From the WSJ:
Greenspan Sees U.S. as Likely
In Recession, or Soon to Be
By GREG IP
January 15, 2008
The U.S. is probably in or about to enter a recession, former Federal Reserve Chairman Alan Greenspan said.
The odds are “not overwhelming but they are marginally in that direction” of recession, Mr. Greenspan said in an interview with The Wall Street Journal.
“The symptoms are clearly there. Recessions don’t happen smoothly. They are usually signaled by a discontinuity in the market place, and the data of recent weeks could very well be characterized in that manner,” he said.
Specifically, he cited a drop in the Institute for Supply Management’s purchasing managers index to 47.7 in December after several months just above 50, the dividing line between expanding and contracting manufacturing activity. While “by no means conclusive, … [that] is the type of thing, if we were going into recession, we’d observe.”
Another sign, he said, was the jump in the unemployment rate to 5% in December from 4.7% in November.
Mr. Greenspan first publicly raised the possibility of recession in February of last year, and put the odds at about 33%. He said in mid-December the odds had risen to about 50%.
Yesterday, he said the odds were still close to 50% but “more likely higher than lower.”
From Bloomberg:
Citigroup to Cut Jobs, Reduce Dividend, WSJ Reports
Citigroup Inc. plans to cut more than 20,000 jobs, or about 6 percent of the workforce, and reduce its dividend after as much as $20 billion of costs to write down the value of subprime-related securities, the Wall Street Journal reported, citing unidentified people familiar with the matter.
Citigroup will receive at least $10 billion in cash from outside investors, including Government Investment Corp. of Singapore, the Kuwait Investment Authority and Saudi Prince Alwaleed bin Talal, to shore up capital, the Journal said. Citigroup gained 4 cents to $29.10 in German trading today.
“The big losses they’re reporting inevitably are the sorts of forces that drive layoffs,” said John Challenger, chief executive officer of Chicago-based recruitment firm Challenger, Gray & Christmas Inc. “Companies need to cut their costs to manage through these periods of severe losses.”
From the WSJ:
States to Tighten Belts as Weakness Of Economy Cuts Into Tax Receipts
By CONOR DOUGHERTY
January 15, 2008; Page A1
Slower growth in tax revenues, the result of a weakening economy, are prompting governors from New Jersey to California to consider an array of belt-tightening measures to balance their budgets for this year and next.
Facing a severe revenue shortfall, Kentucky Gov. Steve Beshear has asked most state agencies to trim their spending by 3% in the current fiscal year, which ends June 30. New Jersey Gov. Jon Corzine has proposed raising tolls and freezing spending to reduce his state’s debt. And California Gov. Arnold Schwarzenegger, in a bid to avert a deficit in the coming fiscal year, has proposed closing state parks, eliminating dental care for the poor and cutting $4 billion from the state education budget.
“There are going to be very difficult — but very necessary — reductions to close the spending gap,” says H.D. Palmer, a deputy budget director for California. “By definition, closing a $14.5 billion budget gap is difficult.”
Uh-oh…State of NJ is one of Citi’s new investors.
From MarketWatch:
Citigroup loses $9.83 billion in fourth quarter
Citigroup to get $12.5 billion capital injection
Citigroup: $18.1 billion in pre-tax write-downs
Citigroup to cut quarterly dividend to 32c a share
NJ Division of Investment, Kuwait and Sandy Weill (among others) are transfusing the patient known as C. 18.1 BIL writedown.
Urrrppp.
Economics…
Again, rereading – trying to assimilate.
Confused in N.J. (193) 1/12/08
“I certainly believe the banking institutions, having the issuing power of money, are a more dangerous threat to liberty than standing armies.” Thomas Jefferson
Essex (120) 1/15/08
“Clinton, Republicans agree to deregulation of US financial system.”
1. Will we need another Great Depression to set things straight? (Create a new generation, having “lost it all”, of consumers who have come to appreciate the power of cash over credit.)
2. Will we need to return (post depression) to some sort of version of a Glass-Stegal Act of 1933-?
“The law was enacted during the first 100 days of the Roosevelt administration to resue a banking system which had collapsed..”
From Bloomberg:
Citigroup Reports Record Loss on $18 Billion Subprime Writedown
Citigroup Inc. posted the biggest loss in the U.S. bank’s 196-year history as surging defaults on home loans forced it to write down the value of subprime-mortgage investments by $18 billion.
The fourth-quarter net loss of $9.83 billion, or $1.99 a share, compared with a profit of $5.1 billion, or $1.03, a year earlier, the biggest U.S. bank said today in a statement. New York-based Citigroup also cut its dividend by 41 percent and said it will receive $14.5 billion from outside investors to shore up depleted capital.
“We are taking comprehensive action to position Citi for the future with the capital strength that will allow us to refocus on earnings and earnings growth,” said Chief Executive Officer Vikram Pandit, who was installed in December after Charles Prince stepped down amid mounting subprime losses.
Citigroup racked up record losses as it misjudged the depth of the mortgage crisis. The writedown for subprime home loans and related securities was almost double what the company expected as recently as November. Citigroup’s markdown is the biggest so far, exceeding the $14 billion reported by Zurich-based UBS AG, Europe’s biggest bank.
“Things are still bad out there for financials, and there’s more bad news to come,” said Jon Fisher, who helps oversee $22 billion at Minneapolis-based Fifth Third Asset Management. “The balance sheet is a mess, they’ve got to raise capital, and the charges keep going up every day.”
Now just imagine if the subprime crisis spreads to credit cards, auto loans and prime. If housing prices drop rapidly this Spring, I think it will spread to all 3 of these sectors. It won’t matter that BOA bought out CFC or that JPM bailed out WaMu. They’ll all be treading water at best.
Of course, as Ben Bernanke’s goal of killing the dollar will serve to only exacerbate the scenario as inflation picks up and makes people pay more for every day goods.
Wow are we screwed!
Of my few long positions left, one of ’em is IBM. I’ve had quite a stroke of luck lately. Now if CMG reports strong earnings…too the moon.
Good luck to all of you and happy Pongal.
Stu (8)-
IMO, CMG is wildly overvalued. I bailed a few days ago when MCD got bombed. If MCD feels the pinch of this economy, CMG will feel it double.
Checkout MLS#2439791. 2 bedroom townhouse in Cambridge heights, Nutley.
OLP 429. LP 399 and you know how long it’s on the market 332 DAYS !!!!!!!!!. Damn what the hell the owner is thinking. Morons.
SM,
She is the reasonable one with an asking of $399k.
What is the neighbor thinking?
MLS# 2453406
Exact same unit, except it’s interior (the lower priced listing is a more desirable end-unit).
Asking is $425,900.
I’ve been in CMG since 40 and have sold 70% of my position off already. The last 30% block I sold off within 25 cents of its 52-week high. The bad news is, it is still a pretty sizable position for me. If it breaks down past 100, I’m out. If the earnings suprise, we’ll see 175.
From a P/E standpoint, I agree it is overvalued. But from a potential growth standpoint, heck half the cities in the U.S. do not even have their first location.
Either way
God help us..
From MarketWatch:
New Jersey joins the sovereign wealth funds
Wall Street sent around the charity plate again on Tuesday, an unusual name joined the ranks of the Kuwait Investment Authority, the Singapore Investment Corp. and the Korean Investment Corp. — The New Jersey Division of Investment.
New Jersey sure doesn’t have quite the oil resources of Kuwait, and it’s not in the position of Singapore or South Korea to benefit from the Asia-Pacific surge.
…
But the investment, however small it is, has a certain logic.
For one, Wall Street is a huge employer in the state, and it is in the state’s interest to make sure the big banks can ride out the subprime storm.
“after as much as $20 billion of costs to write down the value of subprime-related securities”
That can’t be true! Bi said there’d be no more writedowns!
From CNBC:
Greenspan Joins Hedge Fund: WSJ
Greenspan is set to join hedge-fund firm Paulson & Co. as an adviser, the Journal said.
New York-based Paulson, with assets of $28 billion, is set to make the announcement on Tuesday, it said.
Greenspan has been criticized by some for keeping the trendsetting federal funds rate at a low 1 percent from June 2003 through June 2004, which some say contributed to a housing bubble that is now bursting.
Paulson & Co. was among hedge fund industry’s big winners in 2007 after it bet against subprime mortgages.
njcoast Says:
January 14th, 2008 at 9:28 pm
I work at Convention Hall in Asbury Park from time to time and it is such a cool building.The acoustics at the Paramount Theatre are wonderful. There is nothing like hearing BC Bob’s much quoted artist there.
njcoast,
You da man!!
NJ Invests in Citigroup:
Great, a nearly insolvent state investing in a nearly insolvent bank. Sounds like a match made in heaven.
Stu (11)-
Looks like you’ve got a lot of room for error. Sweet.
It’s a good wager that CMG blows past their quarterly number. It’s the outlook for ’08 that concerns me. Gonna be tough maintaining such a torrid growth pace.
HE (16)-
…like Beavis and Butthead.
“Greenspan is set to join hedge-fund firm Paulson & Co. as an adviser, the Journal said.”
I don’t think Paulson requires any advice regarding shorting the subprime.
anyone know how many of the Citi layoffs will be from nyc?
SAS
#2
Isn’t it interesting that other states are tightening their belts while Corzine is taxing more through tolls. There will be no belt tightening in NJ.
Clotpoll;
I am right of Bill & Jim Buckley.
# 2 “Facing a severe revenue shortfall, Kentucky Gov. Steve Beshear has asked most state agencies to trim their spending by 3% in the current fiscal year”
Tghe thing I wonder is what is meant by “cut.” Is it reduce the spending from what was spent the prior year OR, as so often happens with government, at all levels, does it mean increase a little slower?
too bad you can short New Jersey……..
Friday will be a great buying day in fixed income. Lots of bad news this week and traders will be scared to sit on positions on a three day weekend. I got a feeling Helocopter Ben might use the three day weekend to analize what is happening and digest the latest news and if he has a huge set of balls drop a 75bp bomb one week early next tuesday.
U.S. Dec. retail sales ex-autos fall 0.4% vs. -0.1% expected
U.S. Dec. auto sales fall 0.4%
U.S. Dec. PPI up 6.3% in past year
This was supposed to be a safe bank.
NEW YORK (Reuters) – U.S. Bancorp (USB), the sixth-largest U.S. bank, on Tuesday said fourth-quarter profit fell 21 percent, hurt by losses from loans and money market mutual funds, and a legal settlement.
Net income for the Minneapolis-based company fell to $942 million, or 53 cents per share, from $1.19 billion, or 66 cents, a year earlier.
No contagion?
“Sales at U.S. retailers unexpectedly fell in December, capping the weakest year since 2002.”
“Sales dropped 0.4 percent, the first decline since June, following a revised 1 percent gain in November, the Commerce Department said today in Washington. Purchases excluding automobiles also decreased 0.4 percent.”
“A sustained slump in consumer spending brought on by falling property values and rising unemployment would spell the end of the six-year expansion, economists say. The report underscores Federal Reserve Chairman Ben S. Bernanke’s concern that risks to growth were intensifying.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aRO4SNNaGqWA&refer=home
http://www.theonion.com/content/opinion/if_elected_i_will_have_the?utm_source=EMTF_Onion
Fred Thompson for President!!!!!!!
John (28)-
Buffett sure likes it. Must be some value there that only he can see.
BC (29)-
Story of ’08= deflationary credit crisis.
Steroid man deflates and becomes girly-man.
From MarketWatch:
Factory activity in New York growing slowly in January
The factory sector in the New York region grew slowly in early January, the New York Federal Reserve Bank reported Tuesday. The Empire state index fell to 9.0 from 9.8, indicating little change in overall conditions. Readings over zero indicate growth. The new-orders index fell to 0, the lowest reading since May 2005. Expectations for growth over the next six months deteriorated, as the expectations index fell to 19.4 from 34.7. The percentage of firms expecting conditons to worsen rose to 24% from 16%.
Clot [32],
2007-Denial
2008-Reaction
Short the consumer, discretionary.
All disclaimers.
god, i hope i find a steady job before reinvestor admits we’re in a recession. although, i did convince a private equity firm to commission me as a consultant to trade non-performing assets. first deal of the day: kenny logens home in atlanta. 1mm second lien on its way down. (he’s not the borrower but previous owner). current offer 49 cents.
From Reuters:
Retail sales unexpectedly declined in December
Sales at U.S. retailers fell 0.4 percent in December and were less vigorous in November than previously thought, according to a government report on Tuesday that implied costlier energy and slumping housing prices were taking a toll on consumers.
Retail sales for all of 2007 posted their smallest gain in five years.
Excluding autos, the Commerce Department said December sales still were down 0.4 percent. Wall Street economists surveyed by Reuters had forecast that overall sales and sales excluding automobiles would be unchanged in December.
The department revised down November’s sales gains to show a 1 percent rise rather than the 1.2 percent gain it reported a month ago.
…
Consumers have been a mainstay of the economy over the past year, continuing to spend despite rising gasoline and other costs, so the fresh signs of a pullback by shoppers are likely to fuel fears of recession.
2nd (35)-
I think this new gig is gonna be steady work for you. How many more washed-up celebs are knee-deep in PE garbage?
John 30 Now ther is a platform we would all like to get behind!
Secondary,
Sounds like something I’d enjoy doing.
There will be no belt tightening in NJ.
Agreed. There will be no belt tightening in NJ.
Falling revenues will just mean new sources of revenue are needed (i.e. higher tolls). A freeze in spending at the state level will simply mean that municipalities will need to fill the gap with higher property taxes.
From Bloomberg:
State Street’s Earnings Fall 28% on Legal Fund Costs
State Street Corp., the world’s largest money manager for institutions, said fourth-quarter earnings fell 28 percent after setting aside $618 million to settle legal claims stemming from losses on subprime mortgages.
Net income declined to $223 million, or 57 cents a share, from $309 million, or 91 cents, a year earlier, the Boston-based company said today in a statement. Revenue rose 53 percent to $2.48 billion.
State Street faces at least three class-action lawsuits from investors claiming its funds made inappropriate bets on subprime-backed securities. It disclosed the legal reserve Jan. 3 and said it replaced William Hunt, its chief investment officer for the past three years.
There will be no belt tightening in NJ.
Mabye with your new Gov, the old one like to loosen the belt and drop trou for all his boy toys.
From MarketWatch:
Citi put aside $539 million in quarter to cover job cuts
Citigroup said Tuesday it set aside $539 million in the fourth quarter to cover job cuts announced and yet to come. The firm said it made 4,200 job cuts in the fourth quarter, but that it plans more, primarily in markets and banking. On a conference call Tuesday, CEO Vikram Pandit said, “You can interpret this current quarter’s $539 million charge as a down payment on the productivity efforts we are working on.” Last year, in April the company announced 17,000 job cuts.
#39,
Yeah, not bad. they’re gonna give me 2% of the unpaid principle balance on each deal awarded. but there are many hurtles, it’s the wild west on the secondary with rogue brokers, exclusive deals and false inflated bids by hedge funds and private investors with no accurate pricing model.
but here is my shameless plug for anyone in banking: please point me in the direction of your portfolio manager!
first deal of the day: kenny logens home in atlanta. 1mm second lien on its way down. (he’s not the borrower but previous owner). current offer 49 cents.
Why do I want to put a bid in for 50 cents only if I could get Kenny Loggins to play footloose while I pelt him with tomatos.
Cindy # 6
# Cindy Says:
January 15th, 2008 at 6:58 am
1. Will we need another Great Depression to set things straight? (Create a new generation, having “lost it all”, of consumers who have come to appreciate the power of cash over credit.)
2. Will we need to return (post depression) to some sort of version of a Glass-Stegal Act of 1933-?
“The law was enacted during the first 100 days of the Roosevelt administration to resue a banking system which had collapsed..”
Personally i think that a return to something like the the Banking Act of 1933 (the second Glass-Steagall Act)is needed. banks are to greedy to act in good fair left to their own devices. But the greed and power of the banks arises from the fiat fractional reserve monatery system we use. The real solution is to get rid of the FED and get off of the fiat money system.
Might i suggest the following;
a 45 min video, but you will actually understand the banking system afterward, its pretty clear cut.
http://video.google.com/url?docid=-9050474362583451279&esrc=sr1&ev=v&len=2827&q=money%2Bas%2Bdebt&srcurl=http%3A%2F%2Fvideo.google.com%2Fvideoplay%3Fdocid%3D-9050474362583451279&vidurl=%2Fvideoplay%3Fdocid%3D-9050474362583451279%26q%3Dmoney%2Bas%2Bdebt%26total%3D2072%26start%3D0%26num%3D10%26so%3D0%26type%3Dsearch%26plindex%3D0&usg=AL29H22i0vLoUKUk-_j3XBz_-GtXvslntA
Unfortunately i don’t think we will see any real change in our financial or political system with out a significant event taking place. So while a depression might not be required, history shows that significant change does not take place unless there is a significant driving force. For example fuel efficiency and alternative fuels were not touched until the 70’s oil embargo and were promptly forgotten after the embargo was over.
Clot # 32
# Clotpoll Says:
January 15th, 2008 at 8:45 am
BC (29)-
Story of ‘08= deflationary credit crisis.
Steroid man deflates and becomes girly-man.
between the M1/M2 numbers and the fed running the printing press on overdrive it looks like a race between deflation and inflation. Which one will get us first? I am sure a in depth analysis would point at which one is a stronger driver, but that is currently beyond me
From the AP:
New Jersey American Water seeks 23 percent rate increase
New Jersey American Water Company, the state’s largest water utility, wants to raise rates by 23 percent to upgrade its lines and treatment plants and help it meet increased operating expenses.
That would mean an increase of about $9.50 a month for the average residential customer. New Jersey American has more than 2.6 million customers statewide.
The company announced the filing of the request with the state Board of Public Utilities Monday. The agency will hold hearings on it during the next year or so.
Its last rate increase went into effect in March of 2007. It was 12.5 percent and raised residential rates an average of $5.30 a month.
I disagree 100% with Cindy, the system is perfect. My 20 something newlwed cousin got married in 2006 ran out and bought a 600K condo and leased two new cars cause everyone was doing it. Now she is in debt up to her eyeballs and her husband is in banking and getting laid off. No one told them to do it, in fact everyone over 40 in our family told them not to. It boils down to there are three types of people in the world.
1) The type if you tell them the fence is electrified they stay away from it.
2) The type that does not believe you but throws a stick at it just to check.
3) The type that just whips it out and has to take a piss right on the fence
Type 3 got wiped out in sub prime, it is not our job to pass laws to protect the stupid. Darwin is just trying to help this people evolve by learning from their mistakes.
March 2007 Increase
2,600,000 * $5.30 * 12 = $165,360,000
Proposed Increase
2,600,000 * $9.50 * 12 = $296,400,000
The NJ consumer is getting hit from every angle.
Kettle1 (46) Thanks – I’ll watch it tonight when I try to absorb what I can from the site’s “day of instruction…” School calls..
NJ is truly an addict when it comes to spending, and like an addict it will not quit until someone forcibly cuts it off or it OD’s.
In this case i think the state will OD in the sense that the state will see a mass exodus that will devastate the tax rolls. This has already started and its likely that as a state we are already seeing diminishing returns (i.e the more we tax the less money comes in, i.e the inflection point on the laffer curve)
Some interesting comments from the Citi call, courtesy of MarketWatch:
Citi tightening standards for credit card lending – CFO
Delinquencies rising on high LTV mortgages – Citi CFO
Citi sees growing credit card delinquencies – CFO
Stu (8)
“Now just imagine if the subprime crisis spreads to credit cards, auto loans and prime.”
Doesn’t require much imagination, does it?
# 21 “There will be no belt tightening in NJ.”
I disagree. There is in fact ongoing belt tightening. Unfortunately, it is around the state’s neck, and not its waist.
“NJ is truly an addict when it comes to spending”
Same with the US generally – the federal deficit ain’t so pretty either.
John,
I agree with the general idea of letting the stupid sink themselves. But the bureaucracy has become so large in both the public and private sectors without any serious checks on their power, that the average individual is essentially handicapped from the start. One of the biggest mistakes we made was giving corporation the ability to act as legal individuals. Corporate personhood combined with the supreme courts opinion that money=speech means that private individuals have little hope of competing against corporations. Just consider the difference is the amount of speech (money) that a corporation has compared to a real person
does anyone have any insight into why deflation would be a stronger driver then inflation?
From Bloomberg:
Hypo Real Estate Tumbles on Lower Pretax Profit, Dividend Cut
Hypo Real Estate Holding AG had its biggest decline ever in Frankfurt trading after the German commercial property lender said pretax profit fell in 2007 and that it will cut its dividend. The shares tumbled as much as 31 percent.
…
The shares sank 29 percent to 23.57 euros at 3:03 p.m. in Germany, their biggest decline since the lender was spun off from HVB Group in 2003. Hypo Real Estate said “continued weakness in international financial markets” because of the U.S. subprime crisis required a revaluation of its CDO investments.
Just wait until the politicos try “creative accounting” to “reduce” tax rates. An example, taken from a NY county:
The county legislature and executive trumpet their achievement of lowering the tax rate. Sounds good except for two things: 1) home prices were still up y.o.y. so taxes on the lower rate still went up; 2) they took the levy for support of the local community college out of the equation for the basic tax rate and just moved it to a different section of the tax bill, and increased the levy to boot.
Thus, they wee able to charge the residents more all while being able to point to charts and graphs showing that people being taxed are paying less. Chutzpa! All they seem to be missing is Officer Obey and some blind justice.
kettle, I don’t agree with all of this, but
http://onlinejournal.com/artman/publish/article_2834.shtml
# 58 Ket,
I am not an economist but my understanding is that the tools the Fed has to deal with inflation do not work well with deflation. Also, while inflation causes people to buy NOW, for it will cost more tomorrow, thus greasing the economic machine, deflation has the opposite effect. To add to the equation, as prices drop, and the economy grinds to a hault, more people lose jobs and the income necessary to pay off debt. More defaults lead to a spiral that just seizes up the economic engine as those with money know that things will be less expensive later. If the Fed raises interest rates, it chokes off economic activity, if it drops rates people still do not spend because they know prices are dropping.
Any economists in the audiance feel free to correct me.
Shore 52
Thank you :)
But, i am familiar with those concepts, perhaps my questions wasnt clear. M3 is growing at a somewhat alarming rate but M1 and M2 are showing deflation. So from the info i have seen the fed is actively inflating while deflation seems to be self propagating through the economy.
It is starting to look like deflation is expected to be the primary force and has scared the FED to death, hence the rapid inflation.
Given that i am just an armchair economist i was curious how the 2 forces play against each other and sorts of drivers determine which one will be dominant.
While it appears that deflation could be the stronger force, run away inflation also doenst seem to be beyond possibility.
On my way out the door…
John #49..I too, believe we should not make an effort to “save” those making poor choices. I’m asking..is the system working and I think we agree – yes – as long as the government stops saving everyone. Are there enough #1’s and #2’s to keep us out of a depression? Or…are there too many #3’s out there so we will all have to suffer.
Regarding my reference to deregulation..I’m clueless. It just seems that there used to be checks and balances that keep poor loans off the books altogether so I have no idea how you rein that back in?
Thanks – enlighten me…I’m your basic “grasshopper.” I know you have more important things to do so I’ll understand if you don’t. I honestly am trying to make sense of what to tell my children. My hope is that they can be part of the solution and not part of the problem.
Cindy
61 pat
that answered some of my questions, thanks
# 63
Ket,
About 20 years ago I had a question about something economics related. I don’t remember what it was now. So, I called Martin Feldstein up at Harvard. At first his secretary wanted to give me the brush off. After telling her about our family’s connection to Reagan, she not only passed on the message but also got someone on the phone immediately to answer the question. A couple of days later I got a call from him asking if I had what I needed.
So, my advice is to call Marty, or call Big Ben’s office. You may not get through, but, by starting high enough and talking very nicely to the administrative assistant who takes your call, you are likely to get directed to someone in the organization who is eager to help — especially when the referral comes from a higher-level office.
A few months back we talked about neg-am caps as a potential new factor in mortgage delinquencies. If you aren’t familiar with the concept, certain types of loans that allow for negative amortization (an increase of principal), have a limit to how much that principal can increase. It’s typical to have an 110% limit. Once that limit is hit, the minimum or IO payments are no longer available to the borrower, the borrower is forced to make an amortizing payment.
The most common type of loan that this applies to is the Option ARM. These “pick-a-payment” loans have a “minimum payment” option that results in negative amorization.
Unfortunately, buyers who used these loans to purchase unafforable homes used the “minimum payment” as a way to increase “affordability” (In some odd Orwellian sense of the term).
Well, we didn’t think we’d hit those limits so soon..
FirstFed Reports Rising Delinquencies at December 31, 2007
Non-accrual single family loans at December 31, 2007 rose to approximately $180 million, from $83 million at September 30, 2007, while single family loans thirty to eighty-nine days delinquent rose to approximately $237 million, from $72 million at September 30, 2007. Adjustable rate mortgages that have reached their maximum allowable negative amortization, which now require an increased payment, are a contributing factor in the higher level of delinquent loans.
Inasmuch as anyone who has been paying attention can cee that consumers are nearly tapped out, how can the following be any surprise? In recent years, we have been like cartoon characters who run off the cliff but do not fall, now we realize that there is no ground beneath our feet; the fall (pull-back of consumer spending, either by choice or the cutting of access to credit) is just beginning.
http://www.cnbc.com/id/22663966
Retail Sales Unexpectedly Declined in December
Topics:Inflation | Retail Sales | Economy (U.S.)By Reuters | 15 Jan 2008 | 08:44 AM ET Font size: Sales at U.S. retailers fell 0.4 percent in December and were less vigorous in November than previously thought, indicating costlier energy and slumping housing prices were taking a toll on consumers.
Separately, U.S. producer prices declined unexpectedly by 0.1 percent in December after a sharp drop in fuel prices, but core inflation at the producer level rose by 0.2 percent as projected.
For all of 2007, wholesale inflation shot up by the largest amount in 26 years even though falling gasoline costs allowed price pressures to moderate in December.
[snip]
Re Citi, From Dealbreaker:
The Kitchen Sink Does Not Include $37.3 Billion In Subprime Exposure
http://www.dealbreaker.com/2008/01/the_kitchen_sink_does_not_incl.php#comments
64 Cindy:
Just tell your children that they can’t have anything unless they pay cash with their own savings, even if it comes from their allowance.
Credit is fine for mortgages and to some extent, for car loans, but not for daily purchases. If a child can’t save enough for that fancy pair of jeans or that Barbie doll, then that child should not have it. It worked for me and I’m pretty stupid :P
I might actually watch this on CSPAN:
Oversight Committee to Examine Mortgage CEO Severance Packages
“As part of its ongoing investigation into executive pay, the Oversight Committee invited three CEOs implicated in the subprime mortgage crisis to testify on February 7 about their severance and compensation packages: Mr. Angelo Mozilo, the CEO of Countrywide Financial; Mr. Charles Prince, the former CEO of Citigroup; and Mr. E. Stanley O’Neal, the former CEO of Merrill Lynch.”
Mozillo:
http://oversight.house.gov/documents/20080114170131.pdf
grim Says:
January 15th, 2008 at 7:29 am
God help us..
New Jersey joins the sovereign wealth funds
New Jersey sure doesn’t have quite the oil resources of Kuwait, and it’s not in the position of Singapore or South Korea to benefit from the Asia-Pacific surge.
…
But the investment, however small it is, has a certain logic.
For one, Wall Street is a huge employer in the state, and it is in the state’s interest to make sure the big banks can ride out the subprime storm.
grim: If you know fact one about risk mitigation, this action is a fundamental violation. It sounds interesting or even comical on its face, but in reality it is a foolhardy and poorly considered foray into a correlated exposure with no particular motivation except optics.
The correlation: the same forces that would cause this investment to lose value are the ones that would add to the NJ DOL Unemployment rolls, and hence a period where NJ revenues are reduced (taxes) and entitlement program liabilities are increased (unempl benefits)….patent stupidity…and particularly pointless too.
Interesting Report re Banks:
“The report found that a growing number of European, U.S. banks and Japanese banks are responding to the risks and opportunities presented by climate change, primarily by setting internal greenhouse gas (GHG) reduction targets, boosting climate-related equity research and elevating lending and financing for clean energy projects. But many others are still not addressing climate change and only a handful of the 40 banks have begun integrating climate risks into their core business of lending by pricing carbon into their finance decisions or setting targets to reduce GHG emissions in their lending portfolios.”
http://www.ceres.org/NETCOMMUNITY/Document.Doc?id=269
“Even Citigroup admits that it is just looking at the ABX and making intelligent guesses.”
HEHE [69],
They are all pissing in the wind. There is no valid method to predict the development of the mortgage market. That said, they are whistling dixie trying to calculate the ultimate impact on their positions[subprime and prime]. Much, much, more to come.
grim Says:
January 15th, 2008 at 9:00 am
From MarketWatch: Citi put aside $539 million in quarter to cover job cuts
On a conference call Tuesday, CEO Vikram Pandit said, “You can interpret this current quarter’s $539 million charge as a down payment on the productivity efforts we are working on.”
grim: nice euphemism from the Pun-dit
Chifi,
NJ doesn’t have as much oil as Kuwait? Come on now! We both know Ara Hovnanian, NJ’s favorite resident and CEO, has at least a few years worth of US demand in his hair.
He’s jellin’
http://americancity.org/groundup/images/ara_hovnanian.jpg
Ara’s got swagger.
His “spec” quip towards Bob Toll at a homebuilder conference in June of last year was legendary. (Looking for the video clip)
For the “it’s different here” files:
“Housing on LBI immune from dip”
“The oceanfront market is a recession-proof market,” Luedtke said. “These people making these purchases are the top 1 percent of the people in the country.”
http://www.pressofatlanticcity.com/top_three/story/7527890p-7429435c.html
Ara Hovnanian: Well, Ian, one of the big questions I guess we have is, there are obviously two kinds of inventory. One is a house. And, as we know, we’re all interested in moving that. And those of us that weren’t big spec builders, we’ve inherited accidental specs from a customer that canceled at the last minute, after a house was built. We’re all going to move the standing inventory down rapidly, as much as we can.
The wild card, and the hard question, is, what about the land? And where are public builders, as well, standing with the land? And it’s hard to sell land as just land, developed or undeveloped. So, many are choosing a tactic, private and public, of popping a house on that land, because you can sell it when it has a nice house on it more easily than you can just sell raw land. So, you know, there’s a lot more of that kind of inventory, and it’s not clear how that’s going to play out.
Bob Toll: But are you suggesting that public builders are building specs to move land?
Ara Hovnanian: Not uniformly, but, yeah, absolutely.
Margaret Whelan: Some definitely are.
Ara Hovnanian: I would say that. I don’t think Toll is, but I think some builders are.
Bob Toll: Toll is certainly not.
Margaret Whelan: Bob, is that a surprise to you?
story came out awhile ago, but still important learning too nonetheless…
“Florida Schools Struggle to Pay Teachers Amid Freeze”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aHR5KklFq4X0&refer=home
Has anything like this happen to NJ yet?
if not yet… when??
SAS
# 78 “Ara’s got swagger.”
Not the penicillin-resistent forms, I hope?
Cindy, your children have it made!!!! Houses will be 199K in twenty years and salaries thanks to inflation will be 500K, the downside will be the 90K in property taxes.
From CNN/Money:
S&P downgrades Citigroup’s long-term counterpary credit
Standard & Poor’s lowered Citigroup Inc.’s long-term counterparty credit rating to AA- from AA, and on Citibank N.A. to AA from AA+, citing the financial services company’s ‘severe losses.’ The outlooks for the ratings are negative.
The short-term counterparty credit ratings of A-1+ were affirmed.
‘Our downgrade also takes into consideration that Citigroup’s performance could be rocky in 2008 amid prospects for a continued difficult operating environment for U.S. banks,’ said S&P credit analyst Tanya Azarchs. ‘More writedowns of mortgage-related securities cannot be ruled out.’
Hey, wasn’t bi talking about a bottom in financials and the homebuilders on one of the only up market days of the year last Thursday?
Wonder what his next brilliant statement is gonna be?
http://www.bloomberg.com/apps/news?pid=20601087&sid=a0av0lu31EgM&refer=home
Court Limits Shareholder Suits Against Vendors, Banks (Update1)
By Greg Stohr
Jan. 15 (Bloomberg) — The U.S. Supreme Court put new limits on shareholders suits against a company’s banks and business partners in a ruling that may hinder efforts to recoup billions of dollars lost in frauds at Enron Corp. and HealthSouth Corp.
The justices, voting 5-3, threw out a lawsuit by Charter Communications Inc. shareholders against two of the cable company’s suppliers, Motorola Inc. and Scientific-Atlanta Inc. The court said the shareholders didn’t show they relied on the alleged deception by the suppliers in making investment decisions.
[snip]
From nj.com:
Essex County budget proposal hikes taxes (From last Thursday)
Essex County Executive Joseph DiVincenzo presented a $672 million budget proposal today, one that requires raising taxes by 4.4 percent and using a portion of the county surplus while it holds the line on hiring and promotions.
County budget officials said they began planning the spending guide three months ago knowing they needed to come up with an additional $71.5 million to compensate for dropping revenue and increased expenses.
They noted Essex has had lower annual tax increases over the past five years than any other county in the state: an average 3.15 percent a year. Last year’s budget raised taxes 2.8 percent.
The budget leaders were unable to say what the tax impact would be on homeowners in any of the county’s 22 municipalities. County Treasurer Paul J. Hopkins III said the county tax board does not yet have 2008 valuations in hand.
…
To help compensate, they said, they are leaving numerous positions open, renting out jail and hospital beds, and taking $19 million from a contract reserve fund and other revenue areas. They are also taking $16.7 million from the county’s surplus fund.
Still, DiVincenzo said, taxes must be raised to make ends meet. “Nobody likes it; I don’t want to increase property taxes. But we’re paying for the sins of the past,” he said.
Copyright (c) 2008 Dow Jones & Company, Inc.
01/15 10:14 *DJ Kuwait Invest Authority: Citi Convertible Investment Is $3B
Copyright (c) 2008 Dow Jones & Company, Inc.
01/15 10:14 *DJ Kuwait Invest Authority: Merrill Investment Is $2B
you have to wonder what the long term impact of forgiven countries buying large stakes in the largest banks in the US will be?..??…
#88 According to Bush and Larry (goldilocks) Kudlow, its GREAT!!!
# 86 “Essex County Executive Joseph DiVincenzo presented a $672 million budget proposal today, one that requires raising taxes by 4.4 percent and using a portion of the county surplus while it holds the line on hiring and promotions. ”
I just LOVE this (well, in a scartastic way), times are getting tough so instead of real cuts or even holding steady they still raise taxes. And, to top it off, they dip into surplus for routine spending to give the appearance of holding the line on expenses; if taxes did not rise, they must be doing something right. Uggh.
The continual rise of taxes sticks in my craw. As does the “ability to pay” statements politicos make. Just because I can afford a couple of shiny new Lamborghinis or Rolls Royces does not mean it is financially priudent for me to buy them. It is time people demanded that elected officials manage budgets with an eye towards prudance, not affordability.
regarding Essex taxes;
Have any of the NJ counties ever just cut spending???
heres a question for any local geniuses; how do you set up your political system so that it is in the best interest of the politicians to maintain a sound fiscal policy in stead of being in the best interest of the politicians to appease the masses with spending????
# 88
it depends on whether one has stock options that will be worthless if share prices drop further.
Ara’s got swagger…………hmmmmm
I guess so, not sure why. He was born on third base and actually believes he hit a triple.
well, the last support for local housing (employment) is now dropping steadily. this comes on top of high inventory, tighter credit and negative buyer sentiment. But employment is by far the most important support because it heavily affects the other three. Even those who do not actually lose their jobs will become more reluctant to make the financial commitment of buying a house now (reinforcing negative sentiment). Some people who lose their jobs will be forced to sell their homes (higher inventory). Increased defaults on mortgages and other loans probably will make credit even tighter.
shore 90,
as i am sure you are aware, the [roblem is the entrenched political interst. try cutting any part of the budget ans watch people scream bloody murder. The problem cannot be fixed until the average joe in town understands the very basic principles of sound finance (i.e not spending more then you make). Currently the average joe in town thinks the world might end if you reduced the municipal benefits or fired a cop. bread and circus my friend, bread and circus
“Have any of the NJ counties ever just cut spending???”
THey can’t. NJ is the Welfare state.
Best thing to do is to vote with your feet and leave NJ, but who will be the last to turn out the lights?
SAS
# 91
Ket,
The first step, and this will not do it by itself but it is impossible to fix the system without doing so, is to cease granting pensions to elected officials. This will eliminate, well at least reduce, the “I need to keep my position, or keep leapfrogging to a new position” mentality.
Essex County Joe D. says:
“They noted Essex has had lower annual tax increases over the past five years than any other county in the state”
I love the way all politicians use math to their advantage.
Well is 4% of $1,000 not less than than 6% of $500.
Who wants to research how much more county taxes are collected in Essex County (on average) vs. other New Jersey counties?
If it is less than most, I’ll pay ya for the research time.
NJ politicians, crooks to the sheeples.
Back when I was in college and tuition doubled in 5 years, my college president stated that this year’s increase was the smallest in the past four years as it was only 8%, vs. the average 15-20% increases in the prior four years. Well at the time his 8% increase on $80/credit worked out to be a $6.40/ credit increase. Of course, the 15% increase on the then $42/credit cost 4 years earlier worked out to be a $6.30/ credit increase. I boldly stood up at the press conference where the announcement was made and asked him if he took any math classes when he was in college? He confidently answered, “Yes.” Boy was he embarrassed when I pointed out to him that he should consider repeating the coursework as his numbers were obviously wrong. I want to got back to college!
Besides shorting consumer discretionary, you might want to consider going long in adult education companies like Strayer and Devry (the sector that is currently ranked #1 in timeliness according to ValueLine). When peoples can’t find jobs, theys go get demselves an edumacations!
Disclaimer: I am admittedly an investing moron.
Brand new S&P research –
Our fundamental outlook for the thrifts and mortgage finance sub-industry is negative.We look for earnings to decline on a year-over-year basis in 2008, largely due to higher provisions and a decline in mortgage originations. Specifically, we look for
provisions to continue to increase from already elevated third quarter levels as chargeoffs will likely spike in the coming quarters due largely to a projected 11% decline in home prices. Also, stricter
lending standards combined with weak housing
demand will likely continue to pressure mortgage originations. All told, after declining roughly 15% in 2007, mortgage originations will likely decline by 20% in 2008.
SAS,
i would love to leave, but its an uphill battle for me. My family is scattered to the 4 winds while my wifes entire family is in morris and hunterdon counties. between just my wife just wanting to be close to her family and the fact that being around family makes raising baby Kettle1 much easier leaving would be a last ditch decision :(
# 95,
Don’t even get me started. Everyone wants something for nothing and seems to believe that unless services are provided tomorrow in just the same way they were provided yesterday they can’t be any good. NJ needs serious political consolidation — just look to the absurdity of Loch Arbor, for instance. The multitude of small municipalities, the related boards, commissions, and taxing districts is the perfect recipe for corruption and mismanagement.
grim,
101 in moderation???? why???
“you have to wonder what the long term impact of forgiven countries buying large stakes in the largest banks in the US will be?..??…”
kettle [88],
You can fill up your gas tank at the bank drive thru window.
#90 shoreguy: The problem as I see it, at least in Bergen County, is that over the last 7 or 8 years, local elected officials have convinced, and many belive themselves, that all of BC is a wealthy affluent area.
We are just minutes away from NYC, and as such all sorts of psending is justified, warranted, and easy as we all can afford it.
Anybody that questions this spending is deemed a gadfly, a malcontent, or hooros of horrors not affluent enough to live there.
There are many I ams sure who would speak up, but nobody wants to be the trouble maker in town,and as such people go along to get along.
Finally many of the lcoal elected officials, whil very nice, do not have a clue as far as finances, markets and all the rest.
In fact many lack plain old common sense, and from the many meetings I have attended over the years, I can tell you that very few have any idea as far s current events etc.
Kust because you coached Little League, or girls softball, does not qualify you (IMO), to be a mayor, council member or member of the school board, but that is the way it is.
Citigroup loses billions, Merrill loses billions, CFC bankrupt if BOA doesn’t step in, heating oil at $3.45 per gallon, gold approaching $1000 per ounce, the dollar is approaching kindling, a trip to go a few miles on the GS Parkway and NJ Turnpike will cost a days wage, sales tax up 16.5%, property taxes up 10% a year for the last 7 years and……. I opened up the latest email listings received last night and compared them to print-outs I had form early 2006. Guess what, no difference in price.
PS – Tony Romo is a ____.
3B:
“Just because you coached Little League, or girls softball, does not qualify you (IMO), to be a mayor, council member or member of the school board, but that is the way it is.”
This is so true.
does anyone have any insight into why deflation would be a stronger driver then inflation?
I’ve heard 2 schools of thought on the issue:
1) School 1: Deflationary events are historically rare and are almost impossible under a fiat currency. Most economic collapses throughout history have been inflationary events. The last time we experienced deflation we were under a gold standard, where our currency had an intrinsic value pegged to gold. This encouraged hoarding & made it hard for the govt. to inject liquidity & encourage spending. When the gold standard was dropped, deflation disappeared overnight. This time around the Fed can print, dump & devalue our way out of deflation.
2) School 2: The impending credit collapse is so large that no amount of printing or helicopter Ben dumping can overcome the loss of spending power loss that cheap and easy credit gave us. The Fed can print, but if no one is willing to lend, this liquidity won’t find its way into the markets.
I’m more concerned about inflation over deflation.
# 105 “Just because you coached Little League, or girls softball, does not qualify you (IMO), to be a mayor, council member or member of the school board”
I thought those were the qualifications to gain an Assembly seat.
Gary [104],
Tony R has all winter for Jessica to massage his sore butt, on the beaches of Mexico.
Jessica?
Jessica = Yoko Romo
ING cuts rate twice in a month.
6 Month 4.35% 01/15/08 Open Now
9 Month 4.35% 01/15/08 Open Now
12 Month 4.35% 01/15/08 Open Now
18 Month 4.30% 01/15/08 Open Now
24 Month 4.30% 01/15/08 Open Now
30 Month 4.30% 01/15/08 Open Now
36 Month 4.30% 01/15/08 Open Now
48 Month 4.30% 01/15/08 Open Now
60 Month 4.50% 01/15/08 Open Now
I am SO not in touch with pop culture.
Ever since Ozzy left Sabbath, it lost most appeal to me. When I dipped my feet back in a few years ago and saw that Fear Factor was passing for entertainment, I again retreated from it.
3b (#103): You could be talking about my town. We have a mayor who pleaded guilty to DWI in September. His house is on the market and is said to be empty. Where he’s living is anyone’s guess. The council has set it up so that one of their own (it’s a one-party town; no one even bothers to run in opposition) will take over when this numbnuts resigns. They let him stay on till this year so he can get a pension at taxpayer expense. $400,000 was paid to a landscaper friend of the mayor to do landscaping and a fountain outside of the town hall. Their latest boondoggle? They want to spend $1 million to renovate some baseball fields. My property taxes have gone up $300-$500/year so that they are more than double after just 11 years. There is no accountability. Those who speak up (we have a town gadfly) get death threats. No one dares run opposite them.
Jill [114],
That could be any town in NJ.
#114 Jill: Washington Twp?
If we reopened Alcatraz, it would be a perfect home for the Bureaucrats (like Greenspan & Congress), after the Depression Hits. Charge, Economic Treason.
# 117 Come zee rev-o-loo-tion?
It looks like the DJIA is on its way to 12,4xx today.
C’mon Jobs, give me an iPhone that can tether.
Stu, # 98
how much are you willing to pay, it turns out that middlesex had the greatest $ value increases while essex county had the 2nd highest ($) value increases. Percentage wise essex does not rank in the top 50 and burlington county had the highest numbers of towns in the top 50 increase % wise???
# of towns in each county that were in the top 50 towns in the state for property tax increase ($) 2000-2007
middlesex 7
Essex 5
somerset 5
union 5
monnmouth 5
ocean 4
mercer 4
hudson 3
passaic 3
Camden 2
atlantic 2
burlington 2
morris 1
bergen 1
Gloucester 1
# of towns in each county that were in the top 50 towns in the state for property tax increase (%) 2000-2007
burlington 8
Gloucester 8
monnmouth 5
ocean 5
warren 4
middlesex 3
mercer 3
cape may 3
atlantic 2
sussex 2
salem 2
hunterdon 2
somerset 1
Camden 1
morris 1
Essex 0
If you would like, i can e-mail the spread sheet with the detailed data to Grim so he can link it for you.
RE -94
Great post, couldn’t stop laughing. It is probably as funny as teacher’s paying part of their healthcare. LOL
Jim
#122 – MacWorld just kicked off, who knows you may get your wish. Current rumor de jour is of a ultraslim sub-notebook called the ‘Air’.
Also they introduced the ultamuslim notebook that blows when within ten feet of an infidel
Kettle1…I appreciate your efforts and it indeed does look like you have proven my thesis to be wrong on the surface, but can be a tricky thing.
My guess is that you are looking at the NJ.COM data.
Unfortunately, # of towns in each county that have the largest $ and % increase, does not exactly prove my point. It is very likely that the data that would be required would need to be found not in property value increases, but in county taxes collected, since this portion is very different than the municipal portion of the property taxes. I’m thinking each county office would need to be contacted to get the correct numbers.
For instance, the average county tax paid per household in Essex would be considerably higher than that of the average household in Middlesex county, especially if Newark, East Orange and Irvington were not included. Then if you factored in what the Essex County tax increase was compared with the Middlesex County tax increase, you could determine the true dollar amount of the total cost to the average tax payer in each respective county.
I hope this makes sense. I’m not very good with articulating my point ;)
Though, if I am wrong, I will gladly accept it. I’m not a politician so I can own up to my mistakes. :P
Ben Stein. —> Allow the Fed to buy Stocks in insolvent Banks to prop them up.
From the Article.
There is a real solvency fear out there right now — a fear to lend at all, even at apparently advantageous rates. The Fed must act decisively to calm these fears by reassuring lenders.
This might even take the form of legislation allowing the Fed to buy stock in large banks on a temporary basis. The banks are already largely socialized through federal deposit insurance. To add the prop of government capital infusions is not such a big step.
Let the Fed concentrate on stimulation. No matter what, we’ll get through it all, but why make it more painful than it needs to be?
http://www.nytimes.com/2008/01/13/business/13every.html?_r=2&ref=business&oref=slogin&oref=slogin
Just the other day Ben Stein was calling for Prosecutors to investigate the banks and their lending practices and now he is calling for the Fed to prop them up?
I say let the banks go under, new ones will take their place. We are a capitalist society or at least we pretend to be.
Can we play connect the dots?
1) Greenspan sets the stage for a subprime crisis.
2) Paulson & Co. make tremendous amounts of money “shorting” subprime.
3) Greenspan hired by Paulson & Co.
4) Greenspan intensifies recession calls.
Anyone want to take a stab at their current position?
Every January, Shilling forecasts the upcoming year’s major themes. In his latest newsletter he focuses on thirteen recommendations for stock investors facing a long bear/recession. The first five are directly linked to the subprime mortgage meltdown:
“Sell or sell short homebuilder stocks and bonds.
“If you plan to sell your home, second home or investment houses anytime soon, do so yesterday.
“Sell short subprime mortgages.
“Sell or sell short housing-related stocks.
“Sell or sell short consumer discretionary spending companies.”
“I say let the banks go under, new ones will take their place. We are a capitalist society or at least we pretend to be.”
I agree Sean. Plus it seems like it would be much less of a bureaucratic cluster-F if the government simply had to pay of the FDIC insurance rather than go through a prolonged bailout of these teetering banks.
Ridgewood
SLD 113 CIRCLE AVE $653,000 6/1/2006
ACT 113 CIRCLE AVE $669,000 9/2/2007
PCH 113 CIRCLE AVE $649,900 10/2/2007
PCH 113 CIRCLE AVE $624,900 1/15/2008
I don’t know why everyone is complaining. We have been told again and again and again for a year now that RE is going down, banks are taking a hit and we are headed towards a recession and lower short term interest rates are headed our way.
I did not have the guts to hedge the fall in my home price by shorting the ABX etc. or to sell my home and rent.
I did not have the guts to bet against Citi or other big banks and I should have.
I did lock in as much as I could in 1-3 year investment grade, munis and CDs to avoid CD rate reshock, but that just protects prinicpal it ain’t making me money.
I did switch jobs in 2006 to get to a company that would not be affected by the RE crash and that worked out.
I did not trade up homes and that worked out.
I missed out on the big opportunities to cash in on the RE crash which bothers me but I was smart enough to protect my job and my downpayment funds.
I knew plenty of people who took high paying mortgage related jobs and used ARMS to buy high priced homes. Directly correlated, once homes crash they lose jobs. They could have hedged their bets and did not.
We all saw this coming it was telgraphed to us via this blog and again in August of 2007 in every newspaper in the country.
Why the sour grapes? We are all big boys and girls.
STu,
I understand what you are looking for and i believe that that info is available on NJ.com, it would take a couple hours to compile and compare the data, but it is there
129 grim
spot on
Anyone want to take a stab at their current position?
Profit? Any suggestions or possible scenerios of Making Money?
A $75,000 loss in Ridgewood? Inconceivable!
#133,
John, The complaining is about the fact that prices are down, in fact they are up in NYC and Gold Coast, so keep it quite for now.
“Anyone want to take a stab at their current position?”
JB [129],
The same with Gross.
Beats the 150k loss the owner would have if he kept the home to next year, congrats to the seller and a big ha ha to the idiot who bought it.
grim Says:
January 15th, 2008 at 12:41 pm
A $75,000 loss in Ridgewood? Inconceivable!
Make,
Pick a “name” and stick with it.
137 & 140
The Ridgewood listing is still Active.
“I don’t know why everyone is complaining.”
John [133],
Who’s complaining?
-$220
Hey, wasn’t bi talking about a bottom in financials and the homebuilders on one of the only up market days of the year last Thursday?
Wonder what his next brilliant statement is gonna be?
Waterer it is historically you would be a fool not to bet the opposite. As a matter of fact, I think some people on this board are already doing this and making out like bandits.
Prices are not up on the gold coast, some new high end inventory hit the market in 2007, that does not mean prices are up.
Lets say your bought a house in 2005 for 550K and poured 200k into flip and now you sell it for 700k, it looks like the house rose in value 150K when in realty it fell in value. Tear downs, high end condos etc do wacky things to prices. The gold coast had a lot of that.
NYC prices are up for two factors, wall street money and foreign money, well wall street money is dead and once prices start falling we will lose foreign money.
You people have thick heads if you think RE is coming back in 2008.
Frank Says:
January 15th, 2008 at 12:42 pm
#133,
John, The complaining is about the fact that prices are down, in fact they are up in NYC and Gold Coast, so keep it quite for now.
Somebody posed the inflation/deflation scenario earlier.
http://www.financialsense.com/fsu/editorials/ciovacco/2008/0114.html
grim Says:
January 15th, 2008 at 12:43 pm
Make,
Pick a “name” and stick with it.
This went right over my head, but thanks anyway.
#137 A $75,000 loss in Ridgewood? Inconceivable
But it has Blue Riboon Schools, and its a train town, and its oh so close to NYC, and it’s a Wall St town, and it has charming older colonial and Victorian homes, and a delighful downtown, and exquistite restaurants, and trendy expensive stores!!
This cannot be!!!
re: Greenspan
He is doing it for the executive Jet privleges.
Paulson & Co, hired him because they plan on doubling down on the credit crisis and need a Greenspan to kept saying the word recession on TV for the next coulple of years.
What’s a 340% return when you can turn it into 10,000%?
http://www.pionline.com/apps/pbcs.dll/article?AID=/20070709/FACETOFACE/70705017/1021/TOC
Can the global commodities boom survive a U.S recession?
By Clifford Krauss
Published: January 14, 2008
The price of copper has tripled in half a decade. Zinc has doubled. Wheat and soybeans rose 70 percent last year. Crude oil, silver, lead, uranium, cattle, cocoa, corn – all are at or near record prices – while gold hit a historic high of more than $915 an ounce Monday. 9(continued).
http://tinyurl.com/3cgu9t
OT
but apparently the hand recount in NH shows that obama won the democratic primary there
Clinton’s hand count share of such votes is 47.07% to Obama’s 52.93% share and a virtually exact reverse pattern occurs with machine counts where Clinton’s share is 52.95% to Obama’s 47.05%.
http://www.unobserver.com/index.php?pagina=layout5.php&id=4271&blz=1
#106 – gary
i hear you. i don’t see a lot of new listings, and when i do get one, they’re so overpriced. it’s nuts- like they live in a cave. it’s frustrating, because i’ve seen the pattern – put it on the market at a stupid price, let it linger for months and months, and gradually lower the price – then it becomes for sale and for rent – rent is too high, so nothing happens.
i’m beginning to wonder if i should just negotiate a nice rental, and forget it for a while. my kids will be out of high school soon, i have no family in nj, so who needs it?
# 153 i’m beginning to wonder if i should just negotiate a nice rental, and forget it for a while. my kids will be out of high school soon, i have no family in nj, so who needs it?
Wny not throw some bids in on houses you might be interested in? That is what I am going to start doing come end of Jan begining of Feb;all the sellers can do is say no.
Ket,
How do the report results of a hand recount that has been asked for but that has not yet happened?
101 kettle 1 re leaving NJ
Just curious. In general, where would people go that is better than NJ? Everyone always says that, but I can’t think of anywhere.
Pennsy?
North Carolina?
Anyhow, we are here too because of family because why would you leave your family? Although, if I did leave, I think I would leave the country.
From the FT:
McKinsey warns of threats to US financial leadership
The US looks poised to lose its mantle as the world’s dominant financial market because of a rapid rise in the depth and maturity of markets in Europe, a study suggests.
The change may have occurred already, not least because US markets are beset by credit woes, according to research by McKinsey Global Institute, a think-tank affiliated to the consultancy.
“We think the differential growth rates are so significant that it is quite likely Europe has overtaken the US,” said Diana Farrell, author of the report.
Kettle1:
When I have time, I will do the math. For now I have work related homework.
Ultimately, the problem is with the outrageous benefits (mostly pension and medical) promised government retirees. They can halt new spending, but they must still continue to fund the ever growing retiree rolls with tomorrows dollars today.
Grim,
As I said last week, time to get your Euro passports people. The next 10 years could be brutal in the financial sector if more and more financial leadership moves overseas. Even the mighty Citi is literally on its knees. Not good.
Mike,
Already have one.
From the WSJ:
Home Sellers’ Pain Is Renters’ Gain
By NICK TIMIRAOS
January 15, 2008
There’s one bright side to the housing crisis: some lower rents.
——————–
This is the highlight, to me, of the article Grim posted just below this one. The WSJ says lower rents are a “bright side” to the housing crisis. That must be because landlords are so busy twirling their mustaches they don’t really need the money. Why is the fact that prices have to come down not a “bright side”?
Do they write in crayon there already?
#136 – Good idea – let’s talk about how to make money. You know there will be big losers from the current chaos, but big winners too. Here’s some ideas (without shorting or anything too too risky).
1. Keep a lot in cash, but when a recession is OFFICALLY DECLARED, buy large cap growth – a Russell ETF is available
2. Watch your targeted aspirational real estate area – mine is waterside (or water-near) Hob and JC – and buy when prices go down at least 30%, preferably more (live in condo and sell within a number of years at desired profit level)
3. When the smoke clears a bit buy stuff that will benefit from credit market turmoil – one is this Highland Distressed Opportunities closed end fund (HCD) – doing absolutely $hitty now, but should benefit when risk appetites return to normal. Run by absolute sharks, have come out on top, way on top, before.
4. Buy RWT – Redwood Trust – REIT, currently looking at distressed properties, poised to benefit from crash
5. Anyone else have any ideas?…
From Reuters:
Merrill Lynch braces for record-setting pain
A $20 billion fourth-quarter write-down at Merrill Lynch & Co Inc’s would not wreck the company, but it might force new Chief Executive John Thain to sell a major asset and cut deeply into the company’s capital intensive fixed-income division.
Thain has announced capital infusion deals of nearly $13 billion in the past month. And analysts say that’s enough for Merrill to weather a $15 billion write-down of subprime mortgage related assets in the fourth quarter. The day of reckoning is on Thursday when the company releases year-end results.
#154 – 3b
i could do that. but, i guess what i’m thinking is kinda what ann (i think) said, that the sellers have to come to the realization themselves. i’ve seen some not very expensive houses come down well over 100K, but it takes a while-and many of these just linger.
also, prices got so detached from fundamentals, that i’m not even sure what things are worth. doing the calculations that some have suggested here (X% annualized gain over 2000ish prices – or rent to cost of ownership) leaves such huge gaps in the number i come up with and asking price that i can’t imagine the seller accepting.
When the DOW hits 2500, & the S&P hits 500, buy, you’ll double your money over the following Decade.
SRS
The train has already left the station, but I have a funny feeling that when Ben cuts the interest rate .5 or .75, you’ll get a one day buying opportunity, probably lower than it is today. I’m hoping and praying I can take some long term gains on this bad boy since I have some really, really decent gains on it. That would require me to hold on through early August of 2008. I might sell half at 150 for a 60% gain which just might occur prior to the FED meeting.
I agree with your large cap growth assessment, although finding the bottom is tough. If Obama gets in, that might make a nice entry point.
If you MUST go long, I would look at higher education as a sector and maybe the old health care and consumer staples issues. It’s probably much safer though to do corporate bonds in non-financial related companies. Take the 6-9% and collect cash for the cycle turnaround. I just hope it’s quicker than what Japan is going through (20 year bear market caused by inflated RE prices. Who would have guessed?).
Confused:
You might be exaggerating just a tad. I can see the Dow at 8 or 9K, but not 2500. There is still ‘some’ growth going on and the majority of the pain will be in the financial/housing related sectors. Sure retail might get pummeled too, but once people curtail their spending (and they will when their house is worth 30% less and they’re upside down on their mortgage), oil will come down and lots of companies will do significantly better because of it.
Re: If Obama gets in, that might make a nice entry point.
I am buying some Muslim Islamic Value Funds if Obama gets in.
#164 tcm: Agreed. But in my case I just feel like I will be actually taking part in the process, rather than being passive on the side lines.
I fully expect that my initial offers will be turned down, and sellers will be insulted (who cares, its just business).
And I expect it may take me the better part of this year before I am successful, but time is on my side.
Real estate is dead, the fact that many sellers still refuse to believe that, does not change it.
Can anyone access the MLS for Ocean County? I don’t have the number, the address is 291 Central Blvd E, Brick, 08724.
It has gone on and off the market several times over the last year, now it is a FSBO on Zillow.
kettle1,
If you are not willing to move, my next suggestion is to get active in your local & state politics and vote these muzie bags out the door.
SAS
#161 Ray: Why is the fact that prices have to come down not a “bright side.
It will be as the year progresses, it is the only thing that will get the real estate market moving again.
Hey I am saying RE is dead but not everything is dead. My company is having a great year, not everything has to do with mortgages and retail you know.
RE is kooky now, last year I went nuts and looked in the town I really like but prices were still high. Got a call from realtor today from last year and I tell her I am not interested in even looking at an open house till 2009. I told her MLS has same prices for homes in that neighborhood since last year. She tells me that owners refuse to cut listing prices but eventually her market research shows selling prices are off 7%. The she tells me I should go to the overpriced open houses and her exclusives and make lower bid offers on several houses and deal with the owner listing sitting for months on end before they cut the price.
I then ask her if houses are worth 7% less than last year why don’t you just price them at 7% less? She said honey it does not work that way.
“where would people go that is better than NJ?”
you serious with that question?
I like the Carolinas, Colorado, Texas, Virginia.
These states are not perfect, but have more to offer than NJ.
Only thing NJ offers is its location to nyc & good pizza joints. Thats it.
“not everything has to do with mortgages and retail you know”
True, I have a friend who makes signs. He is making a killing right now with all those “For Sale” signs he is supplying to various real estate companies and private individuals.
yeah man, this guy is maken good money right now.
SAS
Does anyone here feel that RE agents are not encouraging their sellers to lower prices as they are afraid of losing some in commission if the house sells for less? Especially when considering how their gravy train of the last 4 or 5 years has dried up?
I’m just curious and mean no ill-will to the informed RE agents who frequent this blog.
Interesting Read on Rubin/Greenspan Chicanery;
http://www.jensenstrategic.com/pdfs/The_Economic_Rebalancing.pdf
hughesrep Says:
January 15th, 2008 at 2:01 pm
Can anyone access the MLS for Ocean County? I don’t have the number, the address is 291 Central Blvd E, Brick, 08724.
It has gone on and off the market several times over the last year, now it is a FSBO on Zillow.
hughesrep: I know a realtor down there, do you want me to check?
Citi thinks home prices can go down another 14 % but what the hell do they know
“Does anyone here feel that RE agents are not encouraging their sellers to lower prices as they are afraid of losing some in commission if the house sells for less?”
I don’t really think so. For an agent, a commision is better than no commish at all.
Sellers just don’t want to believe that there house isn’t worth as much as they thought & also, some people just can’t lower prices, it will wipe them out, they need to keep it at current levels and hope there is the greater fool out there.
SAS
“Citi thinks home prices can go down another 14 % but what the hell do they know”
they do know, that they know, that they have no idea how far this RE market is going to fall and how much they are going to have to write off due to RE, commercails RE, and CC defaults.
he..he..
; )
SAS
#180,
I have had more than a few friends in the last 6 months let their listings expire and then try to sell on their own without a realtor to make up for a discount
#178 chicagofinance:
I don’t want you to go out of your way. It is around the corner from me. I’ve had my eye on it over the past year as a “maybe if the price were right”.
I’m just trying to gauge how far down the sellers have dropped their pants so far. You know, before I decide to bend them over.
My contact is a client, so we are talking all the time. Check or no?
If it is not a hassle, I would appreciate it.
Frankly, the Fed’s behavior is far less a problem than Wall Street’s. In the past decade alone, a rotating cast of institutions has assisted Enron and others in hiding their fraudulent accounting, issued bogus “buy” recommendations on companies that happened to be lucrative banking clients, and papered the world with toxic debt. Call it the P.T. Barnum school of business: “There’s a sucker born every minute.”
Or to play on an old brokerage ad: When Wall Street talks, don’t listen.
“I have had more than a few friends in the last 6 months let their listings expire and then try to sell on their own without a realtor to make up for a discount”
yup, thats usually the next step, and not always the wise thing to do.
perhaps Clot might comment on this one…
Commercial RE…
I have a question regarding COMMERCIAL/INDUSTRIAL…
I just had an agent tell me prices are NOT coming down, that industrial is at 8% vacancy statewide, businesses are clammoring to come in to NJ due to ports, etc., and 8A area has tenants signing leases 1 year b4 the bldgs are completed…
He also told me office space is at 17-18% vacancy.
He said buyers cannot get financing, so sellers are taking bldgs off market. I asked what about sellers who cannot carry costs… he wasn’t clear, but said “they’re just sitting” on them…
I’m looking at prices in the $65-115 sq ft and want to know if this, too, will come down.
Wow. CFC is back in the 5’s. I hope those lucky ones who bought on the rumor, sold on the news.
http://tinyurl.com/yvhlm7
What does this say about the merger? Does the Street think it won’t go through?
G’night from Chennai!
Bank of America to cut 650 investment banking, markets jobs
>>
Are any of these jobs around NYC metro?
#190 njrebear: A bunch of them uptown NYC, Fixed Income sales trading and IB (munis & corps).
Coule somebody get Address for MLS ID# 2474818
Thanks a lot!
3b 172
I guess it just irks me that no writer would say “it is good that purchase prices have come down 20%” (if they ever did). That was my point, somehow it is good for rents to fall, but bad for purchase prices to come back down. But there was nothing wrong with what he said. Just a victim of my frustration. I’ll start writing my own market reports for me to read alone, I almost always agree with what I have to say. Almost.
#168 John,
I know you’re kidding but in case you’re in a benevolent mood some day, here’s a fund for you: the Amana Growth Fund (AMAGX). It is a large cap growth fund that invests “based on Muslim principles or Sharia”, and has done consistently well. They also have an Income Fund.
As far as Obama is concerned, CNN Money did a piece on the current millionaires-in-chief at http://money.cnn.com/galleries/2007/moneymag/0712/gallery.candidates.moneymag/5.html :
“Excluding Michelle Obama’s retirement plan, whose value needn’t be reported, the couple has about $715,000 in investments. All the money except for two very large checking accounts is in mutual funds. About $350,000 is divided between Vanguard FTSE Social Index Fund, a socially responsible fund, and Vanguard Wellesley Income, which has a mix of 60 percent bonds and 40 percent stocks.”
Looks like we just might be in for another mediocre President.
#173 John They have a lot more to go down than 7%.
sas Says:
January 15th, 2008 at 2:11 pm
“where would people go that is better than NJ?”
you serious with that question?
I like the Carolinas, Colorado, Texas, Virginia.
These states are not perfect, but have more to offer than NJ.
Only thing NJ offers is its location to nyc & good pizza joints. Thats it.
The only thing wrong with NJ is cost of living and politics. If you can avoid the politics and afford to live here, it is better than any state hands down.
I came up with an exhaustive list, along with another fellow blogger on this board, a few weeks ago about practically every other city/state in this country.
“I like the Carolinas” – They have Raleigh (RTP) and Charleston (Finance); We commented greatly about them.
“Colorado” – Denver? It’s the midwest. Can we say Columbine?
“Texas” – Houston (Ghetto), Dallas (Eh, I can think of better cities), Austin (Overrated)
“Virginia” – The state where those from the northern part want you to know they are from the northern part. The rest of the state might as well be West Virginia.
Al,
134 Mercer
RE FSBO
Take the three realtor listed houses that most closely matches your own and then list it for 5% less than the cheapest listing via a FSBO, advertise very heavily for the day one open house and try to time it with a heavily advertised realtor open house where their clients are forced to drive by your house. Give it two to three weeks then call realtor. In a falling market, price sells and without a realtor you might be able to do it. Trouble with listing then going FSBO people think there is something wrong with house. I also would recommend advertising in the local papers of the neighborhoods where new people are moving in from.
Speaking of West Virginia. Has anyone noticed the infrastructure change while driving through Maryland to West Virginia, especially through Harpers Ferry. It is like getting of the Garden State Parkway an exit Haiti.
Thank you !
177 156 sas, ann
I seem to be in a limbo of sorts. We are currently renting and will continue to do so for the next couple of years. I dont really want to dive into local politics if i am not going to stay in the immediate area long term. Ideally in about 3 years we would buy, possibly in southern sussex county ( sparta) or similar area.
The other stumbling block for me is that i have not come to terms with staying in NJ. Being able to raise your child around your family is a huge factor, but all of the other factors say GET OUT. If i really pushed, my wife would probably agree to leave NJ, but i do not think that it has gotten to that point yet, for the kettle family at least.
As to where would we go? possibly southern NH ( we know and like the area); i have family in NC but i have lived in the south before and do not know if i really want to again… it would take some soul searching. Regardless i will not stay in NJ if i think it has no opportunity for me and my family or if i think we have a noticeably better opportunity elsewhere ( its already close to this one)
so who called the DJIA at 12,500 in 08, sas 3b???
it 12507 right now and -270
speaking of west virginia, maybe i will call the Re agent about this place
http://www.era.com/trulialisting/2406404.html?utm_id=20
the price may be right!!! ;)
Does anyone know about area around James Madison U in Harrisburg Va.Have an opportunity at the school will be down there next week to interview.Don’t know squat about Va.
174 sas re other places other than NJ
“you serious with that question?
I like the Carolinas, Colorado, Texas, Virginia.”
Yep, I’m serious! Aren’t Virginia and Colorado just as overpriced as here? Texas, I guess if you’re from there, but I can’t see myself there and are there more jobs there than here? Same for the Carolinas.
202 Kettle I think it was shore guy.
164 tcm
Yep, that’s my theory, that the chance of real lowballs being accepted (more than 10%) is still low and sellers have to get to reality themselves. You can even see it in the lowball data grim publishes. The percentages are HUGE against original list price, but not as big against list price.
You still have nothing to lose though!
That is Harrisonburg VA.
…but we all know that 12.5K is the bottom.
OK, texas if off my list…
Dozens Report Mile-Wide UFO Over Texas
http://ap.google.com/article/ALeqM5hrFLORohm1ZxTh_d9jY-Zrencj0QD8U5UO580
Vodka (47)-
In the end, deflation always wins.
193 RayC
Remember, most of the people in the media own real estate! No matter how objective they want to be, it’s painful to write “RE prices falling 20% is a good thing” when you own.
speaking of Virginia/West Virginia, in the Civil War the former fought for the south and the latter for the north, fwiw
Ann,
Only if those in the media need to sell.
Rich
kettle (63)-
To see how deflation always prevails, look at Japan. The gubmint inflates and inflates to stimulate growth (or create the illusion of growth). However, a point is always reached at which the hyperinflation ceases to have an effect.
At that point, asset values collapse, lenders contract their activities (sound familiar) and a deflationary credit crisis ensues.
180 why won’t sellers lower
In my six month househunt, where I’m sure I saw dozens of houses in NNJ, there were very few sellers who actually would be underwater if they lowered their prices.
There were the elderly in assisted living, literally half-dead, who couldn’t understand why their bozo neighbor got that price two years ago while their houses rotted in the ground, buyers-uppers in their 40s who would only sell if they got X price and totally wasted our time, even the house of a dead man was overpriced.
As far as listing agents, I would bet they are trying to get their clients to lower, but that’s a delicate situation. It’s also admitting that you were wrong to advise them to list at that price (which helped you get the listing).
““Colorado” – Denver? It’s the midwest. Can we say Columbine?”
Like they say on those Budweiser commercials when I watch football….
Dude!!
if this is your logic of thought, then best of luck to you.
btw- you should research serotonin reuptake inhibitors, you might be surprized.
: )
SAS
214 Rich
But no homeowner wants to think that their house is plummeting in value, no matter when they are planning on selling. I’m thinking it’s actually a subconscious writing block on their part.
Ann #205, Cary-Apex NC feels just like New Jersey, just newer and cleaner and less ethnic. Not nearly as many jobs as this area, though, that’s true. But it may not matter, they have fewer people too. I believe actual unemployment is quite low.
CLOT 215 If that is the case ,then cash should be king?
grim (67)-
One of my clients right now is an investor who (fraudulently) lined up a series of neg-am, owner-occ loans on investment property purchases in 2005. He’s now at the neg-am cap on his last property; I’ve been able to unload the others before the clock struck 12. On this one, he never once made any payment other than the minimum! Best of all, he overestimated his anticipated rent (of course, no budgeting for vacancy factor), so the dump was cash flow-negative from the get.
His latest pronouncement to me?
“I’m in it to win it.”
Bring back debtor’s prison.
This last sale is gonna r#eam him from stem to stern.
“Aren’t Virginia and Colorado just as overpriced as here?”
No.
mike (220)-
Except for the fact that hyperdeflation- like hyperinflation- erodes the purchasing power of cash.
Think Weimar Germany.
219 sync
That’s what I’ve heard too, that if NJer wants to move to NC, Cary would be the best place, where they would feel most comfortable.
“Remember, most of the people in the media own real estate!”
Correction:
the media owns YOU the consumer, be it RE, autos, ipods, whatever…
SAS
Gold, baby…gold!
All disclaimers.
Hey Clot,
It’s Inflation Stupid
Holding onto its “all is well” bias like a terrified cowboy on an enraged bull, Wall Street has managed to convince itself, and much of the world, that inflation is a non-issue. When confronted with facts to the contrary, their rationalizations come fast and thick. Nowhere is this spin more pronounced than in their dismissal of the surging price of gold as a relevant indicator.
Rather than favoring the logical conclusion that the rise in gold prices results from an inflationary expansion of money supplies around the world, Wall Street has credited its rise to other factors. The most common explanations include strong economic growth, rising jewelry demand, speculative buying, higher oil prices, the weak dollar, terrorism, uncertainty, middle east tensions, volatility, supply and demand, etc. Every possible explanation is offered save one, inflation.
http://www.europac.net/externalframeset.asp?from=home&id=11400
Did anyone notice C s right off on CC today I belisvs it was 1.1 to 1.3 bil,very telling.
Next on the hit parade of trouble for banks.
what wrong clot you dont like silver???
#213 njpatient: Actually West Va was part of VA. but sympathetic to the Union, and as such was admitted to the union during the Civil War.
As I understand it, West Va, constitutionally has no legal right to exist. The union was sovereign, and indissolveable, as was each state in the union.
At the end of the Civil War, Va. pettioned the Federal Govt to have West Va reincorporated to Va. the Supreme court sided with West Va,a nd Va’sd application was denied.
I was screaming Gold back when this blog had only 8 posts/day ; )
However, I still like silver better than gold.
Silver = poor man’s gold.
SAS
Citibank Layoffs
Citi Job Cuts Expected After Huge Losses Posted
Citigroup Inc. is expected to announce thousands of job cuts after posting dismal results for the fourth quarter, when the bank’s mortgage-riddled portfolio lost billions of dollars in value.
Citigroup swung to a loss of nearly $10 billion in the fourth quarter as it took a write-down of $18.1 billion for bad bets related to the mortgage industry, the bank said on Tuesday.
On the hunt for cash, the nation’s largest bank said Tuesday it also got a $12.5 billion investment from outside investors, including $6.88 billion from the Government of Singapore Investment Corp.
Word has been 14,000-20,000 jobs.
sas,
if this is your logic of thought, then best of luck to you.
btw- you should research serotonin reuptake inhibitors, you might be surprized.
I don’t have to think, I know. I worked there for a year. It has to be the goth/emo/kill myself kid capital of the world. Those kids wouldn’t have to take SSRI’s if were from somewhere else besides the midwest.
SSRI’s are not the reason Columbine happened, Denver is:) I can break down the logic if you so would like.
i love the pictures from the weimar republic where the woman is using treasury bills as fuel for a fire :)
and maybe i missed the point, but that was hyper-inflation,, not deflation
Clot [226],
Watch out for hiccups in the short term.
Vodka (229)-
I actually love silver as much- or more-than gold.
As BC says: hi-ho.
The one thing you can count on is that when gold runs hot, silver runs hotter.
All disclaimers. Most rappers have more silver and gold in their mouths than I will ever touch in a lifetime.
The top suicide states:
http://www.afsp.org/index.cfm?fuseaction=home.viewpage&page_id=05114FBE-E445-7831-F0C1494E2FADB8EA
State Depression List: (Happiest to Saddest)
NJ is the #3 happiest state
http://www.msnbc.msn.com/id/22044451/
BC (235)-
I see something that makes me hiccup- or retch- at least once a day.
Gold could drop to $700 right now, and it’d be better than a full day of doing what I do.
“Those kids wouldn’t have to take SSRI’s if were from somewhere else besides the midwest”
that’s right, and if your a kid in NJ, you take meth.
Its like putting perfume on a pig.
SAS
#219 If you seriously consider North Carolina. Because of schools, crime rate, amenities, etc. Here are my picks for the best places to live in NC.
Charlotte area
1 – Mooresville, NC
2 – Fort Mill, SC
3 – Denver, NC (Give it 2 years)
Raleigh/Durham
1 – Cary (Bit Stuffed but nice)
2 – Apex (Cary overflows into Apex)
These areas are very NJ feeling because a very large portion of the residents are NJ/NY/PA people who moved south.
222 sas
Ok, correction. Isn’t anywhere someone would want to live or could find a job in VA or CO just as overpriced as here?
There are plenty of cheap towns in NJ too.
if you are considering where to move, you might want to consider changing climate patterns. global warming impacts could make some places not so pleasant in 10-15 years (i.e the southwest that may be entering long term drought etc)
212 Ann,
You are right, of course. I may never have come to the understanding I have now if I owned Real Estate. And I’m sure if I ever buy, I will be looking for the comps to go up. Like the next day. Human nature, I just needed to vent. I do feel better having said it and gotten a response. Maybe this blog obsession is a good thing.
“There are plenty of cheap towns in NJ too”
town might be cheap, but the state is not.
50+ billion deficits, does’nt matter what town in NJ you live, that is going to come out of your wallets.
But hey, what do I know ; )
SAS
SAS,
that’s right, and if your a kid in NJ, you take meth.
Its like putting perfume on a pig.
Please stop and use discretion before making your statements, and where do you live Plainfield?
http://www.pbs.org/wgbh/pages/frontline/meth/map
Meth can be legally prescribed under the trade name desoxyn for ADHD and narcolepsy FYI
Shore Guy Says:
January 15th, 2008 at 11:58 am
It looks like the DJIA is on its way to 12,4xx today.
Pretty good call
SAS 238 NJ is heroin not meth we have other states for that ,very sad.
#240. All the good paying jobs in NJ are pretty much Edison, NJ and North or close to Philadelphia.
Atlantic City is pretty much a bust.
Even across the borders into PA the deals dried up a long time ago.
You really have to commit to a long commute to get a good deal. But then the Car Insurance companies will rake you over the coals and the high gas prices will add their toll. Still taxes aren’t easy no matter where it is in NJ.
Seriously unless housing in NJ drops another 20% the income to home cost ratio’s don’t work out well for a home buyer.
Even Grim is a renter. It’s just not the time to buy in NJ if your serious about staying in NJ.
Rent close to work in NJ is my suggestion.
i believe that shore called the DJIA at 12.5 when we were doing new years predictions
BOA Cutting 650 jobs, selling prime brokerage:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDxUEXjpbSm8&refer=home
I hear ShoreGuy is going to Paulson with Greenspan
Looks like Colorado has quite the drug problem.
http://www.oas.samhsa.gov/2k5State/Ch2.htm#Fig2.1
hey gary, i agree with you, there’s been no change in price at all. Moldy neglected colonial neighborhoods or POS-hunting shacks from when Plainfield was in it’s prime, all going for 1/2 a million now with 2 out of the 3: oil, septic, &/or well.
… this article below is from the spring when citi cut jobs, wonder if that’s what propped up various areas around here this past year?
March 2007
“…Citigroup will announce a broad restructuring plan that could involve the elimination or relocation of as many as 15,000 high-cost jobs from areas including New York, London and Hong Kong…”
“With the restructuring, some jobs may also be moving to less expensive cities in the United States, like Buffalo, N.Y., Warren, N.J., and the suburbs of Cincinnati, Ohio.”
http://www.nytimes.com/2007/03/26/business/26cnd-citi.html?hp
Will it again going forward into ’08 too? BOA, Merrill, etc? in addition to various other companies keeping an NYC flag-ship but send the bean counters & lawyers etc. out this way?
Kettle 249 I thought he called 1200,we will have to wait for shore.
Ann (218),
I think I’m reacting to the whole media conspiracy feel your comment had. But I’ll go along with the “subconscious writing block on their part”.
Rich
Was it Richard that stated, don’t bet against the US consumer?
Why does everyone think NJ is expensive cause real estate is expensive. What happened to renting. People rent out properities for less than the cost to own.
Lets say you went to buy a cadillac and were told total cost to own was 40K over 4 years assuming you want to give it back in 4 years. Then dealer says I will lease it to you for four years at 20K, everyone will lease. In houses people can’t wait to pay double to own to avoid stigma of renting.
Bob,
I believe you are correct sir.
Maybe the consumer will bounce back this month…
Rich
#204
Don’t know much about that area of VA but wanted to mention to watch your speed when driving in VA. This summer a relative was leaving VA Beach after a weeks vacation and didn’t realize she was going 20 miles over the speed limit. She was pulled over and given a ticket (I’m sure the NY plates didn’t hel). She thought she would just have to pay a fine by mail. Nope. She had to appear in court, get a lawyer, etc. The fine would have been thousands except that it turned out the lawyer and the judge went to law school together. She had the charges reduced and she had to pay about $150 in fines. This was on top of the flights for herself and her husband, the two days off work, rental car and hotel.
Just heard the other day that a bicyclist was given a ticket in VA for speeding.
BC 256 There is no money left to bet only debt.
Willow 259 Thanks for the heads up.I guess
I will have to get the lay of the land myself.
Willow,
Read this the other day; not on Forbes, but on MSNBC.
http://finance.yahoo.com/family-home/article/104065/The-Most-Expensive-States-for-Speeding-Tickets-2007
20 MPH over in any state other than your own is looking for trouble.
Intel reports 51% jump in net income
By Benjamin Pimentel
Last update: 4:24 p.m. EST Jan. 15,
INTC 22.69, -0.39, -1.7%) reported fourth-quarter income of $2.27 billion, or 38 cents per share, compared with $1.5 billion, or 26 cents for the year-ago period. Revenue for the quarter grew more than 10% to $10.7 billion. Analysts expected had expected Intel to report earnings of 40 cents per share on revenue of $10.84 billion, compared with 26 cents per share on revenue of $9.69 billion for the year-ago period, according to Thomson Financial.
miw [260],
Baseball cards? However, they are even tainted, steroids.
Was it Richard that stated, don’t bet against the US consumer?
Richard, Bi, Donald Duck and MYSELF…
Intel down 10% in AH. I would like to read their outlook. Tomorrow may be brutal for Nasdaq
INTC is getting pummeled after hours. Man this market is getting ugly fast. I wonder if we’ll get a pre-meeting cut.
Jinx
BC I forgot debt is money in our present system,we can bet worthless mortgage backed securities.
“Please stop and use discretion before making your statements”
thats awfully kind of you to post that graph of “reported” cases.
“NJ is heroin not meth we have other states”
You may be right, but I have my sources as well.
and my sources tell me that one family owns the heroin market in NYC, another family runs the meth market in NJ. and I don’t question those guys or I will be floatig in the meadowlands.
but like I said in an earlier post “hey, what do I know”.
“Recapitalization of the banks is heavily dependent upon the investment appetite of sovereign wealth funds and banks in Asia and the Middle East. Given the size of the requirement and the frequent trips, this well is at risk of running dry.”
http://www.minyanville.com/articles/AXP-cof-libor-CDS-swap-cdo/index/a/15545
There are NJ towns with good governance and they deserve to be mentioned.
One of them is Weehawken.
A quick snapshot of Weehawken back in mid 1980s – The mayor was convicted of extortion and did 3 years. 40% of town’s tax base vanished when railroads went bankrupt and stopped paying taxes on their waterfront properties. A rapid demographic shift took place as longtime residents fled in droves and were replaced by Cuban refugees. State auditors decertified the school system in part because it was segregated.
Then Richard Turner, a technocrat with expertise in municipal finance and budgeting, was appointed by the state to manage Weehawken’s affairs. He moved there and was elected mayor. Twenty years on, due to solid governance, the town is back in good shape.
The town’s tax base has grown substantially, reflecting a pro-development attitude that is rare in most of NJ. Today, commercial property owners fund more of the town budget than homeowners. Property tax on my home, for instance, has gone up 3.2% per year since 2000 – hardly unreasonable.
The school district, judging by test scores, is average by NJ standards. But it is a lot better than its urban peers in a couple of ways. First, student performance is decent. Second, the school budget is financed mostly by local taxpayers, not state handouts.
Savvy governance has brought other benefits. Take the new waterfront park that opened a few months ago, complete with fancy sport facilities like football and baseball fields. The developer who owned the land was persuaded to build and pay for the park and ultimately donate it to the town. Already, the mayor has leveraged this multimillion dollar asset – not by putting debt on it – but by trading time on the fields for a couple of full scholarships and other benefits with Stevens.
Sorry for the long post. I didn’t realize it would be that long. And by the way I am not the mayor of Weehawken. I just think he’s doing a good job, and I want to counter the whiny tone that sometimes exists in this blog.
“INTC”
analysts at work again.
Analysts serve 2 masters: banks & shareholders. and do a great job of pump & dump.
Don’t trust em…
SAS
pretorius,
you running for a city council spot or something?
ok, Kudos to Weehawken.
SAS
242 RayC
I totally agree that it is lame beyond belief that the media can’t ever say something like “it’s a good thing that prices are dropping.” It is, at least for some people.
I do think it’s mostly subconscious, not a conspiracy, but part of being a journalist is being able to be objective.
“you running for a city council spot or something?”
Nope. I’m merely an objective observer of NJ politics and a voter.
#202 “kettle1 Says:so who called the DJIA at 12,500 in 08, sas 3b???”
Ket,
I don’t know that I “called it,” but I did say that given everything that was going on I would not be surprised if it reached 12,000-12,500. I just did not think it would happen this closely.
pretorius,
“I’m merely an objective observer of NJ politics and a voter”
good. now only if we can gets the rest of the population to think like that.
But, I think McDonalds & TV wins out everytime.
SAS
moderation?
here we go again.. Red China…
he he…
SAS
Pre,
And a property owner in Weehawken too?
Whiny tone? Housing market is crumbling and you read a majority of the posts as having a whiny tone?
Huh, and REinvestor reads the posts as everyone is overly happy about the turn around in the market (and evil for doing so).
Unless of course you two are “reflecting”…
Rich
wee: they just locked up the mayor and his wife. No.
just another run of the mill nj town.
Sas,
Meth is a homegrown drug that tweakers makes. Having a “family” control that is like hearding cats. And it is dirt cheap, no profit, like crack/cocaine. The “families” control the big imports (i.e. Heroin, Cocaine). Now, I can provide a link to major import busts of drugs that are shipped to the U.S. through port Newark, etc. Those imports are being delivered to someone controlling group or “family”.
You may be right, but I have my sources as well.
I am sure those guys are statisticians and are monitoring their inbound state supply vs. the rest of the country. NJ is small peanuts when it comes to the drug world. Florida, Texas and California is where it is at.
“closely”? DUH! That is what I get for not paying attention to my editing. I meant “soon.”
http://www.usdoj.gov/dea/pubs/state_factsheets.html
DEA Drug seizures by state. NJ vs (any other state)
“And a property owner in Weehawken too?”
Yes.
“wee: they just locked up the mayor and his wife. No.”
Seems like your thinking of Guttenberg, not Weehawken. It is Guttenberg where the mayor and his wife have been caught accepting bribes from a local slaveowner. The Guttenberg mayor doesn’t think it is a big deal though so he isn’t going to resign.
http://tinyurl.com/3d5exx
TJ,
u may find of interest, of how all that black drugs money gets funneled into the financial markets.
Its pretty interesting actually.
If illegal drugs were gone tomorrow, the DOW would be below 10,000 in a blink of an eye the funds in your 401k might be a worth a little less.
Its called “the red button problem”.
look into it.
yee ; )
SAS
Huge amount of Latin American money laundered thru US banks, where it is invested in US stocks & bonds.
Most rich 3rd worlders trust anonymous bankers in New York and Switzerland more than they trust their own kith and kin.
pret –
i lived in there until 1999. it couldn’t have changed that much. you make it sound so great – compared to other hudson co. towns, it’s better, but it really isn’t a good place to raise kids – especially teenagers.
one of the best things about it was the fantastic commute – so many buses along palisades ave, and at the post office. i also liked bergenline ave. in north bergen and west ny. lots of really authentic restaurants and stores. there was also a great deli, i think it was called the central bakery, sort of in the back section of union city – (24th and central?) if it’s still there, you should go – again, really authentic – not hoboken fake stuff. i also used to go to a deli called ginos on palisades and 24ish – for pre-made dinners when i had family over and didn’t want to cook.
Stu Says:
January 15th, 2008 at 1:58 pm
Confused:
You might be exaggerating just a tad. I can see the Dow at 8 or 9K, but not 2500. There is still ’some’ growth going on and the majority of the pain will be in the financial/housing related sectors. Sure retail might get pummeled too, but once people curtail their spending (and they will when their house is worth 30% less and they’re upside down on their mortgage), oil will come down and lots of companies will do significantly better because of it
Split the difference Dow 5000, S&P 1000, Buy! Double your money in a Decade.
Hehehe Says:
January 15th, 2008 at 4:11 pm
BOA Cutting 650 jobs, selling prime brokerage:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDxUEXjpbSm8&refer=home
New York is definately one target!
230 3b
details, details
:)
Vodka (234)-
Sorry about the Weimar analogy. That was really massive deflation, followed by the German gubmint’s deliberate inflation of its currency.
t c m,
I generally agree with what you wrote. One reason I live there is the commute. If I had teenagers I probably wouldn’t live there.
However, there have been visible changes recently. For example, there were 3 factories that were vacant (not counting homeless residents) until 2 years ago.
One was redeveloped into luxury condos. One was demolished and turned into a parking lot. And the third was demolished and will become a residential building.
At that is happening within one block of where I live.
Park Avenue is improving too, with fancier things coming in like a gastropub and a wine shop.
291
Been to Antique Bakery on Willow?
As far as listing agents, I would bet they are trying to get their clients to lower, but that’s a delicate situation. It’s also admitting that you were wrong to advise them to list at that price (which helped you get the listing).
Even worse if you sold them the house DOH!
KL
“i also used to go to a deli called ginos on palisades and 24ish – for pre-made dinners when i had family over and didn’t want to cook.”
I go there too sometimes. Very good and very inexpensive.
When your family arrived for dinner, did you claim the meals as your own?
pret –
that sounds good. i actually liked it there – and i would recommend it over hoboken: (i lived in hoboken too)
first of all, more house for your money
second – arguably, better commute – at least to midtown
third – you can get parking! (with a house)
fourth – better views of nyc in many places
fifth – easier access to grocery store (important when you have kids)
sixth – felt more real – more of a mixture of people in terms of age.
t c m,
I agree with each of the 6 points. I lived in Hoboken for a couple years too. Weehawken has most of the Hoboken advantages but fewer annoyances and lower costs.
If you don’t mind me asking, why and where did you move?
Pre,
I am amazed at that park Weehawken built on their waterfront. That’s the type of give-backs you get when you have decent urban planning and local government that’s not completely on the make ala Hoboken.
Current Writedowns:
http://www.reuters.com/article/fundsFundsNews/idUSN1553893620080115
#299 – pret
“When your family arrived for dinner, did you claim the meals as your own?”
no, but i made my own salad – sometimes.
Soevereign Fund Investments:
http://www.reuters.com/article/fundsFundsNews/idUSN1554060820080115
Grim #67
Unfortunately, buyers who used these loans to purchase unafforable homes used the “minimum payment” as a way to increase “affordability” (In some odd Orwellian sense of the term).
I can tell you with a good degree of certainty that close to 85% of the borrowers who took out neg-am arms were making the minimum payment.
we moved to boston for a job opportunity.
“BC Bob Says:
January 15th, 2008 at 4:17 pm
Was it Richard that stated, don’t bet against the US consumer?”
Yes.
Hehehe,
Visiting the parks that have been built is an easy way to observe differences in governance quality between Weehawken and other Hudson County towns.
Compare what Weehawken got from Roseland to what Hoboken and JC got from Toll.
Best thing about Weehawken is the availability of Jolly Fat’s Weehawken Airlines
(anybody know what I’m talking about?)
Bernanke may move us from a “Fiet Cash System” to an “Asset Backed Cash System”. In keeping with the Current Cash Trend, the likely choice will be “Lead”. Only real concern is that much “Lead”, at Fort Knox, may tilt the Earth.
Ugh….stop with the Weehawken love. I don’t mean to sound close minded, but please. You are overlooking the weaknesses as if they are nothing.
The air quality is piss poor. In the summer you can feel the industrial diesel soot being blown up from 495, the helix, and the Lincoln Tunnel toll plaza. The park? You need a car to get to it, it may as well be in the next county. Almost every part of the town is segregated from the other because of natural boundaries of rock formations or else REALLY busy roads that have speeding traffic. You are practically land locked……
seriously…..it is really unpleasant and disgusting [due to pollution] except for the parts that are right on the cliff’s edge….
get one of these….save your lungs and add 10 years to your life…..
http://www.air-purifier-direct.com/catalog/shopping/Air_Pura_Comprehensive_Filtration_Plus_Air_Purifier
BTW – I am no snob….I know all the backroads up there….I used to walk to Riverside Audi and also an old “friends” place on Palisade Avenue from Hoboken.
Always got my car washed up the hill and my wife bought a Christmas tree up there….
Chicago,
Do you recommend that air purifier based on the years you spent living a few feet from the Weehawken border and a couple hundred yards from all the things in Weehawken you don’t like?
Damn, you lived closer to that bad stuff than most people in Weehawken. 80% of the Weehawken population lives within 2 blocks of the top edge of the cliff. Only the Shades neighborhood is exposed in a major way to the tunnel stuff.
I do agree that pedestrian access to the park is bad, although the main point is too give the school teams some better facilities.
chicago –
when talking about weehawken, it’s in comparision to other hudson co. towns – so if you are willing to breathe the air in hoboken, i think your lungs can handle weehawken.
as far as land locked, i always felt much more landlocked in hoboken when i lived there, although if you have a car, it shouldn’t be a problem in either town. actually, last time i was in hoboken a few months ago, it seemed so overbuilt and cavernous. i remember when i lived there, there was so much controversy around building condos on the lots on the waterfront – many said that they would block the views if too high, and give the town a more claustrophobic feel. well, they were right.
hey, i’m not saying people should rush to weehawken, but, come on, as an alternative to hoboken, i think it deserves a look.
if you really want fresh air, you need to get out of hudson co. altogether.
#294 NJ I love that stuff
plus, hoboken still floods, doesn’t it?
Hudson County the armpit of NJ.Please don’t split hairs on which town is better.I’ve been eating bread from central bakery before most here were potty trained & for those of us who grew up there success was getting the hell out.
If your single or newly wed, work in NY ,rent there.But when you can get out of the war zone.