How does real estate perform in a recession?

From Bloomberg:

Recession in U.S. May Be Just Beginning as Job Losses Mount

The U.S. economy, now officially in recession, may be in the midst of the longest slump in the post- World War II era as job losses mount and credit dries up.

The economic slump began in December 2007 when payrolls reached a peak, the business cycle dating committee of the National Bureau of Economic Research, a private, nonprofit group of economists based in Cambridge, Massachusetts, said yesterday. The last time the U.S. was in a recession was from March through November 2001, according to NBER.

“We’re going on 12 months already, and we’re just getting started,” said Stephen Stanley, chief U.S. economist at RBS Greenwich Capital in Greenwich, Connecticut. “We’re looking at some pretty severe numbers for the fourth quarter, and the first quarter of 2009 will be pretty bad as well. The economy isn’t going to turn around definitively until the credit markets unclog.”

The NBER designation means the U.S. was the first country to have slipped into a contraction. While definitions differ, the economies of both the euro area and Japan fell into a slump in the second quarter of this year, making it the first simultaneous recession in the three regions in the postwar era.

The longest economic slumps since 1945 were the 16-month downturns that ended in March 1975 and November 1982. The Great Depression lasted 43 months, from August 1929 to March 1933.

“This may be referred to as the Great Recession,” because of its length, said Norbert Ore, chairman of the Institute for Supply Management’s factory survey. “It looked like we were headed for a shallow recession earlier in the year because of higher energy prices. With the meltdown in the financial sector, it has become something more serious.”

The loss of 1.2 million jobs so far this year was the biggest factor in determining the starting point of the U.S. recession, the NBER said. By that measure, the contraction probably deepened last month.

“It is clearly not going to end in a few months,” Jeffrey Frankel, a member of the NBER committee and a professor at Harvard University, said in an interview. “We would be lucky to get done with it in the middle of next year.”

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219 Responses to How does real estate perform in a recession?

  1. grim says:

    From the Record:

    Are we heading to a second Great Depression?

    As a child in East Paterson during the Great Depression, Albin Zwiazek wore shoes that had holes the size of half-dollars. His father, a Polish immigrant, owned a shoe repair shop but couldn’t afford to fix his own children’s shoes.

    When his family’s home burned down, Zwiazek spent his vacation scraping cement from bricks off the old chimney to use the same bricks for a new home’s foundation.

    Economists are pretty much unanimous that we are now in a recession. Unemployment has hit levels not seen in 25 years. Social services are stretched to the limit, conjuring up memories of the Great Depression.

    People are now looking back to the nation’s history 80 years ago and wondering, could it happen again?

    One thing’s for sure: Talking to people who were alive during the 1930s won’t necessarily make you feel better. In interviews conducted with Passaic County residents last week, people over the age of 80 said conditions during the Great Depression were often grim but that life was manageable. They had mixed feelings on whether today’s conditions are as bad — or could get as bad.

    Zwiazek said he’s not stressed today. Yet. “I’m not as worried as I was as a child, because I’m maybe a little smarter by now. But we’re on a limited income,” said Zwiazek, a 90-year-old Clifton resident who lives with his wife, Margaret, who has Alzheimer’s.

    “And I’m worried about running low on money. I’d hate to be on welfare like we were as kids,” he said.

    George Fekete, 88, a Clifton resident, said he never went hungry as a child during the Depression. His father, a carpenter, worked odd jobs, he said.

    “We survived,” he said.

    It’s today’s conditions that worry him, he said.

  2. grim says:

    From the WSJ:

    The Future for Home Prices
    Americans still see real estate as their best shot at wealth. It may be wishful thinking.
    By JAMES R. HAGERTY

    Over the past few years, Americans have had a brutal lesson in the risks of real estate. House prices have crashed more than 35% in some parts of the country, millions of people are losing their homes to foreclosure, and banks are failing.

    The takeaway? Many Americans still see real estate as their best shot at wealth. In survey after survey, people expect prices to bounce back — in some cases, as soon as six months from now.

    Those hoping for a quick rebound are likely to be disappointed. Economists and other pros generally say home prices won’t bottom out before the second half of 2009, and some don’t see a bottom until 2011 or 2012. Even when they stop falling, prices may scrape along the bottom of the rut for years.

    And longer term? Over the next 10 to 20 years, housing economists expect prices will rise again — but, on average, probably not nearly as much as they’ve averaged over the past decade. That isn’t to say that some places won’t experience booms (and busts). But, the experts say, you should generally expect house prices to rise just a bit more than inflation and roughly in line with household income.

  3. grim says:

    From CNBC:

    JPMorgan to Axe 9,200 Washington Mutual Jobs

    JPMorgan Chase said Monday it will eliminate about 9,200 jobs at the former Washington Mutual, which on Sept. 25 became the largest U.S. bank to fail.

    The cuts amount to more than 21 percent of the work force at Washington Mutual, which ended June with 43,198 employees.

    Seattle will bear the brunt of the cuts, with 3,400 layoffs out of a total of 4,300 Washington Mutual employees in the city, JPMorgan said.

    Another 1,600 layoffs will be in the San Francisco area, and the remaining 4,200 will be elsewhere. Most branch workers will keep their jobs.

  4. grim says:

    From MarketWatch:

    Sears Holdings swings to loss on 8.3% lower sales

    Sears Holdings Corp., the Hoffmann Estates, Ill., parent of Sears and Kmart stores, swung to a third-quarter net loss from a year-earlier profit on 8.3% lower total sales and 9% lower domestic same-store sales. The company also added $500 million to its share-buyback authorization, bringing the total available to $572 million. For the quarter ended Nov. 1, the loss was $146 million, or $1.16 a share, compared with net income of $4 million, or 3 cents, in the year-earlier period. Excluding special items, the adjusted loss for the latest quarter was 90 cents a share. Shares outstanding fell 10% to 125.5 million. Revenue fell to $10.66 billion from $11.62 billion. A survey of analysts by FactSet Research was looking for a loss of 49 cents for the quarter.

  5. grim says:

    From Radar Logic:

    http://www.radarlogic.com/research/RPXMonthlyHousingMarketReportforSeptember2008.pdf

    New York MSA home prices down 8.6% year over year.

    Philly home prices down 7.3% year over year.

  6. cooper says:

    “Recession-hit automakers brace for grim US sales”

    Grim- I love seeing your name in the headlines, it’s a breath of fresh vindication. Not that I love the bad news but seriously, I can pick up a cell phone and call someone on the other side of the planet but for some reason it takes our brilliant leaders 12 months to figure out that were in a recession.

    http://biz.yahoo.com/ap/081202/financial_meltdown.html

  7. Mikeinwaiting says:

    http://seekingalpha.com/article/108684-why-bailouts-are-not-the-answer

    The brutal truth that no one in Washington dares acknowledge is that our systemic economic problems can only be solved by a reduction in consumer borrowing and an increase in savings. We must repair our national balance sheet and a painful recession is the only path to achieve this. By interfering with the market’s attempts to bring this necessary change about, all the proposals currently coming from Washington or bubbling up from think tanks and Nobel prize-winning economists, will only exacerbate the imbalances and lay the foundation for even greater losses and a larger crisis.

    Schiff on the money as usual.

  8. grim says:

    From MarketWatch:

    Beazer Homes 4th-period loss widens, revenue off 35%

    Beazer Homes USA Inc., the Atlanta home builder, reported a wider fiscal fourth-quarter net loss on 35% lower revenue. For the quarter ended Sept. 30, the loss widened to $473.9 million, or $12.29 a share, from $155.2 million, or $4.03, in the year-earlier period. Revenue fell to $712.6 million from $1.09 billion. A survey of analysts by Thomson Reuters was looking for a loss of $2.10 a share. The backlog at Sept. 30 was 1,358 homes, down 55% from the year-earlier 2,985. The sales value of the backlog was $326.6 million, down 61% from $838.8 million.

  9. grim says:

    1. Lost $474 million this quarter.
    2. Market continues to deteriorate.
    3) $584 million in cash remaining.

    Hmm…

  10. cooper says:

    “‘Bernanke-san’ Signals Policy Shift, Evoking Japan Comparison ”

    reminds me of the vintage 1980 song by the Vapors-

    “Im turning japanese
    I think Im turning japanese
    I really think so”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aziecc.MkO28&refer=home

  11. still_looking says:

    and…. this little gem sent to me by “Emergency Medicine Today.”

    Medicare chief actuary warns Medicare Part A trust fund may be exhausted sooner than thought.

    The AP (12/1, Freking) reported, “Federal health officials estimate that the struggling economy will speed up by one to three years the exhaustion of the Medicare trust fund covering hospital and nursing home care.” Medicare’s trustees “warned last March that the trust fund for Medicare Part A would become insolvent in 2019. But the chief actuary for Medicare,” Richard Foster, “said Monday the economy will likely generate less revenue through payroll taxes than the trustees had projected.” Department of Health and Human Services Secretary Mike Leavitt “said that Foster’s update reinforced his concern that too many people view Medicare’s finances as one that is in the distant future.” Leavitt said, “We’re not talking about some future president. We may be talking about this one.” In the last year, according to the AP, “Leavitt has frequently talked about Medicare drifting toward a financial disaster. He said Congress will be forced to take action by raising taxes, cutting benefits to seniors or reducing payment rates for healthcare providers.”

    sl

  12. still_looking says:

    grim, 8

    starting a death pool?

    sl

  13. BC Bob says:

    [9],

    Beazer, the Chuck Wepner of housing. Not for much longer, pretty soon, kaput.

  14. DL says:

    I’ve read estimates that we have roughly 2m more homes than famalies/individuals who can afford them. Seems like builders will need to become banks to survive the downturn.

    I like the idea of skipping paying taxes a year as an alternative to an economic stimulis plan.

  15. BC Bob says:

    “Im turning japanese
    I think Im turning japanese
    I really think so”

    cooper [10],

    Yep.

  16. kettle1 says:

    SL,

    Good article. As soon as they start to cut medicaid/care benefits the we will see TSHTF in terms of elderly care. if nothing else perhaps it will force us to actually address the medical care issues in the US instead of sweeping them under the rug.

    ————————————-

    Mike

    Private citizens are saturated in debt, 1/2 of homes on the market are bank owned, banks wil not loan to anyone now as most people and businesses are insolvent, the US is now monitizing debt, we have no real industrial base, and the powers that be keep talking about restarting consumption in order to save the economy?????

    Will someone please publicly call BS on this charade so that we can address the real problems? How can consumption based on debt expansion continue when the IB’s collapsed due to excessive debt expansion themselves?

    The hole we are digging ourselves will continue to get deeper until we recognize this and start to address the underlying issues

  17. kettle1 says:

    DL,

    I am 1099 since i am self employed. That would save me close to $30,000 that i would have to pay. I will support that.

    The only problem is that income tax pays for servicing the US debt. SO now you must cut an equivalent amount from other programs and use it for debt servicing. Good luck!

    If they banned automatic tax deductions by your employer and required people to pay the taxes directly you would see a tax revolt. people have no idea how much they are paying unless you are 1099. Out of sight out of mind…..

  18. kettle1 says:

    16 should say:

    ‘1/3 of home son market are bank owned’

    from article linked on yesterdays post

  19. grim says:

    From the Star Ledger:

    Mall owner gets debt extension

    A giant Chicago mall operator that owns shopping centers in Wayne and Paramus has gotten a two-week extension to figure out how it will pay off $900 million in debt.

    General Growth Properties Inc., a real estate investment trust that owns 200 malls nationwide, including the Willowbrook and Paramus Park shopping centers, said Sunday that its lenders agreed to an extension for Nov. 28 maturities for mortgages on two properties in Las Vegas.

    The company potentially faces filing for bankruptcy if it cannot pay off debt — a fate some real-estate experts expect to befall other retail-property owners as consumer spending drops off and the recession deepens.

    Even if General Growth avoids bankruptcy, the company faces an additional $3.1 billion of debt scheduled to mature in 2009, according to a filing with the Securities and Exchange Commission. And General Growth wasn’t optimistic about its chances at refinancing in a difficult credit market.

  20. grim says:

    From CNBC:

    Beazer Homes Loss Balloons as Revenue Plunges

    Struggling homebuilder Beazer Homes says fiscal fourth-quarter losses more than tripled as revenue plunged and income taxes ballooned.

    The homebuilder said demand for new homes continues to be hurt by low consumer confidence, falling prices, extensive supply and less access to mortgage financing.

  21. DL says:

    Ket: I once read where a CEO of a large corporation said his company paid no taxes; it just collected them from the consumer on behalf of the government.

  22. grim says:

    From the WSJ:

    Goldman Faces Loss of $2 Billion for Quarter
    By SUSANNE CRAIG, CARRICK MOLLENKAMP and SERENA NG

    Goldman Sachs Group Inc., known for avoiding many of the blowups that have battered its Wall Street rivals, now is likely to report a net loss of as much as $2 billion for its quarter ended Nov. 28, according to industry insiders.

    The loss, equal to about $5 a share, would be more than five times as steep as the current analyst consensus for the Wall Street firm, as it faces write-downs on everything from private equity to commercial real estate.

  23. grim says:

    From the AP:

    TransUnion: 3Q mortgage delinquencies shoot higher

    Mortgage delinquencies shoot up to nearly 4 percent in 3Q, nearly double historical average

    The percentage of people who are two months behind on their mortgages shot up in the third quarter from the same period last year, according to credit reporting agency TransUnion LLC.

    For the quarter ended Sept. 30, 3.96 percent of people holding a mortgage were at least 60 days behind in payments, compared with 2.56 percent in the 2007 third quarter.

    “It’s nothing short of staggering,” said Ezra Becker, principal consultant in TransUnion’s financial services group. Becker noted the rate had hovered at about 2 percent for years, until the second quarter 2007, when it started climbing.

    Moreover, the climb is not likely going to slow, he said. “Our projections are that it’s not only going to be increasing but it’s increasing at a faster pace,” he said. The fourth quarter of 2008 could see the percentage of mortgages past due jump as high as 4.6 to 4.7 percent, he said, an estimate that reflects the recession and rising unemployment rates. “This is more pessimistic than what we would have forecast a quarter ago,” he acknowledged.

    The figures are culled from TransUnion Trend Data, which consists of 27 million consumer records randomly sampled each month from the credit reporting agency’s national consumer credit database. TransUnion uses actual reported data on past-due payments. The widely-followed measure of deliquency rates from the Mortgage Bankers Association, a voluntary survey of over 120 mortgage lenders, is due out Friday.

    Becker said it is unlikely that mortgage delinquency will level off before 2010.

  24. Cindy says:

    http://clusterstock.alleyinsider.com/2008/11/robert-shiller-crisis-has-lots-of-parallels-with-great-depression-will-last-for-years

    Did anyone post this? 11/28 – I apologize if it is a repeat..

    Yale’s Robert Shiller – Three parts about 10 min. each. Youtube

    He sees striking similarities in the problems the UK and US face – yet we have very different monetary policies. He, instead, focuses on behavioral economics.

    In the 3rd youtube he calls for important changes – long term changes…

    1. Improve the information infrastructure so people do not only rely on salepeople for financial advice.
    2. Improve financial markets – broaden the scope to avoid the failure to manage risk.
    3. New retail products – Mortgages designed around the risks homeowners must take. Workouts written into the original mortgage product – Equity insurance etc.

    I thought he had several good points surrounding the application of social sciences to economics. I especially agree that the time is right for some “long-term” solutions instead of crisis decision making. He contends that the UK has been the arena for financial innovation in the past and could be again.

  25. 3b says:

    Maybe now that we are officially in a recession, the sellers out there may actually start to serioulsy lower their prices

  26. grim says:

    Now here is a guy I want to meet.

    Miami Activist Moves Homeless Into Foreclosed Homes

    Max Rameau delivers his sales pitch like a pro. “All tile floor!” he says during a recent showing. “And the living room, wow! It has great blinds.”

    But in nearly every other respect, he is unlike any real estate agent you’ve ever met. He is unshaven, drives a beat-up car and wears grungy cut-off sweat pants. He also breaks into the homes he shows. And his clients don’t have a dime for a down payment.

    Rameau is an activist who has been executing a bailout plan of his own around Miami’s empty streets: He is helping homeless people illegally move into foreclosed homes.

    “We’re matching homeless people with people-less homes,” he said with a grin.

    Rameau and a group of like-minded advocates formed Take Back the Land, which also helps the new “tenants” with secondhand furniture, cleaning supplies and yard upkeep. So far, he has moved six families into foreclosed homes and has nine on a waiting list.

    “I think everyone deserves a home,” said Rameau, who said he takes no money from his work with the homeless. “Homeless people across the country are squatting in empty homes. The question is: Is this going to be done out of desperation or with direction?”

  27. chicagofinance says:

    from last night….

    chicagofinance Says:
    December 1st, 2008 at 10:19 pm
    Bost: I forgot to mention this important item. I’m sure there is a perfectly good explanation, such as the time of year, BUT……the water has been turned OFF…

  28. grim says:

    cf,

    Is this at your place?

  29. BC Bob says:

    Chi [27],

    Maybe just a clog in the system. Thanks.

  30. grim says:

    From the Star Ledger:

    Embracing a frugal mentality

    Once a word used to describe embarrassingly stingy tightwads who favored inexpensive, tasteless items of poor quality “cheap” now means chic, hip, fashionable and most of all, smart.

    “People are now proud of being cheap because frankly, few of us can afford to be spendthrifts anymore,” says Kathryn Finney, chief executive and founder of TheBudgetFashionista.com. “We now have to think seriously about our purchases, why we’re buying what we’re buying, and how the items we buy bring value into our lives.”

    Rather than buy on credit and worry about paying for it later, consumers are rethinking their spending strategies. A recent Pew Research poll found nearly half of respondents said they’re changing the way their money is saved or invested, while nearly 40 percent are delaying plans to make large household purchases. More than a third are holding off on buying a new car. Nearly six in 10 have delayed or canceled vacations, and 55 percent said they’re eating out less often.

    And they’re not ashamed to admit it. Rather than hide their troubles, families enduring economic hardship are boldly sharing their plight and their newfound frugality. “Cheap” is losing its social stigma.

    “I don’t think today there’s any stigma to saving money,” says Beverly Levine, a licensed clinical social worker in Chatham, whose practice includes mostly middle- and upper-income clients. “They’re all being affected right now, and nobody is afraid to say that it’s hurting them.”

  31. grim says:

    Hat tip to the commenter over at Ritholtz for this one. Isn’t the difference in policy amazing?

    Swedish government ‘rules out takeover of Volvo Cars’

    The Swedish government has ruled out a takeover of the country’s beleaguered automaker Volvo Cars if its owner, US group Ford, decides to sell it, daily Dagens Nyheter reported on Tuesday.

    “It’s not in our industrial policy to own carmakers and we will not jeopardise taxpayers’ money,” Enterprise and Energy Minister Maud Olofsson told Sweden’s newspaper of reference on the sidelines of a meeting in Brussels.

  32. yikes says:

    anyone seen this?

    http://tpmmuckraker.talkingpointsmemo.com/2008/12/senate_goper_blocking_appo
    intm.php

    can we find out who the senator is?

  33. grim says:

    From the WSJ:

    Delinquent Mortgages Set to Nearly Double in 2009
    By JANE J. KIM

    The number of consumers with delinquent mortgages is poised to almost double by the end of next year, hitting its highest level in at least 16 years, according to a leading credit bureau.

    The big culprit is adjustable-rate mortgages that were underwritten several years ago, when lending standards were loose.

    Now, many of the initial teaser rates on these loans are expiring and resetting to higher interest rates and higher loan payments.

    “There are a lot more loans that will be resetting throughout 2009 through 2011,” says Ezra Becker, principal consultant in TransUnion’s financial-services group, who notes that rising unemployment and depreciating home values are other contributing factors. “There may be an ongoing flow of consumers who may now be able to pay their mortgage but may not be able to a year from now.”

    Mortgage delinquencies are likely to peak in the first quarter of 2010 as today’s new loans, which have tighter underwriting standards, take effect, he says.

  34. Stu says:

    “It’s not in our industrial policy to own carmakers and we will not jeopardise taxpayers’ money,”

    The day I hear this from either our fed chief, treasury chief or O, will be the day I drop my shorts.

    Oh my!

  35. Stu says:

    Russian translation:

    Theme well it is simple пиздец. Really anything was not more actually?

  36. grim says:

    Here is some New Jersey 60+ day delinquency data from the NY Fed

    http://www.ny.frb.org/regional/NJ_September.xls

    NJ Alt-A Delinquencies
    Fixed Rate 5%
    Adjustable Rate 8%
    Balloon & Other 9%

    NJ Subprime Delinquencies
    Fixed Rate 9%
    Adjustable Rate 19%
    Balloon & Other 11%

  37. 3b says:

    #33 grim: frank said resetting mtgs would not be a problem next year.

  38. yikes says:

    anyone here sitting on any muni bonds? how worried would you be about them? what if you dont need them for five years? would you let them ride or sell?

  39. Stu says:

    Wow,

    The fixed rate numbers are pretty high as well. So much for mortgage reworking.

  40. Stu says:

    “muni bonds”

    I would guess it happens to do with which municipality you chose to invest in.

  41. grim says:

    From the AP:

    Fitch downgrades Prudential, citing capital needs

    Fitch Ratings lowered ratings today on Prudential Financial, citing concern that the insurer will need additional capital over the next year.

  42. C Dawg says:

    Hey, Guys. I kind of need some home buying advice. I’ve decided our family needs to buy (twins are on the way), and I had a couple of questions.

    First, do you know anything about these MLS listings?
    2526978
    2562709

    Second, how much do you think you can lowball on these types of houses?

    Thanks in advance for the advice! Dawg

  43. grim says:

    4 Franklin was purchased in ’03 for $500k. Current asking of $439k is down from the original list price of $550k. From what I’ve heard, it needs quite a bit of work/updating and is still overpriced at current asking.

  44. yikes says:

    # Stu Says:
    December 2nd, 2008 at 9:30 am

    “muni bonds”

    I would guess it happens to do with which municipality you chose to invest in.

    Duh – one in PA.

    also want to thank everyone from an extra doom-and-gloomy monday. read most of the comments just prior to bed and of course didnt sleep well.

    i fear not for myself and my wife, but for friends and family who bought in 06-07-08.

  45. Stu says:

    Yikes,

    I heard a report on munis last night on Bloomberg radio. You need to really understand the credit rating (or solvency) of the government in which you are investing. The commentator expected a good amount of pain for some muni holders. He did say that if you find a financially responsible town, there could be some really great opportunities out there.

  46. yikes says:

    good stuff, Stu. looking into it now …

  47. HEHEHE says:

    Question re the GLD etf, is the bullion they hold kept in the US?

  48. comrade nom deplume says:

    [47] Yikes

    Also make sure that you are buying a bond backed by the taxing power of the jurisdiction, not a revenue stream. Some revs can appear to be state GOs. You have to read the OS to be sure that they can soak the taxpayer if need be. If you are going to look at revs, look at sewer or water authorities as they will always have a cash flow (bad pun intended).

    I diverge from Stu in that I would avoid towns.
    State bonds are safer as it is less likely that the state will go belly up or suffer a property taxpayer’s revolt, which can happen more readily in a town.

  49. Pat says:

    Stu, here’s another from a few weeks ago. Note the caution re revenue streams.
    http://www.bloomberg.com/apps/news?pid=20601212&sid=aL9HFhS1cSGo&refer=home

  50. Pat says:

    ack. Owe you a beer.

  51. grim says:

    From HousingWire:

    Mortgage Defaults Continue to Rise, MI Firms Say

    A surge in residential mortgage defaults continued during October, according to a trade organization representing private mortgage insurers. More than 80,000 defaults were recorded during the month, the highest such total in at least 12 months, said the Mortgage Insurance Companies of America Monday, in its monthly report.

  52. PGC says:

    #48 HEHEHE

    “Question re the GLD etf, is the bullion they hold kept in the US?”

    Sorry HEHEHE, this is for me the post of the day.
    The answer is “What Bullion?”

    Here is a link that will tell you more
    http://www.goldprice.org/forum/gold-etf/195-gold-etf-gld.html

    Summary
    In conclusion, it is clear that with GLD you own exposure to the gold price. You don’t actually own physical gold for several reasons:

    1. GLD does not prove the gold exists with independent third party audits.

    2. The same gold in GLD may be owned by two people because of short selling.

    3. Even if GLD were in reality backed by gold, there are too many parties between you and the gold to claim that you really own it. So while you may have “access” to the gold price through GLD, you do not have access to any physical metal that it may be holding.

  53. comrade nom deplume says:

    [50] Pat,

    If you had faster fingers, you could have saved me the trouble of posting [49].

  54. grim says:

    From MarketWatch:

    Obama seeks states’ input on economic recovery plan

    President-elect Barack Obama called on state governors on Tuesday to help design a recovery plan to “jumpstart” the economy. Speaking to the National Governors Association, Obama repeated a call for a plan that will save or retain two and a half million jobs and give tax cuts to the middle class. “Any true solution will not come from Washington alone,” Obama told governors, according to prepared remarks. “It will come from all of you.”

  55. grim says:

    From the Star Ledger:

    Corzine says he will press Obama for $600B economic stimulus

    Gov. Jon Corzine said he’ll press the case for a $600 billion-plus economic stimulus package for the states when he and other governors meet with President-elect Barack Obama.

    Corzine is among a group of governors meeting with Obama today in Philadelphia.

    Corzine said the faltering economy has made the need for a larger stimulus package apparent.

    He said he’d like the states to get money to jump-start infrastructure projects such as building of highways, schools and airports, which can provide thousands of jobs.

    Corzine said he’d also like to secure funds for Medicaid, unemployment programs and special education. The former Wall Street CEO on Monday signed legislation that provides assistance to homeowners facing foreclosure.

  56. Pat says:

    I’m watching that on TV. It’s why my fingers were slow. I was entranced by Arnold. Ar Node. Stop da baleeding.

  57. Stu says:

    HeHeHeHe:

    I’ve submitted my application to the Bullion Vault. I’ve been researching their concept for months and it appears completely legit. The only real downfall with buying/selling gold through them is that at times, there may be limited quantity since it is a closed market. But as a hedge against Armageddon, they will serve just fine. I don’t plan to trade my gold, I expect to simply insure my future with a slight position. Costs to purchase, carry and sell my own physical seems outweighed by the vault’s pretty low fees and their buy/sell spread means little to me as I don’t plan to trade it.

  58. Sean says:

    re: #55 & #56

    The US will lose over 10 million jobs in the service, manufacturing and retail sectors in the coming months.

    O’Bama’s plan to create 2.5 million jobs as welders and masons isn’t going to fix jack squat with this economy.

  59. HEHEHE says:

    Stu,

    Thanks, I’ll check them out. Yeah I just read an article saying the Perth Mint was suspending new certificate purchases until January due to the rise in demand they’ve been recieving.

  60. grim says:

    I’d like to work on my tan, hardhat on and shirtless by the side of the road. Leaning up against my jack hammer, Marlboro hanging off my lip.

    Ladies passing by would blush and giggle.

    “Just doing my duty and rebuilding America, ma’am”, I’d say.

  61. Al says:

    I wonder how long untill somebody will say this:

    The underlying US-economy problems stem from the fact that USA moved from Manufacturing/undistrial based economy to SERVICES based economy.

    Strong economy produces Material GOODS. If economy does not produce enough goods to support it’s level of consumption – it will inevitable fail. It might take a long time but it WILL fail.

    Now can we actuall start producing goods?? With EPA regulations, Lawyers (liabilities and very complex and costly patent system), Local goverments, Unions…. We simply can not.
    In china manufacturers are completelly ignoring European/US patents and make products not only for internal consumption but products they sell in USA. (Trust me, we do some buisness with china right now).

    I am not suiggesting abandioning EPA regulation or IP rights. I am suggesting abandoning World Trade agreements and imposing SEVERE TARIFFS in imports and a mean to grow manufacturing base in USA. In effect abolish globalization.

    Otherwise USA quality of life will come co common denominator with India and China – not right away, but a lot faster that one might think.

  62. Al says:

    He said he’d like the states to get money to jump-start infrastructure projects such as building of highways, schools and airports, which can provide thousands of jobs.

    More money to State Goverments… Just what we need here, in NJ!!!! They manage it so well!!!!

  63. C Dawg says:

    Hey, thanks, Grim. Do you or anyone else have any information on MLS 2597402?

    Thanks again!

  64. Al says:

    grim Says:
    December 2nd, 2008 at 10:54 am
    I’d like to work on my tan, hardhat on and shirtless by the side of the road. Leaning up against my jack hammer, Marlboro hanging off my lip.

    Ladies passing by would blush and giggle.

    “Just doing my duty and rebuilding America, ma’am”, I’d say.

    Classic…

    But, I’d rather use Pick-Axe… And In addition to Marlboro hanging off my lip I will have I-pod headphones in one ear, second hanging down….

  65. HEHEHE says:

    Kettle,

    I don’t believe you had permission to photoshop that picture of my body!

  66. kettle1 says:

    sorry heheh ;)

  67. HEHEHE says:

    Re Gold,

    Is there a service at a bank out there that provides something like a direct deposit into a gold denominated account. You know like a checking account where the dollars are exchanged for gold while the money is sitting there but that you can later exchange out of to pay bills etc in dollars?

  68. grim says:

    C Dawg,

    MLS# 2513560
    Listed: 5/1/2008
    OLP: $535,000
    Reduced: $499,000
    DOM: 184
    Expired

    MLS# 2597402
    Relisted: 11/1/2008
    OLP/LP: $499,000
    DOM: 31
    Active

    Was purchased in ’99 for $260k

  69. kettle1 says:

    i believe that grim has mentioned he is a fan of art deco

    http://tinyurl.com/6kddzy

  70. grim says:

    C Dawg,

    Owners of that property purchased 66 Heritage in Randolph for $790k on 8/21/2008. Paid close to asking too..

  71. kettle1 says:

    interesting paper

    This Time is Different: A Panoramic View of Eight Centuries of Financial Crises*

    by
    Carmen M. Reinhart, University of Maryland and NBER
    Kenneth S. Rogoff, Harvard University and NBER

    http://www.economics.harvard.edu/faculty/rogoff/files/This_Time_Is_Different.pdf

  72. Mikeinwaiting says:

    Al 62
    “I am not suggesting abandoning EPA regulation or IP rights. I am suggesting abandoning World Trade agreements and imposing SEVERE TARIFFS in imports and a mean to grow manufacturing base in USA. In effect abolish globalization.”

    Didn’t the world try that in the last depression. Doesn’t work out so well.

  73. Victorian says:

    HEHEHE(70) –

    Check out goldmoney.com @ Mish’s site. Similar concept to the one you mention.

  74. Sean says:

    While you are busy working digging ditches and building bridges what are the other possibly 20 million other unemployed and perhaps homeless poor souls going to do?

    We shall soon find out maybe as soon as this summer.

    I expect there to be a backlash against immigrants both illegal and legal such as the H-1B and L-1 programs but will the citizenry protest in the streets and riot?

  75. Al says:

    Didn’t the world try that in the last depression. Doesn’t work out so well.

    There was no globalization back then… Chinal was mostly agricultural, nodoby even heard of not-important former british-controlled India, no huge super-carrier’s shipping fleets, NO Internet – so in fact It was different back then.

    I think most importantly – during last depression dollar was still on gold standard…. So you couldn’t really create virtual dollars…

  76. Stu says:

    HeHeHe:

    “Is there a service at a bank out there that provides something like a direct deposit into a gold denominated account.”

    Bullionvault.com!!! There is sliding rate fee for buys and all of the purchases over a year are cumulative so once you obtain higher thresholds for how much you own, the fees being to drop. It is not exactly direct deposit, but there is no penalty for making one large purchase or multiple small purchases.

    disclaimer: There is more gold around my neck than I hold in bullion vault.

  77. grim says:

    I expect there to be a backlash against immigrants both illegal and legal such as the H-1B and L-1 programs but will the citizenry protest in the streets and riot?

    I see a temporary suspension of new H1-B and L-1 as a plausible scenario. Restriction of renewals a somewhat less likely scenario. High unemployment of IT and backoffice to be the primary driver here.

  78. kettle1 says:

    Sean,

    Was browsing some of the Raleigh NC message boards/ blogs a few weeks ago ( insomnia will make you do strange things). The anger and distaste directed towards illegal immigrants seemed substantial. I dont think it would take much to push it out into the open.

    i wouldnt be surprised to see similar issues arise in Cali, with the number of bi-lingual and social programs that are perceived to be geared towards illegal immigrants ( regardless of how accurate that may be) and the state facing severe budget issues, things could get heated

  79. Al says:

    Aren’t there a danger of “owning” Physical gold in places like “some vault” – in case of nationalization/confiscation of gold thouse places will be first to go.

  80. grim says:

    Fresh commentary from Mr. Gross:

    Dow 5,000 Redux

  81. Al says:

    wouldnt be surprised to see similar issues arise in Cali, with the number of bi-lingual and social programs that are perceived to be geared towards illegal immigrants ( regardless of how accurate that may be) and the state facing severe budget issues, things could get heated

    In California English speaking crown is Minority….. And They know it. So I think they will keep it quiet there.

  82. Al says:

    Crown = Crowd even

  83. kettle1 says:

    AL 78,

    There was no globalization back then…

    not so much during the depression but look at the South Sea bubble (1720). A historical example of globalization falling apart.

  84. Sean says:

    Since I am Irish I keep my pot of gold under the rainbow in county Clare. Even the Germans who did make excursions into Ireland During WWII did not leave with anything of value since there was none to be found.

  85. C Dawg says:

    Thanks, Grim. Very useful info.

  86. Stu says:

    Kettle1, Grim, Al,

    It’s easy to blame the immigrants since they are defenseless, but they are really not to blame. The one’s we need to go after were the greedy. Until you understand this, you are no better than the Nazis. Isolationism (anti-globalism) is a sure recipe for long-term disaster. You will need these so-called enemies later, so to befriend them for short-term gain is just plain ignorant.

    Unfortunately, humans never learn and it is human nature to pick on those who can not defend themselves, regardless of whether or not they are at fault.

    If you want to reestablish the progroms, then you should start by burning down the mansions of the executives on Wall Street. Then move on to the insurers, the mortgage lenders and the rating agencies. They are too blame. Not that dude who is willing to mow your lawn for $5 an hour without any benefits.

  87. kettle1 says:

    Al 84,

    normally perhaps, but if the state falls apart financially and unemployment spikes then all bets are off.

    purely a speculative guess, but who’s side do you think the pols and police would be on, who gets scape goated [escape goated ;)]?

  88. #59 – O’Bama’s plan to create 2.5 million jobs as welders and masons isn’t going to fix jack squat with this economy

    This raises an interesting question on the fungibility of jobs in the modern workplace.
    We’re going to see both MIG/TIG welders as well as RMDS/Linux SAs out of work, can either do the other’s job?
    Sure they could dig ditches, but how many ditch diggers does the economy need?
    In an age of increasing micro-specialization what happens when you have widespread lay-offs and the only work available will require more micro-specialization?

  89. Sean says:

    re: #81 Kettle1 – wait for it by next summer when things heat literally.

  90. kettle1 says:

    Stu,

    I agree with you and do not support going after or blaming immigrants. The people who need to be strung up are those in the capital building.

    Just making observations. Most people will choose the easy and visible scape goat

  91. Al says:

    DO I blame immigrants?? I am one… In addition I blame the ones who are doing something illegal – like working and not paying taxes – buy doing so they are not only taking a job from american and lowering american standard of living in the long run, but also abusing the system.

    I can nto tell you how many times i heard a story about illegam immigrants being in a car accident or pulled over for speeding/othe offence, polica officer would get their information (fake ID) and they are free to go.

    In the end other’s person insurance pays for accident and illegals would not have unsurance, correct address on the registration – so they can not be tracked.

    I am for giving all illegal immigrants a work permit, and mandating them to pay healthcare and taxes, and car insurance if they have one. I want to see how many would stay here after that.

    And to prevent employees from hiring illegals impose stiff penalty – 500K for knowingly hiring an illegal, and for small buisness owners they should be rsponsible with personal property.

    DO nto hit illegal immigrants – hit employers which hire them.

  92. kettle1 says:

    90 Tosh,

    Classic catch 22. The more specialized a population becomes the more productive it becomes in that specific environment, BUT the more vulnerable it is to environmental changes.

    Doesnt matter if we are talking about bacteria, or markets

  93. Hobokenite says:

    “Sure they could dig ditches, but how many ditch diggers does the economy need?”

    Don’t forget, the government can hire ditch fillers as well.

  94. Sean says:

    I wonder what kind of backlash will be felt when O’Bama fails to redistribute the wealth as promised, and only offers up menial jobs digging ditches?

  95. Al says:

    In an age of increasing micro-specialization what happens when you have widespread lay-offs and the only work available will require more micro-specialization?

    Simple – the group which lobbies the most and pushes goverment to focus spending programm in their area wins…

    Right now it is finance industry.

  96. kettle1 says:

    Al, 93

    you are correct, and business fought tooth and nail to makes sure that there were no penalties for using what amounts to slave labor. the lax enforcement was a government gift to big business.

    I would add a revocation of business license for a second offense and personal legal liability

  97. HEHEHE says:

    THX for the info

  98. chicagofinance says:

    grim Says:
    December 2nd, 2008 at 8:50 am
    cf, Is this at your place?

    BC Bob Says:
    December 2nd, 2008 at 8:54 am
    Chi [27], Maybe just a clog in the system. Thanks.

    Dudes: I’m talkin’ Ara’s House of Pleasure…

  99. comrade nom deplume says:

    [58] stu

    I have some hedge metals too. Brass and lead, mostly.

  100. kettle1 says:

    The only way to undue the job depreciation we have seen is to undue globalization. as long as you are competing against a chinese or Indian worker who will work for 1/2 the price and no benefits then you are guaranteed to lose.

    The only way to avoid that is to have heavily regulated globalism involving equalization tariffs/fees. Good luck with that

    Not a suggestion, just an observation.

  101. RayC says:

    California has an immigrant problem? Well, they re-elected him. Oh, not Ahhnold…

  102. Ben says:

    what good is building highways going to do? Last time I checked, we have tons of them in NJ. If the road to salvation involves them building the New Jersey Turnpike 2.0, then we are all doomed from the start.

  103. Stu says:

    California loves their immigrants. I lived out there and every time there was a referendum like some discussed here, the people legal voters voted it down. Once legals are willing to work for $5 an hour, then the immigration will stop. For now, I still see lot’s of minimum wage help wanted signs.

  104. comrade nom deplume says:

    [96] sean

    The big O’s mouth wrote more checks than he can cash (literally). Fact is, and you see it from his post-election reversal, his plan would cause capital flight and disinvestment as (as Kettle sagely observes), the only way to implement it is to go protectionist. He and his people recognize this, so they calmed the waters by backing off.

    Now economists predict that there is no way to pay for all of the promises under the current tax system, so we either create a VAT system or ramp up income taxes dramatically and/or impose new taxes, such as property taxes (leading to much more capital flight and disinvestment). The VAT is less destabilizing, but would never pass because (1) it is new, (2) Europe does it, (3) most americans don’t want to become Europe, and (4) O and the dems implicitly promised we would not become Europe.

    Provided that there is enough growth, then the masses may grumble, but there won’t be a sufficiently large enough population of permanent poor to result in the sort of revolutionary backlash that would cause more “redistribution” efforts on the Hill.

  105. 94 – ket – Doesnt matter if we are talking about bacteria, or markets

    Very true.
    Heinlein had a quote that went something like;
    “A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship….. fight efficiently, die gallantly. Specialization is for insects.”
    I always thought that specialization bred extinction…. As a RMDS SA it will be interesting to see if I’m right.

  106. Victorian says:

    SRS setting up for another nice entry point.

  107. kettle1 says:

    Nom,

    Provided that there is enough growth

    Devil in the details….. what do we grow and how do we pay for it? dont forget you cant cut medicare/caid if you want to forestall that revolt. You must also continue to service debt unless you want a billion dollar cheese burger

  108. scribe says:

    From the WSJ:

    Self-Employed Are Frozen Out of Mortgages
    Efforts to Jump-Start Lending Bypass Those Without W-2s; The Trouble With Jumbos

    By NICK TIMIRAOS and RUTH SIMON

    The government’s recent moves to backstop the mortgage market have made it easier for many people with decent credit scores to get a loan. But for many self-employed people — even those with pristine credit — the mortgage freeze has yet to thaw.

    A reversal of the loose lending practices that led to the banking industry’s current woes was certainly expected. But some economists and mortgage brokers say lending standards have become overly restrictive, which could be exacerbating the credit crunch and helping push down home prices further.
    Locked Out of a Home Loan

    * Some self-employed professionals are not benefiting from federal moves to loosen the mortgage market.
    * The volume of jumbo loans — those that exceed limits for government backing — fell by more than 70% for the first nine months of the year from a year earlier.

    “Underwriting criteria have swung from foolish ease to tighter than any in modern times,” says Lou Barnes, a mortgage banker in Boulder, Colo.

    The changes are increasingly frustrating a group of borrowers whom banks once coveted: affluent self-employed professionals such as doctors, lawyers, accountants and small-business owners.

    http://online.wsj.com/article/SB122818315556971151.html

  109. Clotpoll says:

    Vic (108)-

    Yep. Gotta think Waggoner can slice 100 off the Dow the minute he opens his yapper.

    SKF getting juicy now, too.

    FXP about to touch $50. If it does, I’m all over it.

  110. Stu says:

    Clot:

    You sound like my plan!

    I won’t touch SKF though.

  111. Stu says:

    You have to like the economic reports coming out for the rest of the week as well Clot.

  112. Victorian says:

    Where is Bi with his daily market predictions?

  113. Al says:

    The changes are increasingly frustrating a group of borrowers whom banks once coveted: affluent self-employed professionals such as doctors, lawyers, accountants and small-business owners.

    Don’t they pay taxes??? Can’t you just provide last 3-4 years of your tax forms???

  114. chicagofinance says:

    OT: Opinions on the GNR record? I’m no fan, but it is an important release. I won’t pay attention too much other than wanting to know whether AR delivered…

  115. galgon says:

    NJ NOVEMBER WARN NOTICES

    http://lwd.dol.state.nj.us/labor/lwdhome/warn/2008/1108warn.html

    CITY & SUBURBAN DEL. STATEWIDE 1/4/2009 372
    HANOVER DIRECT WEEHAWKIN 1/4/2009 18
    THELEN FLORHAM PARK 11/30/2008 645
    NAT. WHOLESALE LIQUID. LODI/EDISON 1/8/2009 134
    SEARS WOODBRIDGE 1/11/2009 94
    COMCAST CABLE E. WINDSOR 1/19/2009 185
    NATIONAL GYPSUM DELAIR 1/19/2009 66
    JOHNS MANVILLE BERLIN 1/31/2009 170
    PIKE MACHINE PRODUCTS ELIZABETH 1/31/2009 71
    BLACKSTONE MEDICAL WAYNE 2/19/2009 10

  116. Stu says:

    Galgon,

    I’ll let you know when my place of employment is in the list.

  117. yikes says:

    grim –
    what happened to shore guy?

    he was smart.

  118. Stu says:

    I haven’t heard the GNR release, but unless they retooled, I fear it will annoyingly suck.

  119. Stu says:

    “he was smart.”

    he was smart to leave ;)

  120. shawn212 says:

    bought chinese democracy for thanksgiving road trip to PA – i’m terribly dissapointed. First couple of songs are tolerable…the rest is horrible. I’m a huge GnR fan by the way

  121. Stu says:

    Worst second album ever…Portishead/Portishead.

  122. MT says:

    If anybody knows the bast and inexpensive way of obtaining sold prices in area I live in past 6 months, please advise.Thank you.

  123. grim says:

    Ask me nicely then throw a tip in the jar if you like what you see.

  124. Al says:

    MT Says:
    December 2nd, 2008 at 1:44 pm
    If anybody knows the bast and inexpensive way of obtaining sold prices in area I live in past 6 months, please advise.Thank you.

    Talk to your lockal realtor , say you are interested in buying but would like to check latest sale prices??? Realtor would gladly send you the report (at least I think so, I did it before)

  125. MT says:

    125 Grim
    I APPRICIATE VERY MUCH If YOU, GRIM knows the bast and inexpensive way of obtaining sold prices in area I live in past 6 months, please advise.PLEASE HELP.Thank you.

  126. MT says:

    126 Al,
    Thanks a lot.

  127. Sybarite says:

    MT,

    LOL

    I think Grim was saying that HE could get you the data you are looking for, if you ask for the specific details nicely. Just remember to toss a few $$ his way by clicking the button on the homepage….

  128. grim says:

    Tip isn’t required.

    Email me the towns you are looking for

    jamesbednar at gmail dot com

  129. MT says:

    129 Sybarite
    Oh! I see.

  130. kettle1 says:

    Nom,

    I dont know if you saw this already, but you have been suggesting we would see this for a while now….

    NEW YORK (Fortune) — It’s highly possible, if not inevitable, that Americans will soon live under a radically different tax system – one that the pundits and politicians aren’t talking about.

    It’s called a value-added tax, or VAT, and it’s been used for decades to pay the bills and sustain the immense growth of governments around the world, from France to Mexico to Australia. Created in 1954 by a French economist, the VAT is the most potent, efficient machine for revenue generation yet invented.

    http://money.cnn.com/2008/12/01/news/economy/tully_vat.fortune/index.htm

  131. grim says:

    From CNBC:

    The Investor “Revolt” Over Modified Loans

    I’m actually surprised it took this long. As more and more banks announced they were getting more and more aggressive on loan modifications, it seemed the investors in these loans were being just a little too silent.

  132. grim says:

    From Reuters:

    Investors sue Countrywide to force loans purchase

    A group of bond investors sued Bank of America-owned Countrywide Financial on Monday demanding that Countrywide buy every mortgage loan for which it agrees to reduce payments under a predatory lending settlement deal.

    Countrywide and its Bank of America parent would be liable to pay hundreds of trusts a total of about $80 billion for loans it modifies, said lawyers for the plaintiffs who filed the complaint in New York State Supreme Court.

    Countrywide, ensnared by the subprime mortgage crisis, was the largest U.S. mortgage lender before Bank of America bought it for $2.5 billion on July 1. Under an agreement announced in October with 15 state attorneys general, Countrywide will modify mortgages for about 400,000 homeowners to settle allegations of predatory lending.

    Bank of America said it was “disappointed in this attack on a program intended to keep at risk families in their homes” and help stabilize the housing market.

  133. BC Bob says:

    “Bank of America said it was “disappointed in this attack on a program intended to keep at risk families in their homes” and help stabilize the housing market.”

    HAH, what a bunch of BS. They pretend to have a heart. If you are so disappointed, step up and buy every single modified loan.

  134. kettle1 says:

    BC et all

    IS the lawsuit forcing CW to buy back the loans a serious financial threat to BOA?

  135. grim says:

    Ouch.

    BMW U.S. November sales drop 26.8%
    Daimler AG U.S. November sales fall 29.9%
    Mazda Nov. N. American sales down 31.3% to 14,134 units
    GM U.S. November light vehicle sales drop 41.3%
    Honda U.S. Nov. sales down 31.6% to 76,233 vehicles
    Porsche U.S. November sales drop 48.2%
    Ford U.S. Nov. auto sales fall 30.6% to 123,222 vehicles
    Toyota U.S. November sales fall 33.9%
    Kia Motors U.S. November sales fall 37.2%
    Chrysler Nov. U.S. sales fall 47% to 85,260 vehicles
    Nissan U.S. November sales fall 42.2% to 46,605 units
    Audi U.S. November sales fall 25.4%
    (Courtesy of MarketWatch)

  136. kettle1 says:

    How can banks agree to modify loans that they dont legally own?

    At least my understanding is that they do not legally own the loans anymore since they are securitized? am i missing something?

  137. Clotpoll says:

    stu (113)-

    One of these days, a really terrible report is going to trigger a rally. To me, that will be a sign that traders have become immune to bad news.

    Hopefully, that day is nowhere close yet. I expect the unemployment numbers this week to be a horrorshow.

  138. BC Bob says:

    kettle [136],

    Haven’t read it. However, when BAC bleeds compassion, you know how the flip side will unwind; they are fcuked.

  139. Stu says:

    Clotpoll:

    “a really terrible report is going to trigger a rally.”

    Scary thought. What impact do you think these new leveraged ETFs are having on market volatility?

  140. grim says:

    I can’t believe John hasn’t posted this yet.

    LIMP ECONOMY

    Gotham gals want their own rescue package.

    With Wall Street woes worsening and job security shaky, men have bailed out of the bedroom and women are reporting a citywide sexual recession.

    Men’s libidos have gone the way of the Dow as struggles with economy-related stress, depression and anxiety are at an all-time high, experts say

  141. Clotpoll says:

    Stu (141)-

    I still think forced selling and general panic are the main drivers of volatility. The ETF action seems to me more add-on effect- than cause- of volatility.

    Heard a report today (forget whose) that anticipates another 200bn of hedge redemptions.

  142. jam says:

    I applogize if this has been posted before, but if you haven’t seen it, it’s worth a watch:
    http://www.youtube.com/watch?v=bNmcf4Y3lGM

  143. SG says:

    Torchlight tours of US properties

    As the number of home repossessions continues to rise in the US, one company is offering prospective buyers bus tours of homes for sale in Long Island, New York.

  144. Sean says:

    Grim, Kettle1, BC – Those articles are misleading, not that the news does any real reporting anymore. Frey is the Greenwich Hedgie who was called down to the mat in DC by Barney Frank last October over these lawsuits. He is a former Bear Sterns Alumni who worked on structured MBS. He made a mint on securitization and now is losing his shirt, guy was even buying a bunch of Russian MBS recently.

    This all has to do with the Hope for Homeowners 300 Billion dollar bailout that was passed in July and went into effect in October. Barney has his panties in an uproar over the lawsuits, stupid Congress should have added indemnification in the Law for the banks if they mod the loans. You would think that since a bunch of lawyers are running DC they would have thought of a no sue clause.

    The MBS mess is only going to get ulgier and uglier as time goes on, one giant champagne supernova of lawsuits.

  145. chicagofinance says:

    grim Says:
    December 2nd, 2008 at 2:45 pm
    I can’t believe John hasn’t posted this yet.
    LIMP ECONOMY

    Best Passage….

    Some women have taken matters into their own hands – literally.

    Toys in Babeland in SoHo is witnessing a rise in “appliance” sales – nearly doubling units sold, to 3,304, between mid-October and mid-November, from the same period last year.

  146. chicagofinance says:

    Stu Says:
    December 2nd, 2008 at 2:43 pm
    Clotpoll:
    “a really terrible report is going to trigger a rally.” Scary thought. What impact do you think these new leveraged ETFs are having on market volatility?

    A WHITLOAD…..

  147. chicagofinance says:

    Stu:

    $1.57? Do you trump me?

  148. PGC says:

    Bush sorry economic crisis has cut jobs, 401 (k)s
    http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20081201&id=9416504

    Can’t you just feel the compassion?

  149. TB says:

    Wasn’t expecting too much out of this album, I think anyone expecting them to top Appetite or Illusion will be disappointed. Compared to 95% of the rock music released this decade, it is pretty good. Axl doesn’t really put his voice to good use on this album – Kinda like the last Tool Album – not enough Maynard.
    I listened maybe twice through, I like it but 15 years, they could of spit it out in 2. My opinion.

    bought chinese democracy for thanksgiving road trip to PA – i’m terribly dissapointed. First couple of songs are tolerable…the rest is horrible. I’m a huge GnR fan by the way

  150. grim says:

    Steve Smith, Giants receiver, robbed at gunpoint at his Clifton Townhouse (Cambridge Crossings)?

    This town is going to hell.

  151. grim says:

    Not the first time Smith was robbed, he paid $470k for the townhouse.

  152. #138 – BMW U.S. November sales drop 26.8%

    This certainly explains why I started seeing 0% loans on BMWs recently.
    Also, Toyota U.S. November sales fall 33.9% hopefully this means they don’t have enough $ for ads and pull that “Saved by 0” crap.
    And yes, I know they won’t pull it.

  153. comrade nom deplume says:

    [133] Ket,

    I did see it, but I still think that a VAT would receive quite the cold shoulder in DC. It has been floated numerous times and has always died a quick death.

  154. Clotpoll says:

    grim (154)-

    Are we sure the stickup guy isn’t Plaxico?

  155. PGC says:

    #155 grim

    $470K for an NFL receiver. At least he is living within his means.

  156. BC Bob says:

    Clot [158],

    You beat me to it.

  157. Stu says:

    “$1.57? Do you trump me?”

    Congrats ChiFi, you beat me for the way in. When I get home tonight, I’ll tell you what it was on my way home. Was still $1.61 this morning.

  158. kettle1 says:

    Schwarzenegger declares California fiscal emergency

    Gov. Arnold Schwarzenegger ordered the new Legislature in to work on its first day, declaring a fiscal emergency Monday in response to the state’s deteriorating finances and urging lawmakers to “get off of their rigid ideologies.” But even as Schwarzenegger warned that California could run out of cash within two months, there was little indication that the Capitol’s partisan gridlock has waned enough to allow for an easy resolution to the state’s $28-billion budget gap.

    http://www.latimes.com/news/local/politics/cal/la-me-budget2-2008dec02,0,1439586.story

  159. Clotpoll says:

    Opening bell in 7 minutes.

  160. kettle1 says:

    Though some energy-producing states enjoyed a boom when oil prices surged this year, Gov. Rendell said 43 states face a looming deficit within the year.

    Hey, we only need 7 more states before both the federal government and all 50 of the state governments are broke……

    http://online.wsj.com/article/SB122816536473969919.html

  161. kettle1 says:

    Not a good time to be heavy on swiss francs

    SNB Looks for New Tools in Zero Interest-Rate World

    The Swiss National Bank is becoming the first central bank in Europe to learn what it’s like to live in a zero interest-rate world. “They simply don’t have much room left on interest rates” following a 100 basis-point cut Nov. 20, said Reto Huenerwadel, senior economist at UBS AG in Zurich. “Still, they’re actively using monetary policy and are looking for creative solutions” that may include buying bonds, intervening in currency markets and expanding swaps with other central banks, he said.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aYrMqy8ILvFw

  162. Sybarite says:

    tosh,

    Got a flyer for 0.9% financing on a brand new M3. Nuts right? When the E46 came out, there were waiting lists and delear premiums lopped on. My how times have changed.

  163. kettle1 says:

    out of the pot and into the fire?

    Some Nations That Spurned the Euro Reconsider
    http://www.nytimes.com/2008/12/02/business/worldbusiness/02euro.html?_r=1&partner=rss&emc=rss

  164. kettle1 says:

    Financial crisis may worsen food crunch it eclipsed

    Call it crisis eclipse. The global food crisis that dominated headlines earlier this year has been overshadowed by this fall’s financial crisis, but it continues to exact a crippling toll on the world’s poor. And, although commodity prices for a wide range of crops have fallen by as much as 50 percent from record highs in June, the financial crisis is expected to make it dramatically worse: credit for farmers could dry up, meaning less money to buy fertilizer and seed, leading in turn to greater global shortages of food. Money for food aid could dry up as well. In June, governments and donors pledged $12.3 billion for the food crisis. So far, only $1 billion has actually been disbursed, as lending institutions and governments instead scramble to save ailing banks.

    http://www.csmonitor.com/2008/1202/p01s03-wogi.html

  165. Doyle says:

    #154

    Grim, frightening… Ahmad Bradshaw who was with Plaxico when he shot himself lives there too.

  166. grim says:

    $470K for an NFL receiver. At least he is living within his means.

    You’ve got a point there.

  167. Stu says:

    We are back into the SRS and doubled our FXP. I’m done with FXP but just starting to accumulate the SRS.

    It’s nice to have something to root for again. Eh Clot?

  168. Clotpoll says:

    Stu (171)-

    To the moon, Alice.

    Today’s rally was less than impressive. I smell whackage in the AM.

  169. Vince says:

    Does anyone on this site enlighten me on how to find foreclosure properties in Morris county

  170. Victorian says:

    Stu (171)-

    Got in @ 128.

    Yesterday was the only time I timed SRS to a perfection – In @ 120 and out @ 170. Unfortunately, it was a tiny amount.

  171. Clotpoll says:

    Lots of REITs up big today. Time to beat them back down.

  172. SAS says:

    like I’ve told you blokes on this board once before:

    we’ve had a military draft in this country for sometime now. (its an economical draft)

    “US soldiers re-enlisting because of poor economy”
    http://tinyurl.com/5am3vw

  173. kettle1 says:

    SAS,

    if i were a betting man i would wager a nickel that china see’s civil war before the end of down turn. perhaps before the US dollar crumbles ( depends on how determined bergabe is to hand out billion dollar big macs))

  174. 3b says:

    Plosser from the Fed rambling on today about how the housing market is going to hit bottom in 2009 (like it was supposed to do in 2008), and how unemployment is going to peak, yes PEAK at 7%.

    I would like to ask Mr. Plosser how unemployment will PEAK, yes PEAK at 7&, if we are already at 6.50% unemployment , and the reccession is just really getting under way.

    I guess this is what passes for thoughtful comments on the state of the economy by a member of the illustrious Federal Reserve.

  175. kettle11 says:

    anyonw want to guess what real unemployment currently is?????

    about 16%

    http://www.shadowstats.com/alternate_data

  176. 3b says:

    #181 kettle: But Mr. Plosser says……

  177. shawn212 says:

    TB (153) plus Axl’s braids wig me out. So far my favorite album this year is Everlast – “Love, War & the Ghost of Whitey Ford”. Bought it on a whim and now in heavy rotation. The “Folsom Prisom Blues” cover with the Cyprus Hill beat is growing on me.

  178. SAS says:

    “that china see’s civil war before the end of down turn”

    I don’t really think it would happen, unless of course things escalate with Taiwan. Which is always a possibility..

    SAS

  179. BC Bob says:

    Why doesn’t Bergabe send a cruise ship filled with the fed’s balance sheet?

    “NAIROBI, Kenya – Pirates chased and shot at a U.S. cruise ship with more than 1,000 people on board but failed to hijack the vessel as it sailed along a corridor patrolled by international warships, officials said Tuesday.”

    “The captain of the M/S Nautica ordered passengers inside and gunned the engine, allowing the ship to outrun the pirates’ speedboats in the Gulf of Aden on Sunday, a company spokesman said.”

    http://www.msnbc.msn.com/id/28011013?GT1=43001

  180. RentinginNJ says:

    Steve Smith, Giants receiver, robbed at gunpoint at his Clifton Townhouse (Cambridge Crossings)?

    Steve Smith lives in Clifton, Plax lives in Totowa….I figured these guys would be in Blue Ribbon towns.

    BTW…How long before the Plax mansion hits the market?

  181. RayC says:

    Great Headline from the Borowitz Report

    December 2, 2008

    “China Buys Naming Rights to U.S.”

  182. chicagofinance says:

    BC Bob Says:
    December 2nd, 2008 at 5:10 pm
    Why doesn’t Bergabe send a cruise ship filled with the fed’s balance sheet?

    Bost: I know this is Bergabe territory, but I think most out there refer to him as “Bernanke-san”.

  183. stu says:

    ChiFi…gas was still $1.61!

    You beat me. You beat me for real. Don’t spray the chips!

  184. grim says:

    From CNBC:

    BofA and Merrill Job Cuts Could Now Reach 30,000

    Bank of America could end up cutting 30,000 jobs as it moves to absorb Merrill Lynch, three times as many as previously estimated, sources told CNBC.

    As of yesterday, sources were saying that layoffs could total at least 10,000 and would start before the end of the year.

  185. grim says:

    BTW…How long before the Plax mansion hits the market?

    A little more expensive, $1.5m in 2005. At least he lowballed the $1.695m asking price.

  186. kettle1 says:

    when does deflation switch to inflation?

    I proposed 2011 before, but after thinking about it, a significant amount of the derivatives and “bad debt” is tied to RE. So it makes sense that we cant see debt deflation level out until most of the associated RE debt is written off or accurately valued.

    Mish from global analysis has suggested 7 years from peak to trough for this US housing bubble. that would put the trough at approx 2013.

    Bergabe-son’s quest for the billion dollar cheese burger will be an opposing force, so we will see the switch to inflation before the actual bottom of RE.

    Based on how hard King Henry and friends are trying to hide the toxic debt behind the banks that is re related, i think that this can be dragged out long enough that we will see the switch to rapid inflation in 2012 with a final housing bottom in 2013-2014

    feel free to rip this apart.

  187. still_looking says:

    grim,

    “you’ve got mail”

    sl

  188. Al says:

    kettle 192

    I stand buy your earlier prediction of 2011 – early 2011.

    Debt deflation level out until most of the associated RE debt is written off or accurately valued. Can and will exist in simultaneously with inflation…

    In effect we have inflation now – food is still getting more expensive, Medical services, car insurance, education – still getting more expensive… My utilities bills and rates are going up 12% this year Elizabeth town gas company asked for 18% increase but was granted “Only” 12%. This is on top of 20% increase in 2006…

    So inflation is here, its just right now there is no salary inflation, in fact inflation lead to more and more deflation in housing as people have less and less money to spend on rent/houses.

  189. Bystander says:

    Grapevine news at work – Credit Suisse, fresh from cutting 10% in London, will cut 20% in NY. Christmas party is tomorrow. This would be a very bad present.

  190. kettle1 says:

    AL,

    in my lay opinion i would caution against mixing CPI (consumer price inflation) with monetary Inflation/deflation. They are 2 different phenomena. I am referring strictly to monetary deflation.

    We are going to see some price divergence as you have pointed out and some other effects, such as oil at 90 being the equivalent of oil at 150. ( just an example) the point being is that prices are relative, so if gas is $2 a gal but deflatiob has significantly reduced peoples in come then it may be the same as gas @ $3/gas before deflation.

    I think we will see the phenomena of monetary deflation switch to monetary inflation in 2012.

    Monetary inflation/deflation refers to the total money supply, where price inflation only has meaning in relation to some other metric

  191. kettle1 says:

    oil at 47…

    $30 here we come. just a WAG on my part

  192. grim says:

    NJ NOVEMBER WARN NOTICES

    http://lwd.dol.state.nj.us/labor/lwdhome/warn/2008/1108warn.html

    THELEN FLORHAM PARK 11/30/2008 645

    Lots of out of work attorneys. Wonder how many of them were able to land new positions.

  193. Clotpoll says:

    grim (198)-

    I wish one or two of those lawyers could help me fight with banks.

    Dealing with Fannie & Countryfried is an all-day clusterf*ck.

  194. BC Bob says:

    kettle [196],

    At this time, monetary inflation is thru the roof, adjusted monetary base. The fed is massively adding reserves, monetary inflation. However, it is not visible since the velocity, multiplier, is non existent. Basically, the fed is aggressively pumping, to no avail, at this time.

  195. chicagofinance says:

    Al Says:
    December 2nd, 2008 at 8:49 pm
    kettle 192 I stand buy your earlier prediction of 2011 – early 2011.
    Debt deflation level out until most of the associated RE debt is written off or accurately valued. Can and will exist in simultaneously with inflation…
    In effect we have inflation now – food is still getting more expensive, Medical services, car insurance, education – still getting more expensive… My utilities bills and rates are going up 12% this year Elizabeth town gas company asked for 18% increase but was granted “Only” 12%. This is on top of 20% increase in 2006…
    So inflation is here, its just right now there is no salary inflation, in fact inflation lead to more and more deflation in housing as people have less and less money to spend on rent/houses.

    AL: You also forgot to mention that NJ sucks and you can’t wait to move to the SF suburbs….

  196. SAS says:

    Just talked to a friend of mine,

    Cigna healh insurance company is letting people go.

    nurses, doctors, accountants, etc…

    SAS

  197. wallies says:

    I know there are a few Bucks County PA people on this blog (Yikes) so I just had to post the most ridiculous listing I’ve seen yet –

    MLS#5450972
    3 bed/3 bath Cape in Yardley Borough
    Just listed – Asking $459,900
    Purchased in 2002 for $209,00

    http://www.tomsellsbucks.com/MyHomeDtl.asp?HomeID=810285&P=28

    What makes this listing even more ridiculous is the fact that there are two other overpriced POS capes for sale in the same block for about $325,000 – the same asking price that two other capes on that block FAILED TO SELL AT about a year ago!

  198. Pat says:

    LMAO off at the Yardley cape. They must have left the gold bars in the back yard.

  199. JBJB says:

    Heh. That Yardley place is a dump. Any property description that starts out “Pride of ownership” should be skipped for obvious reasons.

  200. NJGator says:

    My company is doing more layoffs. This time in the back office operations in Delaware. Not sure of the numbers yet. People were being told today. Apparently the news was given today so the affected employees could attend a big job fair tomorrow.

    We are still having our holiday party next week. One of our magazines is actually having their party in the office.

  201. Firestormik says:

    I’m seeing opposite here, I haven’t seen that many people in the office since 2002. As I said before, we usually in better shape in bad economy then in good times. (Walmart supplier)

  202. yikes says:

    # grim Says:
    December 2nd, 2008 at 6:51 pm

    BTW…How long before the Plax mansion hits the market?

    A little more expensive, $1.5m in 2005. At least he lowballed the $1.695m asking price.

    funny stuff

  203. yikes says:

    wallies Says:
    December 2nd, 2008 at 9:50 pm

    I know there are a few Bucks County PA people on this blog (Yikes) so I just had to post the most ridiculous listing I’ve seen yet –

    pathetic indeed. i talked to a new agent this week who said that prices are only down 7% here, and they didn’t think it would get much worse. i held back laughter.

    here’s one of the reasons i dont think prices will tank – there wasn’t a ton of new construction in Bucks (at least Newtown-yardley-wash crossing). and so far, in newtown and wash crossing, the foreclosures have MOSTLY been limited to houses under 350k.

    as much as we want to buy this spring, im starting to think maybe we push back to 2010. dont want to for a variety of reasons that aren’t worth getting into here.

  204. Pat says:

    My reasons that aren’t worth getting into here are the results of my latest foray into rent vs. own calculators, assuming zero price appreciation (instead of negative).

    It is now more than four years until we break even on a purchase, assuming the house loses no value.

    With the economy the way it is, who knows where we will be in four years. Only the shadow knows.

  205. Al says:

    Wow really busy tonight

    chicagofinance Says:
    AL: You also forgot to mention that NJ sucks and you can’t wait to move to the SF suburbs….

    I do not need to say it apparently I have you to say it for me…

  206. d2b says:

    Yikes:
    I live right outside of Philadelphia in Montgomery County. I’m seeing the same thing. Purchased in 2000. I can’t speak for the last month, but housing was typically going for close to asking and nothing priced reasonably sits for more than a few weeks.

    Our taxes are cheap. (4500 for a 5 B 2.5 BA) Our schools are very good and our neighborhood is excellent. Prices haven’t plummeted because our area is in demand and we didn’t see a huge run-up in prices. Plus the towns that you speak of are drawing NJ and Philadelphia residents.

    Yes, they are not be rising any more, but they will not drop considerably until there is no demand in other areas.

    I wouldn’t own a house if I didn’t have kids. Not because of taxes or a mortgage. I hate owning a house because I have to fix everything. In eight years I’ve replaced 1 Washer, 1 Fridge, 1 Stove, 1 Heater, 2 Dishwashers, 1 Built-in Microwave, and 8/9 window air conditioners.

  207. Comrade Nom Deplume says:

    [198] grim,

    That has to be national. There’s no way Thelen has that many lawyers in Florham Park.

  208. Comrade Nom Deplume says:

    [211] Zieba

    If you have the cash and the disposition, there is room for you at the NJREReport Compound.

    I have been busier than a repo man lately so no business plan for the compound until 2009. Damn, is that really the time?

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