From the WSJ:
High-End Homes Frozen Out of Budding Housing Rebound
Housing is fast dividing into two markets: Sales of low- and moderately priced homes are picking up and values have stopped falling in some parts of the nation. But on the upper end, sales remain mired in a deep slump and price declines are expected to accelerate.
Signs of the divide are visible across the country, including in suburban Chicago. In middle-class Schaumburg, Ill., which had a median income of $65,000 in 2007, sales were up 41% in June from the depressed level of a year earlier and bidding wars have broken out on some properties. “I can’t even tell you how many I’ve been in over the last two months,” says Joe Stacy, a local real-estate agent.
But 25 miles away in the affluent town of Kenilworth, with a median income of $230,000, home sales have stalled. While there are 65 homes on the market, just 13 have sold this year. “We’re extremely oversupplied,” says Sherry Molitor, a local real-estate agent. “Sellers are struggling to realize that we’re back to 2001-02 prices.”
The divide between the mass market and the high-end — generally defined as homes that cost above $750,000 — partly reflects the effects of Washington’s housing-rescue plan, which is producing winners and losers.
Policymakers have helped spur sales of lower-priced homes by offering first-time buyers a federal tax credit of as much as $8,000, by driving mortgage rates to near 50-year lows and by expanding the mission of the Federal Housing Administration, which will guarantee mortgages for consumers buying homes with down payments as low as 3.5%.
Sales at the lower end are also helped by the large number of foreclosed homes that banks have dumped at fire-sale prices, which has pulled down values of neighboring houses and sparked bargain hunting. Prices in both Las Vegas and Phoenix are down more than 50% from their peaks of several years ago, according to the S&P/Case-Shiller index.
…
To be sure, the affluent housing market is substantially smaller than the mass market. Sales of existing homes priced over $750,000 accounted for 2.3% of all sales in the first quarter of this year, compared to 4.4% of the housing market in 2007, according to the National Association of Realtors.
…
Inventory of expensive homes is rising. Overall, the inventory of unsold homes in June was enough to last 9.4 months at the current selling pace, down from 11 months a year ago, according to the NAR. But the supply of unsold homes priced above $750,000 swelled to around 17 months in June, up from a 14.5-month backlog one year ago. A recent forecast by analysts at J.P. Morgan Chase & Co. said it would take until at least 2012 for the expensive-home market to recover and that peak-to-trough declines could surpass 60%, compared to 40% for the rest of the market.
…
A recent survey by the NAR found nearly three-quarters of real-estate agents said buyers were purchasing smaller houses due to tighter credit requirements. “We’re in a ‘trade-down’ environment for the first time since the 1930s,” says Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley.
…
Having lost large amounts in the stock market and on real estate, “a lot of people are licking their wounds and hoarding their cash,” says Sally Daley, a real-estate broker who sells luxury homes in Vero Beach, Fla. She says many customers are asking, “Do I really need this big a house?”
From the NYT:
A Tarnished ‘Gold Coast’
AMID the flurry of signs that much of the state home sales market began a recovery in June, there was pretty clear evidence that Hudson County, across the river from Manhattan, was undergoing no such thing.
Condominiums make up roughly 80 percent of Hudson’s housing stock — and across the price spectrum, they have sold poorly, according to the Otteau Valuation Group, which reports to the housing industry. Even for those priced under $400,000, Otteau reported an 11-month inventory build-up.
Condos priced at $1 million and up weren’t selling at all; in June, there was not a single signed contract for a condo in that price range in Hudson County, although 86 were listed.
“We had one sell for $961,000 in April at Crystal Point” in Jersey City, said Adrienne Albert, the chief executive of the Marketing Directors Inc., the broker for the project. “And we’ve had 13 sales in July, with an average sales price over $750,000.”
…
During the housing boom years in the early part of the decade, Hudson County’s market was constantly the star in the monthly Otteau reports, and it did not begin to flame out until last year, about two years after the overall state market dimmed. In that trajectory it more closely resembled Manhattan’s market.
For example, in the downtown section of Jersey City — a district proudly known as “Wall Street West,” until Wall Street had its meltdown last fall — there were 404 homes on the market in June. Only 33 sold. “That is a very low buyer-to-seller ratio,” said Jeffrey Otteau, the president of the Otteau Group. “Only eight buyers for each 100 homes.”
Hoboken used to be the top performer in Hudson County when the county was the top performer in the state in the early 2000s. But the story in Hoboken was similar in June: 575 homes listed, 87 sales, which means demand was 15 percent of supply.
New listings continue to pour onto the county market, at a reported average rate of 499 condos per month, and 99 single-family houses per month, although Mr. Otteau said he believed those figures were somewhat inflated by the relisting of properties that had not sold at a higher price.
segunda!!
From the Daily Record (this one has just about been beat to death):
New Jersey family lives alone in 32-story Fla. high-rise
The Vangelakos’ southwest Florida condominium has marble floors, a large pool overlooking a river and modern furnishings that speak of affluence and luxury. What they don’t have in the 32-story building is a single neighbor.
The New Jersey family of five purchased their unit four years ago, when Fort Myers was in the midst of a housing boom and any hints of an impending financial crisis were buried in lofty dreams of expansion and development. They made a $10,000 down payment and eagerly watched as builders transformed an empty lot into an opulent high rise, one that now symbolizes the foreclosure crisis.
“The future was going to be southwest Florida,” said Victor Vangelakos, 45, a fire captain who planned to eventually retire and live permanently in the condo.
Most of the other tenants in the 200-unit condo didn’t close on their contracts, and the few that did have transferred to an adjacent building owned by the same company because more people live there.
The Vangelakos’ mortgage lender will not allow them to do the same.
That leaves them as the sole residents of the Oasis Tower One.
From the APP:
N.J. suit puts farmland development under microscope
MONTVILLE — Thomas Perrone’s three girls were in grade school when the family learned their upscale development 30 miles west of Manhattan had been built on pesticide-contaminated soil from a former apple orchard.
As his oldest daughter prepares for college, the question of who knew about the contamination, when they knew it and what they were obliged to do about it has dragged on through a maze of lawsuits, leaving the Perrones and other residents of Bonnieview Lane sitting on property that has plummeted in value and could pose a health hazard.
On a broader scale, the case raises questions about what restrictions should be placed on builders seeking to develop former farmland where pesticides were used.
Love the headline juxtaposition over at CNBC:
Double-Dip Recession Still in the Picture: Roubini
Ex-Fed chief [Greenspan] says economic downturn’s end is near
Dare I say, but does Roubini have more credibility?
From the WSJ:
Rookie Home Buyer Mistakes
Like many first-time buyers who want to take advantage of the $8,000 tax credit before it expires on November 30, Brendt Montgomery was in a rush to buy a home. And what better than a seemingly bargain-priced distressed property?
Mr. Montgomery, a 25-year-old manufacturing engineer, recently moved to Atlanta from Pittsburgh. After looking around for a day, he quickly found a condo that had been repossessed by the bank. He gave it a quick tour, made an offer and then embarked on a short vacation. While he was gone, a bidding war erupted, and spurred by the competition, he upped his bid to $143,100. His offer was accepted, and as soon as he returned, he signed a 33-page contract without really reading it. He was thrilled.
But the high didn’t last more than a week or two. After paying $2,000 for an earnest money deposit, plus $250 for an inspection and $85 to the condo association—but before the deal closed–he again toured the condo.
There were problems: dirty carpets, mold in the air conditioning system, holes in the wall. He had second thoughts about how secure the first-floor location might be, and realized that the north-facing windows would never let in much light. “It was a little depressing,” he says. “I realized I’d acted hastily.”
Mr. Montgomery called his agent and asked how he could unwind his deal. He quickly learned that backing out wouldn’t be easy or cheap. He agreed to talk about his mistakes so that other first-time buyers wouldn’t duplicate them.
From MSNBC:
Superstar real estate agent plots comeback
It’s the perfect Miami morning at Carlos Justo’s penthouse — warm and bright, with luxury yachts powering through the sparkling blue Atlantic Ocean some 30 stories below.
Justo, a 53-year-old real estate agent, has been awake since 3:30 a.m. but he shows no sign of fatigue. His eyes scan back and forth, from the high rise condos, to the water, and back to the condos.
…
“Right now, we don’t have any money,” Justo says. He continues talking. Fast. Pacing back and forth, he gazes out the window.
“There’s money to be made,” he says, grinning. “I’m creating the team. I’m creating the billion-dollar real estate team.”
In fact, Justo is $20 million in debt. He is five months into a massive bankruptcy filing. The IRS is after him for $6 million.
And yet, he dreams.
…
Once, he starred on the TLC network program “Million Dollar Agents.” There was a time he appeared in social columns for brokering real estate deals for one-named celebrities like J-Lo, Shaq, Versace, and two-named notables like Gloria Estefan, Sylvester Stallone, Rosie O’Donnell.
Like so many of our modern titans — like Donald Trump — he inspires both admiration and contempt. Greed, he acknowledges, fueled his rise. Hubris ensured his fall.
Next time, he says, it will all be different.
grim (7)-
Clowns like this are one of the few things that make me doubt my choice of profession.
“A Cuban immigrant who came to the United States with nothing, Justo’s is a rags-to-riches-to-rags story, a peculiarly American dream.”
Wonder if he’ll follow the path of this famous Cuban immigrant:
http://i233.photobucket.com/albums/ee219/Shawn2939/TonyMontana.jpg
“But the story in Hoboken was similar in June: 575 homes listed, 87 sales, which means demand was 15 percent of supply.”
From #1.
Yes, Hoboken is on fire.
From a long time lurker, second time poster… I’m getting concerned that the “good news” coming out of the MSM is going to convince sellers and would be sellers to hold their price/set their price too high. Also, not much on the market in our price range (575k to 700K) in the areas we are looking (Bernardsville/Basking Ridge). We prefer Bernardsville because the taxes are much lower than BR. Thoughts anyone? Incidentally, we put in a low ball offer on a house in B’ville that was turned down flat. The house was purchased by a builder a month or so later (two acres, but only one lot). Why a builder would buy a house that needs an enormous amount of work in a declining market for what we think they paid is beyond me.
Thoughts anyone?
the crisis seems to be over. this according to all i’m reading.
good times may be around the corner.
anybody here kudlow over the weekend?
its a bull market ,,, again
“But the story in Hoboken was similar in June: 575 homes listed, 87 sales, which means demand was 15 percent of supply.”
That’s not what Frank said.
according to bloom. we have a housing recovery,, markets recovery, and consumer is the only one lagging,, and will catch up shortly. after all the car program is working.
11% unemployment ,, not matter.
12#, but how about my ultrashorts? srs at $14.8, fxp at $9.20. i’m bailing ou.
> its a bull market ,,, again
From the Providence Journal 7/12/09.
I wonder if they are just as outraged when sellers and agents overprice listings? The one comment on the story is also funny– although who knows if its true–as it accuses one of these offended realtors of doing the same thing in another town.
PROVIDENCE — “Appalled and outraged” by a $45,000 price for a foreclosed house listed for sale in their neighborhood, South Elmwood residents launched a protest that prompted a real-estate broker to relist 153 Ontario St. just days later at a much higher price — $169,900.
As part of the second listing, Stacey Eliades, a broker at Storm Realty, LLC, of Warwick, representing Deutsche Bank, requested cash-only bids by July 2.
The bidding went above $169,900, according to Clark Schoettle, executive director of the Providence Revolving Fund. Schoettle said his nonprofit agency had the highest bid and plans to close on the sale sometime in August.
On Friday, June 26, the same day it was listed for $45,000, the house went into “pending” status, according to a petition drafted by a group of residents including Ronald Hirschauer, a sales associate with Armory Properties, LLC. “Pending” means there is a signed purchase and sales agreement and the property is “under contract” to be sold.
Hirschauer, a 19-year Elmwood resident, said he lives four blocks from 153 Ontario St., and he knows the house and the neighborhood sales history. He said the $45,000 price was clearly far below market value.
Assessed at a value of $507,400 by the City of Providence, 153 Ontario St. is also a historically significant property. The c. 1890 “Olde English” style house is listed in the PPS/AlAri Guide to Providence Architecture…
Helene Gerstle, a real estate lawyer and Elmwood resident, wrote to Eliades on June 29 to protest the $45,000 listing.
Gerstle wrote that $45,000 “is, at a minimum, $200,000 below its value, according to the sale of comparable properties in the neighborhood.”
Jane Driver, another neighbor who also works for Armory Properties, said she and Hirschauer both called Storm Realty to express their concerns about the circumstances of the sale.
The petition reads in part: “A disservice has been done to nearby taxpaying property owners by potentially reducing their property values if the sale is completed at the current price or below….”
“We challenge the claim made by Ms. Eliades on 6/28/09 that the list price is consistent with the properties’ appraised value, nor do we believe that the institution that holds title to the property would agree to sell it at a price so far below its true market value.”
Ken Schadegg, housing director for the City of Providence’s Department of Planning and Development, is a former executive director of the Elmwood Foundation. He said the sale of such a “critical” house in the neighborhood at a price so far below market value would have been “devastating” to property values in Elmwood.
Foreclosures have driven down prices in Elmwood, but not to the degree where such a large, landmark house would be sold so cheaply, he said.
Schadegg said people who have invested in Elmwood by moving in and fixing up houses there in the past 15 years were right to speak out swiftly and strongly against the $45,000 price.
“It has kind of galvanized the neighborhood,” he said. “…There may be some places where you can get away with that kind of hanky panky, but this neighborhood is not one of them.”
Hirschauer said 17 people signed the petition, but he stopped gathering signatures when the property was relisted at the higher price, and he never gave the petition to Eliades. Eliades could not be reached for comment.
Driver said that Joy Riley, owner of Westcott Properties, was “instrumental in changing the outcome.” Riley’s Providence agency handles a large volume of foreclosure sales. Riley also declined comment.
“All of us were watching this house,” as it went through the foreclosure process, Driver said. Deutsche Bank foreclosed on former owner Billieskye Crystal in December 2008. Schoettle said the Revolving Fund has been monitoring 153 Ontario St. for “the past 3½ to 4 months.”
153 Ontario St. is a corner lot and one of the largest in the Southern Elmwood Local Historic District, but the overgrown, trash-stewn yard is an anomaly in the well-tended neighborhood. The house was also left filled with “about eight Dumpsters worth of trash,” Schoettle said…
Gerstle’s letter to Eliades warned that she intended to report the matter to a Realtors’ board, but she said last week that she is happy with the way the situation turned out, and that Storm Realty responded to the neighbors’ concerns.
“I don’t know what really happened there,” she said. But she added that people who are concerned about their property values should take an interest in what happens with foreclosed properties in their neighborhood.
“We really have to be on the alert about these things,” Gerstle said.
Michelle Caprio, CEO of the Greater Providence Board of Realtors, said her group has received four or five complaints this year about alleged unethical conduct by Realtors. A group of peers reviews complaints, and hearings are held if the complaints are found to have merit. Caprio said the board also offers mediation services.
Caprio said consumers who complain to professional associations also often simultaneously report problems to the state licensing authority, the Rhode Island Department of Business Regulation. The DBR has issued 18 enforcement actions against licensed real estate sales people or brokers so far this year.
Although complaints are made in all kinds of markets, Caprio said, there are new issues and problems associated with the many distressed properties for sale at this time. In the case of distressed properties, sellers are often large financial institutions far from Rhode Island, and getting responses to questions and offers can be difficult, she said.
“There are realities of working with short sales and foreclosures that take us well out of the scope of the typical transaction,” she said.
Hirschauer said he has seen a number of other foreclosed properties in Providence sold within one or two days after being offered at prices that seemed too low even in this troubled market, but no situation “as blatant” as the initial price of 153 Ontario St.
“It’s so irresponsible. It’s just not right,” he said. “There’s nothing ethical about it.”
http://www.projo.com/projohomes/content/HO_153_Ontario_07-12-09_7BEU731_v34.1b7d86f.html
Hello all,
New guy here… wanted to know about MLS 2702541 if possible. Seems unusually low for that area, not that I’m jump on it. 18K Tax really kills it…
Tks in advance, love it site.
NJChoo
The end is nigh…..
http://www.nypost.com/seven/08032009/photos/lifeguard.jpg
It’s true. Happy days are here again. Look at China. Their economy is rocking again. The Chinese figured out that rather than have the US lend money to people who can’t pay it back so that they can go out and buy Chinese goods, the Chinese can cut out the middle man and lend money directly to Chinese people who can’t pay it back and have them buy Chinese goods. The invisible hand of “capitalism” at work.
This is quite interesting…Perhaps worth a top story here.
The Finance Buff:
Foreclosed Homeowners’ Rate of Return
http://thefinancebuff.com/2009/08/foreclosed-homeowners-rate-of-return.html#more-585
“Now, that’s an inconvenient truth. The foreclosed homeowners made money. Who knew? On average they held their homes for 5-1/2 years. Making 40%, tax free, over 5-1/2 years is quite good, isn’t it?”
well the market is up big this AM.
all news over the weekend good?
bad news,, just ignored .
car sales, eco data all good.
ford , a miracle, GM will lead the way back for cars .
amazing
guys – it works much better when you ignore bi (re: sunday)
My question is when do the press releases start coming out lowering earnings expectations? Two weeks? Three weeks from now?
Stu – yes, ira and roth. just asking around to see who is doing it. mostly will depend on how large of a check we have to write.
oops, meant that for shore guy, not stu
Choo-
When asking for this kind of info, it’s helpful to also state what town. NJ is sliced up into 6 or 7 different MLS and the numbers don’t help much without the town.
freedy,
What is amazing to me about all of the positive news is that the markets appear to be in either one of two places. Either it is anticipating a massive rebound back to prior growth levels evidenced by forward P/Es that are approaching pre-crisis levels. Or, it is extremely overvalued, based on the fact that paying for the stimulus is gonna put a major hurt on future growth.
It’s really crazy. Earnings are beating analysts expectations on a year over year basis as they expected the numbers to come in over 30% off last year’s levels. So far they have come in only 25% off last years levels. Yet the market is rallying like the last two quarters were an anomaly that should be completely ignored.
Place your bets!!!
Yikes,
One must be a fool to not take advantage of the one time traditional to Roth conversion opportunity. We have loaded our traditional over the past two years, even though they were not deductible knowing this option was coming.
Now let’s just hope Wall Street doesn’t figure out a way to steal our ROTH dollars.
he [20],
http://www.financialsense.com/editorials/casey/2009/0728.html
I think you picked the perfect profession.
Pol Clot says:
August 3, 2009 at 7:12 am
grim (7)-
Clowns like this are one of the few things that make me doubt my choice of profession.
My new favorite TV show is HGTV’s Real Estate Intervention. That Realtor doesn’t sugar coat anything for the prospective sellers.
Last night, they had a Seller-In-Denial over the listing price point of his home.
Home was an old split-level with the Master Bedroom in the Attic, the 3rd bedroom lacked a closet, and the kitchen looked like a galley. The place was Butt Ugly.
It had been on the market for $585K and hadn’t had a nibble in months.
The Realtor (can’t remember his name right now) took the seller to several good comps, walked him thru the homes pointing out the major positives….and the seller took an attitude with the realtor!! That was funny.
They had to drag this seller, kicking & screaming, to lower his asking from $585K to $550K.
The punch-line was…he got a offer, the inspection turned up major problems and the deal fell thru !!
HGTV simple MUST put this show on at a reasonable hour. It is classic.
#29 Stu,
Not necessarily a fool in regard to the Roth conversion. It always depends you your individual situation.
I recall a discussion with ChiFi on Roths. Although the discussion was more on the Roth 401ks, the same principals hold. If you run the numbers, unless you are at the start of your career with low earnings that will rise or close to the end where income will tail off, the tax hit for the Roth conversion may not make sense.
I will defer to those more knowledgeable in this area.
I actually smell the panic among fence sitting first time home buyers for starter homes sitting in apartments with a baby on the way. The bottom end, much to my suprise looks like it is healing much quicker than I or anyone expected, the top end still has a big second leg down to go. A tale of two markets. Me thinks hubbie who has a kid sleeping in living room and another one the way in a one bedroom apt better be right starters have another 20% or more to fall or he will be beaten severely with rolling pin when second baby is crawling around and they are still in apartment and home prices have risen not fallen.
HEHEHE
Are you the same one who posts on kannekt?
“according to bloom. we have a housing recovery,, markets recovery, and consumer is the only one lagging…”
Too bad the consumer is 70% of the C+I+G equation. Thinking you can continue to expand the other 10% and 20%, respectively, to cover the decline in C is like bailing water out of a sinking boat with a teacup. Just can’t keep up.
MSP (11)-
You’re way too early to the party. The people who’ve lost jobs in those areas need to go another 6-12 months before they deplete their credit and savings.
It will happen.
NASDAQ 2000!!!!!!! Need to break out my hat from the mid 90’s!!!!
PGC 33:
“It always depends you your individual situation.”
I agree, but there are so many unknowns about both the future of government taxation as well as your own situation. I would think that for most people under 40 years old, it would be a near no brainer. The tax hit this year, should be small beans compared to the ability to make tax free gains on earnings over the lifetime of an investment over 30 or so years. Especially if one is priced out of the ROTH area, as many of us in high-income areas are.
Re: Rookie Home Buyer Mistakes
At least this guy understands his actions got him in trouble, he learned from it, and he’s trying to educate others.
The other 90% of the populace blaim the realtor for not telling them their sight unseen purchase had problems, their lawyer, their bank, and then hit up the US (uh, I mean you and me) to pay for their irresponsibility.
Chicago – Maybe I missed it…
Did you give a report on DM in AC?
Yes? No? Pretty Good? Out of the Park?
blame even
I suspect that Timmay is spending his morning in the woodshed:
“”We will not get this economy back on track, recovery will be not strong and sustained, unless we … can convince the American people that we’re going to have the will to bring these deficits down once recovery is firmly established,” Treasury Secretary Tim Geithner said on ABC’s “This Week.”
Asked point blank whether it was right to suggest it is a matter of when, not if, taxes will be raised, Geithner responded, “It is absolutely right.”
I suppose that the admin is on the horns of a dilemma. Push the tax hike now and everyone will say that the Pres lied on the campaign trail. But wait too long and you lose the ability to blame it all on Bush, and claim that they were shocked, shocked, to discover that the economy was in such bad shape, and that they had no idea the Porkulus 1.0 package would lead to deficits.
I predict Timmay will back off this comment, and they will wait until after Porkulus 2.0 to talk about middle class tax hikes. by that point, we will have a good portion of the populace demanding a permanent welfare state, and they can pitch the tax hike as the price for avoiding anarchy.
As Clot might say, I welcome the anarchy. Hate to think all that target practice might go to waste.
I like Blaim better!
leftwing, jobs are back. My laid off friends are interviewing like crazy. One friend who had a good job at MS I got him an interview and check this there is an appearance fee of $1,000 to show up. There is a huge war for talent right now. My other buddy got laid off in Energy trading and GS called him the next day!!! Even on lower end it is there, Netflix is looking for housewives and college students at the shipping center in Huntington, they have openings at $20 bucks an hour.
Cindy,
The show better have been good for $125 a pop.
“Blame” is better because it contains “lame”
John
Jobs may be coming back but does that translate into C (consumer spending) or are we going into a period of household balance sheet repair?
If C is really back, hope everyone is long the markets.
Kannekt, could be, why r you asking?
33.PGC says:
August 3, 2009 at 9:27 am
#29 Stu,
Not necessarily a fool in regard to the Roth conversion. It always depends you your individual situation.
I recall a discussion with ChiFi on Roths. Although the discussion was more on the Roth 401ks, the same principals hold. If you run the numbers, unless you are at the start of your career with low earnings that will rise or close to the end where income will tail off, the tax hit for the Roth conversion may not make sense.
I will defer to those more knowledgeable in this area
The big unknown is how much Obama/Corzine will raise taxes and fees. Those in traditional 401K’s & IRA’s may well find their savings will be appropriated by the government and redistributed to the illegals. Either from Direct Tax Increases or Surcharges like other peoples HealthCare.
Previous runs of my numbers indicated don’t convert. Planned Government changes makes this questionable.
32 Fiddy
We have the DVR set to record the whole season. We love that show. I’d like to see him more frank with the people he’s trying to help though. Watching the sellers and their denial is unreal. It’s terrible that they find themselves in these situations. and even worse that they won’t take the advise which could really help them.
The Obama/Bernanke/Geitner Strategy will have to deal with “The Operation was a Success, but the Patient died Reality”, after the dust settles.
That would be advice. I think I’m still asleep. Too much sangria last night.
if someone posted already plz excuse-
“Welcome to the bottom: Housing begins slow rebound”
“It was — note the past tense — the worst housing recession anyone but survivors of the Great Depression can remember.”
“By every measure, except foreclosures, the housing market has stabilized and many areas are recovering, according to a spate of data released in the past two weeks. Nationwide, home resales in June are up 9 percent from January, on a seasonally adjusted basis. Sales of new homes have climbed 17 percent during the same period. And construction, while still anemic, has risen almost 20 percent since the beginning of the year.
Even home prices, down one third from the top, edged up in May, the first monthly increase since June 2006.”
http://news.yahoo.com/s/ap/us_housing_mid_year_outlook;_ylt=Al6WeT9Qw7r4CrvalHXvn3V0fNdF
BC,
yeah, I saw an AP article this weekend with a headline with Timmay saying how bad a problem the budget deficit is:)
what a shameless t*rd
oh I forgot to add to #54
“Green Shoots!!”
ISM 48.9…Rally on!
Stu (57)
What the hell do we manufacture? LOL!!! Rally on!
“What the hell do we manufacture?”
Easy, debt! Want to buy some?
I was in the gym this morning, and the monitor in the locker room had the fox news version of this town hall with Sebelius and Specter. The woman giving it to Specter was phenomenal; I had to stop and listen. Folks in the gym went wild hearing her comments to Specter.
http://www.youtube.com/watch?v=Vd2B3RzIXDc
The Youtube version doesn’t do it justice as it is barely audible. There were other youtubes of the same meeting, and the crowd was quite hostile to Benedict Arlen and Sebelius.
Sebelius. Whenever I hear her name, I think of Finlandia (and no, not the vodka).
Since I lost my MLS access (friend did not renew his RE license) can somebody post listing history for the last 3 years for the MLS ID #2699191 in Bridgewater – perfect example of slow bleed – always one step behind the market.
lost in ny –
Ah, Sangria !!
The upshot of that Intervention was…..they had to stop the camera and take a break. The seller had so much attitude ! This couple had TWO homes and were carrying two mortgages. The new wife was rolling her eyes at the hubby.
Just sell the place and get on with your life.
Tax News of the Day:
Unlike a lot of other states, New Jersey Dept. of Taxation (a Jon Corzine Production) has decided that the Cash For Clunkers rebates are taxable.
You heard right. You get to pay sales tax on it.
From the Department:
As the Federal funds provided to the dealer under this program are directed towards the purchase or lease of a new vehicle, those funds are deemed to be third-party consideration. Like in a manufacturer’s rebate situation, the amount of third-party consideration must be included in the sales tax base when calculating the applicable sales tax due on the transaction. The funds are not deemed to be an augmentation of the trade-in value that a dealer offers a buyer.
New Jersey’s definition of “sales price” includes “the total amount of consideration, including cash, credit, property, and services, for which personal property or services are sold, leased, or rented, valued in money, whether received in money or otherwise…”. N.J.S.A. 54:32B-2(oo)”
Soooo, in English, this means that the money that the feds give the dealer reduces your price, but doesn’t reduce the price for sales tax purposes. So, if a car costs 30K, and you trade in your clunker for the rebate, you get taxed on 30K even though you paid 25.5K. But if you traded in your car for 4,500, you are taxed only on the 25.5K.
Thus far, New Jersey is the only state I know of that is taxing the Cash for Clunkers rebates.
Got out of SKF a few weeks back @ 46 and it’s now down to 32. Thinking about getting back in. Does this thing have a chance or is it dead like some of the other leveraged ETFs?
62 Fiddy
I just watched it. That guy was an idiot! Way too emotionally involved and too self important. He could have sold at 425 with no loss.
Grim,
In our property tax appeal in Montclair, the town wants to use MLS 2683951 as a comparable, which was most definitely a case of mortgage fraud. Of course, there is no proof, so it can probably be called Montclair’s greatest comp killer.
Sale History:
01/08/2008: $550,000
04/14/2005: $475,000
01/21/2004: $125,000
Currently listed:
08/03/2009: $214,900
61% off in Montclair on the low end?
Can’t wait to see the town lawyers face when we try to use the same comp to claim that our house which sold for 480K in 2004 should be worth at least 50% lower when considering this comp.
Nom,
As much as I see the cash for clunker state tax as complete BS, I read that about half the states are taxing it as well.
I will not be voting for Corslime none-the-less.
The Second Coming of Jimmy Carter???
Aug. 3 (Bloomberg) — Just as banks from JPMorgan Chase & Co. to Deutsche Bank Securities Inc. rushed to raise their forecasts for U.S. growth in coming quarters, Nobel laureate Edmund Phelps warned the economy is in for a “long slog.”
The divergence emerged after the Commerce Department said July 31 the economy has now contracted the most since the 1940s. Benchmark revisions to the department’s National Income and Product Accounts also showed consumer spending has tumbled 2 percent since the end of 2007, a magnitude unseen since the 1980 slump that ushered President Jimmy Carter out of office.
The deeper decline sets the stage for a faster recovery in the second half of the year, said Bruce Kasman at JPMorgan and Joseph LaVorgna at Deutsche Bank. It’s what comes later that worries Phelps and others, including Mark Gertler, the New York University economist who was a research partner of Ben S. Bernanke before he became Federal Reserve chairman.
“I’m not convinced that there’s going to be another wave of innovation in the offing” to propel growth, leaving the economy facing a “long slog,” said Phelps, a professor at Columbia University in New York. Gertler said “financial headwinds” will restrain growth by limiting credit to households and companies.
Phelps foresees real, or inflation-adjusted, gains in gross domestic product of 2.5 percent in the years following the current slump. That’s weaker than the average expansion rate during any postwar decade except the current one, in which growth has been pulled down by two recessions. Growth averaged better than 3 percent in the 1990s, 1980s and 1970s, and exceeded 4 percent in the 1960s.
Jobs Outlook
“Employment is going to be on the weak side” for several years, added Phelps, who won the 2006 Nobel economics prize for his theories on the interplay between inflation expectations and joblessness.”
When the Porkulus went to fund state budget items rather than stimulate economic growth, it meant that there was no economic engine being primed.
Reagan had tech and defense spending; Clinton had tech, financials, and internet bubble spending; and Bush had security infrastructure, financials, defense spending, and a real estate bubble. The Messiah has a small program to support Government Motors and the promise of support for the green energy industry (which seems to be taking off, just not here).
So I tend to believe this guy. There won’t be any recovery the likes of which we saw under Reagan or Clinton.
I really am just about done with living in this state.
plume (68)-
Our economy has two main features:
1. It is not primed to produce any items or services of real value in quantity enough to heal itself.
2. It is not in a position to launch, finance and sustain even the most harebrained of bubble schemes.
3. Therefore, it must collapse. The really interesting times will begin when the economy that replaces it begins to emerge.
My fear is that what replaces what we have now is a fascistic uber-welfare state.
[67] stu
I haven’t heard of any except NJ. Perhaps the ones taxing it have been keeping it quiet, which makes sense.
Gotta figure that this would make for a good Christie ad though. Especially when neighboring states don’t tax the rebate.
Hate to pull a Mr. Furter here, but I was at the Borgata at 12:30AM on Saturday night….what recession?
Fcuk…unbelievably sick good! AND $200 min tables in the hoi polloi area.
RE: Ca$h for clunkers.
I don’t know if this has been posted yet. Sorry if it’s a dup.
Some video on what cash for clunkers really means.
I really hadn’t paid too much attention to the program up until this weekend. It was just kind of there. Part of the generalized background noise of theft, waste and corruption that I’ve gotten used to.
That video really brought home what a wasteful absurdity the whole thing is. I’m beginning to hate this admin as much as the last one.
Nom,
I heard her last night. Her slamming the gov for screwing up Cash For Clunkers and now asking us to rely on them for an extra 1/7 of the economy was classic.
Did I call MELT UP?
RE: Clunker Taxes
Yes; that’s how it works. They don’t take the $4500 off of the pretax amount. The $4500 is used as credit off the final price including all taxes, etc.
I don’t see it as bad; most people are trading in cars worth much less then $4500, so they are getting a deal either way.
reporting from paradise: looks like florida keys real estate market has stabilized after a 70% off sale. Many REOs in the area have been snatched up at that depressed level and prices seem to be actually rising a bit. time will tell.
#76
“I don’t see it as bad; most people are trading in cars worth much less then $4500, so they are getting a deal either way.”
their good deal is taxpayers bad deal
Chi when I go to the borgata, I ask myself if these people have Jobs, I mean the place is packed on weekdays. I’m thinking it is all those state workers from trenton enjoying their paid furlows.
ChiFi.
Bally’s at 10pm on Friday night was the deadest I have ever seen it. Perhaps those patrons willing to spend $125 to see DM, are the same ones willing to play $200 per hand of black jack.
[76] richie
Except that it is, in essence, a trade-in, just a three-party trade instead of a two party trade. You are giving something of value up, not just getting a freebie. The latter is generally taxable as an acession to wealth; the former is not as it is an exchange of assets that has generally been given nonrecognition treatment.
Since NJ takes the position that the rebate was a flat grant from the USG, then the “donation” of your car to the USG for envirnomnental purposes ought to qualify as a charitable deduction, at least for state tax purposes. So you should reduce your state AGI by the fair market value of the car since you didn’t really trade it in, you donated it to the USG for environmental reasons.
Sorry Fiddy… newbie mistake!
Guttenberg Town, NJ 07093
MLS 2702541
TIA
NJChoo
Borgata is actually the only game left in town. Although their revenues and earnings are down a bit year over year, their loss is small potatoes compared to that of their AC brethren.
Atlantic City’s painful losing streak continues as its casinos reported revenue of $322.7 million in June, a 13.6% decrease over the same month a year ago, said the New Jersey Casino Control Commission Friday.
The numbers, while somewhat better than May’s 15.4% drop, extend a downward trend for the gambling haven’s 11 casinos, which have struggled to remain competitive amid a recession and mass defection of gamblers to newer slot parlors in Pennsylvania and New York. A new casino in Bethlehem, Pa., by gaming giant Las Vegas Sands (LVS) is shaping up to be a major threat to the island town given it’s less than 100 miles away from New York City.
For the first six months of the year, Atlantic City casinos generated $1.94 billion in revenue, down 15.3% from the same period in 2008. Atlantic City industry suffered a 24.6% drop in gross operating profits in 2008.
Borgata Hotel and Casino, jointly owned by Boyd Gaming Corp. (BYD) and MGM Mirage (MGM), had the smallest decline as its casino revenue decreased 4.2% to $57.8 million in June compared to the same period last year. Meanwhile, the biggest decline continued to be at the Atlantic City Hilton, which saw revenue drop 24% to $15 million last month.
[72] chifi
True. Some places in NJ are still living fat and happy. Short Hills mall was pretty full yesterday, and Nordstrom’s shoe dept. was a zoo.
To get back to normal, we then went to Home Depot and I took my daughter around to show her all the things that would go into building her doll house. That kept her pretty amused, but she wanted me to start hauling out plywood right then and there.
NJ CHOO-
Guttenberg is in Hudson county. Maybe one of our citizens of North Jersey can look into that MLS #
What is the deal with town houses?
Will they get clobbered like single family homes?
In this area, CNJ, town homes have barely corrected in price at all while single family homes are down 10-25% from peak.
#85 – Some places in NJ are still living fat and happy.
Undoubtedly. I was in Monmouth Mall on
Sat and it was pretty much the diametrical opposite of Short Hills. The place is becoming eerily reminiscent of what Seaview Square Mall was like.
Although I’m a permabear, something weird is going on. First off, 4th of July, despite being on a weekend, was a complete disaster for the shore industry in NJ. The entire Jersey Shore was dead. These past 2 weeks, however, have been ridiculous. I haven’t seen traffic this bad in about 3 years. On top of that, I went to AC Saturday. The place was incredibly packed and did not resemble the desolate place it was a few months back.
What worries me is that all this new money is now making it into the market which will mask itself as a recovery. It’s going to be another phony recovery driven by cheap money. We cannot have a real recovery until our consumer driven debt financed economy implodes. We’ve done nothing to fix the imbalances of trade that currently exist in the world today.
Stu #84-
Don’t forget that the Borgata was smaller last June because they didn’t have The Water Club. So the bigger hotel from this year didn’t equal the smaller’s numbers last year.
NY City is immune. Here’s a $20,000,000 price cut:
502 Park Avenue
http://www.modlingroup.com/BrokerWebsite3/code/sales_detail.asp?listing_id=699653
Now only $31,000,000
Toshiro, in the 1990s, Monmouth Mall was a ghost town. It used to have 50% vacancy. I was baffled by it’s resurgence after they added the theatre. The restaurants were still awful and they never brought in any good stores. Also, the food court is disgusting. Monmouth Mall will return to it’s status of 15 years ago soon enough.
Monmouth Mall has mostly teenagers killing time while waiting for the movies to start. Foot traffic means nothing if they are not buying. Count how many shopping bags they are carrying.
If Monmouth Mall is bad, take a look at downtown Red Bank. There are many vacant store fronts and parking remains a problem. There’s a game called Broad Street Bingo….drive down the main drag and if you see three vacancies in a row, call out BINGO !!
d2b,
I didn’t forget the water club. I heard they do not even offer rooms in the water club on weekdays as there is no demand. I think MGM/Boyd would have wished they did not expand to try to keep up with the mothballed Pinnacle casino (where Sands used to be) and the half scaled Revel casino. We all know how well the Tropicana expansion went (bankruptcy).
Chi,
Are you going to the Depeche Mode concert at MSG today or tomorrow? I have tickets for tomorrow.
Nom 85 – Sounds like standard back to school shopping to me.
RE: “Justo is $20 million in debt.”
This fool used to walk around in white silk pajamas while bringing aspiring bagholders around in a $300K Bentley.
All a charade.
95 Scribe
Butting in. I’m going tonight and tomorrow.
the market like this will kill all the bears. can you believe it? srs down under 15 from over 100 a few weeks ago despite of all store vacancies reported here. fxp down to $9 from $60.
bi says:
August 2, 2009 at 8:32 pm
101#, some folks here must be regret they didn’t listen to my pos blackbox in january.
bipolar: I don’t know. This just cracks me up being unintentionally funny.
today will be a big day. S&P touched 1000 mark. if S&P stays above 1000 at close, it will be tomorrow’s headline all over the place.
Faber: China Really Growing At 2 Percent
China’s economy is growing at 2 percent, not the 7.8 percent its government claims, says economist Marc Faber, publisher of the Gloom, Boom and Doom report.
“The Chinese government is one of the few governments in the world that knows its GDP numbers three years in advance,” Faber told CNBC.
“I’d be a bit careful about China.”
http://moneynews.newsmax.com/streettalk/faber_china_growth/2009/07/30/241896.html
Pol Clot says:
August 2, 2009 at 9:03 pm
I will give $500 to anyone who can decipher #108.
pol: this seems to work much better than an enema….
It’s a familiar refrain of the skeptics: You can’t cure a debt crisis with more debt.
“The government’s attempts to ‘help’ are actually prolonging the inevitable deleveraging this economy has to go through,” says Peter Boockvar, equity strategist at Miller Tabak. “Deleveraging is a freight train and anything the government does to try to slow that down pushes out the inevitable recovery.
Boockvar cites three “successful” programs as examples of what he calls the government’s wrongheaded approach:
Cash for clunkers: “They’ll give you $4500 but they want you to leverage up to buy the [new] car,” he says. “Paying down debt, saving more – that’s the key to putting this country on a firmer foundation.”
Loan modifications: The only reason housing markets like Arizona and California are starting to bottom is because of high foreclosures, he says. Given the high levels of “re-defaults” by people who’ve gotten loan modifications, all the government is doing is forcing people to make higher mortgage payments vs. paying rent, ultimately costing those individuals money and preventing the natural “clearing” of the market, he contends.
The Big Two: The “quick rinse” bankruptcies of GM and Chrysler have been hailed by some as a great success, but Boockvar disagrees. Effort to keep the automakers out of bankruptcy last year wasted time and money. “We are making the same mistakes as Japan,” he says.
“We need to incentivize the jobs creators — that’s the private sector,” Boockvar declares. “We want the private sector to be creating jobs, not the government throwing out money to those people they think should be providing the jobs.”
Boockvar’s solution to what ails America’s economy is simple in theory but highly complex to accomplish, and runs counter to the prevailing winds in Washington: “We have to start making things the rest of the world wants, incentivize businesses to make things here…and recalibrate so we’re less dependent on consumer spending to [where we’re] saving more, investing more and making things,” he says.
http://tinyurl.com/nmqna5
Pol Clot says:
August 2, 2009 at 9:20 pm
I just like posting stuff from Mikey, because he pisses off so many people here:
Pol: his posts sound like Hitler in April 1945
damn, was Bi right about FXP/SRS? Are they the new bagholders?
O can keep his promise to not raise taxes on the sub 250k crowd by reducing and/or eliminating deductions. The end result is the same as raising taxes, just a matter of semantics.
Stu says:
August 3, 2009 at 8:58 am
Yikes,One must be a fool to not take advantage of the one time traditional to Roth conversion opportunity. We have loaded our traditional over the past two years, even though they were not deductible knowing this option was coming.
Stu: I’m sure you are aware of the prorata rules. Assuming you have other outside IRAs, you can consider rolling those balances into 401(k)s for the conversion if need be and material.
chi (105)-
To me, O sounds like Hitler in 1945.
Between Mikey and O, who do you think the real fascist is?
John says:
August 3, 2009 at 9:29 am
I actually smell the panic among fence sitting first time home buyers for starter homes sitting in apartments with a baby on the way. The bottom end, much to my suprise looks like it is healing much quicker than I or anyone expected, the top end still has a big second leg down to go. A tale of two markets.
JJ: just from this description, aren’t you tacitly admitting that it is a sucker’s rally on the low end….interest rates, tax breaks….then what? These people are going to be fcked like a $2 whore….
Clotpoll says:
August 3, 2009 at 12:17 pm
chi (105)- To me, O sounds like Hitler in 1945. Between Mikey and O, who do you think the real fascist is?
I think I like you better as pol clot
PGC says:
August 3, 2009 at 9:27 am
#29 Stu, Not necessarily a fool in regard to the Roth conversion. It always depends you your individual situation. I recall a discussion with ChiFi on Roths. Although the discussion was more on the Roth 401ks, the same principals hold. If you run the numbers, unless you are at the start of your career with low earnings that will rise or close to the end where income will tail off, the tax hit for the Roth conversion may not make sense.
I will defer to those more knowledgeable in this area.
PGC: I think at this juncture, if you have wealth and will be a future high income earner, then it is foolish not to be prepared with some meaningful diversification across standard, IRA and Roth accounts. The govt looks as if they want to bleed you dry.
As an aside, it looks so bad that I would argue it makes sense in certain cases to just take the entire tax hit 2010 versus splitting it 50/50 across 2011-12.
Million dollar townhouses for all in Brooklyn!
http://www.myfoxny.com/dpp/news/local_news/brooklyn/090802_Elderly_Woman_Murdered
An elderly woman was shot in front of the Surfside Garden Houses in the Coney Island area of Brooklyn. She later died at the hospital.
The murder was just part of a bloody day in Brooklyn. Seven people were stabbed during a fight at a subway station early Sunday morning. Apparently two groups of men began arguing on Crescent Avenue and Fulton Street. Six of the men were stabbed on the streets, and another man was chased down into the Crescent Avenue subway station where he was stabbed.
In another unrelated attack from the morning, police found an unidentified man shot twice at the corner of Newport Avenue and Osborn Street in Brooklyn.
ChiFi (108):
“Stu: I’m sure you are aware of the prorata rules. Assuming you have other outside IRAs, you can consider rolling those balances into 401(k)s for the conversion if need be and material.”
This doesn’t make sense to me. Why would I want to roll anything into my piss poor 401K (horrible options in my company’s 401K)? Also, if you meant converting after tax 401k contributions into a Roth Ira, I haven’t made after tax contributions in the past 5 or so years.
Am I missing something?
DM SPOILER – do not read LOST & SCRIBE
Cindy says:
August 3, 2009 at 9:36 am
Chicago – Maybe I missed it…
Did you give a report on DM in AC?
Yes? No? Pretty Good? Out of the Park?
C: Realize the bar is extremely high. It was truly excellent, but not the best that I’ve seen. The venue was just great. There was a scheduling issue, and it forced them to cut 3 songs. However, I was dead center and close to the stage.
Recognize that one of the songs cut was Strangelove which has an excellent topless lesbian massage video being projected…I’m not joking…
grim unmod DM stuff
[114] stu
It is a way to minimize the tax hit. I deliberately avoided rolling one of my 401(k)s into an IRA until after I did this so as to avoid the pro-rata rule and the tax hit.
Like you, I have been loading up my IRAs with nondeductible contribs for the past 4 years, and will do so in 2009 and 2010 as well. But a good chunk of my IRA cash will be rollover or traditional IRA money, and that will be taxed at the current marginal rate. That’s fine if I think that taxes will be out of control in 20 years, but not so good if they aren’t, and that makes it a sucker bet.
But, if I could roll my former 401(k) money into my current 401(k), I can shelter that from the pro-rata rule and simply move largely my previously-taxed money into the Roth. Unfortunately, my employer doesn’t permit it.
http://www.money-zine.com/Financial-Planning/Retirement/2010-Roth-IRA-Conversions/
“Example 1
For example, let’s say you started to fund traditional IRAs in 2006 and by 2010 you’ve got $20,000 in your account. Furthermore, let’s say this account consisted of four years of $4,000 non-deductible contributions – a total of $16,000 in non-deductible contributions and $4,000 in account growth.
In this example, you’d need to pay income taxes on the $4,000 in fund growth when you convert to a Roth IRA. But the good news is you’ll never have to pay income taxes on this account again.”
I haven’t been able to contribute to a traditional IRA pretax for years. My pro rate percentage to pay taxes on should be miniscule so I’m not concerned.
More tax news for small business (and an incentive for those businesses to get smaller):
“The House Energy and Commerce Committee voted 31-28 to approve its portion of a health care overhaul bill (H.R. 3200) late July 31 after modifying a provision related to payroll taxes on small businesses failing to provide health insurance for its employees.
As per a July 29 deal with the anti-deficit Blue Dog Democrats, the committee voted 33-26 to adopt an amendment by Rep. Mike Ross (D-Ark.) that would increase the exemption for small businesses from $250,000 to $500,000. Ross said the change from the Ways and Means Committee-approved bill would exempt 86 percent of small businesses from the mandate and the tax.
Penalties in the form of taxes would phase in at 2 percent for businesses with annual payrolls of between $500,000 and $585,000, increase to 4 percent for businesses with annual payrolls between $585,000 and $670,000, increase again to 6 percent for firms with annual payrolls between $670,000 and $750,000, and be 8 percent for businesses with payrolls over $750,000.”
What I have to check is whether they will apply unitary business rules here and deem an entire control group to be one business. Otherwise, some businesses could divide themselves into separate companies, all with payrolls under the limit, and simply sell to one another within the control group, or operate as separate entities. For example, a small franchisee operating 4 Pizza Huts with a 1MM payroll under a single S corp, could divide into four separate S corps, each with a payroll of roughly 250K, and avoid the surtax.
Nom (116):
“It is a way to minimize the tax hit. I deliberately avoided rolling one of my 401(k)s into an IRA until after I did this so as to avoid the pro-rata rule and the tax hit.”
This makes perfect sense and something to keep in mind if the pink slip arrives for me.
I only have one traditional 401k and it is still active as I have worked in the same company for over ten years.
Now Gator has a small Roth 401k. I’m assuming, without being terminated from her current employment, this can not be rolled into a Roth Ira. Right?
116#, nom the tax attoney,
a little confused here. i thought it would be the same for taxation purpose whether you hold an employer (or former emploryer) sponsored 401k account or you hold it by yourself via IRA.
[117] stu
The hit comes on rollover IRAs from former pensions and traditional deducted IRAs. As long as you don’t have much money from those in your IRA mix, you are in good shape.
The cherry picking/pro-rata rule says that if you convert, you have to take the same percentage from each IRA, not just convert the one you funded with nondeductible contributions.
[120] bi
Your 401(k) may not be immediately distributable, therefore it can’t be converted to an individual Roth.
As I understand it, only your IRAs (from whatever sources) are affected, and only these can be converted (generally, you can’t roll out your 401(k) from your current employer, and you aren’t obligated to do so from a former employer, so my understanding is, so long as it is still in the plan, it isn’t covered. I haven’t examined closely enough to see if 401(k) balances that could be rolled over and converted must be included, but I suspect not because of the accounting nightmare that this would produce.
FWIW, I am willing to guide anyone through this process for a nominal fee.
[119] stu
“This makes perfect sense and something to keep in mind if the pink slip arrives for me.”
Exactly. At that point, your bracket is much lower, making it an ideal time to make that move.
Stu says: August 3, 2009 at 12:37 pm
ChiFi (108):
This doesn’t make sense to me. Why would I want to roll anything into my piss poor 401K (horrible options in my company’s 401K)? Also, if you meant converting after tax 401k contributions into a Roth Ira, I haven’t made after tax contributions in the past 5 or so years. Am I missing something?
NOTE SOMETHING TO BE AWARE, BUT NOT NECESSARILY A DECISION DRIVER
3. Be prepared to pay tax on the Roth IRA conversion.
When converting from a Traditional IRA to a Roth IRA, you will owe income tax on any taxable portion of the account balance. An important point to note: Conversions must occur on a pro-rata basis, meaning you cannot choose to only convert the portion you’ve already paid taxes on. For example, say you have an existing $100,000 Rollover Traditional IRA with pre-tax money. You make $5,000 in after-tax contributions to it every year from 2008 to 2010 for $15,000 in total. You’d have to pay taxes on 87% of the $15,000 because taxes are calculated as a proportion of the total of your IRA accounts ($115,000). Please consult a tax advisor to see what this may mean in your situation.
Those who convert in 2010 may have a dramatically higher tax bill in 2011 and 2012. However, if you do the conversion in 2010, TIPRA offers two additional benefits. First, you don’t have to pay any federal tax on the conversion in 2010. What’s more, unless you elect otherwise, and as long as the converted amounts are not distributed before 2012, half of the taxable amount will be included in income for 2011 and half for 2012. Of course, it is better not to pay those taxes with funds withdrawn from the IRA or other retirement accounts, since doing that could generate yet more tax.
Stu: not everyone has a crap employer 401(k) so I cannot generalize
So Nom (121): We can discuss this further when we get together.
I do have a sizable chunk of tax deductible traditional IRA contributions that I have been fully funding to the max amount since I was 17. I think I know the loophole that ChiFi was hinting at. Essentially, if I were to convert this pretax IRA contributions to a traditional IRA prior to my more recent non-deductible IRA contributions. Then these recent non-deductible IRA contributions would be 100% shielded from the prorata portion which is used to determine the tax rate I would pay on the conversion.
I found a site that better describes this strategy…
The Workaround
As with most tax situations, there is an effective (albeit somewhat inconvenient) workaround… If you happen to have tax-deferred money sitting around in a non-Roth IRA you can shield it from this rule by rolling it over into a non-IRA employer plan. Check with your employer about doing this with your 401(k), but be aware that they can’t accept any non-deductible money, and many just plain won’t allow it. Another option would be to open a Solo 401(k) and then roll your non-Roth IRA funds into there. All except for the non-deductible contributions, of course, as that’s what you’ll want to convert into the Roth account.
So is it worth the trouble? I’m still undecided. It would be great to get around the Roth contribution limits, but this is a pretty inconvenient way of doing it. Beyond that, there’s no guarantee that the tax laws will remain unchanged through 2010. While even non-deductible IRA contributions have their advantages, you lose a ton of flexibility, and you don’t necessarily gain much that couldn’t be achieved through tax efficient investing.
chicagofinance says:
Your comment is awaiting moderation.
August 3, 2009 at 12:40 pm
DM SPOILER – do not read LOST & SCRIBE
Cindy says:
August 3, 2009 at 9:36 am
Chicago – Maybe I missed it…
Did you give a report on DM in AC?
Yes? No? Pretty Good? Out of the Park?
C: Realize the bar is extremely high. It was truly excellent, but not the best that I’ve seen. The venue was just great. There was a scheduling issue, and it forced them to cut 3 songs. However, I was dead center and close to the stage.
Recognize that one of the songs cut was Strangelove which has an excellent topl-ss l-sbian massage video being projected…I’m not joking…
128 ChiFi
I was on the DM message boards. I saw your comments along with the complaints. That’s all I’ll say because I don’t want to ruin it for Scribe.
BTW I’m meeting a friend at Stout’s at 7:45 if you guys want to meet beforehand. I have no interest in seeing the opening band.
Ignore this Nom.
We really do need to simplify our tax rules!
Stu: You strike me as the kind of guy willing to go to great lengths to stick it to The Man, so I thought it reasonable to mention it to you.
Aug. 3 (Bloomberg) — GMAC Inc., the money-losing lender labeled too big to fail by the U.S., has used government guarantees to slash its borrowing costs and undercut profitable lenders, lifting its bond prices by 80 percent since March.
GMAC sold $3.5 billion of federally backed bonds in June at a 2.2 percent yield, 65 percent below its average borrowing costs in the first quarter. GMAC’s bank, renamed Ally in May, cut the rate it pays on 12-month certificates of deposit by half in the past year to 2 percent.
Lost,
I haven’t been to MSG in a while.
I bought my tickets just last weekend, so I’m in the 303 section.
Want to meet after?
I plan on getting there no later than 7 to get on the line.
I take it Chi already went to the show in AC (??)
Stu,
I went to AC on 7-18 on a Greyhound bus with a bunch of people. A sightseeing and music trip – not for gambling.
But the deal was you pay $35 for the bus ticket, and then, when you get off the bus, the bus greeter gives you a $25 coupon you can use to gamble at Caeser’s.
I didn’t know I had to bring state-issued ID, so I got a coupon that’s good for “next time.”
Do you want it? I don’t plan on going back to AC anytime soon, and the coupon expires 10/31.
If you do, have Grim send me your snail mail address, and I’ll send it to you.
“Stu: You strike me as the kind of guy willing to go to great lengths to stick it to The Man, so I thought it reasonable to mention it to you.”
Chifi: (131) You ain’t seen nothing yet. Montclair is planning on raising the police chief and the deputy police chief’s salary by 4% since their underlings were guaranteed a 4% raise due to their union contract. I have already begun an email discussion with the town council and our mayor of which the results are below…I will make my same argument publicly at the town meeting tomorrow. Those with access to Montclair’s public access channel can watch me live.
This is how you stick it to the man!!!!
—————————————
On Sun, Aug 2, 2009 at 9:48 AM, Stuart Weissman wrote:
>
> I just checked the agenda for the upcoming council meeting on the 4th. I trust that in this time of falling revenues and repeated calls to reduce our property tax bills, you will voice your opinion against any non-contractual salary increases at this time.
>
> Also, I noticed that there is a preliminary resolution regarding Joe Hartnett’s resignation. After his deplorable behavior in regards to the mayor’s request to reduce the budget by 5%, he deserves no exit package above and beyond what he is promised in his already overly generous employ agreement.
>
> Please do the right thing and show some leadership on these issues.
—————————————-
It is being proposed that our management/non-union employees should
receive salary increases in line with the union positions that report
to them or are equivalent to them. Thus, the police chief and deputy
chief are being scheduled for 4% increases, as that is the raise the
union people who report directly to them have received.
Of much more impact is the potential need for hiring. Our police
force is down from the authorized numbers, and the COPS grant which
would have paid for five officers has not materialized. Depending on
what we do, these hires will carry a much higher price tag than the
pay increases.
As to the Town manager’s resignation, there are contractual and
statutory obligations that we will, of course, follow.
Appreciate your interest!
Cary Africk
2nd Ward Councilor
—————————————-
Cary,
Thank you for your response. In my large company, highly compensated employees (executives) were forced to take a 15% pay cut. Non-executive salaried employees (such as myself) were forced to take a 10% cut. Hourly workers, some of whom are unionized did not receive any cuts, but their salaries were frozen. As a result of these actions, there was no noticeable increase in voluntary resignations if any.
In this current economy of increasing unemployment and various reports of unemployment benefits running out prior to job seekers finding new employment, the fear that empty positions will not be able to be filled is pure poppycock. Many towns, including our neighboring towns have frozen and/or cut public sector salaries. In Montclair, there continues to be this endless cycle of they got it, so we deserve it. We saw it when the BOSE approved raises for the teachers which was then used by the other municipal workers to justify their increases. Absolutely no leadership was shown by the BOSE and the same can be said for town council that can’t even agree on passing a small increase in the public pool fees even though our seasonal prices are significantly lower than that of any other town in our area.
As to the issue of paying for new hires if I understand what you are saying correctly, one can not fairly justify the paying of raises by claiming that it is small beans compared to the cost of hiring five new officers. These are entirely separate issues and should be treated that way.
I do appreciate your explanation, but I completely and utterly disagree with your justifications.
Stuart
—————————————-
Stuart I am good for 7pm monday night …. 973744**** call Me tomorrow to confirm… I can also bring cary.. Rich Murnick Sent from my Verizon Wireless BlackBerry
I think a lot of the anger on this board is due to people not listening to me. I recall a few chanting that investment grade corporate bank bonds would be wiped out when the banks are nationilzed and there would be no more US Car market. I recall the chanting about home prices completely being wiped out by now, even chanting that FDIC would be broke by now. Several talked about skyhigh gas prices, compounds, stacking up on canned food as if the world was ending. Well you were wrong doomsday folks. You cash is paying 1% while stocks are through the roof. When I told you guys to jump in on Ford Bonds at 40% ytm, Citi at 16% ytm and even the day AIG hit 72%!!! YTM you all laughed. Remember the greatest buying opportunities is when everyone is selling not buying.
Scribe,
Why not!
Get my email from Grim.
Grim,
Can you take my ‘Sticking it to the Man’ out of mod at 135.
“Remember the greatest buying opportunities is when everyone is selling not buying.”
Conversely, the greatest selling opportunity is when everyone else is buying.
Profits before Patients.
Bill Moyers – July 31, 2009
http://www.pbs.org/moyers/journal/07312009/profile.html
John,
Thanks for the tips. You the man. What else you got for us?
John,
You are right. You filled your trunk with junk, and it worked out. Buying at the time of maximum fear does work, but the challenge is that the point of maximum fear is only observable in retrospect. Lot’s of people thought max-fear had been hit pre-Lehman, and got wiped out.
Now I wonder if an asset bubble comes back. There are many counting on it, including doomsayers. If more people expect devaluation of the currency, folks will run to buy tangible assets, including houses, and other assets too.
Just musing, not predicting.
Bank of America Settles SEC Lawsuit for $33 Million, SEC Says
http://www.bloomberg.com/apps/news?pid=20601087&sid=aMV3tuBQIZNM
Hahaha, SEC sues them and they settle for $33M. They forgot to add $33M of likely taxpayer dollars. Woooo, glad they learned their lesson!
Who the hell takes a trip to Iraq to go hiking?
http://www.philly.com/philly/news/20090803_Man_detained_in_Iran__Montco_kin_await_word.html
“Who the hell takes a trip to Iraq to go hiking?”
SAS?
According to a bloomberg article today –
“Those taking advantage of the government discount plan to drive their new vehicles an average of 11,000 miles a year, up from the 6,000 average miles the clunkers were driven last year,
according to a survey released today by CNW Research, an industry-analysis firm based in Bandon, Oregon.”
Sweet. Should rename the bill “Cash for Car Dealers” because that’s about the only group benefitting from this.
133 I think scribe
get my email from grim
Could you imagine if they offered the employee discount pricing on top of the cash for clunkers deals?
My head would explode!
Nom – You’ve got mail…
“Nom – You’ve got mail…”
Should I be concerned :P
#11 – Exactly the same situation in Fort Lee, where we have been tracking since 2003, at least.
Sellers are still delusional with 2006 ask prices, now will be even more so, after all this bs from govt.
“If more people expect devaluation of the currency, folks will run to buy tangible assets, including houses, and other assets too.”
A West,
i agree here.
At no other time in history have we seen such extreme disagreement on inflation/deflation. The most accomplished economic academics are all contradicting eachother. This tells me that inflation/currency deval is 50/50 possibility, since nobody really knows.
In that case, id rather have a depreciating house and mortgage rather than gold bricks under the bed.
just preference i guess but this fear/risk is real and its pushing me to buy a home sooner than i otherwise would have.
hmm, SAS has been missing in action it seems?
Here’s a prime example of why we need to change our legal system:
http://www.nydailynews.com/ny_local/2009/08/03/2009-08-03_student_.html
NEW YORK — A New York City woman who says she can’t find a job is suing the college where she earned a bachelor’s degree.
Trina Thompson filed a lawsuit last week against Monroe College in Bronx Supreme Court, The New York Post reports. The 27-year-old is seeking the $70,000 she spent on tuition.
Thompson says she’s been unable to find gainful employment since she received her information technology degree in April.
She says the Bronx school’s Office of Career Advancement hasn’t provided her with the leads and career advice it promises.
Monroe College spokesman Gary Axelbank says Thompson’s lawsuit is completely without merit.
The college insists it helps its graduates find jobs.
Read more: http://www.nydailynews.com/ny_local/2009/08/03/2009-08-03_student_.html#ixzz0N9AKErSE
westy (141)-
There are as many- if not more- who expect the USD to maintain a position of relative strength vs other world currencies, since virtually every other nation on the planet has embarked on a beggar-thy-neighbor monetary policy.
Check out Mish for some great thoughts on this topic.
veto (151)-
Just the thought of trying to arb a home purchase vs inflation scenario makes my bones hurt.
Four walls and a roof. Shelter. Consumption, not investment.
Aug. 3 (Bloomberg) — U.S. lenders bailed out by the government are returning the favor by stepping up purchases of Treasuries, helping to temper a rise in borrowing costs.
Bank holdings of U.S. government securities are up 15.6 percent from a year ago, almost double the average annual growth rate of about 8 percent since the Federal Reserve began tracking the data in 1973, according to the Greenwich, Connecticut-based trading and research firm MKM Partners LP. Purchases may accelerate as lenders look for places to park rising deposits as sales of federal agency debt of companies such as Fannie Mae and corporate bonds slow.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aucooSmI6UQQ
Isn’t this like doubling down?
This disagreement on inflation/deflation is ridiculous. Gas used to be $10. Houses used to be 120k. Government was half the size it was 10 years ago. The only things that never went up in price were things we were able to outsource. Health care, auto services, commodities, insurance, taxes, tolls, public transit fees, school budgets…all of these things have done nothing but go up.
Cheap stuff from China is the only thing that kept the cost of living down and it’s been at the result of the expansion of the trade deficit. The fact that a Margarita maker and George Foreman Grill still cost me 20 bucks means nothing.
There is no deflation. Money supply up, prices up. The trade deficit cannot unwind without a printing press kicked into high gear. Anyone betting on deflation will get slaughtered over the long term. Debt to GDP is meaningless. A country that produces no products cannot have a Gross Domestic Product.
What will happen when all the demand that has been brought forward by Cash for Clunkers is exhausted?
What will happen when all that demand has been exhausted and the consumer has been Pavloved into not making a major purchase without some sort of gubmint rebate, discount or kickback?
Would the auto industry’s attendant loss of pricing power be in any way deflationary, or at least, disinflationary?
HE (155)-
Better than doubling down…it’s doubling down and reinforcing a negative feedback loop.
Doom is nigh.
veto,
Buy a house that you can afford and plan on staying for the long haul. Anybody trying to arb trade a house is nuts.
Clot [157],
Stealing from future demand. Just kicking the can down the block. Gimmicks are not sustainable.
153.
Alexnyc,
after this weekend’s financial hype, I’m officially sidelined until late fall. As you say, this only deepens the delusion, will have to wait for the market to shake the sellers out.
Gubmint as racket? Threaten Ken Lewis if he doesn’t follow through with the MER purchase, then butt-bang him for 33mm a few months later for non-disclosure of MER bonuses.
The takeaway: you can only avoid disclosing that which the gubmint tells you you can avoid disclosing.
Honestly, loan sharks treat people better.
Ken Lewis is a moron. When he announced the purchase of Merrill, I couldn’t believe it. He was paying top dollar for a firm worth zero. I figured that he was just buying them hoping to guarantee BOA a bailout by being too big to fail. They got their bailout and then some. Either he’s stupid or lying…either way, I wouldn’t want to own shares in his company. Besides, BOA doesn’t strategically put executives on the Board of Governors at the Fed or in the treasury department. Goldman, GE, and JPMorgan do, and they steal from the taxpayers. BOA is just a glorified welfare case that wishes they had someone inside Obama’s administration.
I got nothing today. Actually I am selling some winners and I have no clue what too buy. I am more fearful when I am making money. Even stuff like XL and CNA bonds I bought on a whim without research in March are up 60%. I am going to pre-pay the last bit of my mortgage and if any stray munis jump up with at least a 5% yield at par or less I can buy that. But I am a little hesitant on the whole market. One thing worth throwing a little money into is old GMAC bonds, there are still 5-10 year GMAC bonds with a 6% coupon at 52cents on a dollar floating arounding yielding 12-18%. They are issuing FDIC bonds at 2% and doing car loans via cash for clunker at 6%. The clunker buyers turns out have a lot better credit score than regular buyers as they are naturally consertative. Plus the govt won’t let them down, still wouldn’t put more than 5k or 10K there cause you never know.
HEHEHE says:
August 3, 2009 at 1:36 pm
John,
Thanks for the tips. You the man. What else you got for us?
Ben (163)-
Banks are the new welfare niggas.
I kind of feel like we’re entering the euphoria before another collapse.
clot
could not agree more ,,this is sad to see what the banks have got away with at taxpayer expense.
“What happens when the demand has been exhausted…” “Stealing from future demand…” #157 #160
BC/Clot…
I was wondering about the supply side of the equation. Isn’t cash for clunkers like bulldozing houses? I mean – The idea is to get the car off of the street. They have to ruin it following specific rules.
Also, one has to wonder how many ways to Sunday that can get gamed. Ruin a car that still works….hum…..do ya think some people might try to get around that?
“I kind of feel like we’re entering the euphoria before another collapse.”
Saw a reporter on Bloomberg on Thursday of last week that said during the last 21 out of 22 times that the Shanghai markets had scene such a dramatic increase in individual investors entering the fray, the market corrected dramatically.
I suppose once again, this time it is different.
I think if you look back at where the markets are today compared to where they were in mid 2007, it helps one change your perspective on this recent rally just a bit. It also helps you stop focusing on all of the MSM noise.
I still can’t believe there are that many people driving around vehicles that get less than 18mpg.
Moral hazard once again I suppose. You do the right thing and buy a 40 mpg rice burner and drive it for 14 years and you get nothing. You go out and buy a 40K truck and your are rewarded with a $4,500 check at trade in.
John (135) well said …as to what to buy …TBT,UYM ….
more fun with john stewart.
http://www.thedailyshow.com/watch/wed-july-29-2009/home-crisis-investigation
“Home is Shelter. Consumption, not investment.”
I realize that you use it but its like saying gold is not an investment because you wear it as jewlery and use it in electronics.
If you buy a 2 bedroom townhouse for your 3 person family, its an expense. But if the same family buys a 7 bedroom mansion, a good part of that house is an investment, whether the price goes up or down it will effect your net worth.
Also, the land does not depreciate, it appreciates over the long run like most other investments.
In the event of a total meltdown, i want house as protection of my assets. Treasuries can default, Gold is has risk since govt can ban it or someone can steal it. Also, if dollar collapses, then the chinese or ruskies may create a new currency that is not pegged to gold and then gold price wouldn’t increase either so its not a sure hedge.
When you calculate your net worth, you would list market value of your home as an asset along with the market value of your stocks and bonds and 401ks and gold chips. The outstanding mortgage amount should be listed as a liability. Any difference from mkt value to morthage amount is equity that adds to (or subtracts from) your net worth.
In that case, a home is as much of an investment as anything else.
john, great calls.
i bought lqd and fax back in march along with fcx and some other commodities, select techs as well as tbt. i remember thinking, this is overdone pessimism. that being said, i get that same strange feeling now with this euphoria.
we need low mortage rates. so what is the possibility that long treasuries catch a rather good big and equities fall. it’s what the gov needs to make the the alt-a situation easier for the masses. guess the question is whether rising equity markets do enough for confidence in housing as a remedy, or whether lower equity markets and a push down in mortgage rates is more desirable.
[149] stu
“Should I be concerned”
You should always be concerned, but not about that.
[130] stu
“The tax laws should be simplified”
Communist!
Stu, I have a compact truck with 225K miles that they will give 3500 if I trade in for a comparable compact truck. Since I paid 3800 in taxes this year I’m still losing money if I trade it in. ; ) I’ll just save for the new truck the government can’t keep the auto dealership bailout.
Timmay and Larray, Meet Mr. Woodshed:
“WASHINGTON (CNN) — The White House shot down concerns Monday that middle-class families may face a tax increase in order to combat rising deficits and a struggling economy.
Treasury Secretary Timothy Geithner says the stimulus plan is working, but tough choices may be ahead.
“The president was clear during the campaign about his commitment on not raising taxes on middle-class families,” White House press secretary Robert Gibbs said Monday afternoon. “I don’t think any economist would believe that, in the environment that we’re in, that raising taxes on middle-class families would make any sense.”
The concern came after the Obama administration’s two top money men floated the idea that tax increases to fund the nation’s economic recovery could extend beyond the wealthiest Americans.”
Stu, don’t forget that massive tax write off they got for initially buying that SUV in the first place. We subsidized them to buy a car that wastes gas and now we are subsidizing them to trash it.
“Also, if dollar collapses, then the chinese or ruskies may create a new currency that is not pegged to gold and then gold price wouldn’t increase either so its not a sure hedge.”
veto,
Wrong.
JJ: here you go…Depeche Mode…some lez t!tty and a good foot tongue lashing…
Skip to minute 3:00 of 4:14
http://www.youtube.com/watch?v=yE5CuE42Aig&feature=related
I don’t know why people think it’s that easy to create a currency. Except for the European economies and the US, no other economy in the world can prove some form of credibility. The Russians — defaulted last in 1997, barely a dozen years ago; would you trust them to handle monetary policy? The Chinese — have you seen how transparent their banking system is, as well as their statistics?
Have to agree with BC Bob
If this is the best they can do, Christie might as well start planning the inaugural festivites now.
“The enemy of the economic downturn”
http://www.youtube.com/watch?v=jDqtvnfhHZo&feature=player_embedded
ok BC, you got me there. im speaking out of school since i have no idea what would happen to gold in that situation.
Housing Remains Shaky
Matawan considers limiting elected officials
Vendor conflicts eyed
MATAWAN — Can you work as an elected municipal official and do business with the town at the same time?
Matawan now finds itself grappling with that very same question. The Borough Council already has crafted two drafts of such an ordinance, but is facing opposition from one councilman over its legality.
Mayor Paul Buccellato is spearheading the proposed municipal ordinance that would forbid elected officials who operate such businesses in town from conducting business — providing a service or goods — with the municipality.
And based upon an informal survey of a half dozen other Bayshore towns, Matawan may be the first northern Monmouth area municipality that actually places such a formal law on its books.
Buccellato, 55, said a draft of the ordinance was first presented in April.
Councilman Joseph “Bud” Mullaney, a Democrat, contends that the Borough Council is making up its own rules to push through such an ordinance. Mullaney, 64, said the ordinance, as proposed, violates state constitutional law.
“There is a way to do this, and the way they’re proposing is incorrect,” Mullaney said. “There is a regular procedure to follow to change the law, but they want to make their own rules — they can’t make their own rules.”
Mullaney, who is up for re-election in November, says the council must form an ethics committee, and have a state review of the ordinance before passage.
Mullaney, who owns and operates Mullaney Tire and Auto, 310 Broad St., Matawan, hired attorney Paul P. Josephson, of the Princeton-based firm Hill Wallack LLP, for his expertise in constitutional law.
In April, Josephson wrote a letter to Matawan Borough Attorney Pat “Pasquale” Menna, stating the ordinance, as written, could discourage future council candidates from running.
The ordinance was subsequently pulled off the council agenda for further revision, Buccellato said.
Menna said a second draft of the ordinance, yet to be formally introduced, would shift focus away from incumbent officials to vendors that seek to do business with the borough and have a connection to a sitting municipal official.
Buccellato, a Republican, also has written a letter to state Attorney General Anne Milgram asking for her opinion on the issue. At the council’s July 7th meeting, Buccellato said he feared adopting an ordinance could spark a lawsuit by Mullaney against the borough, costing the town legal fees.
“Mr. Mullaney has a history of being litigious and would, in all likelihood, sue the borough and any council member that would support the ordinance,” Buccellato said.
Mullaney dismissed Buccellato’s claim.
“I am a Matawan taxpayer,” Mullaney said. “Why would I want to increase my own taxes?”
Buccellato said he proposed the ordinance because he claims that Mullaney and Councilman Kevin Mendes are in conflict by sitting on council and doing business with the town government at the same time.
“My reason for introducing this ordinance is simple: Both Bud Mullaney and Kevin Mendes have and still are performing work for the borough as they sit on the dais,” Buccellato said.
Buccellato said a review of municipal business records indicates that approximately 40 percent of Mullaney’s business with the borough, which began in 2000, occurred between 2006 and 2008 when both Mullaney and his daughter Megan Mullaney were council members.
Mullaney, who said he no longer does any business with the borough, contends said the ordinance, if passed, may have a chilling effect, discouraging other business owners in town from running for office.
Buccellato said that Councilman Mendes, who works for Key Auto Body, 20 Main St., Matawan, has conducted about 45 percent of his overall business with the borough between 2008 and this April.
Mendes, a Democrat, joined the council in January 2008. Started in 1976, Key Auto is owned and operated by Mendes’ parents. Mendes, 52, said his council position offers no influence — that Key Auto’s contracts with the borough are controlled by third-party insurance companies that set the fee rates.
Mendes also said that in the past, the borough’s towing work was shared by a pool of other local towers.
“The borough sets the game plan — here’s the requirements for you to work with us,” Mendes said.
“There’s no way that me becoming councilman was going to influence or increase our business,” Mendes said. “The only thing that I have increased here is the amount of aggravation that I get from people in my immediate family who see what’s going on.”
If Matawan eventually does approve its ordinance, it may be the first Bayshore town to do so.
To date, neither Aberdeen, Hazlet, Holmdel, Keyport nor Middletown have passed such a law that would outright forbid elected officials from doing business with the town that they’ve been elected to serve.
Borough clerks at both Keansburg and Union Beach said that while they have no such formal conflict of interest ordinance, the council has been advised in the past by their borough attorneys that elected officials should recuse themselves when such conflict-of-interest situations arise.
“We do not have an ordinance on the books per se, but our borough attorney tells us that, as a matter of policy, it’s not advisable,” says Keansburg municipal clerk Thomas Cusick.
http://www.app.com/article/20090802/NEWS/908020342/-1/FRONTTABS01/Matawan+considers+limiting+elected+officials
reynon the govt is propping up long term treasuries front door, back door and through the banks, I do think short term 6-12 months we will have lower rates and a pop in bonds, problem is US govt debt is the titanic of bonds, it is tough to steer it in anyone direction for very long, the govt can prop up bank bonds, auto bonds even muni bonds, but that mother ship it manipulates but sometimes it will just bash into an iceberg. Govt bonds are like a skinny italian girl with a fat mother, enjoy the short term ride but jump off before it blows up.
My big SUV gets 8.9 mpg baby. A true american hero of a car!!
Stu says:
August 3, 2009 at 3:31 pm
I still can’t believe there are that many people driving around vehicles that get less than 18mpg.
Moral hazard once again I suppose. You do the right thing and buy a 40 mpg rice burner and drive it for 14 years and you get nothing. You go out and buy a 40K truck and your are rewarded with a $4,500 check at trade in.
“Aug. 3 (Bloomberg) — Plaxico Burress, the former New York Giants wide receiver who accidentally shot himself in the leg with an unregistered firearm, was indicted on gun charges by a Manhattan grand jury.”
“If convicted, Burress faces from 3 1/2 years to 15 years in prison for each gun count. The maximum prison sentence for reckless endangerment is one year, according to Morgenthau.”
http://www.bloomberg.com/apps/news?pid=20601079&sid=auiPahmPzfRo
Residents protest Avaya rezoning
The rezoning will add another 319 credits toward the township’s obligations, said Jason Greenspan, the township’s director of planning and community development. Most of those credits would let the township meet its total obligation of 1,561 for the second round of affordable housing credits, he said.
The most controversial amendment in the ordinance was the Avaya property, a communications lab on approximately 65 acres along Middletown Lincroft Road. Under the zoning ordinance, 375 homes could be built on the site, 75 of which would qualify as affordable housing. The township is also planning for 5.5 units per acre instead of the eight units per acre suggested by the state, he said.
Greenspan said more COAH rezoning should be expected by the end of the year. The state is reviewing the township’s thirdround plan, and if approved, it would require more affordable housing units be zoned within 45 days. That round calls for the township to provide another 463 affordable housing units, Greenspan said.
Cindy (169)-
Expect to see a lot of these clunkers end up in places like Myanmar, Lebanon and the Philippines.
veto (176)-
A home may be an investment (of sorts). I just don’t advocate treating it like one.
If I evaluated my personal situation by using net worth parameters, I’d find that I’ve been worth more dead than alive for most of my adult life.
ponzi
http://www.bloomberg.com/apps/news?pid=20601087&sid=aucooSmI6UQQ
Sean [196],
Disguised form of printing and monetizing debt.
John (190)-
I think I will print this and paste it above my desk.
“Govt bonds are like a skinny italian girl with a fat mother, enjoy the short term ride but jump off before it blows up.”
#171 – Cindy – Yes, it is like bulldozing houses. I posted this video earlier, but it was via Jalopnik who seems to be having problems.
Any car taken in as part of the cash-for-clunkers program has to have its engine destroyed. The oil is drained and replaced with a 1:1 mixture of water and sodium silicate. The engine is then run until it seizes. Dealers face a $15k fine for not doing so.
I’m not saying the program can’t be gamed. Just pointing out what is supposed to be done.
Incredibly wasteful. Especially from a president that made overtures to a “green” economy.
Somebody should run a solution of sodium silicate through bi’s blackbox.
Or, bi’s intestines.
BC (197)-
Are you saying that’s a bad thing? :)
“If I used net worth parameters, I’d find that I’ve been worth more dead than alive for most of my adult life.”
Ha you are not supposed to gain on an insurance policy and its not like you liquidate it without doing something illegal. You can include the mkt value of the policy if you were able to sell it but you should not include the full benefit amount on your balance sheet.
Your wife however should claim the full benefit amount if she plans on putting arsenic in your knob creak within the year.
Bye the way, i just made up these accounting rules off the top of my head.
“Treasuries can default, Gold is has risk since govt can ban it or someone can steal it. Also, if dollar collapses, then the chinese or ruskies may create a new currency that is not pegged to gold and then gold price wouldn’t increase either so its not a sure hedge.”
If the government bans gold, it’s value will only increase on the black market. The Chinese have no plans to undermine gold. In fact, China tripled it’s gold reserves…for good reason.
August 3, 2009 at 4:25 pm
John (190)- I think I will print this and paste it above my desk. “Govt bonds are like a skinny italian girl with a fat mother, enjoy the short term ride but jump off before it blows up.”
JJ: Everyone has their favorites, but for my money, this is flat out the wittiest thing you ever posted. I would put this up there in my all-time NJRE favorites, although it doesn’t quite get up to “Read My Lips You Schmuck” from Booya.
http://pressofatlanticcity.com/news/press/cape_may/article_afd9e271-b1e6-53a5-9ad5-d6896b027881.html
From the Press of AC-
City of North Wildwood is going to approve the purchase on a councilman’s property under the open space provision. They are going to pay full assessed value for the property.
Secondary Market says:
August 3, 2009 at 3:35 pm
more fun with john stewart.
sec: so good
Sean [196],
Disguised form of printing and monetizing debt.
How is it that we can still fool the world is unbelivable. Why would anyone send their money to washington?
Biggest tax revenue drop since 1932
WASHINGTON – The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab.
The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.
Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.
The last time the government’s revenues were this bleak, the year was 1932 in the midst of the Depression.
“Our tax system is already inadequate to support the promises our government has made,” said Eugene Steuerle, a former Treasury Department official in the Reagan administration who is now vice president of the Peter G. Peterson Foundation.
“This just adds to the problem.”
While much of Washington is focused on how to pay for new programs such as overhauling health care — at a cost of $1 trillion over the next decade — existing programs are feeling the pinch, too.
Social Security is in danger of running out of money earlier than the government projected just a few month ago. Highway, mass transit and airport projects are at risk because fuel and industry taxes are declining.
The national debt already exceeds $11 trillion. And bills just completed by the House would boost domestic agencies’ spending by 11 percent in 2010 and military spending by 4 percent.
For this report, the AP analyzed annual tax receipts dating back to the inception of the federal income tax in 1913. Tax receipts for the 2009 budget year were available through June. They were compared to the same period last year. The budget year runs from October to September, meaning there will be three more months of receipts this year.
Is there a way out of the financial mess?
A key factor is the economy’s health. The future of current programs — not to mention the new ones Obama is proposing — will depend largely on how fast the economy recovers from the recession, said William Gale, co-director of the Tax Policy Center.
“The numbers for 2009 are striking, head-snapping. But what really matters is what happens next,” he said. “If it’s just one year, then it’s a remarkable thing, but it’s totally manageable. If the economy doesn’t recover soon, it doesn’t matter what your social, economic and political agenda is. There’s not going to be any revenue to pay for it.”
A small part of the drop in tax receipts can be attributed to new tax credits for individuals and corporations enacted in February as part of the $787 billion economic stimulus package. The sheer magnitude of the tax decline, however, points to the deep recession that is reducing incomes, wiping out corporate profits and straining government programs.
Social Security tax receipts are down less than a percentage point from last year, but in May the government had been projecting a slight increase. At the time, the government’s best estimate was that Social Security would start to pay out more money than it receives in taxes in 2016, and that the fund would be depleted in 2037 unless changes are enacted.
Some experts think the sour economy has made those numbers outdated.
“You could easily move that number up three or four years, then you’re talking about 2013, and that’s not very far off,” said Kent Smetters, associate professor of insurance and risk management at the University of Pennsylvania.
The government’s projections included best- and worst-case scenarios. Under the worst, Social Security would start to pay out more money than it received in taxes in 2013, and the fund would be depleted in 2029.
The fund’s trustees are still confident the solvency dates are within the range of the worst-case scenario, said Jason Fichtner, the Social Security Administration’s acting deputy commissioner.
“We’re not outside our boundaries yet,” Fichtner said. “As the recovery comes, we’ll see how that plays out.”
The recession’s toll on Social Security makes it even more urgent for Congress to address the fund’s long-term solvency, said Sen. Herb Kohl, D-Wis., chairman of the Senate Aging Committee.
“Over the past year, millions of older Americans have watched their retirement savings crumble, making the guaranteed income of Social Security more important than ever,” Kohl said.
President Barack Obama has said he wants to tackle Social Security next year, after he clears an already crowded agenda that includes overhauling health care, addressing climate change and imposing new regulations on financial companies.
Medicare tax receipts are also down less than a percentage point for the year, pretty close to government projections. Medicare started paying out more money than it received last year.
Meanwhile, the recession is taking a toll on fuel and industry excise taxes that pay for highway, mass transit and airport projects. Fuel taxes that support road construction and mass transit projects are on pace to fall for the second straight year. Receipts from taxes on jet fuel and airline tickets are also dropping, meaning Congress will have to borrow more money to fund airport projects and the Federal Aviation Administration.
Last week, Congress voted to spend $7 billion to replenish the highway fund, which would otherwise run out of money in August. Congress spent $8 billion to replenish the fund last year.
Rep. Richard Neal, D-Mass., chairman of the House subcommittee that oversees fuel taxes, is working on a package to make the fund more self-sufficient. The U.S. Chamber of Commerce, which doesn’t back many tax increases, supports increasing the federal gasoline tax, currently 18.4 cents per gallon.
Neal said he hasn’t endorsed a specific plan. But, he added, “You can’t keep going back to the general fund.”
http://news.yahoo.com/s/ap/20090803/ap_on_go_ot/us_plummeting_taxes
190
john, you should have a reality show.
john, i was gonna post something serious, but your comment.
“Govt bonds are like a skinny italian girl with a fat mother, enjoy the short term ride but jump off before it blows up.”
was too precious. though, so you don’t think you are too infallable, my wife is italian, and skinny (marathon runner), and her mother is the same… but she would be an outlier i would say.
veto (202)-
I think my wife is already slipping tiny amounts of arsenic into my Knob Creek.
That’s how the pros do it. :)
reynon (210)-
You tapping the MIL?
I loathe myself for saying that.
d2b, that property in N. Wildwood is such a scam on that councilman part. I am very familiar with Cape May County, and nothing in the Wildwoods can generate that kind of sales price today. Single family zoned land in Cape May a considerably more desirable area isn’t going for that. Ahh Corruption and NJ perfect together.
Warren Buffett thinks most of the country’s housing woes will be over by the end of next year.
“We’re not too good at avoiding challenges, but we’re marvelous at surmounting them,” Buffett told a crowd that had gathered in Des Moines to help a family-founded firm unveil one of the 10 largest furniture showrooms in the country.
Looking around the store, he added, “I don’t see how anyone can be a pessimist about the future of the country.”
On the mounting federal debt, he observed, “It is not dangerous where we are now. It may be dangerous where we are going.”
And Buffett had this to say about taxes: “I would make the tax rates a little more progressive. I would help my cleaning lady and take a little more out of me.”
A recent survey by the National Association of Realtors found nearly three-quarters of real-estate agents said buyers were purchasing smaller houses due to tighter credit requirements.
“We’re in a ‘trade-down’ environment for the first time since the 1930s,” Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California told The Wall Street Journal.
Sales of low- and moderately priced homes are picking up but high-end homes remain stuck in a deep slump and price declines there could accelerate
“How is it that we can still fool the world is unbelivable. Why would anyone send their money to washington?”
makemoney, we aren’t fooling anyone. They know we aren’t good for the money. It’s just not politically acceptable to allows the currency of a nation that has 700 military bases around the world to collapse. We are literally getting away with spending the world’s money. In a year or two, when the real negative pressure on the dollar grows out of control, some creative default through some currency swaps via the IMF will probably be proposed. At that point, it will be politically acceptable for China, Japan, Russia, the Saudis, and everyone else to spend their currency reserves. That’s the only way the US avoids >20% annual inflation. At that point Global consumption will rise while the US consumer is a shadow of his former self.
Million dollar comp killer:
100 Post Kunhardt Road, Bernardsville NJ
Purchased: 06/04/04
Purchase Price: $3,650,000
Listed: 7/24/2005
List Price: $3,950,000
Expired DOM 181
Listed: 1/20/2006
List Price: $3,950,000
Reduced: $3,195,000
Withdrawn DOM 291
Listed: 5/7/2008
List Price: $2,995,000
Withdrawn DOM 305
MLS# 2664741
Listed: 3/18/2009
List Price: $2,995,000
Sold: 7/31/2009
Sale Price: $2,650,000
27% under the 2004 sales price
Exactly $1,000,000 under the 2004 sales price
beer (217)-
The place looks like a Marriott.
#218 I know the listing agent on one of the (many) prior listings.
The asking rent of $8k per month was a bargain, that place rented for $11k back in 06.
So was this a distress sale, or charity?
By the way, the CEO of Avis owned that house. Although I’m not sure it was it primary residence, he owns a considerably higher valued property in Gladstone. At $2m compensation a year, I doubt he is hurting.
Grim,
At 8K, the first 6 months rent went straight to the property taxes. A shade under 50K per year.
From the Record:
Cabela’s: Xanadu won’t open until ‘late 2010’
A key partner in the Meadowlands Xanadu project has announced it does not expect to open its doors until “late 2010.”
Cabela’s — a publicly traded, Nebraska-based hunting and outdoors store — made that announcement as part of its second-quarter earnings call Thursday.
News of the latest delay for struggling Xanadu comes as Colony Capital, the project’s parent, has begun seeking $500 million in new financing to complete the $2 billion project.
Tom Millner, the Cabela’s chief executive officer, gave the update about Xanadu on a conference call.
“In regard to our store in East Rutherford, we continue to work with the developer of [Xanadu],” Millner said. “This project has been delayed a number of times, and we now expect the store to open in late 2010. Since this is a leased facility, we do not have a material investment in the site, and we have significantly slowed our planning to match progress of the development.”
Can’t wait ’til I can pick up ammo at Cabela’s, then head for the Jets game.
One stop shopping.
I’m thinking there are about 30,000 Jets fans having the same thought I am…
who will wager that cabela’s never opens
this location?
Can’t wait ’til I can pick up ammo at Cabela’s, then head for the Jets game.
Still wondering why Cabela’s want to open up in an anti-gun/anti-hunting state.
Hunting equipment accounted for 41.6% of retail sales in 2008.
Where’s lostinny?
grim (226)-
The people who run Cabela’s aren’t exactly the best and brightest.
freedy (225)-
I’ll give you +140 odds that someone will be shot in the Cabela’s space before Cabela’s is able to sell as much as a BB gun.
Did somebody say today that the Russians would be at the helm of a new world currency?
Why not? It takes national genius to declare that drinking whiskey will help you ward off swine flu.
08-03-2009
Russia tells fans to avoid Wales over swine flu
Russian football fans should stay away from the national team’s World Cup qualifying tie with Wales in Cardiff next month due to the risk of contracting swine flu, the state health agency said Monday.
‘This would be an extremely uneccessary and inappropriate undertaking at a time of a flu epidemic,’ the head of Russia’s state health agency Gennady Onishchenko said, according to local news agencies.
‘We will persuade our compatriots not to go to this match in Britain,’ he said.
Onishchenko expressed fear that the ‘the expressions of emotion on the part of football fans involving intense shouting’ could lead to the airborne transmission of the flu virus.
The two sides are due to play their group four qualifier on September 9.
Britain is the hardest hit country in Europe by the A(H1N1) virus with some 110,000 new cases last week of the virus, which started in Mexico before growing into a full-blown pandemic as defined by the World Health Organisation.
Russia has been relatively spared by the swine flu pandemic. Onishchenko said that according to the latest figures there were now 55 confirmed cases in the country.
The suggestions of Onishchenko — who in July recommended banning trips by Russian school groups to Britain — caused a degree of surprise among supporters of the resurgent national squad.
‘We are recommending that Russian football supporters drink Welsh whisky, this will prevent all symptoms,’ quipped the head of the Russian supporters association, Alexander Shprygin, according to the RIA Novosti news agency.
The spokesman of the Russian football union, Andrei Malosolov, also indicated that the advice was not binding.
‘We think Mr. Onishchenko’s advice is useful,’ he told Echo of Moscow Radio.
‘But football is football. The Russian team is playing a crucial match and we hope that the backing of our supporters will help us to win.’
MOSCOW (AFP) © 2009 AFP
Re Roth IRA
The best strategy is to open 3, 4 or 5 new Roth IRA accounts and roll your IRA into each of these accounts based on your asset allocation. For example, if you want 40% in US Large Cap, that would go in one account. BRIC of 15% – another account. At then end of the year, you can “undo” your Roth conversion election if you want. So, if any have that decline significantly in price, you may want to undo your election, wait 12 months, and then do another conversion. You can undo the election for any or all of the accounts.
sl,
February LSAT? You in?
#223 Clot
Priceless
“Can’t wait ’til I can pick up ammo at Cabela’s, then head for the Jets game.”
PGC #233
Somebody needs to glean through these pages and make a book…
Clotpol – Pol Clot
and JJ – John – have their own chapters – of course.
Can solve a lot of problems and fast if they’ll able to pull it.
A New Approach to Fusion
A startup snags funding to start early work on a low-budget test reactor.
http://www.technologyreview.com/business/23102/
This came to me via an ASCAP newsletter and, for anyone mid-40s and above, should be entertaining:
http://bighollywood.breitbart.com/kschlichter/2009/07/31/popular-music-abandons-everyone-over-40/
And Russia joined the club
Traditionally at Friday Prayer, people are encouraged to chant “Death to America” and “Death to Israel” but today, they defiantly shouted “Death to Russia”, in referring to opposition accusations that Russia has been involved in training repression forces of the regime.
http://globalvoicesonline.org/2009/07/17/iran-death-to-russia-at-friday-prayer/
July 2009 WARN Notices released:
http://lwd.dol.state.nj.us/labor/lwdhome/warn/2009/0709warn.html
COMPANY CITY EFFECTIVE DATE WORKFORCE AFFECTED
CONTINENTAL AIRLINES
NEWARK
9/23/2009
To be Determined
EPV SOLAR
STATEWIDE
10/2/2009
31
GERDAU AMERISTEEL
PERTH AMBOY
9/12/09
165
HGA QUEST, INC
STATEWIDE
8/16/09
81
HOUGHTON MIFFLIN HARCOURT
BELLMAWR
10/2/09
60
NONNI’S FOOD COMPANY
DAYTON
8/31/09
25
TRI-COUNTY COMMUNITY ACTION PARTNERSHIP
BRIDGETON
10/1/09
81
VALUEOPTIONS
HAMILTON
9/7/09
67
EPV SOLAR
STATEWIDE
10/2/2009
31
Looks like “green jobs” are disappearing in NJ too
From Bloomberg:
N.J. Rating Outlook Cut by Moody’s on $31 Billion
New Jersey’s $31 billion in debt was reduced to a negative credit-rating outlook from stable by Moody’s Investors Service, which said the recession hurt tax revenue and led the state to deplete its reserves.
New Jersey, whose net tax-supported debt load is the third highest among U.S. states after California and New York, has ratings from New York-based Moody’s of Aa3 on its $2.5 billion in general-obligation bonds and A1 on its $28.5 billion in appropriation-backed securities.
The outlook change, disclosed late today in a news release, raises the possibility that those ratings will be reduced.
“The depletion of the state’s rainy-day fund, enactment of temporary tax increases and significant reliance on nonrecurring expenditure reductions, including minimal pension contributions, contribute to both short-term and longer-term budgetary pressures,” Moody’s analysts Mark Tenenhaus and Edith Behr said in the release.
The Xanadu opening will be scheduled to coincide with the opening of Colony’s new casino, Resorts Meadowlands.
Shore Guy says:
This came to me via an ASCAP newsletter
Let’s face it, rock died in 2000. The number of cd’s that I have dated after that is a precipitous drop. I listen to Sirius on my hour and 15 minute drive to work each way and it pretty much all sucks now. Hard rock is people screaming like they’re in some apocalypse movie. The rest is a bunch of soulless whiny white kids. Don’t even get me started on watching these 90 pound jewish kids cranking up the rap in their BMW’s. My grandmother has more street cred.
20 years now, it’ll all be in the trash heap…erased from the hard drives like some virus or outdated program.
Annie Leibovitz’s subprime loan…
August 2, 2009
For Annie Leibovitz, a Fuzzy Financial Picture
By ALLEN SALKIN
IF money and fame are the yardsticks, Annie Leibovitz is one of the most successful photographers of all time. She has a seven-figure salary from Vanity Fair and commands tens of thousands of dollars a day from commercial clients like Louis Vuitton. Her latest book, “At Work,” made best-seller lists, and an exhibition of her classic images — Demi Moore naked and pregnant, Mikhail Baryshnikov on the beach — has been touring the world for over two years.
So as the news has spread in recent months that Ms. Leibovitz is facing extraordinary financial troubles, with the possibility of losing her Civil War-era town houses in Greenwich Village, a home in upstate New York and the rights to decades of her work, many have formulated the same questions: How is this possible? How could an artist of her standing be in such financial straits? If Annie Leibovitz can’t make it in New York, who can?
On July 29, Ms. Leibovitz was sued in State Supreme Court for nonpayment by a company that had lent her $24 million, and which demanded access to her homes so it could begin the process of selling them to satisfy her debt. Ms. Leibovitz had taken out the loan last year, pledging as collateral properties in Greenwich Village and in Rhinebeck, N.Y., her negatives and the rights to her photographs. The lender, Art Capital Group, claims Ms. Leibovitz is behind on hundreds of thousands of dollars in unpaid fees associated with the loans.
The photographer, 59, declined to comment. Friends and colleagues said that despite her many successes, Ms. Leibovitz has been shadowed by a long history of less than careful financial dealings. Public records show that in the last two years, Ms. Leibovitz has faced tax liens of $1.4 million and two lawsuits claiming that she has not paid more than $700,000 in bills for photography services.
“The mind that can take these extraordinary pictures is not necessarily the same mind that is a perfect money manager,” said Graydon Carter, the editor of Vanity Fair.
A recent series of personal issues has made navigating her already complex life more difficult, close associates said. In the last five years, Ms. Leibovitz lost her father, her mother and her companion, Susan Sontag; added two children to her family and oversaw the costly and controversial renovation of three properties in Greenwich Village.
Charlie Scheips, the former director of the Condé Nast photo archive who helped Ms. Leibovitz make a deal last year with an auction house to sell prints of her photographs, said that when he spoke to her recently, he was told: “I’m really under the gun. I’ve got three daughters, I lost my spouse. I’ve got too many jobs to do and it’s chaos.”
Matthew Hiltzik, a spokesman for Ms. Leibovitz, pointed a finger at the lender suing Ms. Leibovitz, Art Capital Group, a company in New York with a history of litigation over its boutique loans to artists, art dealers and collectors, who pledge their art works as collateral. “Annie is in the same shoes as many other people involved with Art Capital,” Mr. Hiltzik said.
The firm, with offices in a former Sotheby’s building on Madison Avenue, has been compared to a high-end pawn shop, and it has sued and been sued by a litany of clients and associates, including Julian Schnabel, its former lawyers and ex-employees.
But all that would presumably have been known to Ms. Leibovitz before she turned to Art Capital in 2008 for a $22 million line of credit, which was later increased to $24 million. The full amount, plus interest and fees, is due Sept. 8, according to the lawsuit.
The question is why she found herself needing that much cash. Mr. Hiltzik said his client had no comment.
Friends and colleagues agree that it is not a taste for luxuries that has caused Ms. Leibovitz’s financial difficulties. Although well known for extravagant spending while on assignment, those expenses are paid by her employers.
“Annie is not an expensive liver herself,” said Tina Brown, who edited Vanity Fair from 1984 to 1992, where Ms. Leibovitz began working after her early years at Rolling Stone magazine. “She hangs out with her kids. She doesn’t hang out in the lights at the parties.”
In the 1970s, Ms. Leibovitz flew around the world chronicling rock ’n’ roll during its hedonistic heyday and accompanying hard-partying reporters like Hunter S. Thompson. She was notoriously bad with her expenses and was also known to give away expensive Minox cameras to anyone who said they admired hers.
In “Life Through a Lens,” a documentary about Ms. Leibovitz directed by her sister Barbara Leibovitz, Jann Wenner, the founder of Rolling Stone, said that he thought her move to Vanity Fair in 1983 might be good for her because she was at her “peak drug use and was so irresponsible, was leaving rental cars everywhere and not turning things in on time.”
Over the years at Vanity Fair, her shoots became more complex and expensive, often elaborate as movie shoots. “Month after month, it got a little bit more complicated with every shoot,” Jane Sarkin, a Vanity Fair features editor, said in the documentary. “Her demands became bigger. Fire, rain, cars airplanes, circus animals — whatever she wanted she got.”
As Ms. Leibovitz became more famous and successful — she was hired by American Express, Gap and the Milk Board for prominent advertising campaigns— her business and personal life became more complicated.
For years, she declined to speak publicly about her relationship with Ms. Sontag,the writer 16 years her senior. David Rieff, Ms. Sontag’s son, said that the relationship between the two women, who met in 1988, was “on again and off again.”
Ms. Leibovitz purchased a penthouse apartment at the London Terrace complex in Chelsea in 1988, and from her balcony could see Ms. Sontag’s penthouse in the same complex. A photo of the view appeared in her 2006 book, “A Photographer’s Life.”
Meanwhile, she was running a studio in a garage she owned in Chelsea, where she made many of her portraits. A close business associate, who asked not to be named so as to preserve the professional relationship, said that Ms. Leibovitz has been lax about keeping records of which studio expenses to bill to which client. In a 2008 book, Ms. Leibovitz admitted of the Chelsea studio: “We had too much equipment. Things were getting out of hand.”
Ms. Leibovitz gave birth to her first child, Sarah Cameron Leibovitz, in 2001. Around the same time the photographer’s father, Samuel Leibovitz, became sick, and Ms. Sontag had a recurrence of cancer. Ms. Leibovitz spared no expense shuttling from magazine shoots in far-flung locales to hospital beds to see her father and Ms. Sontag, the business associate said.
In 2005, 37 days after the death of Ms. Sontag, Ms. Leibovitz’s father also died. Three months later, on May 12, Ms. Leibovitz’s second and third children, twins, were born. In the documentary, Ms. Leibovitz is shown crying as she holds Ms. Sontag’s photo.
There has been speculation on blogs and in news articles that Ms. Leibovitz’s financial problems arose because Ms. Sontag left her a large inheritance, with steep taxes due because the two women were unable to be legally wed.
But Mr. Rieff, the executor of his mother’s estate, said that all Ms. Leibovitz received from Ms. Sontag were sentimental items.
Meanwhile, Ms. Leibovitz was facing real estate expenses. She had bought two adjacent town houses in 2002 on West 11th Street for $4.15 million. During renovations, a neighbor sued her over a damaged wall. Historic preservationists picketed the renovations, holding signs saying, “Not a pretty picture.”
The neighbor withdrew the suit when Ms. Leibovitz bought his town house, her third, for $1.87 million. She lives and works in two, and rents out the third. Ms. Leibovitz has recently taken on more commercial work, shooting Keith Richards, Sofia and Francis Ford Coppola, and a group of former astronauts for Louis Vuitton ads.
A deal with the auction house Phillips de Pury to sell portfolios of some of her prints for $33,000 did not go as well as hoped, possibly because the first sale of the works took place in October 2008, just as the art market fell apart. Colleagues and close business associates of Ms. Leibovitz are of two minds about how she might escape her financial bind. Some assume her talent and earning power can bail her out. “If anybody has the ability to put these debts away through work, she has the energy and the opportunity,” Mr. Carter said. “She has an infinite capacity for work.”
But others said Ms. Leibovitz needs to reexamine her attitude and habits around money and spending.
Jerrold Mundis, who has counseled well-known people with debt issues, and does not know Ms. Leibovitz, said, “Celebrity or even a spectacular talent doesn’t proof one against a problem with debt.”
In its lawsuit, Art Capital alleges that Ms. Leibovitz was aware that her homes and intellectual property “would likely need to be sold in whole or in part” to satisfy her $24 million debt. It seeks to begin those sales before Ms. Leibovitz’s Sept. 8 deadline for full repayment.
In fact, Art Capital appears to have been shopping the rights to Ms. Leibovitz’s photographs for several months. In a separate lawsuit the lender filed in State Supreme Court this April, it charged the photo agency Getty Images with going behind its back after it had begun talks over Ms. Leibovitz’s work.
The suit states that Art Capital had been in talks with Getty over a sale of Ms. Leibovitz’s archive, valuing it at more than $50 million. Art Capital alleged it also offered Getty a chance to hire Ms. Leibovitz to take freelance assignments. The suit charged that Getty then went directly to Ms. Leibovitz and signed her for $1.1 million to do eight shoots over two years.
In March, Getty announced in a press release that Ms. Leibovitz was “available for commission photography.”
Art Capital charged that Getty’s signing of Ms. Leibovitz had made it difficult to sell her archive.
On July 31, Justice Emily Jane Goodman denied Art Capital’s request for a preliminary injunction against the contract between Ms. Leibovitz and Getty. The judge dismissed parts of the lawsuit, but ruled that other issues would be decided later.
Until now, Ms. Leibovitz has closely guarded the right to reproduce her photographs. But should she lose control of her archive, her famous portraits of Whoopi Goldberg, Jack Nicholson and the like may one day be found on postcards in Times Square.
http://www.nytimes.com/2009/08/02/fashion/02annie.html?_r=1&sq=annie%20leibovitz&st=cse&scp=2&pagewanted=print
#236 Shore,
I just turned 40 and have the new Black Eyed Peas blasting me to work in the mornings.
If anyone’s interested in cheap music downloads, here’s a great site I recently found. Downloads are in between 9 and 15 cents per song.
http://www.gomusicnow.com
I’ve used it for a few weeks now. I used to subscribe to allofmp3.com but it got shut down by the US music industry.
Disclaimer…I make no representations on how safe your credit card info is by sending this company money.
Grim, can’t seem to send you an email from my remote location in Belmar. Could you please send my email to NJ Coast or send NJC’s to me so I can say hello now that I’m in country?
Went to drive by some houses, including the sideways house which actually looks like it needs some work – am in a great rental in Belmar, 4th Ave and loving it – I want to FEEL like I’m in a beach time – not so sure that’s the case in Allenhurst! Some great renovations being done to the house I missed in foreclosure on Evergreen in Bradley. Ah well, the great salty air!
Hope all is well with you all!
Grim, 246 is in mod. But anyway seems like everybody is sleeping
“Iraq”
here is a little tip I laerned last time i was there, up north east of the Tigris, just south of Al’Azamiyah…there was a pretty big round a bout in the street. Reminds me alot of Columbus Circle over on w59.
In any case, if you ever see a gernade go kaplunk at your feet, do not run (very stupid), instead dive forward as far as you can as if your trying to win the belly flop contest, point your head away, and lay flat as a pancake. You should survive the shockwave, just hope to hell shrapnel goes over you, and at least in your feet, rather than your head.
works like a charm, but don’t practice at home, and leave these things to professionals.
:P
SAS
is=are
Yeap, and I was accepted by Canada immigration rules in terms of language\qualifications. Passed IELTS 7.5 out of 9. I was $1500 spent close to immigrate there. Green card came earlier. Right now I feel stupid :(
The rich are no longer rich. They are the biggest debtors of us all and are plugged into a system that gives them enormous credit lines to spend more than they have. If most of them make 1 bad movie, it’s over Johnny, IT’S OVER!!!!
Grimmy,
Oct LSAT gets you in spring/fall next year. Feb is late, no?
October? or too busy? I’ve got board recert exam course in late august but won’t recert til next year.
I’v got books… lots and lots of LSAT books.
Call me tomorrow.
We see the same things happening in Utah, and with the economy going the way its going and the way politics are changing, these upper end homes are not going to sell for years. There going to have to turn them into group homes or something to keep the vacant properties from entirely deteriorating.