From the Wall Street Journal:
Commercial Loans Failing at Rapid Pace
U.S. banks have been charging off soured commercial mortgages at the fastest pace in nearly 20 years, according to an analysis by The Wall Street Journal. At that rate, losses on loans used to finance offices, shopping malls, hotels, apartments and other commercial property could reach about $30 billion by the end of 2009.
The losses by regional banks on their commercial real-estate loans will be among the most watched details as thousands of banks report second-quarter results over the next two weeks. Many of the most troubled banks have heavy exposure to commercial real estate. So far, 57 banks have failed this year.
The $30 billion estimate is based on financial reports filed by more than 8,000 banks for the first quarter. The trend continued as a handful of major banks reported second-quarter results, including Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Bank of America Corp. Regional banks tend to have higher exposure to commercial real estate than these big financial institutions.
The commercial real-estate market, valued at about $6.7 trillion, represents 13% of the U.S.’s gross domestic product. But the recession and scarce credit are pushing more commercial developers and investors into default. Meanwhile, property values continue to decline, and banks are required to record a loss on any troubled real-estate loans where the appraised value falls below the amount owed.
Delinquencies on commercial mortgages held by banks more than doubled to about 4.3% in the second quarter from a year earlier, Foresight Analytics estimates. Rep. Carolyn Maloney (D., N.Y.), who heads the House’s Joint Economic Committee, said she is working with Treasury Department officials on a plan to try to head off rising defaults on commercial mortgages before they cascade into a crisis.
In contrast to home loans, the majority of which were made by about 10 lenders, thousands of U.S. banks, especially regional and community banks, loaded up on commercial-property debt.
From the Contra Costa Times:
Real estate agent’s body found in house
A real estate agent discovered the body of a man who appeared to have been stabbed repeatedly on the living room floor of a Westchester home on Saturday night.
Family members identified the man as Ricardo Contreras, 45, of Lakewood according to news reports. He was a real estate agent and father of five who had gone missing on Tuesday, family members said.
The agent who discovered his body was about to show the ranch-style house to prospective buyers at about 7 p.m. Saturday.
Coroner’s and police officials would not confirm the identity of man or his cause of death.
The body was turned over to the Coroner’s Office for an autopsy, which had not been completed by Sunday.
It was unclear how long the man had been dead, but detectives put on masks when they went inside the house, witnesses said. A white car on the street may have belonged to the victim, police said.
The real estate agent discovered a broken window in the back of the house when the key was found missing from the lockbox on the front door, police said. The 1,900-square-foot house is in the 8900 block of Kittyhawk Avenue.
…
The apparently bank-owned house is priced at $539,000 and listed by the Modern Realty Co., which specializes in foreclosures and bank-owned properties, according to its Web site.
From CNBC:
Survey: US Recession Easing But Likely Not Over
The U.S. recession’s grip on the economy appears to be easing but likely has not yet ended, according to a survey of economists released on Monday.
The National Association for Business Economics’ quarterly industry survey found that demand is stabilizing, but a small majority of the 102 respondents said their firms had not yet seen the bottom.
The survey “provides new evidence that the U.S. recession is abating, but few signs of an immediate recovery,” said Sara Johnson, managing director of global macroeconomics for IHS Global Insight, who helped analyze the report for the NABE.
“Industry demand was still declining in the second quarter of 2009, but the breadth of decline had narrowed considerably since late 2008, raising prospects for stabilization in the second half” of the year, she said.
From the Record:
Only recovery sign that counts: ‘Now hiring’
All the talk about a “jobless recovery” being ahead for the economy misses the point. There won’t be much of a recovery at all if the labor market stays in such dire straits.
You don’t need to be an economist to understand why the nation’s joblessness is the biggest hurdle to reviving growth.
The official U.S. unemployment rate is at 9.5 percent and climbing, and it stands at a startling 16.5 percent when you add in discouraged Americans who have stopped looking for work and those who want to work full time but can only find part-time jobs. No wonder consumer spending has flat-lined. That only perpetuates the crises in the housing and banking sectors.
The deep recessions that started in 1973 and 1981 were followed by a burst of hiring about six months after the peak in job losses. That wasn’t the case in 1991 and 2001, when shallower recessions were followed by nearly two years of difficulties for workers.
The term “jobless recovery” grew from those latter experiences. Even though the economy was looking stronger, plenty of Americans didn’t feel much relief because they still didn’t have jobs.
Part of that shift in post-recession employment had to do with structural changes in the economy. The manufacturing sector lost prominence to the service sector over the years.
“Manufacturers tend to have deeper job cuts in a downturn and they have a sharper upturn,” said David Wyss, chief economist at Standard & Poor’s in New York. “The service sector does layoffs later but hires later, too.”
Many economists are forecasting a “jobless recovery” for the United States as it emerges from the recession that began in December 2007.
From Reuters:
U.S. REITs seeking billions in IPOs, follow-ons
By Phil Wahba and Ilaina Jonas
NEW YORK (Reuters) – Several large investment firms are creating new lending companies that plan to go public to raise billions of dollars to take advantage of the distress in the commercial real estate market, and more are on the horizon.
The planned IPOs, which include units of firms like Apollo Management APOLO.UL and Alliance Bernstein Holding LP, could be just the beginning of what some bankers expect to be a boom in Real Estate Investment Trusts (REITs) going public over the next few years.
The U.S. commercial real estate market has been reeling ever since a prime source of financing, the commercial mortgage-backed securities (CMBS) market, virtually closed and banks shut off their lending spigots in the past year.
“In the real estate world, the next few years will be defined by a lack of capital,” said Michael Knott, a senior analyst with Green Street Advisors.
According to a recent Deutsche Bank report, as much as $40 billion will be needed to salvage about $420 billion of CMBS mortgages maturing over the next 10 years.
More recently, the sector has grappled with falling rents and rising vacancies driven by the recession.
The dislocation in the real estate and CMBS markets has prompted several top investment firms to create REITS that will aim to buy up, manage and originate commercial real estate loans.
“As assets start to come on the market and distress in commercial real estate increases, REITs will be the buyer of choice, and they will get bigger and bigger,” said Brad Smith, managing director for equity capital markets at Bank of America Merrill Lynch.
With significant amounts of mortgages coming due in the next three years, there will be demand for loans that traditional players such as banks have been unable or unwilling to make.
In the past two months alone, eight REITs have filed for IPOs seeking to raise up to $3.9 billion, a larger pipeline than that of traditional IPOs, according to Thomson Reuters.
For instance, an affiliate of private equity firm Apollo Management last week filed for a $600 million IPO to take advantage of what it called a “void of several hundred-billion dollars” that must be filled by new mortgage lenders.
The newly formed companies were set up as REITs, a tax structure that exempts companies earning most of their revenue from either rent or mortgages from paying taxes on their taxable income if the company distributes 90 percent of that to shareholders.
From the NYT:
Cashing In, Again, on Risky Mortgages
From the ninth floor of a downtown office building on Wilshire Boulevard, Jack Soussana delivered staggering numbers of mortgages to homeowners during the real estate boom, amassing a fortune.
By Mr. Soussana’s own account, his customers fared less happily. He specialized in the exotic mortgages that have proved most prone to sliding into foreclosure, leaving many now scrambling to save their homes.
Yet the dangers assailing Mr. Soussana’s clients have yielded fresh business for him: Late last year, he and his team — ensconced in the same office where they used to broker mortgages — began working for a loan modification company. For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California.
“We just changed the script and changed the product we were selling,” said Mr. Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and “Now, we’re able to help you out because we understand your lender.”
Mr. Soussana’s partners at FedMod, as the company is known, were also products of the formerly lucrative world of high-risk lending. The managing partner, Nabile Anz, known as Bill, previously co-owned Mortgage Link, a California subprime lender, now defunct, that once sold $30 million worth of loans a month.
From MarketWatch:
Hypo Real Estate may need more than $14 billion
Rescued German lender Hypo Real Estate may need to tap the government for even more capital than previously expected, according to a media report citing the group’s Chairman Michael Endres.
The bank’s capital needs had been put at between 6 billion euros and 10 billion euros ($8.5 billion to $14.2 billion), but Endres wouldn’t be surprised if an injection of 10 billion euros still isn’t enough, Germany’s Welt am Sonntag reported Sunday.
Endres said in an interview that the bank “clearly has a solvency problem,” due to its problematic loan portfolio, the newspaper reported.
From the Record:
Hard times pit cops, towns
Negotiations between police unions and local officials have grown increasingly tense over the past year as cash-strapped towns try to decrease benefits and keep salaries from rising.
“It’s the harsh reality of the day,” said Bill Dressel, executive director of the League of Municipalities. “Some of these unions haven’t gotten the memo that people are suffering out there.”
Police salaries comprise a significant portion of the budget, Dressel said. “A lot of these police departments have very rich benefit packages including health benefits, pensions, education costs and clothing allowances.”
A growing number of North Jersey towns, including Garfield, New Milford, Norwood, Hillsdale, Bloomingdale and Demarest, have asked police to make concessions. They are cutting raises, health benefits and overtime pay.
July 20 (Bloomberg) — To keep interest rates at a record low, Ben S. Bernanke may have to show Congress and investors he can be as creative about soaking up cash from the financial system as he was when pouring it in.
The Federal Reserve chairman will probably outline his strategy for exiting the biggest monetary expansion in history when he delivers his semiannual economic report to Congress tomorrow. Among the options: establishing term deposits at the Fed designed to induce banks to keep money there rather than lending it out, said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey.
Laying out a plan now may give Bernanke leeway to hold down borrowing costs for as long as it takes to reduce unemployment from a quarter-century high. To do that, he first has to convince lawmakers and investors he’s ready and able to contain inflation as the economy recovers.
“Bernanke needs to explain that the Fed has the tools to do the job and that it intends to use them forcefully when it has to,” said Lyle Gramley, senior economic adviser with New York-based Soleil Securities Corp. and a former central bank governor. “That would help hold down inflation expectations and give the Fed the opportunity to stay easier for longer.”
House Financial Services Committee Chairman Barney Frank said he expects Bernanke to spell out how the Fed will end its unprecedented expansion of credit when he testifies before the Massachusetts Democrat’s panel tomorrow.
‘Prepared to Unwind’
“I’ve urged him to be ready to tell people how he’s prepared to unwind some of those facilities when it’s prudent to do so,” Frank said.
Bernanke is “very conscious” of worries that the Fed may end up rekindling inflation, the lawmaker said.
Already, some investors are betting such concerns will force Bernanke’s hand. Trading in federal-funds futures suggests a better-than-even chance the central bank will raise its short- term interest-rate target by January from the current range of zero to 0.25 percent.
Laurence Meyer, another former Fed governor who’s now vice chairman of St. Louis-based Macroeconomic Advisers LLC, said policy makers will need to keep rates unchanged a lot longer, perhaps until late 2011, to bring down unemployment.
The Fed’s latest forecast, published July 15, projects the jobless rate will rise to 9.8 percent to 10.1 percent next quarter, from 9.5 percent now, and will still be 9.5 percent or higher at the end of 2010.
Fed’s Holdings
Bernanke’s purchases of assets such as mortgage bonds and Treasury securities pumped money into the financial system in an effort to lift the economy out of its deepest decline in half a century. That helped to more than double the Fed’s holdings to a record $2.3 trillion in December from a year earlier. The balance stood at $2.1 trillion last week.
Meanwhile, banks’ excess reserves at the Fed rose to a record $877.1 billion daily average in the two weeks ended May 20, from $2 billion a year earlier. Excess reserves — money available for lending that banks choose to leave with the Fed instead — averaged $743.9 billion in the first two weeks of this month.
While policy makers would like credit markets to recover, they don’t want banks to lend that cash out all at once as the economy improves, because that could unleash inflation, said William Poole, former president of the St. Louis Fed. So the central bank is counting on its ability to pay interest on those reserves to help keep a lid on prices.
“Interest on reserves is an important part of the exit strategy,” Fed Vice Chairman Donald Kohn said at a conference at Princeton University May 23.
Not So Easy
Poole said it may not be so easy for the Fed to choke off credit expansion by raising the rate paid on reserves once banks start lending in earnest.
“Historically, banks have had to fund new loans by adding to their liabilities, by issuing certificates of deposit or commercial paper,” said Poole, a senior economic adviser to Palo Alto, California-based Merk Investments LLC. This time, they will be able to finance increased lending just by “drawing on an asset they already are sitting on,” which is the reserves at the Fed.
A possible way to counteract that would be by establishing term deposits at the central bank, where excess reserves could be parked for extended periods, rather than just overnight, Crandall said. The Fed might hold periodic auctions to encourage banks to leave the funds with it, he added.
U.S. central bankers have also mentioned using reverse repurchase agreements to help drain money from the financial system. In such a transaction, the Fed would sell bonds to Wall Street dealers with an agreement to buy them back later.
Fed’s June Meeting
Fed staff briefed policy makers on ways to exert greater control over the supply of reserves at their meeting on June 23- 24, according to the minutes.
“Meeting participants agreed that the Federal Reserve either had or could develop tools to remove policy accommodation when appropriate,” the minutes said.
There’s a risk Bernanke might end up fanning expectations of a Fed tightening if he harps on the exit strategy, Crandall said. “If you’re a parent trying to get your child to sleep, you don’t do that by assuring them there are no monsters under the bed,” he said.
Mark Gertler, a co-author with Bernanke on economic research, said the Fed chairman needs to stress that he’ll keep interest rates low for the foreseeable future.
Strengthening Commitment
“It’s important for the Fed to be clear that it’s not going to exit prematurely and to strengthen its commitment to stay accommodative,” said Gertler, a professor of economics at New York University.
Complicating Bernanke’s task is what Tom Gallagher, head of policy research at International Strategy and Investment Group in Washington, calls the Fed’s “unsettled institutional backdrop.” The 55-year-old’s term as Fed chairman ends in January, and President Barack Obama has yet to say whether he’ll nominate Bernanke for another four-year run.
Lawmakers have stepped up their attacks on the Fed for pushing the limits of its authority to avert a collapse of the financial system, committing $81 billion to stabilize insurer American International Group Inc. and helping push through Bank of America Corp.’s purchase of Merrill Lynch & Co. last year.
Some legislators advocate congressional audits of the Fed’s money policy. Others are considering subjecting the appointment of regional Fed presidents, who vote on interest rates, to Senate approval.
Inflation Expectations
Investor expectations for inflation for 2015 to 2019 — the so-called five-year, five-year forward rate calculated by the Fed — increased to 2.79 percent last week from 2.1 percent at the start of the year. The rate, which is based on trading in Treasury Inflation Protected Securities, has averaged 2.66 percent since 2005.
What’s got investors concerned is the combination of the Fed’s expanded balance sheet, a record $1.8 trillion budget deficit and the building congressional pressure on the politically independent central bank, said Peter Hooper, chief economist for Deutsche Bank Securities in New York.
“That raises the stakes and the potential for an inflationary misstep,” said Hooper, a former Fed official. “It’s in the Fed’s interest to reassure investors that won’t happen.”
The Federal Reserve chairman will probably outline his strategy for exiting the biggest monetary expansion in history when he delivers his semiannual economic report to Congress tomorrow. Among the options: establishing term deposits at the Fed designed to induce banks to keep money there rather than lending it out, said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey.
Laying out a plan now may give Bernanke leeway to hold down borrowing costs for as long as it takes to reduce unemployment from a quarter-century high. To do that, he first has to convince lawmakers and investors he’s ready and able to contain inflation as the economy recovers.
“Bernanke needs to explain that the Fed has the tools to do the job and that it intends to use them forcefully when it has to,” said Lyle Gramley, senior economic adviser with New York-based Soleil Securities Corp. and a former central bank governor. “That would help hold down inflation expectations and give the Fed the opportunity to stay easier for longer.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=a.3INX2TI_Ec
OT comment but since there appears to always be an interest in guns on this site, figured the attached was worth sharing.
Senate Bill SB-2099 will require us to put on our 2009 1040 federal tax form all guns that you have or own. It may require fingerprints and a tax of $50 per gun.. This bill was introduced on Feb..24. This bill will become public knowledge 30 days after it is voted into law. This is an amendment to the Internal Revenue Act of 1986. This means that the Finance Committee can pass this without the Senate voting on it at all.
——————————
The full text of the proposed amendment is on the U.S. Senate homepage, http://www.senate.gov/ You can find the bill by doing a search by the bill number, SB-2099.
yo’me (8)-
The Fed has no plan. Bergabe has no plan…other than doing whatever it takes to get through the day/week/crisis at hand.
Remember, Bergabe was going to target inflation and respond to it according to a series of tight metrics. Doesn’t that seem like about 30 years ago now?
The Fed has behaved like a drug dealer. Now, unfortunately, the drug dealer has committed the fatal error of getting hooked on his own product.
None of this will end well. Might as well get your wheelbarrow now.
Deflation, to inflation, then to collapse.
The recession is over. its all over the print,tv, radio. thats all they are talking about. markets rally,,,
“. This is an amendment to the Internal Revenue Act of 1986. This means that the Finance Committee can pass this without the Senate voting on it at all”
Bull-$hit! No bill becomes law by the action of one committee in one house approving it.
Let us review some basic civics:
A bill gets introduced inone of the legislative bodies (House or Senate), sent to committee, either voted-out of committee or not and, if approved, sent to the full body for debate and then a vote. If approved by the full body, the bill is sent to the other body where a member of the other body may or may not introduce the same or similar bill and the sameprocess begins there.
If the bills are approved by both bodies and are the same, the bill is sent to the president for approval or veto. If the bills are different, the house and senate establish a conference committee to work out the differences. If they do so, the bills go back to the two bodies for another vote and, if approved by both, return to the president.
Oh, and changing even a single letter, number, or punctuation mark requires the same process.
“its all over the print,tv, radio”
Kiss of death. No more Michael Jackson?
People who’ll be happy to hear the recession is over:
“500,000 Will Exhaust Unemployment Benefits by September, 1.5 Million by Year-end”
http://globaleconomicanalysis.blogspot.com/2009/07/500000-will-exhaust-unemployment.html
Perhaps I am missing something but if CIT’s bondholders decided to kick the can 2 1/2 years down the road is it safe to say they don’t think the recession is over?
7 Reasons Why Housing Isn’t Bottoming Yet
There are a plethora of reasons why I believe we are nowhere near a bottom in Housing prices or activity. Here are a few:
• Prices: By just about every measure, Home prices on a national basis remain elevated. They are now far off their highs, but are still remain about ~15% above their historic metrics. I expect prices will continue lower for the next 2-4 quarters, if not longer, and won’t see widespread Real increases for many years after that; Indeed, I don’t expect to see nominal increases for anytime soon;
• Mean Reversion: As prices revert back towards historical means, there is the very high probability that they will careen past the median. This is the pattern we see after extended periods of mispricing. Nearly all overpriced asset classes revert not merely to their historic trend line, but typically collapse far below them. I have no reason to believe Housing will be any different;
• Employment & Wages: The rate of Unemployment is very likely to continue to rise for the next 4-8 quarters, if not longer. This removes an increasing number of people from the total pool of potential home buyers. There is another issue — Wages, and they have been flat for the past decade (negative in Real terms), crimping the potential for families to trade up to larger houses — a big source of Real Estate activity. Plus, more unemployment means more . . .
• Foreclosures: We likely have not seen the peak in defaults, delinquencies and foreclosures. Many more foreclosures — which are healthy in the long run but wrenching during the process of dislocation — are very likely. These will pressure prices yet lower. And Loan Mods are not working — they are redefaulting in less than a year between 50-80%, depending upon the mod conditions themselves.
• Inventory: There is a substantial supply of “Shadow Inventory” out there which will postpone a recovery in Home prices for a significant period of time. These are the flippers, speculators, builders and financers that are sitting with properties that they do not want to bring back to market yet. Given the extent of the speculative activity during the boom years (2002-06), and the number of foreclosures so far, my back of the envelope estimates are there are anywhere from 1.5 million to as many as 3 million additional homes that could come to market if prices were more advantageous.
• Psychology: The investing and home owning public are shell shocked following the twin market crashes and the Housing collapse. First the dot com collapse (2000-03) saw the Nasdaq drop about 80%, then the Credit Crisis of 2008 saw the unprecedented near halving of the market in about a year. Last, Homes nationally have lost about a third of their value since the 2005-06 peak. Total losses to the family balance sheet of these three events are about $25 trillion dollars. These losses not only crimp the ability to make bigger purchases, it dramatically curtails the willingness to take on more debt and leverage. Speaking of which . ..
• Debt Service/Down Payment: Far too many Americans do not have 20% to put down on a home, have poor credit scores, and way too much debt. All of these things act as an impediment to buying a home. At the same time, to get approved for a mortgage, banks are tightening standards, including 1) requiring higher Loan to Values for purchases; 2) better credit scores to get approved for a mortgages; 3) Lower levels of overall debt servicing relative to income for applicants. Yes, the NAR Home Affordability Index shows houses as “more affordable,” but it conveniently ignores these real world factors.
Deleveraging: For the first time in decades, the American consumer is in the process of saving money and deleveraging their balance sheets. After a 40 year credit binge, its long overdue. The process is likely to go on for years, as a new generation is losing confidence in the stock market, Corporate America and their government. Think back to the post-Depression generation that were big savers, modest consumers, who eschewed credit and borrowing. The damage is going to take a while to repair.
http://www.ritholtz.com/blog/2009/07/why-housing-isnt-yet-bottoming/
the markets speak, recession over .
all systmes go. wall street is fine.
screw main street.
“And Loan Mods are not working they are redefaulting in less than a year between 50-80%, depending upon the mod conditions themselves”
Whom does this surprise? Surley nobody here.
http://www.sacbee.com/ourregion/story/2038862.html?storylink=lingospot_top2
California foreclosure deals are bittersweet for novice investors.
What I find interesting about this story is that the investor is someone who lost a house to foreclosure in 1997 and says she “learned her lesson.” Hopefully, many have learned their lesson this time around. As you know, I still think there is hope for the lot of us.
20- thanks for the analysis. How can people save 20% for a down payment if their wages are flat (or even negative)? You provided a well written analysis and it’s kind of unnerving. Even if you are careful with your money it’s hard to get ahead when you don’t get even a cost of living raise.
“Here’s what middle-class families are facing now:”
Is this writer a regular here?
* Spiraling debt burdens: Lower- and middle-income families devoted 20 percent of their income to credit card debt in 2004, and Demos estimates that jumped to 25 percent last year.
* Falling asset values: Households with mortgages have an average equity of only 20 percent, according to Web site Calculated Risk.com, a record low that erases a backup source of funds for the cash-strapped middle class.
* Spiking unemployment: The official unemployment rate hit 9.5 percent, the highest in 26 years, and many experts say the true rate is approaching 20 percent when under-employed and discouraged workers are included. Most middle-class families have no cushion to ride out job loss – Demos estimates 76 percent lacked the assets to cover three-quarters of basic expenses for three months, even before the recession hit.
http://www.nypost.com/seven/07112009/business/the_vanishing_class_178755.htm
” I still think there is hope for the lot of us”
We could initiate the Cindy/Clot scale of Social Behavior — one at one end of the scale (Cindy, the essential goodness of people) and one at the other (Clot, the world is hoing to Hades via an express elevator ride).
Frank at 9, Kettle and Nom battling for 7/8, I am probably at 6, Stu at 5…. aor something like that, but filling out 2-4 would seem a task.
But we have hope and change and that’s all that really matters. Anyone how doesn’t realize this is just not compassionate.
Gary,
In November 2012, maybe we can click our heels together and go home.
What do you call one dead realtor in an empty REO?
From the Record:
Mixed grades in Class A
The part of Bergen County connected to New York City by the George Washington Bridge has long been a prime spot for office space.
ut the recession’s strain has surfaced in this cluster of shiny corporate homes: A recent report said that nearly half of the most sought-after office space was available for lease.
The report by the commercial real estate brokerage Grubb & Ellis showed that 45 percent of Class A office space in this prized portion of Bergen County was up for grabs, the highest percentage of Class A space available since at least 1996, according to Grubb & Ellis. Of about 3.1 million square feet of Class A office space available in the eastern Bergen County submarket, 1.4 million square feet was available for lease. The large sections of space available for lease are prodding landlords to offer rent deals and forcing them to improve their buildings.
“Offices are the factory floor of the post-industrial economy,” said James W. Hughes, the Rutgers University economist. “So when you see space for lease and empty parking lots, it means there’s fewer high-paying professional jobs located in those buildings.”
Yes, this was a huge turning point, A tarp firm headed for extinction was able to raise private capital in the billions in a few dsys. Lets see one million small business saved, 30-40 billion in bonds saved, 10,000 jobs at CIT saved. Would have been one of the top five bankruptcies every saved. Yes it is big. Plus great boom to anyone who owns a corporate bond muni fund.
A pos cape gcing back to 650K is not what is good for us, this is.
Dissident HEHEHE says:
July 20, 2009 at 7:59 am
Perhaps I am missing something but if CIT’s bondholders decided to kick the can 2 1/2 years down the road is it safe to say they don’t think the recession is over?
#3 You don’t need to be an economist to understand why the nation’s joblessness is the biggest hurdle to reviving growth.
Seems to me alot of economists have trouble understanding that concept.
27 – Shore
I see people here adjusting/adapting to a bad situation.
One builder friend who went from 20 employees down to five then finally only his wife and son now buys rentals.
That is what he can do. He has the connections to fix them up, he knows the market and only buys what he knows he can rent out at the going rate.
Another friend with a sporting goods store – He stocks more guns and ammo. He sells more bikes these days.
The electrical engineer has work for at least a year. I don’t know the details but he does hospitals and schools so that can’t hurt.
I have neighbors who say they are working on fixing cars – one neighbors installs flooring on the weekend with a buddy to supplement the income from his job where he lost hours.
No, things aren’t rosy. Sure it is hard to save. I haven’t had a raise in 4 years from a secure line of work. Teachers all over the city are losing jobs. There will be more foreclosures.
But I am of the mind that the cutting back and move to austerity is a good thing. That people adapting and making do is just dandy. I think we will make it.
312 freddy: Anything to get people to spend money;even f many don’t have it to spend.
3b [34],
That is correct. I think the FED should drop the lending rate to 0% to 1% and mortgage rates should be dropped to around 5.25%. That’ll really get the economy going! :o
http://seekingalpha.com/article/149797-cit-a-turning-point-in-the-financial-crisis?source=article_sb_picks
John – #31
Felix Salmon agrees: CIT: A Turning Point in the Financial Crisis
#31 John: for a POS Cape to go back to 650k, I would think you would at least need people to be employed.
CHIFI, short dated senior bonds of 100 year companies now trade like a vegas slot machine!!
CIT bonds gain after source says financing possiblePROVIDED BY Reuters – 08:42 AM 07/20/2009
NEW YORK, July 20 (Reuters) – The price of U.S. lender CIT ‘s debt surged higher on Monday after a person close to the matter said the company may announce an agreement to get $3 billion of emergency financing from bondholders.
The price of CIT’s floating rate notes due in August rose to 85.4 cents on the dollar early on Monday, from 70.5 cents on the dollar late on Friday, according to MarketAxess. (Reporting by John Parry; Editing by Theodore d’Afflisio)
#35 gary That soudns very familiar. Maybe I dreamed it.
John,
You really don’t see this as just a delay in the inevitable?
this is an incredible article. it was posted at patrick.net. the author is a mortgage banker in Chicago; nonetheless it’s the most insightful thing I’ve read about what’s coming down the economic pike, apart from stuff by Mish and Denninger. as a bonus the writer is really snide and snarky re people who have loads of money and can’t fathom the situation of those who don’t. and he points out what financial figures we *don’t have* that we need to be able to predict anything.
http://newobservations.net/2009/07/17/debt_man_walking/?ref=patrick.net
[9] mob,
I will look into that, but I hope you are kidding or that it is a trial balloon from a pinko like Maxine Waters. Sometimes these b.s. bills get submitted but go absolutely nowhere.
As for procedure, I think you may be incorrect in how it will get passed. One can’t simply amend existing legislation in committee and have it take effect. You must be thinking of a markup.
Cindy there are actually around three million jobs that go begging. Main problem is mobility. When we has a lower home ownership rate, unemployed renters don’t stick around too long without a job, they move to where the jobs are, homeonwers when homes are worth more than you paid for them or sell easy the home owners evenutally move to where the jobs are. Other problem is we don’t really retrain people. For instance, you hear about unemployed mortgage brokers and home flippers. Well they are not mortgage brokers or home flippers, those jobs don’t exist anymore, they need to retrain. Those who can find work. I heard of a guy who got a good paying job this weekend at chase working out default mortgages. He does the number crunching. Turns out the big banks have lots of openings. Your unemployed engineer friend should use his math skills to find that type of job, not to continually look for work in a dead profession.
[9] mobmic
S. 2099 (first giveaway was the SB, which is done at the state level and made me query whether it was a state bill), died a quiet death 8 years ago.
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=106_cong_bills&docid=f:s2099is.txt.pdf
So it is an urban legend, but always good to stay viligant for this sort of crap.
#43 John: If all those jobs were out there, I am sure that all the skilled/trained unemployed people who are willing and able to work would be taking them.
Nom,
Forgot one last week. Dollar bearish etf, UDN.
Cindy, I hope your friend who is buying to rent places out knows what he’s doing. this was just posted by the person who used to blog as the “view from silicon valley”; it comes from T2 partners. among other things it shows how differently this is going to play out in CA vs. NJ. same ultimate end, maybe, but totally different timeline.
California housing – at the low end – is ‘bottoming’ mostly (only) because: a) median prices are down 55% from their peak over the past two years, thereby making the low end affordable; b) foreclosures have temporarily been cut by 66% through moratoriums reducing supply; and c) demand is picking up going into the busy season.
But the moratoriums are ending and the number of foreclosures in the pipeline is massive (!)– they will start showing themselves as REO over the near to mid-term. The Obama plan held the foreclosure wave back, creating a huge backlog and now the servicers are testing hundreds of thousands of defaults against the new loss mitigation initiatives. We presently see the Notice of Defaults at record highs and Notice of Trustee Sales back up to nine-month highs – there is no reason for a loan to go to the Notice of Trustee Sale stage if indeed it wasn’t a foreclosure. However, the new ‘batch’ are not only from the low end but a wide mix all the way up to several million dollars in present value.
Because the majority of buyers are in ultra low and low-mid prices ranges, the supply demand imbalance from foreclosures and organic supply will crush the mid-to-upper priced properties in 2009. We already have early seasonal hard data proving this. As the mid-to-upper end go through their respective implosions this year and the volume of sales in these bands increase as prices tumble, the mix shift will raise median and average house prices creating the ultimate in false bottoms. We also have data proving this phenomenon.
After a year or so the real pain will occur when the mid to upper bands are down 40% from where they are now, and the price compression has made the low to low-mid bands much less attractive – the very same bands that are so hot right now. Rents are tumbling (crushing those knife-catcher “investors”) and those that bought these properties for investment will be at risk of default (investors have been buying all the way down). Investors have just started to get taken to the woodshed from all of the supply and this will get much worse. Mid-to-upper end rental supply is also flooding on the market making it much better to rent a beautiful million dollar house than putting $300,000 down and buying.
After investors are punished — and with move-up buyers gone for years – it will leave first-time homeowners to fix the housing market on their own. (i.e., buyers will have real leverage). Good luck and good night. Five years from now when things look to be stabilizing, all of these terrible kick-the-can-down-the-road modifications that leave borrowers in 5-year-teaser, ultra-high-leverage, 150% LTV, balloon loans will start adjusting upward and it will be Mortgage Implosion 2.0. These loan mods will turn millions of homeowners into over-levered, underwater, renters and ensure housing is a dead asset class for years to come. (THEN, it will be a good time to invest! You won’t have much competition…)
Due to a confluence of events including a national foreclosure moratorium and near-zero sales in the mid to upper end during the off season, the broader housing data show signs of stabilization. Taken in context, it is a blip.(!!) There are no(!) silver linings or green shoots in housing whatsoever other than by these first-time homeowners – former renters – who now find it cheaper to own than rent. (Yes, this is still the best metric for “when” to buy.) This is a very good thing, but it only applies to a small segment of the population and will not be able to support the market.
In addition, the first-time buyers who come out of the rental market put continuous pressure on rents. Our data shows that the mid-to-upper end housing market is on the precipice of the exact cliff that the market fell off of in 2007, led by new loan defaults. What happens to the economy when you hit the mid-to- upper end earners the same way the low-to-mid end was hit with the subprime implosion? We will find out soon enough.
Lets see my unemployed IB Friend, is looking for IB jobs, my unemployed shipping friend is looking for a job in shipping, my unemployed mortgage banking person is looking for a job in mortgages. So on and so on. People complain there are massive layoffs and no jobs in their field yet they continue to look for jobs in their prior field.
3b says:
July 20, 2009 at 9:24 am
#43 John: If all those jobs were out there, I am sure that all the skilled/trained unemployed people who are willing and able to work would be taking them.
“Lets see my unemployed IB Friend, is looking for IB jobs, my unemployed shipping friend is looking for a job in shipping, my unemployed mortgage banking person is looking for a job in mortgages. So on and so on.”
J,
Attendees at the end of the recession bbq, mem day?
Shore,
i am insulted. I rate at least a 9.5 on the CindyClot scale!!!
I just keep my contempt for society better concealed then clot ;)
Re: Friday’s headline (Baking her way out of Foreclosure)
– I mentioned this to my wife and her jaw dropped. I come to find out that she’s taking a summer class with this woman in Bergen CC. She tried peddling her cakes in class too. Although only 2 or 3 suckers bought them – her other classmates ignored her. Turns out this one is not well liked in the class anyway – she’s “the annoying one” who monopolizes class time with dumb questions and typical Peter Griffin outbursts.
Green shoot?
Bausch & Lomb opens pharmaceutical headquarters in Madison
http://www.nj.com/news/index.ssf/2009/07/bausch_lomb_opens_pharmaceutic.html
Personal Finance According to Family Guy
http://www.mint.com/blog/finance-core/personal-finance-according-to-family-guy/
John,
What we need is another bubble for all those people.
Kareninca #47 “Cindy, I hope your friend who is buying to rent places out knows what he is doing.” He owns 53 rentals and has 13 mortgages…he knows what he is doing. He has owned rentals for over 30 years.
http://voices.washingtonpost.com/hearing/2009/07/protecting_consumers_against_govt.html?wprss=hearing
John @ 43 – Kettle and I have discussed the problems with pushing home ownership many times –
Kettle – here is an article with some new ideas.
And John, you misunderstood about my engineer friend. He has work into 2011 – at least….
Recession is long over, this group includes smoking hot girl who worked in IB as eye candy at peak who should really have been a stripper or gold digger. Middle aged shipping guy who stayed in job ten years too long and tony barone gumba mortgage guy who wants the good old days back when people in their 20’s with a 2.0 GPA five year out of school can make six figures pushing subprime mortgages. All three broke the Peter Principal and rose two to three levels beyond their level of incompetence as a result of a red hot economy in 2004-2007
BC Bob says:
July 20, 2009 at 10:01 am
“Lets see my unemployed IB Friend, is looking for IB jobs, my unemployed shipping friend is looking for a job in shipping, my unemployed mortgage banking person is looking for a job in mortgages. So on and so on.”
J,
Attendees at the end of the recession bbq, mem day?
#48 John: Would it not make sense that the fields that they worked in would be the fields that they would continue to try and work in? How can someone who worked in a particular field for 10, 15, 20 years, all of a sudden transition into a new field, and what new field exactly?
3b [57],
Yanks need a couple of starting pitchers.
#56 John: No offense, but that last post, is why I leave this site from time to time. The mindless drivel sometimes is just too much to take.
HE # 19
“Deleveraging: For the first time in decades the American consumer is in the process of saving money and deleveraging their balance sheets. After a 40 year credit binge, it’s long overdue. The process is likely to go on for years, as a new generation is losing confidence in the stock market, corporate America, and their government. Think back to the post-Depression generation that were big savers, modest consumers, who eschewed credit and borrowing. The damage is going to take a while to repair.”
You see, this is a good thing – I think….but it will take a long while. The Dr. Housing Bubble post from yesterday said he is now pushing his 2012 prediction of a bottom in CA out to 2013.
“Surley”
Surely, whatever
BC,
The Yankees always seem to find a way to make Nom a happy man.
Maybe if they spent more signing over-the-hill pitchers to outlandish contracts they would do better.
If the average person is spending 20% of his or her income on credit cards and is now saving something like 6% of disposable income, are these people (on average) not falling deeper into debt, given the relative rates on interest rates on credit cards (and the interest generated on large outstanding balances) and “safe” investments like CDs, etc?
(#5) Grim:
Reminds me of Sylvester McMonkey McBean of the Sneetches
#64 Shore: Makes no sense to me. Why would people start saving before paying their debt off? Classic case of putting the cart before the horse.
3b,
For one who is planning on declaring BK and walking away from the debt, having cash on hand (or burried in the garden) may make more sense than lopping-off the top 1-2% of outstanding debtload.
Kettle,
You might enjoy this:
http://www.defenseindustrydaily.com/mopping-up-the-usas-30000-pound-bomb-03172/?utm_campaign=newsletter&utm_source=did&utm_medium=textlink#more-3172
#66 – 3b – Why would people start saving before paying their debt off?
Agreed, we’re missing some bit of the data here. They certainly aren’t spending the cash anywhere other than Walmart.
“Why would people start saving before paying their debt off?”
Paying down debt counts as saving, according to all those savings surveys…
#67 – Shore – Alright, that is fairly logical. Are people really thinking ahead and planning like this?
Tosh,
Thinking ahead would be a very nice change. Too many people headed accelerated toward the edge, ala Thelma and Louise, without giving a moment’s thought what would happen once their tires were no longer in contact with the earth.
WallMart — yuch. I suspect I feel about WallMart like NJC feels about Live Nation.
#70 veto: Makes no sense. If I am saving $100 a week, but I still have credit card debt, why bother. Pay off all the debt than start saving.
Could be a double-edged sword, but could also be of use for occasional-use homes.
#67 shore: You are right. Why bother doing the right thing any more.
http://tech.msn.com/boardsblogs/askpaulblogpost.aspx?post=1188436&_blg=1,1188436
“Why bother doing the right thing any more.”
Mrs. Shore and I ask ourselves this question more and more every day.
On a related note, we are actively considering ditching certain streams of income because the proposed new taxes will be taking enough extra money from us to make the effort to obtain what is leftover not worth the sacrifices necessary to earn the extra income. I woner how many productive people will engage in similar calculations should the proposed taxes go through. There comes a point when the return on one’s inverstment of time and effort is no longer worth the loss of family time, recreation time, etc.
HE (18)-
I also fail to see how a failing finance company borrowing 3 bn at 1,000 bps over LIBOR is green shoots material.
“The Fed has no plan. Bergabe has no plan…other than doing whatever it takes to get through the day/week/crisis at hand.
Remember, Bergabe was going to target inflation and respond to it according to a series of tight metrics. Doesn’t that seem like about 30 years ago now?
The Fed has behaved like a drug dealer. Now, unfortunately, the drug dealer has committed the fatal error of getting hooked on his own product.
None of this will end well. Might as well get your wheelbarrow now.”
The Fed has been hooked on it’s own product for 40 years. They had about 2 years of Sobriety in the 80s and quickly went back into relapse never to come out.
new post up by Mr. Mortgage! (fieldcheckgroup)
What do you call this style of house?
http://www.realtor.com/realestateandhomes-detail/Cranford-Twp_NJ_07016_1107160655
Shoots (29)-
A good start?
“What do you call one dead realtor in an empty REO?”
Didn’t follow up on this bill earlier. But it seems it has passed both houses in NJ and now waiting Governer signature.
S2577 Permits conversion of age-restricted housing units to non-age-restricted housing units and modifies laws concerning affordable housing.
2/23/2009 Introduced in the Senate, Referred to Senate Economic Growth Committee
2/26/2009 Reported from Senate Committee with Amendments, 2nd Reading
3/16/2009 Passed by the Senate (21-15)
3/16/2009 Received in the Assembly without Reference, 2nd Reading
3/16/2009 Assembly Floor Amendment Passed (Greenwald)
3/16/2009 Substituted for A3772 (1R)
3/16/2009 Passed by the Assembly (42-28-8)
3/16/2009 Received in the Senate, 2nd Reading on Concurrence
3/16/2009 Passed Senate (Passed Both Houses) (21-15)
5/4/2009 Conditional Veto, Received in the Senate
5/21/2009 2nd Reading in the Senate on Concur. w/Governor’s Recommend. (22-14)
6/18/2009 Passed by the Senate (21-13)
6/18/2009 Received in the Assembly on Concurrence with Gov. Recommend.
6/25/2009 Passed Assembly (Passed Both Houses) (46-28-4)
7/2/2009 Approved P.L.2009, c.82.
Shore [78],
Major problem. In addition to taxing the “rich”, the current proposal, health care, will penalize small businesses 8% of total payroll, if more than 250K, if they don’t provide health coverage. Now include the expiration of the Bush tax cuts and increasing state taxes and you have a tax bonanza.
Many will come to the same conclusion, the effort is not worth the reward. The big losers, the millions that are employed by small business.
3b (32)-
The problem is, we’ve exited the last two recessions with recoveries that have been (allegedly) jobless.
However, the reality is, those two recessions were jobless because the Fed essentially stoked new bubbles to take the place of the ones that had been burst. This time around, there are no new bubbles to be inflated, so the recovery will have to be of the old-fashioned sort.
That means we either have to wait for real, legitimate economic growth to occur (unlikely) or throw a war (highly likely).
Cindy (33)-
Meanwhile, the bankseters and their accomplices, Congress, will be laughing at our sorry asses. They will (as always) be fine. However, they’ll suck every last drop of blood out of the us in order to keep their rigged, filthy con game going.
“But I am of the mind that the cutting back and move to austerity is a good thing. That people adapting and making do is just dandy. I think we will make it.”
“I also fail to see how a failing finance company borrowing 3 bn at 1,000 bps over LIBOR is green shoots material.”
Yeah, sounds like they feel CIT is a rock solid bet:)
MallWart – Your Source of Cheap Plastic Crap (my favorite t-shirt).
but sometimes you *need* a piece of cheap plastic crap.
#82 – Repellent? almost as bad as those unwholesome River Edge houses.
Cindy – I gathered that your friend had loads of experience. what’s disturbing is how many people who have done very well over the past 30 years, are now going down the toilet. I’ll agree though that he likely has a better chance then recent investment buyers.
yes, paying off debt counts as “savings” for purposes of those statistics. I believe that defaulting on debt does, too, though I could be wrong (after all, the debt goes away!)
Cindy,
Austerity, I agree.
However;
“Well, people when I say that look at me and say, ‘What are you talking about? You’re telling me we have to go spend money to keep from going bankrupt?’” Biden said. “The answer is yes, I’m telling you.”
http://caps.fool.com/Blogs/ViewPost.aspx?bpid=229553&t=01000218353128929071
#82 – Ah, I believe that is a prime example of Brooklyn Beaux Arts.
These are usually called ‘Fedders Boxes’ and are becoming increasingly common in NJ.
I have no idea if they are part of any serious architectural or design movement. I can’t imagine anyone wanting to admit to designing one.
Wait ’til everybody has piled into the “recession is over” camp…then GS yells “fire!”.
Pump and dump. Pump and dump.
Cindy, one *sees* the people who are adapting and making do. the ones who aren’t just sort of . . . disappear . . . they’re off somewhere eking out a meagre existence and mostly suffering. believe me, I’m all for adaptation and simplicity, but it requires training and social capital that most people lack. no coincidence that your friends have such social capital.
you can put me down as an 11 on the Cindy/Clot scale
Clot,
Right up there with their oil at $200 call?
I’m not that different from Cindy. I’m just more willing to shoot people, that’s all.
John,
A group that reinvented themselves;
“Subprime brokers mutate into loan fixers”
“NYT analysis: profit making loan modification firms often fail to deliver”
http://www.msnbc.msn.com/id/32007521/ns/business-the_new_york_times
90 BC – @ 60 “The process is likely to go on for years, as a new generation is losing confidence in the stock market, corporate America, and their government.”
My daughters could give a flying whoop about what Joe Beiden thinks they should do….
Cindy [97],
You go girl.
Shore 15 – Didn’t Don Young recently rewrite the rules on that? :)
Seneca – #82.
If it’s in South Florida – shrapnel.
#93 – Kareninca – I see every family situation imaginable as a school teacher….it is precisely because our problems are coming to the forefront that I believe we will make it. That and because the generations watching this fiasco will learn. We were too far removed from the lessons of our ancestors. We lost our way.
Some Las Vegas RE anecdata. Stu and I had lunch yesterday with a friend that lives in a 10 house luxury cul de sac in the NW section of town. 4 of the homes on her block are currently on the market. The last one to sell was an REO that previously sold for 1.2M which sold for under 600k. My friend is underwater on her 2003 purchase.
She and her husband also dabbled in condo investing during the bubble. They were going to buy a 2BR condo near the strip in 06, but they walked away from their substantial deposit and didn’t close. She was pretty ticked at her husband at the time, but now considers him brilliant. They had a friend who bought a 1BR in the same building for $350k. It was costing him 2,000/month in overhead. He just short sold it this year for under $150k and is now renting a nicer unit in the same building for $700/month.
Heard earlier today on WCBS radio – Chris Christie has selected Monmouth County Sheriff Kim Guadagno to be his running mate.
A walk down Maiden Lane
“By any measure, the Fed is in the hole with all three SPVs. Its own estimates are that the amount by which the fair value of the net portfolio assets of each vehicle falls short of the outstanding balance of the loans extended to each of these vehicles (including accrued interest) is US$ 3.77 billion for Maiden Lane I, US$ 1.97 billion for Maiden Lane II and US$ 2.82 billion for Maiden Lane III. This is likely to be an underestimate of the true loss, because the reported fair value of the assets in the Maiden Lane vehicles is likely to overstate the present value of their held-to-maturity net cash flows. Much of the assets is illiquid, especially those in the AIG-related SPVs, Maiden Lane II and III.”
http://blogs.ft.com/maverecon/2009/07/a-walk-down-maiden-lane/
Any chance people are saving more now because they see prices dropping and things becoming more affordable?
Like in 2000 you could buy a 2 bedroom townhouse for 100k to 120k. Saving up 12k meant we could put 10% down and buy a nicer place for about the same as renting a 2 bedroom apartment. At the top of the bubble, same townhouse was going for over 250k, a 11k downpayment was like 3% down leaving the buyer with a monthly payment a lot higher then renting a 2 bedroom apartment.
Whats the deal with oil tanks?
Above ground tanks in basement seem ok.
Do they increase the insurance premium?
I hear that some in-ground tanks cant obtain insurance at all.
What am i missing?
“This is likely to be an underestimate of the true loss, because the reported fair value of the assets in the Maiden Lane vehicles is likely to overstate the present value of their held-to-maturity net cash flows.”
He,
Sounds like an IB.
“Whats the deal with oil tanks?
Above ground tanks in basement seem ok.
Do they increase the insurance premium?
I hear that some in-ground tanks cant obtain insurance at all.
What am i missing?”
Veto, I think it simply boils down to the fact that it’s visible. If there is something wrong with the tank in the basement, you’ll know about it. No one knows if the tanks in the ground are leaking and taking them out of the ground to officially rectify the problem is a complete nightmare (even if it’s not leaking at all). On top of that, after the fact, be prepared to have whatever deal you are trying to make (purchase or sale) to be delayed 3 to 5 weeks while the EPA takes their sweet ass time giving you the results of a test that I could perform in my lab in 2 hours. Of course, they are willing to get you the results the next day if you send them a big fat 4 figure check…
In short, underground oil tanks are simply a way for everyone to skim money off you. You will have to hire someone to remove the tank. You will have to hire police officers to be present during the entire process. And you will have the EPA charging you money and delaying the sale. I’m not sure what happens if it was actually leaking and the soil is now contaminated. I’m sure there are big penalties.
My parents just went through the oil tank fiasco on a property they sold. There was nothing wrong with the tank. But it ended up costing them 5 figures and delaying the sale nearly 2.5 months.
Very, very good read (note Kyle Bass was featured in the CNBC expose on the collapse of the housing market, he made a mint shorting MBS):
“But European banks have been much more aggressive in funding emerging-market expansion than US or Japanese banks: Western European banks have lent $4.5 trillion to various emerging-market countries, businesses, and consumers. Many Eastern European businesses borrowed in low-interest-rate euros. New homeowners in Hungary and the rest of Eastern Europe borrowed in Swiss francs and euros, and as their currencies have collapsed, they now find they owe more on their homes than the homes are worth. And here’s the problem: Europe’s banking system is in far worse shape than that of the US. The losses may be bigger, and their capital to meet those losses is certainly less. Let’s look at some charts. (Pour yourself an adult beverage.) ”
http://www.minyanville.com/articles/print.php?a=23621
“You will have to hire someone to remove the tank. You will have to hire police officers to be present during the entire process.”
Ben,
Police officers? I buried a tank, not leaking. Actually, an easy process. If it’s leaking, kiss your #ss goodbye.
veto:
had to fix a tank on a property we sold.
got off cheap at around 5k,, we got
ripped off., but you got to do it.
state regs
Veto-
Underground oil tanks are an issue in NJ especially if you are within 100 yards of water. Oil leak clean ups become a huge expense if there is underground water contamination. I purchased a home and was informed two weeks after closing that my homeowners policy was being cancelled due to an underground tank. I converted to gas and got a new policy with another company. Fast forward 5 years, same company cancels my insurance because I’m too close to the ocean!!
Shore Guy- yeah Live Nation sux! A great book about the concert industry before these corporate monkeys got involved- Bill Graham Presents: My Life Inside Rock and Out by Robert Greenfield. Those were the fun times.
thanks guys.
I always wanted to stay away from the in-ground tanks but now i will for sure.
What about the tank sitting in the basement?
What are the risks and complications to that set-up?
tosh [91]
It all makes sense to me now. And I must thank you because I happened upon this website which actually tracks some of Brooklyn’s finer Fedder Box stylings.
http://www.newyorkshitty.com/?cat=45
Wasn’t sure that a 2-zone central AC home could qualify but I do see the similarities. What I found most impressive was the use of brick/paver for the front of the home and the driveway, yet the typical “ran out of money” siding look in the back and sides.
veto [113],
No problem with that. However, if you ever decide to switch, make sure you let the oil co know and cap the line. I know of someone who bought a place and switched to gas, oil tank in basement. The previous ownwers were on automatic delivery. Lo and behold, on schedule, the oil co, never alerted to change in ownership, made the delivery.
Imagine, coming home to 350 gallons of heating oil wall to wall in your basement?
owners.
NJC,
Wh&t was it Lester Bangs said in the early 70s? Something like, “Rock and Roll is dead, the corporations have ruined it,” or similar sentiment.
“Police officers? I buried a tank, not leaking. Actually, an easy process. If it’s leaking, kiss your #ss goodbye.”
Bob, that’s what the town made my parents do. I’m sure some towns down have that requirement. Teaneck? Those jerks in power have all kinds of shakedown techniques.
Ben [118],
Wow. What a farce.
It cost me 1k to bury the tank, the town came over towards the end of the day, talked with the tank cleaning firm and gave me the seal of approval. However, it could have easily been a fiasco. The 1st firm I had over told me that it was leaking, cost would be somehwere between 25-50K. Freakin crooks.
#114 – No problem Seneca. I was going to provide a link to the same site you found but our corporate firewall blocks access to it.
Remember, there is no contagion. Just a small burning issue, subprime, nothing to worry about.
By Dawn Kopecki
“July 20 (Bloomberg) — U.S. taxpayers may be on the hook for as much as $23.7 trillion to bail out financial companies, according to Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.”
“Barofsky made the estimate in testimony prepared for a congressional hearing tomorrow.”
Marc Faber sees a total collapse coming
http://themessthatgreenspanmade.blogspot.com/2009/07/marc-faber-sees-total-collapse-coming.html
Shore 68,
anyone can make a big KABOOM with enough explosives. the impressive part to me is
a new fuze well design allowed a Small Diameter Bomb fuze in an 1,800-pound warhead to survive “a supersonic impact into high-strength reinforced concrete and soil”
Now that is an achievement!
I wonder when they stop playing games and use a solid tungsten penetrator, accelerated to hypersonic speeds with a scramjet? Such a device would have a similar impact energy to a small nuke but without the use of explosives or nuclear material
Veto(113),
I had an above ground in the basement of a house I recently purchased. I knew before I bought that I was converting to natural gas. Anyway, it was pretty cheap to remove (under $1000) and no issues. If the above ground tank is indoors, you will smell the heating oil a little bit.
cool thx, and what does it cost to convert to nat gas…
“It cost me 1k to bury the tank, the town came over towards the end of the day, talked with the tank cleaning firm and gave me the seal of approval. However, it could have easily been a fiasco. The 1st firm I had over told me that it was leaking, cost would be somehwere between 25-50K. Freakin crooks.”
Right…we are kinda discovering that the oil tank thing is a racketeering tool for some people. An honest town will let you hire someone with a tractor to take care of it lickety split for a few grand at most. Other towns and people are obviously using the oil tank issue as a tool to hold you hostage and prevent you from selling a property until you give them a nice payoff.
I used to work as a mechanic so I’m familiar with the gross estimation of labor…but in reality, we never forced anyone to come to us. We were up front about what we would charge and we were willing to bargain if someone didn’t want to pay that much. Most people nodded their heads and didn’t seem to care.
If these guys were mechanics, they would be cutting your brake line and slashing your tires before inspection unless you let them replace your brakes and tires for a hefty fee.
mobmic says:
July 20, 2009 at 7:10 am
OT comment but since there appears to always be an interest in guns on this site, figured the attached was worth sharing.
Senate Bill SB-2099 will require us to put on our 2009 1040 federal tax form all guns that you have or own. It may require fingerprints and a tax of $50 per gun.. This bill was introduced on Feb..24. This bill will become public knowledge 30 days after it is voted into law. This is an amendment to the Internal Revenue Act of 1986. This means that the Finance Committee can pass this without the Senate voting on it at all.
anyone know if there’s an iota of truth to this? i only ask because this guy’s not a regular commenter here
#127 – There’s a Snopes entry about the bill. While not conclusive a quick google search shows a lot of places believe the bill to be imaginary.
#127 – It looks like the original bill was proposed in 2000 and shot down (ha!), clicky here. Apparently there’s a chain email going around rousing the rabble.
whew. just saw Comrad’s calling BS on this at comment 44.
the silver lining in the stock market – anyone who didn’t sell at the top in the last two years, or on the way down, might still be able to get away with a small profit.
all the profits go directly to the pool fund.
I like this term I just saw on the internet to describe the lucky people enjoying the beach today while we work.
“funenployment
Veto(125),
Depends on what you have now or what you want. I had one zone radiator steam heat with a very old oil burning heater (probably 50% energy efficient). I read up a lot and if you’re going to stay with steam heat than stay with oil b/c it burns hotter. I switched to a baseboard hot water system (95% efficient) with three zones. It’ll cost between $10,000 to $15,000. I was doing major renovations so I had most of the walls open to the studs. If your walls aren’t open, they could probably still do it. They’ll use pex tubing which will last forever as long as the installer doesn’t kink any of the plastic tubing. I got three estimates and it ranged between those prices above.
Ben [126],
http://www.nj.gov/oag/newsreleases09/pr20090407a.html
HEHEHE [122],
Mr. Faber may be correct. The bulk of the resets for mortgages haven’t even happened yet. Why isn’t anyone talking about that tidal wave? We’ve seen what happened thus far, what happens when this next wave comes?
has anyone seen an updated version of the mortgage reset chart..
“Why isn’t anyone talking about that tidal wave?”
Gary,
Where have you been? It’s been discussed ad nauseam.
veto,
This is what I posted yesterday. Don’t know if there is something more recent. But how can one look at this and not expect a f*cking disaster?
http://tinyurl.com/nd9x7e
BC Bob,
Here perhaps, but the so-called experts are talking about this green shoots BS.
Here is the neweset mortgage reset chart i could find.
The next two years look beautiful…
http://www.calculatedriskblog.com/2009/05/new-mortgage-loan-reset-recast-chart.html
thanks gary…
looks nice.
Gary,
Not to worry the FED will create a bunch more special purpose entities and take all the junk off the banks books and we’ll all act like everything is fine.
Besides there’s all these loan modification programs out there now right. Hope Now. Hope Later. Hope Someday. These people have nothing to worry about.
Faber rarely gets it wrong.
Think I’ll keep my money on him.
[78],
Mrs. Shore and I ask ourselves this question more and more every day.
On a related note, we are actively considering ditching certain streams of income because the proposed new taxes will be taking enough extra money from us to make the effort to obtain what is leftover not worth the sacrifices necessary to earn the extra income.
——————————
Oh no! Shore Guy and his productive wife are going to do less of whatever it is they do! Could the fall of capitalism be far behind?!
Whatever, dude. If you stop doing something, someone else will just do it instead.
Didn’t know pimpin, ho’ing and dealing, the three main businesses in NJ even paid taxes.
PA Bound says:
July 20, 2009 at 2:48 pm
[78],
Mrs. Shore and I ask ourselves this question more and more every day.
On a related note, we are actively considering ditching certain streams of income because the proposed new taxes will be taking enough extra money from us to make the effort to obtain what is leftover not worth the sacrifices necessary to earn the extra income.
——————————
Oh no! Shore Guy and his productive wife are going to do less of whatever it is they do! Could the fall of capitalism be far behind?!
Whatever, dude. If you stop doing something, someone else will just do it instead.
[115] BC
I don’t have to imagine, it happened to a friend of ours.
Irony was, the delivery wasn’t suppposed to be for them. Oil guy went to the wrong house, saw the oil fill and went to town.
Later, they tried to deny liability for the cleanup. But our friend was a permanent law clerk to one of the associate justices on the state supreme court. So I suspect she had no problem finding competent counsel.
[103] gator
“Chris Christie has selected Monmouth County Sheriff Kim Guadagno to be his running mate.”
Who the fcuk is Kim Guadagno?
careful comrade this is NJ
she’s a good pol. has not yet been arrested
non can we identify if she stops on the parkway or turnpike.
[I]#66 – 3b – Why would people start saving before paying their debt off?[I]
The only outstanding debt I have is my $200K mortgage. I have $100K saved up in the bank. I could refinance and lower my monthly payments, but I’d rather keep the ‘cushion’ in the bank in case of layoofs, etc.
Another day of Shorts taking it to the chin.
Man-o-maneshiwitz
121: That’s a lot of California-style IOUs forthcoming.
zack (150)-
This dog will have his day. I hope they gun the SPY up to about 1,000.
Then, the fun will start.
Zack,
I am a zen master, I do not worry, I am patient.
What is the longest anyone has ever waited to get a mortgage pre-approval? Is it just me or does 6-weeks+ seem like a long time? Good thing I don’t need a mortgage!
The end is nigh:
Solar eclipse pits superstition against science
“MUMBAI (AFP) – Indian astrologers are predicting violence and turmoil across the world as a result of this week’s total solar eclipse, which the superstitious and religious view as a sign of potential doom.
But astronomers, scientists and secularists are trying to play down claims of evil portent in connection with Wednesday’s natural spectacle, when the moon will come between the Earth and the sun, completely obscuring the sun.
In Hindu mythology, the two demons Rahu and Ketu are said to “swallow” the sun during eclipses, snuffing out its life-giving light and causing food to become inedible and water undrinkable.”
http://news.yahoo.com/s/afp/20090720/sc_afp/scienceastronomyeclipseasiatourismsuperstition
Wow, Citigroup sold $2.5 billion 30-year bonds today.
I love Polish Math, you are 200K in debt and have 100K in “savings”.
NJLifer says:
July 20, 2009 at 3:44 pm
[I]#66 – 3b – Why would people start saving before paying their debt off?[I]
The only outstanding debt I have is my $200K mortgage. I have $100K saved up in the bank. I could refinance and lower my monthly payments, but I’d rather keep the ‘cushion’ in the bank in case of layoofs, etc.
Nom 147 – The short answer – She’s the current Monmouth County Sheriff (1st woman ever to hold the position), former Asst. US Attorney and Monmouth beach Commissioner. Her husband is currently a Superior Court Judge sitting in Ocean County.
Maybe Shore Guy has more detailed info on her.
“John says:
July 20, 2009 at 4:47 pm
I love Polish Math, you are 200K in debt and have 100K in “savings”.’
How do you think we got in this mess?
[148] freedy
“careful comrade this is NJ”
Yeah, I know. Everyone tells me the same thing. It’s different here.
What I want to know is, if she is so good, how come I haven’t heard of her? (or is that the point? we only hear of the awful ones?)
It’s different here.
Christie, Corzine…doesn’t matter. NJ is already down the crapper, dead and gone. Things will only change once the state admits it’s insolvent and defaults. IMO, that time is a long way off.
Meanwhile, Christie could stand to lay off the doughnuts.
NJ. Third World, all the way.
However, I suspect a rich guy could recruit himself a top-notch personal militia here.
157 John…
Hey numbnuts, what I am saying is that I’m choosing not to pay off my mortgage early because I rather have the cash on hand. Go it?
#163 stated otherwise
I rather be shakled as a house slave eventhough I have the keys to unlock myself and experience freedom.
Sorry, but #164 reeks of bitter renter.
Paying on a mortgage is not uniformly a financial death sentence. I think we can all agree on that.
All I know is you are going to want to be short everything now that Rahu and Ketu have swallowed the sun!
It’s fascinating seeing the market go up day after day at serious percentage – especially given the numbers for our economy don’t really ad up. Yet up it goes (what 40% now off the lows?) Certainly could profit from this hype if you buy in to it. It just makes me again ask the simple question of why a stock goes up – earning? future earning? Rising tides lifting all boats? My gut tells me it will all come down but it may take years. They can extend and pretend with hype and double talk for years.
chicagofinance says:
July 17, 2009 at 4:31 pm
Baby came this morning at 5:19AM.
Chifi, congrats.
Congrats as well, chifi!
My 2nd, now 4 months old is so much fun. Work too, but fun. First few weeks are the toughest.
Baby came this morning at 5:19AM.
Wow, I missed quite a bit over the weekend.
Congratulations ChiFi!