“Where’s the bottom?” Not in 2009…

From the Record:

Where’s the bottom?

Mounting economic woes worsened conditions in North Jersey’s stumbling housing market at the end of 2008, sending prices down another 8 percent and the number of sales down to levels not seen in nearly 20 years.

Amid a deepening recession and a banking crisis that squeezed the flow of mortgage money, the median price for a single-family home in Bergen and Passaic counties slipped to $390,000 in the fourth quarter, from $425,000 in the same period of 2007.

The drop marked the biggest year-over-year decline in the two-county region since the market began to stall in 2007.

The economic problems followed a yearlong buyer-seller standoff that staved off major price erosion as sellers held out for peak prices and refused buyers’ attempts to negotiate downward. But with economic conditions declining in late 2008, price drops accelerated and the market cooled so much that fewer than 2,000 homes sold in the two counties from October through December.

“It was bad as I’ve seen it in my 33 years in the business,” said Richard Stabile, president of ReMax Real Estate Associates in Woodcliff Lake. “It was the perfect storm for real estate.”

As Marlyn Friedberg of Friedberg Properties in northeast Bergen County said: “The market died. People went into hiding.”

An analysis by The Record of data obtained from county and state agencies found that:

* The median price for single-family homes in Bergen County sank from $455,000 in the fourth quarter of 2007 to $425,000 in the fourth quarter of 2008. In Passaic County, the decline was steeper, from a median of $370,000 to $335,000.

* Since the all-time peaks of $495,000 in Bergen County and $390,000 in Passaic County, medians in the two counties both are down 14 percent. While substantial, those drops are nowhere near the dips of 30 percent or more felt in other parts of the country.

* An estimated 1,600 to 1,700 homes sold in Bergen and Passaic counties from October through December. That is down nearly two-thirds since the all-time fourth-quarter high of 4,713 in 2004 and the first time since 1990 that fewer than 2,000 homes sold in any fourth-quarter period. The Record used past years’ trends to reach this estimate; the available data did not include all sales through the end of 2008 because of a lag in deed recordings.

* The downturn not only cut into potential profits for people who bought before the real estate boom of the 2000s, but it forced losses onto sellers who bought when prices were at their highest. Among the 185 homes that sold during the peak of the real estate boom and sold again in 2008, two-thirds lost value.

In many towns, sales were so few that median prices could not be meaningfully calculated. But among towns with at least 30 sales in the quarter, the combination of economic forces hit hardest in such places as Clifton, Fort Lee and Ridgewood, where prices were down 20 percent to 24 percent from their peaks.

At the other end of the scale, medians in Paramus, Ringwood and West Milford were off less than 10 percent.

Jeffrey Otteau, an East Brunswick appraiser who tracks the market statewide, predicted a 9 percent total drop in New Jersey prices in 2009.

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

215 Responses to “Where’s the bottom?” Not in 2009…

  1. sas says:


    No bottom for you.


  2. 3b says:


    And no, no bottom.

  3. sas says:

    interesting, not a bad gig:

    “Final-year rule boosts cop, fire pensions”

    -Yonkers taxpayers shelled out more than $3.2 million over the past year for a major benefit for their police and firefighters: pensions based on their more lucrative final year of pay instead of the average of their best three years

  4. Cindy says:

    (356) BC Bob

    “Bonuses are going to save the real estate market?”


    “I thought it was the wealthy Europeans.”


    Here’s an idea from Market Oracle:

    “Buy a Home, Get a Green Card”

    “..Couple 1 million new buyers with current US demand, and the excess inventory would be worked through within a year…”

    The proposal involves making buying a house a restriction for moving here for the next few years. Since about 1 million come each year, that would be 1 million buyers.

  5. sas says:


    “GMAC to add ‘hundreds’ of jobs in Charlotte”


  6. james says:

    Hey folks,

    I want to purchase american eagle gold coins. I would prefer not to use ebay. Can anyone refer a reputable dealer?

    Thanks in advance,

  7. Shore Guy says:

    ” Among the 185 homes that sold during the peak of the real estate boom and sold again in 2008, two-thirds lost value.

    Sure, but they are making it up in volume.

  8. Cindy says:


    “Housing Conversation Needs a Dose of Reality”
    Markham Lee – Seeking Alpha

    “While it may not be what people want to hear, the real conversation needs to be around the housing market stabilizing in terms of prices hitting bottom, in addition to acknowledging that prices were inflated during the boom and the gains weren’t real.”

    “In other words: the conversation needs to revolve around helping people cope with the new reality they live in, as opposed to providing them with false hopes and/ or a skewed sense of reality.”

  9. safeashouses says:

    #5 sas and kettle

    I like the ballyntine area of Charlotte.

  10. Shore Guy says:

    Bottom? Anyone looking for a bottom this spring or summer better go to Gunnison Beach at Sandy Hook. As for real estate, until people dig themselves out of debt, things will keep declining; even then, the “magic” has gone away, who in their right mind sees buying RE as a quick path to riches?

  11. Shore Guy says:

    ” prices were inflated during the boom and the gains weren’t real.”

    How many times have various people here said the same thing? Would that more people accepted this fact and saw the price decline as a positive sign.

  12. Herring123 says:

    For a minute there, I thought prices on the upper west side of manhattan fell enough for buying a 1BR to make sense from a rent-buy perspective, but then rents began to fall! Too bad I’m only 8 months into a 2-year lease (I expected rents to rise based on heightened demand for rentals and the policy of our government to address its problems by printing more cash).

  13. Shore Guy says:

    Does anyone have any knowledge about the area with the highest elevation along the Outerbanks, the mainland shore of NC, and the coasts of Florida and SC? I have been looking over topo maps but it is a rather slow process.

  14. chicagofinance says:

    200kplus says:
    March 22, 2009 at 1:37 pm
    Taxes are higher than before and Corzine intends to keep his state spending the way it is. Most people in NJ are sheep, they just pay their taxes because they make enough money. Imagine what happens when the people lose their jobs. There’s going to be less taxes to collect and Corzine will realize that he can’t raise taxes any more.

    Thus that’s why unless NJ starts gaining unemployment in the middle class, we won’t see any change in the state.

    So again NJ is sheltered because we’re relying heavily on the close proximity to NYC. And the current administration is hell bent on saving that financial sector at all costs. So that’s the reason why housing hasn’t tanked like the rest of the country.

    200Kplus: My contacts who work with Trenton say that it is about to get seriously ugly. NJ works on a 7/1-6/30 fiscal year. They are search for cash, but in an underhanded way. Any approved program that has been funded has to basically fork over any cash that they haven’t yet spent. There are exceptions obviously, and I’m sure someone will post a few here. Once they get past jury-rigging this year’s budget. They will have the election cycle for governor. Whatever happens there, it will not stop what will commence starting in about a year from now. It would happen right now, but they are using every delay tactic possible to get to the other side of the election.

    I hope this helps….

  15. LordJohnWarfen says:


    Heading down to outer banks in April for a week with the family. Bookings look fairly strong, holding off a little before finalizing, trying and get a deal.

    Pine Island seems really nice.

  16. schabadoo says:

    (Just catching up on the weekend thread)


    That’s a great amount of craziness for a Saturday; part McViegh, part Unabomber.

  17. jamil says:

    16 schabadoo: Modern medicine can do wonders. You should not delay treatment anymore. The men in white coats are your friends!

  18. jamil says:

    12 herring: “For a minute there, I thought prices on the upper west side of manhattan fell enough for buying a 1BR to make sense from a rent-buy perspective, but then rents began to fall!”

    Yeah. One-month free and no-fee is a standard policy. Some big buildings offer additional benefits, e.g. 1k gift card and free gym. Rents are also lower..Easily 15% off.

  19. jamil says:

    I understand why congress wants to focus on bonuses.

    UK media seem to be operating as an actual media (as opposed to local MSM):


    The 9,000 pet projects inserted in the
    budget by Congress include:

    – Removing tattoos from gang members (California): $200,000
    – Polynesian Voyaging Society (Hawaii): $238,000
    – Swine odour and manure management (Iowa): $2m
    – Preserving Lahontan cut-throat trout (Nevada): $250,000
    – Stable fly control (Nebraska): $866,000
    – Blackbird management (North Dakota): $265,000
    – Encouraging teenagers to abstain from sex (Pennsylvania): $24,000

  20. All Hype says:

    The Geithner toxic bailout plan will come out before the market opens tomorrow….


    My first guess about it’s success. Minimal….but I could be wrong.

  21. Frank says:

    “down 14 percent” Are you Fn kidding me?? You call this a recession?? Give me a break.
    I just got back from the Chicago RE auction, homes are selling for 5% of prior sale price. That’s down 95% for those that can’t do math. That’s recession. If 0bama could not help his home city, how is he going to help the country?

  22. safeashouses says:

    This house in Westfield looks nice.


    newly renovated and listed for 429k. Last sold in 4/08 for 430k. (according to trulia)

    Don’t know if the current or previous owner did the renovations.

  23. Frank says:

    The union for cops is too strong, this guy has no chance.
    A friend of my was a mayor of a small town, when it came to salaries, the cops said, we want 4% and it was it. There was no negotiation.

  24. Frank says:

    Again, what are you smoking?? 25% of Westfield is unemployed right now, this home will be selling for $159K in 12 months.

  25. veto says:

    “I have been looking over topo maps but it is a rather slow process.”

    You might want to download Google Earth, its a great way to get elevation.

  26. veto says:

    good article from ny times,
    i know lou neely personally, straight shooter, wharton guy i think.
    has done alot of innovative things in muni finance. has been educating people about the pension mess for a decade.

  27. Hudson Hawk says:

    #23, #25

    I’ll buy that for a dollar!


    Where’s the pet project to recycle doggie doo in Hudson County?

  28. Aardvark says:

    22 – please give more details

  29. Aardvark says:

    22 – are you serious – what type of homes are going for 95% off of the previous price .. I am moving to Chi – town if this it true…

  30. LordJohnWarfen says:


    The pilfering of our children’s future by the government in the past 3 months is unprecedented.

  31. yikes says:

    Dual income $1.4mn. But that’s pretty risky because my wife could lose her job. My income alone, ~$900k.

    august, you mind me asking what your wife does to make 900k?

    i want that job

  32. Shore Guy says:

    I don’t know Pine Island. It it flat or hilly?

  33. LordJohnWarfen says:


    Looks pretty flat, I will know April 11th.

    Whole island is pretty flat.

  34. 200kplus says:

    ” stan says:
    March 22, 2009 at 8:48 pm

    New Jersey public
    Safety Costs, Sunday NYT:

    Yeah that really hits it right on the head. The cops are nothing much more than the extension of the ‘think of the children’ syndrome. It’s just a ‘i fear for my safety’.

    I know of a cop in my town that’s on permanent disability for undue stress at work. This is a town of lexus and beemers.

    But the article hits it right on the money.

    1. Cops can’t be touched.
    2. There are paid well.
    3. There too many of them.
    4. You can’t get rid of them once they’re in.
    5. Cops only has to work 25 years.
    6. We pay for all the pensions and medical for life after they leave.

    For what? Sitting all night ticketing folks? There’s just no control over these people at all.

    I have no idea how a town can keep on approving all these new frivilous positions. Does the people have any say anymore?

    Corzine is not going to help get rid of them that’s for sure.

  35. Hobokenite says:

    “august, you mind me asking what your wife does to make 900k?

    i want that job”

    I think he was referring to the mortgage they could afford, not income.

  36. DoughBoy says:

    Those of you talking of the ‘cop problem’ just don’t know what you’re talking about. The real ‘cop problem’ is the same problem as every other industry: nepotism. Kids, cousins, son-in-laws, whoever no matter how far less they’re qualified they are than people who have applied get lined up with their appointments. Damn shame, I know a lot of people who would have been fine police officers who have gone elsewhere (location and profession).

  37. Chuchundra says:

    The pilfering of our children’s future by the government in the past 3 months is unprecedented.

    Unprecedented? Have been asleep for the last eight years?

  38. james says:

    I feel bad for anyone that isnt paying attention to whats going on in this country. Never thought I would live to see such interesting times. It makes me feel like a jewish guy in 1940 Germany.

  39. LordJohnWarfen says:


    Wide awake, the last 3 months worth of sending and bailouts are beyond the plae or the ability to repay.

  40. Chuchundra says:

    And spending hundreds of billions of dollars on two screwed up wars — the long-term cost of which will be well into the trillions — while giving massive tax cuts for corporate fat cats isn’t beyond the pale? Seriously?

    I’m hearing a lot of whining about the bailout and the stimulus, but what’s the alternative here? Should we just throw up our hands, let the financial institutions fail and hope things get better on their own?

  41. 200kplus says:

    ” james says:

    I feel bad for anyone that isnt paying attention to whats going on in this country. Never thought I would live to see such interesting times. It makes me feel like a jewish guy in 1940 Germany.”

    Unfortunately most people don’t want to hear of it. The polls shows it well. How is it possible that a good chunk of people still believe Corzine is doing a good job?

    I listen to 101.5 to and from work every day. It sickens me but knowing is better than being ignorant.

    What sickens me is that there’s no hope any more in the system. Every public officer is there to help themselves first then the people they are supposed to work for. So it isn’t just one useless governor anymore, it’s a whole blob that needs to be extinguished.

  42. Stu says:


    The answer is simple. Cut taxes on the rich and watch their wealth trickle down. Oh wait! That’s not wealth…that’s their urine. We’ve all become piss boys.

  43. DoughBoy says:

    Sometimes I think of my friends who make more money than I do, have their houses, their cars, their wife & 2 kids and I think I’m missing out on some things.

    Then I think about having zero debt, no lease or mortgage, rent that is covered with the pay from 2.5 days and know how happy and lucky I am to be able to pick up and leave when things go from the current bad to what looks like an inevitable worse.

  44. d2b says:

    Nepotism is the American way. On the one hand, some people grow up in the family business and they have a decade of experience before they are finished school. On the other hand, I have a friend that has been in the family business all of his life. He’s burned through most of the cushion that his father left him. He makes a living now. Fifteen years ago you would have considered him rich.

    I know a cops son that is on a hiring list stuck behind some regular applicants. They are doing everything that they can to get him on the force. Should be interesting to see how they get this done.

  45. DoughBoy says:


    Oh, I know. Hell, I know first hand because the only reason I got the interview for my current job was that I *knew* someone. Sure, I had to actually GET the job myself but if it wasn’t for that little bit I’d never be where I am.

    That being said, I’ve seen people be passed over for jobs on a few forces and when you find out who was actually hired, they always seem to share a last name with someone on the force or someone in a power-position in that town. It really depresses me that people being chosen to ‘protect and serve’ aren’t those who are the best qualfied.

  46. james says:

    Dough, it is very noble to live debt free and obviously you made sacrifices to achieve that. Just FYI, there is only 1 group of people that benefit from a hyperinflation scenario. The indebted. So if you are sitting on all cash I suggest you dont. I am dumping dollars by the thousands. Tangible assets (Guns, gold, ammo, land)is my move with a low rate mortgage as a hedge against inflation. Study the Weimar republic.

    PS. I am looking for referrals for reputable Gold retailers. Please inform.

  47. DoughBoy says:

    Yeah, I’m not sitting on a pile of cash but i’m not willing to go into the red. I’ve got a good amount of money set aside so that I can live in my current lifestyle without a job for 6 months and still have money for the various nightmare scenarios (exploding transmissions come to mind) and I’m funding my retirement accounts (which are still in the black, up roughly 4.5%).

    I do have some stuff: a car, a truck, a boat, high end quad, a ton of fishing gear, some various ‘high end’ toys.

    I was considering starting a good gun collection and maybe getting into hunting.

    I’m not so sure how much I like Au. Buying something when it is high just scares me.

  48. Qwerty says:

    RE: “This house in Westfield looks nice.”

    Lot size is 33 X 145. Looks like a $429K teardown, with the owner next door as the only potential buyer, who will plant grass seed in its place.

  49. james says:

    “I’m not so sure how much I like Au. Buying something when it is high just scares me.”

    Yeah me too, thats why its taken me so long to pull the trigger. I figure I will dollar cost average it. I fear for the future value of the dollar more than I fear losing them if I buy in on the high side.

    The numbers just dont work. If someone can explain to me how the Fed’s actions wont kill the dollar then I am all ears. China is losing confidence and they have said so publicly. The Fed is buying their own treasuries. So they print money then use it to buy their own debt? WTF! Perhaps they are exporting the inflation to China? China continues to buy US treasuries then they issue their currency. How long are they going to do that for? Why would they do that other than the fact we asked them too?

  50. cobbler says:

    China doesn’t know how to grow other than via the export-heavy model. The only country who is (was) willing to buy their exports in large quantity is the U.S. The only way we pay is in USD. That’s it. The Chinese Communist bosses know they will be in yet much deeper doodoo if they begin to dump their USD stockpile – sort of similar to pricing the subprime mortgages…

  51. grim says:

    From the APP:

    Learning to sell real estate in a struggling economy

    In a down housing market, Tinton Falls resident Mindy Borruso sees an opportunity for a career change.

    “I’d rather get into it when it’s tougher out there, because some of these people that got into it when it was at the height, they weren’t really salespeople. They were order takers,” Borruso said.

    At the time, demand for homes were high, and listings quickly had many offers with brisk sales. Now Borruso said her more than 20 years in advertising sales, before she lost her job, will come in handy.

    “When I get my start — and it’s tougher — I’ll be even a better Realtor because I’ll know what it’s like to really get out there,” she said.

    Borruso sat with a room full of other would-be real estate agents at the Monmouth Adult Education Commission’s real estate sales licensing course last week.

    Once they pass the course and the state exam, they’ll enter a rough real estate market. Last year there were 75,200 home sales, down from a peak of 145,692 sales in 2005, said real estate consultant Jeffrey Otteau, president of the Otteau Valuation Group in East Brunswick.

    That’s a decline of 47 percent. Talk about trial by fire.

  52. Clotpoll says:

    Dough (48)-

    High? You ain’t seen nothing yet.

    “I’m not so sure how much I like Au. Buying something when it is high just scares me.”

    All disclaimers. I am also the bast@rd offspring of one of the Hunt brothers.

  53. Clotpoll says:

    grim (52)-

    I bet a lot of the new agents immediately drub a lot of the old-timers.

    I’ve noticed that a fair amount of new licensees have some education, drive and instinct. A lot of good jobs have been lost, and getting a RE license is still a pretty fast way to inject oneself back into the realm of the earning.

    I’d rather teach a total newb how to do short sales than do the same with a 20-year veteran (most of whom are too stupid/lazy to do it or do it well).

  54. Mikeinwaiting says:

    Preaching to the choir.
    Have to read this one, he must post here.

    Policy-makers not only misunderstand the economic crisis, they continue to underestimate it. Consequently, solutions to date have not only failed to “fix” anything, they have made the problem worse. The problem isn’t falling asset prices, it’s not rising foreclosures, it’s too much debt. With an assist from mark-to-market accounting,* too much debt inflated the asset bubble in the first place. Yves Smith has it exactly right that the only “solution” to this crisis is price discovery, to allow asset prices to fall to whatever level they need to in order for markets to clear. This is bad news for over-levered balance sheets, but there’s nothing else to be done.

  55. Shore Guy says:


    But will the new folks have all the hair and makeup secrets? Some things take YEARS to perfect.

  56. afe says:

    Basking Ridge “Outlier”

    mls 2626918
    LP: 685k
    Sold ’02: 640k
    Sold ’06: 780k

  57. Shore Guy says:

    Let’s see where it sells. LP means nothing.

  58. afe says:

    Have seen that puppy on the market – at least a year now I think – current listing has DOM as 72.

  59. Shore Guy says:

    Are there any rules of any kind about how long one must pull a property before it may be listed as a “new” listing with new DOM? It strikes me, if it is not off the market at least 30 days, it is the same listing.

  60. afe says:

    Not sure Shore. I think once it expires, it can just be relisted w/ a new mls #. Maybe grim or clot can give us more insight.

  61. Mikeinwaiting says:

    Shore as far as I know just relist & it is a new listng.

  62. Mikeinwaiting says:

    You can also take off market before listing expires & relist with your agent to freshen up so to speak.

  63. Clotpoll says:

    afe (62)-

    No rules. Some agents list & relist…repeatedly.

    As always, the only rule in RE is caveat emptor.

  64. Clotpoll says:

    The only rules in the Ponzi Nation are for the purpose of extending the scheme.

  65. Clotpoll says:

    I think the pop the markets get today is the easiest shorting opportunity I’ve ever seen.

    Anybody else think this rally is over by the opening bell tomorrow?

  66. Clotpoll says:

    If there is a God, weasel-faced Timmay will go on TV today and rain all over his own parade.

    He must be great at parties.

  67. Clotpoll says:

    Is that Timmay’s real face, or does he suffer from chronic constipation?

  68. DL says:

    “Clearly, Corzine is in trouble. And he’s starting to act like he knows it. Three years of people complaining about high taxes, the need to rein in unions and his failure to do enough on ethics reform didn’t get through to him. The prospect of losing his re-election bid might.”

  69. Secondary Market says:

    This is huge:

    Critical meeting for Wolf Block


    Against a backdrop of failed mergers, layoffs and rising costs, partners at the law firm Wolf Block have been summoned to a meeting today to discuss the possible dissolution of the storied law firm, according to senior partners.

    The future of the 300-lawyer firm, which dates to 1903, transfixed the legal community over the weekend.

    Former City Solicitor Mark Aronchick, who spent nearly a decade at the firm, said that “if there’s any truth to the reports that Wolf Block partners are meeting to discuss dissolution, it’s a very sad and difficult day.”


  70. Comrade Nom Deplume says:

    Can’t post much today, or this week (so schab will have to find others to insult), but CBO is reporting that O’s budgets will lose trillions thru 2019.

    Reason they give is not deadweight loss, which I expect to happen thought the topline number seemed excessive for just that. Rather, ITHO, O isn’t taxing enough. The losses come from “tax expenditures” which is what joint committee types call it when the gov let’s you keep the money (seriously). So CBO says the budget pojections “lose” money because they aren’t collecting as much as they could.

  71. 3b says:

    365 clot: How is the Spring selling season shaping up in your neck of the woods?

    I would think we should see a big leg down in prices both asking and closed this Spring selling season.

    If not than do we slog thru yet another Spring selling season of sellers refusing to lower their prices, or lowering them slightly?

    If so that is simply amazing to me, after all that has unfold and continues to unfold.

    As I always say much more denial in this housing bust/recession than in the early 90’s.

  72. Sean says:

    Watched O’bama last night on CBS, he seems pretty convinced that we will need to save the big banks at all costs to avoid a depression, and that we will see our way out of this recession sooner than later do to a time compression factor in which information and events now occur.

    He also played it pretty cool on the 250k pay limits for Wall St, comparing the salaries in Arkansas to New York. Really bad analogy. His gallow humor comment and laughter will also come back to haunt him, it comes across as grounded in arrogance and wishful thinking. I have aleady heard rumblings in the MSM already about it.

    Romer, Bernake, Geithner, and Summers must have really sold O’bama a bill of goods on more spending to solve our spending problems. IE: massive inflation and dollar devaluation as the way out of the debt and recession.

    Romer made a statement yesterday that we will actually see growth by the end of the year.


    I don’t think we are going to see anything but massive losses worldwide on top of the 50 Trillion of asset price deflation we have already been witness to in the last 19 months. But hey what do I know, I only have been investing for 20 years while O’bama hasn’t bought or sold a stock in his entire life.

    We are truly toast…..

  73. 3b says:

    #74 sean:Romer made a statement yesterday that we will actually see growth by the end of the year.

    Amazing. Is that before or after we hit 10% unemployment before year end?

  74. All Hype says:

    Watching CNBC:

    Steve Liesman is going to be a sad person to watch when all these gubbmint plans fail.

    Economists are weird people. They have a cultist attitude about their economic theories and will argue them like they are defending their cult leader.

    No wonder why we are so screwed.

  75. Sean says:

    re#73 3b – Here is Romer’s comments on Growth by the end of this year!

    Speaking on CNN, Ms Romer said she had “every expectation, as do private forecasters, that we will bottom out this year and actually be growing again by the end of the year”.


  76. Clotpoll says:

    3b (73)-

    Spring market DOA here. Same pattern as always: most sellers not really selling as much as trolling for a sucker…those who have to sell price to market and get it done at levels far below the prevailing asking prices.

    “Lost” a listing last week to a competing agent who priced it 50K higher than my suggested ask (590K to 540K). Spent an hour yesterday in my office talking a youngish couple out of buying an investment property right now.

    These are the things I’m doing when I’m not fighting with banks and talking underwater borrowers out of doing things that will make their situations even worse.

    Ain’t RE easy?

  77. Shore Guy says:

    “Watched O’bama last night on CBS, he seems pretty convinced that we will need to save the big banks at all costs to avoid a depression, ”

    I wonder how many really strong banks we could create out od whole cloth for $1-2T? It would be far better to start fresh and let the toxic institutions and their enabling investors take their lumps.

  78. Clotpoll says:

    Sean (74)-

    It’s like watching Wil E Coyote crank his Acme Turbo-Charged Rocket further and further up the ramp.

    The only thing we know for sure is that it will make a bigger puff of smoke when it inevitably plunges into the canyon floor.

  79. Clotpoll says:

    Can’t be surprised that a nation full of shit-for-brains are led by shit-for-brains.

  80. Clotpoll says:

    Watch the people on the podiums at NAS and NYSE clap when the bell rings.

    Always reminds me of a pack of conditioned monkeys.

  81. Stu says:

    Busy day for me today.

    Checked out the treasury plan this morning. There are two simple reasons it is not going to work and why Clot see today’s pop as a fantastic shorting opportunity. One, no one in their right mind has any idea what the toxic assets (legacy loans) are worth. Two, who in their right mind is going to assume this kind of risk, even if Uncle Sam had cut the risk in half?

    Comments on the dollar. Heard this on Bloomberg this morning and agree with it. All currencies will drop together. No export dependent nation is going to allow their currency to strengthen against the US Dollar for it will kill their exports. This is why valuable commodities (shiny) may be the best option out there.

    Clot: I think you are two for two this morning.

    Disclaimer: I am the piss boy.

  82. Clotpoll says:

    I especially like when they smile and clap when the market has dropped 600 points.

  83. chicagofinance says:
  84. SG says:


    Real estate experts say demand is far less than what had been projected, in large part because seniors are leaving for cheaper locations. Baby Boomers who were expected to “trade down” into smaller, age-restricted are also deciding to stay put. Many are unable to sell their homes, or are keeping them as adult children and their families move back in.

    “That leaves the state’s vast amount of age-restricted housing in limbo,” Sarlo said. “People in real estate now believe there is already enough age-restricted housing built or in the pipeline to handle the lower demand for up to 20 years.”

  85. BC Bob says:

    “All currencies will drop together.”

    Stu [85],

    Yes, it’s the great race to the bottom for paper. There is a bull market, debasing of all currencies.

  86. stan says:

    I think B.O.’S push for more openness from the whitehouse will be trouble for him down the line. Showing himself as a man of the people, with his quips about handicapped bowling and the gallows humor, while true and pretty funny are more suited for me and my buddies sitting on the coach, then a sitting president.

    Sound bites last forever…..that being said, how could you not have gallows humor at this point.

    Putting out fires every hour on the hour needs a little humor

  87. Clotpoll says:


    FXP @ $28 may happen for you.

  88. Anon E. Moose says:


    Tiny – notice no total SF listed – great view of the inside of your neighbor’s bathroom. Wrong side of the tracks – Edison schools? Keep calling it “Westfield” though.

  89. 3b says:

    #78 sean: Amazing!! And yet the Fed last week from their announced statement removed the language stating that we would start to see growth by year end.

    Growth with a 9 or 10% unemployment rate? What am I missing.

    And who are these private forecasters? I am hearing/reading and most importantly seeing the exact opposite.

  90. Stu says:


    I am hopeful. I’m pretty hammered right now in that position and getting in at 28 should help me recoup a bit of the paper losses on my initial purchase at 54. I’m kind of glad that Geithner and company continue to wasted trillions on facades. When the canopy rips, the downward pressure is going to be unbelievable. Next earnings season can’t come soon enough (April 7th).

  91. Victorian says:

    “And who are these private forecasters? ”

    3b –

    Maybe this guy?

    `Bull-Market’ Equities Rally Has Begun, Templeton Asset’s Mark Mobius Says

  92. SG says:

    US doing a mini-Mozambique on its debts

    Obama’s Government deficit is now estimated by Goldman Sachs to reach $US2.5 trillion this year. That is an additional $US25,000 per household on top of record US mortgage, credit card and other debt.

    Official US federal debt is now approaching $US12 trillion. That is nearly $US120,000 for each household, and more than seven times national savings.

    No surprise that the Chinese Prime Minister has told the world he is now worried about the effects of these subsidies, doubtful loans, and deficits on the US bond market, the dollar and world trade. It was a stark warning that China may not finance future US Government bonds and government spending.

    Instead of wasting scarce funds on Wall Street mates, the President could divert what is left to training the unemployed.

    But creating more debt and encouraging more debt-based spending is a recipe for permanent recession.

  93. 3b says:

    #79 clot: Thanks clot. Seems pretty dead by me too. And yet almost everyday new delusionally priced listings come on the market in my town.

    As you probably get tired of me saying, I am just truly amazed at the denial out there.

    One listing came on a few weeks ago in my town, went quickly at a2002 closed price. I was going to bid on it, but did not want to on the very first one. Also not completely what I wanted but would have worked.

    In the meantime similar type houses are rotting on the market with asking prices of 100 to 150K higher and more, than the closed price on the above mentioned one.

    I guess I should just ignore the real estate market for 6 months, than come back and check out the landscape.

    Than of course there is the pesky matter of those NJ property taxes.

  94. twice shy says:


    The house is on Downer St. in Westfield. The Edison school reference is for the Edison middle school, south side Westfield.

  95. 3b says:

    #96 victorian:Bull-Market’ Equities Rally Has Begun, Templeton Asset’s Mark Mobius Says

    Yeah, based on what, bailout plans, rising unemployment massive inflation (down the road), confident consumers.

    These clowns should be splintered.

  96. Frank says:

    Existing homes sales up by 5%, where’s the recession???

  97. comrade nom deplume says:


    “Wolf Block have been summoned to a meeting today to discuss the possible dissolution of the storied law firm, according to senior partners”

    Holy crap, Batman!

    If it actually happens, that’ll hit CC like an OK City truck bomb.

  98. Victorian says:

    But..But…Didn’t C and BAC just say they were profitable last week? So, I am guessing that they won’t be a part of this plan, right? right?

  99. All Hype says:

    Existing homes sales up by 5%, where’s the recession???

    Where are they selling all the houses in the Northeast? Data says up 15%.

    prices down 15%. Bad news for the bagholders. The banks have just stepped in front of you to sell.

  100. Clotpoll says:

    plume (102)-

    There goes Le Bec Fin.

  101. Shore Guy says:

    “One, no one in their right mind has any idea what the toxic assets (legacy loans) are worth. ”

    If these things trade on pennies on the dollar, or anything less than 100 cents on the dollar, how can anyone advocate an adjustment of mark to market?

  102. BC Bob says:

    “Existing homes sales up by 5%, where’s the recession???”

    Buffoon [101],

    “Sales of foreclosed properties or short sales accounted for about 45% of sales, the real estate trade group said.”


  103. jamil says:

    “Amazing!! And yet the Fed last week from their announced statement removed the language stating that we would start to see growth by year end.”

    Not so far-fetched. O will kill the economy in 6 months. Then, we’ll see growth when the starting point is so low.

    “See, houses are selling for $2000. They are up 50% from last month! We are having strong growth”. Likewise for everything else.

  104. Clotpoll says:

    SG (104)-

    Great article. Most chilling part, to me:

    “The most likely scenario, should the Geithner plan go through, is a combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil. Ultimately the losses fall on the public anyway, since deposits are largely insured. There is no chance that the banks will simply resume normal long-term lending. To whom would they lend? For what? Against what collateral? And if banks are recapitalized without changing their management, why should we expect them to change the behavior that caused the insolvency in the first place?”

  105. chicagofinance says:

    Stu says:
    March 23, 2009 at 9:51 am
    Clot: I am hopeful. I’m pretty hammered right now in that position and getting in at 28 should help me recoup a bit of the paper losses on my initial purchase at 54. I’m kind of glad that Geithner and company continue to wasted trillions on facades. When the canopy rips, the downward pressure is going to be unbelievable. Next earnings season can’t come soon enough (April 7th).

    Stu: At the casino, sometime you have to put some of your winnings in your pocket and walk away. Keep you bets level. Don’t fcuk this up. Quote me next month if you wish as a useless a55hole when you look prescient.

  106. bklynhawk says:

    Happy Monday morning everyone!

    Could I get some help with this listing:

    MLS ID #2598404

    I know some of the older history, but kind of curious what’s happened over the last 90 days.

    BTW, Grim, great charts as always. I’ll be making a donation today. You may want to create another Amazon wish list or something along those lines, as well.

  107. Stu says:

    Just looked at a chart of the existing home sales report. February of 2005, 2006, 2007 and 2009 all exhibited a similar increase. February of 2008 had an increase, but it was much smaller than the other 4. People can read whatever they want into this months data. I see nothing more than a nice month over month pop due to a plethora of foreclosure sales. Year over year, the drop is still -4.6%. Toodles.


  108. Stu says:


    I hear ya. I sold a bit around the edges of my SRS for a nice profit last week. Was my shortest term trade ever. I think I held it for 72 hours.

    I just don’t see any recovery taking hold in the near term (6-9 months) based on all of the data in which I study. Once I do, I will sell all with a loss if that is the position I am in. I do not let stock price alone dictate my buys and sells.

  109. Stu says:

    And Chi:

    I do keep my bets level. I am now fully positioned in FXP but not yet full in SRS as I sold off that 1/6th piece last week. I am still playing with the banks money (what I made on the SRS spike last year) and it is not even close to all of it.

  110. Shore Guy says:

    Let’s just take $1.5 T and initially capitalize 6 new banks with $250B each. Sound money and assets will flow here and the toxic institutions and investors can take their lupms. The current plans have moral hazard written all over them.

  111. 3b says:

    #110 clot: Any comments on thoday’s existing housing #’s?

  112. Clotpoll says:

    3b (117)-

    REO and distressed properties- of all types- now dominate every regional market’s sales. Why wouldn’t you see a rise in sales?

    IMO, only a 5% rise is anemic, at best.

  113. Clotpoll says:

    Chi (111)-

    You know my bets are level. I’m fully short the planet, as lines of eager RE buyers still are not queued up outside my office.

    I’d love to be short-squeezed into oblivion. That’d mean I can go back to doing my day job.

  114. Stu says:

    Shore Guy:

    It’s what FDR did, only FDIC insurance did not yet exist so both shareholders and account holders got wiped out. Today, anyone with 250K or less will be protected which makes the move less politically risky.

    Of course, the government is only interested in padding the pockets of the rich. Perhaps the porkulus will end up being the only benefit that the middle and lower classes see out of this whole charade. Maybe we shouldn’t be so critical of it.

  115. Clotpoll says:

    3b (117)-

    Of even more import are the numbers of distressed, abandoned and improperly-handled properties that still have not found their way to market.

    Too bad nobody seems to know the exact number…yet everyone knows they’re there.

    Natch, TPTB have decided the best course of action to take with this massive inventory of shame is for all the players to collectively pretend it doesn’t exist.

  116. 3b says:

    #118 clot:IMO, only a 5% rise is anemic, at best.

    Good point, aof course there are those who will try and spin it.

  117. Shore Guy says:

    “collectively pretend it doesn’t exist.”

    Back when we were an economically-secure nation, we used to take-on big and complex problems in a straighforward way. We seem to have lost that ability..

  118. bklynhawk says:

    OT (Actually on the compound/survivalist topic)-

    Here’s a place the future compound inhabitants could stock up on some equipment/supplies:


  119. Shore Guy says:

    …willingness, anyway

  120. still_looking says:

    nom 102

    What is CC?

    My partnership is represented by them. What are the implications for us?

    Not sure if anyone at “home” knows about this. Would our assigned legal counsel guy have a reason to not report this to us.

    It this a problem? Forgive my naivete – it’s just not my area of expertise.



  121. confused in nj says:

    Administration officials said the plan put forth Monday will deploy $75 billion to $100 billion from the government’s existing $700 billion bailout program for the purchase of bad assets — resources that will be supported by loans from the Federal Deposit Insurance Corp. and a loan facility being operated by the Federal Reserve.

    Under a typical transaction, for every $100 in soured mortgages being purchased from banks, the private sector would put up $7 and that would be matched by $7 from the government. The remaining $86 would be covered by a government loan provided in many cases by the Federal Deposit Insurance Corp.

    Geithner defended the decision to have the government carry so much of the risk. He said the alternative would have been to do nothing and risk a more prolonged recession or have the government carry all of the risk.


  122. Shore Guy says:

    ” He said the alternative would have been to do nothing and risk a more prolonged recession or have the government carry all of the risk.”

    Sure, because bearing all the risk and getting all the upside is far, far, far worse for taxpayers than taking on 93% of the risk and getting NONE of the upside.

    I think I hear fiddles in the banking woods.

  123. 3b says:

    grim/richnj When one of you guys get a chance, can you please give me the sales history and taxes for njmls #2910947. Thanks.

  124. Stu says:

    “The remaining $86 would be covered by a government loan provided in many cases by the Federal Deposit Insurance Corp.”

    Oh Yeah? The same FDIC that is not even close to self supporting?

    What a friggin joke.

  125. Shore Guy says:

    The bankers are about to tell Timmy:

    “Come over here and pray and pray real good,” as the solvent amongst us squeal like pigs.

  126. Shore Guy says:


    Please stop paying attention. You will throw a monkey wrench into the machinery by being thoughtful and logical.

  127. SG says:

    OT: This was interesting home construction method, esp for hot weather climates.

    $2,500 USD Habiterra Affordable House

  128. Shore Guy says:

    I wonder who will play the part of Burt Reynolds in this production. Of course, MS may have had the boat sunk.

  129. Stu says:

    Once our debt becomes so large that we lose our foreign treasury support, then we will finally close the insolvent banks, but not before transferring all of your wealth and a good amount of your offsprings. What a complete and total waste. How does it feel to get fiscally raped ya’all?

  130. ruggles says:

    cc = center city. like midtown manhattan

  131. Shore Guy says:


    Just so the powers that be understand that I AM NOT advocating any such thing but, we 2e on the cusp of the kind of situation that leads to revolts. Unfortunately, like the petri dish where the population doubles every minute, even at 5 minutes before the populatiin reaches its limit, there will be little sign of the social explosion to come. I wish I had more faith that the folks running the store on our behalf were on-top of the situation.

  132. Shore Guy says:

    apparently, 2e is a new substitution for “are”

  133. confused in nj says:

    Part I: Geithner’s Plan “Extremely Dangerous,” Economist Galbraith Says
    Posted Mar 23, 2009 11:08am EDT by Henry Blodget in Investing, Newsmakers, Recession, Banking
    Related: ^gspc, ^dji, c, bac, jpm, WFC
    Tim Geithner has finally revealed his plan to fix the banking system and economy. Paul Krugman, James Galbraith, and others have already trashed it.

    [We spoke with noted economist Galbraith this morning. In the accompanying segment, he calls the Treasury Secretary’s plan “extremely dangerous.”]


    In short, because the plan is yet another massive, ineffective gift to banks and Wall Street. Taxpayers, of course, will take the hit

    From The Business Insider, March 23, 2009:

    Tim Geithner has finally revealed his plan to fix the banking system and economy. Paul Krugman, James Galbraith, and others have already trashed it.


    In short, because the plan is yet another massive, ineffective gift to banks and Wall Street. Taxpayers, of course, will take the hit.

    Why does Tim Geithner keep repackaging the same trash-asset-removal plan that he has been trying to get approved since last fall?

    In our opinion, because Tim Geithner formed his view of this crisis last fall, while sitting across the table from his constituents at the New York Fed: The CEOs of the big Wall Street firms. He views the crisis the same way Wall Street does–as a temporary liquidity problem–and his plans to fix it are designed with the best interests of Wall Street in mind.

    If Geithner’s plan to fix the banks would also fix the economy, this would be tolerable. But no smart economist we know of thinks that it will.

    We think Geithner is suffering from five fundamental misconceptions about what is wrong with the economy. Here they are:

    The trouble with the economy is that the banks aren’t lending. The reality: The economy is in trouble because American consumers and businesses took on way too much debt and are now collapsing under the weight of it. As consumers retrench, companies that sell to them are retrenching, thus exacerbating the problem. The banks, meanwhile, are lending. They just aren’t lending as much as they used to. Also the shadow banking system (securitization markets), which actually provided more funding to the economy than the banks, has collapsed.

    The banks aren’t lending because their balance sheets are loaded with “bad assets” that the market has temporarily mispriced. The reality: The banks aren’t lending (much) because they have decided to stop making loans to people and companies who can’t pay them back. And because the banks are scared that future writedowns on their old loans will lead to future losses that will wipe out their equity.

    Bad assets are “bad” because the market doesn’t understand how much they are really worth. The reality: The bad assets are bad because they are worth less than the banks say they are. House prices have dropped by nearly 30% nationwide. That has created something in the neighborhood of $5+ trillion of losses in residential real estate alone (off a peak market value of housing about $20+ trillion). The banks don’t want to take their share of those losses because doing so will wipe them out. So they, and Geithner, are doing everything they can to pawn the losses off on the taxpayer.

    Once we get the “bad assets” off bank balance sheets, the banks will start lending again. The reality: The banks will remain cautious about lending, because the housing market and economy are still deteriorating. So they’ll sit there and say they are lending while waiting for the economy to bottom.

    Once the banks start lending, the economy will recover. The reality: American consumers still have debt coming out of their ears, and they’ll be working it off for years. House prices are still falling. Retirement savings have been crushed. Americans need to increase their savings rate from today’s 5% (a vast improvement from the 0% rate of two years ago) to the 10% long-term average. Consumers don’t have room to take on more debt, even if the banks are willing to give it to them.

    The two charts below from Ned Davis illustrate the real problem: An explosion of debt relative to GDP. The first is Nonfinancial Debt To GDP. The second is Total Debt To GDP.

    In Geithner’s plan, this debt won’t disappear. It will just be passed from banks to taxpayers, where it will sit until the government finally admits that a major portion of it will never be paid back.

    Too bad we don’t have Capital Punishment for Economic Treason starting with “O”. Stupidity not being a valid excuse.

  134. jamil says:

    Would it be too much to ask to fill the open Treasury positions? I know it is hard to find leftist who has not cheated on this taxes but surely there are must be at least one? Timmy is now the only nominee (I think 18 top positions are unfilled).

    Maybe all those White House Girls and Women Council nominations, and hanging around with Jay Leno are more fun?

  135. 3b says:

    #135 stu: how long before the markets figure this out? Tomorrow??

  136. zieba says:

    I don’t understand why so many, seemingly of relatively good pedigree, are closing up shop. We’re these partnerships running on such small margins that they can’t cover debts or see business going forward with reduced staff? Were there increased draws during the good times?

    Surely, business can’t be down 100% percent even for the transactional folks.

    Does it make more sense to just dissolve and reform with half the partners at half the overhead and retain goodwill?

  137. Victorian says:

    From Krugman –

    Leave on one side the question of whether the Geither plan is a good idea or not. One thing is clearly false in the way it’s being presented: administration officials keep saying that there’s no subsidy involved, that investors would share in the downside. That’s just wrong. Why? Because of the non-recourse loans, which reportedly will finance 85 percent of the asset purchases.

    Let me offer a numerical example. Suppose that there’s an asset with an uncertain value: there’s an equal chance that it will be worth either 150 or 50. So the expected value is 100.

    But suppose that I can buy this asset with a nonrecourse loan equal to 85 percent of the purchase price. How much would I be willing to pay for the asset?

    The answer is, slightly over 130. Why? All I have to put up is 15 percent of the price — 19.5, if the asset costs 130. That’s the most I can lose. On the other hand, if the asset turns out to be worth 150, I gain 20. So it’s a good deal for me.

    Notice that the government equity stake doesn’t matter — the calculation is the same whether private investors put up all or only part of the equity. It’s the loan that provides the subsidy.

    And in this example it’s a large subsidy — 30 percent.

    The only way to argue that the subsidy is small is to claim that there’s very little chance that assets purchased under the scheme will lose as much as 15 percent of their purchase price. Given what’s happened over the past 2 years, is that a reasonable assertion?

    Update: Another way to say this is that by financing a large part of the purchase with a non-recourse loan, the government is in effect giving investors a put option to sweeten the deal.

  138. comrade nom deplume says:

    [126] still,

    There are a lot of things to consider. This is better discussed entre nous, as it were. You have my email.

  139. Stu says:

    “#135 stu: how long before the markets figure this out? Tomorrow??”

    If I knew this, I would not have to eschew the values of daytrading. Everyone should be more concerned about the long-term implications of all of these terrible government actions. A 5 or 10% change in the market means nothing to me. Once the market goes rational again, a 5-handle would not be out of the question in my opinion.

  140. 3b says:

    #145 stu: Agreed. In the last few months every so called solution out of D.C. has been greeted with initial euhporia by the markets.

    Only to have them digest it, and than realize the solution is more of the same, which is nothing, only to be followed by by another big leg down in the markets.

  141. chicagofinance says:

    ruggles says:
    March 23, 2009 at 11:24 am
    cc = center city. like midtown manhattan


  142. Justin says:

    cc = chocolate city = DC?

  143. Nicholas says:

    Charm City
    Ci Ci’s pizza
    Circuit City

  144. still_looking says:




  145. still_looking says:

    144 nom

    ok! thx, will do.


  146. chicagofinance says:

    Clotpoll says:
    March 23, 2009 at 10:08 am
    plume (102)- There goes Le Bec Fin.

    Shot in the arm for Geno’s…..

  147. Nicholas says:

    I have been busy and haven’t gotten around to doing the analysis for my own areas given the MRIS data. It looks like February was one of the worst months for house value decline in MD.

    Nearly 60,000$ lost on the Average Sold value.

    Average Sold Price

    Feb-06 403,175$
    Feb-09 249,056$

    If homes were selling in MD then they were definitely distressed. 17 months of inventory remain on the market for 20715.

    You were losing 50,000$ a year for three years if you bought at the top of the RE bubble. That’s quite a sum of money considering the median income is just about that range.

  148. Stu says:

    “Ci Ci’s pizza”

    My parents made us eat there when we were doing Disney last week. Three people ate for $13.00. Unfortunately, it wasn’t worth $3.00!

  149. Nicholas says:

    My office mate said that if I invested in SRS then the recession would end and I would lose my money.

    I bought some SRS because if thats what it takes to end the recession/depression then I better do my part.

  150. Nicholas says:

    I agree with you about Ci Ci’s pizza Stu.

  151. Shore Guy says:

    “Three people ate for $13.00. Unfortunately, it wasn’t worth $3.00!”

    Are you sure the name of the place wasn’t Geithners?

  152. chicagofinance says:

    I remember eating lunch as a party of 4 on E6th Street/ Curry Row (circa 1992). The bill came and it was $19.50. I was aghast that it was that inexpensive.

  153. BC Bob says:

    Feb-06 403,175$
    Feb-09 249,056$

    Nicholas [153],

    Approx 40% off peak in MD?

  154. Shore Guy says:

    “February was one of the worst months for house value decline in MD. ”


    Not to worry, all the folks leaving Ft. Monmouth for Aberdeen will rescue Md.

  155. All Hype says:

    I admit I got fooled this morning. When I head that sales were up, I thought it was YOY. I was wrong.


    But hey, time to sky the market boys!

  156. Nicholas says:

    Shore Guy,

    Someone from my office said that the BRAC realignment will save RE here.

    I just laughed in his face. I have been sitting next to three empty townhomes for the last six months. Maybe some of those people from BRAC can move near me. I’m only 25 mintues away from Ft. Meede.

    Those three townhomes are not listed from what I can find on the internet.

    Yep, we hit 40% off the market high after three years. I’m going to be watching for the next 3-4 months and then if things have stabilized I will look to making a purchase this fall.

  157. yikes says:

    livinginpa says:
    March 22, 2009 at 7:15 pm

    From Bucks, some anecdata…

    listings are up significantly in the last two weeks or so. Went to several open houses today with lots of looker traffic. These homes were all in the 600k+ range. Don’t know whether traffic will actually translate into sales. Wish I had access to the bucks MLS. I am perplexed b/c we have lots of Merril and Pharma employees here. The market seems much more positive than one would expect.

    a lot of jersey folk coming over to see what the buzz is about? i still haven’t seen concrete #’s on how much values went up in the last 6-7 years.

    calculated the house we bought in jan … they lived here for about 15 years and gained less than 7% per year (based on what they bought for and what they sold for).

  158. skep-tic says:

    Would appreciate spa recommendations within 2 hrs of NYC. Wife’s birthday is coming up.

  159. Nicholas says:

    Why can’t we get an economic recovery plan that includes institutional changes to fiance as the cornerstone even if it includes propping up the old one until the new one comes along?

    Maybe try putting something together that includes tighter oversight, restrictions on campaign contributions, stronger shareholder power over pay. All the while you could introduce a stronger SEC, begin enforcment of on-the-books regulation, rewrite regulation that isn’t working.

    Use that as a cornerstone to financial reform and THEN propose a plan that includes scrubbing these toxic assets from balance sheets.

    I’m tired of hearing plans that loot the taxpayer with nothing in return and no promise that it won’t happen again in the future.

  160. Victorian says:

    Looks like JPM is doing some stimulating of its own..

    Embattled bank JPMorgan Chase, the recipient of $25 billion in TARP funds, is going ahead with a $138 million plan to buy two new luxury corporate jets and build “the premiere corporate aircraft hangar on the eastern seaboard” to house them, ABC News has learned.


  161. 3b says:

    Well down here on Water St today, Cops are posted outsied AIG.

    Oh and they took the AIG name down from outside the building

  162. Victorian says:

    “I’m tired of hearing plans that loot the taxpayer with nothing in return and no promise that it won’t happen again in the future.”

    Nicholas – Joe6P still does not understand what is being done to him and by the time he does, the republic would have been completely looted. Crony capitalism at its best.

  163. skep-tic says:

    look at the way the absorption rate spikes up in Nov in grim’s chart. That is crazy. I am currently seeing 5x as many new listings as sales coming on the market. We are no where close to a bottom

  164. make money says:

    Oh and they took the AIG name down from outside the building.

    Is it being re-named Nancy Pelosi? After all her knees bucked when Hank kneeled down and blew smoke up her as.

  165. schabadoo says:

    It makes me feel like a jewish guy in 1940 Germany.

    Can’t post much today, or this week (so schab will have to find others to insult)

    The victim mentality is strong in this thread.

  166. make money says:


    NEW YORK (Reuters) – Workmen rolled up their sleeves at American International Group Inc this weekend to take down the most prominent sign at the downtown Manhattan offices of the embattled insurer that has become the scorn of America.

    A spokesman said the company had decided to replace the large AIG sign — outside the entrance to its property-casualty offices — as part of its plan to change that operation’s name to AIU Holdings Ltd.

  167. 3b says:

    #172 make: Well that explains it.

  168. chicagofinance says:

    skep-tic says:
    March 23, 2009 at 1:00 pm
    Would appreciate spa recommendations within 2 hrs of NYC. Wife’s birthday is coming up.

    Here ya’ go….

  169. Kettle1 says:

    Shore 137

    You nailed it on the head!

    The greatest shortcoming of the human race is our inability to understand the exponential function – Albert Bartlett

    An example:

    Suppose we had bacteria with a doubling time of 1 minute ( that is one bacteria becomes 2 in 1 minute). Suppose we put one of these bacteria into an empty bottle at 11:00 in the morning, and then observe that the bottle is full at 12:00 noon.

    When have 50% of the intial resources for bacterial growth been consumed?

    Now consider that constant positive growth over a time period, whether 1% or 10% constitutes exponential growth. The US GDP growing at an average rate of 1.5% for a given time period is exponential growth.

    the danger in exponential growth is you dont see the cliff until you are doing 100 MPH and are 10 ft from the edge.

    If danger / limits (i.e resource shortages) are immediately apparent within an exponential system then its probably to late to fix the problem in a desirable manner.

  170. schabadoo says:

    Could someone recommend a restaurant near the Paper Mill Playhouse? I hear the one in the theater is mostly sandwiches and wraps.

  171. Stu says:


    Spent way too many late nights keeping the puke down at “the spa”. Best cheese fries ever.

  172. NJGator says:

    schabadoo – what are you looking for?

  173. Stu says:


    Anything in Millburn Center is walkable. Can’t really recommend any though cause for some reason, I don’t ever remember eating in Millburn.

  174. NJGator says:

    RE: AIG changing their name to AIU – this is just like Freehold Area Hospital changing their name to CentraState Medical Center. I’m sure it really was to “better reflect the greater area they served” and had nothing to do with their bad rep after a few too many malpractice lawsuits are filed.

  175. Kettle1 says:




    this place is supposed to be pretty good. My wife loves it. its in Morris plains/parsimony

  176. confused in nj says:


    1. Open a new file in your computer.

    2. Name it ‘Barack Obama’.

    3. Send it to the Recycle Bin.

    4. Empty the Recycle Bin.

    5. Your PC will ask you: ‘Do you really want to get rid of ‘Barack Obama?’

    6. Firmly Click ‘Yes.’

    7. Feel better?

    GOOD! – Tomorrow we’ll do Jon Corzine!

  177. schabadoo says:


    Something nice, pricey’s ok. We go to the theater so infrequently now, would like to maximize the enjoyment.

  178. comrade nom deplume says:

    [176] schab,

    Can’t believe I am helping you, but the Martini Bar in downtown Millburn is great. Only went once but food and service were excellent.

    It’s where all us victims like to hang out.

  179. schabadoo says:

    Here ya’ go….

    I lived two blocks from the Spa. Great drunk food.

  180. confused in nj says:

    Part II: Geithner, Obama Kowtowing to “Massively Corrupted” Banks, Galbraith Says
    Posted Mar 23, 2009 12:07pm EDT by Aaron Task in Newsmakers, Banking
    Related: XLF, FAS, SKF, C, BAC, JPM, ^DJI
    Like it or not, many people seem to be resigned to the idea there’s no alternative to the public-private investment fund scheme Treasury Secretary Geithner detailed this morning. (Click here for part one of our discussion of the plan.)

    That’s hogwash, says University of Texas professor James Galbraith, author of The Predatory State. Of course there’s an alternative: FDIC receivership of insolvent banks.

    Aside from being legally proscribed, the upside of FDIC receivership is the banks are restructured and reorganized for potential sale (either in whole or parts), Galbraith says. Such was the fate in 2008 of, most notably, Washington Mutual and IndyMac.

    Crucially, FDIC receivership also means new management teams for insolvent banks; and Galbraith notes new leaders will have no incentive to cover up the fraudulent or predatory lending practices of their predecessors. Given the entire system was “massively corrupted by the subprime debacle,” the professor believes criminal prosecutions on par with the aftermath of the S&L crisis – when hundreds of insiders went to jail – is a likely (and necessary) outcome of the current crisis.

    But don’t expect to see many “perp walks” if Geithner’s current plan comes to fruition. That’s one reason Galbraith called the plan “extremely dangerous” in part one of our interview.

    So why isn’t the Obama administration pushing for FDIC receivership? “Political influence of big banks,” the economist says.

  181. SG says:

    Taxpayer puts up 94% & gets 50% PROFIT

    It seems some democrats are not too happy.

  182. NJGator says:

    Nom 184 – You must just be a regular bleeding heart :)

    I second the recommendation for Martini. Pizzeta next door is a little more casual alternative with good food (same owner). Then there’s also:

    Semolina (got a “Very Good” review from Los Tiempos del Nueva York).


  183. Stu says:

    “Taxpayer puts up 94% & gets 50% PROFIT

    It seems some democrats are not too happy.”

    That’s because they are afraid they’ll be no money left for Porkulus II.

  184. 3b says:

    grim: Please see poat #129 when you get a chance. Thasnks.

  185. Shore Guy says:

    ” AIU Holdings Ltd.”

    It should be called AIOU.

  186. Sastry says:

    #182: confused…

    Did that for so long with Rummy, Dubya and rest of GOP. Worked for me, but it was a very painful process.

    Good luck. I hope you never have to go through the loss of basic rights that have happened in the past eight years. May be a 3% tax cut for some is worth it [oh, and a small matter of a credit crisis and a housing price adjustment].


  187. Clotpoll says:

    confused (139)-

    The “piano wire” threats at AIG people were misdirected.

    They should’ve been sent to weasel-faced Timmay.

  188. Sastry says:

    schabadoo says:

    The victim mentality is strong in this thread.

    “It makes me feel like a jewish guy in 1940 Germany.”

    Second that. Based on the original poster’s trivialization of the holocaust, I can wager that he/she hasn’t met any jewish person from ’40s Germany. I’d further wager that further that he/she is not jewish, and very likely a closet anti-semite too!


  189. schabadoo says:

    Can’t believe I am helping you

    Very Christian of you.

  190. Clotpoll says:

    And I thought I was the nasty guy here…

  191. Clotpoll says:

    Anybody see Weasel Face on CNBC at 2:00?

  192. chicagofinance says:

    Wall Street Journal – Op-Ed page A15

    OPINION MARCH 22, 2009, 11:36 P.M. ET The Bonus Tax Is Just Plain Stupid
    Come October I’ll have no incentive to work anymore.


    Like Bernie Madoff, I’ve got the government coming after my money. Unlike Madoff, I didn’t do anything wrong.

    The House of Representatives, alas, thinks otherwise. Last Thursday, 328 members voted for a bill that would slap a 90% surtax on my bonus, with Ways and Means Committee Chairman Charles Rangel dismissing the payout I received in January as “repugnant to everything that decent people believe in.” The Senate is considering a similar bill.

    All of this might come as a surprise to those of you who recognize my byline. Until a year ago, I was The Wall Street Journal’s personal-finance columnist — and widely considered to be a friend of the ordinary investor.

    But that was then. In April 2008, I left to join a new Citi venture. (What follows are my views — not those of Citigroup Inc.) For the past year, I thought I was involved in building a wonderful, customer-friendly business that minimizes conflicts of interest, favors index funds, and helps everyday Americans with their entire financial lives.

    It seems that I was sadly mistaken. If the rebuke from Washington is any guide, I have apparently played an integral part in the collapse of the global economy and the financial markets — and I must be punished.

    Should the House bill become law, my bonus will be taxed at up to 90% once my adjusted gross income hits $250,000. The tax will apply to employees of those companies, like Citi, that have received more than $5 billion from the government’s financial rescue program. As you might imagine, this is a tad perplexing, given that I’ve never been involved in lending to subprime mortgage borrowers and, as far as I know, nor have any of the folks I now work with.

    In fact, many of the Wall Street executives responsible for today’s mess have long since moved on — and, unless they receive a bonus in 2009, will escape the 90% surtax. Unfair? Indeed, it is. The House bill is akin to, say, penalizing the earnings of today’s politicians because their predecessors failed to save us from the current economic debacle.

    I realize readers won’t be shedding tears — $250,000 is a decent chunk of change (though, trust me, it doesn’t buy that great a lifestyle in New York). Still, the bill could cause financial headaches. Some of my colleagues have already spent their bonus or put a big chunk into their 401(k) plan, so finding the money to pay the 90% tax will be a struggle. Some have total incomes that don’t come close to $250,000 — but they breach that level once their spouse’s salary and their investment income are included. The bill could also hurt the economy, encouraging banks to cut back on lending, so they can return their bailout money and protect employees from the surtax.

    Not buying the hardship angle? Not persuaded that this tax is unfair? Consider this truly searing indictment: A 90% tax is downright stupid, creating bizarre disincentives. Exhibit A? That would be me. Once my total income hits $250,000 for the current calendar year, I will have no incentive to work a single day more in 2009. After all, for every extra dollar of income I earn above $250,000, I will lose 90 cents of the bonus I received earlier this year.

    Being somewhat knowledgeable about personal finance, I’m trying to figure out how to finagle this. By minimizing my investment income in 2009 and pushing other income into 2010, I reckon I can delay the day of tax reckoning. But even with that finagling, by mid-October, I will hit $250,000 in total income — and have no incentive to earn any more income in 2009.

    At that point, I plan to ask Citi for an unpaid sabbatical. Forget earning more income. There’s no point. Instead, you will find me hunkered down at home, desperately trying not to spend money. This will make entire financial sense for the Clements household. What about the struggling economy? Not so much.

    Mr. Clements is director of financial guidance for myFi, a unit of Citi, and the author of “The Little Book of Main Street Money,” out in May by Wiley.

  193. chicagofinance says:

    WSJ Editorial

    A Smoot-Hawley Moment?
    Congress on AIG and banks: ‘Oppressive, unjust and tyrannical.’

    When does a single policy blunder herald much larger economic damage? Sometimes it’s hard to know ahead of time. Few in Congress thought the Smoot-Hawley tariff was a disaster in 1930, but it led to retaliation and a collapse of world trade. The question amid Washington’s AIG bonus panic is whether Congress’s war on private contracts and the financial system is a similarly destructive moment.

    It is certainly one of the more amazing and senseless acts of political retribution in American history. In its bipartisan rage, the House saw fit last week not merely to punish the employees of AIG’s Financial Products unit that the company still needs to safely unwind credit default swaps. The Members voted, 328-93, to slap a 90% tax on the bonuses of anyone at every bank receiving $5 billion in TARP money who earns more than $250,000 a year. A draft Senate version is even broader. Never mind if the bonus was earned last year or earlier, or under a legally binding employment contract. The confiscatory tax will apply ex post facto.

    Never mind, too, that such punitive laws were expressly deplored by America’s Founders. In Federalist 44, James Madison warned that “Bills of attainder, ex post facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation.”

    In 1827 in Ogden v. Saunders, the U.S. Supreme Court issued a similar warning about legislative limits under Article I, Section 10 of the Constitution: “The states are forbidden to pass any bill of attainder or ex post facto law, by which a man shall be punished criminally or penally by loss of life of his liberty, property, or reputation for an act which, at the time of its commission, violated no existing law of the land,” wrote Justice Bushrod Washington.

    “Why did the authors of the Constitution turn their attention to this subject, which, at the first blush, would appear to be peculiarly fit to be left to the discretion of those who have the police and good government of the state under their management and control? The only answer to be given is because laws of this character are oppressive, unjust, and tyrannical, and as such are condemned by the universal sentence of civilized man.”

    Yes, Article I, Section 10 applies to the states, and this is a federal law. Congress may also figure it avoids the “bill of attainder” objection by applying the law to individuals at several companies receiving TARP money. But Congress’s willingness to wreak such vengeance against a specific class of Americans is still as offensive as a matter of principle as Justice Washington and the Federalist Papers noted. The Founders feared the punitive whim of the legislative mob as much as they did the tyranny of a King.

    The House legislation may also be unconstitutional on equal protection grounds given that it treats a homogeneous group of individuals differently depending on which companies they work for. It is one thing to treat the companies that receive federal funds differently from those that don’t. But the individuals receiving bonuses may have nothing to do with the decision to receive TARP money. The House’s 90% tax on some bankers but not others is only a step away from deciding to impose a higher tax rate on employees of any company out of political favor — say, tobacco companies, or in the next Republican Congress, the New York Times Co.

    Which brings us to the Smoot-Hawley analogy. With such a sweeping assault on contracts and punitive taxation, Congress is introducing an element of political risk to economic decisions that is typical of Argentina or Russia. The sanctity of U.S. contracts has long been one of America’s competitive advantages in luring capital, a counterpoint to our lottery tort system and costly regulation. Meanwhile, the 90% tax rate marks a return to the pre-Reagan era when Congress and the political class behaved as if taxes didn’t matter to growth or incentives. It is a revival of the philosophy of redistributionist “justice” of the 1930s, when capital went on strike for an entire decade.

    The financial system will suffer in particular, just when the Obama Administration is desperately seeking more private capital to ride out future losses. Facing such limits on the ability to reward talent, every bank CEO will try to pay off the TARP as soon as possible, whether or not this leaves the bank with a weaker capital base. Hedge funds and other investors that Treasury needs for its new Public-Private Investment Program, or for the Federal Reserve’s TALF, will also be warier, if they’ll play at all. Treasury may promise nothing punitive for these programs, but that’s also what it said about the TARP.

    The other Smoot-Hawley comparison relates to our new President. Herbert Hoover sent mixed signals about the tariff until he finally bent to a panicked GOP Congress. President Obama has behaved in the past week as if he can appease and “channel” Congressional anger without being run over himself. So not only did he incite the Members last Monday, he welcomed the House bill on Thursday. By the weekend, cooler White House heads were whispering that the mob had gone too far, but it will take more than words to kill this terrible legislation. Mr. Obama will have to fire a gun in the air — which means threatening a veto.

    On Inauguration Day, we wrote that our young President has a first-class intellect and temperament. Our question was whether he is tough enough. So far the answer is no. He has failed to stand up to a Congress of his own party on anything difficult — from stimulus priorities, to earmarks, to protectionism against Mexican trucks. Mr. Obama needs to face down the AIG mob, or his Presidency may be its next victim.

  194. chicagofinance says:

    grim unmod?

  195. chicagofinance says:

    Geither wrote an WSJ Op-Ed also on page 15

  196. Clotpoll says:

    Yves Smith, Naked Capitalism:

    “Since when is someone who puts 3% of total funds and gets 20% of the equity a “partner”?”

    Hey…this is just like an 80-20 “piggyback” loan.

    Those were great. Virtually no money down, and the borrower gets out of paying PMI.

    What could go wrong with this plan?

    [sarcasm off]

  197. Clotpoll says:

    Another ringing endorsement for Weasel Face, from Mish:

    “Bear in mind I am not exactly a proponent of the “Swedish Solution”, rather I am favor of letting failed banks fail. Nonetheless, Krugman is absolutely correct when it comes to the heart of this story: Geithner’s plan is sheer hocus-pocus idiocy.”

  198. Clotpoll says:

    Chi (201)-

    If 1 in 1,000 Americans could even offer up a crude definition of “bill of attainder”, I’d be shocked.

  199. Victorian says:

    It is funny that the WSJ is all in favor or re-negotiating union contracts. Guess the rule of law does not apply in case of blue collar workers.

  200. BC Bob says:

    “Anybody see Weasel Face on CNBC at 2:00?”


    Which weasel face?

  201. danzud says:

    I’ll second the Martini bar. There’s also another restaurant on Main St two hundred yards south of Martini bar similar to Martini. Just can’t remember the name but some New York guy opened it up.

    To save some $$, go to Gian Marco and BYOB on Millburn Ave.

  202. meter says:

    @205 – ironic statement given that the Swedish don’t seem to be in the ‘saving’ mood this time around:


  203. Zack says:

    I hear Mike Morgan is sqeeling with his 780 line on the sand..ha ha

    What he doesn’t realize that in a bear market, you can’t always short the market. One day, the market will chop your head off and hand it over in a silver platter.

    If we close ablove 800 on the S&P, I suspect, we could rally hard tomorrow also..

  204. freedy says:

    i think mike may have a few disappointed clients. how much can this guy be down at this point?

    and tomorrow we go higher,,,

  205. Al says:

    Never mind if the bonus was earned last year or earlier, or under a legally binding employment contract. The confiscatory tax will apply ex post facto.

    WOW – welcome to Russia!!! and I thought I escaped the commies !!!

    Just to clarify – ex post facto means Retroactively???

    How is one supposed to do ANY business and plan for the future if US government starts to accept Retroactive Laws???

  206. Barbara says:

    ok, Quicken is calling me back on a refi.
    i have credit score in the 8s, almost no debt save the mortgage on my investment props, all of which were never borrowed against and bought in the 90s. The refi is for my residence, no money out. I’m just looking for a lower monthly.
    Whar should
    i expect to pay in fees and points coming in as strongly as I am?

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