“You can sort of feel the local economy on the edge of a cliff.”

From the Wall Street Journal:

New York, Boston Prices Expected to Fall Further
DECEMBER 31, 2008

Although New York has been at the epicenter of the financial crisis, housing prices in the city haven’t dropped nearly as fast as cities elsewhere. The same is true of the financial hubs of Boston and Charlotte, N.C.

But that doesn’t mean these cities are skirting the worst of the housing bust. Rather, markets where price declines have been slightest may be in worse shape, because prices still have further to fall before enough buyers step in to bring housing activity to normal. Meanwhile, heavy foreclosure activity in hard-hit areas like Phoenix, Las Vegas and San Diego are bringing prices into equilibrium. Those cities may be closer to a turnaround.

In October, single-family-home prices in the New York metropolitan area were down 12% from the all-time high they reached in 2006, according to the S&P/Case-Shiller home-price indexes. That is roughly half the decline registered by the 20-city index and well short of Phoenix’s 41% drop. A separate index of New York-area condo prices was down just 4% from its peak.

Part of the reason New York housing prices have held up is that lot of New Yorkers are holding on to their homes rather than selling for less than the Joneses got last year. Esty Lobovits, a 31-year-old lawyer in Manhattan, has been looking to buy an apartment since the summer but says she isn’t willing to pay what she considers to be inflated prices. Many apartments she has viewed are empty or filled only with staged furniture, and brokers are more aggressive, sometimes following up with her broker even if Ms. Lobovits hasn’t placed a bid.

In the language of Wall Street, with asking prices not dropping to levels where bidders like Ms. Lobovits will pick them, the market isn’t “clearing.” The Federal Reserve Bank of New York noted in its “beige book” survey of regional conditions this month that many would-be buyers have opted to rent out their apartments rather than sell, driving rental prices lower — particularly in higher-end buildings.

While New York is probably an extreme example, its inertia is being repeated in many of the other housing markets that have yet to see sharp declines. Some owners with hefty mortgages can’t face selling their house for less than they owe, but also, many don’t want to sell at a steep discount to what a house down the street might have fetched two years ago.

New York’s slower adjustment is a more typical housing-market decline, with a deteriorating economy grinding down values over time. The last time prices in the area fell, starting in 1988, it took three years before they hit their trough, at 15% lower.

This time, the price decline may be far more severe. While subprime mortgages didn’t play as big a direct role in the New York real-estate market as elsewhere, there were plenty of Wall Streeters who made their living off of packaging those loans into the complex securities and trading them. Even last year, with the housing market fraying, Wall Street pulled in record bonuses.

“Right now, people are still living on last year’s bonus,” says Barclays Capital economist Ethan Harris, who is based in New York. “You can sort of feel the local economy on the edge of a cliff.”

This entry was posted in Economics, Housing Bubble, New Jersey Real Estate. Bookmark the permalink.

212 Responses to “You can sort of feel the local economy on the edge of a cliff.”

  1. PGC says:

    At least some pundits are owning up.

    Allan Sloan, Forbes Magazine
    What he said: “Lehman won’t fail.” — July 7, Fortune

    What happened next: The investment bank filed for bankruptcy Sept. 15.

    What he’s saying now: “I got it wrong.”


  2. bairen vulture says:

    Charlotte and NJ will get hammered like a frat boy on a Thursday night.

  3. Cindy says:

    Hello all from Superstition Mountain in Arizona.
    I have nothing to report about real estate here (gated community) except to say my daily walks are glorious and they are still building and some are up for sale….1.5M to 2M the going price. These are second homes for most.

    Immaculate grounds, road runners, birds in the sajuaro (however you spell it) cactus, rabbits, coyotes howl at night….golfers (we are next to the second hole) as we swim – stroll by each day.

    A car is coming for us today so we can go to town for shopping, lunch and some New Year’s festivities in Scottsdale.

    There is a computer in the kitchen, where I am just now.. up earlier than everyone else – as usual.

    I have a question for you Still Looking regarding shingles. I had a horrible case last year – teaching is stressful/ exposed to everything…take thyroid meds – my counts were down…wham – horrible illness. It settled in my eye. I still have to do the steroid drops ..yet another checkup soon after I return – This is from a year ago.

    Does it help those of us who have had shingles to get the vaccine to avoid further outbreaks? Yeah or nay?

    Grim – In the article today..”..These citites may be closer to a turn around.” That appears to be what is happening where I live in CA but we will have to see how we are affected by the resets in 2009-2010. Could things fall even further in CA – sure..are they near a bottom – many say “yes.” But one thing is for sure – the fall in prices brings on the buyers.

    Enjoy. Happy New Year to all. Don’t know when I’ll check in again…Having fun! Did you know a Lemon Drop is a kind of martini? I didn’t – tasted too good to have just one…oopps.

  4. DL says:

    Idea for a new Corzine program to make up the budget deficit. Free houses to anyone willing to relocate to NJ and stay for a minimum of ten years so they pay the outrageous State and local taxes.

    “New Jersey Gov. Jon S. Corzine is planning to delay the introduction of the next state budget by two weeks to see how much the President-elect’s federal aid package will help the state.”

  5. grim says:

    From MarketWatch:

    Mortgage application volumes hold steady as rates drop: MBA

    The volume of residential mortgage applications filed last week was essentially unchanged on a seasonally adjusted basis from the prior week, evan as the interest rates charged on mortgages fell further, data compiled by the Mortgage Bankers Association showed Wednesday.

    However, overall applications were up 155% on an unadjusted basis for the week ended Dec. 26 compared with the same week last year, according to the Washington-based MBA’s latest survey, which tracks about half of all the retail activity in U.S. mortgage applications.

    Filings to refinance existing mortgages dipped 0.4% on a week-to-week basis, while applications for mortgages to purchase homes were up a seasonally adjusted 1.4%. The results included an adjustment to account for the shortened holiday week.

    The MBA’s four-week moving average for all mortgage applications showed a seasonally adjusted increase of 10.3%, underscoring how consumers have moved to take advantage of lower mortgage rates.

    Refinancing applications accounted for 82.9% of all filings last week, down from 83.2% the previous week. Adjustable-rate mortgages made up 0.8% of all applications last week, unchanged from a week earlier.

  6. grim says:

    #5 – Could it be that Jersey is in a deeper hole than we know? Something to hide?

    From the AP:

    N.J. GOP may sue Corzine seeking budget documents

    Republicans in the New Jersey Senate may make good on a pledge to sue Gov. Jon Corzine concerning access to budget documents.

    Senate Minority Leader Tom Kean Jr. said last week Republicans would sue Corzine today if he failed to release records showing how he is addressing a $1.2 billion revenue decline in this year’s budget. The Republicans said Corzine’s office has failed to release documents requested for more than a month under New Jersey’s Open Public Records Act.

  7. grim says:

    From the Allentown Morning Call:

    Lehigh Valley unemployment spiked in November

    Unemployment in the Lehigh Valley region spiked in November to 6.5 percent, the highest since 1996, according to numbers to be released today by the state.

    They confirm this holiday season was probably less than merry for many local retailers, who hired far fewer workers than usual in November.

    The Valley’s unemployment rate of 6.5 percent in November was better than the nation’s 6.7 percent, but worse than Pennsylvania’s 6.1 percent.

    The region’s jobless rate was pushed higher, as usual, by Carbon County, which registered 7.8 percent. Lehigh County’s rate was 6.3 percent, and Northampton County’s was 6.4 percent.

    The remaining county in the metropolitan area, Warren County, N.J., had a November rate of 5.7 percent.

    The number of retail jobs usually jumps by about 1,100 as stores around the Valley hire seasonal help for the holiday shopping season. But retail jobs increased by less than half that number — only 500.

    ”It’s no secret — we’re in a recession”

  8. yikes says:

    huge piece on shoplifting and crime on GMA this morning.

    74% of retailers served are seeing an increase in shoplifting.

  9. yikes says:

    GMA ties it all directly to the tanking economy. im sure the report will be on abcnews.com later today

  10. DL says:

    Just because your assesment goes down doesn’t mean your property tax will.

    “Home Values Decline 3.4% in 3 Years, But Owners Can’t Count on Tax Relief.”

    “In years when assessments rise by less than the cap, however, increases from past years, deferred by the credit, are phased-in. As a result, many longtime homeowners see their assessments rise by about the same amount each year, regardless of new valuations.”

  11. grim says:

    From Forbes:

    Troubled Mortgages Jump For Fannie In October

    A monthly report from the government-supported mortgage finance firm said that delinquency rates rose to 1.89% in October, from 1.72%.

    Delinquency rates on mortgages rose in October, according to a monthly update from mortgage provider Fannie Mae on Tuesday.

    The proportion of borrowers that fell behind on mortgage payments climbed by 17 basis points in October, to 1.89%, from 1.72% in September, according to Fannie Mae’s November summary, which also said the serious delinquency rate on multifamily dwellings gained five basis points, to 0.21%, in October. Serious delinquencies represent a greater risk of default on a mortgage.

  12. lurkerd says:

    Not sure if anyone saw this post from yesterday. It sat in moderation for awhile. Since it discusses home prices, I think it is okay to post it again.

    lurkerd says:
    December 30, 2008 at 9:04 pm

    Thank you very much for the effort you put into this blog.

    It is necessary to point out that you are guilty of selection bias in the top chart. In this chart, 4 S&P/Case-Shiller home price indices are shown. These indices happen to show the most negative results of the indices you purport to track. However, the S&P/Case-Shiller condo index for the New York area continues to be censored for an unacceptable reason: the result deviates from the consensus of the group of regular njrereport posters. Obviously this data is relevant to your readers as many of them live presently or have lived in areas of New Jersey , such as Hudson County , where condos are prevalent.

    It is likewise necessary to mention that the New York area condo market is the top performer of the 25 markets (20 house markets + 5 condo markets) tracked by the S&P/Case-Shiller home price indices. This is true if one measures the latest monthly change or the change from the peak price level. Surely an analyst of your caliber is aware of these facts.

    I am very curious to receive opinions of other posters regarding the price performance of New York area condos. The S&P/Case-Shiller data show that timing cannot explain this outperformance as New York area condo prices peaked at a similar time as other housing markets, despite inaccurate suggestions that “the bubble popped here last” and home prices in the New York area were the “last to fall.” (3b, December 30, 2008 at 9:48am).

    Thank you again for the effort you put into this blog.

    % change, October 2008 compared to September 2008

    New York condo -0.5%
    New York house -0.9%
    Cleveland house -1.0%
    Boston house -1.1%
    Dallas house -1.1%
    Boston condo -1.3%
    Seattle house -1.4%
    Chicago condo -1.4%
    Denver house -1.5%
    Chicago house -1.6%
    Charlotte house -1.8%
    Portland house -1.9%
    Los Angeles condo -1.9%
    Atlanta house -2.4%
    Los Angeles house -2.6%
    Washington house -2.7%
    Las Vegas house -2.7%
    Miami house -3.0%
    San Diego house -3.0%
    San Francisco condo -3.1%
    Phoenix house -3.3%
    Tampa house -3.4%
    Minneapolis house -3.4%
    San Francisco house -4.2%
    Detroit house -4.5%

    % change, October 2008 compared peak price level; month of peak price level

    New York condo -4% Feb-06
    Dallas house -5% Jun-07
    Charlotte house -6% Aug-07
    Chicago condo -6% Oct-06
    Denver house -8% Aug-06
    Boston condo -10% Oct-05
    Portland house -11% Jun-07
    Seattle house -11% Jul-07
    Cleveland house -12% Jul-06
    New York house -12% Jun-06
    Atlanta house -12% Jul-07
    Boston house -13% Oct-05
    Chicago house -14% Aug-06
    San Francisco condo -20% Oct-05
    Minneapolis house -21% Sep-06
    Washington house -26% May-06
    Los Angeles condo -27% Jul-06
    Tampa house -31% Jul-06
    Detroit house -32% Dec-05
    Los Angeles house -34% Sep-06
    San Francisco house -36% May-06
    San Diego house -36% Nov-05
    Miami house -38% Dec-06
    Las Vegas house -39% Aug-06
    Phoenix house -41% Jun-06


  13. lurkerd says:

    grim, in mod

  14. grim says:

    From the WSJ:

    Mortgage ‘Cram-Downs’ Loom as Foreclosures Mount

    Mortgage lenders who wake up Thursday with a New Year’s hangover are likely to face another headache soon: The effort to give bankruptcy judges the power to rewrite mortgages is gaining steam.

    The banking industry hoped the mortgage “cram-down” measure died when Congress removed it from the $700 billion bailout bill that passed in October. But it has been gathering momentum in Democrat-controlled Washington, as evidence emerges that current voluntary foreclosure-prevention programs are falling short.

    In a cram-down, a judge modifies a loan, often reducing principal so a borrower can afford it. Lenders hate it because they have to absorb the loss. Bankruptcy judges currently have the ability to modify certain personal loans and even mortgages on vacation homes, but they can not cram-down mortgages on primary residences.

    Even staunch opponents acknowledge that mortgage cram-downs for primary residences are likely to be as part of Congress’s economic-stimulus package in early 2009. The National Association of Home Builders used to reject any bill with a cram-down provision outright. Now it is saying the measure is worth a look.

    The latest embattled foreclosure-prevention program is Hope for Homeowners, which was approved by Congress last summer and supposed to help 400,000 homeowners. Only 357 people have signed up so far for the voluntary program. The Department of Housing and Urban Development, which is administering the program, acknowledges that it has been encumbered by high fees and narrow eligibility requirements.

    Another government program, FHASecure, was intended to help 80,000 homeowners who had fallen behind on their payments after their adjustable interest rates reset. It has helped only 4,100 delinquent borrowers refinance since September 2007 and will stop taking new loan applications as of Wednesday.

  15. grim says:

    Those last two paragraphs are stunners.

  16. lostinny says:

    14 Grim
    All of this is like the parent who tries to take the band-aid off one hair at a time. It only prolongs the pain. Be a good daddy and just rip the thing off already.

  17. grim says:

    #13 – Yeah, so? You accuse me of bias and manipulation for not including a 1 month old index, even though I’ve probably been one of the most vocal supporters of the Case Shiller Index since its release. During the first few months after release, it was largely ignored by the press, who chose to focus on significantly less sophisticated NAR index. I, on the other hand stood on my head screaming that this was the index we needed to look at. Now, you are going to point fingers at me because I didn’t include the condo index in my graph? Why aren’t you up in arms over the inclusion of the seasonally adjusted price index?

    Instead of jumping to conclusions and concocting an amazing conspiracy theory, perhaps the answer is much more simple. I just haven’t gotten around to taking a good look and including them in the spreadsheet.

    So maybe now I should turn this into a conspiracy and not unmod your post?

  18. HEHEHE says:

    Peter Schiff: Capitalism Has the Cure for the Government’s Disease


  19. grim says:

    By the way, I spent the morning updating the spreadsheet to include the condo index. You know, you could have done the same and emailed me back an updated copy of the spreadsheet in the time it took to concoct your theory.


  20. Instead of jumping to conclusions and concocting an amazing conspiracy theory
    It doesn’t involve the Templars does it?
    Or Adam Weishaupt?
    I’ve suspected both for years. I don’t know what of, but I’ve suspected them of something!

    /grabs tin-foil derby

  21. grim says:

    It doesn’t involve the Templars does it? Or Adam Weishaupt?

    Would have been more entertaining, as long as it wasn’t 800 pages long.

  22. grim says:

    Ok ok, released from mod. Keep in mind that 2 links or more in a single post will automatically push you into mod.

  23. NJGator says:

    11 DL – Isn’t it interesting how other jurisdictions manage to keep assessments current every 1-3 years and NJ assesses ever 15-20. Other jurisdictions also limit the annual increases for assessments and if town assessments go down, town spending goes down. In NJ even if assessments go down, the town spends whatever it wants and the tax rate just jumps to make up the difference.

  24. PGC says:

    From the FT

    Paulson rues shortage of firepower as battle raged
    By Krishna Guha in Washington

    Hank Paulson feared the world financial system faced meltdown three times in the past six months.


  25. yikes says:

    savings thanks to NJ re …

    Hey Frank … in 2006, i bought an investment property in another state (new construction, on a golf course). value of the house, based on comps, was going up by like 10k a month. i’m giddy.

    i start wondering if maybe i should pull out equity to buy another place. in summer/fall of 2006, i find this blog. at first i think it is all doom and gloom … then i start tracking how many houses in the community were for sale … and slowly, the stats begin increasing each WEEK. i began to believe the NJ re posters.

    two relatives in said were cleaning up in flips – they owned like 7. i told them i want to sell and they looked at me as if i had 3 heads.

    i put my house on the market at a huge value … it sits there, not one offer. a week later i really panic, drop the price 30k (nobody wanted to drop prices back then) and it sold in days.

    i cleared a nice profit … and the bag is now being held by whoever bought from me.

    grim says NJ re saved people 35k? well, that move alone made me more than double that.

    but keep believing in long lines at A&F.

  26. victorian says:

    Is there a bigger idiot in this country than this guy?

    ““I’ve enjoyed the limelight I’ve had for the last couple of weeks,” crowed the governor who sounds ever more out of touch with reality.”

    Mr. Blagojevich shows every sign of feeding off the chaos he has created through his crass rantings about his appointment power.


  27. Shore Guy says:

    “Is there a bigger idiot in this country than this guy?”

    The Gov is certainly a low life jerk, but, for my money, the current president is such a poor performer and such a danger to constitutional government and the rule of law that he has my vote for biggest idiot and most dangerous politician of the year.

  28. grim says:

    From MarketWatch:

    U.S. insured unemployment rate at 25-year high

    U.S. 4-week avg continuing claims up 103,750 to 4.42 million

    U.S. continuing jobless claims rise 140,000 to 4.51 million

    US 4-week average claims down 5,750 to 552,250

    U.S. weekly initial jobless claims fall 94,000 to 492,000

    Initial jobless claims fall, continuing claims at 26-yr high

    First-time applications for state unemployment benefits fell 94,000 to a seasonally adjusted 492,000 in the week ending Dec. 27, the Labor Department said Wednesday, citing seasonal factor volatility to explain the surprising drop. Despite the decline, the level of claims is 45% higher than the same period in the prior year. The four-week average of new claims fell 5,750 to 552,250. Meanwhile, the number of people collecting benefits in the week ending Dec. 20 rose 140,000 to 4.51 million – the highest level since December 1982. The four-week average of continuing claims rose 103,750 to 4.42 million – also the highest level since December 1982. The government added that the insured unemployment rate rose to 3.4% — the highest level since November 1983 — from 3.3% in the prior week.

  29. Shore Guy says:

    And how many people are NOT includen in the jobless figures because they worked one or two (or similar) hours during the reporting period or fell out of the analysis because they were unemployed for so long or became “discouraged?”

  30. Young Buck says:

    Moody’s: Bad Time for Localities
    Downgrades To Be Historically High

    By Lynne Funk
    | Dec 31

    WASHINGTON – This recession will likely result in more rating downgrades for local governments than any other during the last 40 years because it will be deeper and longer lasting, Moody’s Investors Service warns in a new report.


  31. lennie says:

    hey grim… could you please send me comrade nom deplume’s email…he asked me to get it from you yesterday as he wanted to respond to my questions. thanks! i also emailed you

  32. John says:

    Hey happy new years!!! Why is everyone so glum? You Toyota Republicans are in denile, 2009 will be great!

  33. DL says:

    I’m more of a Lexus liberal myself.

  34. Shore Guy says:

    included, even

  35. 3b says:

    #34 John: Yeah!!! Free Mustard Capitalism.

  36. lisoosh says:

    PGC – #113 from previous thread- agree.

  37. chicagofinance says:

    yikes says:
    December 31, 2008 at 8:22 am
    savings thanks to NJ re …
    i cleared a nice profit … and the bag is now being held by whoever bought from me. grim says NJ re saved people 35k? well, that move alone made me more than double that.

    yikes: and on behalf of grim, thank you for hitting the donate key on the home page…..

  38. RentinginNJ says:

    Just because your assesment goes down doesn’t mean your property tax will.

    Depends. In NJ, like most other markets, low-end housing appreciated the most relative to higher end housing. If your town was reassessed in the past few year AND the housing stock in your town is diverse (a mix of high and low end housing), over the next few years you could see a redistribution of the tax burden away from lower end homes and back toward higher end homes.

  39. John says:

    Rescap bonds trade at more than Beazer, actually I don’t like firms that sound like washed up 90’s bands.

    Price (Ask) 33.500
    Yield to Worst (Ask) 36.859%

  40. ruggles says:

    Are mortgage rates below 4% yet?

  41. John says:

    You should send Grim a nice check, also give his address to the person you sold the overpriced house to so they can throw rocks. On a macro level, 35k went out of one pocket and into another, good for you bad for the buyer. That is why I don’t understand bailing out mortgage holders, on a macro basis no money was lost you have his 35K so why should uncle sam refund his 35K loss, it is doubling the money supply. That said go buy GM CARS!!!!!!!!!!!! The money spent there goes right into my pocket.

    chicagofinance says:
    December 31, 2008 at 9:19 am
    yikes says:
    December 31, 2008 at 8:22 am
    savings thanks to NJ re …
    i cleared a nice profit … and the bag is now being held by whoever bought from me. grim says NJ re saved people 35k? well, that move alone made me more than double that.

    yikes: and on behalf of grim, thank you for hitting the donate key on the home page…..

  42. John says:

    God Bless America and Free Market Capitalism!!!

    GENERAL MTRS ACCEP CORP 5.10000% 09/15/2009FR
    Third Party Price 83.576

  43. Frank says:

    Why would you buy these corp bonds when you can get a guaranteed 20%+ yield on mortgage bonds?

  44. Stu says:

    Will Banks and Financial Markets Recover in 2009?


    “But the worst is still ahead of us. In the next few months, the macroeconomic news and earnings/profits reports from around the world will be much worse than expected, putting further downward pressure on prices of risky assets, because equity analysts are still deluding themselves that the economic contraction will be mild and short.”

  45. Frank says:

    Commercial Real Estate Direct Staff Report

    Only $12.1 billion of CMBS were issued in the United States this year,
    making it the most listless year since the market took off in the

    That volume was comprised of only nine deals and represents a 95 percent
    reduction from 2007. The year saw bond spreads skyrocket and gyrate
    wildly, eventually making it impossible for lenders to economically
    originate and securitize mortgages, and for property owners to borrow.

    Few are expecting much change in the market’s volatility, so they’re not
    predicting much if any 2009 CMBS transactions.

    For any issuance to take place, lenders will have to start originating
    loans. And that would be a challenge not only because of uncertain and
    volatile market conditions, but also because most issuers have let go
    most of their origination staffs. Even if bond spreads narrowed sharply
    and stabilized, it could take months before loans can be securitized.

    One thing is certain: with the massive volume of commercial mortgages
    coming due in the next two years, and with most traditional lenders
    curtailing their activities, property owners will need a lending source
    like CMBS. Market participants are concerned enough that they’ve pleaded
    with the Department of Treasury to provide financing to prospective
    buyers of highly rated CMBS

    Over the years, as bond spreads had shrunk to historically low levels,
    the CMBS market became the lender of choice. The market provided $601.4
    billion of financing between 2005 and 2007 and accounted for nearly a
    quarter of all outstanding commercial mortgages at the end of last year.

    But those tight spreads ultimately led to a feeding frenzy that arguably
    led to a breakdown in underwriting standards, which are in large part
    the cause of the current market trepidation.

    The year started with spreads on super-senior AAA bonds at 85.75 basis
    points above swaps – well above the 46.8125 bp average for all of 2007.
    But fear took over the market, especially after two large loans that had
    been securitized only in April had missed their regular payments and
    were shifted to special servicing
    . Spreads ballooned to 1,325 bp over swaps during the
    week ended Nov. 21. The massive spreads eventually drove demand,
    particularly from small investors looking to pick up odd lots of bonds.

    Next year, a total of $20.8 billion of fixed-rate CMBS loans mature,
    according to Realpoint’s Lead Generator. And another 432 floating-rate
    loans with a balance of $53.6 billion will face their initial maturities
    next year. But most, if not all, could be extended.

    Barclays Capital pegs the total amount of maturing loans at $271.4
    billion in 2009 and $268 billion in 2010.

    The 2009 number includes the CMBS maturities – Barclays has $2 billion
    of floating-rate loans reaching their final maturities – $144.5 billion
    of loans held by banks, $36.1 billion of insurance company loans and $20
    billion from Fannie Mae and Freddie Mac.

    The thinking is that most maturing loans, in the face of an inhospitable
    refinancing environment, will be extended by their lenders. But the
    ongoing de-leveraging is expected to result in the continued decline in
    property values, which will have a negative impact on loan valuations.
    That could add to the reluctance of lenders to lend.

    Banc of America Securities was the most active CMBS bookrunner among a
    shrinking group of issuers and it stands to remain at or near the top of
    the list, given its acquisition of Merrill Lynch, which ranked fifth
    among bookrunners. Bear Stearns, Lehman Brothers and Wachovia
    Securities, each a perennial top-ranked bookrunner, have disappeared
    from the landscape, the result of their forced acquisition or

  46. Frank says:

    Is Guatemala a place where everyone wants to come to US? We can’t keep them away.

  47. Stu says:

    “Is Guatemala a place where everyone wants to come to US?”

    No, but Guatemala is apparently a place where the media is willing to look at both sides of a story instead of preaching nothing but continuous short-sighted optimism.

  48. Sean says:

    Nice write up from the Washington Post on what will be another chapter in the textbooks for the next generation.


  49. JBJB says:

    Not sure if this was posted, but a cool interactive chart showing housing bust magnitude in selected cities based on CS data.


  50. Jay says:

    Looks like I don’t understand how (ultra short ETF) DXD is priced, I always thought it moves (twice as much) opposite to DJIA but if you compare these two, DJIA lost around 40% last yeat but the gains in DXD are not even close, any insight will be greatly appreciated.

  51. 3b says:

    #49 Stu: Jeez!! What’s the matter, don’t you want a recovery??

  52. kettle1 says:

    happy new year!

    have fun be safe!

  53. Victorian says:

    Jay (52) –

    The volatility is what kills it. The 2X move is calculated at the end of each trading day. So if DJIA moves down 5% one day and up 5% the next, DXD actually loses money even though the underlying index has not changed.

    Lets say DXD is 100 on the first day and the index drops by 5% – DXD is 110.
    The next day DJIA gains 5%. DXD is down 10% of 110 = 99. So, you lost a dollar although the Index is unchanged after 2 days.

    Hope this helps. Gurus – Please correct me if i am wrong.

  54. stan says:

    My prediction 2009:

    ‘Lurkerd’ goes back to lurking after being spanked…

  55. John says:

    Frank that is distressed not guaranteed paper, the fannies and freddies of the world don’t yield much. Also investment grade bonds with cusips are part of trace and have transparent pricing and a set amount of liquidity. Non confirming mortgage securities you can’t see a price push a button and sell. Kinda like auction rate securities, yea they were yielding 20% but they were roach motels you could not get out of. Now that muni and corp yields are drying up I may be interested. How do I get in on the 20% MBS, where do I buy them from? Thanks
    Frank says:
    December 31, 2008 at 9:37 am
    Why would you buy these corp bonds when you can get a guaranteed 20%+ yield on mortgage bonds?

  56. 3b says:

    #57 John: There was a good piece on Bloomberg television last night regarding defaults to date and going forward on sizeable amounts of Municipal revenue bonds. Could not catch the whole thing as I was in a dentist chair.

    I wonder if there are still some double barrelled muni revenue bonds kicking around out there.

  57. Stu says:


    Victorian pretty much nailed it, but there are some other minor issues that impact the price. First of all, the funds reprice everyday so over a long period of time, there is some variance. There are also fees. Ultimately, you will see the opposite occur when the ^vix shoots up. It explains how SRS could go from 60 to almost 300 in under a month. Make a chart comparing your ultrafund to the ^vix and you will see how much they move based on volatility.

  58. Seneca says:

    Co-worker shared the news with me that according to Case-Shiller, Bergen County home prices are sitting pretty.


    Guy has owned in Hackensack for probably 20 years or more and is nearing retirement. I am not one to rain on anyone’s parade and how can you argue when The Record is leading with the headline that “Home prices drop nationwide; Bergen County stable”?

    Further, how do you debate when Bill Gilsenan is offering the unbiased opinion that there are “signs of hope” in Bergen?

    If the whole NY metro area dropped 7.5% and Bergen only 6.5%, then its time to party I guess. When NY Metro drops another 7.5% next year and Bergen is down again only another 6.5%, we can all breathe a sigh of relief that while our neighbors are down 15%, Bergen only dropped 13%?

    Disclaimers: I don’t even live in Bergen County but this is the thought process for the average person.

    By the way, Gilsenan went on to say: “Looking in short term, we’re starting to see some stability,” he said. “We’re seeing that line level out – it really is a correction.”

    I made the counter-point that Wall St. and related workers probably can stick it out for at least 6 months if they saved properly to which the response was: “Right! … and by then the economy will have turned around.”

  59. Frank says:

    May be you should move to Guatemala? Clotpoll is opening a bodega down there.

  60. Frank says:

    “How do I get in on the 20% MBS”

    Every major broker (except TD) will sell it to you, but you need a Bloomberg and little knowledge of mortgage bonds.
    These days non-agency prime mortgages trade at 50, Fannie trade at 100. Crazy days.

  61. John says:

    3b, I know, pretty much at the crazy 6-7% yields on Munis back in Nov and early December you could absorb some defaults. Now rates are going back to 4-5% range while default probability has increased. The last muni I bought was Christmas Eve. The other issue when rates were back in Nov you could get a long term revenue muni for 75 cents on a dollar. Even in default you get like 50-60 cents as munis are backed by decent revenue. Now that munis are getting back to par, 50-60 cents on a default is very bad news.

  62. 3b says:

    #60 seneca: No reason why Bergen Co should be or will continue to sit pretty.

    As far as Mr. Gilsenan, small time operator in Bergen County.

    With the NYC job machine
    grinding to a halt, i wonder if he will stop using minutes to NYC in all of his listings.

  63. JBJB says:


    The collective group think of Bergen Co home owners is something to behold. I work with many who live in NW Bergen and it’s like they all have the same list of talking points sent to them every week. You would think Ridgewood is Shangri-La after a five minute discussion with some of them. There are even some who indicate that I am doing my family a tremendous disservice for not immediately picking up and buying a 600K shack in Allendale. The schools, the schools, the schools…

    I do think that NW Bergen has a lot of educated folks who collectively believe that “talking it up” will help stave off the downturn. I also think the area has a lot of folks that are highly invested in their homes as a retirement vehicle, and want to keep the party going as long as possible.

  64. 3b says:

    #63 John: i wonder if various state govts will step in to support soem of these issues that are going under. As per the Bloomberg report many of them are sizeable, with large ramifications for various local economies.

  65. 3b says:

    I #65 JBJB: I do think that NW Bergen has a lot of educated folks who collectively believe that “talking it up” will help stave off the downturn.

    those that appear to have the most to lose, also appear to be the most in denial.

    I have spoken to a few people over the holidays who think that in 2009 things will be better.

    When I asked why, I got the eye blink.

  66. Seneca says:

    I am a Union Co person myself and there is plenty of group think here too, even in the less desirable towns. Westfield is Brigadoon so need to even discuss. Summit is Brigadoon West. Cranford is Westfield Jr. Clark is just a short drive to the shopping in Westfield and the train stations in either Rahway or Linden (without the commercial tax base of any of the aforementioned towns by the way and word is L’Oreal is leaving town soon). Rahway is the next Hoboken.

    Drive through Rahway. Half empty Skyview condo complex, new condo and apartment projects that haven’t seen progress in months and burnt out buildings that pass for retail in the “thriving” downtown.

    I have yet to hear a Realtor or current homeowner steer me away from any of these towns.

  67. veto says:

    Does anyone know how to obtain sales, inventory or price figures for central NJ? Particularly Mercer County?
    Im not a realtor and dont have access to MLS but the type of info that you display for Bergen County and NNJ would be really helpful to see for my county. Thanks!

  68. chicagofinance says:

    Victorian says:
    December 31, 2008 at 10:20 am
    Jay (52) – The volatility is what kills it. The 2X move is calculated at the end of each trading day. So if DJIA moves down 5% one day and up 5% the next, DXD actually loses money even though the underlying index has not changed. Lets say DXD is 100 on the first day and the index drops by 5% – DXD is 110.
    The next day DJIA gains 5%. DXD is down 10% of 110 = 99. So, you lost a dollar although the Index is unchanged after 2 days.
    Hope this helps. Gurus – Please correct me if i am wrong.

    Vic: check your math…Stu as well. You identify vol and then your explanation is arithmetic.

    Think about it. The reason that the 2x strays is not arithmetic, it is expenses, leverage, the complexity of the dynamic hedge, and the lack of the return components being correlated exactly to 2x the index.

    To be clear: typical user looks at headlines and sees DJIA Day 1: -5%; Day 2: +5% and expects to be even. Even under a perfect hedge the DXD won’t be even, but neither will the DJIA.

  69. John says:

    I bet 99%, if states had a real problem financing the US will have to step in and backstop the bonds. You can’t let things like port authority and MTA go under. Tobaco bonds maybe. Problem is we have entered a moral hazard. People like me have thrown fundementals out the window as my uncle sam is set on saving things, why should I take the risk free rate on a t-bill of 1% when I have a 99% risk free rate of 5% on a muni? Hence either uncle sam has to stop backstopping everything or tbill rates will rise. The bozos rolling the dice on 40% GMAC bonds are getting paid by the US while the suckers in t-bills are getting 1%. Can’t last forever. If I am getting 1% I want to see other people defaulting.

    3b says:
    December 31, 2008 at 10:54 am
    #63 John: i wonder if various state govts will step in to support soem of these issues that are going under. As per the Bloomberg report many of them are sizeable, with large ramifications for various local economies.

  70. Stu says:

    Thanks ChiFi.

  71. chicagofinance says:

    Vic & Stu: I have a cynical theory that I just made up in my head this moment.

    I think the 2x funds managers know these instruments are so complicated that by the second sentence of explanation, they have lost about 95% of the audience.

    As a result, even though the reason for the deviation is a whole host of factors, in order not to scare people off, they have highlighted the easiest and most straightforward one to understand in their Q&A literature. It basically explains nothing, but it gives the user an idea and a comfort level.

    In a lot of ways it reeks of the indexing propaganda spewed by McMoney Magazine, Vanguard and Fidelity to line their pockets.

  72. comrade nom deplume says:

    [34] John

    How’d you know I have a Toyota????

  73. chicagofinance says:

    John says:
    December 31, 2008 at 11:08 am
    Problem is we have entered a moral hazard.

    JJ: Problem? I thought you built your whole life around it ;-)

  74. comrade nom deplume says:

    Can’t stay long because I gotta travel, so Feliz Ano Nuevo to the assembled regulars, lurkers, and trolls. You know who you are.

    And for those who benefitted (and those who just got a lot of free entertainment), be sure to hit the Donate button for 2008 (even if it isn’t tax deductible–Grim, we should discuss that!).

    Peace out!

  75. I Like Turtles says:

    Is it better to be a lurker or troll?

  76. 3b says:

    #71 John:as my uncle sam is set on saving things,

    Only problem is it is not going to work. I think deep down you know that too.

  77. #77 – No one dislikes lurkers…

  78. John says:

    Yes I have, but even I have misgivings. Moral Hazzard is the equivlent of setting up a stand on Middle Neck Road in Great Neck and yelling out Free Ham.

    chicagofinance says:
    December 31, 2008 at 11:21 am
    John says:
    December 31, 2008 at 11:08 am
    Problem is we have entered a moral hazard.

    JJ: Problem? I thought you built your whole life around it ;-)

  79. veto says:

    Found this link from NJ REALTORS for info by county, including mercer county details…
    Can anyone help me guage the credibility of this report? From my experience on the ground level in Mercer County, regularly looking at individual listings and comps, going to open houses and even making a couple low offers, I see prices down at least 20% over the last two years and other realtors have confirmed that. Oddly, this chart shows prices have actually continued to increase in Mercer County recently but overall sales slowing a good amount. What could possibly explain that? I would think that less sales would bring prices down too? My only guess would be that condos and other entry level homes froze first with the credit crunch while the higher-end market continued to chug along a bit longer. Does that sound right? Also the footnote (1) looks like a red flag but i can’t put my finger on why… Thanks for any advice and please forgive me if the report has been dicussed a hundred times in the past.

  80. scribe says:

    from Marketwatch:

    Freddie Mac: 30-year fixed mortgage rate at new 37-year low
    By Wallace Witkowski
    Last update: 10:11 a.m. EST Dec. 31, 2008
    Comments: 46
    SAN FRANCISCO (MarketWatch) — Freddie Mac (FRE:
    Freddie Mac
    News , chart , profile , more
    Last: 0.72+0.03+3.84%
    11:20am 12/31/2008
    Delayed quote data
    Add to portfolio
    Create alert
    Sponsored by:
    FRE 0.72, +0.03, +3.8%) said Wednesday that its benchmark long-term mortgage rate average fell for the ninth consecutive week and to a new low since it started tracking the rate in 1971. The 30-year fixed-rate mortgage average fell to 5.1% with an average 0.7 point for the week ending Dec. 31, down from last week when it averaged 5.14%. Last year, the average was 6.07%. “Since the end of October of this year, these rates have declined by about 1-1/3 percentage points, or payment savings of approximately $173 a month for a $200,000 loan,” said Frank Nothaft, Freddie Mac chief economist, in a statement. “As a result, the number of refinance applications for conventional mortgages jumped over 500% between the weeks ending on Oct. 31st and Dec. 26th.”

  81. Jay says:

    Victorian (55), Stu (59), chicagofinance (70):
    I understand it now.
    Thank you all!

  82. Victorian says:

    Chifi (70) –

    Thanks for the correction. Yes, volatility was the incorrect term to use to describe the tracking error. Leverage and the way it is employed is probably the most important factor.

    However, volatility and path dependency kind of explains the price action of the 2X ETFs over a longer period of time.

    BTW, I would appreciate it you could point me to some good books regarding investing and trading strategies.

  83. mtnbika says:

    Can someone tell me if the SPCS data from yesterday’s post is adjusted for inflation? Or does inflation account for some of the rise?

  84. Fiddy Cents on the Dollar says:

    Quick Question for the Assembly….

    Essex County (E. Orange) is covered by which of NJ’s many MLS systems??

    Garden State?


    Why we slice the MLS’s up per county is beyond me.

  85. John says:

    The downside of record low rates!

    CD Term and Rate APY* as of 12/30/08
    2 Month 1.05%
    4 Month 1.40%
    6 Month 1.80%
    9 Month 1.75%
    1 Year 2.30%
    18 Month 2.75%

  86. John says:

    NEW YORK (Fortune) — One of the least explored personal sides to our new president is the amount of gasoline in his veins. We know all about his affection for the basketball court and his tendency every now and then to sneak out for a cigarette. But we’ve heard very little about what drove him to acquire one of the least politically-correct cars on the planet: a Chrysler 300C.

    With its high torque and horsepower, voracious appetite for fuel and gangsta-car persona, it is hardly the kind of vehicle you’d expect a consensus-building politician to drive. But those are Obama’s wheels.

    Or were. During the campaign he sold the 300C in favor of a hybrid Ford Escape, and as president of the United States, he won’t be getting into the driver’s seat very often – unless he’s at a military base or some other secure location where he can let loose. He’ll be spending all his time in the back seat of an armor-plated Cadillac.

  87. Fiddy Cents on the Dollar says:

    veto :81

    I’ve seen that NAR chart before. Keep in mind, it is reporting “median” sales price (half of sales above, half below). It can change quarter over quarter. Didn’t Mercer county open a new Adult Community just south of 195 recently in Robbinsville?? If a bunch of $400K homes sell in any given quarter…it’s going to skew the results.

    I’d take the NAR stats with several grains of salt….remember they screwed up the math last year on one of the reports???

  88. veto says:

    John says:
    The downside of record low rates!
    CD Term and Rate APY* as of 12/30/08
    2 Month 1.05%
    4 Month 1.40%
    6 Month 1.80%
    9 Month 1.75%
    1 Year 2.30%
    18 Month 2.75%

    The rates are not as bad when adjusted for deflation…
    CD Term and REAL Rate APY* as of 12/30/08
    2 Month 2.75%
    4 Month 3.10%
    6 Month 3.50%
    9 Month 3.45%
    1 Year 4.00%
    18 Month 4.45%

    Nov Data From Bureau of Labor Statistics…
    On a seasonally adjusted basis, the CPI-U decreased 1.7 percent in November after declining 1.0 percent in October.

  89. Victorian says:

    Holy Cow!

    Kevin Bacon, economist may be latest hurt in Madoff scheme

    “Economist Henry Kaufman lost several million dollars, which he had in a brokerage account with Bernard L. Madoff Investment Securities for more than five years, the Wall Street Journal said, citing Kaufman in an interview on Tuesday.”

    Wow! This is the bond guru in Liar’s Poker.


  90. John says:

    Which Days do you remember in 2008 – List of BIG POINT LOSSES FOR DOW:

    9/29/2008 10,365.45 –777.68 –6.98
    10/15/2008 8,577.91 –733.08 –7.87
    10/9/2008 8,579.19 –678.91 –7.33
    10/22/2008 8,519.21 –514.45 –5.69
    10/7/2008 9,447.11 –508.39 –5.11
    9/15/2008 10,917.51 –504.48 –4.42
    11/5/2008 9,139.27 –486.01 –5.05
    9/17/2008 10,609.66 –449.36 –4.06
    11/20/2008 7,552.29 –444.99 –5.56
    11/6/2008 8,695.79 –443.48 –4.85
    11/19/2008 7,997.28 –427.47 –5.07
    11/12/2008 8,282.66 –411.30 –4.73
    6/6/2008 12,209.81 –394.64 –3.13

  91. John says:

    Kevin Bacon shouldn’t be so footloose with his money.

  92. veto says:

    “I’d take the NAR stats with several grains of salt…”

    Thanks FiddyCoD, I was hoping you would say something like that. I wish the broke out the data so it would tell a story instead of aggregating everything into one big crude worthless number.

  93. PGC says:


    From yesterdays discussions, this popped up on the NYTIMES.

    While this maybe all above board and legitimate, I would say that at a minimum there is a very big conflict of interest in his research. He has been very vocal against groups that suggest proscribing the likes of Ritalin and Prozac to two year olds is wrong.

    Researchers Fail to Reveal Full Drug Pay

    A world-renowned Harvard child psychiatrist whose work has helped fuel an explosion in the use of powerful antipsychotic medicines in children earned at least $1.6 million in consulting fees from drug makers from 2000 to 2007 but for years did not report much of this income to university officials, according to information given Congressional investigators.

    In the past decade, Dr. Biederman and his colleagues have promoted the aggressive diagnosis and drug treatment of childhood bipolar disorder, a mood problem once thought confined to adults. They have maintained that the disorder was underdiagnosed in children and could be treated with antipsychotic drugs, medications invented to treat schizophrenia.

    Other researchers have made similar assertions. As a result, pediatric bipolar diagnoses and antipsychotic drug use in children have soared. Some 500,000 children and teenagers were given at least one prescription for an antipsychotic in 2007, including 20,500 under 6 years of age, according to Medco Health Solutions, a pharmacy benefit manager.

  94. PGC says:

    proscribing should be prescribing

    No wonder I failed Latin in school.

  95. still_looking says:

    Cindy, 4

    You, sadly, have the misfortune of the varicella virus dormant in the V-1 (uppermost segment of the trigeminal, cranial nerve #5 – hence, “V-1”)

    When reactivated, it will always be at this site (unless you for worse reasons develop disseminated zoster — total body shingles — but this is extremely rare.

    If you have emerged from this attack without corneal scarring, consider yourself lucky!

    If your attack was within the past year, I doubt the vaccination will help you as your body had already revved up production of antibodies against the virus.

    Just as PGC had VZV (varicella zoster virus) titers done, you may consider having them done as well in 4 or so years to determine your level of immunity.

    V-1 is the worst site. Preventing another attack is truly in your best interest.

    Beyond that, immediate diagnosis and treatment of any further attacks is second best.

    You should discuss with your doctor keeping antiviral meds [Valtrex, Zovirax, etc] at hand so that you can start them as soon as it arises (if it does again.)

    Some might consider this overkill but when your vision is involved, I prefer overkill than under.

    I hope this helps.

    My apologies for the “bandwidth abuse” but this is type of shingles is hazardous.


  96. grim says:

    Quick Question for the Assembly….

    Essex County (E. Orange) is covered by which of NJ’s many MLS systems??

    Garden State?


    Why we slice the MLS’s up per county is beyond me.

    East Orange, Essex Co is GSMLS.

    “We” don’t slice them up, they were sliced up in the past by either Realtor boards or their respective owners, yes, owners. Great monopoly to be in, cash cow for doing little work.

  97. grim says:

    Can someone tell me if the SPCS data from yesterday’s post is adjusted for inflation? Or does inflation account for some of the rise?

    It is not adjusted for inflation. If you adjust the SPCS data by using CPI Less Shelter series (as recommended by OFHEO), the declines are much sharper.

  98. JBJB says:

    “When I asked why, I got the eye blink.”

    I am surprised you didn’t get “The One” as the answer. I am hearing that a lot from people who are otherwise somewhat intelligent and should know better.

  99. wallies says:

    veto #81 and fiddy #88 –

    Keep in mind what you are looking at is actual sale prices, not asking. That’s exactly what I see on the streets of Bucks County – a refusal to sell at anything but astronomical peak prices. They will only sell to the bigger fool – or take the property off the market. Furthermore, if somebody does cut the price buyers stay on the sidelines to see if they’ll cut even more and eventually interest fades. Frustrating, because it really does skew the comps.

  100. grim says:

    #60 – Spent the morning with two brokers in Ridgewood, got quite a different vibe. Things must be going pretty well over in Gilsenan’s corner of Ridgewood.

    Disclaimer: I’m a member of Realsource, the Bergen Co. Realtor Board, and my office is in Ridgewood.

  101. John says:

    Putin Warns Ukraine of Consequences of Gas Problem

    About time someone did something, that Russian food always makes me fart.

  102. mtnbika says:

    Grim (98) Thanks.

  103. John says:

    I had shingles myself, but since I switched to vinyl siding I feel better.

  104. Stu says:

    “I am surprised you didn’t get “The One” as the answer.”

    I’m fairly certain that the hope for “The One” is the only thing holding our current market up. Once the inauguration is complete, it shouldn’t take too long before the realization that ‘hope’ is not a remedy for a deep recession/depression.

  105. Stu says:


    You are a dope!

  106. Jersey Jim says:

    You need to get in the Christmas Spirit and stop being a knucklehead.

  107. Sean says:

    I am hearing “the one” way too much too.

    Corzine, Arnold, David Paterson are busy praying at his altar right now.


  108. Fiddy Cents on the Dollar says:


    Re: mls

    I meant the “editorial we” in my comment about slicing….

    I have access to GSMLS and I was just looking up some sales in East Orange. I only found 1 sale in the past 6 months???? I might be doing something wrong here.

  109. grim says:

    Speaking of Bergen…

    Glen Rock Comp Killer!

    23 Hudson Place, Glen Rock NJ

    Purchased: 6/24/2002
    Purchase Price: $505,000

    MLS# 2844428
    Sold: 11/24/2008 (reported late)
    Sale Price: $482,500

    Under the 2002 purchase price in Glen Rock! Wow!

  110. grim says:

    Another one from Bergen:

    45 Cypress Street, Westwood NJ

    Purchased: 11/10/2004
    Purchase Price: $440,000

    MLS# 2841056

    Sold: 12/29/2008
    Sale Price: $427,500

  111. grim says:

    I have access to GSMLS and I was just looking up some sales in East Orange. I only found 1 sale in the past 6 months???? I might be doing something wrong here.

    I think so, if I run a days back hotsheet from 6/1 to 12/31 I’ve got 94 sales.

  112. John says:

    stu and jim, christmas is over I no longer have to be nice.

  113. grim says:

    Oh no, a soon-to-be comp killer in Upper Saddle River!

    2 Emerald Woods Court, Upper Saddle River NJ

    Purchased: 10/12/2006
    Purchase Price: $2,200,000

    Listed: 7/10/2007
    List Price: 2,825,000
    Reduced to: 2,799,000
    Reduced to: 2,694,500
    Reduced to: 2,599,000

    Relisted: 7/4/2008
    List Price: 2,299,000

    Relisted: 9/10/2008
    List Price: $2,199,000
    Reduced to: $1,899,000

  114. grim says:

    Oh no! It is a short sale too!

  115. grim says:

    Wow! What a history

    Purchased for $2,200,000

    First lien: $1,760,000 from a private mortgage lender

    Second lien: $300,000 from National City Bank.

    $2,060,000 in loans! Only put down a $140,000 down payment.


  116. sas says:

    man, what a day.
    ended the year in & out of hoosgau.


  117. Qwerty says:

    What is the best public records website, where one can look up liens, bankruptcies, etc? Costs per search? Costs per month?

  118. Seneca says:

    Grim [101]

    … any juicy tidbits? I guess Gilsenan is working the more optimistic blocks of Bergen Co.

  119. PGC says:

    #96 SL

    What is very funny is that I last year I had a case of Pityriasis Rosea that I must have picked up from one of my sons playschool friends. My doctor was staring at the dermatologists report mumbling ” but that’s a childhood illness”

    Must be something with me and childhood diseases.

  120. Wag says:

    Sas (117) – Hoosgau, not good. Everything ok now?

  121. Victorian says:

    Rumors circulating on the tubes that Microsoft is going to layoff 15% on Jan 15.

    If majority of those are on site, more 401(k)s out of the market.

  122. Dink says:

    Stu, #105

    Don’t forget that close to half of the population didn’t vote for “the one”, and fell for the foxnews/drudge stories of the market tanking due to his climb in the polls. I doubt that they have false hopes of him saving the economy.

    Maybe the blue collar workers are banking on it, but would that sentiment really be keeping the market propped up?

  123. Yikes says:

    chicagofinance says:
    December 31, 2008 at 9:19 am

    yikes: and on behalf of grim, thank you for hitting the donate key on the home page…..

    if my nfl wild card bets hit this weekend, i’ll throw a bit more his way.

  124. grim says:

    Clot (if you are around),

    I’d love to get your take on #116 as a short sale candidate.

    Given the second lien, and current asking price, I find it a very unlikely candidate for an accepted short sale.

    In this scenario, the second position lien stands to bear the full loss. Given the asking price of $1.899m and an outstanding loan balance near $1.7 million, the primary lienholder stands a good chance at recouping most of the loan amount at foreclosure. Mainly because the second lienholder would be forced to bid the upset amount to get the chance to recoup some of their loan.

    Seems unlikely that the primary lienholder would agree to a short sale. Given the asking price, once you factor in a commission, there is likely nothing left for the secondary lienholder in a short sale. How do you approach the second lienholder with that short sale request? Hi, we’ve got an offer on this property, but you stand to lose everything. Will you accept?

  125. sas says:

    “Sas (117) – Hoosgau, not good. Everything ok now?”

    things are ok now.
    i was in a line at sbuxs, this bloke about 35-40 yrs old cut in front of me, and proceeded to be very rude to one of favorite servers.

    i told him he was an a**hole for cutting in front of me & being mean to my favorite servers. tells me to mind my own buisness. so, i clocked him.


  126. sas says:

    wasn’t very smart on my part.
    i shouldn’t of just kept my mouth shut.


  127. sas says:

    in any case..
    i mistakes too.


  128. sas says:

    this is a bs story.
    every dollar is accounted for, they just want you to know where & to whom some of the money goes.

    “Officials: tracking bailout money is difficult”

  129. Fiddy Cents on the Dollar says:


    I see what I did wrong in my search….I put too narrow a price limit, lotta low-end sales in town.

    comp killer in USR
    2 Emerald Woods Court, Upper Saddle River NJ

    There must be an interesting story behind this one.

  130. John says:

    what kind of man has a fight in starbucks? was it a greenwich village coffeehouse slap fight or a real man to man fist fight?

  131. sas says:

    “what kind of man has a fight in starbucks?”

    a man that doesn’t take crap from anyone, anytime, anyplace.


  132. sas says:

    will an oz of gold buy the dow?

    “Gold Heads for Record Eighth Annual Gain on Dollar, Recession”

  133. Essex says:

    126….SAS, damn…time was something like was settled by two guys and police were not involved….

  134. sas says:

    “NCR makes cuts to employee benefits”

    -international benefit plans, such as pension plans and retirement plans, are under review and he expects another announcement this month about them.

    -canceling holiday parties, business travel and eliminating merit pay raises for employees, including executives.

    -The company, which sells ATMs and retail automation systems, has 1,300 local employees and 20,000 worldwide.

  135. sas says:

    “settled by two guys”

    you would think right?
    oh well, a little skirmish like that is not even a drop in the bucket of my life.

    we should drop the subject, i shouldn’t of brought it up. i don’t want to dirty up Grim’s boards.


  136. sas says:

    “Public pension scandal investigations mushrooming”

  137. jami says:

    Dink 123: “Don’t forget that close to half of the population didn’t vote for “the one”, and fell for the foxnews/drudge stories of the market tanking due to his climb in”

    Almost half the country watched CBS “News” and NBC and fell for The Messiah, like this one:

    “In a televised interview with NBC6 at an O$ama rally, O$ama supporter Peggy Joseph praised O$ama’s speech, then went on to say that she won’t have to worry about paying for gas or her mortgage, because she’s helping O$ama and O$ama will help her.”

  138. Barbara says:

    is the GSMLS/public down?

  139. Bubble Disciple says:

    Regarding DXD (and other ultra-shorts), they just announced large short-term capital gains distributions on Dec 22.

    Since these had to be paid out in cash, it forced DXD, etc to liquidate a siginficant portion of its holdings.

    e.g. if a fund announced a 10% distribution, the share price would drop about 20% almost instantly.

    This makes it very dangerous to schedule limit order, since you might have a strike price that is unstable.

  140. Bubble Disciple says:

    Proshares recent capital gain distributions:


  141. NJGator says:

    40 Renting – Only if you proactively appeal your assessment. The town is not going to look out for you and do it on their own.

    RentinginNJ says:
    December 31, 2008 at 9:21 am

    Just because your assesment goes down doesn’t mean your property tax will.

    Depends. In NJ, like most other markets, low-end housing appreciated the most relative to higher end housing. If your town was reassessed in the past few year AND the housing stock in your town is diverse (a mix of high and low end housing), over the next few years you could see a redistribution of the tax burden away from lower end homes and back toward higher end homes.

  142. grim says:

    Light volume, I know, but the 10 year made one hell of a move today.

  143. Essex says:

    140. Yeah you are right. Man I wish Bush could have served another term. We could all be Chinese this time next year.

  144. JoeR says:

    Anyone thinking of looking at real estate in the new town, Woodland Park?!?

  145. John says:

    Treasury Drafts Broad Rules on More Auto Industry Aid (Update1)
    Email | Print | A A A

    By Rebecca Christie

    Dec. 31 (Bloomberg) — The U.S. Treasury drafted broad guidelines for aid to the auto industry that would let officials provide funds to any company they deem important to making or financing cars.

    With today’s announcement, the Treasury is giving itself room to provide money from the Troubled Asset Relief Program beyond loans already committed to General Motors Corp., GMAC LLC and Chrysler LLC.

    That’s consistent with analysts’ speculation yesterday that suppliers, such as GM’s bankrupt former parts unit Delphi Corp., might be eligible for assistance. The Treasury guidelines may encourage more guessing on what companies and industries are next, said Vincent Reinhart, resident scholar at the American Enterprise Institute in Washington.

  146. Victorian says:

    Jamil (140)-

    Link, please?

  147. BC Bob says:

    “will an oz of gold buy the dow?”

    SAS [135],

    Gold up 8 years in a row, finishes up 5.5%? Trillions lost in equities, real estate and raw materials, yet only a clown would own gold? Welcome to 2009, the year of the clown.

  148. Victorian says:

    BC Bob –

    Gold is definitely the end game. However, will it go to 600 – 700 on the way to 2000?

  149. jami says:

    149 Victorian: It is pretty easy to use google. 1M hits for Peggy Joseph.

    Here is NBC clip, “O$ama Is Going To Pay For My Gas And Mortgage!!!”


    Some people are going to be disappointed. We’ll have race riots if O does not pay for their gas and mortgages.

  150. jamil says:

    Also if you google ‘short bus retard’ you can see my picture!

  151. BC Bob says:

    Viv [151],

    I hope so, I’ll be buying more.

  152. bairen vulture says:

    #152 jamil,

    Maybe she meant her job won’t get shipped overseas while her company gets a tax break for doing it, or maybe she thinks O will launch gas stamps and add mtg payments to the list of benefits the gubermint hands out.

    Can’t ell from the cut job on the video.

  153. sas says:


    yes, gold is a good invest
    as in silver (poor man’s gold)

    another investment that can be worth more than gold is investing in your family, friends, and networking.

    this never gets talked about in the silly financial press, but its true.

    family & friends:
    will help you when chips are down (most anyways), and can help finance you etc..etc.

    help find a job, learn a new gig, connect you with the right person, may spark a new idea.
    don’t be bashful.

    these are areas that are free to invest in and the returns can’t be beat. maybe make them an 09 investment?

    ex. Me. I’m asked alot “man, what do you do for a living?”
    easy answer: i make sure capital & connections find eachother :)
    yeah, sure, I have to sometimes help people out, and in return, they always help me out. quid pro qu.

    another ex. when I got arrest this morning, i made a 1 or 2 phone calls, about 10 minutes later, cops cell phone rings, gets a confused look, then turns to me and says: “your free to go Mr. SAS”

    and I said “thank you sir, you have a happy new year”


  154. jamil says:

    Just to clarify, it is the libtards that have taken this country to our new low. The worst congress ever! Yada Yada Yada…Blah Blah Blah….

  155. Essex says:

    156. SAS….lead with your left! Good work. Happy New Year!

  156. Victorian says:

    “We’ll have race riots if O does not pay for their gas and mortgages.”

    – Does a race riot turn you on or something? You have been predicting/wishing for race riots for the last 3 months.
    Are you still posting from your bunker after the latest race riots due to the sentencing of O J Simpson?

  157. jami says:

    Some liberal idiot is using my nickname in 153, 157

    Hope you have fun. Given your limited IQ, this is probably the best you can do in life.

  158. 3b says:

    Happy New Year to all!!!!

  159. bairen vulture says:

    #160 jamil

    What makes you so sure it’s a liberal? Could be a conservative unhappy with your comments.

  160. Barbara says:

    who doesn’t just LOVE a political blowhard? Hours of fun.

  161. John says:

    CUNY BABY, C U Next Year.

    I am off line till Monday.

    BTW a liberal is a codeword for commie, even the big O drives a 300 and a escape, not a commie car.

  162. Essex says:

    I would consider myself a nihilist.

  163. sas says:


    -avoid debt leverage or margin (don’t get greedy, too many manipulated fluctuations)

    -don’t leave with a broker (your broker could be Madoff)

    -coin dealers, check with better buisness bearu first (most are scams be careful).

    -Gold/silver ETFs
    i’m not a fan, as i like gold in my hot little hands. but if you must get a paper or stock certificate.
    don’t laugh… if you were in Houston in the 70s some stock brokers went under, courts had to sort assest, people had to wait. meanwhile stock market went down.

    just my thoughts.

    *usual disclaimers-i’m just some idiot on the web that hasn’t left Lodi since 77, you decide for yourself*


  164. sas says:

    “liberal is a codeword for commie”


  165. sas says:

    what does that mean?

  166. Essex says:

    I for one question the wisdom of ridiculing someone who obviously is treading on the bottom of society and may really believe the government can help here in any way. When in fact the government is incapable of helping anyone except large failing banks that overextended themselves, wall street executives who steal millions from their firms and now taxpayers, and criminals who game the system.

  167. Essex says:

    168…it means John still is the frontrunner for NJRE Dumbf*ck of the Year.

  168. Barbara says:

    165. Essex
    me too until I had kids. Now I have to be all hopeful and stuff. Its hard.

  169. Stu says:

    Happy Stu Year!

  170. Essex says:

    171…I love my kid (almost 5) more than anything…we lucked out. I will give her a moral compass and a traditional upbringing…but we all know the score.

  171. Yikes says:

    inspection went well today. it seems very likely we’ll hit closing in a few weeks.

    mortgage guys are acting weird. wells is aware that i can get a better rate and seems to not want to compete with it. but he definitely wants my application.

    i refuse to apply – but have given them all the necessary info (and they ran credit score and know we’re good to go).

  172. Barbara says:

    Fake it till you make it (if). Same.

  173. Yikes says:

    oh – house a block over is on the market for 585k. inside is HIDEOUS. it’s a nice house, but the owners are quirky and you can tell my the horrendous wallpaper and decor.

    we hear from an agent that the owners refuse to budge on price. well, we’re 100 sq feet bigger, and .20 of an acre larger, and we’re buying for 535k.

  174. Barbara says:

    176 Yikes
    Happy for you. We have been on a 5 years house hunt. I stopped altogether 1 yr ago out of frustration.
    I’m have my second in early March. At this point I think husband and I will be in need of a bunk bed system, adult sized.

  175. BC Bob says:

    2008: The year in markets
    U.S. indexes
    Dow Jones Industrial Average -34%
    S&P 500 -38%
    Nasdaq -40%
    Dow Jones Financials -55%
    Amex Oil Index -38%
    International indexes
    Germany DAX -40%
    FTSE 100 -31%
    Japan Nikkei 225 -42%
    China Shanghai Composite -65%
    Mexico IPC -24%
    Brazil Bovespa -41%
    Gold +5.5%
    Crude -54%
    Dollar index +6%
    Pound vs. dollar -28%
    Dollar vs. yen -18%

  176. grim says:

    mortgage guys are acting weird. wells is aware that i can get a better rate and seems to not want to compete with it. but he definitely wants my application.

    Had a client looking for a refi that said the same thing.

  177. Yikes says:

    cindy – moved out to PA about 7 months ago, been looking since. finally, something we really liked appeared on the market (they found a short sale and wanted to upgrade).

    best combination of house and yard we’d seen. not even close, really. price? eh, im sure it will go down at least a bit over the next few years, but i plan on trying really, really hard not to pay attention.

    but we were able to find something in our price range that will keep or mortgage at 2600, which is manageable in case just one of us wants to work.

  178. Yikes says:

    but grim – stu wrote here recently that what usually happens is the small shops end up selling the mortgage to wells in a month or two anyway.

    why wouldn’t wells match? is there an advantage if they buy the loan in a month from another mortgage company?

  179. serenity now says:

    Happy New Year from Mr&Mrs Serenity!

  180. Essex says:

    Well, HAPPY NEW YEAR to the smartest bunch of misfits on the web. Thanks for making 2008 a bit more bearable.

  181. Yikes says:

    john, is your name really rick edelman?


    “Furthermore, panicked investors have been selling so many shares for so many months that, according to Bloomberg, 2,267 companies now hold more cash than the total value of their stock and debt. So you could buy all the shares of any of these companies, shutter them, pay off their debt — and still have a tidy profit.”

  182. JBJB says:

    Well, time to start drinking. Grim, thanks for another year of hosting this great site. It’s hard to believe that it wasn’t that long ago that the only place you could get NJ real estate information was from realtors and their useless websites. Dare I say this site has been a game changer for those fortunate enough to make their way here.

    Happy New Year to all. I received a new bottle of Dalwhinnie for Xmas and it’s time to crack it.

  183. Yikes says:

    of course, this part from the usa story above is not fully explained:

    For example, the S&P 500 fell 89% during the Great Depression (from its 1929 high to its low in mid-1932). But few recall that the S&P 500 then skyrocketed, rising 206% over the next three years. If you were in the market for the whole ride, you lost two-thirds of your money, but if you got in at the bottom, you tripled it.

    It was similar in the deep recession of the 1970s. After the S&P 500 fell 48% from December 1972 to October 1974, it jumped 73% over the next two years.

    in both cases, the stock market took two years to go down. the market only dropped here within the last six months.

    this would lead me to believe that we’ve got at LEAST another year before the recovery hits. and that isn’t even taking into account the fact that we’ve NEVER SEEN A BUBBLE like this current mess.

    have moved my 401k from 3% metals to 10% metals. i know, i know, others here are 90% metals. sorry, not that risky. surely, i will regret the missed opportunity.

  184. grim says:

    Have a safe and happy new year everyone!

  185. Punch My Ticket says:

    Thanks for a terrific hosting job in 2007, grim.

    Happy New Year all. Drink responsibly tonight.

  186. Wag says:

    Happy New Year to us all. No more arrests for today, NJRE Report bail money fund is low.

  187. Fiddy Cents on the Dollar says:

    I will wish all you citizens of NJRE Report a Happy, Healthy and Prosperous New Year.

    Thanks, grim, for all you do for this August Community.

    I’m going to be sipping Single Malt Scotch and may not be awake to see the Crystal Ball drop.

  188. lurkerd says:

    Grim #18 & #20,

    Thank you for unmoderating my post.

    If my post came across as mean-spirited, then I apologize. I didn’t genuinely suspect a conspiracy; I was aiming to stir up a real estate debate amid the off-topic postings that continue to detract from this blog’s quality. Plus, I believe that an analysis of the New York metro housing market must reflect the condo data. Thank you for including this data in your latest chart.

    I don’t apologize for my post, however, and scratch my head when you suggest more work for me. After all, I organized the S&P/Case-Shiller data so that blog readers could observe the relative performance of US housing markets. This input tops the efforts of yesterday’s other posters, which isn’t saying a lot.

    (snip! -jb)

  189. lurkerd says:


    What is your e-mail address? I will send you a spreadsheet that I created. It contains the S&P/Case-Shiller condo data and a chart. The chart makes it easier to see the trend in condo prices in the 5 markets tracked – Los Angeles, San Francisco, Chicago, Boston, and New York.

    Njrereport readers should note that condos in the New York metro area have outperformed condos in each one of the other 4 markets across time periods of 1 month, 1 year, 3 years, 5 years, 10 years, and since the inception of the index in 1995. Grim, these performance calculations are included in the spreadsheet I will send to you.

  190. victorian says:

    Happy New Year to Everyone and your families!

    Be safe out there, and don’t drink and drive.

  191. lisoosh says:

    lurkerd – You seem to disapprove of the content of the blog and the quality of the posts. Rather than dictate to your host, perhaps you could start your own blog where you can be the master of your domain and decide whose input is worthy.

    When you are a guest in someones home, do you argue with his choice of invitees and wine selection?

  192. Yikes says:

    lurkered … also, remember that some people have jobs that prevent them from really going in depth with any kind of analysis. i wont speak for chifi, perhaps he can elaborate.

  193. grim says:

    My email?

    Top right, the “Contact” button.

  194. bairen vulture says:

    Very peculiar.
    Burris, the appointee for the Sesnate from IL, has listed all of his accomplishments on his tombstone.


    Note: he’s still alive. Not so sure about his chances to get in the Senate.

  195. bairen vulture says:

    An estimated 148k retail stores closed in 2008.


    Too bad they don’t mention how many close in a normal year.

  196. bairen vulture says:

    maybe we’ll see some famous Aussies do perp walks for tax evasion this year.


  197. sas says:

    “90% metals”

    wow, i like metals, but all eggs in one basket is asking for trouble.


  198. sas says:

    happy new year everyone.

    lets help eachother keep our heads above water.


  199. Yikes says:

    sas, i’d agree with you, but we’re talking about guys on this board who have KILLED the market in the last year. heck, they helped me to a tidy profit on SKF.

    if i wasn’t buying the house, i’d be right behind them on SRS.

  200. sas says:

    “Be safe out there, and don’t drink and drive”

    i don’t go out on new years eve these days. too crazy.


  201. bairen vulture says:

    #202 sas


    New Year’s eve is amateur night out.

    PS. Maybe I’m just old and bitter. Hope to stay awake to watch the ball drop this year.

  202. sas says:

    “I’m just old and bitter. Hope to stay awake to watch the ball drop this year”

    i hear ya.
    back in my day, we brought the ball down, hoisted it back up and brought it back down again.

    now, i just get headache.

    but, i like to goto a nice, soft place and have some scoth.


  203. sas says:

    My wife & I are big ABBA fans.

    and for some silly reason, past few new years we pull out the albums, and sing & dance in the kitchen.

    i know, i know…..silly


  204. BC Bob says:

    “i don’t go out on new years eve these days. too crazy.”

    IMO, the most overrated night of the year. However, do like the college football.

  205. NJGator says:

    203 Bairen – I wish I lived in CA….then I could see the ball drop in NYC and still fall asleep by regular bedtime. So sad…

  206. Shore Guy says:

    ” This input tops the efforts of yesterdays other posters, which isnt saying a lot.”

    On my way out to the neighbors, I note the following: it generally takes very little to top the efforts/content of my posts. Happy 2009 all.

  207. Shore Guy says:

    last post of 2008 and first of ’09?

  208. bairen vulture says:

    #207 NJGator,

    I’m so jealous!!

    This year I fell asleep, but woke up at 11:45 PM, watched the ball drop, then back to sleep.

  209. ricky_nu says:

    Grim – re post 115 – that comp killer in upper saddle river – what was that agent thinking putting the house up for 2.8mm right after they bought it for 2.2mm? Or are these agents just idiots (Like any potential buyer wouldnt be able to see where the house just traded a year earlier). I wish there was some way to see an overpriced house and short it, BAM – immidiate price discovery. I am surprised that listing offices dont charge the agent/homeowner for wasting their time with such ridiculous asking prices.

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