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From the WSJ:
Lehman Races to Find a Buyer
By MATTHEW KARNITSCHNIG, CARRICK MOLLENKAMP, SUSANNE CRAIG and ANNELENA LOBB
September 12, 2008; Page A1
The investment bank Lehman Brothers Holdings Inc. spent Thursday energetically shopping itself to potential buyers — among them Bank of America Corp. — just a day after insisting it had found a way to patch up its massive real-estate-related losses.
Given the firm’s deep financial troubles, a deal of any sort is far from certain, according to people familiar with the situation. In addition, prospective buyers, which also could include Barclays PLC, would likely want the U.S. government to help shield them from future losses from any such transaction, these people said, as happened in March, when Bear Stearns Cos. was forced into a deal to be acquired by J.P. Morgan Chase & Co. In that deal, the federal government agreed to absorb as much as $29 billion in potential losses.
The Federal Reserve and Treasury Department have been working with Lehman to help resolve the bank’s troubles, including talking to potential buyers, according to people familiar with the matter. Federal officials currently aren’t expected to structure a bailout along the lines of the Bear transaction or this past weekend’s rescue of mortgage giants Fannie Mae and Freddie Mac.
Second! Ha!
When do the counterparties stop trading with Lehman?
Will this kabuki of failure go just like Bear? LEH enters the weekend stumbling, all the other players start an electronic run, counterparties back off, Klink & Bergabe work the phones on Sunday and all hell breaks loose Monday AM.
This will be double fun if WM bleeds out some more today.
August foreclosures hit another record high
mobile.cnn.com/xhtml/en/p/a/mo1/foreclosures/1.html
From Bloomberg:
U.S. Foreclosures Hit Record in August as Housing Prices Fell
U.S. foreclosure filings rose to a record in August as falling home prices made it harder to sell or refinance homes to pay off the mortgage, RealtyTrac Inc. said.
Owners of 303,879 properties, or one in 416 U.S. households, got a default notice, were warned of a pending auction or foreclosed on last month. That was the most since reporting began in January 2005. Filings increased 27 percent from a year earlier, about half the annual pace of previous months, because of high default totals in August 2007, the Irvine, California- based seller of foreclosure data said in a statement today.
“The chickens have come home to roost,” Jim Croft, founder of the Mortgage Asset Research Institute in Reston, Virginia, said in an interview. “Real estate inflation bailed out an awful lot of bad loans.”
The worst housing slump since the 1930s shows little sign of abating. Home prices in 20 U.S. metropolitan areas declined 15.9 percent in June from a year earlier, according to the S&P/Case- Shiller index. Prices may fall another 10 percent through the end of 2009, according to analysts at Lehman Brothers Holdings Inc.
August filings were 11 percent higher than the previous record of 273,001 set in May, according to RealtyTrac. Filings rose 12 percent from July. Bank seizures, the last stage of the foreclosure process, known as real estate-owned or REO properties, more than doubled from a year ago to 90,893.
Defaults rose 10 percent and auctions rose 7 percent from August 2007, said RealtyTrac, which has a database of more than 1.5 million properties.
grim,
Did 23 crefeld or 34 tulane in Lincoln park close yet? I lost the mls #’s. Can you give me the sales prices if they did?
Thanks
HP
Clotpoll Says:
September 12th, 2008 at 6:43 am
When do the counterparties stop trading with Lehman? Will this kabuki of failure go just like Bear?
clot: they have the window which was not in place when Bear spit the bit….
Found this just now…..
http://www.bloomberg.com/apps/news?pid=20601103&sid=airzqk3hw_ac&refer=us
“There’s a sort of willingness to trust the system to find a solution.”
From # 8,
Trust the system? How about you fu*ked up and live with the ramifications.
“clot: they have the window which was not in place when Bear spit the bit….”
Chi,
Hopefully they can make it to the window before expiration of the contract. The line is extending to the graveyards on Broadway.
#3 Will this kabuki of failure go just like Bear?
That’s a nice turn of phrase.
I’m guessing the BAC rumors to be unfounded since they seem to have stopped?
BC (9)-
Now the IB guys walk and talk like the living dead. They are mainlining the narcotics of gubmint support, bailouts, pacifiers and band-aids.
Welcome to communism of the rich.
People will trade with Lehman if it is listed securities, remember DTCC gurantees settlement of equity trades and OCC gurantees settlement of options even if counterparty goes under. However, the juicy non listed stuff like a CDS that is guranteed by the counterparty they are toast. I bet when people say they are trading with Lehman today to make govt happy it is all listed stuff. The heads of risk managment at these firms would blow a gasket if they put more Lehman risk on their books going into a weekend.
# 5 “August filings were 11 percent higher than the previous record”
Cmon, Grim. RE is still setting records. It is a great time to buy.
Sept. 12 (Bloomberg) — Rising speculation that Lehman Brothers Holdings Inc. may fail is generating less concern among investors than when Bear Stearns Cos. imploded in March.
Unlike the days leading up to the forced sale of Bear Stearns to JPMorgan Chase & Co., volatility in the money markets remains relatively muted. The difference between what the U.S. government and banks pay to borrow in dollars for three months, the so-called TED spread, rose 13 points in the past two weeks to 123 basis points, compared with an increase of 38 basis points to 160 basis points in the period leading up to Bear’s failure.
Investors are showing less fear after the Fed set up special lending facilities following the Bear Stearns bailout, giving securities firms the same access to its cash as commercial banks. The ability to tap the Fed for funds means financial troubles at one investment bank are unlikely to bring down others.
“We’ve learned that no dealer’s going to fail,” said Julian Mann, a bond manager at First Pacific Advisors LLC in Los Angeles, which oversees $11 billion. “The equity may be worthless, but the trades are honored.”
[snip]
http://www.bloomberg.com/apps/news?pid=20601103&sid=airzqk3hw_ac&refer=us
Will this kabuki of failure go just like Bear? LEH enters the weekend stumbling, all the other players start an electronic run, counterparties back off, Klink & Bergabe work the phones on Sunday and all hell breaks loose Monday AM
I think so.
Fed bails out LEH under the guise of a thinly veiled private buyout before Asian markets open Sunday. All trading partners will be protected.
Futures soar heading into Monday A.M.; all is right with the world again. By Tuesday the gravity of another failure sets in and it’s back to reality.
6. HP
23 CREFELD CT
LP $404,900
SP $385,000
DOM 82
34 TULANE
LP $439,900
DOM 76
ANT CD: 09/15/2008
WSJ – Lehman Employees Face $10B in losses
“Lehman Brothers Holding Inc. boss Richard Fuld Jr. long encouraged his employees to share in the ownership of the 158-year-old firm. With Lehman stock hovering at $4 a share, its 24,000 employees have now lost an estimated $10B or more in paper wealth.”
(8) Chicago
“The equity may be worthless but the trades are honored.” ???? Don’t understand…
Is this yet another group of employees who lose out?
Question – does anyone think that all of the government bailouts and market manipulations of the financial system are just attempts to keep it from totally collapsing until after the presidential election?
19 BINGO.
I suspect whichever candidate wins will regret having won.
(19)-
Yes.
Don’t look now, but MER is entering the zombie zone.
The advance reading for August retail sales decreased 0.3%, which is below the 0.2% increase that was widely anticipated. Sales during the prior month were revised lower to reflect a 0.5% decrease. Excluding autos, August retail sales were expected to slide 0.2%, but decreased 0.7%. They were up 0.3% the month before. Rising unemployment claims and a muddled outlook continue to represent stiff headwinds for consumers.
Sales continue to fall and unemployment continues to increase. These are the #1 and #2 components used to predict a recession. It’s too bad that without the loan from our children’s children (stimulus checks), we would already have been in a declared recession rather than a pseudo slow growth period.
And now there is some serious talk of more interest rate cuts. They have got to be kidding. IMO, the FED should be raising interest rates as soon as possible to force the great unwind. Until then, I’m guessing the economic books will call this period the great delay.
In the late 70’s – early 80’s – I worked for a bank called The Bank of Oregon. They had about 12 branches in Woodburm, St Paul, Silverton – small towns in Oregon. The had an agricultural customer base (mostly seed farmers) and had made it through the Great Depression.
They decided to expand to 18 branches. Ooops. Bad timing. They were bought out by Key Corp. in the early 80’s.
My retirement for 7 years of employment – stock in the bank – worthless.
#23 more interest rate cuts!!!
I have must have mised that one. That is just absolute insanity.!!
ATG (19): I see it more as a bailout of the wealthy and a hat tip to our Asian friends who continue to finance our debt. As partisan as I may be at times, B and M are far from being friends and even farther from looking out for each others or their parties welfare. The FED, just like the supreme court, has a pretty solid record of being non-partisan historically. Now the stimulus checks? That was an election year gimmick by both parties as if one side of the aisle refused, the other side would have eaten them for breakfast.
Potential rate cuts link:
http://www.reuters.com/article/marketsNews/idUSCHB00052320080912
Direct quote from a JPM workout guy I talk to about three times a week:
“Since the end of June, nothing here works.”
JPM is one of our “healthy” banks.
#19
That’s been my feeling right along: It hits the fan after the election.
Bloomberg:
Bernanke May Be Wrong: Next Fed Rate Move Might Be Down, Not Up
http://www.bloomberg.com/apps/news?pid=20601109&sid=aycV_ACyiEtw&refer=home
“As of yesterday, futures trading showed about a one-in-three chance of a December reduction, up from zero odds at the beginning of September.”
Started hearing rumors of the next cut prior to this mornings retail sales numbers as well. Part of the rational is that with the dollar gaining strength against our European partners we have to cut some more to compete with the anticipated European Central Bank cuts. Australia has already started making their cuts.
Moody’s downgrades Wa-Mu to junk. Better late than never I guess.
Flash! Gubmint to Lehman: drop dead.
Stu (30)-
Got gold?
Just saying.
ATG [19],
Both candidates are watching in horror. How do the fund this mess, especially during a recession? Raise taxes, collapse the dollar, kiss Opec’s/world’s cb’s #ss? Forget about the candidates. How about the next generation? They will be the recipient’s of this recklessness. In addition to this, completely immoral.
#27 – I’d seen the same re: rate futures a few days ago. Starting to see some movement of USD falling against foreign currency. I’m not sure if this is due to anticipation of the cut or some other exogenous factor.
#32 – It looks like it. They’re too scared of the impending WM collapse and have to prep for that. Does the FDIC have enough employees to cover all 2400 WM branches?
#30 stu: So we will have a repeat of the early 90’s falling house prices coupled with falling interest rates.
tosh (35)-
Employees? Hell, the FDIC doesn’t have enough money. Seizure of WM will send them begging to Klink.
The whole house of cards is going to collapse before the election. I don’t think the chewing gum and baling wire will hold.
#19 The frantic activity of bailouts and manipulation is a sign of panic and the pace is increasing.
WaMu says they have enough capital to weather the storm – announcement after the close today?
#34 – Both candidates are watching in horror.
They’d have to be. I wouldn’t be surprised if O at some point gave the nomination back. M can’t wait though, unless he really is a zombie.
#38 clot: And still most Americans appear not to have a clue.
most american really dont have a clue
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worried about fall tv lineup ,,, and getting ready for holiday shopping,,
#37 – Oh I knew about that. I’m just wondering if the WM failure will be like the Katrina of banking; with huge long lines in front of the branches and no govt. agents to be found when they’re actually needed.
Wgat happens when these 5k+ Lehmaan employees hit the street looking for work. Like my friend a long time well respected Wall St head hunter said, there really is no place for most of these people to go. (She is talking about the traders, bankers, salespeople).
Lotsa doom and gloom here this morning guys, it makes me feel sort of warm and fuzzy in a sadestic sort of way. But alas, I open up a fresh set of listings and I’m still seeing gas mask specials with a silly asking price attached to it. Just sayin’.
IMHO, a vote for O is more Volcker-like as he actually has the old man as one of his economic advisers. Volcker knows that short-term pain results in long term gain.
A vote for M is more Gramm-like as Phil is his primary economic adviser. Gramm is a free market guy who is now an investment banker at UBS. He is supposedly a free market proponent as well, but does not have the renegade resume of Volcker.
I too agree that whoever gains the white house will have a very Carter-like 4-years. The only positive is that I doubt anyone could possibly do worse or be more unpopular than our current Gump in chief.
Here is an interesting article from Fortune from February:
http://money.cnn.com/2008/02/18/news/newsmakers/tully_gramm.fortune/index.htm
#43and getting ready for holiday shopping,,
Quite a few may have to skip that
this year.
tosh (44)-
That’s how Northern Crock started last year’s holiday season in the UK.
I suspect this will be the story with some bank/banks here around Nov. 1.
# 34 “Forget about the candidates. How about the next generation? They will be the recipient’s of this recklessness. In addition to this, completely immoral.”
Current leaders to our posterity: “Kiss our posterior. We willbe dead when you have to pay the piper.”
# 40/41
Heck. Most members of congress do not have a clue.
#46 gary: You just have to laugh, what else can you do.
I would expect that many of those gas mask prices are from people whoa re trying desperately to get out from under the house, and need every dime to pay off their debts and start over.
I am still amazed that here and there I am still seeing tear downs and McM rebuilds buy these one truck contractors. You cannnot fix stupid.
3b [36],
Much worse than that. We have all turned Japanese. Actually worse than Japanese. During their crunch, they had a positive current account balance, were creditors and the population had savings to draw on. On the flip side, we are financing our current account balance, we are the world’s largest debtors and the sheeple will be be paying down debt during the crunch. Got cash?
Gary (46)-
I sent this about 45 minutes ago to an agent looking for “feedback” on a craptastic Troll Bros megashack, sited in the middle of a breeding ground for ragweed, with the interior looking like the joint could be turned into a grow house any day now. Asking price? Only $990,000 (you can buy new from Troll there for 825K):
“Is there a delinquency or possible default happening on their
mortgage? My investor does have interest, but the property
looks as though the owners are in way over their heads.
If there is a possibility of working something out that would relieve the stress on the owners and fashion something
acceptable to their lenders, we could do something.”
Her reply:
“To my knowledge there is nothing happening with their mortgage. They are going back to California. They were just getting started on the landscaping and sprinkler system when they made to decision to return. They moved here a year ago May. When they moved in there was carpet in the family room, conservatory and hallway upstairs. The had that removed new hardwood floors installed and then had all the wood floors redone because they were much lighter and they did not like it. They also put in a new vanity in the powder room.
If your client has any further interest, please get back to me.”
I’ll get back to her, as soon as I can tell my client that some hardwood and a new vanity in the powder room justifies a 165K premium over the builder’s current asking.
[sarcasm off]
3b
It has struck me for some time that the, “one truck contractors,” that you mention see the quick sale of a single hous as the key to their financial security. Especially for the ones building on or near Ocean Avenue in Monmouth County.
There ia a house in Spring Lake that was a teardown of an old Spring Lake mansion. The Asking price was millions above what was reasonable for it. I met the banker who financed it and he was saying how the builder was paying something like $30,000 month to the bank, and unable to cut the price of the house because of what it had cost to buy, tear down, then rebuild.
Gary [46],
You are trying to finish first in the marathon, completing it faster than a 100 yard dash. In any given year, you have over 100% turnover in the stock market. In RE, it’s probably closer to 10%. Just sayin’.
Shore (51)-
After watching VPILF last night, I’d sadly have to say we should add her to the ranks of the clueless.
McC had better gag her and toss her in a basement until Nov. 5.
Clotpoll [54],
Well geez, the sellers are entitled to top dollar for their investment. I mean, real estate only goes up and they’re not going to give it away. [sarcasm still on]. :)
BC Bob,
I know.. I know… the 2 X 4 is coming out real soon. :)
57 Clot
I didn’t see the whole thing but I have seen some clips on the news. Talk about unprepared! I really think she thought she was going to get over but all that she showed was that she will not be able to handle her role as VP. She certainly is not ready for the presidential office if it comes to that.
Can we now place a stop loss order for all political talk?
#57 clot: She is scary, it was like she memorized what she was instructed to say,a nd was not capable of deviating from that.
I’d like to place a stop loss order on everything in my life.
#54 clot: sounds like the realtor is in denial too. I recall from the last housing bust as I bought at the top,a and lived through the decline, that people selling during that time were much more realistic, and seemed to be much less in denial that the market had changed and prices had fallen so much.
I think that fact that so many sellers and or realtors are still so much in denial shows just how bad things are.
#62 and #57…which is it, clueless or memorizing party line…seems can’t be both (yes I know..suppose the party line is clueless!)
They also put in a new vanity in the powder room. = Estimated cost of $60.
(46) Gary
The foreclosure next door has been on the market for 6 months. They started out at $326,400. (the amount owing I’d bet.) They went to $305,490 now $299,500. Right now, they would be lucky to get $225,000.
Like everywhere else, if it is priced right – it will sell. BUT – the banks are really dragging their feet here. They don’t seem to want to sell anything…I think…pretty soon there will be enough appropriate sales to dictate the comp. – then they will have no choice.
S&P Research says they’re expecting a LEH deal to be done over the weekend.
No exactly startling news.
“I’d like to place a stop loss order on everything in my life.”
Clot,
LMAO.
my fear is that if Obama wins in Nov, the gang in the executive will let it all go straight to hell in the 2 months before inauguration. Two months may not seem like a long time but I suspect they will take their hands off the steering wheel and careen.
Toshiro #68
Yeah, They said that there will be no more writedowns also.
#61 BC Bob:Agreed.I am just going to stay home that day.
OK, so let’s say that the financial system collapses after the presidential election.
What happens then? How likely is it that there will be total breakdown of our society? Can the new president undo the bailouts? Some people on this blog have suggested stocking up on guns, ammo and canned food.
On the other hand, people have pointed out that “transactions never go to zero.” People will still be willing to pay each other for necessities. Even during the credit boom, there were many cash and barter transactions, although they were mostly so people could evade taxes. The point is that cash and barter are established means of commerce. Could it be that we will just become a barter and cash (what little of it there will be left) society and that after a period of adjustment Joe Six Pack will go on pretty much as he always has, just at a lower standard of living. Unlike most of the people in the financial sector and in many white collar jobs, Joe Six Pack actually has skills that people need on a daily basis.
3B, Clot: The problem IMO, is that people are underwater, not stubborn. Where most people should have equity, all they have is $100,000 helocs. They would love to sell, but they can’t afford it for they don’t have the cash to give to the bank nor the downpayment to buy their next place. I share with this board the story of my friends in Red Bank who owe way more on their home than it is worth and they keep on spending like our current president.
See the government can borrow from your child’s future. Parents, unfortunately can not. They just don’t realize this. Soon enough, the foreclosure numbers are going to skyrocket and Gary will get his dream home. He really should sell and rent now though.
“it was like she memorized what she was instructed to say,a nd was not capable of deviating from that”
Yikes! Sounds like Bu-sh. I did not see the interview but will look for it online. On the positive side, for Mc-Ca-in is that she does not have to show herself competent; she just has to not implode — think Danny-boy, how-the-heck-did-I-ever-get-to-be-Veep, a.k.a. The Potatoe, Quale.
http://www.nytimes.com/2008/09/11/opinion/11collins.html?em=&pagewanted=print
Of course, with the Dems doing their thing, M may win anyway.
AP:
China industrial output growth lowest in 18 months
http://biz.yahoo.com/ap/080912/china_economy.html
“The root problem is sluggish consumption in the Western economies,” said Sherman Chan, a Moody’s Economy.com analyst, in a report to clients.
We’re not in a recession? I just hope the story doesn’t change to, we’re not in a depression?
Recent Bergen County Comp Killers!
Washington Township; 58 WOODFIELD RD
SOLD: $722,000 6/21/2005
SOLD: $617,500 9/8/2008
Ridgefield Park; 52 RIDGEFIELD AVE
SOLD: $385,000 9/20/2005
SOLD: $307,000 9/8/2008
Oakland; 84 THACKERAY RD
SOLD: $610,000 4/8/2005
SOLD: $557,000 9/10/2008
Northvale; 415 SEMINO RD
SOLD: $475,000 8/31/2006
SOLD: $410,000 9/9/2008
Little Ferry; 212 REDNECK AVE
SOLD: $465,000 12/1/2006
SOLD: $340,000 9/8/2008
Rich. They’re looking better every week.
Stu, 76
We sneeze and China gets pneumonia, on a ventilator in ICU.
We are ALL screwed.
sl
Regarding all of the short sales, etc. Not tool ong ago, there was resistance amongst some to count those when looking at “comps.” What are folks seeing now?
REDNECK AVE??????? No, say t’aint so.
The governor of our 57th state did well last night.
http://www.youtube.com/watch?v=EpGH02DtIws
Rich [77],
Thanks for the RE related info.
WOW. W.Twp., 15% off 2005.
BC – I found a bit on Volcker from Bloomberg on 9-5. If you have anything else, let me know. Get my email through Grim if you want.
Wisconsin (11) – Fresno State (25) this
weekend. I only hope Brandstetter can complete a long pass. Ryan Matthews can run, but he needs some help. Another preseason game where we could lose our key players. Fingers crossed…
Off to work – have a great Friday…
#73 Stu: That was my point, they need every last $ to pay every thing off,and try and startt over.
In the early 90’s there was not lots of HELOC-ing and Home Equity loans, and big lease payment, so if you had not bought during the peak at that time ,and found that post peak you needed to sell, you priced accordingly and got on with your life.
I think that people in general and the country as a whole were in a faar stronger position back then evern though we were in a severe recession.
We are even allowed to call what we are in now a recession,as it may become one, (whatever that means)
Clotpoll Says:
September 12th, 2008 at 9:28 am
Shore (51)-
After watching VPILF last night, I’d sadly have to say we should add her to the ranks of the clueless.
McC had better gag her and toss her in a basement until Nov. 5.
I was watching her as well… I was quite terrified on her NON-experience,no, scratch this, negative experience in foreign policy…
Sorry but she called Republic of Georgia (The one russia invaded) a Small DEMOCRATIC!!! Country
Makes me sad.. How about she will go into this small democratic country with out bodyguards and try to wal the street with face not covered by a veil….
Or see the goverment structure – it is a clan-based society.
I am scrared to even think what will happen if McCane will have health issue and she have to step in…. But again thats why president’s team normally have dozens of different advisers – you just have to hope that they are morpe competent than the president.
End of political rant.
Bingo! And what does he do when faced with a crisis forced by Putin, Chavez, etc. We are in the poor position of being in serious debt and having little ability to raise the money necessary to deal with a conflict involving Russia. “Hey Vlad, can you lend me a few bucks so I can help throw you out of Georgia?”
[Snip]
Even across the Atlantic, the Times of London sees the lipstick incident as revealing:
“The character question it raises is not that he is a sexist or that he lacks courtesy. It is that he folds under pressure.
“Obama has looked amazingly uncomfortable under the pressure that Palin has put him under. He relies on his cool — it is a core part of his appeal. So he looks bad when he loses it. During the Hillary contest he rarely came under any pressure from the media. When he did he reacted badly.
“So the problem caused by Palin isn’t really about Palin — it’s about Obama.”
[snip]
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/12/AR2008091201086_4.html
#86 Al: I do not know where you got the veil thing from, but Georgia is an overwhelmingly Orthrodox Christian County, not Islamic (history lesson done).
Bingo! And what does he do when faced with a crisis forced by Putin, Chavez, etc. We are in the poor position of being in serious debt and having little ability to raise the money necessary to deal with a conflict involving Russia. “Hey Vlad, can you lend me a few bucks so I can help throw you out of Georgia?”
[Snip]
Even across the Atlantic, the Times of London sees the lipstick incident as revealing:
“The character question it raises is not that he is a sexist or that he lacks courtesy. It is that he folds under pressure.
“Oh-no has looked amazingly uncomfortable under the pressure that P has put him under. He relies on his cool — it is a core part of his appeal. So he looks bad when he loses it. During the Hillary contest he rarely came under any pressure from the media. When he did he reacted badly.
“So the problem caused by P isn’t really about P — it’s about Oh-no.”
[snip]
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/12/AR2008091201086_4.html
Al
…and to imagine that the top of the Democrat’s ticket has even less experience than Palin. The horror.
“In the early 90’s there was not lots of HELOC-ing and Home Equity loans”
3b,
In addition to this, we had skin in the game. No liar loans, option arm, pick a pay plan, neg amort loans, 120% loans, etc.. This will make the early 90’s seem like a dress rehearsal.
“overwhelmingly Orthrodox Christian County”
Do not underestimate the importance of protecting Israel and “oppressed” Christians to believers like P.
Bob (83),
I’ve been busy as well but when I do skim through all I read is politics.
So I try to keep my occasional posts on RE only.
Doesn’t everyone realize that you’re NOT going to change anyone’s opinion? It’s like trying to get someone to change their religion. It’s going to take more than a few sound bites, articles and links.
I know.
At the Cult of Rich we use booze and this delicious combination of nuts and M&Ms as a form of persuasion.
Without this (or drugs) you’re wasting your time (and clogging up a RE blog).
“But again thats why president’s team normally have dozens of different advisers – you just have to hope that they are more competent than the president.”
And that they won’t get fired for offering advisement.
Rich in NNJ,
Give me a slew of those Washington Twp. types in that price range and I may even sit up straight to notice.
Rich [94],
Amen brother.
Gary [96],
Your damn right you’ll sit up straight. I’ve been adding to my collection of 2X4’s.
3b Says:
September 12th, 2008 at 9:59 am
#86 Al: I do not know where you got the veil thing from, but Georgia is an overwhelmingly Orthrodox Christian County, not Islamic (history lesson done).
Ohh sure it is. What Do I know – I only spent 3 summer there in the 1990’s…
Barbara (71)-
Like a foreclosed family, trashing their house on the way out the door.
Too bad we can’t offer Dubya & co. cash for keys.
r Says:
September 12th, 2008 at 10:00 am
Al
…and to imagine that the top of the Democrat’s ticket has even less experience than Palin. The horror.
I never said thart DEmocratic candidate is better…
I really feel that South Park Episode!!!! about high school elections between Duoch bag and Cr@p sandwich describe this year situation very well….
grain (74)-
You are coming dangerously close to the Mad Max theory with that post.
In the last few months, many of the investment portfolios recommended by Euro Pacific Capital have experienced the most adverse conditions that I have seen in ten years. At present, the troubles are continuing. Driving the declines has been weakness in foreign currencies that are important to our investors. Some have fallen nearly 20% against the U.S. dollar, pushing down the dollar value of stocks in those markets. Simultaneously oil and gold have seen significant declines from their highs in the early part of 2008, which has punished the share prices of commodity-related stocks. The resulting paper declines in our portfolios have been painful to watch. As I’m sure many of you are aware, all of my own investments adhere strictly to our philosophy, so my concern is not academic.
In such an environment it is natural that some of you may be questioning the basic beliefs that originally led you to Euro Pacific. If economic conditions were unfolding differently than what we had expected, then I would share your concerns. Fortunately for our investors, the scenario that I laid out earlier in the decade, which saw an ugly end to America’s bubble economy, is playing out almost exactly as I had predicted.
The problem as I see it is that the vast majority of global investors are still chasing phantoms and clinging to false hopes. I believe the markets have now diverged from reality. This is not the first time in recent history that this has happened. But in the end reality can be defied only so long, and I am absolutely confident that those who refuse to succumb to the madness will be redeemed. Fortunately for virtually all of our clients, by avoiding margin and other investment gimmicks, they are not forced to sell, and are in position to ride out the tempest.
The latest “catalyst” noted for pushing up the dollar is the government’s recent bailout of Freddie Mac and Fannie Mae. If the market were functioning rationally, the resulting transference of staggering new liabilities to the U.S. Treasury would have been immediately seen as a catastrophe for the dollar. Instead the dollar has rallied.
I believe this counter intuitive reaction results from two forces. First, by transforming trillions of dollars of suspect mortgage backed securities into seemingly bullet-proof Treasury bonds, the move has sparked a relief rally in the dollar as foreign investors no longer have to worry about defaults or markdowns. In fact, to holders of Fannie and Freddie debt, it no longer matters what happens to the housing market. Home prices can drop another 50%, every single homeowner can default on their mortgage, and bond holders will not lose one dime. This has emboldened foreign investors, and temporarily increased demand for both dollars and Freddie and Fannie debt.
The second force is related to leveraged players, particularly hedge funds, around the globe unwinding their trades. Those who have been short the dollar are now buying those dollars back. Those who have been long gold, oil, and other commodities, are liquidating their positions. This massive, though in my view misguided, rush to the exits is causing sharp counter-trend price movements. However once speculators have been flushed from the market, I expect the primary trends to return stronger than ever.
Had the government done the right thing and not guaranteed Freddie and Fannie debt, I believe we would now be experiencing outright financial crisis. The dollar would be falling sharply along with real estate prices, gold would be soaring and the recession would be deepening. However, by nationalizing Freddie and Fannie, the government has merely delayed the crisis. The borrowed time will cost us dearly, as the day of reckoning will now likely involve much steeper losses for our currency.
$5.5 trillion dollars of formerly privately held mortgage backed securities are now, in effect, Treasury bonds. In addition, over the next year or two, my guess is that several trillion dollars of existing mortgages, not currently insured by Freddie or Fannie, will be transferred to the pile. Going forward the vast majority of new mortgages made to Americans will be bought by Fannie or Freddie, and will also become the equivalent of U.S. Treasury bonds. Therefore in a few short years there will be in excess of $10 trillion of new obligations for the U.S. Treasury.
The defenders of the bailout claim that Fannie and Freddie debt does not represent true obligations because they are collateralized by homes. But anyone with a casual interest in the current real estate market knows that homes are now only worth a fraction of outstanding mortgage debt. And that fraction gets smaller every day. My guess is that $10 trillion of Federally insured mortgages will result in $2 trillion or more of losses. That amounts to more than $25,000 per American family.
I do not see how the government could possibly cover these losses through legitimate means (taxation or borrowing). To make good, they must rely on the printing press to create money out of thin air. As a result, even though bond holders will get their dollars back, they will lose purchasing power.
The Freddie and Fannie takeover does nothing to address the underlying problems that forced the companies into bankruptcy. All the bad mortgage debt still exists. In fact, based on this bailout, there will be trillions more in bad mortgages insured over the next few years. The only thing that has changed is how the losses will be distributed. Instead of falling solely on bond holders, who had chosen to invest in mortgage debt, they will now be dispersed among U.S. taxpayers and all holders of U.S. dollars, who made no such choices.
It is my guess that annual Federal budget deficit will soon approach, and then exceed, $1 trillion, and that the national debt, including actual bonds and guaranteed mortgages, will soon exceed $20 trillion. When these untenable obligations force investors to shift focus from default risk to inflation risk, a mass exodus from both Treasuries and mortgage backed securities (now Treasuries in disguise) will ensue.
Right now every asset on the planet is being sold except the U.S. dollar. To me this rally looks like the last gasp of a dying currency. Just like a toy rocket ship, once the dollar runs out of fuel it will crash back down to earth. In the mean time, I realize that it is difficult for Euro Pacific clients to watch the dollar value of their accounts fall every day.
If you see the world as I do, we have no choice but to grin and bear it. The alternative is to sell our foreign stocks and get back into the dollar. However, I am confident that such a course of action will lead to total disaster. I feel sure that any current paper losses in our accounts will be temporary. However, the real losses that will befall holders of U.S. dollars will be permanent.
For those of you on my mailing list who do not have accounts with me, or who have not already moved out of the dollar through other channels, recent events are a blessing in disguise. On the eve of what I see as a pending economic collapse of historic proportions, you have an unexpected ability to protect yourself. Right now the window of opportunity is wide open, –please climb though it before it is slammed shut.
Peter Schiff e-mail to clients.
Agree and stay put or run back to the mighty dollar?
#102
I like the Mad Max type movies, even the one with Tina Turner and that rip-off that Kevin Costner was in, but everyone please feel free to come up with a more rosy scenario because I really am an optimist.
Interesting, Lehman is a non event. Not a single reporter or news truck outside NYSE today, when Bear was collasping it was like Mardi Gras out there.
There goes SOV up again, I swear something is fishy.
[98] BC,
You can stock up on 2x4s. I am stocking up on guns n’ ammo.
(well, not that much–I really spend more on booze and cigars, and in truth, I should be stocking up on those as well).
Who are the people still trading in FNM/FRE common?
– and why??
[98] BC redux,
and not even guns anymore. I got enough guns. What I really need is more ammo. You can use it, and in the event of TEOTWAKI, trade it.
Damn, I should never have bought a Makarov since I can’t find the damn ammo anywhere.
Make $:
Awesome find. This particular paragraph sums it up perfectly and seems to align with what the group here has been saying all along.
“Had the government done the right thing and not guaranteed Freddie and Fannie debt, I believe we would now be experiencing outright financial crisis. The dollar would be falling sharply along with real estate prices, gold would be soaring and the recession would be deepening. However, by nationalizing Freddie and Fannie, the government has merely delayed the crisis. The borrowed time will cost us dearly, as the day of reckoning will now likely involve much steeper losses for our currency.”
Reuters
Paulson “adamant” no goverment funds for Lehman:
http://biz.yahoo.com/rb/080912/lehman_treasury.html
Can someone please tell me, where have we heard this before? Oh that’s right. He said the same thing to FNM/FRE. My bad.
Paulson should be hung just like Saddam for atrocities committed against his own people.
#103
I bet Peter Schiff is stocking up on guns, ammo and canned food.
Maybe that guy John can tell us – he seems to know everyone.
Toshiro,
I too hope that O will come out and say these bailout/bandaids are a rouse to hopefully keep the world as we know it together, until the next administration takes over. I have no control over what is being done now with that in mind, Stick it.
KL
“At the Cult of Rich we use booze and this delicious combination of nuts and M&Ms as a form of persuasion.”
I may join this cult.
Stu [11],
Paulson is the # 1 liar in the world. Then again, how do you rise to the top at GS?
AIG now entering the land of the zombies.
BC (115)-
I thought it was by taking the other side of the trades you recommend to your clients.
Richinnnj
I too like your comp killers but since I am so familiar with a lot of the towns and streets i think sometimes you miss the point. There have been 5 houses in my immediate neighborhood that have sold since March 08. The top price was 1 milion and it took a while but they got it. Next came a flurry of spring listings all of which have sold and closed. Now we have a sweet farmhouse colonial which is listed for 999k and is getting lots of interest. I expect it to sell very quickly. So my point here is that a lot of real estate here is moving and moving well. They didn’t just sell, they closed. Ok Ok one particular POS is still sitting but it is the worst of all houses…a bilevel. HA…makes a split look sweet.
bc bob, where did you hide in last few days? seems you bring bulls back to gold market
Clot [117],
Yes, they are joined at the hip.
In case anyone is wondering GS is the biggest bunch of lying liars who lie. So it wold make sense that Hammering Hank and our esteemed Gov J Corzine would have worked there. The main reason for their insane profitability is to lie to the market and trade on that information and never get caught, trust me there is nothing magical about them just their superior lying ability.
This crisis will be a blip on the tiny minds of the american people in a few years. Last night (9-11-08) out on stone street around 7pm where the bars are the drunken fireman and cops were whooping it up playing bag pipes and having a good time after the 9-11 cermonies. Supposed to be a somber day and still is for me, but the average lima bean sized brains of the general population like to keep touching the electric fence to make sure it is still on.
would
I call it trading on the misfortune of your clients!
bi [119],
I was drinking martini’s watching Hanna smash the windows of the bar. Escaped that and came back to the the NJ political blog, thanks to you. Then decided I needed something much stronger than a martini.
If anything has convinced me to stay out of ETF’s, this market action has.
All hell is breaking loose in the financials, but SKF ( I know, the dreaded word) still is 115 range.
OK – I googled and i found this.
“The problem with SKF is that their major holdings are in
BANK OF AMERICA CORP COM 129,789,096.90
JPMORGAN CHASE & CO COM 123,896,171.70
WELLS FARGO & CO COM STK 90,855,600.25
CITIGROUP INC COM STK 87,271,315.85
US BANCORP DELAWARE COM 50,025,203.00
GOLDMAN SACHS GROUP INC 48,691,862.40
BANK OF NEW YORK MELLON 39,046,364.58 ”
So, they are shorting the relatively good stuff.
Well GS is doing a huge house cleaning soon and will pick up bear, citi, lehman, merrill people to replace these people for 20% less and the new people won’t be vested in any LTI or stock for a few years so GS can make nice money in 2009, 2010 and 2011 until the new folks have something to vest out of. That is why GS does well, in good times they still nickle and dime.
“In case anyone is wondering GS is the biggest bunch of lying liars who lie.”
jcer,
No argument from this side of the aisle.
If someone has guts good day to buy AIG bonds.
i don’t think anybody here is trying to persuade anybody to change their political stands. as other topics, it is just exchange of information and opinions, feel free to skip any such kind of stuff as you like. but trust me, if this board was only limited to talking about RE bubble, it would have become zombies long time ago.
John [129],
Their risk management dept was drinking tini’s with me during the storm. They have no clue what their CDS exposure is.
Laurie (118)-
Please come out to my highest-median-family-income-in-US county. All the 1 MIL+ houses do here is breed newer, more virulent forms of ragweed.
It will hit your neighborhood…hard. Count on it. There are now about 7,000 LEH employees that just left your potential buyer pool.
John (122)-
Touch an electric fence…or piss on an open transformer box?
“it would have become zombies long time ago.”
bi[130],
They have been here. Unfortunately, they have all been put out to pasture. Personally, I would rather dissect your market calls than draw lipstick on a pig.
RE: 132.The funny thing here is that all these houses are circa 1968-1972.yuck..it’s all cramped baths and tiny kitchens. Most of this part of Bergen county was built out by then and there is just very little newer housing around. upside= mature landscaping
“it would have become zombies long time ago.”
You speak prettier than a $5 whore.
no skin in the game:
http://alamedalearning.com/reality/2008/09/11/bubble-dreams/
Many people I worked with went there, pay wise they aren’t so wonderful, and they work them like dogs. Sure they have a lot of good competent people but I for the life of me cannot figure out the great appeal.
136#, stu, where can we find $5 whole here? i know you can get it 30 euro in europe. no wonder you guys want to move to eu.
“136#, stu, where can we find $5 whole here?”
I was going to make a momma joke, but I’m not that mean-spirited. Or am I?
BI: the $5 whore thing was a Mel Brooks quote from Blazing Saddles.
71 Barbara – You mean they haven’t been doing that all along the last 8 years?
my fear is that if Obama wins in Nov, the gang in the executive will let it all go straight to hell in the 2 months before inauguration. Two months may not seem like a long time but I suspect they will take their hands off the steering wheel and careen.
140#, no. you are not mean-spirited. but seriously, the quality of life in eu is better even afer euro appreciated. btw,
euro is up 1.7% today, ending slide in last few sessions.
RichNNJ: Can you gove me any color on things in River Edge. I know there are a few bank owned properties on the market. Another one that you were kind enough to tell me sold for 430K in 06 was attemoting a short sale at 359K, now schedukled to foreclose on 10/10/08.
I see lots of listings now asking below 400K, and the 450’s are moving down to the low 400K’s, and so on.
But it appears that nothing is selling. Any upadate as always is appreciated.
Lots Of GS bashing today, but when I worked there (still a partnership), it was agreat place to work, and yes they did work you like a dog, but it paid oh so very well too.
Perhaps it has changed since it went public. Most of the people I knew who worked there, are no longer there like myself.
# 112 And Bush was never going to go to war with Iraq, and just wanted the authority in order to strengthen his diplomatic position.
http://www.wtop.com/?nid=213&sid=1475778
Biden asks wheelchair-bound man to ‘stand up’
September 10, 2008 – 1:38pm
WASHINGTON – Democratic vice presidential candidate Joe Biden found himself in an embarrassing situation during a Missouri campaign appearance Tuesday.
During a stop in Columbia, Mo., Biden was speaking before a large crowd when he decided to give special recognition to State Senator Chuck Graham.
“Chuck, stand up, let the people see you,” Biden shouted.
However, Biden did not realize that Graham is confined to a wheelchair.
“Oh, God love you. What am I talking about? I’ll tell you what, you’re making everybody else stand up, old pal. I’ll tell you what, everybody else stand up for Chuck. Stand up for Chuck!” Biden said.
“the $5 whore thing was a Mel Brooks quote from Blazing Saddles.”
Are you sure it was not Hugh Grant?
Qwerty,
That is a pretty funny occurrence!
Was Hugh Grant in Blazing saddles?
Hedley Lamarr: My mind is a raging torrent, flooded with rivulets of thought cascading into a waterfall of creative alternatives.
Taggart: God darnit, Mr. Lamarr, you use your tongue prettier than a twenty dollar whore.
Yippi-yi-yea
HO-HO-KUS — Authorities are trying to determine who owns a runaway cow that was roped in Ho-Ho-Kus.
The 400-pound Hereford was spotted on Hollywood Avenue Thursday night.
Carol Tyler of Tyco Animal Control says she managed to toss a lariat over the bovine’s head and capture the animal.
No one has reported a cow missing.
The animal is being kept at a farm
http://www.app.com/apps/pbcs.dll/article?AID=/20080912/NEWS/80912016
If Hugh Grant was in Blazing Saddles, he would have played the part of Hugh Johnson, also known as “Huge”.
# 149
No, stu, but he was caught getting BJ from a crack-addicted $5 (or so) prostitute. Lost girlfriend, Elizabeth — Bedazzled — Hurley.
Where is Pret, and Frank??
people said the same thing when they watched reagan interviewed on tv.
did you find any gaffing yet?
like it or not, she passed all major speeches and first interview. the only thing left is one debate. look at how she greets with people, she is politician by born. if her brain is as good as her appearance, she will be a major political figure for years to come. my bet is she will be the first female president of this great country.
63#, 3b Says:
September 12th, 2008 at 9:35 am
#57 clot: She is scary, it was like she memorized what she was instructed to say,a nd was not capable of deviating from that.
Against the grain # 74,
SAS has answered your question before: look at Argentina economic crisis of 2000.
———————————————-
for all,
what happens if WAMU fails…….
FDIC funds = approx 40 billion
WAMU insured accounts = approx 120 billion
# of banks failed to date = 11
# of failed banks during S&L crisis = approx 1000
—————————————-
UNOFFICIAL Troubled Bank List
http://bankimplode.com/list/troubledbanks.htm
Bi,
All she had to do was NOT implode. She did not, so it is ok, even if she struggled. If Mc-Ca-in fights to a tie against Oh-no, and P comes close to a tie with B, then all is well. If either of them looks BAD………. oy!
“like it or not, she passed all major speeches and first interview. the only thing left is one debate”
Then what? She passes summer school?
Are you not at all bothered that the party has put a muzzle on this woman and keeps her on a leash like an animal? If she has such a great story to tell, why doesn’t she tell it?
” put a muzzle on… and keep… on a leash like an animal?”
Sounds like a party John might have attended.
Kotok: Market To Plunge 1000 Points If Lehman Fails Another
CNBC front page
THAT would help flush things out a bit.
kettle1-
Interesting list. One PA bank. Two NJ banks. Do you thinks that it’s because our RE markets are stronger?
bi (153)-
“people said the same thing when they watched reagan interviewed on tv. did you find any gaffing yet?”
I wish somebody would bury a gaffing hook in your typing hand.
bi (153)-
“like it or not, she passed all major speeches and first interview.”
bi, keep in mind that a “D” is a passing grade.
Grain 104,
Argentina in 2001 is the Rosey scenario…..
Strike 1- Fed is created in 1913
Strike 2- 1971, Gold Standard is abandoned
Strike 3- Fannie/Freddie are bailed out by US taxpayers. We bend over to cb’s around the world. Sorry, forgot to include Bill Gross.
The crooks/liars take the plebeians to the grave.
One gets the feeling like the period from 1996-2006 was OUR Roaring 20s
#154 Kettle1
Citizens Community Bank in Ridgewood (#27) will no fail due to its proximity to New York and Wall St.
I agree with BC Bob and others regarding the political discussion. JB put the candidates’ names into the filter for a reason. Skirting the filter by changing the names isn’t clever, it’s disrespectful.
How about everybody reads Steven Pearlstein’s recent articles and then comment on them instead?
http://www.washingtonpost.com/wp-dyn/content/linkset/2005/03/24/LI2005032400138.html
# 166
The NYC/NJ forcefield will protect everyone and everything.
Anon:
From the banner at teh top of the page GRIM created: New Jersey Real Estate Report
Real Estate, Economics, and Politics
The political issues being discussed are being discussed because they affect the economy and RE. The policies of these two candidates, and the actions of the current joker, affect RE in so many ways.
As this one man sees it, the filters keep the spam bots at bay.
BC (163)-
The gubmint changed the rules. Now, all the bank crooks get four strikes.
http://www.ftd.com/patriot-day-9-11-ctg/occasion-patriotday/?noparent_bread=1
only in america, FTD has a 9-11 Patriot Day collection of flowers and cards to send out to celebrate Patriot day which is 9-11. How creepy and nasty.
#160 clot: Do you have any thoughts on what still appears to be a lot of seller/realtor denial regarding the market? I gave some unscientific thoughts of my own earlier. Yours since you are on the front lines every day is always appreciated.
Clot [169],
Unfortunately, you are correct. There will be 4,5,6, etc.., strikes.
Can’t wait for the “temporary credit facilities” to open up for the non-financial community. Over/Under? Days, weeks, months?
#163 BC Bob: just met and old colleague from my GS days who is a muni saleman (commission based) at one of the few remaining small but very influential muni shops.
Business is dead across the board, and all his contacts report the same. Muni auction market collapsed (customers won’t touch them). Expect more lay offs as the big firms continue to dismantle their auction operations. Just bad, bad, bad all around he says.
“you are on the front lines every day”
Come to think of it, Imus was also. Has that front line retreated?
John [170],
They should be hung upside down.
John #105
Plenty outside their 49 – 50th St building
Someone seems to have slashed the tires about 15 minutes ago.
Grain,
here is a video on the Argentinian collapse if you an find it with english subtitles. or just watch it on youtube in spanish
“Memoria del Saqueo (Memory of the Looting, a Social Genocide)”
A film by Pino Solanas, in Spanish w/English subtitles.
The film highlights how, after the fall of Argentina’s military dictatorship in 1983, the political class, the judiciary, the labor unions and social institutions sold out to the international financial institutions and brought Argentina to the massive social rebellion of 2001.
Do you have any thoughts on what still appears to be a lot of seller/realtor denial regarding the market? I gave some unscientific thoughts of my own earlier.
Many sellers really are in denial. They don’t follow the market closely enough to really know what is happening. Many sellers around here still subscribe to the “bubble-wrapped by NYC” school of thought; “it’s different here”, “we’re special”, “but my neighbor got $$$ for his POS in 2005 and mine is nicer”, so on and so forth.
Realtors generally aren’t in denial so much as many aren’t willing to point out that the emperor has no clothes. All realtors work for the seller and they are afraid of upsetting the seller.
Understood. But for realtors to continue to take listings at prices that they know these POS’s will nevrr sell at, appears to be a massive waste of time, money and effort on their part.
How long can the Coldwell Bankers and ReMax’s not to mention the small independent broker/owners continue to pay for all the advertising/support people, and space?
3b (171)-
Good question. Lately, my business has taken me into luxury homes, since I have a couple of clients (very smart, very fortunate, holding lots of dry powder) looking to buy.
After tabling a handful of very decent offers, listening to several agent pleas to raise our offers simply because “it’s so beautiful, it’s worth it” or “the owner needs x to come out whole”, I’ve come to the conclusion that 99.9% of all real estate agents and all sellers in the current market are dumber than a bag of hammers and will, in short order, be cashiered out of the business and separated from their assets.
There’s pretty much nothing else for us to do, other than sit back, have a drink, make VPILF jokes and wait for things to take their normal course. Ask me again in three months; maybe I’ll have a different take. A lot of the sellers I encounter can probably only hold on for another 3-6 months, tops.
Clot – great street level reporting. thx.
Re: SPalin interview with Charlie G.
I don’t watch that blather, but I happened to surf across a recap on one of the channels. Here’s a quick synopsis…..
Charlie asks, “have you ever met a leader of a foreign country?”
Sarah Baracuda replies, “No, but I would venture that if you asked that question to many of the VP Candidates, they would also have to answer NO.”
The news channel’s fact checking division did the research. Wouldn’t you know it. EVERY VP IN THE LAST 30 YEARS HAD MET A FOREIGN HEAD OF STATE BEFORE BEING ELECTED!
#172 – Over/Under? Days, weeks, months?
I’ll go with 4-5 months and bet Ford is first to tap.
AIG down big, looking at single digits. It’s still early though.
RE: Biden asks wheelchair-bound man to ’stand up’
Maybe he was performing a good old fashioned faith healing.
Nothing wrong with that, right; it happens all the time at certain church in Alaska.
This guy will really cheer you up:
Bailouts Will Push US into Depression: Manager
http://www.cnbc.com/id/26656750/site/14081545/
RE: “she will be a major political figure for years to come. my bet is she will be the first female president of this great country.”
She’s an overnight sensation, a rock star really.
#187 hehe: Kudlow will strighten this guy out. After all we are the USA, we are the best.
And we all know that kind of sort of free market (only until we screw up) capitalism is the best path to prosperity for the chosen few.
tosh [185],
Some idiot, on this site, threw out 5-1 odds, back in August.
“Sept. 12 (Bloomberg) — American International Group Inc. plunged to the lowest level in 14 years and the cost of insuring its debt rose to a record on concern that the company may be the next big U.S. financial firm to run short of capital.”
“AIG, the largest U.S. insurer by assets, dropped $3.63, or 21 percent, to $13.92 a share at 11:14 a.m. in New York Stock Exchange composite trading. The price of credit-default swaps, used as hedges against losses on bad debt, approached distressed levels and traded higher than those for Lehman Brothers Holdings Inc., the securities firm that’s fighting for survival.”
“In an extreme liquidity scare, we believe the Federal Reserve could act by opening its borrowing window to AIG.”
“It now costs more to protect against an AIG default than it does to protect bonds of junk-rated casino operators MGM Mirage and Las Vegas Sands Corp.”
JPMorgan buys WM?
#181
Is the reason the “sellers” can’t hold on because of an interest rate change on the mortgage?
I haven’t been following the NJ track so much but Charlotte has cooled. Could lose another point down here but when homes are priced well they are still selling the problem is a lot of people here are basing entirely on square footage it seems and not considering all the other factors in the homes so there are certainly a lot of over priced homes here now which will cause a showing of homes sitting on the market. Greed Factor > Reality. This doesnt work well in the McMansion category. Especially when one home has granite, cherry, hardwoods and the one next to it doesn’t but wants more because its larger. I think a lot of people here should be content that they made money since 2005 on their homes and that because we don’t have a bubble doesn’t mean that home prices moved at the rates they did from 2001-2005.
I have a feeling that most northerners that moved here are thinking no bubble means their house value are skyrocketing somehow. This seems very common on the homes that are northerner owned and vacant/rented until spring summer.
I have to say we have a ego bubble in Charlotte. Insert Mitchell jokes here. Its only a housing bubble if the homes are selling above value. Charlotte’s ego/overpricing bubble needs to burst. So we have a lot of walk 5 houses down and get nearly the same house for 30-50K less. Still ones priced right are selling but taking a few months.
I would say priced right = 3 months on market here.
I’m going to say that new home builders are also overpricing building homes. Its not like the supplies and workers are costing more today than they did a few years back. Most are desperate for work so they will work for less but construction costs for new are still increasing just offering incentives no one cares for. If they follow the market conditions then they should have no problem selling new homes. Of course they need to build to the economy too. McMansions in a job recession doesn’t pan out. It might if people could sell in higher cost areas but with them being cold its not smart to build big. Wasn’t really before but now its even worse.
Oh well off to the courthouse for the foreclosure lists.
JPMorgan buys WM?
it looks like it. WM up 13% in last 2 minutes
Welcome back Mitchell
Will JPM buy the treasury too?
That’s the rumor.
“China, which holds a fifth of its currency reserves in Fannie Mae and Freddie Mac debt, may cut the portion held in US dollars, according to China International Capital Corp (CICC), one of the nation’s biggest investment banks”
http://www.chinadaily.com.cn/china/2008-09/12/content_7020656.htm
#183 To be fair, there have been only 5 VPs in the past 30 years. If you say the past 30 VPs have all met foreign heads of state prior to becoming VP, that would make Palin look foolish.
Can someone with GSMLS access please give me the status for 319 Maolis in Glen Ridge? Is it UC or Withdrawn? If UC, what is the expected close date?
Simon,
How’s the RE market in Lyndhurst?
Kettle, others –
Thanks for pointing me to that info on Argenting. I see there’s an article on it in Wikipedia, but something tells me I should wait until after I’ve had a few JD and Cokes later before I read it.
Laurie (118),
I too like your comp killers but since I am so familiar with a lot of the towns and streets i think sometimes you miss the point. There have been 5 houses in my immediate neighborhood that have sold since March 08. The top price was 1 milion and it took a while but they got it. Next came a flurry of spring listings all of which have sold and closed. Now we have a sweet farmhouse colonial which is listed for 999k and is getting lots of interest. I expect it to sell very quickly. So my point here is that a lot of real estate here is moving and moving well. They didn’t just sell, they closed.
I too am very familiar with towns and streets in northern Bergen County and I believe it is you who is missing the point.
I never said or intimated that houses aren’t selling at all. Fewer homes are selling and many are selling below previous comps.
Today’s listings don’t happen to have your area or neighborhood, that doesn’t mean prices aren’t falling in your area.
Five or seven listings… come on. That’s a lot? If they are on the same street, ok. But that’s too small a number for analysis.
Finally, because the houses in your neighborhood sold and sold at a price you wouldn’t pay doesn’t mean that they didn’t sell for less then the market would bear 1, 2 or 3 years ago.
What is your neighborhood, the Fardale section of Mahwah?
Give me the town and I’ll pull some stats when I have time.
Rich
JPMorgan buys WM?
Who’s going to buy JP a year from now then?
“Who’s going to buy JP a year from now then?”
That’s easy, PetroChina!
“Who’s going to buy JP a year from now then?”
That’s easy, PetroChina!
So I’m going to have to learn Mandarin & Arabic? Nuts.
JP Morgan needs SEC to grant them a waiver of the accountng rule that says when you buy a company you have to value its assets at fair market value. Under GAAP certain things are valued at what you paid for them and are only marked to mark when you sell it. The moment JPM buys wamu their capital craps as it gets marked down. However, JPM loves to buy branches, they did if from BONY, JPM could buy a ton of west coast branches off WAMU and take the branches and branch deposits and give WAMU a hunk of cash. The new CEO of WAMU is more adept at triage and has no loyalty for WAMUS past and he is very connected.
Clotpoll [181],
After tabling a handful of very decent offers, listening to several agent pleas to raise our offers simply because “it’s so beautiful, it’s worth it” or “the owner needs x to come out whole”, I’ve come to the conclusion that 99.9% of all real estate agents and all sellers in the current market are dumber than a bag of hammers and will, in short order, be cashiered out of the business and separated from their assets.
That passage sounds so good it’s almost porn*graphic in nature.
Not true Toshi, you just have to keep buying their krap.
Clotpoll [181],
After tabling a handful of very decent offers, listening to several agent pleas to raise our offers simply because “it’s so beautiful, it’s worth it” or “the owner needs x to come out whole”, I’ve come to the conclusion that 99.9% of all real estate agents and all sellers in the current market are dumber than a bag of hammers and will, in short order, be cashiered out of the business and separated from their assets.
That passage sounds so good it’s almost p*rnographic in nature.
# 180 “but my neighbor got $$$ for his POS in 2005 and mine is nicer”
I suspect that, in a world where the cost of everything seems to go up every year, people just assume housing will too.
Forgot the italics in my last post.
YUP JPM buying WAMU, every single WAMU bond that were trading disappeared off my screen, dang it, could have got them at 50 cents on a dollar and hour ago.
So when does the SEC and the banking regulators step in and say no to these deals.
Do JPM still own Chase? What size bank would adding WM make?
I think the SEC would have to look at BOA LEH. I think BOA had to divest its clearing operations after Fleet Boston got fined for market timing with its mutual funds. Bringing in LEH would have to clear a lot of hurdles.
Update: CNBC’s David Faber calls BS on the deal.
They only got a quick 15% pop on it anyway. Remember always use Buffet’s name in a rumor, it gets you at least 20% :P
Gary,
Please be patient, this baby is just starting to crawl. Watch out 2009-2011.
“Alt-A Mortgages Next Risk for Housing Market as Defaults Surge”
“About 3 million U.S. borrowers have Alt-A mortgages totaling $1 trillion, compared with $855 billion of subprime loans outstanding, according to Inside Mortgage Finance, a trade publication in Bethesda, Maryland. Of the Alt-A borrowers, 70 percent may have exaggerated their income, said David Olson, president of mortgage research firm Wholesale Access in Columbia, Maryland.”
http://www.bloomberg.com/apps/news?pid=20601109&sid=arb3xM3SHBVk&refer=home
WM/PK – WASHINGTON MUTUAL INC. PRFD ‘K’ Trade
Last Trade: 4.8500 [-] (Real-Time Quote) 09/12/2008 02:22pm
Change: 1.7000 53.97%
Volume: 1,670,846
WAMU pref up 54% in last hour.
In case this has not been posted (I have not read all the posts yet):
Bailouts Will Push US into Depression: Manager
The end result of the global economic slowdown may be the U.S. announcing national bankruptcy as the government cannot afford the bailouts that it promised and the market will not bail out the government, Martin Hennecke, senior manager of private clients at Tyche, told CNBC on Thursday.
http://www.cnbc.com/id/26656750/
BS, I think it is a done deal, WM bonds and pref stock is cranking while common is crashing, I think they are going to jam the common shareholders and make debt holders come out smelling like roses. Run from the common.
toshiro, Dimon is just making sure JPM is “too big to fail” so they can get their own gov bailout and get to keep the assets.
Oh yea now SOV is tanking as WM is getting bailed out. There is a lot of day old fish out there.
#195
Thanks Stu I have been here all along just not much to say. Been busy combing the foreclosure lists.
Not many bargains out there in the foreclosure market so for those who see the infomercials on get rich quick buy a home for next to nothing lemme give you the facts on most of the homes I see on the foreclosure listings. Expect to do a lot of work even if you can find a bargain. There are very few actual bargains even though there are a lot of foreclosures.
Most of the time they owe more on the home than its market value. – I have to think zero down and a market value decrease is to blame as well as people taking out home equity loans to buy a BMW/BOAT.
They are usually in very poor to bad condition. They lost their home and didn’t get rich like they expected. They left in a hurry and didn’t care about the home. The problem didn’t happen overnight so they stopped caring for the home a long time before they got out. I am amazed that some people could live like this.
Example:
Home worth about 335K in today’s market but trying to be sold for 290K this is after it was on the market by the bank for 315K. Home is 4 years old you wouldn’t think much could go wrong in 4 years right? Dont underestimate people losing a home. At 290K it needs all new carpets (who knows what is underneath), holes in walls, broken doors, chewed window sills, dirty like no tomorrow, Kitchen appliances like the range top will cost $1500 to replace, there is signs of water leaks from one of the bathrooms, broken tiles (good luck matching), possible break in granite counter top where under counter sink attaches (Wife saw this house), and gouges in wood floors (they left in a hurry). To bring it back to the way it was when they bought it would cost about $20K at least to be able to sell it for its worth and that’s doing the work myself 290+20 = possibly $310K for a home that might be worth 335K. If I hired someone to do the work that needs to be done that gap closes even more. Add Realtor fees if you sell the home and there is no profit to be made. I didn’t mention application fees etc.
So if anyone reading this thinks foreclosures all the way. Sure if you are looking for a home for yourself and willing to do the work yes you can find something but there are many other people with the same idea as you doing the same and some who do it for profit you will be up against. So when the infomercial pep talks you into all this get rich quick in foreclosures well the saying goes if its too good to be true. You might as well want to pick up a bucket of kaboom and a tube of didi7 while your at it.
#213 – Do JPM still own Chase? What size bank would adding WM make?
Absolutely “too big to fail”.
That’l show ’em.
http://media.cnbc.com/i/CNBC/Sections/News_And_Analysis/__Story_Inserts/graphics/__SPORTS/__N-Z/no_coffee_for_reporters.jpg
Foreclosures are a real problem, banks are still delusional as the homes all have way more owed on them than their actual value and in general the condition of the homes are atrocious especially when they are older than a few years old and the previous owners took no care of it and could not afford to, big problems with leaks water damage etc, once a house goes bank owned it is very hard to keep it in good cond. I remember aug of 07 being at dinner with my parents and one of their friends who did a lot of real estate deals with lehman and I was telling him that I thought some good deals might be coming a result of the economic mess that was coming and he seemed to think that commercial real estate would just keep gunning along and the banks could foreclose and resell on the defaulted mortgages without taking a huge haircut. This is the attitude of the bankers and until panic set in and they aggressively try to liquidate defaulted loans and properties this situation will not resolve itself and you will not get a good foreclosure or short-sale deal.
RE: WM & JPM Rotella and Dimon shared the same steam room on occassion. It is definetly possible JPM will buy them, when WM got rid of CEO Killinger they replaced him with Stephen Rotella who was Chief Executive Officer of Chase Home Finance, and Executive Vice President of JP Morgan Chase.
individual financial stocks are just like whores. you can watch it but cannot touch it. i was tempted when LEH was at $20, $7 and $4. better stay aside and watch them play out. funny thing is XLF is still 20% above its low reached 2 months ago despite of recent blow up of FNM, FRE, LEH and WM
Not sure if you have this up there but I heard of a bank down here offering no fee refinancing if you maintain your checking account with them and set up direct deposit.
individual financial stocks are just like whores. you can watch it but cannot touch it.
Then they’re not like whores at all, are they?
Agreed, Obama and Palin have about the same amount of experience.
Then they’re not like whores at all, are they?
They are. WM and Hank are getting spanked around by Dimon and Dick from Leh is bent ovee beging for a capital infusion.
Now that’s a whore.
re: #227 Mitchell – pretty soon the banks up here in the NYC metro area will be offering up a free rub and a tug if you come in with the spare change from your couch.
#224 jcer
I hear you. Most of the banks never see the condition of the homes they foreclose on and put up for sale. The transactions are usually some out of state bank. They never investigate the homes condition before they give the listings to a local Realtor who sends in a cleaning person who doesn’t do much more than vacuum and remove trash. Not sure who cuts the grass. Its probably a great deal for someone who can live with pee in every corner from the previous owners dog oh and the dirt spots on the walls. Ewwww. If you have seen the show Verminators some of these homes are close to being on the show. The house isn’t priced on its condition its based on its loan/expected value. No wonder some banks have a lot of homes on the books.
Like the infomercials wont show you the condition of the homes bought in the program. This house was bought for $600 and is worth $130,000 meanwhile they probably had to gut the entire inside. Anyone watching the show would think they could buy a 130K home in the condition they show on TV for $600.00 well if that were true the Realtor would be the owner and seller.
“Verminator”
??????????? That someone who eliminates RE agents and members of congress?
Remember, as a wise person once said, “congress is just another word for fu*king.”
Gator :200
I looked up 319 Maolis….
Went UC on 9/3/08 with anticipated closing date of 9/30/08. ‘Twas on the market for 106 days, Original list price of $549K. Taxes are said to be $11,800.
Looks like a nice older colonial with updated kitchen and baths.
#230 NYC has some great looking women. Might be worth the trip.
shore guy, 233
LMAO… [thanks, I needed that today]
sl
Rich: When you get a chance can you please give me the status on njmls# 2831467. Thanks as always.
#99Al: :https://www.cia.gov/library/publications/the-world-factbook/geos/gg.html
Just to finish up from earlier, as per the CIA World Facts Book 83.9% of Gerorgians are Orthrodox Christians. 9.9% are Muslims, with the majortiy of that Muslim population residing in Abhazia, which has de-facto independence from Georgia.
Mitchell (193)-
“I have to say we have a ego bubble in Charlotte.”
I’d say it inflated to the bursting point the day you hit town.
#239 Clott
Down here its called an ego but up north its just typical Jersey shore attitude.
Like if you meet my Italian friends anywhere else its called arguing. In Jersey its forplay.
gary (209)-
It gets better. Not even an hour ago, one of the listing agents with an offer of mine in front of him just called me with this tale:
“Listen, Clotpoll, I’ve had my sellers out looking at a 55+ community that is much less expensive than where they’ve previously been looking. If they make a move to buy there, they can let their current home go for much less. Don’t tell your buyer that, though, because you know they’ll probably come up less to meet my seller’s price. Just hold this piece of info, and only use it if you have to.”
“OK?”
[silence]
“OK?”
[silence]
Me (fighting through laughter): “Yeah…sure…whatever.”
You can’t make this stuff up.
213 pgc
“So when does the SEC and the banking regulators step in and say no to these deals. ”
Don’t be ridiculous.
“So when does the SEC and the banking regulators step in and say no to these deals. ”
When one of them involves rich bankers actually facing the consequences of their mismanagement.
“Just hold this piece of info, and only use it if you have to.”
Hey clotpoll – violate the Sherman Act for me, baby! You know I love you!
SKF hitting the Friday bell on an uptick.
Gonna be some rough sledding this weekend.
nok (244)-
My agency counterpart probably can’t spell “antitrust”.
nok (244)-
He didn’t even offer me any blow.
Clot(246)
Is it thanksgiving yet? Hank and co are gonna carve up a turkey or two.
Clotpoll [242],
You need to hire me on your team. It sounds like you’re having way too much fun. I deal with a million lines of code day after day and you get to listen to stand-up comics. It’s no fair.
ATLANTIC CITY — At The Water Club, the Borgata Hotel Casino & Spa’s ultra-posh luxury hotel, you’ve got 60 seconds to decide if you’re in the mood.
If a package of adult personal care items including condoms and other intimate products called “The Passion Kit” isn’t put back on the shelf by then, the hotel automatically charges you for it.
Since the hotel opened next to the Borgata at the end of June, the sex kits are the
top-selling in-room item. Drew Schlesinger, vice president and general manager of the 800-room hotel, says they’ve sold more than 1,500 of them at $18 a pop.
A light sensor determines when the item is lifted from a dresser-top display, and
automatically charges the item to the guest’s bill if it’s not replaced within a minute.
From the Asbury Park Press
http://www.app.com/apps/pbcs.dll/article?AID=/20080912/NEWS/80912049
The link.
From the Big Picture regarding F/F;
http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/2008/09/12/freddie_fannie.png
I hope that the public is finally getting the true picture here. This is not a real estate crisis this is a mortgage crisis.
The housing market especially in New Jersey is far ahead of the majority of the united states and will always continue along at a stead pass because of our huge commuter population.
Real is LOCAL, there are a ton of bargins to be had out there because of the mortgage crisis, not to mention the great interest rates (they dropped yesterday).
Don’t by into the media BS now is a great time to purchase an investment property if you know how to find them and then what to do with them.
3B (237 & RE stats),
SOLD: $429,000 6/26/2003
ACTIVE: $519,900 7/24/2008
ATTORNEY REVIEW: $519,900 9/2/2008
—————
River Edge Jan 1 – Sep 11:
Year AvgList$ AvgSold$ Med$ #Sold #U/C
2004 $439,311 $433,650 $429,950 88 99
2005 $504,524 $495,859 $469,500 82 91
2006 $535,681 $507,126 $492,250 58 67
2007 $539,398 $510,080 $500,000 81 88
2008 $538,197 $505,022 $455,000 78 83
30-year mortgage rates drop below 6% for first time since May
http://www.usatoday.com/money/economy/housing/2008-09-09-mortgage-rates-fall_N.htm?csp=34
http://www.courierpostonline.com/apps/pbcs.dll/article?AID=/20080912/NEWS01/80912034
EnCap severs ties to Donald Trump
EnCap severs ties to Donald Trump
http://www.courierpostonline.com/apps/pbcs.dll/article?AID=/20080912/NEWS01/80912034
http://www.courierpostonline.com/apps/pbcs.dll/article?AID=/20080912/NEWS01/80912034
VPILF she said “Churly”
Yikes we are screwed.
http://gawker.com/5048884/worst-of-sarah-palins-first-interview?autoplay=true
Hey Bob, thanks for the beatch slaps about RE.
I was just sitting here, bored, smelling the farm down the road, and missing NJ Real Estate.
There’s no RE in MD.
So, I was sniffing and feeling sentimental, but also proud of myself. ‘Cause I figured out how to fix bad pixels on my brand spanking new Dell by pressing them. Bad pixels. That sux. I AM SO BORED.
Then I found this:
http://www.nj.com/news/ledger/index.ssf?/base/news-14/122114375890760.xml&coll=1
Now I really miss NJ.
Bergen County NJMLS Sales Today
So far today there have been nine SFH sales.
Of the nine, five do not have prior sales history and the last one prior sale history is from 1997.
Bergenfield, 19 FREDERICK PL
SOLD: $380,000 1/31/2007
SOLD: $320,000 9/12/2008
River Edge, 201 WEBB AVE
SOLD: $425,000 1/19/2005
SOLD: $385,000 9/9/2008
River Edge, 743 6TH AVE
SOLD: $365,000 8/18/2003
SOLD: $400,000 9/12/2008
Tue Feb 19, 2008 6:29pm GMT
“WASHINGTON, Feb 19 (Reuters) – U.S. Treasury Secretary Henry Paulson said on Tuesday that credit markets were making progress in working through turmoil and a wider government bailout was “absolutely not” needed.”
Thanks, Hank.
http://uk.reuters.com/article/marketsNewsUS/idUKWAT00893720080219
Sean (256)-
VPILF’s charms are def. wearing thin. If she loses the election, she could probably get a job co-hosting the 700 Club.
And Rove or somebody needs to work on her voice…fast. She sounds like Frances McDormand in Fargo.
BC (259)-
Well, there we have it. Nothing to see here; everybody move on.
re VPILF – She only has charms in D.C., which as the old saw goes, is Hollywood for ugly people.
Rich, others with MLS understanding –
Is it possible that that ones without prior histories have been owned for so long records aren’t available? If yes, how long back does MLS go for sales history?
[183] Fiddy,
“EVERY VP IN THE LAST 30 YEARS HAD MET A FOREIGN HEAD OF STATE BEFORE BEING ELECTED!”
I met Dr. J. once. Does that make me a starter in the NBA?
[170] John,
not to mention, insulting. Patriots Day is celebrated in April in Mass. One of my favorite holidays. This Patriot Day think is a poseur from the folks that invented St. Valentine’s day as a way to sell flowers.
For the real holiday: http://en.wikipedia.org/wiki/Patriot's_Day
that’s “,I think,”
BTW,
We are at war with Pakistan.
http://www.presstv.ir/detail.aspx?id=69186§ionid=351020401
#253/258 Rich: Thanks as always, Even in mighty River Edge the prices are declining, swiftly, and significantly.
Looks like prices were actually higher in 2007, than 2006, and have than dropped significantly from 2007 to 2008.
vic,
i’m surprised it took this long for the pakisatn military to take these steps. isnt it just a little pretentious for the US to strike inside another countries borders without permission?
somebodies house is burning down, (jimi hendrix) and their ain’t no one in the watchtower.
“And Rove or somebody needs to work on her voice…fast. She sounds like Frances McDormand in Fargo.”
I keep hearing the first lady on the radio these days and I’m stuck with the image of Peggy Hill.
http://en.wikipedia.org/wiki/Image:Peggy.jpg
kettle,
we already have permission from God. It is all part of his plan.
http://apina.biz/9489.gif
About being at war with Pakistan.
It is nice to see George Bush bring traditional enemies togther: Taliban and the Pakistani government. Unfortunately, they will be aiming their weapons at us. Friggen madness. Can wn not keep secret operations secret anymore?
Anyone down the shore up for a mini gte tomorrow night?
hurricane ike update!
must see
http://www.youtube.com/watch?v=AKwMiExUKXg&fmt=18
kettle1- Hopefully whomever gets the top job in November does what should have been done 7 years ago and go after them for good. They have a porus border region and cannot control the tribal areas, where the Taliban and Al Qaeda are organizing and lauching attacks into Afghanistan, we should have done this in 2001 when we invaded.
New Pakistan Pakistan President Asif Ali Zardari and New prime Minister Syed Yousaf Raza Gilani have their work cut out for them if the are going to rein in Al Qaeda the Taliban.
oil
hurricane bear?
276 – Sean
The main controlling entity in Pakistan is the Army. There have multiple coups in Pakistan over the years. The only reason Pakistan was under control till this point was because of US aid.
If the US starts bombing this place, all bets are off.
We are messing with a nuclear country with rising fundamentalist influence.
This is some funny shiite..
“Mr. Kessel, a money manager and financial planner in Los Angeles who is a longtime yogi himself, noted that most people try to get rid of their fear of the markets through some kind of external action, like selling.
“This is where yoga comes in,” he said. “It’s the practice of breathing through discomfort. You intentionally put your body in postures that are right at the edge of discomfort and then cultivate the ability to stay there. You tend to find it passes if you give it time, but instead we rush to the Internet to trade on our portfolios.””
http://www.nytimes.com/2008/09/13/business/yourmoney/13money.html?hp
“I met Dr. J. once. Does that make me a starter in the NBA?”
Nom,
I sat at the bar, Daisy Buchanan’s/Newberry St, with Irabu, [I Rob You] and his interpreter, George Rose. Does that mean I constructed the carry trade?
Vic [280],
Some more comedy. By the way, old story.
“A former trader with SAC Capital Advisers, a leading US hedge fund, is claiming in a lawsuit that his former boss forced him to take female hormone tablets in an attempt to curb aggression.”
http://business.timesonline.co.uk/tol/business/law/article2646366.ece
I sat next to a lunatic, when he was getting whipped, would bang his desk drawer, with his hands firmly clasped, screaming. “I love pain, give me more”. As his open trade equity was rapidly declining, he would increase the pace, actually broke a finger.
Oh, by the way, the fed was not providing a backstop.
274 Shore Guy
Saturday night if it’s not raining, I’ll be at the Allenhurst Beach Bonfire as we mark the closing weekend of the beach cabanas. Feel free to join us. We have electricity until Sunday so the fridge is still full of beer and booze that we have to drink up. Also a band on the beach. If it’s raining we’ll probably go up to the bar that over looks the ocean (Mr. C’s). Email me if you or anyone else are interested.
I just put up a chart generated from the troubled bank list. enjoy
http://maldream.blogspot.com/2008/09/fail.html
Hurricane Ike location
http://tinyurl.com/4ot9t2
Hurricane Ike location
A great hurricane website:
http://www.stormpulse.com/
NJ Coast
Grim can pass you my e-mail, or You can have him give my yours.
I may take you up on it
me, my, thee, thy
282 – BC Bob
I actually feel sorry for the people who are nearing retirement and have no idea that their pension funds have been pillaged and looted with leverage.
I hear that Paulson is reserving the last shot of his bazooka for bailing out the PBGC, or he may just kick the can down the road for the poor sap who is going to be the Prez.
NJC[283],
Sounds like a great GTG location? Bus trip from NNJ?
Vic [289],
Not a problem. They are going to retire on their RE.
For anyone looking for an interesting read, I would recommend “Juggling Dynamite”. It is a quick and easy read with a lot of sense about the fallacy of the “buy and hold” strategy of investing, which was perfectly fine in the extraordinarily long bull market of 80 – 00, but will not work for most people as a lot of people do not have the luxury of a 20 year horizon.
The author also states that we are in a secular bear market since 2000.
All in all, a good read for a financial novice like me.
The boys are busy.
“New York Fed Holds Emergency Meeting On Lehman’s Future”
http://online.wsj.com/article/SB122126724103330909.html
OT: Just a reminder that we live in the 21st century in reportedly civil and humane times….
Teenage girls buried alive in Pakistani tribal ‘honor killing’
THE GUARDIAN, ISLAMABAD
Tuesday, Sep 02, 2008, Page 5
Three teenage girls were buried alive by their tribe in a remote part of Pakistan to punish them for attempting to choose their own husbands, in an “honor” killing case.
After news of the deaths emerged, male politicians from Balochistan Province defended the killings in parliament, claiming the practice was part of “our tribal custom.”
The girls, thought to have been aged between 16 and 18, were kidnapped by a group of men from their Umrani tribe.
They were driven to a rural area and then injured by being shot. Then, while still alive, they were dragged bleeding to a pit, where they were covered with earth and stones, Human Rights Watch said. Officials, speaking off the record, confirmed the killings.
However, six weeks after the deaths, no one has been arrested, amid claims of a cover-up. According to several accounts, Balochistan government vehicles were used to abduct the girls and the killing was overseen by a tribal chief who is the brother of a provincial minister from the ruling Pakistan People’s Party.
Some reports said that two older relatives of the girls tried to intervene but they too were shot and buried with them while still alive.
“This is a heinous criminal offense,” said Ali Dayan Hasan of Human Rights Watch. “We have corroborated it and cross-corroborated it, but the second the police admit that it happened, it would trigger an investigation.”
Hasan said that with a presidential election on Saturday, one in which Balochistan’s provincial parliament will be strongly relied on to deliver votes, action that would antagonize the region’s politicians was highly unlikely.
In Pakistan’s national parliament, a member of parliament from Balochistan, Israrullah Zehri, said on Friday that “this action was carried out according to tribal traditions,” a view backed up by some other male lawmakers, who attacked a woman senator who had raised the case.
“These are centuries-old traditions and I will continue to defend them,” Zehri said over the weekend.
The killings happened in the Naseerabad district of Balochistan. Although so-called honor killings are not unusual, burying the victims alive seems to have been brutal even by tribal standards.
“It is very common for women in these cases to be deprived of an honorable burial. This is to make sure others learn the lesson,” said Samar Minallah, a human rights activist based in Islamabad.
Sarang Mastoi, a local journalist in Balochistan with Pakistan channel KTN, said that the villagers were scared to talk openly about the crime but he had been taken by some to see the burial site.
Under tribal — not religious — tradition, marriages are carefully arranged by elders. Marrying without permission is considered an affront to the honor of the tribe. Sadiq Umrani, a provincial minister, admitted that the girls were buried alive, but denied the involvement of his brother.
sl
The fed officials need a bonus this year. They have been working weekends these days.
I wonder if they get time and a half?
Helluva weekend going on;
AIG admits the whole kit-n-kaboodle is on the table.
LEH is up in the air and desperate for a buyer.
WM isn’t any better and about as desperate.
The Fed is having emergency meeting for all the biggies.
Its so bad we wont make it till Nov.
It was nice while it lasted.
#296 – They do, but they’re paid in USD.
Shore Guy-
I’ll be in touch tomorrow.
Come on down BC Bob- but the band is not one that I work for ;).
Vic (280)-
“You intentionally put your body in postures that are right at the edge of discomfort and then cultivate the ability to stay there.”
Right now, I’d say LEH, AIG, WM and MER have put a lot of folks into the bend forward/grab ankles position.
I guess after you’ve done that long enough, you can probably get used to it.
Nice little SKF chartology tidbit:
http://tinyurl.com/4emto4
Clotpoll Says:
September 12th, 2008 at 11:41 pm
Nice little SKF chartology tidbit:
http://tinyurl.com/4emto4
Unlimited foolishness….
Chifi,
ignoring SKF and other speculative investment positions, where do you see this mess going? you seem to disagree with clot myself and a few others.
It sounds like a lot of people are in a panic. Don’t worry, as all is not lost. The government is stepping in to fix the problem and right the ship. I note a lot of anti-Americanism here. Lets not give the old Red, White and Blue a black eye.
Jim (304)-
People here are panicking…precisely BECAUSE the gubmint is stepping in to “fix” the problem.
#304 Jim,
The government has doubled the national debt in a weekend by taking over Fannie and Freddie, this is after the government doubled the national debt during the previous 7 years.
It’s not anti-Americanism you are seeing here. It’s anti-welfare for the rich that the middle class and our grandchildren’s granchildren will be stuck paying for.
Grim,
The weekly report from the hinterlands…
Hunterdon County Comp Killers:
GSMLS recorded sales for Hunterdon County for the past week = 9
Number that made this list = 3
Here we go…
MLS#: 2498718
9 Mission Hills Road West
Clinton Twp
SLD: 09/03/03 $290,000
OLP: 03/16/08 $319,900
SLD: 09/10/08 $280,000
DOM: 93
MLS#: 2519181
115 Main Street
Hampton Boro
SLD: 02/23/05 $330,000
OLP: 05/18/08 $329,900
SLD: 09/12/08 $316,000
DOM: 89
MLS#: 2525950
16 Turtle Court
Raritan Twp
SLD: 06/29/04 $787,000
OLP: 06/04/08 $765,000
SLD: 09/10/08 $735,000
DOM: 89
(289) Victorian (291) BC Bob
“I actually feel sorry for the people who are nearing retirement and have no idea that their pension funds have been pillaged and looted with leverage.”
“Not a problem, They are going to retire on their R/E.”
It would be easier to laugh about if this wasn’t my situation. Nearing 60, I have seen my 403b funds, house, chances of a pension all deteriorate.
Folks like me have cut back spending and would love to save at anywhere near a decent rate. Would raising rates to encourage saving help our situation as a nation? Instead of crying spend, spend, spend what if the mantra were changed to save, save, save…would this help?
308 CIndy
You and I are in the same boat, except that I have a few more years before retirement. I have also seen my 403b funds lose money. As I’ve stated previously, I don’t believe the pension will exist here in 20 years.
I think that this nation has become a lot like spoiled children. People have been buying buying buying, using credit so they don’t have to take the time to save for something. How do you then pull that away from people? You’ve seen what its like when spoiled children don’t get their way. The temper tantrums are numerous. So the parents give in. Isn’t that what our government is doing? Instead of teaching the important lesson of saving and working hard for what you want, its just handed to us. So what we learn is, if I yell loud enough, I’ll get what I want.
I’m going to try standing outside later and yelling for the winning lottery ticket.
Hello Everybody
Windows vista is also causing lots of boot issues, so I often get questions like this:
I have a Dell Dimension, which won’t boot to Windows (Vista), and none the repair options work:
Startup repair: Reports repair fail due to problem with registry
System Restore: Reports no restore points available
Windows Complete PC Restore: Reports no backups available
Windows Memory Diagnostic Tool: No memory problems
Command Prompt.
Can’t think of any appropriate command to use here.
So I booted with the system DVD (as one would with XP) but the upgrade
option has been greyed don’t want to do a new install. I want to fix existing
installation.
What should I do?
————————————————————
And here is the answer:
You can’t do a ‘repair install’ because you need to launch the Vista DVD
from within Windows, not, as you have been doing, booting straight from the
DVD; that is why the ‘upgrade’ is greyed out.
If you cannot launch Vista and none of the fix variants will work a clean
install is the only other option.
To save problems in future it is actually a good idea to make image of the hard drive, using software like True Image. What I do is install operating system, download all updates, check system I working okay for a day or two, activate system, then create image of the whole drive/partition. Any time I get a problem I can re-image the drive/partition quickly and be up and running without much inconvenience. And minor repairs are done by using any registry repair utility, there are plenty of them on the market today.
Cheers,
Carl
Clot [305],
Those charged with the crimes are determining their own sentence.
Absolutely right lostinny. Can you scream for me as well? I’d be happy with a pick-3 jackpot at this point.
NJC[299],
You never know. Can I crash in the cabana?
“Down the shore, everything’s all right”
312
Stu,
I’d offer to split it with you but my track record with winning lottery tickets is roughly $2.
Lost…
“How do you then pull that away from people?”
I am the first one to tell many children – NO! (And mean it…)
Have you ever seen that nanny show on TV?
What we need is a strict “disciplinarian”
to be in charge of these “kids.”
Did anyone download the PDF file at Roubini’s site regarding the World Economic Forum – WEF? Roubini was the lead academic.
“The WEF’s Financial Development Report and index: Why is the US ranked #1 in spite of its serious financial instability and crisis?”
They scored 52 nations on their financial development. US and UK ranked (overall) 1st and 2nd. Go figure…
A related article at FT.com – “London and NY tie in fiance ranking” points out that “weaker points for the US include regulation of security exchanges, the protection of intellectual property rights, and the relatively high risk of banking crisis – an issue that has come to the fore since the onset of the credit crunch.”
RE 315 –
Financial Developement Index ranking
US 1 5.85
UK 2 5.83
Germany 3 5.28
Japan 4 5.28
At the bottom per the FT.com article:
“Venezuela is at the bottom of the index, just below Ukariane and Nigeria, according to the report.”
I have to go to a football carnival and collect tickets this AM -7:00. (We start them in grade school here in the Valley.)
But one final word – for what it’s worth..
Following the “spoiled child” analogy.
There is no kid who can’t learn and there is no country that needs to fall into ruin.
What is required is discipline, consistency and direct instruction.
315
Cindy
I know the nanny show. Have you seen the ones where the parents aren’t on board with the nanny? Last week a kid was hitting and kicking because he didn’t want to be in school. His mother didn’t like my tone with the child when I told him “no kicking” and made it a point to say something to me. I don’t like the black and blue he left when he kicked me. But why should that matter.
We have no strict disciplinarian because the “parents” don’t see the need for it. They are doing everything to sabotage teaching the importance of becoming a self sufficient independent adult.
I remember when parents smacked a kid’s hand for going into the cookie jar. Now they help crack it open.
(318) Lost – I left out logical consequences….
Wouldn’t it be grand if spoiled children (and lying, cheating officials – bankers) suffered “logical consequences” for their actions…”time out” – JAIL
Grim,
The weekly report from the hinterlands, part 2…
Hunterdon County FUTURE Comp Killers:
GSMLS new actives for Hunterdon County for the past week = 61
Number that made this list = 7
MLS#: 2577242
1 CYPRESS COURT
Clinton Town
SLD: 11/15/06 $369,000
OLP: 09/13/08 $348,000
DOM: 0
MLS#: 2577116
12 KENT CT
Clinton Twp
SLD: 01/29/07 $429,000
OLP: 09/11/08 $416,900
DOM: 2
MLS#: 2575586
1 Hillcrest Lane
High Bridge Boro
SLD: 09/27/04 $340,000
OLP: 09/09/08 $339,900
DOM: 4
MLS#: 2576601
269 RUMMEL RD
Holland Twp
SLD: 03/01/06 $524,900
OLP: 09/11/08 $519,900
DOM: 2
MLS#: 2576308
23 Fitzer Road
Kingwood Twp
SLD: 07/25/07 $380,000
OLP: 09/10/08 $360,000
DOM: 3
MLS#: 2574984
58 FERRY ST
Lambertville City
SLD: 04/19/06 $423,500
OLP: 09/07/08 $399,900
DOM: 6
MLS#: 2576778
3 Kinney’s Sawmill Rd
Readington Twp
SLD: 07/21/03 $729,900
OLP: 09/11/08 $699,000
DOM: 2
NJCoast :283
If that’s an open invite to Allenhurst, I may take a ride down there. I think the rain will clear out by tonight. It shouldn’t be too hard to find a bonfire on the beach.
Are they open to out-of-towners?? I know they’re kind of tight about that during the high season.
How do I get in contact with Realtors on this board who agree with the overall market sentiment (overpriced houses etc.) and will work for us as a buyers agent?
Still – 294
Ugh. I so didn’t need to read that with my coffee.
Those poor women. We have a long way to go.
319 Cindy
Agreed.
321 Fiddy
Come on by all are welcome. In Allenhurst turn east off of Ocean Ave. at Spier Ave. to Ocean Place-which is one way going north. Bonfire is at the north end of the beach closest to Deal. We are cabana #37.
Rumors flying that Lehman may just be liquidated… via Calculated Risk.
#325 – I know that area really well. There are some great old houses there, absolutely beautiful, and just as expensive.
Did anything ever replace the Acme that closed in Deal?
The markets have to go higher on Monday – who is for a half a point cut?
Late Action in gold and USD looks like the FED has let its buddies know.
Tosh,
I just woke up to something on Bloomberg about a meeting for all the biggies …and B of A wasn’t there because, they said, it was a possible buyer for LEH.
I was half asleep, but seemed strange.
#328 USD was falling against the Euro, GBP and CAD all of Fri. Odds on for an emergency rate cut to go with the liquidation of Lehman.
#329 – They really may not be able to find a buyer. This might be where things start to get very serious.
What will transpire from all those bigwigs meeting? I think they will not allow shorting on the downtick of all stocks starting Monday.
Tosh- the old Acme is now a Rite-Aid.
Whats going on with AIG?
#332 – I haven’t seen too much new news. Per Reuters there’s going to be an investor call on Mon and an emergency meeting on the 25th, but that may be too late.
maybe we should export the poor to Alaska.
It’s Dividend Day in Alaska, when every resident man, woman, and child receives a check representing their share in the state’s oil profits. This year the amount sets a record: $2,069. And for the first time, there’s a second check, pushed through the legislature by Gov. VPILF: $1,200 to pay coming heating bills. At the Mug Shot Saloon in Wasilla, the 10-inch brass bell rings every time someone buys a round for the entire house, and Sam Christy is calling Gov. VPILF “Cinderella in Robin Hood’s clothes.” On Dividend Day it seems there’s not a soul in gov. VPILF’s home town of Wasilla who doesn’t support her. In the parking lot of the Mug Shot, a banner reads We Love You Sarah and a pickup truck has a bumper sticker reading “Palin 2012″ in the back window. Mr. Christy, an x-ray tech who has a wife and four kids and had $19,614 direct deposited today, shouts over the Grateful Dead on the jukebox to say he wants Gov. VPILF in the White House. “She can wrestle with the boys and beat em,” he says. “If George W. Bush can be president, Sarah VPILF could be.” But the dividend money, he says, isn’t going anywhere. “That’s Alaska money,” he says.
people can no longer get rich quick off their houses … so they turn to the lottery. excessively.
http://www.nytimes.com/2008/09/13/us/13lottery.html?_r=1&hp&oref=slogin
the priorities in this country are so damn warped. hard work and dedication are meaningless when there’s a tiny sliver of hope that you could win $25 million
#344 – the ultimate in buying votes.
#345 – or everybody could move to Alaska for a while and get a check (courtesy of the Federal Government, ahem, taxpayers of the USA). Much better odds than the lottery.
Scribe/Tosh/NJC,
They will not find a buyer for LEH unless the fed is behind the plate.
A fed rate cut would not surprise me. However, it would have a greater efffect if announced this Friday,[triple witching hour] around 8:00-8:30 AM. The question; can they wait a week if LEH fails this weekend?
A cut, would have nil effect, it would just provide short sellers an opportunity to sell at higher prices. The problem is not interest rates, it’s insolvency.
Sal #332,
Send an email to Jamesbednar@gmail.com, he is a real estate agent.
KL
#347 BC Bob: Agreed. What could they possibly hope to accomplish with another rate cut? What are they going to do cut it to 0?
Rich: Looking at the numbers provided to me yesterday by you, it looks like RE prices are down by about 10% from peak, (if I am reading them right)Going forward it is my humble opinion that even using the sacre limited comps of the last 1 to 3 months is not uselful for determining where to bid going forward, as those numbers are backward looking.
We are in extremely dangerous and unchartered waters here going forward, and I do not think that is reflected in limited current comp #’s.
Do you think I am mistaken? Clot and anybody else please feel free to chime in.
Hasn’t it been AGES since Grim did residential sales charts? Or am I just not seeing them?
351 Lisoosh
Good to see you back here.
I think Grim’s been occupied with some other things.
#273 BklynHawk
It depends on the MLS and how the township reports. There is definately alot of inconsistence from township to township in what’s in the MLS system – certainly not the same records as when a title search is run on a property. Not that detailed
AIG is buying Lehman who in turn is buying Wamu them they will spin off a firm called AIGWMLEH and stick all the garabage there and sell it in a IPO to the same folks who took out subprime loans in the first place. AHHHHHH if it was that easy. Monday may be ugly.
John[354],
That’s exactly what weekend warrior Hank proposed about a year ago. The Super Duper SIV. I called it the Hospice Care Fund, at that time. Another brilliant idea by Hammerin’ Hank.
Maybe it’s a better idea to print and then buy China/Russia/Japan/Bill Gross. At least we would not have to bend over for them??
#354 John: Maybe it should be ugly,and we can hit boottom once and for all, and start to recover.
Disgruntled, recent, buyers all over the globe;
“About three years ago in Shanghai, a group of home owners went to court demanding compensation from the developer of their properties after a price fall. They lost the case.”
“Fast forward to now in Shenzhen. The same absurd claim is made by a group of disgruntled home owners in a particular housing complex. Instead of going to court, they reportedly gave vent to their anger and frustration by smashing one of the developer’s sales offices and threatened to stop paying back their mortgage loans.”
http://www.chinadaily.com.cn/bizchina/2008-09/12/content_7022539.htm
3b/John,
If it’s not resolved, we may just witness a good old fashioned blow off.
“But maybe everything that dies, someday comes back”
Boss.
#358 BC Bob: Maybe it does, but this time around it will be a long time coming. That is whay I will have to plan my house bidding process in 2009 accordingly.
Ok so I picked up my BMW car today. Since it was from the auction but preowned it had all the paper work. Even the prior owners name and his wife names their home address his lease agreement, his insurance cards etc. Just for fun looked up address on propery shark and saw his million dollar plus home in old Greenwich. The internet is info overload. I kept thinking about the Jon Voight eposode from Seiinfeld.
3b[359],
I wasn’t making reference to the subsequent bounce back. Strictly alluding to the 1st action, the good old fashioned blow off. There’s a whole world of traders/money manager’s that have not experienced one.
A resurrection of a crash?
333, 334, Lost/lisoosh,
Sorry. Just a sad reminder that in countries where women are powerless, voiceless and where ignorant men make the rules there is no justice.
(I posted that last night – sorry for the morning reality dose…)
I’ll buy your drink at the next GTG – in a free country where women are free to choose their mates.
These folks aren’t killing enemies… they are killing their own flesh and blood.
sl
just a notice… we haven’t seen grim’s Lowballs in a long time…
sl
Related to John’s post say they find somebody to buy Lehman, then who is going to buy AIG or Wamu or Merril or Wachovia when the time comes? And if you are Bank of America why do you buy Lehman if you’d rather have Merrill and you know at a certain point they are going to be in a same position.
“After Bear Stearns, regulators face a no-win decision with Lehman, said former Representative Richard Baker, a Louisiana Republican who served on the House Financial Services Committee. “You bail them out, you are putting taxpayers’ money at risk,” Baker said. “You don’t bail them out, you are facilitating the short sellers.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=amz2b69NbXhA&refer=home
Where was this clown when Lehman etc were shorting other companies throughout the years?
question regarding 30 days rent increase notice:
If a landlord is late in giving 30 days notice (say by 2 weeks) that rent is increasing, and the tenant decides to move out instead of pay the increase in rent, how many days notice does the tenant have to give about moving out? Can the tenant take the full 30 days and move out 2 weeks after the end of lease? (and of course pay the landlord 1/2 mo additional rent)?
(Sounds like a GRE Analytic question don’t it?) Thanks/
Afe
I would think that if you are abiding by the lease and it states that you must give 30 days notice, then you have 30 days. Since the landlord gave you late notice, its not your problem. But I’m not a lawyer so all disclaimers.
Lehman Liquidation….
U.S. Gives Banks Urgent Warning to Solve Crisis
As Lehman Brothers teetered Friday evening, Federal Reserve officials summoned the heads of major Wall Street firms to a meeting in Lower Manhattan and insisted they rescue the stricken investment bank and develop plans to stabilize the financial markets.
Timothy F. Geithner, the president of the New York Federal Reserve, called a 6 p.m. meeting so that bank officials could review their financial exposures to Lehman Brothers and work out contingency plans over the possibility that the government would need to orchestrate an orderly liquidation of the firm on Monday, according to people briefed on the meeting.
http://theautomaticearth.blogspot.com/
thanks Lost- that’s what I am thinking too. Any landlords want to chime in?
I would talk to the landlord and see what he/she thinks. No landlord is going to take you to court over 1/2 a months difference in the rental increase. Chances are they will let the increase take place the next month. If they see that it might be provoking your immediate exit, they may choose to negotiate with you the amount of the increase. Talk to your landlord.
car buying question, OT I know. I want to buy a mini cooper clubman this year however, the last time I was at the dealership they told me there was a waiting list (about 3 months ago). Should I assume that there isn’t any negotiation on price since there is a waiting list? I don’t desperately need a new car but right now I ave a 2003 miniS and a 2nd child on the way so a clubman would work for me nicely.
Any advice on how to approach the dealership or should I just straight out ask, “hey, any wiggle room on the price?”
I plan to buy and msotly on cash,I would maybe finance 12K.
btw, the rent increase is 11%, ridiculous!
Will Monday be the market dislocation day?
I see one of two things happening with LEH.
1) The fed does another Bear Stearns type bailout.
2) The fed forces LEH to liquidate.
The prudent thing would be #2 of course.
The likely thing will be #1.
The real problem with another bailout is that the reasoning for it can not be the same as used for Bear. The Fed can’t defend their actions again by saying it will cause to much pain in the markets. If they use the same reasoning, the market should be closed as it will no longer be free. Additional, the potential cost of FNM/FRE is staggering. Without that bailout, they might have tried to save LEH. No way they can do it now. The FED is seriously out of bullets.
A rate cut will not help anyone whatsoever and could accelerate deflation. The cost of credit is not the problem. The issue is the lack of credit availability.
Monday should be a very very interesting market day indeed.
afe, does your mom live in NJ? If so, we have state mandated rent increase % limitations for ongoing tenents. 11% is more tha double the highest % the state has ever mandated.
Being a landlord and having read a bit about similar cases, you will potentially put some of your deposit at risk by staying an extra 2 weeks past the end of your lease. I honestly think that although your landlord posted the increase late, your lease still ends at the end of the month.
You have nothing to lose by speaking with the landlord. You will not want to bring a case against them for their failure to let you know the increase 4 weeks ahead of the end of your lease. If the landlord is unreasonable, I would move. That damn security deposit gives the landlord the upper hand in this case.
I am not lawyer nor do I play one on TV, but I would bet a judge would side with the landlord as not letting you know about a rental increase is less of an offense than squatting, which is what you sound like you might be planning on doing.
#374 Stu: Whether they do it or not, I really do think they are going to have to let Lehman go, otherwise they loose what little credibility they have left.
At that point as you say we might as well shut it all down.
thanks for your input stu/barbara. yes, it is in nj.
afe then as a landlord, in my experience that 11% increase is wildly illegal. A weapon in your negotiating arsenal. Good luck to you and your mom.
#375 Barbara
Please give a citation on that if you can. I thought there was no statewide law prohibiting rent increases except for those that a judge would consider “unconsionable”. Except for in the few cities that have rent control laws in this state.
As per the latest on the WSJ, it appears there will be no deal for Lehman today. The liklihood of a liquadation of the firm is becoming more apparent.
#380
the state does not prohibit increases, they put a limited % of increase for tenents who are resigning. Hang on, I’ll try to find it on the state site.
#382 barbara.
Ok. I will hang on and wait. :)
Yahoo News had a story about a WSJ reporter who had a fun time buying a house in a leafy train town. Most of my friends and colleagues are from out of state, and while most understood the high prices, most were not ready for the games played by realtors and lawyers in the negotiating process as compared to other states.
http://online.wsj.com/article/SB122109665058121975.html?mod=yhoofront
willwork4beer/Barb:
I’m pretty certain that there is no state law prohibiting large increases, unless the local government has rent controls. My landlord tried a move like that on me about 6 years ago. She was also on a fixed income and came down with cancer. It appeared that she wanted me to pay her medical bills. We negotiated the rent down to a more fair 10% increase. Keep in mind, she had not increased the rent for the prior 3 years which was already below market.
She subsequently passed soon after and her family sold us the house off in a private sale saving us tons. I really helped her out a ton and she thanked me in her will. Good karma I suppose.
3b (350)-
Toss the comps out the window. We are firmly in “catch a falling knife” territory.
willwork4beer,
ok, went to my municipality web site and state and I’m getting conflicting info so I will retract my earlier statement until I can call on Monday and get clear myself.
They talk about adopting the state % (this year is 3%) however I cannot yet find a link on the state web site where that % is stated.
Also,
I know that if there was no increase in three years they can get “back increases” etc so your story makes sense to me.
Sorry, to be continued….
ugh, sorry that last part of my post was meant for stu
BC (358)-
With no gubmint backstop- and no time for an investor to do proper due diligence- the only smart play is to let LEH die, then jump the carcass before the meat turns rancid.
vodka (368)-
“As Lehman Brothers teetered Friday evening, Federal Reserve officials summoned the heads of major Wall Street firms to a meeting in Lower Manhattan and insisted they rescue the stricken investment bank and develop plans to stabilize the financial markets.”
They’d have had better luck asking Count Dracula to back off tapping the carotid artery of a damsel in distress.
LEH = When Crocodiles Attack
Stu (374)-
Locked and loaded.
When they put LEH into liquidation, all those mortages, CDOs, etc will get marked to market. That is going to hurt all the banks. Get ready for some more serious writedowns.
I am sure Kudlow and gang will have cardiologists in the studio come Monday…
And to think we still got WM, MER, WB, Citi, National City and last but not least AIG.
givenall the failing banks, how are all of you handling your cash? I spread mine out at citi and BOA to make sure I was fully insured but with citi looking bad among all these others, I wonder if 1st Matress is a better bet
Hype (393)-
Cardiologists? Kudlow should call all his old dealers.
Lehman is for sale on E-bay. Make an offer. Bids start at $1.
http://cgi.ebay.com/Lehman-Brothers_W0QQitemZ110289318047QQcmdZViewItem?hash=item110289318047&_trkparms=72%3A1163|39%3A1|66%3A2|65%3A12|240%3A1318&_trksid=p3286.c0.m14
Frank…too funny!
I think they’re going to get more interest on craigslist:
http://newyork.craigslist.org/mnh/for/837736866.html
Who wants to deal with the whole shipping cost/ paypal thing…when you can just drive into the city and pick up the thing? Will all the file cabinets fit into a 26′ U-haul?
NJ Coast,
A family issue kept me from getting out tonight. I even had to blow off meeting a feiend over at the Stone Pony.
I hope you made short work of the beer.
The primary reasons I can’t vote for M:
1) offshore oil drilling is a farce. We just aren’t in the right part of the world!
2) Cut taxes, but no reform on spending. Where’s the money gonna come from? Your child’s piggy banks that’s where!
http://economistsview.typepad.com/economistsview/2008/09/john-mccains-bi.html
The primary reasons I can’t vote for M:
1) offshore oil drilling is a farce. We just aren’t in the right part of the world!
2) Cut taxes, but no reform on spending. Where’s the money gonna come from? Your child’s piggy banks that’s where!
http://preview.tinyurl.com/68o9wz
stu 401
Primary reasons I can’t vote for O.
1)Every little bit helps till we get other things up & running.(if oil companies are funding why not)
2)Raise taxes spend even more. O has some grand plans to help the masses. We end up in the same place, just with less money in are pockets. I trust me with the money more than the gov.
Stu not looking to get into it tit for tat it is just it doesn’t make a big difference.
I don’t think either party or their respective candidates can pull us out of this sh*t storm we are going to face.
mike 403,
for a number of reasons, drilling off the east coast is a bad idea. and this is regardless of any environmental issues. would be happy to discuss further but dont want to clog the blog, e-mail me if you want a better explanation.
get my e-mail from grim
Reuters has an update on what’s happening with Lehman:
“Lehman Talks Extend to Third Day”
by Dan Wilchins and Glenn Somerville
Another site referred to it as
“A weekend at Bernies.”
Didn’t someone die in that movie?
Thanks for the update Cindy. I have a funny feeling that tomorrow is going to be a very bad market day.
Cindy (404)-
Yeah. Bernie.
Still one of my favorite movies; a grand metaphor for post-modern America.
386 Barbara
Which municipality’s website contains that information? I would like to look at it.
Here’s what I was refering to by “unconscionable” last night. I was on the handheld and unable to find the citation at that time:
From the New Jersey Permanent Statutes Database of the New Jersey Legislature
2A:18-61.1 Grounds for removal of tenants.
(snip)
f.The person has failed to pay rent after a valid notice to quit and notice of increase of said rent, provided the increase in rent is not unconscionable and complies with any and all other laws or municipal ordinances governing rent increases.
http://tiny.cc/j3s7X
What constitutes an “unconscionable” increase? Depends on which judge you get, I guess.
(406) Clot
I have been reading trying to understand the larger implications of all that is happening and am just now getting a sense regarding the interconnections.
From WSJ – No Deal Reached Yet to Decide Lehman’s Fate.”
“There could be further effects to such an event, with the banks calling in loans from hedge funds and other clients in turn setting off more forced selling that further depresses asset and securities prices.”
How is it that investment firms don’t have leverage limits?? Do they? 60:1 – How is that okay?
Why wasn’t something done re: several outfits once Bear fell apart? Are they all sitting back waiting to be bailed out?
We lost to Wisconsin 13 – 10. This time it was our kicker who blew 3 chances. We had opportunities and couldn’t capitalize. No BCS bowl bid for us – but we tried.
Cindy,
I don’t think there is much they can do. Like the dreamy subprime borrower who’s monthly nut is now 3 times his salary, LEH can’t send the keys back to the bank and come back from the grave after their credit is cleaned up 5 years later. They owe many more times than they are worth. Game over for the firm and a lot of pain is coming for those who invested with them.
I just pray that the government doesn’t offer them some stupid 15-year loan to hold ’em over until their stupid investments in commercial and residential real estate come back. After all, Paulson could somehow defend his actions by saying that in the long run, it won’t cause the American tax payer a penny. That is, if the government can still get our Asian masters to continue to lend to us. Paulson will conveniently leave this part out.
In this latest adjustment of the Zogby map, Ob has lost 26 Electoral College votes from two states—Pennsylvania and New Mexico – both of which were moved from the Ob column into the toss-up column
http://www.zogby.com/news/ReadNews.dbm?ID=1549
Palin claims Alaska “produces nearly 20 percent of the U.S. domestic supply of energy.” That’s not true.
It is between 2 to 3%.
More Republican lies and deceit. Keep on believing!
(410) Stu
I just don’t understand how it is okay to be leveraged like that. Don’t investment firms have some sort of limits? We need to overhaul this mess.
I also don’t think it is fair to force the banks that have done something right and have a bit of cash to purchase shares in some “bad bank”.
The Bulldogs didn’t look so great last night. The touchdown for Wisconsin came after an interception. They out-weighed us by 30 pounds – to a man – and we didn’t use our speed. Brandstater can’t connect on a long pass to save his life.
Dealbreaker.com says BoA will take over the “good” part of Lehman and has demanded that Fuld resign. Fuld doesn’t think the situation is all that bad.
Cindy (408)-
All the superleveraged IBs entered a state of narcoticized profitability at the same time, about 2004-05. Once everybody else saw the announcements from LEH, MER, etc of the turbocharged profits that came from the zombie quant model of investment, all the rest of the players stepped up their game (a la “Dancing Chuck” Prince).
Limits on leverage? Self-regulation and self-control? Ha! These guys’ idea of prudent was to come up with crap like CDO squareds and giant SIV sausage grinders.
Too bad that no matter what terminology you use for superleverage and the tools of its implementation, the antidote has remained constant throughout history: a massive, deflationary rush for the exits.
And, same as it ever was, at the moment of the rush for the exits, all the doors are barred shut.
#385 clot: That is what I thought.Thanks as always.
With 53 days until Election Day, JM has pulled even with BO in the latest NEWSWEEK Poll. Buoyed by the Republican convention and overwhelming partisan enthusiasm for his choice of Sarah Palin as his running mate, M is now tied with O among registered voters nationwide, 46 percent to 46 percent.
http://www.newsweek.com/id/158627
MINI- the Clubman is new & gets great gas mileage. There will be no negotiation on price. As it was I bought an 07 CooperS as 08s were coming out & only got $500 off. Demand…congrats on needing a bigger MINI!
417…awesome! It is a race to the bottom.
sorry if this is a repost…
Lehman set for three-way break up: paper
Sunday September 14, 10:00 am ET
LONDON (Reuters) – Bank of America (NYSE:BAC – News), Barclays (LSE:BARC.L – News) and Goldman Sachs (NYSE:GS – News) are expected to agree a deal as early as Sunday to buy stricken U.S. investment bank Lehman Brothers (NYSE:LEH – News), Britain’s Sunday Express reported.
http://biz.yahoo.com/rb/080914/lehman_breakup.html?.v=3&.pf=banking-budgeting
sl
actually if you have good credit and are an IB you can leverage up to 98% on certain things. You can buy a million bucks worth of stuff for 20K. Unwinding is ugly.
Anyhow, indian immigrants with money in NJ are funny people. My two indian professional friends have a network of around 1,000 “close” indian friends in NJ. Most with masters degrees. Most of them don’t buy stock or bonds as it is too “dangerous” and either keep it in the bank or buy real estate. The group is going through sticker shock as there 5% one year ING/HSBC cds from 2007 keep maturing and rates are now low. This group also used to think as jewlery and gold coins as investments, but now they are too expensive. They are now looking at RE and those people drive me nuts in a way as they won’t let the market hit a bottom. The immagrant crowd who believe in buyng only physical assets and cds are now jumping into semi distressed RE. They will lose their shirts but people trying to catch a falling knife get bloodied and slow the knifes fall. I don’t get it. Back in late 2007 and very early 2008 I could not even get those folks to buy short term triple AAA rated munis or US bonds or even buying a two year cd as they said too risky. They don’t even want to go beyond one year in a bank cd. Yet buying a sponsored defaulted condo sight unseen in a falling market is safer. Oh well my one indian friend could not get her dual income indian pharmist friends to invest in their company 401k that had a 100% match as they just see stocks and say too risky.
Other funny thing the indian couple I do know only want to buy a bankrupt sponsor condo to rent. Well they said her level of caste don’t do physical labor so they don’t want a single family house and it is beneath them to go collecting rent checks. They want a condo with a super to do the maint and a place to collect their rent check. Sounds like a very limited RE strategy. I also told them about my car I go at auction and the response I got is it is cheaper to buy new as you have a warranty when I told them I have a warranty they said they don’t like it if someone else has sat in their car as it is beneath them. Plus they said then they can’t trade their car in and it is beneath them to sell their own car.
I think the hardest job in world would be NJ indian fiancial planning. You have to get them to do a George Castanza day where he did the exact opposite of what he would normally do.
From NJ.com,
Patrolling the auction block
A spike in sheriff’s sale
BY SUSAN TODD
When the Highlands condominium went to auction at the county sheriff’s sale in July, the bidding got feisty fast.
In the end, a North Jersey man walked away with the condominium, which looks out over the Atlantic Ocean where it meets the Navesink River in the Highlands, with a bid of $276,000. The condominium is part of Twinlights Terrace, a spot where a two-bedroom unit was selling for $400,000 not so long ago.
==
Among the properties was a condominium on Aspen Drive in Plainsboro. Kessler and Ramesh Diora take turns calling out bids. At one point, Diora offers $135,100. Kessler is silent. The place goes to Diora.
A contractor with a real estate license, Diora started buying foreclosed properties in 2002, backed off from the business in 2005 and recently jumped back in. These days, even if he can renovate a house and put it on the market with the expectation of making a profit, he still has to worry about the buyer landing a loan.
“We have buyers. We have sellers. We don’t have lenders,” he said. “Lending is tough.”
John (421)-
Not to worry. The RE market needs a lot of losers in order to finally clear itself.
As long as we’re creating more and more future losers, this is a positive sign. You’ve still got to agree that- compared to prior busts- things are moving at a pretty quick pace.
still (420)-
“Three-way”? I’d call that a four-way gang b@ng.
LEH being the bangee, of course.
#425 clot: I wonder if the Fed’s break their vow of not providing government financing?
If they do, than they will have to do the same for Mer and AIG too. What a joke.
clot 424,
What a mess, eh?
I’m usually cheering a down market – for bargain hunting reasons… lately, I can’t even see a bargain that I feel sure won’t go bust.
must.remind.self.keep powder dry.must.remind.self.must.remind.self….
sl
Greenspan to Stephanopoulos: This is ‘By Far’ the Worst Economic Crisis He’s Seen in His Career
September 14, 2008 11:07 AM
ABC News’ George Stephanopoulos Reports: Former Federal Reserve Chair Alan Greenspan said this morning that this is “by far” the worst economic crisis he has ever seen. “There’s no question that this is in the process of outstripping anything I’ve seen, and it still is not resolved and it still has a way to go,” he said in an exclusive “This Week with George Stephanopoulos” interview.
Greenspan also noted, “let’s recognize that this is a once-in-a-half-century, probably once-in-a-century type of event.”
Looking ahead, Greenspan changed a previous prediction on whether the economy is headed towards a recession. When asked if the chances of escaping a recession were greater than 50 percent, Greenspan responded “no, I think it is less than 50 percent.” But in a “This Week” interview last December, Greenspan predicted “that the probabilities of a recession have moved up close to 50 percent, whether it’s above or below is really extraordinarily difficult to tell. I think it’s correct.
On the fate of investment bank Lehman Brothers, Greenspan said he did not know enough of the details to comment on whether the government should step in and help. However, when asked if we will see the failure of more financial institutions, Greenspan affirmed “I suspect we will.”
“But in and of itself that does not need to be a problem,” he explained. “It depends on how it is handled and how the liquidations take place. And indeed we shouldn’t try to protect every single institution. The ordinary course of financial change has winners and losers.”
Anyone out there still calling bottom?
Roubini is as cheerful as ever on Lehman.
Quote: “We are only in the third inning of a nine innings economic and financial crisis. And the only light at the end of the tunnel is the one of the incoming train wreck.”
http://tinyurl.com/RMeltdown
“Anyone out there still calling bottom?”
Sean,
Fuld stated that the worst was behind us on April 15.
BC Bob Says:
September 14th, 2008 at 12:32 pm
“Anyone out there still calling bottom?”
Sean, Fuld stated that the worst was behind us on April 15.
Bost: I don’t think we are at a bottom, although: #1 a definition of a bottom has to be agreed; #2 bottoms appear very much like what we are currently observing….
Chi[431],
If you listen to the pundits this fiasco has seen more bottoms than the 18th Ave beach in Belmar.
[366]afe
As any lawyer will tell you, it depends:
What does the lease say? If it is silent on notice provisions, that cuts two ways. If it is silent as to the landlord, a court may impute a 30 day notice period, or may also consider that the landlord waived the tenant’s notice period by giving late notice of a rent increase.
As for whether it is illegal, that depends first on NJ and local law (depending on the location, there may be an ordinance).
If no law restricts it, then a tenant may argue that it is a retaliatory increase, but the retaliation has to be for something that a tenant had a right to do. If the tenant complained about the cockroaches and uncollected garbage, there may be a defense. But if landlord decides he wants the tenant out because tenant is a Mets fan and LL is a Yankees fan, then retaliation won’t fly.
grim, 433 in mod, and I didn’t even discuss “poltics.” Really
Bost: But no one I see is calling a bottom now (whatever definition)….my banker clients are “spooked”….I don’t think we are at the bottom, but honestly, this situation is the beginning of the end…..I will use the last stock market cycle as an example…..Enron 11-12/2001, WorldCom 4-6/2002, capitulation 10/2002. So, again as an example, Bear 3/08, LEH/FNM/FRE 9/08, capitulation? early 2009? O-man wins election? late 2008?
I just want to point out that in the short-run we are $crewed, but given time to react, there will be an unexpected floor placed. There is liquidity out there, it is just not held by parties that you necessary are comfortable exerting their influence……
Honestly, those looking for real estate….I would be actively out there looking. If the timing and circumstance is right for you and you have dry powder…GO FOR IT….we have chaos and there will be some crown jewels out there if you are panning for gold….GO FORTH…BARGAIN HARD…TAKE NO PRISONERS….KILL’EM…..GET YOUR DREAM HOME
WSJ
Barclays Emerges as a Leader
In Talks Over Lehman Brothers
By CARRICK MOLLENKAMP, DEBORAH SOLOMON, AARON LUCCHETTI, SERENA NG and SUSANNE CRAIG
September 14, 2008 12:07 p.m.
Barclays PLC, the U.K.’s third-largest bank, is emerging as a leading contender for Lehman Brothers Holdings Inc. as discussions continued Sunday in London and New York in what is a highly fluid and pressure-charged environment.
A sale of Lehman to either Barclays or Bank of America Corp. remained dependent on government financial support, according to people familiar with the situation. According to these people, Barclays appeared to be moving more aggressively in trying to find a way to complete a deal.
That, however, would put any proposed deal at odds with the government’s reluctance to step in with funding. Discussions are expected to begin again this morning at the New York Fed. Wall Street’s top executives attended meetings yesterday before departing in black town cars Saturday evening.
Under a plan that was crystallizing Sunday, either Barclays PLC or Bank of America Corp. would buy Lehman’s “good assets”, such as its equities business, people familiar with the matter say. Lehman’s more toxic, real-estate assets would be ring-fenced into a “bad” bank that would contain about $85 billion in souring assets. The move would avert a flood of bad assets deluging the market, damaging the value of similar assets held by other banks and insurers.
On Saturday, one idea was for Wall Street firms to inject some capital into the bad bank. By Sunday morning, though, this option appeared to be losing support. Unlike when Wall Street firms stepped in to bail out hedge fund Long-Term Capital Management, today’s banks are much weaker financially. Some also are loathe to provide financial support at the same time a rival like Barclays has the potential to buy Lehman for a cheap price.
Lehman, as part of a previous plan to shore up it balance sheet, had already identified billions of dollars in bad assets and planned to dump them in a separate company so the process of extracting them from Lehman is already under way.
Demands by Bank of America and Barclays that the government somehow financially backstop the bad bank could be negotiating tactics during the talks. Barclays in the past has shown a discipline to not overextend on deals. It proved unwilling to get in a drawn-out bidding battle for Dutch bank ABN Amro Holding NV last year and ultimately a European consortium led by Royal Bank of Scotland Group PLC won the deal.
Barclays has hired Deutsche Bank AG and Credit Suisse Group to advise it. Another challenge for Barclays: Convincing U.K. regulators that it has the capital strength to pull off the deal.
On Saturday afternoon, the credit-trading heads of major investment banks gathered at the meeting to discuss how to deal with their exposures to Lehman in the intertwined credit-default-swap market. The lack of a central clearinghouse in this market means that dealers, hedge funds and others are directly facing each other in insurance-like contracts that are tied to trillions of dollars in debt instruments.
Credit derivative traders at some firms were asked to come to work over the weekend to help quantify their exposures to Lehman and compile lists of outstanding contracts they have with the investment bank.
One person familiar with the matter said large dealers contemplated showing each other all of their credit default swap trades with Lehman. Disclosing their positions may enable dealers to find ways to offset their positions with each other wherever possible. Later in the day, some traders were told that Lehman — with the help of Federal Reserve officials — will try to figure out which of its counterparties have CDS trades that can be offset. Those counterparties would be informed of the offsetting positions, following which they can unwind their respective swaps with Lehman and concurrently enter into new swap contracts with each other. For example, if one dealer has bought a swap from Lehman and Lehman sold a similar swap to another bank, the two banks could agree to face each other directly.
Such moves could help prevent individual firms from scrambling to find new counterparties to rehedge their positions with when the markets reopen on Monday, potentially unleashing turmoil across the credit markets. They could also help facilitate an orderly wind-down of Lehman’s derivative positions, if that becomes necessary. Still, sorting out the firm’s CDS positions promises to be a difficult and time-consuming task, because many of the contracts have different terms and maturity dates.
It is not known how much in CDS contracts Lehman has. In a survey last year by Fitch Ratings, Lehman was listed among the 10 largest CDS counterparties by number of trades and the amount of debt to which the contracts were tied.
Wall Street traders poured into their offices Saturday for emergency meetings to consider the actions they would take if Lehman is forced into liquidation. They broke into teams to evaluate their positions and exposure to Lehman in everything from energy trades to equity derivatives to credit,
One trader said conditions in the credit default swap market and the short-term repo markets are more stable today than they were in March, when Bear Stearns nearly collapsed, but still, “if they go into liquidation,” it is going to be a bad situation on Monday.
A disorderly unwind of Lehman’s derivatives trades is only one worry. Another worry is that if Lehman collapses, its distressed assets — such as commercial real estate — could suddenly hit Wall Street for sale, forcing prices even lower and potentially forcing other dealers to mark down once again the value of their own holdings.
Lehman has hired law firm Weil, Gotshal & Manges LLP to prepare a potential bankruptcy filing, according to a person familiar with the situation. The New York-based Weil has a leading bankruptcy practice and advised Drexel Burnham Lambert on its 1990 bankruptcy filing.
In a Lehman bankruptcy, the firm’s brokerage units would have to enter a Chapter 7 liquidation, in which a court-appointed trustee would take over, liquidate the firm’s assets and get Lehman customers back their money. In general, securities that a customer holds at a brokerage firm are legally the investor’s property and aren’t exposed to the claims of the firm’s creditors.
In trying to hold firm to their no-bailout stance even while pressing for a deal, federal officials could try to pit Bank of America and Barclays against each other. But that leverage can work only if both banks stay in the discussions.
Bank of America and Barclays know each other very well, having considered a merger several years ago. More recently, Bank of America agreed to pay $21 billion for ABN Amro Holding NV’s LaSalle Bank of Chicago in 2007. That deal came at a time when Barclays was trying to buy ABN and fend off a European consortium bid. Bank of America’s purchase was seen at the time as helping that Barclays bid, which ultimately failed.
At Barclays, a big question will be whether CEO John Varley and his No. 2, Robert Diamond, both agree on buying all or part of Lehman. Mr. Diamond is eager to expand Barclays’s U.S. investment bank operations. But the unit, called Barclays Capital, is also responsible for write-downs the bank has recorded.
NY Times is reporting Barclays is backing out
Link
http://www.nytimes.com/2008/09/14/business/14lehman.html?hp
FT.com “Denial disguises reality of Lehman crisis” – Lina Saigol
“Ask employees at Lehman Brothers what went wrong, and they say Dick Fuld was so drunk on hebris he refused to see the gravity of the credit crunch.”
“Like an alcoholic in denial, the chief executive of the fifth-largest US bank did everything to protect himself from the pain of reality by making believe Lehman’s situation was other than what it was.”
“It’s too late for Lehman to put Mr. Fuld in rehab, buth the other banks should try to understand the importance of changing a long serving chief in times of crisis. If they are emotionally attached to the group, the cannot make radical decisions.”
“Citigroup hit rock -bottom quicker than Lehman and was forced to make the first step to recovery by bringing in a chief who was not afraid to address the bank’s credit difficulties and capital needs.”
Merril Lynch also came out of denial earlier than some of its rivals, hiring a chief who was detached enough to sell most of the bank’s portfolio of badly damaged mortgage-related securities at 22 cents on the dollar.”
Sometimes, when an alcoholic’s problems reach crisis level, the only choice left to those close to him is professional intervention.”
“The process is designed to break through powerful denial and avoidance defenses and connect him with the reality of his condition so that he will accept help.”
“Enter the short-sellers. In desperation and frustration at the lack of action at some banks, they have taken the matter into their own hands by betting against many of these stocks.”
“David Einhorn of Greenlight Capital was one of the most vocal in his criticism of Lehman, which he said, via a detailed analysis of its numbers, was under-capitalized and not properly accounting for mortgage-related assets and other holdings.”
“But Mr. Fund, along with his counterparts at Bear Sterns, continued to blame short-sellers for the symptoms of a sickness rooted in denial.”
WSJ
BREAKING NEWS:
Barclays claims to be walking away from a Lehman deal but could return, sources familiar with the situation say. The current deal structure would require a Barclays shareholder vote. Government reluctance to provide funding remains a deal hurdle. More details to come.
Bankers are just jerking around the Fed…
I agree ChiFi. Paulson has set a terrible precedent with Bear. Barclay’s wants the same deal. I don’t blame them.
Stu, he mispoke, what he Greenspan meant to say was: Greenspan to Stephanopoulos: This is ‘By Far’ the Worst Economic Crisis He’s CREATED in His Career
Well if there’s no word by tomorrow morning on a deal for LEH I am pulling all my play money out of the market.
Derivative traders open session to reduce Lehman risk
Sun Sep 14, 2008 3:05pm EDT
NEW YORK (Reuters) – An emergency trading session has been opened between Wall Street dealers with Lehman Brothers counterparty risk, the International Swaps and Derivatives Association said Sunday.
The session will run from 2 p.m. to 4 p.m. and will involve credit, equity, rates, foreign exchange and commodity derivatives, the ISDA said in a statement.
The aim is to reduce risk associated with a potential bankruptcy filing by Lehman Brothers Holdings Inc.
“Trades are contingent on a bankruptcy filing at or before 11.59 p.m. New York time Sunday,” said the statement. “If there is no filing, the trades cease to exist.”
I’m betting that Paulson actually lets Lehman go chapter 11. Just a hunch.
Barclays officially out of the running for LEH. Cited gubmint refusal to backstop them.
less than three house to the opening bell in tokyo. Mini cooper near me dealer had no salespeople just desk taking orders at full price, maybe buyers edge, bjs, costco or consumer reports buying service might get a lttle off. Or just visit every dealer in world.
WASHINGTON (MarketWatch) — Barclays PLC and Bank of America, the two leading suitors to buy financially failing Lehman Brothers, reportedly have balked in the absence of U.S. government guarantees to limit their potential losses.
Barring a late rescue, Lehman could be forced to file for bankruptcy protection. Such a move grew increasingly likely as Sunday wore on, and it could lead to the liquidation of Lehman, a shocking end to the storied 158-year-old firm.
http://new.gsmls.com/media/getImage.do?mlnum=2576266&res=highres&num=0
Asking – 499,900 in Woodbridge.
Very weird!!!!
WSJ:
Lehman Brothers, Moral Hazard and Who’s Next
Posted by Heidi N. Moore
For months, Treasury Secretary Hank Paulson has been drilling one point hard: moral hazard. The government wasn’t going to rescue risk-takers.
But what if regulators’ plan backfired and the government itself became a cause of moral hazard? That is, what if the government’s roles in this year’s bailouts resulted in companies believing the Treasury or Federal Reserve would step in with financing no matter how dire the situation?
It was a question many on Wall Street were asking Sunday night, when Lehman was left facing the possibility of liquidation and Merrill Lynch, seeking its own savior, was in talks to be acquired by Bank of America.
It began with Bear Stearns. Treasury officials in March pushed for a paltry $2-a-share price in the government-induced acquisition of the brokerage house by J.P. Morgan Chase to ensure shareholders, among others, were punished–the deal later was repriced at $10 a share. Regulators then wiped out the dividend payments at Fannie Mae and Freddie Mac and diluted the holdings of shareholders as part of this month’s takeover of the two mortgage giants.
Still, there was the catch-22: in rescuing those businesses to prevent chaos in the markets, the government may have created the expectation that it would be a major financial player in other distressed situations.
But regulators refused to provide a financial backstop to any potential buyers of Lehman. Lehman, some thought, was the line in the sand. And in the end, Barclays and Bank of America, citing the lack of a government backstop for the risky debt they would have been taking on their balance sheets, both walked away from any deal with Lehman.
And now the markets wait. If Lehman, which was adequately capitalized, now stands on the brink of liquidation, whither the next troubled company? By not offering financial support, the government probably hasn’t averted Lehman’s demise or likely market turmoil. It made those prospects more likely.
These weekends are making me giddy..now BAC in talks to buy MER.
http://online.wsj.com/article/SB122142278543033525.html
The price is rumored to be between $25 – $30. This would kill the shorts on MER.
Dow futures now down 300
Ahhh..was wondering when they would start talking about the shorts…
“New Push to Reduce Short Selling”
http://www.nytimes.com/2008/09/15/business/15short.html
I think the SEC will definitely come out with some rules this week to goose the markets.
“Wall Street privatises US government: be very afraid”
http://tinyurl.com/5hjfy8
John[448],
Toyko is closed on Monday, tonight.
#456 BC Bob: If MER and BOA merge, that is going to mean huge layofs, as BOA had been rapidly building it’s IB business. Lots of overlap between the 2 especially Fixed Income.
3b,
Why wouldn’t BOA wait until tomorrow? MER would have been a wee bit cheaper. I guess after LEH failed, they came up with plan B.
was this already posted???
Battered insurer AIG’s $20 billion asset sale
AIG, the world’s largest insurer, is planning a $20 billion (£11 billion) asset sell-off as it fights to correct a record slump in its share price and braces for the impact of Hurricane Ike. Details of the plans could come as early as tomorrow. On Friday the insurer appointed investment bank JP Morgan to work on a rescue plan after its shares fell a record 31% in a single day.
Assets under the hammer include Transatlantic Holdings, its New York-listed reinsurance group. Swiss Re and Munich Re, two giants of the European reinsurance business, are understood to be potential buyers. Other assets on the block are AIG’s consumer finance, reinsurance and plane-leasing units, according to analysts at Citigroup.
Domino’s…..
i suggested we might see this earlier in the year
British Airways CEO: 30 more airlines will go bust this year
Up to 30 more airlines will go bankrupt before Christmas, the chief executive of British Airways warned yesterday, as the biggest rescue of stranded passengers in travel industry history began.
Willie Walsh said the scenes of chaos in which 85,000 passengers have been stranded at locations around the world after the collapse of XL, Britain’s third largest holiday company, would become a familiar sight as the travel industry struggled with soaring fuel costs and the effects of a global economic downturn.
“We are in the worst trading environment the industry has ever seen”, said Mr Walsh. “We have already seen 30 or so airlines go bust this year and it would be fair to expect a similar number of casualties worldwide over the next three to four months.” Mr Walsh also announced up to 1,400 redundancies at his own airline yesterday.
Watch out for AIG next, they are sellign 20 billion in assets. they are a hollow shell once they sell off the high value assets.
AIG, the world’s largest insurer, is planning a $20 billion (£11 billion) asset sell-off as it fights to correct a record slump in its share price and braces for the impact of Hurricane Ike. Details of the plans could come as early as tomorrow. On Friday the insurer appointed investment bank JP Morgan to work on a rescue plan after its shares fell a record 31% in a single day.
dont worry the USA has plenty of money…
Bailout Hide and Seek
On Friday, less than a week after the government took control of Fannie Mae and Freddie Mac, the White House announced that there is no reason at this time to account for the companies in the federal budget.
That is great news for officials who prefer to hide the cost of the bailout since it is due, in large part, to their failure to adequately regulate the financial markets and steward the economy. But it is an insult to taxpayers, whose money is at risk, and it is a reckless gambit.
The Congressional Budget Office reported on Tuesday that the government’s finances are deteriorating rapidly: the budget deficit for this year is expected to reach $407 billion, more than double last year’s shortfall, and to exceed $500 billion in 2009. The takeover of Fannie and Freddie, necessary though it is, will add to the deterioration. Airbrushing that away will only open the door to uninformed — or negligent — decisions on spending and tax cuts.
http://www.nytimes.com/2008/09/14/opinion/14sun1.html
U.S. Treasury moves to calm Japanese investors
Seeking to head off any unloading of Fannie Mae and Freddie Mac bonds by Japanese investors, the U.S. Treasury Department is taking the unusual step of directly contacting Japanese financial institutions about the plan to rescue the mortgage giants, according to a published report.
Because a massive unloading of Fannie Mae and Freddie Mac holdings could hamper the U.S. government’s efforts to shore up the mortgage firms’ finances, the Treasury Department is effectively asking investors to refrain from doing so, Japanese business daily Nikkei said on its Website in a report dated Friday.
According to sources familiar with the matter, Treasury Undersecretary for International Affairs David McCormick on Thursday phoned senior executives at major Japanese banks as well as the Life Insurance Association of Japan to explain Washington’s plans for Fannie Mae and Freddie Mac, the report said.
McCormick is believed to have reiterated plans announced Sunday, including seizure of both mortgage giants and the government’s intention to infuse funds if necessary. During the phone calls, he is also said to have urged Japanese institutions to continue investing with confidence in Fannie Mae and Freddie Mac.
According to a Nikkei report earlier this week, Japanese financial institutions own more than 15 trillion yen ($142.5 billion) in securities issued by based on data disclosed by domestic banks, life insurers and others as of March 31. Many Japanese investment trusts also include securities in their portfolios.
The Treasury Department is expected to continue contacting other major Japanese banks and institutional investors, and the Life Insurance Association of Japan is expected to notify its members of the explanations provided by the U.S., Nikkei said.
wait, i thought the american public would make money on the fannie freddie bailout?!?!?!?
say hello to that 5 trillion in additional debt. the national debt is not approx 15 trillion
White House refuses to incorporate Fannie and Freddie into government budget
The White House refused yesterday to follow the lead of the Congressional Budget Office in classifying Fannie Mae and Freddie Mac as part of the government sector, insisting that they remained outside the federal budget.
Jim Nussle, the director of the White House Office of Management and Budget, said: “I have decided to maintain the GSE’s [government sponsored enterprises] non-budgetary status.” He said the OMB had “considered many factors in this decision, including the level of federal ownership, degree of control, economic risk to the taxpayer and temporary nature of this arrangement”.
The decision means that the Bush administration will present its budgets to Congress on a different basis from that on which Congress’s budget watchdog will assess them. In effect, the Bush administration is saying that Fannie and Freddie remain arm’s length entities, while the CBO is saying government control over them is now so tight they are, in effect, part of the government.
At stake is the appropriate treatment of $5,400bn (£3,000bn) in Fannie and Freddie assets and liabilities – equal to the entire publicly held debt of the US – as well as continuing operations by the two companies. The CBO said that following this week’s decision by the government to take control of the companies, they should be accounted for as part of the government.
However, it cautioned that this does not necessarily imply a $5,400bn increase in reported US debt, since $3,600bn of the Fannie and Freddie liabilities are in the form of mortgage guarantees and the treatment of all their obligations will be subject to public rather than private accounting rules.
I was listening to Bloomberg on my way home from dinner with my folks. They were interviewing Richard Bove about the current situation. Really good stuff. He was very blunt and honest about both Lehman and the economy in general. The quick summary of his interview was he was worried, very very worried.
AP
Banks seen offering plan to restore confidence
Sunday September 14, 7:07 pm ET
By Joe Bel Bruno and Marty Crutsinger, AP
Business Writers
Lehman’s future in doubt, banks seen unveiling plan to restore confidence in financial system
http://biz.yahoo.com/ap/080914/lehman_brothers.html
Everything appeared honky dory until I read this tidbit.
“And officials at the U.S. Treasury and the Federal Reserve are expected to say they are prepared to be more generous in the Fed’s emergency lending program for commercial and investment banks”
Hmm. Soundsan awful lot like what I wrote at 9:29 this morning…
“I just pray that the government doesn’t offer them some stupid 15-year loan to hold ‘em over until their stupid investments in commercial and residential real estate come back. After all, Paulson could somehow defend his actions by saying that in the long run, it won’t cause the American tax payer a penny. That is, if the government can still get our Asian masters to continue to lend to us. Paulson will conveniently leave this part out.”
Dow futures now only -200 representing a drop of about 1.5% on the open.
the banks wouldnt hide losses with dirty cheap government loans backed by handwritten IOU’s would they? would they.?.?.?
Fed Direct Loans Lose Stigma as Banks Push Borrowing to Record
Commercial banks that a year ago rebuffed a Federal Reserve program to provide cheaper cash may be increasingly dependent on it.
Borrowing from the Fed’s discount window hit record levels in six of the past eight weeks, and reached $23.5 billion as of Sept. 10, Fed data show. By comparison, lending averaged just $779 million a week in the three months after New York Fed President Timothy Geithner urged banks to use the program.
The increasing use of the funds risks delaying banks’ disposal of nonperforming assets and capital raising. It also may make it tough to restore the rate on the loans to the historical 1 percentage point premium over overnight funds, analysts said. The Fed has lowered the rate nine times since August 2007.
The low cost may “delay necessary adjustments” at banks, said Vincent Reinhart, a resident scholar at the American Enterprise Institute in Washington who was director of the Fed’s monetary affairs division from 2001 to 2007. Lenders may “have a hard time if the Federal Reserve tries to take it away,” he said.
more from previous article:
consider the chart i linked to on friday showing the FED’s balance sheet chart. the FED itself is now on the ropes if we see any sort of chain reaction tomorrow
Banks had cheap funding during the credit boom, when bond yields reached half-century lows. With mounting losses from the mortgage debt market and the economic downturn, they are rushing to the Fed instead. Borrowing has climbed since March, when the Fed lengthened the term of the loans to 90 days. The discount rate is now 2.25 percent, compared with a 2.82 percent rate for three-month funds lent between banks. The Fed’s benchmark federal funds rate is 2 percent.
“The problem is, you can never go off the methadone,” said Jim Bianco, president of Chicago-based Bianco Research LLC, referring to a drug used to wean addicts off of heroin. Along with the discount-window lending, the Fed also provides $150 billion of funds to commercial banks through cash auctions, where it receives collateral including mortgage-backed debt. For investment banks, the Fed has a $200 billion program for lending Treasuries, also in exchange for a variety of collateral.
By depleting its store of Treasury securities and taking on asset-backed securities, the central bank is diminishing the quality of its balance sheet, said former Richmond Fed President Al Broaddus. That may eventually hurt the Fed’s credibility in other ways, including its monetary-policy commitment to keep consumer prices stable, though such a result isn’t “anywhere near” yet, he said.
wait, i’m confused….
GM chief to lobby Congress for $25 billion in low-cost loans
General Motors’ chief executive Rick Wagoner will today join an intense lobbying drive by the embattled US motor industry to secure approval from Congress for at least $25bn in low-cost loans.
GM to provide $10.6 billion to support Delphi
Delphi Corp. said on Friday that former parent General Motors Corp has increased its support to $10.6 billion, from $6 billion, to speed the auto parts maker’s emergence from bankruptcy.
i thought the USA was the next saudu arabia???
Abandon oil sands, urges big investor
One of Britain’s biggest investors will launch a campaign this week to persuade Shell and BP to drop their plans for heavy investment in oil sands and shale projects in North America.
Co-operative Asset Management is concerned that the huge environmental costs of producing crude from oil sands or shale could change the economics of these so-called ‘unconventional’ fuel sources, putting the oil companies and their investors at risk of a huge wasted investment.
BC (458)-
Methinks BAC might be luring MER into a negotiation trap. At the end of the day, MER is underpinned by a pile of crap that’s almost identical to LEH’s. I can’t see Lewis paying $25-$30 for garbage that he could soon get at a fraction of that price. MER could be trading in the single digits by Wednesday morning.
Get your money ready boys, we been waiting since 2006 and now its happening. The system is crashing and its all coming apart! Next up home prices WILL DROP! Get ready to buy soon KIDS~!!! Patience has paid off.
http://www.nytimes.com/2008/09/15/business/15lehman.html?_r=1&hp=&pagewanted=print&oref=slogin
In Frantic Day, Wall Street Banks Teeter
vodka (459)-
Deflation, anyone?
vodka (464)-
“White House refuses to incorporate Fannie and Freddie into government budget
The White House refused yesterday to follow the lead of the Congressional Budget Office in classifying Fannie Mae and Freddie Mac as part of the government sector, insisting that they remained outside the federal budget.”
Gubmint as Enron. God help us all.
Fox Business: (yes I read the dark side as well)
September 14, 2008 7:35PM
Lehman Brothers and You
By Brian Sullivan
In twelve years in business journalism I have never seen such a troublesome or confusing time. While Lehman teeters on the brink and there are reports that Merrill Lynch may be bought by Bank of America, the question becomes: what does this mean for Main Street?
The answer isn’t fully known yet and may not be for some time, but we know it’s not good.
If Lehman Brothers fails and is liquidated, my sources are talking about a big dumping of bank debt on the markets. Simple economics says that when there is a lot of something in supply and little demand, prices fall. The beaten-up bank debt market will be hard pressed to absorb more supply. My bond market sources also note that this will not only impact prices but confidence in bank debt going forward. If confidence dwindles (more than it already has), this disincentivizes banks to lend because they cannot fund that lending by selling new debt to back it.
Many banks fund their day-to-day operations by constantly selling short term debt. Banks aren’t like other businesses that sell products, take customers money and use that money to buy more inventory. They operate on credit. They have to lend and borrow constantly. Credit is their product.
Simply put: with less ability to borrow on their end, banks will be less able to lend on your end. Home loans, car loans, credit cards and other credit products American consumers use and rely on will be impacted.
vodka (467)-
So, which CB will finally say basta to the drunken lending spree?
Obviously, ours is out of the running.
clott,
deflation???? no, that cant happen!
clott, we are setup for a fantastic(negative connotation) burst of deflation. I honestly hope i am wrong, but you can only take so many supports out before the bridge collapses.
then consider the article i just posted on the rapid increase in banks accessing FED loans.
Everyone will be correct. we are getting set up to see rapid deflation followed by hyper inflation.
Dow futures dropping again -240.
Geez Black Monday anyone….?
clot 476,
if i knew that i would be a very wealthy man. But my guess is that it may be the ECB, forced to due to Euro laws and inter EU political conflict. i.e spain and ireland start the chain reaction and it will be highly unexpected
vodka (469)-
“GM chief to lobby Congress for $25 billion in low-cost loans…”
Typical GM. Beaten to the punch again.
may i suggest a theme song for the financial markets this week???
http://www.youtube.com/watch?v=cGqroT1FZ5Y
funny thing is Merril and CIT unloaded a boatload of this stuff at cents on the a dollar that is now worthless, who bought that bag of garbage?
413 Cindy
over 7 years after arthur anderson and now this. Is this not the most ineffective administration in US history? May 2nd only to Hoover
Barb (484)-
I’d say they’re in Warren G. Harding territory.
However, I’d have to say the current admin. comes up short of Warren G, only because most of the Bushies are actually too stupid to be as larcenous and deceitful as the handful of Klinks and Roves who have the criminal genius required to fleece an entire nation…and avoid a firing squad.
vodka (477)-
Whatever happened to the CDS underwriters who claimed last weekend’s Phony/Fraudy bailout to be a credit event and demanded delivery of bonds?
Have they all been assassinated by the FBI? Had some untimely “accidents”?
2nd to Hoover is to early to call. The market dislocation could be huge if a bank run is involved. If these securitized loans deleverage too rapidly, there could very well be a bank run. Perhaps that is why WM went down in lockstep w/LEH. MER should be next as they are similar to LEH in their leverage.
Clot,
I used Hoover because there has been this asleep at the wheel approach to governing. I hoping that the neocon badass “gubmint is the problem” anthem is finally seen by the american people as the gaslighting technique that it is.
Don’t expect people who hate government to give you good government.
Roubini update from this evening.
Sunday Evening update: as predicted here in the absence of a government bailout of the toxic assets of Lehman the firm was insolvent and no bidder wanted to buy it for a positive price; thus Lehman is now headed – save for an unlikely last moment miracle buyer – towards bankruptcy filing tonite. And the unraveling and collapse of the other independent broker dealers (Merrill Lynch, Morgan Stanley, Goldman Sachs) that was predicted here a few months ago is occurring even faster than I expected: in March it was Bear Stearns; today is Lehman; now newswires are announcing that Merrill Lynch is in talks with Bank of America for a merger; and in a few months it will be the turn of Morgan Stanley and Goldman Sachs. Frankly the best advice that Bernanke, Geithner and Paulson can give to John Mack of Morgan Stanley and Lloyd Blankfein of Goldman is: “dont wait a single further minute and find a large domestic or international bank you can merge with, a large commercial bank that has a stable base of deposit-insured deposits; otherwise you are bust”. This is the end of the Wall Street of independent investment banks; as predicted months ago the collapse of a structurally flawed shadow banking system is now underway in very rapid order.
stu,
see my post at 468. the fed will try to intervene but the commercial customers of the bank now know the fed is a paper tiger at best even if joe sixpack doesnt. Even Joe six will firgure this out shortly.
Bernanke, paulson a nd friends are in a panic to keep things together until the elections. My money in on them failing
so if lehman declares bankruptcy tonight, do the employees go to work tomorrow??? or are the doors lock, paychecks gone?
Sean (489)-
The oracle has spoken. Thus saith the oracle, so it shall be.
vodka (490)-
Election? They can’t keep this wreck on the tracks until Wednesday.
another observation:
How about the black comedy that is bernanke’s tenure as FED Chairman?
his academic claim to fame is the study of the great depression and how deflation effects markets. His tenure as chairman will now be marked as the period in which the USA descended into deflation!
While greenspan may have been one of the primary architects of this disaster in his rate cutting orgy. Bernanke has allowed the FED to be run by the politicians and IB’s instead of following in Volklers footsteps and making the hard choices.
From the WSJ:
UPDATE at 7:04 PM EDT: The Journal reports the Merrill board is meeting now to consider a deal. Merrill shares ended trading on Friday at $17.05, down 12% from where they began the day. The shares had fallen 68% for the year to date and 77% over the last 12 months.
Ket:
Would Paulson really want to wish such a hell on McCane? McCane was not well liked by the right until just recently. He was pretty moderate just 4 short years ago. Perhaps he thinks he is setting up O for the big fall, but more likely I think he is delaying the correction so all of his rich buddies can jump ship before it hits the rocks.
i wonder if any of the presidential candidates are reconsidering their bid for office this evening??
perhaps they may want to hand it off to one of these parties as a sacrificial lamb.
http://en.wikipedia.org/wiki/List_of_candidates_in_the_United_States_presidential_election,_2008
Where’s Bost?
I wonder if Bost is ready to put on his boots now.
424:
Who’s Lucky Pierre in a 3-way?
Wow, Syracuse is the Bush Administration of college football teams.
Any buyer who pays more than $9 for the MER slag heap should be shorted into oblivion tomorrow.
BTW…gotta love those new short-on-downtick rules. My question is, do the markets even open tomorrow?
from CNN
Banks planning to create $50 billion lifeline for rivals
As the outlook for Lehman Brothers’ future appeared to dim Sunday, U.S. and foreign banks joined forces to create a plan aimed at inoculating the global financial system against the investment bank’s possible failure, a top investment banking official said.
Banks are in tense talks to create a pool of money worth up to $50 billion to lend troubled financial companies, the official said on condition of anonymity because the discussions were ongoing. And officials at the U.S. Treasury and the Federal Reserve are expected to say they are prepared to be more generous in the Fed’s emergency lending program for commercial and investment banks .
Jamey (499)-
And there you have it: the post of the weekend!
clot, care to offer your latest SKF musings? You know, for the seven of us interested.
stu,
i think the $hit has gotten deep enough so that paulson doesnt care who he is helping, he just wants things to hold together long enough for him to get out of dodge!
gold jumped up at about u7:30 pm eastern.
lets see what it does overnight? panic buying?
WHAT THE FSCK HAPPENED AT 7:30???
http://www.kitco.com/charts/livesilver.html
Paulson’s exit is not until January. No way, no how, does the crock market (my new term for it) hold up till then. I nearly pulled the trigger on gold on Thursday, but thought I might have a chance at a certain ultra-short at an amazing price. I don’t think I’m get that price I wanted.
I just can’t do the gold thing. Not when I am as confident as I am in my shorts.
417/Bi-product:
One thing to bear in mind (so long as it doesn’t cause you to forget how to breathe. Wait … on second thought…): Going into November 1980, Reagan and Carter were within the standard margin for error of each other.
Point is: Don’t believe the polls about that Mack Cain fella–they might make your $40/bbl oil call seem prescient by comparison. Caribou Barbie isn’t gonna save Mack Cain. Think about it: Is she going to get more or less popular once her face and voice become familiar?
stu,
depends on your reason for buying gold and the form you buy it in….to each their own
Gold chart is prettier.
http://www.kitco.com/charts/livegold.html
BAC board just approved the MER deal – $29 a share!!
Done deal. BoA and Merrill have reached an agreement.
laughy (504)-
As I believed in March- when I cashed out of every long position I had, save gold- the entire financial system of the US is now proving itself to be a sham, a fraudulent criminal enterprise, a ruse and a sickly ward of the Treasury and Fed.
SKF hit $212 in July, based upon nothing but a correct market reading of the fundamentals. Only direct- and criminal- manipulation across the financial sector prevented a meltdown then.
Now, the criminals have used up all their tools of skulduggery (I think). The possible short-term pleasure of holding SKF is well-tempered by the ever-increasing reality that (in the words of BC) it’s gonna be a long walk home.
BoA and MER deal is hiding some very dirty laundry. wonder how long before it comes out?
Dats true Ket!
To each their own.
We are not near Armageddon just yet IMO. You’ll know when we are there when I buy a school bus to hide my methane supply in as some mad man fools everyone into thinking my tanker has the gas in it. That’s when I’ll buy gold.
If a depression sets in, our peers are F’ed. I know so few people who have a penny to their name.
The Question is – which rabbit did the FED pull out of its hat to get BOA to buy MER.
Vic (512)-
The snake of BAC just bit into a rat they may never digest.
what do MER and BOA get out of the merger? both have some very serious baggage and some books so cooked they are crispy.
“gold jumped up at about u7:30 pm eastern.”
kettle,
It was already up over $16 at 7:30, now up $23.
450:
House is pictured actual size.
(h/t, Boris Dimitrovich’s crazy dad, from the Woodman’s “Love and Death.”)
#514 Clot
“Now, the criminals have used up all their tools of skulduggery (I think).”
clot, do you wear a monocle? Please say yes.
baa. (that was me bleating)… i didn’t buy, but my finger hovered over the buy button. still sticking to my main investment vehicle. seeds.
On the bright side of the upcoming depression, our infrastructure will get some much needed repairs and we really do need another rail tunnel into Manhattan.
vodka (515)-
Why would any sane bank pay that kind of price for such a piece of crap?
Dow futures back to -298.
This CNBC special report is not half bad. They are talking about the credit rating downgrade of the US.
stu,
i am not suggesting this will be Armageddon. a huge mess, yes. very painful fpr 99% of the US , yes. but not Armageddon, unless you are a banker.
believe me, i have a very active imagination. my idea of Armageddon is much more interesting then the train wreck we we will see unfold over the next few weeks
Barb (522)-
No. But, on occasion, I do don a codpiece (a la Alex in Clockwork Orange).
vodka (528)-
Just shoot me an e-mail when you get a line on an Abrams.
I got some ideas for what you and me can do with one of those babies.
Scribe[498],
It’s two major HB’s.
I think we can now safely say LEH is left for dead.
stu,
that may be our best option.
Reneg on all for debt and then start a job corps focused on rebuilding the US infrastructure on a non-oil basis. By the time we finish the Jobs projects the US might have a credit rating again. besides it seemed to work for russia
clot –
in english?
Unrelated: As a young guy who just started watching CNBC this year, i wonder: Why do they have all these jerkofffs on there talking foolishness, when I come here and find 10x more truth and forward-thinking? You guys are ahead of the curve on so many of these calls, why does CNBC put these booobs on the air?
The bottom is in. This has to be the lowest point in the history of the FED.
It is now accepting equities as collateral.
Fed Plans Expanded Lending Facilities
The Federal Reserve is expected to expand its lending facilities in the wake of the demise of Lehman Brothers, taking a wider array of securities, including equities, as collateral for its loans, say people familiar with the matter.
The moves, which potentially represent another landmark step in the Fed efforts to address the deepening credit crisis, are expected to be temporary. They are meant to calm markets as they head into one of the most perilous trading environments in decades with Lehman’s massive market positions on the verge of being unwound.
http://online.wsj.com/article/SB122143939332934501.html?mod=special_coverage
Mr Rogers’ neighborhood is rapidly shrinking. Troubling news for those NJ Transit towns.
Is Imus reporting from the front lines tonight?
#535 Just when I think they can’t look any more panic-stricken….
Vic [535],
Will they accept pet.com??
NYC & Wall St. is going to be a ghost town in the next few months.
whatever happened to that Wall St bonuses?
and all those Wall St towns that drive up real estate prices in NJ?
wait a minute…. I hear the crickets….!!
yikes! and a mosquito just landed on my arm!
You blokes better get ready because the house of cards is coming down.
SAS
Gasparino says the fed forced the Merrill deal.
Insurance companies welcome at the window soon?
off topic:
Just got back from doing an assignment in Maine.
A big thing out there right now by the local banks is pushing “home heating loans” for the winter because people won’t be able to afford their oil heating bills over the winter.
“home heating loans”
yikes!
SAS
AIG looking to the Fed.
Roubini on CNBC right now.
Good news is Frank will be able to get his Hoboken Condo at 2003 prices.
clott,
test drive one at your local dealer! now offered low 1% financing for all qualified applicants ( saudi princes, russian oil oliharchs…..)
http://www.liveleak.com/view?i=884_1219798793
“Good news is Frank will be able to get his Hoboken Condo at 2003 prices”
I think you mean 1987.
:)
SAS
SAS,
its not just maine. that problem will be seen throughout new england as well as NY NJ and PA and includes the assumption that oil stays low or goes down further.
“AIG looking to the Fed.”
Tosh,
We discussed the over/under on Friday; how long before the fed opens the window to non-financial firms.
Bost,
Two major HBs? What does that mean?
This business with Lehman taking the gaspipe doesn’t completely add up. They have the Fed window, this one feels like euthanasia…..or as they say in NJ….Youth In Asia….right there with Chow Bella…
scribe Says:
September 14th, 2008 at 9:10 pm
Bost, Two major HBs? What does that mean?
Only GS and MS left….
The WSJ is now reporting MER and BOA are a done deal, or that’s what the language of the latest update suggests:
Bank of America Reaches Deal for Merrill
By MATTHEW KARNITSCHNIG, CARRICK MOLLENKAMP and DAN FITZPATRICK
September 15, 2008
In a rushed bid to ride out the storm sweeping American finance, 94-year-old Merrill Lynch & Co. agreed late Sunday to sell itself to Bank of America Corp. for roughly $44 billion.
The deal, which was being worked out in 48 hours of frenetic negotiating, could instantly reshape the U.S. banking landscape, making the nation’s prime behemoth even bigger. The boards of the two companies approved the deal Sunday evening, according to people familiar with the matter.
They had to cut Roubini off. Wow.
AIG isn’t going anywhere….
Looks like the WSJ updated the headline and the first few graphs of the earlier story but hasn’t had a chance yet to rewrite the entire story.
WSJ is reporting the Fed is expanding lending facilities to include equities.
http://online.wsj.com/article/SB122143939332934501.html?mod=special_coverage
chi,
thank you
heck people revrsion to mean gives us min drop of 60%. that means at least another 30-40% not accounting for over correction which almost a;ways occurs. we will be seeing 70% off at the trough of the market drop. SO that 1 million brigadoon home in 2006 will be had for 3-400K by 2012
Boobs on CNBC = Ratings
Check out their broadcasters resumes. Most couldn’t cut it as local weather reporters.
Lehman is much worse than Bear. Bear was swallowed and a chunk was severed. This one was purely nuked, into a worse labor market. These people are f—-d…..
#547 – I didn’t think it would be 2 days though. Is it now open to manufacturers and retailers; i.e. Ford, GM & Sears?
Chi[549],
Hard to believe, even the fed has standards. The majority of LER’s toxic waste was not on their, fed, list of acceptable securities.
That’s LEH’s waste.
AIG to the fed, holy cow! Talk about moral hazard. They are f***cked! Oh yeah, we are f**cked too!
What a nite….
Scribe[548],
When two major Home Builder’s, not IB’s, go under, the boots hit the street. I guess WCI represents the first. I can’t believe Beazer is still standing.
Chi[559],
Bingo.
all hype,
that song, “oh, what a night” … doesn’t it say something about “late september”?
Bost,
ahhhh….
I was wondering what the “h” stood for :)
AH[563],
Pretty soon the auto industry.
Unless we see a reinstatement of Glass Steagall we’ll end up with an even worse situation in a few years with 4-5 large national level commercial/investment/broker dealers who absolutely can’t be allowed to fail
Late September back in ’63 (I think).
Too bad Asia is closed.
and no, i dont plan on ever buying in brigadoon, so could care less what the homes go for now or in 2012.
I can’t believe I’m watching financial news and posting at 9:30 on a Sun night.
What a weekend.
BC Bob for the WIN!!!!
# BC Bob Says:
August 21st, 2008 at 11:34 am
2-1, Lehman
3-1, Wachovia
4-1, Wamu
5-1, AIG
Anybobdy else making odds?
Disclaimer- Fannie/Freddie are toast. Common will be wiped out.
still sure of that ChiFi?
chicagofinance Says:
August 21st, 2008 at 11:43 am
Bost: putting AIG on that list is idiocy….
Sean Hannity is a total moron.
SAS
AIG must have serious problems if they cannot come up with a plan for the 40 billion. Not like it is chump change but they want the money without anyone looking at the books. Bad, really bad.
I know a person at the gym who works at AIG. They say they have been firing people on a daily basis. They do not think AIG is going to make it. This person has come in the gym more wound every time I see them.
You need to keep in mind technically BAC is not liable for any of the Countrywide debt. They have Countrywide sitting in a sub and can just have it declare bankruptcy whenever they want and I wouldn’t be the least bit surprised to see them structure the Merril deal the same way. Stupid equity traders will just trade the headline BAC buying Merril and think all is fine. The people holding the Merrill debt will find out six months from now they’re f’d.
Gold at $782
Asian markets all down between 1 and 2% now.
Dow futures down -290.
Mets relief pitching -1,000.
Regarding AIG;
The idiots made the same mistake as MBIA/Ambac, venturing into an arena that they know absolutely nothing about.
kettle1 Says:
September 14th, 2008 at 9:27 pm
still sure of that ChiFi?
chicagofinance Says:
August 21st, 2008 at 11:43 am
Bost: putting AIG on that list is idiocy….
Yes…and you are demonstrating your ignorance and lack of maturity to me….please note, I have to be very careful here. I will not comment further on AIG, or to the extent possible individual stocks if I can help it.
AIG situation is one of circumstance and irritation, not futility. Please do not use this information to expose your to financial risks related to this company. Please perform your own thorough research.
Playing Chicken With Countrywide Paper
Bank of America’s Chief Executive Kenneth D. Lewis is no stranger to strategic maneuvering, but his actions regarding Countrywide Financial bondholders are starting to look like a game of chicken.
Nearly two months after closing on the acquisition of Countrywide Financial (nyse: CFC – news – people ), Bank of America (nyse: BAC – news – people ) is still vague about its ultimate intentions for Countrywide, especially its $24 billion in holding company debt.
Countrywide merged into a specially created, arms-length subsidiary of Bank of America rather than being consolidated into the Charlotte, N.C.-based banking company. Meanwhile its assets, including mortgages and servicing rights, were absorbed into other parts of Bank of America. That suggests, as Countrywide bondholders feared almost from the day the deal was announced in January, that Bank of America is keeping its distance to avoid exposure to a bankruptcy.
http://www.forbes.com/business/2008/08/27/countrywide-bonds-boa-biz-wall-cx_lm_md_0828countrywide.html
Hanky Panky probably told Lewis and Thain to put this deal together to get a positive headline but I doubt it won’t be structured the same way as the Countrywide deal. More wag to dog financial manuevering.
The CEO’s and Board members take care of one and other, and with the ridiculous premium on the stock the stick it to the shorts who’ve had the story right for the past five years.
The Fed expands discount window again; now accepts pebble, sticks and shiny shiny tin.
I agree with ChiFi on AIG. They have a very strong balance sheet at a cursory glance. I wouldn’t run out and buy it based on anything you read here though.
Stu [585],
The insurance they sold to guarantee CDO’s deserves more than a cursory glance.
chifi,
relax,
just being a contrarian. didnt mean to step on anyones toes. :)
Who’s next up in the penalty box?
Citi, GS, etc.?
I don’t want to discuss AIG any more in a public forum. I agree the loss of Lehman will hurt them, where we differ is by how much. If AIG does go down, it will make Lehman’s bankruptcy look like Linens & Things.
Gentlemen – Thanks for making finance interesting. Quite an educational discussion up above.
Wonder what is going on in the minds of the old contrarians, Richard, Pret, that Wha Wha listen guy…..
Carlos Mendez on CNBC:
AIG publicly disclosed that they have 60 billion in ABS CDOs which reference residential mortgage securities, much of it subprime.
(484 Barbara
“Is this not the most ineffective administration in US history?”
We shall see – But, where to point fingers – Not just the FED – administration – How about the SEC…
S.E.C. “Alternative Net Capital Requirements for Broker – Dealers That Are Part of Consolidated Supervised Entities” Act of 2004.
In a pdf file – Einhorn – Grant’s Spring Investment Conference 4-8-08 “Private Profits and Socialized Risk”
“The amount of capital that had to underlie assets was reduced substancially.
..more leverage – more revenue – more compensation…
“In hindsight, as you will see, an alternative name for the rule might have been the “Bear Stearns Insolvency Act of 2004.”
I just feel some of the deregulation was so wrong and – I might be mistaken here – but didn’t some of the housing deregulation go back to Clinton as well?
laughy (534)-
In English:
SKF sure seems like a nice place to be right now. In so many ways, we’ve been given signals over the past few months that the wheels are falling off. However, no sane person should enjoy betting against his country’s economy. There will be real sacrifice and pain for all of us in the days ahead.
Vic (535)-
I thought what I’ve been saying about handwritten IOU notes and deposit bottles were just jokes…
Now, the only joke I can think of is: can the last guy out please turn off the lights?
vodka (544)-
I want one with blackout windows.
Well on the bright side I got a job offer.
Not in the banking or insurance arena either.
BC (580)-
Is Greenberg drinking Clos le Mesnil right now?
Or is he drinking:
– hemlock?
– Bud Light?
– cough syrup?
– Mylanta?
– revenge…pureed and served cold?
Hawk (588)-
I’ll bet my left butt cheek MS is next up on the chopping block.
Vic (591)-
Whoops.
bairen – congrats. A good one?
Roubini was on Bloomberg earlier saying MS and GS will eventually be following the Merril route.
soosh (590)-
Who cares? Those guys have been carried out on their shields.
BTW, all tonight’s action keeps taking me away from Celtic-Motherwell on the TIVO. Can’t wait ’til the next Old Firm fixture.
#577 all hype & 581 chicagofinance
Here’s my AIG story.
I applied for a few jobs with AIG in Aug & Sept of 07. They called me for an interview in Dec 07, but I had found a job so i turned them down.
This June I found out I was getting “workforce reductioned” aka canned at the end of August. I applied to some jobs at AIG at the end of June and received reject letters a month or so later. I applied to a few more jobs last week and was receiving reject emails within 24 hours, 1 on the same day.
What does this mean? Either AIG
1) Has improved its screening process
2) Was in denial over the summer
3) Is going through downsizing
4) Officially put my name in the automatically reject, call security if he steps on campus folder.
5) All or some of the above
#600 lishoosh,
Thanks. could be good money in a few months. it’s account manager with base plus bonus. Even the base is more then unemployment and it gets me experience in a new field.
Does the Fed have the authority to lend money to AIG?
Where the f$%% is the President?
– Reading My Pet Goat??
604- bairen
Congrats! Glad to hear some good news amongst all this gloom.
With AIG you are underestimating their balance sheet and how much stand alone assets they have to sell.
The tone on cnbc all night has been really creepy. The way they keep explaining and reexplaining the situation in such remedial terms. They never do that.
#606 Victorian
Thank you. took me 3.5 months to find something. We were given 3 months notice and not one person in my group found something before we were let go at the end of August. 1 found a job last week and another was going for a second interview.
Who wants to buy a house in NJ?
610,
if priced right, in a heartbeat
“if priced right”
Did your right price drop this weekend?
njrebear,
naw, I’ve been unrealistically cheap for 4 years now :) Looks like I was just ahead of my time.
#610 njrebear
We were going to look this June since houses we were interested in were asking at 75 to 80% of peak prices. We were going to see if we could find something for 30% or so off peak. Then I found out i was getting laid off, so we’re waiting till next Spring.
Also a friend of mine is looking in Marlboro since houses seem to be 25% or more off peak. He’s looking to buy and live their for 20 years so he doesn’t care if prices drop more if he can find a turnkey house.
bairen (604)-
Is it in the field of RE liquidation? :)
chi (607)-
We are probably also overestimating the price at which those stand-alone assets will eventually sell.
Deflation’s a bitch.
CNBC’s Singapore anchor’s eyes look like they’re about to pop out.
Barb (608)-
They’re probably trying to explain it to themselves. For the first time.
#616 clotpoll
nothing to do with RE, insurance, or banking.
I sent out over 100 apps to banking and insurance companies and was completely ignored until mid August. then the insurance companies started sending reject letters same day to a week later.
good analysis, clot. i, for one, appreciate reading all of this banter. having been poking my head around here for two years, i sort of feel indebted to some of you – after all, had all your doom and gloom in 2006 not freaked me out, i could have been a bagholder (re: investment property out of state).
i tried to give a heads up to many that i know, but nobody really listened. now, they’re all, “damn laughing, you were right.”
i hope some wiseguy puts together all of the ‘bottom’ calls by the analysts tomorrow. i really do believe this board has a better grasp on things than most of the media/cnbc, etc.
#619 Clot
they do look a little dazed, confused
#618 clotpoll
That Christine Tan on Singapore CNBC is kind of elegant for a 50+ year old. She also has a show where she interviews CEOs from Asia. She actually seems to have a clue, unlike the eye candy on the US cnbc.
I found Squawk Ausralia even more impossible to watch then the US version.
laughy (621)-
I was still a bull in 2006.
I just looked at the above sentence and decided to go to bed.
Let greedy children play unattended and they steal the toys and shit in the sandboxes they all share.
Regulate all the brutes!
The horror, the horror!
Barbara,
When i talk about my right price, people say i’ll never buy a house in NJ. My right price dropped today.
bairen,
I’m still employed but don’t know how long that will last. Wife’s employer is having a credit crunch. She is working for them almost free.
I’m not sure if we are going to stay in NJ…
Here’s the link for Christine Tan’s “Managing Asia” show. http://www.cnbc.com/id/15838822
It’s much better then the pos shows on CNBC US.
bairen (623)-
That ain’t Christine Tan I’m watching right now.
Agreed that Christine is sorta low-key hot, though. She became a lot more interesting to me after Becky Quick turned into Buffett’s gumade.
Christine Tan is especially alluring when I’m up all night, can’t sleep and guzzling Mylanta from the bottle.
There is some good news tonight: Oil broke into single digits finally.
Of course this may have something to do with millions of barrels of refinery capacity being offline until who knows when. It took a hurricane but Bi was finally right about his $100 oil call. I am still waiting on the $40 oil though.
#626 njrebear
I hear you. I really think a family of 4 needs to make 180k at least to own a cape or ranch in a good town. Good town for me is within 90 minutes of Manhattan and does not have gangs in its junior high.
NJ’s nice, but I’m thinking more and more it’s not worth it.
I think Christine Tan is a much better journalist then Erin, Becky, and the Maria on US.
I also found Squawk Asia to be much more profssional and informatve then US version.
ah, still with the crackhead prices in Montclair. Just glanced at the GSMLS for kicks.
Still looks like 2005
Good news!!! A telemarketer from the Fed just called us. They are offering attractive rates and easy terms. I am getting money for a kitchen remodel and all I need to pu up is 2 quarts of waste oil and a broken Coleman stove.
Regarding BoA, from the shore I can’t quite see things clearly. Is that BoA throwing Mer a life ring? Or, is that circular ring a millstone, named Merrill, that is about to pull under the rescuer?
Ok, what are the automatic circut breakers again, and who thinks we will hit one of them?
Oh boy.
I’m so excited.
All this renting and waiting…
And finally, the shitwits are all falling down, going bankrupt, getting called on their loans, getting called on their bluffs.
In time, I will own some loser’s mansion.
Payback’s a bitch!
@bairen:
Here’s my girl talking about me. I knew her back in the 90’s.
http://www3.pictures.gi.zimbio.com/Meet+The+Press+QBWuhAdC5cxl.jpg
From an e-mail from someone who pulled it off yahoo news. I am on the handheld and can’t grab link at the moment:
A global consortium of banks, working with government officials in New York, announced late Sunday a $70 billion pool of funds to lend to troubled financial companies. The aim, according to participants who spoke to The Associated Press, was to prevent a worldwide panic on stock and other financial exchanges.
Ten banks — Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS — each agreed to provide $7 billion “to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets.”
LEH is down under. Merill, no more.
AIG bid/ask at $7 and change down from a close of 12.
Lehman is sitting around $.65 before the bell.
The talking heads on cnbc seem very somber.
MJ,
LMAO
oil is down to $96.
MIke Morgan, cranky as usual:
“Fish don’t bounce, and neither has housing or commercial property. In fact, dead fish get pretty stinky. And that is what is happening in housing and commercial real estate. You can listen to clowns like Jim Cramer or Lawrence Yun talk about the bottom . . . over and over and over. Cramer has called three or four bottoms, and now he has decided to peg the bottom out 300 from now. This gives him lots of time to change his mind and to blame it on any number of things. But it’s not just Crazy Cramer.
The Hype – We keep hearing about all of the fixes to the system. Unfortunately, the only way to fix the system is to allow the free market economy to work. Bailing out Fannie, Freddie and other banks is not going to fix anything . . . other than to take care of investors who should have known better. The system worked on the way up, as people demonstrated how prices can sky rocket when greedy demand is fueling the system with free money from the Fed. We saw foreign governments and investors pour money into mortgage back securities because of huge returns . . . even though the writing was on the wall. So the only way to fix the system is to allow the free market to take home prices and mortgages back to where they belong. If that means there will be losers, so be it. There were a lot of winners on the upside, and I don’t see any of them giving back the profits and huge bonuses in the tens of millioins. Since we are NOT allowing the free market system to work this out, the bottoms we are seeing are only in the minds of the guys manipulating the system for their own financial gain. Eventually, the markets will work this out, but it will be very ugly when the market “fixes” the “fixes” put in place by thieves like Paulson.
The Players – No need to talk about Paulson, Bernanke, Greenspan, Yun or any of the other culprits, since everyone is talking about them. I’m sure you’ve had your fill. I’d like to share a peek into what some of the silent players are doing . . . or not doing.
Hedge Funds – The hedgies I speak with are split. Some are buying simply for the short term trade. Technically, the home builders have taken it on the chin, and it’s an opportunity for the hedgies to rotate out of commodities, oil, gold, retails, etc. It will not last. And as we have seen in the past, the hedgies can trash a sector. Another reason the buying of the home builders will not last is . . . the “R” word. Redemptions. Unlike mutual funds, the hedgies can actually hang on to your money. Many of the hedge funds lock you up for a year or more. But we are seeing two things. Investors that were locked up are seeing their investments unfreeze . . . and they are pulling out. We’re also seeing lawsuits, so the glitter of the hedge fund industry is fading. With that, we will see more unwinding of positions and more failure. The home builders and the commercial property REITs will take heavy hits. On the other side of the hedge fund factor are the hedgies that can’t wait to pummel their unlucky cousins on the long side.
Pension Funds – This unlucky group will take the hardest hit as the builders fail. Pension funds own home builder stock, and they don’t like selling stock. Just look at the record of CALPERs with the home builders. They’ve made complete asses of themselves for statements about Standard Pacific and Lennar, just to name two. But pensions funds have two more problems. First, they are also invested in the home builders through the pension fund investments in hedge funds. Second, they are invested in the home builders through direct loans for development and land banking activities. If there ever was a perfect storm to hit the pension funds, this is it . . . home builders, hedge funds, mortgage industry and REITs. More on REITs in another piece I am preparing as I tour the West Coast.
Mutual Funds – Another source of trouble for the home builder stocks. This week will be the first week the consumer will start to hear about the crisis in the financial industry. Sure . . . they’ve been hearing things for months now. But with the failure of Lehman, and maybe WAMU, Merrill and a few other surprises, we will start to see the nightly news leading off with these stories. We will probably also see some wild swings in the DOW, which is all the general public really knows about. As they see and hear new horror stories, they will begin to sell their mutual funds, just like the more astute investors have been doing with the hedge funds. Unfortunately, the consumer is always the last one out, but when they start pulling out, the mutual funds will be forced to sell the home builder stocks . . . and that’s going to hurt. One final note here. This week The New York Times did a piece trying to convince consumers to stay in the markets. That’s when you really know the end is near.
Insurance Companies – You gotta love this group. It’s another double, triple, maybe even a quadruple whammy for the home builders. Like the pension funds, this group has invested in home builder stocks, land and joint ventures. What’s different here, is these guys don’t take prisoners. The banks have been sissies when dealing with the home builders. They realize, if they make too much of a stink about things like covenants and “true” asset value, the banks will trigger a domino effect that will shut them down months sooner than the FDIC will shut them down. So the banks work with the builders to hide and manipulate the numbers so the bankers can continue to take down huge salaries and bonuses. We’re starting to see a break in the ranks between the insurance companies and the banks. The biggest break was just a couple weeks ago, when the insurance companies forced Woodside into bankruptcy. I realize that was a private builder, but the insurance companies will move faster than the banks to protect their interests. I believe we will see more builders pushed to the brink by insurance companies, not banks.
General Public – The public sucks up Cramer’s Crap through a straw. They can’t get enough of it. It doesn’t matter that Cramer says Bob Toll is buying stock, when reality is Bob and his brother Bruce are selling stock . . . as well as other friends and family. It doesn’t matter that the public is fed numbers that have misrepresented the state of the industry for the last four years. So now when the public is told the industry is bottoming, they want to be first to get in on the greed. Unfortunately, the traders and institutional traders moved the stock prices up in advance of the crap from guys like Cramer. The General Public thinks they are buying at the bottom, when in fact, they are buying at the top for 2008. We will see prices of the home builders 25-75% lower over the next year. It’s basic supply and demand. The demand is not there, and what demand has been there . . . will soon be disappearing like the jet plane in the David Copperfield performance. If you’re still with me . . . you know the airplane was never there. And the good news we are hearing about the housing industry is just an illusion as well.
Which Builders Stink Up First? – The obvious ones are already trading in low single digits, but there might be a surprise or two there as well. For the big boys, you need to look at the impairments they have taken in comparison to what they still need to take. You need to look at what they are selling and how. You can’t do those things sitting in an office reading reports from analyst that are totally clueless, because they are relying on numbers from the builders themselves, as well as manipulated numbers from the National Association of Realtors, the Fed and the Case-Schiller Gang. The latter has been the last of the great numbers to fall, but it is starting to crumble as people realize just how off-base the Case-Schiller index is. One analyst did a great piece on the problems with Case-Schiller . . . like the fact that REOs, short sales and other distressed property is not properly addressed by Case-Schiller.
Centex, KB Homes, Lennar, Toll Brothers, Pulte and Horton all have a variety of issues. For some, there is good news. For others, there is very dark and very dire news. Clueless Cramer should not even discuss the builders anymore, because at this point he is misleading the general public with inaccurate information. Some attorneys might refer to this as negligent misrepresentation. Others might call it something else, when you consider the pumping of Toll Brothers coming from Cramer. In any event, we are short a number of the builders, while we are cautiously watching others, and pairing trades for the more conservative approach.
Commercial Property and the REIT Explosion – I am on a West Coast tour to confirm a few things we have been seeing in other markets, prior to putting out another piece on the REITs. Remember, all REITs are not alike. I am only talking about the REITs involved with commercial property and office space. I have not found enough cracks in the other REITs to warrant my time. And like I tell my clients . . . when I go to the buffet, I like to eat the lobster, not the bread. Look for my REIT piece within the next week. We are short a dozen or so REITs, and we will be increasing our REIT short positions substantially. The Street has been pumping this stuff . . . without doing their ground zero research or their research from Behind Enemy Lines.”
When will all the layoffs in the financial industry finally show up in NJ’s economy? I thought 1 Wall St job created 8 to 10 non Wall St jobs in NJ and NYC.
If thousands more financial workers from NJ train towns get laid off this Fall, will there be a rush to the exits bust in RE for the train towns next Spring as their severance packages expire?
Bairen – Great to hear you have a new job.
Clot @ 642
Mike Morgan seems to be the only one addressing pensions…
“If there was ever a perfect storm to hit pension funds, This is it…home builders, hedge funds, mortgage industry and REITS.”
I listened to Roubini on Bloomberg from yesterday. He slipped in “You need punishment at this point.” And also said basically that Volcker called the Bear Stearns bailout borderline illegal.
State of NJ pension fund has lots of Lehman. Corzine on cnbc now…he is “scared” about the unemployment factor from Wall St on NJ…he is also calling for another stimulus package…what a joke. He is also worried about housing prices dropping. of course not talking about the affordability factor – none of them do
Wake me up when Corzine is on the gallows.
At the very least, he should not be allowed to speak in public on a day like today.
This guy was a director at GS??? How can housing prices be propped up, while every other asset class is selling off? And…why would artificial support beneath housing prices even a good idea in an environment like the current one?
That guy from Housing Panic is right. Monkeys. Monkeys. Our country is run by a bunch of goddamned monkeys.
We have the gubmint we deserve.
Cindy (644)-
I think there are a fair amount of people who know what’s up with the pensions. However, they don’t speak, because those pensions are the nuclear payload of this whole financial debacle.
When the pension funds finally tap out, that’s when I get long again.
Greenspan’s black swan
is finally here.
http://www.itulip.com/forums/showthread.php?p=47721#post47721
Got Gold?
The government needs to start deportation rounds ups now, all those ex-wall st bankers will need jobs, and the only thing they will be qualified for is bus boy and dishwasher.
623. Clot- having been a reporter, um… yes. i suspect you’re right.
MESSAGE
nice site. thanks
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