these homes before they are finally going to auction, we have a solid year and half or more before the sh*t even remotely hits the fan.
The most recent date I could find was a April 2008 date but most of the banks have had that REO since 2007.
2007!!!!
Somebody over at CR made a good point.
Since when are long term treasuries toxic assets?
Or is somebody keeping a secret?
From Jalopnik;H2 production halted until “at least” March.
Please let HD be next.
Isnt the entire concept of a bonus in 99.9% of the world that you receive extra compensation for going above and beyond and coming out successfully.
The bankers tried real hard, but sorry you failed go home……..
“The School Board in Loudoun County, where the recession might be having a greater effect on teachers’ wallets than in any other Washington area jurisdiction, late last night approved a budget of $747. million that would freeze teacher salaries.
The spending plan, which passed by an 8 to 1 vote, would omit cost-of-living and seniority raises to save $31. million. It would be the second straight year that Loudoun teachers have gone without a cost-of-living increase. The other type of raise, for rising seniority, is also known as a step increase. The no vote came from John Stevens (Potomac).”
http://loudounextra.washingtonpost.com/news/2009/jan/28/school-board-considers-budget-plan-freezes-teacher/
Mediabistro reporting that Readers Digest is cutting 300, and cuts may hit the Pleasantville, NY location.
EXCLENT!!!! No MTM for Govt and gov can borrow at 2%, sounds like a cash cow, should be 100x leverage.
grim says:
January 28, 2009 at 2:45 pm
Just heard someone on Bloomberg say that we should use the remaining tarp funds, $350 billion, to capitalize a “bad bank” and allow it to use 10x leverage to purchase bad assets.
Said we could get trillions in bad debt of balance sheets.
God help us all.
Grim 288 - Not a good day for the publishing industry.
Ok, so what would the difference be in the following two scenarios:
1) Treasury issues new debt, Fed prints new money, Fed buys outstanding debt. Out of one pocket, into the market, into the other pocket.
2) Treasury doesn’t issue new debt at all, instead transfers it directly to the Fed, Fed transfers new dollars right back. Straight from one pocket to the other, skipping the market.
JPMorgan saying the average equity in outstanding US subprime loans is below 5%.
http://image.minyanville.com/assets/FCK_Aug2007/File/Lisa/AJ%20chart%203.jpg
The average US Alt-A loan has negative equity. This is a HUGE deal.
http://bitcast-a.v1.iad1.bitgravity.com/minyanville/assets/FCK_Aug2007/File/Lisa/AJ%20chart%201.jpg
Ref 291: in both scenarios the Treasury is monetizing debt, increasing the money supply. Weimar Republic here we come.
#292 - Means that few Alt-A loans can be refinanced in the current market without the owner paying in cash to do so.
“AOL lays off 10% of workforce in cost-cutting move”
http://tinyurl.com/dm6j53
-AOL LLC is cutting 700 jobs
Grim,
just an off the hip thought,
1) Treasury issues new debt, Fed buys outstanding debt. Out of one pocket, into the market, into the other pocket.
The difference is delayed hyperinflation. When the treasury bypasses the normal market channels and goes straight to the fed you run the printing presses in overdrive as there is no real limit to how much you can print ( minus a currency collapse). Since the market no longer dictates the price of government debt foreign investors immediately being pulling out. and its the beginning of the end of the us dollar as a significant currency. at some point all of those printed dollars enter the market in one way or another and inflation explodes. but the effect would be delayed as the fed could keep the excess dollars locked up. the wild card is international response.
Scenario 2 still has a mechanism for the market and investors to find the real market price and hence investors stay ( more or less) in US treasuries. the dollar is still a more or less functional currency under this model.
My 2 cents could be way off….
#292 - The average US Alt-A loan has negative equity.
This just keeps getting better.
#294 - It also means no MEW. That was, what, $600b in ‘05 and ‘06? $400 in `07?
#297 - Even if you net out Florida, California, and those middle states, average equity is below 10%. Still a very tough level at which to refinance right now.
Talk about paradigm shift, no Saturday mail, or worse, no Tuesday mail.
From the AP:
Postmaster General: Mail days may need to be cut
Massive deficits could force the post office to cut out one day of mail delivery per week, the postmaster general told Congress on Wednesday.
Postmaster General John E. Potter asked lawmakers to lift the requirement that the agency deliver mail six days a week.
Faced with dwindling mail volume and rising costs, the post office was $2.8 billion in the red last year and, “if current trends continue, we could experience a net loss of $6 billion or more this fiscal year,” Potter said in testimony for a Senate Homeland Security and Governmental Affairs subcommittee.
Total mail volume was 202 billion items last year, more than 9 billion less than the year before, the largest single volume drop in history.
And, despite annual rate increases, Potter said 2009 could be the first year since 1946 that the actual amount of money collected by the post office declines.
“It is possible that the cost of six-day delivery may simply prove to be unaffordable,” Potter said. “I reluctantly request that Congress remove the annual appropriation bill rider, first added in 1983, that requires the Postal Service to deliver mail six days each week.”
If the change is made, that doesn’t necessarily mean an end to Saturday mail delivery. Previous studies have looked at the possibility of skipping some other day, such as Tuesday.
#298 - And not enough to make up for the lack of income growth, resulting in personal spending cutbacks (didn’t Amex report a %79 fall in revenue?) and thus deflation.
Nothing the Fed can do.
301st!
Hmmm,
Doesn’t seem to say anything about having to have above average performance. Maybe we should contact Merriam-Webster to complain.
http://www.merriam-webster.com/dictionary/bonus
Bonus: Something in addition to what is expected or strictly due: as
a: money or an equivalent given in addition to an employee’s usual compensation
b: a premium (as of stock) given by a corporation to a purchaser of its securities, to a promoter, or to an employee
c: a government payment to war veterans
d: a sum in excess of salary given an athlete for signing with a team
Tosh,
While there are some arguments that the velocity of money is a limited tool at best, in its simplest for it is the root of the problem for the FED and treasury. They can print all they want but if the cash only get locked up in vaults and doesnt actually flow through the economy then it has no effect.
This of course ignores the entire solvency issue which is the core problem
Big deal, I remember when there was no saturday delivery of mail. who needs it.
Grim (299) -
I think they have already begun this program stealthily. Anyone else get their online BlockBuster videos delayed?
kettle and clotpol have trouble understanding the financial markets as they are using their brains and for some ever crazier reason they think most people have a brain.
Dog and pony show not breaking 8,500.
Opened SRS, QID, FAZ.
I have three big P.O.s within 3 miles of each other. Mail volume has decreased. Close two out of the three, increase automation, cut back on employees. The End.
Barb,
See: 306
:)
I called my father on his 77th birthday on Tuesday.
He said that Bank of America called two months back and told him (in his own words), “that if you use your card one more time we are going to raise your rate from 7% to 14%”. This is the first time I have heard of a CC company calling customers to stop them from borrowing more money.
I asked him how much he had borrowed. 35,000-40,000$ was the answer. He shovels snow and rakes leaves for income.
Sigh
“Just heard someone on Bloomberg say that we should use the remaining tarp funds, $350 billion, to capitalize a “bad bank” and allow it to use 10x leverage to purchase bad assets.
Said we could get trillions in bad debt of balance sheets”
So, we use hundreds of billions to leverage the purchase of trillions, that may have little to no worth? Are we that fricken stupid?
#303 - Agreed.
#306 - kettle and clotpol have trouble understanding the financial markets
No they don’t. The game is done. The consumer’s ability to absorb new debt has reached (and passed) the point of saturation. They can’t acquire any more debt and no longer have the means even if they wanted to.
There is one way out, pay people more. This won’t happen though. We are seeing active wage deflation; either through layoffs or cutting back on hours/bonuses/salaries. The end game is certain.
“Opened SRS, QID, FAZ.”
FAZ!! - Damn, you have guts of steel :)
” Anyone else get their online BlockBuster videos delayed?”
its not the mail.
a little trick Blockbuster & Netflicks do to frequent turnover users…they delay in mailing you.. your new movies, otherwise, they are lose money.
but for a guy like me, who has about a que of 10 movies, and it takes me about 2 weeks to watch a flick, i get my movies next day.
SAS
What an odd time… The politburo and Pravda tell the truth and Radio Free America pumps propaganda all day long.
From MarketWatch:
Russia’s Putin: ‘Financial system has failed’
“He shovels snow and rakes leaves for income”
doing this at age 77, your playing with a heart attck. no?
as for me, my ticker is a-ok.
but my back would hurt.
SAS
“Elected officials are the only human beings in the world who are supposed to take large sums of money on a regular basis from absolute strangers without it having any effect on their behaviour” Barney Frank, Congressman.
At least the swiss are on the right track:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aat3AmlPVS8Q&refer=home
UBS AG, the European bank with the highest losses from the credit crisis, cut its bonus pool for 2008 by more than 80 percent.
https://www.godaddy.com/gdshop/registrar/search.asp?se=%2B&app%5Fhdr=&ci=574
gonnna start my own blog!
Yeah sas,
He is made of sterner stuff then I am. At 77 he lived through the first depression. I asked him for tips on how to survive this one. He said some seriously funny sh!t too. His father was a farmer during the depression.
“Dad didn’t have enough money to feed the pigs through the winter. So rather then see them all die of starvation they made the decision to sell them. Market was so bad that all he got was one offer for 50cents a head for the lot of them. (25 pigs total)
After he had sold them the man ran off to get his truck and Mom came out of the house and said ‘did you even save one to eat the garbage?’ Thats when dad paniced and grabed one of the pigs and hid it in the hayloft under the hay. When the man returned with the truck he was so happy to have gotten such a deal that he didn’t notice that there was one pig missing. Turns out the pig was female and we bred her in the spring. Thats how we got back into the pig buisness.”
So Dad, your telling me the way to survive a recession is to cut your losses and steal from the person buying the deflated assets?
“Well I guess you can look at it that way, yeah.”
More Putin at the WEF in Davos.
Putin: In the last few months, virtually every speech on this subject started with criticism of the United States. But I will do nothing of the kind.
I just want to remind you that, just a year ago, American delegates speaking from this rostrum emphasised the US economy’s fundamental stability and its cloudless prospects. Today, investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months, they have posted losses exceeding the profits they made in the last 25 years. This example alone reflects the real situation better than any criticism.
The time for enlightenment has come. We must calmly, and without gloating, assess the root causes of this situation and try to peek into the future…
http://www.weforum.org/pdf/AM_2009/OpeningAddress_VladimirPutin.pdf
grim [#299]
What is this Post Office that you speak of?
Really, who gets physical mail anymore?
Tree Killers!
“What an odd time… The politburo and Pravda tell the truth and Radio Free America pumps propaganda all day long”
yout forgetting an old saying:
violence is to a dictatorship as propaganda is to a democracy.
SAS
I’m a noob here but I’ve been lurking on this blog for months, almost a year, reading everything very, very carefully. My wife and I are old Union County residents but live now in Brooklyn and are thinking of moving back to Joyzee with our 6 week old daughter.
I just want to thank you, Grim, for this blog and everyone’s comments. It really is incredibly fascinating to watch this real estate market spiral so wildly out of control and read all the comments. (Perhaps the reason I find it fascinating is b/c I have no stake in real estate.) Thanks to everyone!
Sean,
While Putin is certainly no saint, he is very cold and calculating. For that i can respect him as a leader of sorts. Perhaps a somewhat brutal one, but much less so then many that we support actively.
SAS
Tell us about the time you worked with putin
#276
“as unemployment exceeds 9%, bankers think charge-offs will start to increase by more than the increase in unemployment. The reason? A high rate could cause an unprecedented wave of defaults among prime borrowers, who tend to have bigger loan balances.”
high rate of unemployment, declining comp among prime borrowers is a huge issue that dwarfs subprime
I used to work for United Parcel Service repairing their 13,000 prefered customer shipping computers around the Metro DC area.
I once asked why I had to put my letter into a huge envelope and spend so much just to send it 3-day ground. I mean, the post office gets your mail there in three days and it only cost cents. There was an uproar among the managers. It seems that they are federally prohibited from usurping the monopoly that the government has on ground mail. There are minimum rates that they can charge for sending mail back and forth.
They all agreed that if the US Postal service was privatized that they would be able to deliver the mail…much cheaper.
US Postal service is a federally protected monopoly.
Nicholas, not true and true. It is a felony for anyone other than the post office to put a letter in your mail box and they will enforce that. But technically, it is illegal to fax or email a letter and they don’t enforce that one.
“US Postal service is a federally protected monopoly.”
If you live in Podunk nowhere, no private company will deliver your mail.
superbowl tickets are $500 last minute if anyone wants to go
Grim - do you have any recent stats on prime borrower defaults since Alt-A is a tier above sub-prime?
Starbucks is cutting 7k more jobs.
Closing 300 more stores, as well.
comrade nom & clot:
water purification for your compound:
http://www.aqua-sun-intl.com/products/pwp-c.htm
been investigating this for awhile since Katrina.
Post Office has a nice history though. It would be a shame to lose it completely.
330.
Victoria,
If you live that far in podunk, you get a P.O. box in the nearest town and pick up mail with your supplies.
Next up: Credit Card debt
“Even as the subprime mortgage fallout continues its ripple effect across the economy, fiscal storm-watchers have an eye on the next gathering cloud: nearly $1 trillion of consumer credit card debt. Defaults are up; in November, the percentage of charge-offs — money card issuers give up on ever collecting — rose to 5.62 percent. According to some economists, that percentage could double before this current downturn is over. The bearish RGE Monitor predicts the default rate could rise as high as 13 percent, eclipsing the previous high-water mark of a 7.85 percent in the first quarter of 2002.”
http://washingtonindependent.com/26372/house-of-cards
Change we can believe in:
http://www.nydailynews.com/news/politics/2009/01/28/2009-01-28_hey_bam_thats_not_the_door.html
Wednesday, January 28th 2009, 3:07 PM
It looks like President Obama hasn’t gotten acquainted to his White House surroundings. On the way back to the Oval Office Tuesday, the President approached a paned window, instead of the actual door — located a few feet to his right.
Looks like the trillion dollar pork laden crap sandwich a.k.a “stimulus” will go through the house today. Another sad day for the future of this country.
lolwhut?
http://www.nalc.org/postal/reform/summary.pdf
Private express statutes: Minimum charge required for private carriage of
addressed letters (those covered by the postal monopoly) is changed from “$3 or double postage, whichever is greater,” to at least six times the rate then currently charged for the first ounce of a single-piece First-Class letter. Exemption from the general prohibition on private carriage is automatic for letters weighing at least 12.5 ounces and may be extended to other types of letters by USPS regulation.
“Victoria,
If you live that far in podunk, you get a P.O. box in the nearest town and pick up mail with your supplies.”
Ocean Gate, on the south side of the Toms River where it meets the Barnegate Bay has a post office but no mail delivery. One must stop in at the P.O. in order to get one’s mail.
SAS 198
Can I join your krav maga classes.. :)
sl
Re: Investment Bankers comp
If we are talking the bankers - not the support staff, IT, etc. but the revenue producers with the client relationships then bonuses this season for that select group make perfect sense regardless of the firm performance.
If a decent MD can control $20m or so of revenue (with better than a 60% profit margin before his cut) then it is illogical to not pay him. Someone else will. I know there will be all sorts of skepticism, but down markets like these are where the IBs go shopping for the talent they want because they know even if other firms are trying to protect their stars they will still be giving them a number lighter than the individual’s revenue production warrants.
The people who get screwed are those progresively further away from the revenue and client relationship - a hot shot SVP gets a bite taken out; run of the mill VPs and especially just out of B-school Associates are basically disposable. They can get zeroed out and if they leave the firm, who cares, no top line impact. Same thing for a second string ECM guy. Client doesn’t even remember his name three weeks after the deal - zero.
Apply it to your own businesses, you’d be crazy not to write that guy a check for $2m, $4m, or higher to come over. That’s the bonus battle going on, and one that occurs every year as there are always divisions/individuals that outperform the firm.
Same thing applies to the prop traders and anyone else that can control that revenue first hand.
Ethical Assessment Examination for the Banksters out there:
Instructions: Please read the questions thoroughly, and circle the letter of your chosen response. And NO CHEATING!!
1. A mortgage broker known to you only as “Big Mo’” offers you a package of loans for your securitisation operations. Your wife is high maintenance, and your kids’ Exeter fees are due next week. Select the statement that best identifies your first sentiments
(a) “AIG will insure it for WHAT?!?!”
(b) The spotty kid at S&P says they’re AAA.
(c) “How close are we to our budgeted P&L”
(d) “Who did the property valuations, how were they compensated, what percentage of the purchasers actually have jobs, who will these be on-sold to, and what representations will be made?”
(e) “Has anyone aggregated the retrospective underlying values over the past decade?
2. The Head of Investment Banking has asked the Director of Research to ask the Senior Energy Co. Analyst to ask you prepare an upbeat research report on “Blackhole Oil Exploration Ltd.”, a company you’ve discovered is owned by the brother-in-law of the IB Head’s sister, and which his wife is an interested party. Which statement best summarizes your sentiments:
(a) “Hellooooo promotion!”
(b) “Will my Porsche be “Fire-engine red” or or Silver like my words?”
(c) “This will make a great short for my brother’s Hedge Fund - let me call him now”
(d) “Ummmm, wasn’t this the guy who received the Wells Notice from the SEC?
(e) “The Peace Corps in Bangui or Ouagadagu would be a welcome change”
3. For your summer job, you have secured a gig selling ice cream on a three-quarter-mile-long beach. The position is “mobile” meaning you get to set-up whereever you want and you get a share of the profits above the cost of the goods. There are two other ice-cream sellers from other competing companies also permitted to sell on the beach. Where would you choose to locate?
(a) adjacent to the other ice cream sellers in order to collude and fix the highest tenable prices with the minimum amount of walking.
(b) nearest to the hippies to whom you might flog some higher-margin “weed”
(c) nearest to the group of sorority girls sunbathing by the entrance
(d) closest to the crowds to achieve highest volumes
(e) keep moving to stay fit and provide the best service for potential customers
4. You are a wealth manager. You discover that even when you’re late putting in buy or sell orders for certain mutual funds, your orders are accepted - even AFTER the cutoff time which is meant to protect existing investors from being predated by new investors taking advantage of market-moving information. What is the best course of action?
(a)Set up a hedge fund to exploit the opportunity until it goes away.
(b) take advantage of the loophole infrequently, but in a big way, so you can profit but at the same time maintain plausible criminal deniability.
(c) trade frequently and in smaller size so as to not attract undue attention, but allow you to profit continuously.
(c) Anonymously inform the SEC to assuage your conscience, while simultaneously doing it from time to time.
(d) Just say No!, but don’t be a whistle-blowing sissy.
(e) Call a reporter at the Wall Street Journal with a scoop.
5. You are a small-cap fund manager running a reasonably large-sized fund with a 60-odd stock portfolio. Many names are less-liquid and trading activity definitely impacts the price due their small cap and prodigious front-running by market-makers and micro-structure “arbs”. Every month, quarter and year-end, you observe that many of your holdings, being value or contrarian plays, suffer from getting “whacked” and smashed into these critical valuation periods, causing your performance to be elevated during mid-month, but unnecessarily hurt during the times that matter causing your firm to lose bragging rights, and you, to lose performance bonus. Do you:
(a) use your power to buy more and attempt too offset the selling pressure
(b) ramp other stocks you hold to offset the negative performance of the ones being smashed
(c) Leave large “market-on-close” sell orders with several of your brokers and then cancel them 25 minutes before the close.
(d) Join the Pat Byrne Anti-Short-Selling Holders Organization for Long Equity Speculators (acronym =….)
(e) Don’t sweat. Be content with being honest and poorer for it.
6. As a retail stock-broker you are paid a percentage of your customers transactions, and trailing commission of varying degrees depending upon what you flog and at what price. Your mother-in-law, who is objectively an unpleasant person, is looking for a conservative large-cap growth fund. You have 25 different funds to choose from. What do you recommend to her?
(a) The Smithfield New Century Growth which has bottom quartile performance over ten years but a 5% load of which you get 2.5 PLUS a 1% trail ad infinitum.
(b) The Fidelity Benchmark-Hugger Fund which has a reasonable trail, AND 50th percentile performance, for which your mother-in-law cannot find additional fault with you for in the future.
(c) A Fairfield-Sentry (Note: her house is fully-paid off and won’t need to move in with you)
(d) You offer to manage it yourself (note: equal to 3 or 4% per annum in self-generated commissions)
(e) Vangaurd Windsor no-load 30bp mgmt fee, low expense ratio, but no trail.
(7) You are a senior trade-executor at a large buy-side money-manager. Your trades are often of significant size, and as such have enormous value to anyone apprised of them such as executing brokers who can front-run them or quietly pass the information to other hedge fund clients who pay premium commissions to the broker precisely for such information. Which statement best summarizes how you know your broker is being honest with your orders?
(a) He was a fraternity brother. He would NEVER do that.
(b) He allocated me lots of Hot Issues during the boom-times.
(c) He scored Miley Cyrus tickets for my daughter’s birthday party in the Deluxe Box and even arranged pony rides for them IN THE BOX!.
(d) I’ve got dirt on him like the photos from that time he showed-up with those Russian hookers…
(e) We have our own post-trade analytics that factor-analyze the outcomes.
(8) Imagine you are a Fund-of-Funds manager, and you have the good fortune to get in early on “great” manager who has demonstrated stable returns and who is so amicable and magnanimous that he doesn’t even charge management or performance fees despite his libor + 600 record. Even though you originally invested in good faith, you begin to suspect that all may not be as it seems. However, you get a 5% load on every new investment, and seemingly quite “real” management and performance fees of $182,000,000 PER YEAR. Yes, PER YEAR!!, for doing precious little. What is the best course of action for your suspicions?
(a) Never admit to suspecting anything. There is a statute of limitations and they won’t be able to take all of it from you.
(b) Act surprised. Make sure you’ve the BEST lawyer on retainer.
(c) Payout as much as possible to family and friends as payroll for work undertaken. It will be hard to get that back.
(d) Kill the Golden Goose, and insure, at least, you won’t go to the Big House.
(e) Seppuku with one of the samurai swords you’ve been collecting
9. As the Senior Manager of a large and highly profitable debt trading group within a bank, it is November and you discover an error in one of your traders pricing models and the accounting system that tracks it, causing it to overstate profit by a large margin. It is the same model and trader that was responsible for your $12mm bonus last year and the year before, and one you’ve been a champion of at the firm. With bonus season almost here, do you:
(a) Stay quiet. Take the money. Resign for “personal reasons”; Hire a good lawyer.
(b) Express shock and indignation and blame it on someone else.
(c) Express shock and horror when its discovered and take responsibility.
(d)’fess-up, take the lumps, claim you “lost” the money on the ponies.
(e)’fess-up, take the lumps, give back the money from prior years
10. As a successful hedge fund manager, you made 100% gross last year with leveraged concentrated bets in risky securities. Your family, friends, and alma-mater (whose new building at the business school is named after you) are invested. You collected NINE-DIGIT compensation (through a Cypriot holding company of a Maltese offshore Trust) tax-free. This year however, you were down 65% - not only wiping out all the “gains” but incurring significant losses. You’ve decided to liquidate the fund since the high-water mark is so far away, there is little motivation to make the journey from CT to NYC and since YOU don’t want to be left with the illiquid crap you can’t sell after you open the gate. Should you rebate investors the “performance” fees you earned last year, since, philosophically speaking, you didn’t really earn them?
(a) No way Jose. My kids, and my kids’ kids will forever fly private!
(b) No, last year was LAST year. THIS year. And in any event, it wasn’t my fault, it was “a perfect storm”.
(c) maybe, ummmmm, dunno really.
(d) Yes, but only to family, friends, and perhaps alma-maters.
(e) Yes. because kharma’s a bitch if not properly tended.
11. As the Chief of a Global Insurance concern that you’ve built with sweat and cunning, you’re company is very profitable. But, despite strong feelings to the contrary, you are not God, you cannot control the fact that occasionally “shit happens” that will negatively impact P&L. You’ve had a good run and your shareholders have come to love your above-average returns. They value stability, even if manufactured. You’ve had an embarrassingly good year on the heels of several prior outrageously good years. Do you:
(a) call an ART specialist and ask him to help you keep some for a rainy day?
(b) get a subordinate to do it with no audit trail to you, and deny all knowledge if depositioned?
(c) do nothing, and blame “a perfect storm” if the shit hits the fan?
(d) reserve as aggressively as possible within plausible limits of scrutiny?
(e) in the event “shit does happen”, take your lumps and try to communicate to shareholders, as diplomatically as possible, that elevated returns come with elevated attendant risks?
12. You are the CFO of a profitable software company. The market has always valued your shares highly due the firm’s attractive returns on equity and stellar growth. As a result, the company’s shares remain eye-wateringly expensive, though according to bulls “justified” due to growth prospects. All the senior management team (who are your friends too) have large soon-to-vest options in addition to large additional stock option awards pegged to your firm’s EPS growth. You foresee small delays in new a product launch that you forecast will cause the company to be light for the quarter causing the shares to torpedo, and for your award grants to be be reduced, and net-worth halved. Which of the following most closely describes the best course of action?
(a) Obviously implement an aggressive stock buyback plan to squeeze the float to make your numbers.
(b) offer aggressive discounts as required to “channel stuff” in order to crystallize awards and give management time to sell stock
(c) hedge by structuring a “collar” on your holdings to lock-in outrageously valued paper wealth bypassing SEC filing requirements
(d) To be safe do A, B & C, then phone a friend (from a payphone) at a hedge fund in which you are invested.
(e) Do nothing and update your CV.
13. As the COO of a bulge-bracket firm who makes copious amounts of money from securities lending and prime brokerage, the CEO is demanding growth growth growth. One of your MDs has pointed out that the “uptick” rule is real nuisance, and that its abolition would increase turnover, short balances and net profits to your firm. How do you proceed with this apparently savvy observation?
(a) enagage powerful lobbysists to campaign for repeal or amendment of historical “impediments” to maximizing profits
(b) increase campaign contributions to friendly lawmakers who can turn the screws on the SEC
(c) both A & B
(d) Let your customers know, off-the-record, you will no longer be policing current regulations
(e) Let independent unbiased academic researchers have access to all your (and exchange data) and let good science assist in the making of public policy.
14. You are a well-connected CEO and CIO of a major-league hedge fund. Your circle of influential and important friends extends far and wide, so you are privileged to much material non-public information about takeovers, business prospects, and other market-moving news. You take your responsibility of delivering above-market returns to your investors very seriously. Your firm has acted on such information and profited handsomely as a result, but insider-trader investigations have caused the regulators to begin asking uncomfortable questions. Do you:
(a) Publicly deny and dismiss any and all allegations
(b) Instruct staff to destroy email records
(c) Call Bill to call Charlie to have him call off the dogs
(d) Hire a former senior SEC counsel with dirt on the investigators to head your newly-beefed up Compliance Department
(e) Admit unintentional transgressions, pay the fine. Be more careful in future.
(15) You are the manager of a large and successful hedge fund. As a result you are one of the most important customers of a bulge-bracket firm with whom you prime, and can always be counted on to trade upon their ideas, where such ideas are based upon reasonably sound information, generating commissions for the brokerage firm, increasing debit balances, and contributing further to the fund’s returns that will attract new subscriptions, and virtuously increase the debit balances and commissions at the brokerage firm. (Note: some of the employees in the brokerage firm also invest personally in the fund). One day, you receive a call saying one of the brokerage firm’s less important, (and admittedly more embarrassing) clients) is **highly** leveraged, and concentrated in a handful of long and short names which they (wink wink nod nod) kindly supply to you. Do you:
(a) “gun them hard”, pushing the market-to-market on positions through the margin threshold, forcing liquidation which the broker then kindly offers to you to close out your shorts
(b) “gun them hard”, pushing the market-to-market on positions through the margin threshold, forcing liquidation which the broker then kindly offers to you to close out your shorts
(c) Both A & B
(d) thank them politely, but do nothing.
(e) thank them politely, call the FSA, who will do nothing and think about retirement.
Scoring:
Calculate your total using a=5 b=4 c=3 d=2 e=1
Ethics & malfeasance forecast potential:
15-17 = Very Low - Dalai Lama, Mother Theresa, Bishop Tutu etc.
18-20 = Low - Eliot Spitzer (Do as I say, not as I do…)
20-30 = Medium - Ken Lay (Who knows what one will until faced with the heat of the moment)
30-35 = Elevated - Bernie Ebbers cellmate potential
35-45 = Very High - I **heart** Jeff Skilling!
Grim #345 in Mod - little humor.
re snow shoveling…. ya lamers!
I took care of a 91(!!!) year old lady who had leg pain after shoveling her snow the day before!!
Yeah! You read right….. 91!
sl
CSPAN has the 1st amendment 121 yay, 242 nay, 71 withhold.
Clotpoll says: Got ammo?
:)
sl
http://finance.yahoo.com/news/Oil-rises-on-Fed-cnnm-14185465.html
Crude stocks increased by 6.2 million barrels in the week ended Jan. 26. Analysts were looking for an increase of 3.4 million barrels of crude oil, according to a consensus estimate of industry analysts surveyed by Platts, a global energy information provider.
“This speaks volumes about the oil glut,” said James Cordier, president of Liberty Trading Group. “The market will have a difficult time putting together a sustainable rally with these huge increases in oil supply.”
still_looking says:
January 28, 2009 at 5:03 pm
“re snow shoveling…. ya lamers!
I took care of a 91(!!!) year old lady who had leg pain after shoveling her snow the day before!!
Yeah! You read right….. 91!
sl’
Probably why she IS 91. Good for her.
“Starbucks today announced the following actions aimed at aligning its business with the current operating environment:”
http://tinyurl.com/d2haz8
-close approx 300 additional underperforming stores
-These stores are in addition to the approx 600 U.S. store closures announced in July 2008.
-reduced 2009 new store openings to 140 new stores from its previous target of 200 new stores
-could result in a reduction of as many as 6,000 store positions
-plans workforce reduction that will result in approx 700 non-store partners being separated from the company in the U.S. and internationally, with about half at the company’s support center in Seattle.
“Can I join your krav maga classes”
Putin actually gives a better class.
i wouldn’t want to mess with him.
ps. he suffers from short man complex
SAS
[348] s l
Yes!
lis re: losing the post office.
Pfeh. We can just watch this and fuggetaboutit.
http://www.youtube.com/watch?v=cDRa8FDL2ts
my great aunt, God rest her soul, lives in Alaska and dosen’t own a snow blower. She fills up her mega blaster supersoaker with anti-freeze and pretends shes dirty harry, who she has a crush on…
paulson is totally going to get exposed.
cbs news doing a big piece about the secrecy of the first rescue plan - how a bunch of necessary information is “blacked out” and how nobody can tell who has the money.
Ultimately, Paulson will lose.
Bubble alert. . ~ o ~ O
http://www.bloomberg.com/apps/news?pid=20601087&sid=aB41Lx90Jojk&refer=home
12 geniuses who made £1bn+ as banks were bailed out
http://www.guardian.co.uk/business/gallery/2009/jan/28/recession-executivesalaries?picture=342424897
yikes,
why would paulson care? you know he has already gotten paid, and into multiple cayman accounts….
Interesting link in the above on bonuses:
http://www.guardian.co.uk/business/2009/jan/28/executive-salaries-banking
“The financial crisis has forced the City to come to terms with the excesses of the bonus culture. Hahn recalls that in his days as banker, new entrants to a firm were aspiring to a lengthy career that might, if they were lucky, culminate in them being the chief executive. Not any more, he said.
“People felt they were entitled to a bonus. The bonus was everything. It’s hard to describe the pressure because the amount is enough to pay off your mortgage,” he said.
One City worker believes there is now a “gradual realisation that the glory days are gone”. He explains that MBA students were lured to the industry despite its 60 hour weeks and gruelling weekends at their desks because of the promise of bonuses.”
“Academics writing in the National Bureau of Economic Research also argue that the higher wages in the financial industry will eventually disappear. “Wages in finance were excessively high around 1930 and from the mid 1990s until 2006,” Thomas Philippon of New York University and Ariell Reshef of the University of Virginia said.”
Grim - in Mod
How did you breed one pig?
http://www.youtube.com/watch?v=sxBl9BXLom4
glass sandwich
someone is gearing up for something.
“Text of H.R. 645: To direct the Secretary of Homeland Security to establish national emergency centers on military…”
http://tinyurl.com/aqsngh
sas, you think somebunny just doesn’t want Katrina II: Chaos in the Convention Center?
But I can’t even imagine 2m PHL/NJ people in Fort Dix. What a stinking blowhard convention that would be.
“sas, you think somebunny just doesn’t want Katrina II: Chaos in the Convention Center?”
nope:)
SAS
“Cabot to cut 500 jobs; first quarter profit drops”
http://tinyurl.com/dkxelx
Who Pays America’s highest property taxes
http://www.forbes.com/2009/01/22/taxes-homes-property-forbeslife-cx_mw_0122realestate_table.html
“Teradyne swings to loss, will cut 14% of staff”
http://tinyurl.com/c4fch8
“Who Pays America’s highest property taxes”
dumb people in NJ :P
but we have good pizza, and can always find a fist pumper who looks like he just combed his hair with a pork chop.
SAS
New thread, move it up!
RE: She fills up her mega blaster supersoaker with anti-freeze
Is it wise to intentionally spray poison into the ecosystem?
Although I still love reading the New Jersey Real Estate Report for all of their relevant national Real Estate information - I got out of the New Jersey condo market and bought a home down south with Taylor Morrison - learn more about them on their website – http://dreambig.taylormorrison.com/?utm_source=bc and sign up to win a dream vacation while you’re there.