From the Associated Press:
Homeowner Equity Is Lowest Since 1945
Americans’ percentage of equity in their homes fell below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday.
Homeowners’ portion of equity slipped to downwardly revised 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the fourth quarter — the third straight quarter it was under 50 percent.
That marks the first time homeowners’ debt on their houses exceeds their equity since the Fed started tracking the data in 1945.
The total value of equity also fell for the third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.
Home equity, which is equal to the percentage of a home’s market value minus mortgage-related debt, has steadily decreased even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans and lines of credit and an increase in 100 percent or more home financing.
Economists expect this figure to drop even further as declining home prices eat into the value of most Americans’ single largest asset.
OT, but in a visible location:
Any recommendations for good companies that provide term life insurance? Thanks.
Building the Future of Lower Manhattan” with Larry Silverstein
Breakfast, Presentation and Tour
This event features Larry Silverstein who will speak of the downtown revitalization efforts underway and a VIP tour of Seven World Trade Center. A tour of the site and facilities will follow the presentation. No dress code.
Tuesday, April 1
8:00 – 9:30 a.m.
8:00 a.m. – Continental breakfast begins promptly
8:30-9:00 a.m. – Larry Silverstein presentation from
8:30-9:00 a.m. – Optional tour
Co-Sponsoring Organizations:
The University of Chicago Graduate School of Business Alumni Club,
Columbia University Graduate School of Business Alumni Club,
The Downtown Association
Interested, let me know…..
does anyone know where to find the ABX indices on the Bloomberg terminal?
BofA purchased stake in CFC at approximately $18/per chare back in Aug. Now CFC is trading at 5 and change. Poof goes 2/3 of the investment. Back them people called this move as the bottom of the market.
lisoosh
We went with Allstate for the term life. The rates seemed comparable to some others we checked out.
BAC gave CFC a billion for those shares and they get back that billion if they buy them.
My bail-out plan consists of a nice empty milk crate, a basket of apples and a guaranteed spot on a good street corner in NYC. Plus free Papapyi King $1.99 recession buster lunch specials for 30 days.
That marks the first time homeowners’ debt on their houses exceeds their equity since the Fed started tracking the data in 1945.
Charge it!
Internally Bank of America is referred to as BOA.
Households with Mortgages: Percent Equity Close to 30%
http://calculatedrisk.blogspot.com/2008/03/households-with-mortgages-percent.html
A research paper for the International Food Policy Research Institute last year broke the dollar-a-day strata into three subcategories:
— the “subjacent poor,” living on 75 cents to $1 a day;
— the “medial poor,” living on 50 cents to 75 cents a day;
— and the “ultra poor,” 162 million human beings, living on less than 50 cents a day.
The article is troubling. My wife and I are still looking for a home and we have come upon the situation more than once where the sellers cannot agree on a price with us because their house value is not greater than the liens which encumber it.
So many sellers have borrowed themselves out of the market that they have no choice other than to pay money toward an asset that is not worth what they owe or walk away. This is a receipe for disaster and by no means will it keep to the sub-prime market. In fact its more likely, I think, to effect 30 fixed loans.
More Mozillo:
http://www.muckraked.com/wordpress/2008/03/06/countrywides-mozillo-defends-paythe-definition-of-chutzpah/
S&P cuts Thornburg Mortgage credit ratings
I love it when they do it after it is too late to help.
MBIA Inc To Cut 48 Positions In Insurance Operations Unit
>>
These can’t possibly be NYC jobs.
chug, chug, chug, chug, chugggggggg
jam [11],
Excellent point.
Very common. Most will argue that asking prices are still unrealistic, which is true. It has always been my contention that many have no room to negotiate. They either paid bubble prices or they have sucked every dime out of their home bank. It’s either sell to a greater fool or walk away.
Soon I will be able to get my DOW 10K hats out of the closet!!!!
‘soosh,
I just got decent rates for 1/2 million policy 20 yr locked in from Banner Life.
Citi to consolidate operations in U.S. mortgage biz
“MBIA Inc To Cut 48 Positions In Insurance Operations Unit
>>
These can’t possibly be NYC jobs.”
You’re correct. They aren’t NYC jobs.
Guys:
Apologize for sounding naive. I am quite late to awaken to this impending disaster and am in mid-twenties.
What steps do you think a person starting out should do in order to protect himself from the annihilation of his/her assets?
Everything which is a hedge against inflation seems to be highly price right now – GLD, commodities etc.
Do we still get into them or as someone said the other day, if your plumber starts talking about commodities – it is time to get out.
Thanks for the inputs.
2008- February WARN Notice
http://lwd.dol.state.nj.us/labor/lwdhome/warn/2008/02-08warn.html
COMPANY CITY EFFECTIVE
DATE
WORKFORCE
AFFECTED
METROLOGIC
BLACKWOOD
4/7/08
78
KNOWLEDGE NETWORKS
CRANFORD
4/9/08
275
NESTLE WATERS
JERSEY CITY
4/4/08
89
GRAHAM PACKAGING
EDISON
4/18/08
115
CHRIST HOSPITAL
JERSEY CITY
4/29/08
65
LIBERTY TRAVEL
RAMSEY/MAHWAH
4/26/08
60
LANXESS SYBRON
BIRMINGHAM
5/2/08
70
BRADLEY PHARM.
FAIRFIELD
4/30/08
196
TITAL TOOLS
OAKLAND
5/1/08
61
BC
if you want to avoid filters try running TORPark (google it) on a thumbdrive. it works for most companies filters. do so at your own risk though, companies do not like people bypassing their filters
$21.17Change:-0.98 -4.42%
CIFG was quick to chenge their home page.
http://209.85.165.104/search?q=cache:1uJEx2rBR9oJ:www.cifg.com/+cifg&hl=en&ct=clnk&cd=1&gl=us
“You’re correct. They aren’t NYC jobs.”
Pret,
I guess NY was also immune to the worst year on record for Wall Street layoffs? Can you imagine the final tally when 2008 is included? Have you been to 85 Broad lately?
“This is definitely the worst year on record for Wall Street and the financial services industry layoffs,” said James Pedderson of Challenger, Gray & Christmas, which has tracked layoffs for 15 years”
http://www.nypost.com/seven/10182007/business/pink_slips_go_to_300_at_morgan.htm
Citi: Staffing levels to reflect market, economic realities
Lishoosh,
While doing your shopping for term life, run the numbers at TIAA-CREF’s website. My Metlife agent matched their premium.
Check with your auto insurance carrier too. Having a term life policy with them (which is MUCH cheaper than auto insurance) reduces your auto premiums 5-10%.
bear [27],
Marketwatch;
(C 21.17, -0.98, -4.4%) said Thursday it will reduce its mortgage assets by $45 billion over the next year and will streamline its remaining mortgage operations in an attempt to lower expenses by $200 million during the same time period. As part of the reorganization, Citi will integrate CitiMortgage, Citi Home Equity and Citi Residential Lending into one streamlined mortgage operation under the CitiMortgage name. The move will cut Citi’s mortgage holdings by 50% and will be a 20% drop from December 2007 levels.
I don’t think anyone else has posted this; Citigroup is cutting their mortgage assets by $45bil over the next year.
BC Bob,
That Pedderson guy must be including California mortgage brokers in his definition of “Wall Street and the financial services industry.”
Because when 5 big Wall Street firms disclosed their 11/30/07 headcounts, every single one of them was higher compared to 11/30/07.
Do you really believe 2007 was a worse year for Wall Street jobs than 2001-2?
The reason I responded to the MBIA job cuts post is because it has become clear that too many people aren’t bothering to check where the job cuts are taking place.
Yes, plenty have occurred in New York City. But most haven’t.
2 chifi
No thanks – seen too much of him already in the last 6 years.
Sorry, made a typo. Should be “Because when 5 big Wall Street firms disclosed their 11/30/07 headcounts, every single one of them was higher compared to 11/30/06.”
“Would there be a possibility of civil action if you get kicked out of a rental house because your landlord lied on his loans and then got foreclosed on?”
Kettle, there’s ALWAYS a chance of a civil action. Whether it succeeds is the real question, and as a corporate guy I’m not qualified to say. Sounds tenuous to me, though.
Because when 5 big Wall Street firms disclosed their 11/30/07 headcounts, every single one of them was higher compared to 11/30/07.
So 11/30/07 headcount was greater than 11/30/07 head count? cool!
31 pretorius
Do you have a link for the 5 big WS firms? It’d be interesting to do a follow-up on that benchmark going forward.
So far, it’s mostly been the CEOs getting fired round here!
Goldman doing second round lay-offs next month. More dead-wood
bob,
Who will they sell to and for how much? :)
#31 – A fair enough point too. We’ve seen some layoffs, but nothing huge yet. We’re well into the time where I would expect them to be happening as well.
I’m wondering if their desperately holding onto anyone who has the potential to generate a profit.
#26 BC Bob: Well there, you had to do it.
You woke the young lad. We will now be subject to a long litany as to why this des not matter, and or it is an exageration,and all the rest.
My couple of contacts I have left at Goldman tell me it has been grim there the last couple of weeks, and they are letting go talented seasoned high paid employees, not dead wood as our young pret might argue.
MBIA and AMBAC will also be seeing big layoffs along with all the other IB’s/BD’s.
[21] When your plumber starts talking . . . you should start walking.
I wish I had the chance to take my own advice, but I remember a . com time when I was in the middle of taking a deposition and my court reporter checked her stocks at a break. I remember remarking to my adversary on the event but did not have the experience to realize the significance.
Later on in life when I owned a home I started seeing clients and friends buying houses and taking on mortgage debt that I would not take on even though my income was higher. Learning from my mistakes in the past I listed my home and sold before the first “housing crash” headline hit the papers.
Likewise, the events of today will hopefully give people the experience to recognize a bubble. What goes up does not keep going up indefinately.
“John Says:
March 6th, 2008 at 4:03 pm
Soon I will be able to get my DOW 10K hats out of the closet!!!!”
I brought mine to the GTG at Grasshopper but Mrs. Patient said it would be rude to wear it.
“I love it when they do it after it is too late to help.”
The ratings firms are like the old-school fortune tellers nowadays: they impress you by predicting the past.
#33 pret; Do not forget those numbers which are now over 3 months old alos include these firm’s overseas operations,where there is still growth.
We have gone around with you head count argument before,a nd its the same tired old rah,rah everything is fine.
Well here is a news flash for you. Everything is not fine.
I suggest you talk to some of the Wall St headhunters.
One is a good friend of mine. Are you telling me this woman who has been in that busienss for years is wrong too?
Clot (or others in the know)– I’d be curious to hear more details regarding the new FHA situation. Such as– who is eligible for these loans, how long is the higher limit supposed to last, etc. Thanks in advance
pret [31],
Pedderson states worst year ever for WS job losses. Go debate him. Isn’t it reasonable to conclude that the leader in the industry, NY, will feel the brunt of this? On the flip side, possibly the highly educated, money hungry have been flocking to Camden for WS jobs.
I see it and hear it every day. It’s only getting worse. Severance packages/early retirement are not included in job loss #’s. By the way, do you think the big IB’s go to the press and advertise the ax?
Njpatient,
Here’s the link you requested.
http://www.bloomberg.com/apps/news?pid=20601010&refer=news&sid=a3UiaWFcpfNM
#47 BC Bob: Iw as ona confernece call the other with bond lawyers, realting to thie whole falied muni auction nightmare, and this is serious, serious stuff.
dreamtheaterr Says:
March 6th, 2008 at 4:34 pm
Lishoosh, While doing your shopping for term life, run the numbers at TIAA-CREF’s website. My Metlife agent matched their premium.
Check with your auto insurance carrier too. Having a term life policy with them (which is MUCH cheaper than auto insurance) reduces your auto premiums 5-10%.
The all knowing and all seeing oracle of personal finance has spoken. Heed his words. Several caveats of course……the only thing exceeding his opinion of himself is his dedication to hypocrisy, lack of social skills, and possibly, fugality to the point of value destruction…..
Ann/spam/dream – Thanks.
Just wanted some input. Hubby managed to stress himself into an angioplasty a couple of months ago so I anticipate HE will cost a fortune to cover – will be doing some serious shopping around.
Pretard,
What do you anticipate the bonus pools being this year?
3b,
Let’s face it, Wall Street layoffs have been mild in light of the size of the financial crisis.
Remember the doom and gloom you predicted back in September?
“The old ‘October surprise’ is still the way the street does it.” – 3b, September 2007.
“I’m hearing 10-20% layoffs. Bear, as we know it, will not be the same. It’s either massive restructuring, 30-50% layoffs” – 3b, September 2007.
When I look at the jobs report each month, the only places that are negative are Orange County and Detroit.
The worst case scenario for New York area jobs simply hasn’t played out.
47
thanks, pret.
I’m not sure those numbers are accurate as to headcount, as opposed to accurate as to the number of people receiving bonuses (this sounds like the former: “paid their 185,687 employees” and this sounds like the latter: “paid $60 billion to 165,293 people”).
I’ll do some digging too.
You mean Goldman?
http://dealbreaker.com/2008/03/some_stuff_happening_at_goldma.php
Yesterday John was talking about someone who made $150k and lived in a pricey home…..something in the order of $600k after the $300k they paid down on a $900k place…..well sir….our household income is 2x that figure….yet our home is 1/2 that cost…and that is OK. Yes, I look at bigger places and think “gee wouldn’t that be nice”…but in my humble opinion someone bringing in $150k has business living in a $600k house…..that is a big nut to cover….and I am sure that there are even BIGGER NUTS out there.
Fannie, Freddie Loan Limits Raised
For More Than 70 U.S. Counties
By SARA MURRAY
March 6, 2008 4:04 p.m.
More than 70 counties across the U.S. will see limits for mortgage loans backed by Fannie Mae and Freddie Mac rise to $729,750 — the new maximum limit set by the economic stimulus bill, the Federal Housing Administration announced today.
****
There is a link to a searchable page on the WSJ site where you can find the new FHA loan limits for any area in the country.
The people out there struggling will be happy to know that the FHA limit for Nantucket was raised to $729k.
“Investment banks are redeploying their staff in a grab for fees in the Middle East in anticipation of a marked slowdown in revenues from Europe and the US.”
“Large numbers of bankers in the US offices of one Wall Street investment bank are being told to join their emerging markets effort or leave the company.”
“One senior banker at the firm said: “The joke doing the rounds is ‘Mumbai, Dubai, Shanghai or goodbye.’”
http://www.financialnews-us.com/?page=ushome&contentid=2349777322
lisoosh Says:
March 6th, 2008 at 2:02 pm
OT, but in a visible location: Any recommendations for good companies that provide term life insurance? Thanks.
l: You should engage a general broker, in the same way you would engage a mortgage broker. The reason? You want to get as many quotes as possible from multiple sources. Bear in mind that pricing in this corner of the market is all commoditized, so you should be able to get the same price from any place no matter where you go – if you don’t….run away!
A good broker, who is not a sleazy, will provide you with a report sourced directly off their database that includes: Premium; Best Financial Rating; and also the correct “health rating”. The health rating is important because you don’t want to get “bait-and-switched”. B&S can happen at two points, the broker can get you with a low quote and then rope you in, also some insurance companies are more prone to jerking you around during the underwriting process.
Bottom line: YOU ARE NOT OBLIGATED TO TAKE ANY INSURANCE OFFER. If you do not like the price and terms, walk away.
CIT down 22% today! Wow!
“I’m hearing 10-20% layoffs. Bear, as we know it, will not be the same.
pret[52],
3b was right on the money. I’m hearing that Bear has cut close to 3k, from peak. However, many are telling me that # is conservative. What do your current #’s indicate?
How do you interpret the below regarding job gains/losses.
http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=BSC
Lisoosh
You can try insweb or selectquote and see what comes back.
Good luck.
“fugality”
I presume this guy also writes the content for his firm’s website. Full marks for consistency.
BTW – I apologize Ann, but I find Allstate to be expensive…..
l: hubby has health issues? You are going to have to think through your strategy. You might be able to save (substantial) money if you look for a policy that excludes coverege his pre-existing condition(s).
dreamtheaterr Says:
March 6th, 2008 at 5:31 pm
“fugality” I presume this guy also writes the content for his firm’s website. Full marks for consistency.
dude: my browser has no word processing and I am a bad typist…..clown
dream/index: the cadre of investments that you crowed about last spring has clearly been blitzkrieged beyong belief. So, your indexing destroyed value, but worse, your pet actively managed mutual funds have also cratered. Yes…..I remember what you wrote…..
“What do your current #’s indicate?”
Things haven’t gotten as bad as the September 2007 doomsayers predicted.
There isn’t a need to spread heresay like this
“I’m hearing”
“many are telling me”
“a good friend of mine”
“My couple of contacts”
When these facts are at our fingertips.
http://www.bloomberg.com/apps/news?pid=20601010&refer=news&sid=a3UiaWFcpfNM
Doesn’t two quaters make a recession call it like it is.
BC Bob,
“How do you interpret the below regarding job gains/losses.
http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=BSC”
I couldn’t actually view the chart.
Anyway, if you want to look at stocks that reflect the latest information about local job markets, look at office REITs. These stocks move based on expectations for rent growth, which is driven by growth in white collar jobs.
Year-to-date, New York-focused SLG has signficantly outperformed 2 companies (MPG, KRC) having a Southern California focus
This indicates that people are becoming less pessimistic about New York job growth as they realize that Southern California is bearing the brunt of the job losses from the current mortgage mess.
pret: have to come clean…the guy I know that got whacked from MS just landed a job…I have to find out the details…I would have assumed that he would have been beached for much longer…again no details, so maybe he had to take a title/pay cut….
pret: also last night I was with 3 BIIB guys, from Boston, San Diego & LA. Supposedly, LA-area is ground zero for being f—ed in CA. San Diego has some oases. The LA guy said Amgen laid off 1400 people in/near Thousand Oaks, and most of those employees are completely screwed beyond belief. I would have assumed as much would have happened in NYC-area by now.
pret [66],
The s*it just hit the fan in the 4th quarter. Bear had close to 16K employees at its peak.
If Bloomberg[post 66] and the NY times are correct approx 10% of Bear was cut in 2007, from peak.
http://www.nytimes.com/2007/11/29/business/29bear.html
pret,
I’ll say it again, stop by 85 Broad St and ask around. Let me know what you hear.
http://www.ocregister.com/money/strong-layoffs-reported-1690495-edd-mortgage
Bear fired more people in Southern California than in New York.
#73 – Bear isnt even listed in there. Can you post a snippet?
“Encore Credit, Irvine. In August 2007, parent company Bear Stearns cut about 100 jobs at Encore, a subprime lender it bought from Irvine’s ECC Capital, and about 140 jobs at Bear Stearns Residential, dubbed Bear Res, in Scottsdale, Ariz. On Oct. 3, Bear Stearns said it will merge Encore Credit with Bear Stearns Residential Mortgage, eliminating 310 jobs. EDD reports that about 72 of those jobs were in Irvine. Bear Stearns announced Nov. 28 it would cut an additional 650 jobs nationwide. National Mortgage News reported about 100 were in Irvine. On Dec. 18, Bear Stearns announced it was shutting down its Irvine loan-making operations, eliminating the remaining 150 jobs.”
It is important not to reflexively attribute jobs losses to New York City simply because the firm announcing them is based there.
chi – Thanks, if the broker costs the same I will save myself legwork and contact a broker.
Especially helpful;
“Chicagofinance Says:
l: hubby has health issues? You are going to have to think through your strategy. You might be able to save (substantial) money if you look for a policy that excludes coverege his pre-existing condition(s).”
We were actually beginning shopping when he had the heart issues. From what I understand it can take a while to get coverage after an angioplasty and you have to prove consistent health and lifestyle improvements. I hadn’t thought about looking into a policy that excluded his pre-existing condition, I didn’t even know that was a possibility. That would at the very least provide a back up in the meantime until we could get some additional coverage that would include it.
Some actual numbers from your link, pretorius. They’re consistent with your thesis that 2007 was a good year for employment, although query what’s going on _now_ as opposed to last October.
2006 2007
ML 43.7K 48.7K
GS 15.4K 17.4K
MS 43.1K 48.3K
BS 13.6K 14.2K
LB 25.9K 28.6K
The numbers for Merrill and Goldman are US employees, for the other, because they do not specify in their public filings, the numbers are international. Also, note that only Merrill’s numbers are for a 12/31 fiscal year end – the others are 11/30.
One thing to remember in this is that 2007 was a HUGE year for all these guys, but that was predicated on a huge first half. The fourth quarter was a disaster, and it would be interesting to have a breakdown of the employment numbers by month. The layoffs that I’m involved in have all been coming in 2008. Employment is a lagging indicator. We won’t really know where the employment numbers are headed at the financial shops until the 2008 10-Ks are filed in the first quarter of 2009. Predictions, anyone?
clarifying 77, the numbers are from the respective firms’ publicly filed financials, not from pretorius’s link.
new thread
patient [77],
Why would you have to wait until next year? There is headcount information in 10-Q forms, e.g. BSC’s Aug 07 10-Q shows 15,516.
Punch – not required in 10-Qs, and so often not present.
#21 Victorian – Set up the basics first: 3-6 months cash in a boring savings or money market fund; health, life and disability insurance; zero credit card debt; zero car loans; then max out your 401K. You have 40 years of investing ahead of you. I think this downturn we’re entering will be deep, long and horrible, but it won’t last forever and if I were you, I’d invest in good mutual funds even while everyone else was panicking. You’re right about the plumber – Old Joe Kennedy got out of the market before the ’29 crash when his bootblack gave him a hot tip on a stock. Disclaimer: My advice is worth exactly what you pay for it – zero.
Pret,
Just a thought, maybe it’s worth questioning your worldview on this one.
All due respect, a number of us who are in business here are hearing this go down across the Street, it’s not merely a blip.
Many have seen it before, and the warning signs have been flashing everywhere. Do you think any of us enjoy the idea that our jobs will be significantly at risk? Of course not, it’s called survival. Better to see what’s coming before getting hit upside the head. The ones in denial go down the hardest, and take the longest to come back, or leave altogether.
The quicker you can get a sense of reality from on-the-ground info, the quicker you can position yourself to have staying power wherever possible. It’s like reading about the real estate downturn in the NY Times- by that time, it’s so far done who cares. Read those reports and 10Qs all you want to make your assessments, it’ll be a nice post-mortem.
Hearing of plenty more senior folks (including 20 year veterans) at all bulge bracket firms, all levels, getting hit. Hiring freezes in many, many places.
Just got two calls tonight, senior sales a PE firm, out. Her husband, ED at a bulge bracket firm, out already for a year. The nicest people, super sharp, and their burn rate I fear is very high. Another good friend, very senior at a big hedge fund, called tonight – fund is not looking good and knows clock is ticking, updating his resume.
I called a headhunter, long time friend, looking for opportunity, he was incredulous that I was even thinking of making a move. He sounded completely despondent. They have nothing, nothing, going on- hoping to do some pharma searches to bring in some money at all. HR of all major firms telling them, don’t even waste time on their supposed “posted” jobs, it’s an excercise in futility.
#52 pret: As I have said to you in the past, just ebcasue it did nto happen in Oct, like it traditionally has in the past, does not mean it is not happening,and continue to happen as 08 progresses.
I have years int his business, not charts. I have seen it before, you have not.