Losing Glitter

From the WSJ Developments Blog:

Hard Times for Hovnanian’s Jersey City Condo

During the boom, home builder Hovnanian Enterprises Inc. launched its biggest tower, a 48-story condo showpiece in Jersey City, N.J., offering Big Apple views just feet from the Hudson River. Now it’s set to debut in an environment gone bust.

The address remains prime, but nearby Wall Street’s continued turmoil is feeding the region’s unemployment, affecting many purchasers and depressing sales and prices. Foreigners, long a key buying group, are battling what has become a worldwide economic crisis.

That could mean unsold units, an elevated cancellation rate and fights over deposits at Hovnanian’s 77 Hudson project, expected to start closings in the late spring/ early summer.

Even interested buyers with good credit may get tripped up: The building isn’t eligible for loans guaranteed by government-backed mortgage agencies Fannie Mae or Freddie Mac. Fannie now requires at least 70% of units to be presold. Hovnanian says it is offering competitive rates through various partnerships.

The builder “is backed into a corner here,” said Vicki Bryan, senior high-yield analyst at Gimme Credit. “They’re trying to get [buyers] to the table, I guarantee you, every way they can.”

But that was the old New York. In the last six months, Hudson County’s property values have experienced a depreciation rate nearly twice the nation’s, according to the Clear Capital Home Data Index. Real estate Web site Zillow.com says Jersey City’s condo values fell nearly 7% in the fourth quarter compared with a year earlier. From their bubble peak in 2007’s second quarter, values have taken an 11% hit.

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

102 Responses to Losing Glitter

  1. grim says:

    From the Record:

    Man pleads guilty in mortgage fraud and property-flipping scheme

    A Paterson man, indicted in a mortgage fraud and property-flipping scheme, pleaded guilty today to a pair of conspiracy charges that carry a potential penalty of up to 40 years in prison.

    Renford Davis, 47, entered the plea before U.S. District Judge Jose L. Linares in Newark to wire fraud and money laundering conspiracy counts, part of a 25-count indictment returned last August against him and three co-defendants.

    A truck driver, Davis admitted he conspired with two co-defendants and at least six others to fraudulently originate mortgage loans and to launder the proceeds of those loans between 2002 and 2005.

    During his plea, Davis acknowledged he is aware of additional information about “fraudulent mortgage loans and other matters” and willing to answer questions – an indication that he is cooperating with authorities.

    The scheme involved buying two- and three-family homes cheaply and flipping them at inflated prices to unsophisticated investors whose loan applications were doctored with bogus incomes and bank account balances, and fraudulent property appraisals, authorities said. In return for ceding control, the investors were to receive monthly payments and a percentage of the profits when properties were sold.

    Under questioning by Assistant U.S. Attorney Mark E. Coyne, Davis, who operated a property management company, said he introduced prospective buyers to fellow conspirators Michael Eliasof, a former Paramus-based real estate agent; Gerald Carti, a former loan officer and part-owner of Pine Brook-based U.S. Mortgage Corp; and others at the Forum Diner in Paramus. The buyers were told they wouldn’t have to make any down payments or mortgage payments to acquire the rental properties, he said.

    Davis said he provided false verifications of rent and other false documents to co-defendants Carti and Amer Mir of Jersey City, a loan officer with United Home Mortgage, to help the borrowers qualify for loans.

  2. Rich says:

    We may be approaching the bottom. Hard to believe the 5 days of gains.

    U.S. Stocks Advance After Unexpected Gain in Housing Starts


  3. homeboken says:

    “Hudson County’s property values have experienced a depreciation rate nearly twice the nation’s”

    PFFFTTT…I can give you the list of at least 25 Hudson County realtors that will tell Buyers/Sellers the exact opposite.

  4. grim says:

    From MarketWatch:

    Housing starts surge 22% on apartment building

    Boosted by an 82% increase in construction of apartment buildings, U.S. housing starts surged 22% in February to a seasonally adjusted annual rate of 583,000, the Commerce Department estimated Tuesday.

    “We’re inclined to write this off as a weather-related fluke for now,” wrote economists for Wrightson ICAP. “If the permits series can hold onto its gains in next month’s March report, though, we’ll take it as a sign that new construction has finally found a floor (albeit a very low one).”

    The government cautions that its monthly housing data are volatile and subject to large sampling and other statistical errors. In most months, the government can’t be sure whether starts increased or decreased. In February for instance, the standard error for starts was plus or minus 13.8%. Large revisions are common.

  5. sas says:

    “The government cautions that its monthly housing data are volatile and subject to large sampling and other statistical errors”

    basically, they are telling you, they are full of it and that they just made up that #.


  6. sas says:

    “Britain showing signs of heading towards 1930s-style depression, says Bank”

    -Britain is showing signs of sliding towards a 1930s-style depression, the Bank of England says today for the first time.

  7. bi says:

    with such a powerful rally, i would be really scared if i still held srs/skf/fxp.

  8. jim says:

    What a rally, and housing is up, up, up! I knew O would save us, just like the mainstream media said. The worst is over now, we can restart the consumer economy.

  9. sas says:

    so, where are the profits?


  10. zieba says:


    You just jinxed it.
    Futures will be off by eighty points, the markets will open red and give us a -3% day.

    Shakes head. Like clockwork.

  11. bi says:

    here is my take on today’s market action. this time is very different from what we saw in last september where the market jumped 10% one day. it was a typical bear market rally. after people took profit yesterday after 4 day rally, the market moved up sharply today. what does it mean? it mean fund managers with cash are chasing the market. this is the most dangerous sign of bull run.

  12. Shore Guy says:

    “Boosted by an 82% increase in construction of apartment buildings, U.S. housing starts surged 22% in February ”

    And as more and more good rental units come online, there will be all the more reason for folks under duress to walk away from sfh and this will only add to the glut.

  13. Alap says:

    Nice article. Right in my wheelhouse. Hov is now offering developer subsidized maintenance fees on top of huge price cuts.

  14. bi says:

    9#, jim, i don’t have high expectations on this former community organizer. i thought he would think big-thing after getting elected. sadlly, he is following MSM and keep talking AIG bonus.
    Fortunately, Bernanke is running the economy and Timmy is a puppy of wall street.

  15. jim says:

    sas- so where are the profits?

    Lets not spoil our illusion of a great big rally and housing recovery with facts. Rally today, profits to follow.

  16. bi says:

    11#, tomorrow is fed day. the market could be volatile after 2:15 pm but you cannot assume it must go down 3%.

  17. skep-tic says:

    I know nothing about investing, but putting money in stocks right now seems to me about as worthwhile as going to a casino. At least in a casino, you have fun. The movements do not seem driven by fundamentals at all. We are still losing 500,000+ jobs per month, experiencing deflation and tons of companies are in a debt clusterf*ck where the only lever they can pull is to cut expenses (i.e., more jobs). It seems to me the deleveraging both on the consumer and on the corporate end has a long way to go

  18. Shore Guy says:

    Can we hide Lassie and hope Timmy falls in a well?

  19. HEHEHE says:

    I ask again, the markets are up WAY up and it’s not going to stop because growth is here to stay. Where’s all my cheerleaders? Bi? Jamil? Essex? They all work for AIG and are hiding or something?

  20. comrade nom deplume says:

    Hopefully, this story from the UK Mail last month ends the debate about lifeboat property in the Caribbean:

    “Britons are among thousands of tourists fleeing Guadeloupe after full scale urban warfare erupted on the French Caribbean island. Trouble broke out on the island earlier last month after protesters began rioting over high prices and low wages.

    But the situation escalated this week after protesters began turning on rich white families as they demanded an end to colonial control of the economy. The troubles come at the height of the holiday season, with thousands of mainly British, French and American tourists on the paradise tropical island.

    Protesters were now targeting ‘all white people’, with the media in mainland France describing the situation as virtual civil war’.

    Guadeloupe is a French overseas department ruled directly from Paris, and authorities in France have sent 300 extra riot police to the island in a bid to quell the violence.”

  21. Shore Guy says:

    Scaring the tourists… yea, that will help the economy:


  22. safeashouses says:

    #22 Shore Guy,

    Unrest in paradise? How can that be?

  23. Stu says:


    You were questioning my insurance premiums. I have a 95 civic that is almost free (no comp/collision obviously) and a 2004 Nissan Xterra. I do increase the coverage a little high since we live in medical fraudville. No moving violations in 15 or so years and no accidents or claims. Policy was almost $1600 with High Point, now it is $997. Does this number sound in line for a couple in their late 30’s living in Essex County (auto theft capital)?

  24. comrade nom deplume says:

    [23] HE,

    Turns out I don’t. Different Finnegan IP firm.

    But in the course of the search, I learned that one of the partners in the other Finnegan firm, a woman that was married to one of my former firmmates in DC, died of cancer in January.

    I think I will take a break now.

  25. safeashouses says:

    #13 Shore guy,

    Did you see my link on Sunday night? The article claimed there could or would be 22 million large lot houses abandoned in the US by 2025.

    The author makes kettle seem like an optimist.

  26. grim says:

    From Reuters:

    Thornburg Mortgage may file Chapter 11 bankruptcy

    Thornburg Mortgage Inc (THMR.PK), a large and troubled provider of “jumbo” mortgage loans, on Tuesday said it may file for Chapter 11 bankruptcy protection.

    The Santa Fe, New Mexico-based company has struggled with liquidity problems since the summer of 2007, when the value of mortgages on its balance sheet began to tumble. Thornburg later suffered a series of margin calls from its own creditors.

    A bankruptcy filing would make Thornburg one of the largest U.S. mortgage providers to seek protection from creditors since the housing slump began, joining rivals such as Washington Mutual Inc (WAMUQ.PK) and IndyMac Bancorp Inc (IDMCQ.PK).

    Thornburg has specialized in making mortgages larger than $417,000 to borrowers with good credit, but it ran short of capital as investors stopped buying its loans. It has stayed alive mainly through a series of agreements to restructure or otherwise delay paying its debts.

  27. borat obama says:

    number 29…..high fiveeer

  28. Silera says:

    Articles like this one make me confused. I know that most people don’t live like this right?


    Ironing your shirts, cooking your food and mopping your own floors doesn’t seem like a return to frugal to me. It just seems like a return to normal.

  29. grim says:

    Articles like this one make me confused. I know that most people don’t live like this right?

    Must be why I feel so dirty. I made my own dinner and washed the dishes myself this evening.

    I might even do a load of laundry or two.

    Gross, I know. I could be at the mall.

  30. safeashouses says:

    #32 grim

    You are not doing your fair share to he

  31. sastry says:


    Could you please answer your email (the gmail address you sent the property information for). As I said, a “No” answer is fine…


  32. Shore Guy says:

    “Did you see my link on Sunday night? ”

    I did and about a year ago I raised the issue here. One day driving around an “exclusive” subdivision in the burbs itstruck me that at some point the places would be divided into apartments and the yards would look like junk yards.

    I tend to think that many folks would prefer to have a decent place in a city, close to work (with all the entertainment, no need for driving, etc) and also have a placein the country for weekends and vacations, like people used to do. The suburbs are neither fish nor foul and the commutes they require and the constant need to drive to do anything may rapidly lose its luster.

  33. Shore Guy says:


    I se the problem. You typed “month” in your first message, whereas I think you may have meant year. I was wondering how one could save $7,200 a year on auto insurance — even in a high-risk pool it would be quite an accomplishment.

  34. 3b says:

    Kudlow said tonight that because of the increase in housing starts announced today (almost entirely due to mult-family building) that “the deflation threat is now off the table”.

    And it is of course a mustard seed.

    Kettle are you listening?

    Kudlow should be splintered.

  35. kettle1 says:


    i just bought a monster chunk of fxp. $29 baby!!!!!

  36. kettle1 says:

    37 3b

    deflation? what deflation????


  37. kettle1 says:


    and to think that i censor my self here so as not to be too extreme….

  38. kettle1 says:

    kudlow doesnt appear to have any concept of what inflation and deflation are. Maybe he does, but he doesnt appear to in public.

  39. Victorian says:

    Rut Roh .. Jon Stewart went after short sellers yesterday and the douche who was explaining short selling did not sh1t about what he was talking about.

    Look out for a short ban..

  40. kettle1 says:

    heard an interview with some “people on the street” yesterday about AIG. of the 3 they interviewed 2 agreed that”an insurance company is good to have so that people can get insurance” and “the bonus was the problem not the bailout, because we need to help american companies”

    The 3 rd thought both the bonus and bailout were ok…

  41. kettle1 says:


    U.S. Bailouts Add to Risk of Depression, Jim Rogers Says

    The U.S. risks sending the world into a depression as its bailouts of failed companies rob healthy businesses of capital, investor Jim Rogers said. “The U.S. is taking assets from competent people and giving them to incompetent people,” said Rogers, chairman of Singapore-based Rogers Holdings and the author of books including “Investment Biker” and “Adventure Capitalist.” “That’s bad economics.”


  42. kettle1 says:

    Mortgage Fraud Up As Credit Tightens

    Mortgage fraud jumped by 26 percent last year even though fewer loans were issued nationwide, and Maryland ranked among the top five states with the most serious problems, according to an industry study released yesterday. The study by the Mortgage Asset Research Institute concluded that fraud is more prevalent than it was at the height of the lending boom. The group singled out the most troubled states based on cases it gathered from roughly 600 lenders, mortgage insurance firms and mortgage investors, as well as federal data on loan originations.


  43. kettle1 says:

    wow,its quite in here.everyone watching american idol?

  44. Stu says:

    O’s latest pick to assist Geithner…oy vey!


    “ALEXANDER: There`s no question that we`ve had a lot of innovation in the mortgage financing system and credit standards eased a lot, particularly towards the end of the cycle, and we`re seeing the payback for that now. You`re seeing higher rates of delinquencies on these sub-prime mortgages and that is going to be a challenge for some mortgage issuers. But there`s an awful lot of credit out there. Interest rates are still very low. Mortgage credit is still quite available and, therefore, that`s going to limit the magnitude of the spillover on the rest of the economy.”


  45. nj ecapee says:

    Corzine reconsiders eliminating state property-tax deduction


  46. Stu says:

    And he only gave $4,500 to the O campaign after wasting $2500 on Hilary. He couldn’t even pick the dem primary winner.

  47. Stu says:


    “I se the problem. You typed “month” in your first message, whereas I think you may have meant year.”

    Please try to read my entries with less care than I expend in writing them. ;)

  48. Victorian says:

    Retail REITs Have Further to Fall as Stores Struggle

    “REITs are cheap but they’re going to continue to be cheap,” said Marc Halle, managing director of Prudential Real Estate Investors in Parsippany, New Jersey, whose firm manages about $32.5 billion in real estate assets. “We’re going to see increased corporate bankruptcies and continued unemployment for the next few months.”


  49. Hey Now says:

    What do you all think of Hillsborough, NJ? any feedback greatly appreciated…

  50. Victorian says:

    Stu (47) –

    If anyone had any doubts that this is a kleptocracy, that piece of news should settle it.
    Wow, the Chief Economist at Citigroup – fine job steering that company.

  51. Stu says:

    Hillsborough, NJ?

    Better than Hillside NJ!

  52. bi says:

    38#, kettle, you got to give us your broker. how can you get $29 even today or even yesterday?

  53. bi says:

    re: fxp/srs/skf. as i said many timers here, all these are good for short-term play. but the longer you hold, the more value it will lose.

  54. Essex says:

    I love my house. Just had some really nice work done on her. Just in time for spring. It’s good to be a homeowner….(bagholder)

  55. Hard Place says:

    Wonder how much those luxury condos like Maxwell Place are eventually going to sell for in Hoboken?

    Anyone know what some of the recent sales are going in terms of $/sqft?

  56. Stu says:


    Short Term Market Outlook from a decent stock picker that I read.

    For those of you following my articles at Seeking Alpha, or my posts here at my blog, you know that I am fairly bearish on the market. In my government-TSP account (which has very few investment options), I have been hiding out in the G-Fund (like a Money Market Fund) since January 2008. Because of that, I have avoided most of the heavy losses in this market. In my IRA accounts and trading account, I have been mostly short the market, short banks, short real estate, and long gold (off and on). I’m filling you in on my personal account movements as it sets the tone for what I’m going to tell you in the next few paragraphs.

    From all the articles/blogs I’ve read and the gurus I follow, I have felt for the last three months that this market would bottom out with the DJIA at around 5750-6250 and the S&P in a range of 575-625. I’m still not sure when I think this bottom will occur. I’ve said all along that I felt our economy (housing, jobs, consumer demand, etc) would not recover until 2011. The stock market tends to lead the economy by 6-9 months during normal recessions. Of course, this is NOT a normal recession, which makes timing a market bottom very difficult.

    Based on these soft targets for a bottom, I started moving some retirement funds from the cash side to the long side when the Dow hit 7200 about two weeks ago. I started with a 30% position, leaving 70% in cash. Being realistic about my bottom-calling ability made me realize that I would miss a potential up move if I held out until I got the 6000 and 600 levels I was looking for. An initial 30% position would allow me the ability to make some money if the market did go higher, and also give me the flexibility to add more exposure if the market continued lower, as it did. As the market continued lower over the last two weeks, I moved my long position to 40%, then 55% at the market low. This leaves me with a 45% cash position now.

    It had become very clear to me that this market was VERY oversold on a short-term basis. I feel like this market has a small vacuum of time to make a very substantial short term rally. All the bad news from the last earnings season is in the past. The market was VERY oversold. Tax refunds should be arriving soon which may find its way into the market. Americans have suddenly started to save instead of spend. The market is representing a short-term value. For these reasons, I feel that the market could see a very nice rally between now and the beginning of the next round of earnings. If you haven’t heard this before, you need to write this down and post it next to your trading desk. THE BIGGEST RALLIES HAPPEN DURING BEAR MARKETS. Not only are they big rallies, but they happen quickly. I’m going to put out another target for the market in this post. That target is an S&P 500 at a level of 875-925 by mid-April. I’m talking about a five-week move of about 35% (or about 20% higher from here).

    Now for the bad news. Simultaneously with this move, you will see everyone jumping on the idea that the market bottom is in, the economy is surging, and all problems are now in the past. DO NOT BE FOOLED! This market is still very sick, and has a long way to go before our problems are behind us. The bottom line is that our economy has been fueled by easy credit and excessive debt since the 80’s. Our economy is trying to correct itself back to normal. Unfortunately, our government is throwing money it doesn’t have at the problem (our kids’ future taxes). Congress is trying to tax and spend our way back into the easy-credit, high-debt lifestyle that we have become spoiled with. THIS WILL ONLY PROLONG THE PROBLEM!! If we continue to nurse this problem with “band-aid” stimulus packages instead of letting Capitalism work like it was intended to, we will end up like Japan. (Expect 20-30 years of subpar growth). I honestly feel like that is the path we are headed towards. Let’s not forget, that prior to the First Great Depression (yes I did say the First), the DJIA topped out in 1929 at 386.1. It bottomed out 3 years later at 40.56 (about 90% lower). It took a full 25 years for the market to regain what it lost in 3 years. Although I do not think our market will lose 90% of its October 2007 peak, I would not be surprised if it takes more than a decade to see the DJIA back at the 14,000 level.

    I’ll end this rant with the thought that my original forecast of DJIA @ 6000, and S&P @ 600 may actually be a bit too high. I won’t be lowering my forecast, but I won’t be surprised if we blow through those levels a bit.

    To sum up, expect another 20% to the upside over the next month, followed by more pain to the downside. It should go without saying that timing the market is a dangerous activity. For those who think it is impossible, you’re not a trader. For those who study the market, keep a keen eye on money movements, and STUDY, STUDY, STUDY, you can make money in a market like this. Of course, I could be way off-base, but I’m willing to put my thoughts out there for your consumption, and yes, I am trading my accounts based on these predicted movements.

  57. House Whine says:

    What do you want to know about it? I have worked in that town – there is a variety of housing. Condos, townhomes, older smaller homes, McMansions. Rt. 206 isn’t fun but neither is it as bad as most people make it out to be. Plus, there are plenty of backroads you can take to avoid it. I don’t know much about the school system though.

  58. Hard Place says:

    And as more and more good rental units come online, there will be all the more reason for folks under duress to walk away from sfh and this will only add to the glut.

    Guess that’s why my landlord gave me a 10%+ rent reduction.

  59. Dissident HEHEHE says:

    “Rut Roh .. Jon Stewart went after short sellers yesterday and the douche who was explaining short selling did not sh1t about what he was talking about.

    Look out for a short ban..”

    I like Jon Stewart. He’s a pretty funny guy. He was right to call out Cramer for some of his ridiculous stock picks, but as is usually the case with people like Stewart they wander into the realm of things they don’t understand and in the end look like an @ss

  60. Stu says:

    And Bi, I’m very upset that you continue to discuss SRS. We made a bet and you did not hold up your end of the bargain.
    Had SRS gone to 25 before it hit 90, you can bet your pea brain that I would have never uttered a word of my beloved SRS again. Unlike most people who feel a blog is a safe place to lie, I choose to treat my posts with the same character that I exhibit in all of my communications whether online or in person.

    Quite simply, you should be ashamed of yourself.

  61. Stu says:

    The day short selling is completely banned will be the day I seriously consider the concept of a Nompound and converting 3/4 of my wealth into shiny. One can no longer call it a market if it is not free nor will anyone ever seriously consider investing in it as well.

    A market without shorting is like going to a sporting event where neither team is allowed to lose.

    With that said and considering the clowns running the show, I now put the chances of a permanent short ban at one in ten.

  62. bi says:

    stu, to your credit, you made a great call on dow 6500 and srs over 90 before going down. but whats wrong with discussion srs/fas and etc? these are just stocks, not age-restricted stuff. right? tomorrw it will go up again and you will be so excited to invite one here to discuss it.

  63. Dissident HEHEHE says:

    “i just bought a monster chunk of fxp. $29 baby!!!!!”

    You shouls have cowboyed up and bought it at $40 like I did :p

  64. Cindy says:


    Just forwarded this excellent article from a while back. If you have not read it – well, just do.

    “The Looting of America’s Coffers”

    New York Times

    Taking advantage of the government – looting. Not your standard “moral hazard” where a banker makes a wager and wins or loses but expecting government involvement – that is crucial – then you can “loot.”

    It is time to break up the too big to fail.

    “Above all, as Mr. Romer says, the federal government needs the power and the will to take over a firm as soon as its potential losses exceed its assets. Anything short of that is an invitation to loot.”

  65. Dissident HEHEHE says:

    Guy who wrote for Minyanville passed away today.


  66. bi says:

    64#, i didn’t hear any discussion on complete short-selling ban. but two items are in discusion: 1) temporarily suspension of mark-to-market reporting for certain illiqid assets; 2) restore up-tick (up-bid) test for short selling. as i said 1 year ago, the current market meltdown started in august 2007, 2 weeks after lifting up-tick test.

  67. sas says:

    “borat obama”

    lol. i like that one:)

    Obama = Bush = failure & disappointments


  68. Stu says:


    Do you even know what the uptick rule is?

    What killed the market is earnings. Have you been following any of them?

    When a companies earnings fall back to 1997 levels, well shouldn’t their stock price?

    What is everyone missing here. Stock prices are based on growth potential. What is the potential?

    It seems everyone simply thinks that since the DOW was at 14K, well it will get back there and quickly. This is just plain ignorance. The downfall will eventually be attributed to the income gap and the failure of trickle down. You all don’t see it now, but you will tomorrow.

  69. sas says:

    had some green beer, I think I’m seeing 2 NJRe bubble blogs.

    Yee (with a kilt)

  70. sas says:

    ok, I need to goto bed.

    Its going to be hell with a hang over and to deal with those damn people.


  71. Stu says:


    You post excellent articles and this one was no exception. Where I see the problem is that as long as our government is at the beck and call of lobbyists, well the system is not going to change regardless of what Bernanke wants. The systemic failure that allowed the loans to take place and the CDOs to be created did not happen by accident nor will such other greed-induced strategies ever be curtailed as long as the wealthy have a vested interest in staying wealthy. It is quite unfortunate, but mpney talks.

    What scares me more than anything is how despotism breeds religious fundamentalism. I can handle the return to a simpler way of life. What I don’t look forward to are the churches, mosques and synagogues using lack of morals as a guilt trip to expand membership. This tends to happen when the masses get poorer.

  72. RemainCalmAllisWell says:

    Client #8, the disgraced Governor himself, and a take on AIG.


  73. bi says:

    71#, stu,

    do you know why i put (up-bid) after up-tick in my post 69#?

    >Do you even know what the uptick rule is?

  74. Sean says:

    Bi you are busted again you Krammer chrony the Uptick rule did nothing for Japan or the res
    t of the world markets. Explain how and why it would have made a bit of difference here in the US?

  75. Victorian says:

    (75) –

    Excellent article by Spitzer.

    “The payments to AIG’s counterparties are justified with an appeal to the sanctity of contract. If AIG’s contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.

    But wait a moment, aren’t we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes—income taxes to sales taxes—to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won’t be laid off. Why can’t Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn’t we already give Goldman a $25 billion capital infusion, and aren’t they sitting on more than $100 billion in cash? Haven’t we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn’t they have accepted a discount, and couldn’t they have agreed to certain conditions before the AIG dollars—that is, our dollars—flowed?

    The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation. “

  76. Shore Guy says:

    SAS in a kilt, Gary in a cheerleader outfit. What a country.

  77. Revelations says:

    Frequent lurker here.
    Some comments/observations.. w/ no offense intended.
    The site is great, thanks for all the effort. I’ve noticed, tho, that it has shrunk into a smaller, less diversified voice. The only dissenters seem clown-like (you know the ones) and it’s difficult to tell if they’re even serious. I liked hearing the different views, debates about real estate — where it’s going, predictions, how to price homes in a non-market, where to go for hard-to-find stats, and other info. More of a knowledge place. The occasional opposing idea usually earns sharp personal insults, and equities have taken center stage. I know the other topics are relevant in a macroeconomic sense, but I think buyers (especially first timers), sellers, and curious lurkers come here for RE info they can’t get elsewhere. You’re monthly graphs are phenomenal, as well as the comp killers. Like I said the site is still awesome, but I find myself just checking the headlines these days, or trying to scan for the relevant data/RE info posts. I think there was a shift when the posting got focused on the election. The “feel” has been different since. I don’t know why.. just an observation.

    Anywho… back to lurking.

  78. Shore Guy says:

    “When a companies earnings fall back to 1997 levels, well shouldn’t their stock price?”

    Given the time value of money, one could assume an even lower stock price.

  79. Shore Guy says:

    Is there any worse position to be in than to have the White House expressing their support for you? It is usually the precursor to being shownthe door.


    “While the White House expressed confidence in Geithner, it was clearly placing the responsibility for how the matter was handled on his shoulders.”

  80. Shore Guy says:


    Part of the change comes from the fact that back in the day, there was not uninimity about the impending crash. Now everyone accepts that it is happening and the only question is the magnitude of the what we all accept will be a very bad crash. Such a state is not conducive to vigerous back and forth. On the other hand, the fate of the equity markets will affect the future of housing prices and housing taxes, hence the attention paid to stocks.

  81. Sastry says:


    I am a realestate newbie, wanna be home owner… I post a lot of cr@p here on politics, race, etc.

    I saw a place by accident on Sunday evening, posted info later that night, and by morning, had the MLS details, and a rather detailed history of the house. Including comments on my (greedy) offer price thought. My wife was impressed by my research!

    One swallow does not make a summer, but this is my story. Extrapolating from one point, I can say that if there is a specific question, there is a good chance of a decent answer.

    Disclaimer: I was getting a bit impatient/worried when I didn’t get a response from Grim for a whole of 1 day, so it seems the blog actually spoiled me!


  82. chicagofinance says:

    Revelations says:
    March 17, 2009 at 10:49 pm
    Frequent lurker here.
    I’ve noticed, tho, that it has shrunk into a smaller, less diversified voice. The only dissenters seem clown-like (you know the ones) and it’s difficult to tell if they’re even serious.

    John The Revelations:
    I do my best to bring a eurotrash flavor to these psuedo-sapiens…..honestly, I think that your critique is more a recognition that there is an overwhelming amount of supporting evidence that there was intense and uniform chowder-head-ization of the general public relative to real estate.

    A good swath of these regular posters have been at these threads for 3 1/2 years. We were grasping for anything that even remotely supported what appeared clear to a logical, critical, and independent analytic mind. Now we get more juicy stories in the space of a day than an entire month in 2005.

    We are mostly talked out at this point, with all the best insights and stories put forth, except for John and SAS. What you see now is mere commentary of new developments on the margin. There is no need to build the model from scratch.

  83. chicagofinance says:

    OT: I want to develop a 3 hour class on fundamental equity valuation. Does anyone have a good example powerpoint? I am being lazy. I was thinking of adapting elements of the CFA study materials, Malkiel, and the UK-based book from the Economist.

    The pitch would be at the non-technical layman…..

  84. Revelations says:

    And part of my comment was selfish. I am (get ready for it!…) in the market for a house! It’s in part thanks to this site, I didn’t buy the 1952 POS cape for $600,001 that someone just “renovated” after buying it 2 years earlier at half the price. But I still crave the RE insight. Stock blogs are everywhere, but Grim and contributers like yourself bring something nobody else in NJ has, and buyers desperately need. That’s why I come here craving indicators. Should we be at ’05 prices? ’02? Etc. Anyway, blog on.

  85. Cindy says:

    (74) Stu


    This old article pretty much takes me full circle. It is on Alan Greenspan – 10/08. I first to Grim’s site to read about Greenspan because you were all telling the truth about his activities after the release of his book.

    Rubin, Summers, Greenspan were the guys who chastised Brooksley Born for trying to regulate derivatives back in 1997. And now – they are still in the picture today…

    I just cringe when I read this…

    “Ms. Born pushed ahead. On June 5, 1998, Mr. Greenspan, Mr. Rubin and Mr. Levitt called on Congress to prevent Ms. Born from acting until more senior regulators developed their own recommendations.”

    “In November 1999, senior regulators – including Mr. Greenspan and Mr. Rubin – recommended that Congress permanently strip the C.F.T.C. of regulatory authority over derivatives.

    Phil Gramm was the head of the banking com. – Clinton signed it into law -1999.

    These are the names still in the news today. The honest, clear-thinking person – Brooksley Born – is lost in obscurity.

    And Revelations – If you don’t realize that the derivative and banking issues ARE the housing issues – Well….you aren’t paying attention.

  86. Pat says:

    I will never be talked out.

    How’s the new home?

  87. Cindy says:

    Hi Pat. No matter what, I will wake at 3. Good night all.

  88. Revelations says:

    Didn’t think of it that way. I was right there with you all, just didn’t know you existed yet.

    I almost bought a condo in San Diego in winter of ’03/’04 , but kept telling my wife that the fundamentals are all wrong. We were competing with drifters and temp workers for $250K condos, and I kept asking the realtor, how are they affording these? I wasn’t buying his answers about creative financing. I couldn’t see how they would get around the “if you borrow it, you have to pay it back” rule. Moved to NJ and watched the insanity build for 4 more years here. I’m STILL watching the insane asking prices > 5 yrs later. Needless to say my wife is tired of waiting, and I’m running out of excuses.
    ..So I come here for new ones :)

  89. Revelations says:


    Usually like your posts. You seem like a nice person, too.
    But I have been paying attention, and I understand the connection. You missed my point, which was volumes of commentary on deriviatives and securities don’t help the not-as-financially-literate-as-you crowd get RE advice. Perhaps the advice is: “don’t buy here” or “don’t buy in the US” b/c of banking and securities fraud. But I think that’s why people come here… Maybe not. Let’s hear from some you lurkers!!

  90. Revelations says:

    Er, maybe after a good nights rest, of course.

    Off to bed.

  91. Pat says:

    CF…too bad you can’t get a hold of a copy of the ppt for PSU’s stock market camp coming up in July. The camp is geared to grades 10-12 (layman).

    There’s a section on valuation.


  92. Curmudgeon says:


    I’ve recently commented on the “State of the Blog” and I fully agree with your observations. Grim provides great info and commentary; that’s why I keep reading. Unfortunately, the rest of the site has degenerated into an AOL Chatroom circa 1998. Lately, I give it a quick scan at the end of the evening but it’s pretty tedious to wade through the droning of the 8-10 “Dead Horse Beaters”… (Do I get a Cindy Smackdown now?)

  93. Essex says:

    On Home Ownership…..I have been saying this from the beginning….if you can afford it and like a place. Buy it.

    I have painstakingly brought back a 1953 raised ranch and in the meantime created a life for myself. I know and like my neighbors, I work and live in the same town…I enjoy seeing renewal and rebirth in my little sanctuary.

    Sure, we are fortunate to have two decent incomes in a very bad economy, but we’ve seen worse times personally.

    P.S. I just cleaned up my bunker….

  94. DL says:

    SAS; ref 6. Get ready for the full court press. Every media outlet, gov’t agency, and realtor will be telling you the worst is over, system is sound, and doing its best to pump the market in an effort to make the perception a reality.

  95. borat obama says:


  96. Stu says:

    Nice try Borat!

  97. Happy Daze says:

    Economics 101

  98. borat obama says:

    lastttt …hii fiiveeee

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