Otteau: Slow recovery for housing, no recovery for high-end

From the Record:

N.J. real estate prices headed up

New Jersey home prices have bottomed out and will rise about 2 percent this year, real estate appraiser Jeffrey Otteau predicted Monday.

“While things will get better from here, they’re going to get better at a slow, steady and sustained pace,” Otteau said. Otteau is based in East Brunswick, but he analyzes real estate markets around the state.

He predicted that prices, which he says have fallen about 18 percent since the peak of the market in 2006, will rise only about 3 percent a year for the next five years. As a result, home values won’t return to their 2005 levels until 2016.

Otteau’s prediction is in line with other forecasts that home values will be either rise slightly or be flat this year. No one is predicting a jump in values, and some analysts expect further declines.

Otteau said the housing recovery will be slow as foreclosures continue “flooding into the system” and high unemployment keeps potential buyers out of the market.

He said home sellers have to price their properties competitively, because buyers will not be willing or able to overpay. Aside from buyers’ stagnating incomes, lenders are no longer giving mortgages to unqualified buyers.

But sellers trying to unload million-dollar-plus homes are in trouble, he said.

“The luxury end of the market will probably never recover,” he said. He said that as baby boomers downsize from big homes, there will be fewer younger buyers who can afford to buy those properties.

There’s an even bigger oversupply of 55-and-up housing units, which were overbuilt during the housing boom, Otteau said. He estimates there is a 16-year supply of those units available.

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224 Responses to Otteau: Slow recovery for housing, no recovery for high-end

  1. grim says:

    From the Star Ledger:

    Atlantic City casino revenue down 9.8 percent last month, 13.2 percent over course of year

    Atlantic City’s casinos posted their worst financial returns since 1997.

    The resorts’ gambling business won $3.9 billion in 2009, down 13.2 percent from the previous year, according to data released today by the state Casino Control Commission.

    It was the worst showing for the resort’s gambling business since 1997.

    The competition is only getting steeper. Table games have been approved in Delaware and Pennsylvania, though it will take months to get it running.

  2. grim says:

    From the Star Ledger:

    N.J. Gov.-elect does not rule out raising NJ Transit fares

    Gov.-elect Chris Christie, who has railed against New Jersey’s mix of high taxes, fees and tolls, today would not rule out raising fares on NJ Transit trains and buses as he introduced two of his transportation policymakers.

    Christie emphasized his overall commitment to hold the line on costs, saying “the people of New Jersey are taking too much money out of their own pocket already for the operations of state government.”

  3. grim says:

    From the Record:

    We’re relieved that the U.S. Congress stepped in late last month and extended unemployment benefits and health care subsidies by another eight weeks. Those with benefits due to expire at the end of 2009 can depend on that assistance until the end of February.

    It’s the fourth extension. But it cannot be the last.

    All recessions are painful. But this one is an endurance contest. Nearly 40 percent of the unemployed have been out of work for more than six months, the greatest percentage since the nation started keeping count in 1948.

    Sandra Ratliff, a 47-year-old unemployed office worker from Paterson, is one of those 6.13 million Americans. She was laid off two years ago and recently interviewed for a job as a food-services worker. She is not optimistic.

    “This economy is supposed to be getting better, but I don’t see it,” she told Staff Writers Kathleen Lynn and Hugh Morley.

    The job market is indeed grim. For every job opening, there are more than six unemployed workers, according to Christine Riordan of the National Employment Law Project. Even during the recovery, joblessness will be “a long-term problem,” she said.

    n New Jersey, the unemployed can qualify for up to $600 per week, plus a 65 percent reduction in health care premiums if they are receiving coverage through a former employer. It’s no cushy handout. Like food stamps, unemployment checks can help families stave off extreme hardship while workers look for a new job or further their education.

    We have to believe there will be better days ahead. The drumbeat in Washington to support new job-creation legislation has grown considerably louder in recent days. We hope lawmakers will take the best suggestions from both political parties to encourage the private sector to add jobs.

  4. grim says:

    From The Day:

    Pfizer cutting jobs in Pa.

    Pfizer Inc. is slashing jobs in Pennsylvania, just as it has done over the past week in New York and New Jersey.

    The Philadelphia Inquirer reports that 680 layoffs are expected at Pfizer campuses in Collegeville and Great Valley by March 12. The reductions – 450 in Collegeville, 230 in Great Valley – represent about 15 percent of the combined 4,500 employees at the two legacy Wyeth sites.

  5. grim says:

    From HousingWire:

    More than 13% of Mortgages Delinquent or Foreclosed in November: LPS

    One in every 7.5 homeowners either fell into delinquency or foreclosure as of November 30, 2009, according to the December mortgage monitor report from Lender Processing Services (LPS: 40.44 0.00%).

    The total amount of delinquencies reached a record high 9.97%, a 5.46% increase from the previous month and a 21.29% increase from November 2008. In a sign that homeowners continue their struggle to meet their monthly mortgage payments, loans falling into more severe delinquent categories reached 5.01% through November, compared to 1.52% of loans improved toward a current status.

    Compare that to November’s mortgage monitor report, when 4.02% of current mortgages through December 2008 fell into delinquency by October 2009.

    More than 4% of the loans that were current in December 2008, fell behind by 60 days or more, including foreclosure, by the end of November 2009. It’s the highest rate for that part of the year since LPS began reporting the data.

  6. grim says:

    From HousingWire:

    Subprime Problems Persist, as Alt-A, Option ARM Crisis Brews

    While the impact of subprime defaults are still being felt in the mortgage finance market, other esoteric mortgage products that were popular during the housing boom, particularly Alternative-A (Alt-A) and option adjustable rate mortgages (ARMs), may provide another set of speed bumps on the road to recovery.

  7. grim says:

    From the WSJ:

    Even in a Recovery, Some Jobs Won’t Return

    Even when the U.S. labor market finally starts adding more workers than it loses, many of the unemployed will find that the types of jobs they once had simply don’t exist anymore.

    Many of the jobs created by the booms in the housing and credit markets, for example, have likely been permanently erased by the subsequent bust.

    “The tremendous amount of economic activity associated with housing, I can’t see that coming back,” says Harvard University economist Lawrence Katz. “That was a very unhealthy part of the economy.”

  8. grim says:

    From Forbes:

    What Wall Street Bonuses Mean For U.S. Housing

    After a year in which banks could neither afford nor justify rewarding their employees above their annual pay, big end-of-year compensation packages have returned. Observers of the luxury real estate market hope this will counter the blows taken by high-end housing last year, when bonuses all but disappeared.

    Unfortunately, the bonus money is unlikely to trickle down into housing markets in any significant way. Developers say finance professionals that would normally splurge on luxury homes are still skittish because of stock-market volatility and a shaky job market.

    “Starting in January or February, brokers would call us up saying, ‘I’m expecting an offer on this property or that property,'” says Edward Mermelstein, a real estate attorney and co-founder of Manhattan law firm Edward A. Mermelstein & Associates, of pre-financial-crisis trends. “I’m not expecting that this year.”

  9. grim says:

    Realtors upset that appraisers aren’t hitting the number..

    From USA Today:

    Critics say new home-appraisal rules drive down values

    Home buyers who take out federally insured home loans will soon find their mortgage brokers can’t select appraisers, part of an effort to ensure appraisers aren’t pressured to inflate home values.

    Starting Feb. 15, mortgage brokers will no longer be able to order appraisals on loans insured by the Federal Housing Administration (FHA). For consumers, that is supposed to mean home appraisals will more closely reflect a home’s value. The reason: Brokers who may profit from a loan being approved won’t also be choosing appraisers, who may feel pressured to declare a higher value.

    But organizations such as the National Association of Realtors (NAR) and the Appraisal Institute say the change, along with other efforts to reform the appraisal industry, is hurting consumers and appraisers.

    They say new rules that swept through the appraisal industry in 2009 — rules designed to ensure appraisals are impartial — are resulting in excessively low home values, because chosen appraisers aren’t as experienced or as familiar with local markets. They also say the appraisers take more time, causing delays in getting appraisals done.

    “The appraisal must be completely independent of the lending side, but there are extensive time delays,” says Joe Ventrone, vice president for regulatory and industry affairs with NAR. “The values that come back are lower. A $300,000 house might come back (appraised) at $200,000.”

  10. grim says:

    And the reason for #9?

    People like this:

    Real estate agent fighting to keep his license

    Storm clouds are looming over a local real estate appraiser who valued numerous homes for former realtors David Crisp and Carl Cole.

    He’s fighting accusations that could cost him his license.

    State regulators say Kirk “Mark” Newton misstated measurements and overvalued homes, some of which are the center of an fbi mortgage fraud investigation.

    Kirk Newton turned away from our camera and outside the administrative hearing, his lawyer delayed comment.

    Newton is fighting to keep his license following a complaint filed by the office of real estate appraisers.

    Fellow appraiser James Henderson was one of the people who blew the whistle.

    “If you have a drivers license and you run recklessly into people,” said James Henderson of J. L. Henderson and Co. Appraisers, “we’re going to take it away from you right? If you are not competent at doing what you’re doing then maybe you shouldn’t be doing it.”

    Newton told us back in 2007 that he valued more than 200 homes for Crisp and Cole Real Estate.

    State regulators examined about a half dozen of those appraisals in their complaint, saying Newton overstated square footage and compared the homes to much more expensive ones outside the neighrborhood in order to justify a much higher price.

    “We’re talking difference of sometimes $200,000 on a half million dollar house, that’s a huge deal.”

    Scores of the properties once appraised by Newton have now gone into foreclosure.

  11. yikes says:

    this will be a hot topic today:

    WASHINGTON — President Obama will try to recoup for taxpayers as much as $120 billion of the money spent to bail out the financial system, most likely through a tax on large banks, administration and Congressional officials said Monday.

    I’m guessing that this is just a move to make it appear as if something is being done … but nothing’s going to happen. i’d love it for the banks to to get screwed, but as others have said, they run this country …

  12. yikes says:

    if Bednar occupies the first 10 spots, can i claim a ‘first?’

    oh, and Jamie Dimon is a pr!ck

    SAN FRANCISCO, Jan 11 (Reuters) – JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon defended the bank’s pay policies on Monday and said he was “tired” of his employees being vilified over bonuses.

    “We do not have change-of-control agreements, special executive retirement plans, golden parachutes, special severance packages or merger bonuses … I am a little tired of the constant vilification of these people.”

  13. Jamie Dimon is a douchebag and a high-ranking member of organized crime.

  14. ruggles says:

    11 – Banks won’t care if there’s a tax. Who do you think is gonna end up paying it? we all have to pick a day and walk away from our debts. let them try to come after us.

  15. freedy says:

    as far as chase goes, i dealt with them
    in my settlement . until you get them
    bent over, they could care less. matter of fact , they go out of their way to find
    ways to screw the consumer.

    dimon could care less, another one who is so
    out of touch.

  16. freedy says:

    i would also think that the American taxpayer
    is sick and tired of bailouts of wall street,car guys, etc.

  17. freedy says:

    they have the balls to cover this car show
    on bloom , as if everything is fine.

    rush to you dealer today for that new,overpriced POS, and finance it with
    the captive so they can stick it to you again. they drag out the same losers who
    took it down the drain. Lutz

  18. yikes says:

    Clot, you should be watching GMA. Some guy named Dave Ramsey just went on saying people should not walk away from their mortgage payment.

    “You entered a contract.”

    He doesn’t get it. I feel bad for him. I feel bad for average, uninformed Americans.

  19. freedy says:

    i walked and i glad i did. most people look at you as if you don’t get it. problem is
    they don’t get it. Most americans have no idea what’s going on.

  20. Dissident HEHEHE says:

    Re 18,

    He’s right they shouldn’t walk away; they should STAY in the house and not pay and force the bank to force them out!

  21. yikes (18)-

    So laughable. It’s a contract, not marriage vows. Contracts can be broken, and the penalties for breaking them are both cooked into the loan for the borrower and spelled out in the note. The whole moral angle of this eludes me (other than the fact that banks use “morality” to keep people chained to their loans as long as possible).

    Fact is, the only way to get a bailout remotely as nice as the one you and I have extended to the banksters is to stop paying your mortgage. I have yet to hear of a loan mod given to a borrower who is current in payments.

  22. If things get much worse, I will probably stop paying both my home loan and the one on my office bldg.

    I’d be an idiot not to. I have a pretty good idea of the kind of workout I’d get on both loans.

  23. Dissident HEHEHE says:

    Yes, it’s good to be taught lessons in morality from the banking industry. It’s like getting celibacy lessons from Tiger Woods.

  24. freedy says:

    i stiffed chase on the first and the heloc.

    screw them, sat for over a year,, could have
    gone longer, if i wanted to. the whole
    system is a disgrace.

  25. grim says:

    Family first.

    If a homeowner is facing foreclosure, and has to make a decision of either family or home, I say side with family.

    Don’t pay the mortgage, bank the savings instead and used that borrowed time to rebuild family finances.

  26. Dissident HEHEHE says:

    Chart Porn, Get Your Chart Porn Here:

    Not a Positive Economic Picture
    For months now, there’s been considerable debate about whether the U.S. economy is on the road to recovery.

    Bulls point to the massive monetary and fiscal stimulus that’s been pumped into the economy, the sharp rebound in share prices, and the relative improvement in certain indicators as a reason for optimism.

    Bears — like me — note the persistent negative sentiment on Main Street and in many corporate boardrooms, the steady increase in foreclosures, personal bankruptcies, and the ranks of the long-term unemployed, and the numerous imbalances — including still-very-high levels of public and private debt — that remain unresolved.

    So who’s right?

  27. Hit to my credit score? What do I want credit for, anyway?

    Never a late or missed payment on my office bldg…my lender cut a credit line that I barely tapped.

    So my FICO takes a hit, and goes from 750 to 650 for a year or two? Question then becomes: how much will I pay for a great credit score? 50K? 100K?

    Better stop. The more I write, the more I’m talking myself into this. And I spend all day talking other people into it, as it is.

  28. Dissident HEHEHE says:

    Grim unmod 26

  29. freedy says:

    this is getting like a mark mcguire, everyone
    knows, financial system .

  30. grim says:

    Obligation to support family and spouse ranks higher than supporting the banksters.

  31. freedy says:

    grim went thru the credit reports yesterday.

    not that bad, will correct in due time.

    you are right, pocket the money, just put
    your phones, on do not disturb. and get
    an attorney to run interference .

  32. Dissident HEHEHE says:

    I’ve switched my direct deposit from Chase to my Schwab savings account. I am doing a slow bleed of my Chase deposits rather than just closing them. I want to see at what point they drop my credit card limit as a consequence of my lack of being a banking customer.

    BTW Schwab pays all ATM fees charged by any ATM. No longer getting nailed for $1.50 to $3 everytime I can’t find a Chase ATM. Blow me Mr Dimon.

  33. freedy says:

    my fico’s are not that bad, after stiffing
    the bank. screw them,, how many americans
    now have bad fico’s?

  34. freedy says:

    and by the way the court system is on the side of the homeowners in NJ. plus their
    are agencies who are ready to go to bat
    for the consumers,, the courts know the banks are screwing the consumers .

  35. Dissident HEHEHE says:

    “how many americans now have bad fico’s?”

    Lack of access to credit is best thing that could happen to 75% of the people in this country.

  36. Cindy says:

    Simon Johnson – The Daily Beast

    “The Bonus Boomerang”

    “Wall Street’s record haul may come back to haunt it. The commission investigating the meltdown now has fresh moral ammunition to propose real change.”

  37. Cindy says:,-mit%27s-simon-johnson-says-402210.html?tickers=XLF,JPM,GS,BAC,C,MS,WFC

    More from Simon Johnson:
    “Kill Wall Street Bonuses or Tax ’em to Death, MIT’s Simon Johnson Says

    Paying out 40% of profits is just not acceptable….

  38. renter says:

    Many businesses perform a background check on employees including pulling their credit report. I know my firm does it.

  39. Submitted by Dylan Ratigan

    As we sit here today, Wall Street continues to exploit a policy of government-sponsored giveaways and secrecy to pay themselves billions.

    Record-setting bonuses due to banks like Goldman Sachs as early next week.

    Yet instead of acting as our cop, Secretary Tim Geithner has become central to what may be a cover-up of the greatest theft in U.S. history.

    Here is the evidence.

  40. John says:

    I am ok if they pay out 50% or more. My only problem is the years they don’t make any money they still pay them out. Should be only in years they make money.

    Cindy says:
    January 12, 2010 at 8:19 am,-mit%27s-simon-johnson-says-402210.html?tickers=XLF,JPM,GS,BAC,C,MS,WFC

    More from Simon Johnson:
    “Kill Wall Street Bonuses or Tax ‘em to Death, MIT’s Simon Johnson Says

    Paying out 40% of profits is just not acceptable….

  41. renter (38)-

    You point is? The people doing the pulling of the credit reports are just as fried as the subjects.

    Besides, an Alt-A borrower having FICO go to 620 from 720 is not exactly a credit disaster. 620 FICO is still mortgageable (FHA, natch), and your score can be built back into the 700s within months.

  42. Cindy says:

    40 – John – Would Goldman have made a cent were they not allowed to become a bank holding company? The idea was to recapitalize these outfits, not pay it out to the employees who took outrageous risks because they knew they were considered to be TBTF.

  43. Cindy says:

    That is fine John. Let them have their bonus. Simon Johnson is simply saying a “windfall tax” should apply for those TBTF institutions who profited from the government money and backstop.

  44. yo/me says:

    WASHINGTON (MarketWatch) — The U.S. trade deficit widened by 9.7% in November to $36.4 billion, the Commerce Department said Tuesday. The trade deficit was above the consensus forecast of Wall Street economists of a deficit of $34.8 billion. Exports rose for the seventh straight month, but imports rose at a faster pace in November. The government also revised the deficit in October to $33.2 billion from $32.9 billion. As a result the deficit for the year now totals $340.6 billion, down from $654.1 billion in the same period last year. The U.S. trade deficit with China narrowed to $20.2 billion in compared with $22.7 billion in October.

  45. frank says:

    Maybe clotpoll will mellow out now but smoking a join.
    Finally something productive out of NJ Lawmakers.

    New Jersey Lawmakers Pass Medical Marijuana Bill

  46. Cindy (43)-

    The biggest whore of that whole lot may be Cuomo. Everything he does is calculated grandstanding to support his run for whatever office he seeks next.

    Also, nothing he tries to do will work. The banksters own the gubmint.

  47. frank (46)-

    I hope you smoke a joint dusted with PCP and rat poison, then die.

  48. frank says:

    Taxes them all 110%.

  49. yo/me says:

    I NJ is a non-recourse state,don’t the bank have seven years to go after the defaultee

  50. frank says:

    I hope you stop charging 6% to people can’t afford their homes.
    Or quit the RE business.

  51. yo/me says:

    If NJ is a recourse state,don’t the bank have seven years to go after the defaultee

  52. Cindy says:

    47 – Clot See my post @36. It has been my hope all along that this Pecora-type commission actually does some good. You knew I wouldn’t give up on that….

  53. confused in NJ says:

    I think Unemployment Insurance for Life is not much different then Welfare.

  54. Cindy (53)-

    What is troubling about this snippet from the article @ #36?:

    “Ten experienced professionals from across the political spectrum, with former California State Treasurer Phil Angelides as their chairman…”

  55. “Ten hungry criminals, with the Joker as their leader…”

  56. confused in NJ says:

    Good site for comparing NJ Hospital Costs for procedures.

    As an example, having a baby with no complications at Hunterdon Medical Center is $7K, while same thing at warren Hospital is $33K.

  57. Somebody wake me up when it’s time to storm the US Treasury.

  58. Dissident HEHEHE says:


    You don’t understand. You don’t live in the area. Those bonuses trickle down to help all sorts of people. There’s the municipal and state employees who get their cut via taxes before anybody else. There’s the illegal immigrant nannies watching the kids and maids and gardners; of course lets not bother them bankers with the social security payments. There’s the teachers at the $50K a year preschool the bankers send their children. There’s the hot tennis instructor from which the bankers wife takes “lessons”. There’s the hookers and the drug dealers that help the banker handle the “pressure” of working on The Street. The real estate agents in the Hamptons. I coule go on and on.

    People have the audacity to say Geithner and Bernanke don’t care about the lower and middle classes.

  59. If we could get Eraserhead and hold him hostage, would the gubmint even bother to ransom him?

  60. HE (59)-

    I can only hope- that along with Frank- these criminals end up betrothed to prison mandingos.

    I’m beginning to think I won’t see it in my lifetime.

  61. Cindy says:

    56 – Clot – LOL – Good One. They have a year and have only just started. They have subpoena power. Who knows…maybe something will come of it..

  62. The more I think about it, the more I believe that Eraserhead will be the Scooter Libby of this whole sad era.

    He will be sacrificed by TPTB, blamed for the whole thing…and we’ll be told the problem is solved, so it’s time to move on.

  63. John says:

    Bond of the DAY!!!! Chifi, looks like a buy, what do you think?

    ISTAR FINL INC SR NT 5.700% 03/01/2014
    CUSIP 45031UAH4
    Price (Ask) 57.789
    Yield to Worst (Ask) 21.675%

  64. db says:

    OK where is our cut ?….Fed earned $45 billion in 2009 The Federal Reserve made record profits in 2009 and will return $45 billion to the Treasury, after its efforts to prop up the economy created a windfall for the government, the Washington Post reported

  65. Cindy says:

    59- HEHEHE – I’m sorry I don’t understand. The moral hazard issues of encouraging the TBTF outfits to continue business as usual is so blatant. Where will we be two years from now when they continue to speculate and refuse to lend? How else can we stop the behavior? Don’t we need to curtail the incentive? What is your answer?

  66. freedy says:

    nj is a recourse state. have to do a settlement with the bank so they don’t chase.


  67. Alap says:

    of course they leave out this part…

    The company earned $100.7 million, or $1.31 a share, in the three months ended Nov. 30. That included a tax gain of $191.7 million. On a pretax basis, KB Home lost $91 million as it abandoned land contracts and wrote down the value of joint ventures and inventory. In the fourth quarter of 2008, the builder lost $307.3 million, or $3.96 a share.

  68. Annie says:

    According to the article:
    High unemployment and foreclosures, yet prices will still be going up? Is Jeffrey on crack?

  69. House Whine says:

    54- It’s insurance and pls. don’t exaggerate. It is not for life. Wait until you are unemployed and see how you feel. And “there but for the Grace of God go I”. (No, I am not very religious, but this I do believe in).

  70. Annie says:

    #9 A $300,000 house might come back (appraised) at $200,000

    Maybe thats becasue it is only worth $200,000

  71. still_looking aka Tan-Less says:

    you’ve got mail.


  72. still_looking aka Tan-Less says:


    Pot farm! Whoo hoo!!


  73. still_looking aka Tan-Less says:


    So…how many acres can you get me in Somerset/Hunterdon? Is pot farming eligible for Q-farm assessment?


  74. chicagofinance says:

    JJ: Does this draw from the royalty stream from that Dustin Hoffman/Warren Beatty movie?

    64.John says:
    January 12, 2010 at 8:57 am
    Bond of the DAY!!!! Chifi, looks like a buy, what do you think?

    ISTAR FINL INC SR NT 5.700% 03/01/2014
    CUSIP 45031UAH4
    Price (Ask) 57.789
    Yield to Worst (Ask) 21.675%

  75. chicagofinance says:

    clot…please respond to my point!

    293.chicagofinance says:
    January 11, 2010 at 10:53 pm
    I’m sorry…clot writing about enjoyment kinds of dulls my ability to focus on any other details. Clot who are you to be writing about enjoyment? It is analogous to me lecturing on managing a menstrual cycle….I thought your range of emotions was from sociopathic; through alcoholic rage; strident bickering; cynical abrasiveness; mild paranoia; and peaking in optimism with a lithium induced temporary amnesia…have I misjudged you?

    277.The Condition-Code Red says:
    January 11, 2010 at 9:53 pm
    Pat (267)- To me, the only thing that matters at this age is enjoyment of the sport.

  76. NJGator says:

    Little Falls resident buys Bruce Springsteen’s former cottage

    LITTLE FALLS — A woman from Little Falls is one of three New Jersey residents who recently purchased a house where singer/songwriter Bruce Springsteen used to live. Located on West End Court in Long Branch, the house is also where Springsteen is said to have written songs for his album, “Born to Run.”

    Kim McDermott, along with her brother Gerard Ferrara of North Arlington, and friend Ryan DeCarolis of Lincroft, purchased the 828-square-foot-house, for $280,000.

    The listing was first noticed online by McDermott’s father Joe, who resides in Woodland Park. He then informed them of the availability.

    “My father knows we are huge Springsteen fans so he forwarded the link to us, which showed the house up for sale,” she said. “The headline read that it was a former residence of Bruce Springsteen. Initially, we were tossing around the idea of making an offer but we weren’t really serious about it. Then we thought that it might not be a bad thing to own. Ultimately, we decided to place a bid but at the time we were not aware of the interest the house was generating and how many other offers were given besides ours.”

    Springsteen rented the house during the 70s, where he once said in a documentary that it was the house where he wrote the hits, “Born To Run,” Thunder Road,” and Backstreets.”

    “We grew up in North Arlington and have been Springsteen fans for a long time,” said McDermott, who has resided in Little Falls for the past 10 years. “I wasn’t surprised that the site about the home sale received 80,000 hits because the songs he wrote there are from a significant album in his career. There were other offers that came in from rock music history collectors and I believe there was a couple from London who also made an offer who are huge fans.”

    The tiny, cottage style home was sold by brothers who inherited it after their mother recently passed away. DeCarolis plans to reside in the house and start renovation projects on it, according to McDermott.

    “Everyone involved were instrumental in helping us get the home, from the sellers to the realtors, and it worked out really nice,” she added. “The location also sold us because it’s a two minute walk from the beach and it is in a commercial district.”

    Solid plans have not been made yet as to what they might to do with the house.

    “We’re thinking about several possibilities, even turning it into a Springsteen museum. The house needs some work, but for right now, we are so excited that we own a piece of music history and it’s the ultimate souvenir. It’s kind of surreal.”

  77. ruggles says:

    76 – farm assessment

    Now there’s an untapped revenue stream. free land for rich people under the guise of keeping NJ in lettuce. biggest cause of sprawl this side of COAH.

  78. confused in NJ says:

    71.House Whine says:
    January 12, 2010 at 9:14 am
    54- It’s insurance and pls. don’t exaggerate. It is not for life. Wait until you are unemployed and see how you feel. And “there but for the Grace of God go I”. (No, I am not very religious, but this I do believe in).

    Been unemployed three times in 40 years. Never collected Unemployment, rather got a different job. Have never seen Unemployment Insurance extend to two years plus with no end in sight. Do know several people on unemployment who will not look for work until all extensions are exhausted. Like you they feel they are entitled. I don’t. at minimum they should be required to at least look for work.

  79. The Unofficial List of Pundits/Experts Who Were Wrong on the Housing Bubble

    “The list includes only pundits and (supposed) experts. That means the list doesn’t include policymakers such as Alan Greenspan and Ben Bernanke, because however wrong they may have been, policymakers—and especially Fed chairmen—are undeniably constrained in what they can say publicly. I strongly suspect that both Greenspan and Bernanke honestly believed that there was no housing bubble, but alas, we’ll never know for sure.”

  80. John says:

    Bottom line, GS is trading around 170 today, was around 60 one year ago. Stock is up $110 a share in last 52 weeks. Shareholders did well, mgt gets good bonuses when shareholders do well. GS repaid govt at a profit, shareholders are making a killing and the average joe is mad cause he does not own GS stock or does not work there.

    Goldman 52 Week Low 59.13 on 01/20/2009

  81. make money says:


    How’s the Bronzini ulqini style?

  82. John (82):

    The common sheeple are pissed because the MSM tells them to be. It is the typical bread and circus delivered from the congress and senate who in return for lobby dollars and favors allowed GS to act in a way that enriched themselves and shareholders but ruined the lives of so many hard-working and oblivious people around our world.

    Those in the know, and admittedly, it’s a small percentage, realize that Wall Street does not provide any benefit to the greater society. It exists to further enrich the rich and for no other purpose.

    And don’t give me that trickle down sh1t. This time, their risk taking has resulted in the greatest recession since the 30s. Anyone want to buy some CDOs so I can short real estate? Fuk u GS and the federal government that enables them!

  83. Juice Springsteen HEHEHE says:


    I was being facetious:)

  84. John says:

    Stu, guess you did not buy GS stock. Bottom line is Wall Street hates GS. GS always ends up on the right side of a trade by having little moral values. Additionally, at a BD you are pretty much restricted from buying competitors stocks. So us honest wall street folk are forced to watch GS make the money and we can’t buy the shares. The common folk for $60 bucks a share could have jumped right in and benefited.

    Also on this web site, I told you and everyone I know, GMAC, AIG, C, HIG, BAC, FITB, and so on and so on are all getting bailed out. I was practically yelling at people to lock in the 14-40% long term yields back in the spring. These people refused, kept money in the bank at 1% and now are complaining. These same people are upset that there downpayment amounts are not growing and the housing bottom is arriving sooner rather than later. Sometimes the old saying, if you can’t beat them join them is true.

    Stu I think you would be singing a different tune if you bought all these stocks back in the fire sale ane were selling them now and paying off your mortgage, booking a cruise, or buying a Hamptons house all cause you pushed a few buttons on your keyboard back in March.

    Trouble is people did do that, and people who earn money quick with no sweat from their brow exerted are more likely to blow money on overpriced things. Moral Hazzard has been created even for the folks who were afraid to thread into the waters last March.

  85. "Bones" Deplume says:

    [59] dissident

    Nice! Funny, sarcastic, and eerily accurate, all at the same time.

  86. "Bones" Deplume says:

    [68] freedy

    If properly timed, certain wealth transfers would not be subject to creditors, and would not consititute a fraudulent conveyance either.

    I fully expect that the laws will be changed in the future to prevent this. The USG is fast becoming the biggest holder of mortgage paper and letting folks skate with their savings neatly tied off in trusts or retirement accounts is akin to tax evasion. In fact, its worse as widespread strategic defaulting is one thing that could bring down the entire system.

    Armageddon Week suggested that pandemics could bring down our economic system and government. That is a natural threat, and potentially controllable within our political and economic systems unless it kills too many people. I suggest that the biggest economic/political threat to our system is a massive increase in strategic defaults. That is why I expect that the USG, which is tolerating it now because it is deflating the bubble, will have to rein it in if it gathers steam.

  87. John,

    The same immorality that GS embraces to profit is exhibited in your justification (excuse) of their bonuses. The problem is, if everyone behaved this way, we’d be living in the 3rd world today.

    Have fun on your cruise or Hampton vacation. May you and your loved ones not get mugged or raped by some poor sap who lost their livelihood when they became unemployed due to a purposely bogus rating that induced his former employer to invest in.

  88. John says:

    Stu, remember, mark to market caused most of problems, the defaults never really came. For instance, Hertz bonds were trading around 75 in December 2007 and as low as 17 in December 2008 and are now 75. That company if it owned one million of those bonds took a massive write down in 2008 as it had to write down the value of the asset. However, in 2009 it got marked back to the original purchase price and the unrealized loss was wiped out.

    Problem was credit lines cut off and lack of consumer spending for small business, not the fact they had unrealized losses. Yes even I took a hit in late 2008.

  89. chi (77)-

    Kids might as well have fun now, since all they can look forward to is an adulthood of paying off the debt racked up by us assclowns.

  90. …of course, today’s generation could always repudiate our debt and declare war on somebody.

    Unless we’ve already taken that option.

  91. njescapee says:

    Stu, let’s face it we’re all our own special interests. influence on government goes to the highest bidder. nothing’s changed.

  92. freedy says:

    the auto show is upbeat this year. now that
    is sad,on the taxpayers back.

    go to a dealer and try to get a deal.

    screw you each time

  93. gator (78)-

    When Springsteen dies, will an Elvis-like death cult spring up?

    Will be interesting to see.

  94. make money says:


    Spot on.


    Dow was 14K+ and is now at 10 so the time line doesn’t start in 3/2008.

    You would have been wiped out first and then made some back but going back to 2007 you’re still in the red.

    Very few people cashed out at 14K, sat tight and then entered the game on 03/2008.

    How many do you know?

    Knowing that I’m just a grasshopper I’m sitting on shiny and riding these waves to all times highes.

    I wish I was smart enough to pick up C at $0.99. but I know my limitations and don’t try to get cute. Although everyone here knows my call on CFC and the 70% return in 48 hours. On the flip side I lost my shirt on SRS after making money 5 times on it. I then gave it all back and some.

  95. confused (80)-

    I pay into UE (rather, paid…since I did away with hourly positions in my office three years ago). What a screw job that is.

    I would not even think about opening a business with hourly/salaried wage workers in this environment. The system is set up to tap out small/midsize employers.

  96. plume (88)-

    Every day, I become more convinced this will happen:

    “…widespread strategic defaulting is one thing that could bring down the entire system.”

    I just hope I play some small role in helping it along.

  97. "Bones" Deplume says:

    Everyone remember Tim Russert and his whiteboard in 2000? There was one word left, circled, that was the lynchpin for all that followed:


    With respect to the Obama Administration’s efforts on the economy, wealth distribution, healthcare, and the environment, there is also a lynchpin, one that is not apparent to everyone. If Obama has a whiteboard in the Oval Office, it too should have one word, circled, left upon it.


    The way I see it, what happens with China will, directly or indirectly, influence all of Obama’s major initiatives, either for better or for worse. I have also said that Obama doesn’t get what he wants on environment and economy, and indirectly on healthcare, without protectionism. This helps make the case as to why that is so, since whatever happens with China will deeply affect the outcome of all else.

    This from CNBC’s guest blog summarizes much of the issue:

    “In the past few months, the United States has imposed anti-dumping duties on Chinese-made pipes and high tariffs to discourage the import of Chinese-made tires. Likewise, China has reciprocated with government regulations that would grant preference to technologies with intellectual property indigenous to China, excluding the U.S. technology industry at large from selling to the Chinese government. The Chinese government has also imposed tight Internet controls on its 300 million users, blocking popular U.S. sites such as YouTube and Facebook and making it exceedingly difficult for individuals to register their own Web sites.

    This past month, from the U.N. climate change talks in Copenhagen, China and the United States battled it over their participation in the international accord to curb carbon emissions, with the U.S. delegation demanding that China open its books on efforts to limit Beijing’s carbon footprint and allow experts to review its data. China, arguing they should be considered a developing and not an industrial nation, went so far as to argue the United States should fund their carbon cleanup.

    Then, perhaps most contentious is the brewing antagonism and angry diplomatic letter writing over China’s currency. Many elected officials have accused China of deliberately undervaluing its currency against the dollar to give Chinese companies the upper hand in international trade. China’s restrictive currency rules have made it the world’s leading creditor. The nation, in part because of its convertible currency, has amassed a large trade surplus with the United States. U.S. lawmakers have proposed legislation to impose a 27.5 percent tariff on imported Chinese goods until China satisfies concerns over the valuation of its currency. . . .”

    This has the potential to become a staring contest real fast. Question is, what happens while we wait for someone to blink?

    My $0.02? If he wants to succeed on his agenda, Obama, Europe and Russia should start work to form a new trading bloc, and form a united front to tell China and India to clean up their act, literally and figuratively, lest they find markets closed to their goods.

  98. John @ 90:

    A legitimate, accepted accounting method CAUSED the problem? Now I know you really are WS.

    Forget the casino environment or the complete mispricing of risk, folks. An accounting method is the bogeyman.

    “Stu, remember, mark to market caused most of problems…”

  99. PGC says:

    This is great fun.

    A Peek Into Netflix Queues
    Examine Netflix rental patterns, neighborhood by neighborhood, in a dozen cities.

    Interesting tracking Brad Pitt across the neighborhoods.

  100. chicagofinance says:

    make money says:
    January 12, 2010 at 10:11 am
    ChiFI, How’s the Bronzini ulqini style?

    make: everything was delicious….I surprised my Uncle. We walked in there and the host (not the owner, but the other guy) was there talking to the two waiters. One was a young thin blond guy with curly hair from Kosovo and then the other guy must have been Fat Tony. Anyway, my uncle stars to sit down and I could see the wheels turning in his head….WTF is this? :)

    My aunt and uncle talked to the host, who was a really nice guy……it turns out that when my aunt’s cousin (not blood relation) first came to the U.S., she and her husband crashed at this guy’s house in Staten Island.

    Anyway, the told us the specials, and I asked the host to say them again in Albanian to my uncle….my Uncle got this big smile on his face because he doesn’t speak English that well.

    They brought out the antipasto trays, and my wife loved the olives. The waiter brought a whole bowl for her. They messed up my cousin’s order, they took the entire entree charge off the bill. The gave us a round of grappa at the end.

    For 8 adult and two kids it was really a reasonable bill considering the alcohol and desserts.

    Thank you for suggesting the place.

  101. ruggles says:

    91 – “Kids might as well have fun now, since all they can look forward to is an adulthood of paying off the debt racked up by us assclowns.”

    that’s why lead-based toys are a good thing

  102. chicagofinance says:

    make: the homemade grappa was so smooth…I had two glasses after about 3 scotches and was pretty fcuked up…strong sh!t!

  103. DL says:

    Ref Fed making $45b; How the Fed did it from The Corner:
    Step 1:Print money.
    Step 2:Buy T-Bills.
    Step 3: Collect interest
    What could go wrong?

  104. "Bones" Deplume says:

    Tax News of the Day:

    “JCT Report Details Expensive Federal Breaks For Mortgage Interest, Health Care Exclusion

    The home mortgage interest deduction and the exclusion for employer-provided health benefits alone will cost the federal government more than $1.1 trillion between fiscal years 2009 and 2013—the two most expensive tax breaks provided by the government—the Joint Committee on Taxation said in a Jan. 11 analysis.

    JCT’s tax expenditure analysis of all of the tax provisions in the Internal Revenue Code showed that the federal government will essentially “spend” $572.9 billion over that four-year period through the tax benefits provided by the home mortgage interest deduction.
    The health benefit tax exclusion was a close second, costing the government an estimated $568.3 billion from 2009-13.
    Current treatment of capital gains and dividends will cost the government $418.7 billion over those four years, JCT said, but that cost reflects many factors, including special provisions through 2009 that would only tax capital assets at death on nominal gains, instead of on real gains in asset values.

    An exclusion for employers’ contributions to defined benefit pension plans is estimated to cost the government $275.7 billion through 2013 and the exclusion for defined contribution plans will cost the government $184.3 billion, JCT said.

    JCT said tax expenditures for the earned income tax credit are expected to be $261.3 billion and the cost of the federal income tax deduction for local and state taxes add up to $250.2 billion over four years.”

    Don’t you love how deductions are considered a payment by the feds, rather than them letting you keep some of your money? Remember, as far as the USG is concerned, it is not your money (legally and figuratively).

  105. chicagofinance says:

    Someone help me here….WTF does this mean? Bullish UST mean rates go down, but I can’t tell…opinions?

  106. freedy says:

    they have the mayor of lansing mi. on

    guys must be on speed. makes it sound like
    the car business will save the town.

  107. chi (103)-

    If I drink enough of that stuff, will it make me stop thinking the gubmint is just a giant organized crime syndicate?

    “the homemade grappa was so smooth…”

  108. SS says:

    lost – re: Outback conversation from last week. Get my email from Grim, send me a note & I’ll reply with the details of the Knoxville, TN dealership.

  109. chi (106)-

    The pattern isn’t important. What is, is the list of institutions that are being tipped off and allowed to front-run the action.

  110. make money says:

    make: the homemade grappa was so smooth…I had two glasses after about 3 scotches and was pretty fcuked up…strong sh!t!


    I should have warned you about the Grappa. When he makes it he invites his friends and we all hang out watch him make Grappa and everyone gets bombed. Its fun especially on a Sunday during the Football season.

    I’m glad you and your uncle had a great time.

    Next time I’m down there I’ll let you know.

  111. “Between November 24 and the time that he became Secretary of the Treasury, Tim Geithner purported to be absolutely engaged in all aspects of saving America. He didn’t go to a monastery for those days. We still have a right to know what Tim Geithner knew and when he knew it and why didn’t he know that we were paying more than double the amount that was commercially reasonable… Certainly Barney Frank doesn’t seem to be interested enough in getting to the bottom of that. More importantly, in the future does the Fed have a right to pay more than a mark to market, simply on the strength of their own decisions and then keep it secretive?” – Darrell Issa

  112. jcer says:

    GS is dirty and I think a lot of people know it. They use their size and clout to manipulate the market and have a mercenary, take no prisoners approach when it comes to clients. It would surprise me at all to find out that they(or JPM for that matter) were involved in putting the squeeze on Lehman or Bear. At least the other scum on the street got hit hard when their clients did(believed in the garbage they were selling by and large), ie they ate their own dog food and did NOT take the short position, I can imagine the snow job they did selling those synth CDO’s. GS is an operation that knowingly dumps bad securities and investment vehicles on pension funds, they also manipulate commodities markets, and equities with their ability to move the market by volume. They represent everything wrong with the equities markets. Lloyd had it backwards they are not doing gods work but rather the work of $atan!

  113. Just looked at that NetFlix interactive chart. Focus on Montclair. There is a giant hole for Mall Cop and it appears to be the only town in NJ that even knew Bill Maher released a video. Pretty interesting. Pretty much everything foreign or political is dark red. Anything funny is white. Check out MILK!

  114. Not that it will even get this far, since healthcare will either die in conference or the final version will fail to pass. It is, natch, an election year…and the unions don’t like the “Cadillac tax”.

    “Mandating that all private citizens enter into a contract with a private company to purchase a good or service, or be punished by a fine labeled a “tax,” is unprecedented in American history. For this reason, there are no Supreme Court decisions authorizing this exercise of federal power. There are strong grounds to predict that the current Court will not devise any new doctrines by which to uphold an individual health insurance mandate. First and foremost, as already mentioned, to uphold this exercise of power, the Supreme Court would have to affirm for the first time in its history that Congress has a general or plenary police power–a position the Court has repeatedly refused to take.

    This statement from a 1994 Congressional Budget Office Memorandum remains true today. Yet, all of the leading House and Senate health-care reform bills being debated in Congress require Americans to either secure or purchase health insurance with a particular threshold of coverage, estimated by CBO to cost up to $15,000 per year for a typical family.[2] This personal mandate to enter into a contract with a private health insurance company is enforced through civil and criminal tax penalties in section 501 of the House bill[3] and with a freestanding mandate and equally questionable civil tax penalties in sections 501 and 513 of the pending Senate bill.[4]

    Nowhere in the Constitution is Congress given the power to mandate that an individual enter into a contract with a private party or purchase a good or service and, as this paper will explain, no decision or present doctrine of the Supreme Court justifies such a claim of power. Therefore, because this claim of power by Congress would literally be without precedent, it could only be upheld if the Supreme Court is willing to create a new constitutional doctrine.”

  115. njescapee says:

    maybe the insurance purchase mandate is supposed to be a poison pill to ensure its failure to become law

  116. sas says:

    “Banks won’t care if there’s a tax. Who do you think is gonna end up paying it?”

    yes. correct.

    don’t fall for the ol’ Jedi mind trick.

    banks and corporations don’t pay taxes, they in turn pass the cost onto the customer/borrower.

    that goes for big banks, big oil, etc.. etc..

    so, anytime you hear in media or by a politicans “lets tax’em”

    you know, its a Jedi mind trick, the time is now for you to stop being a sap!!


  117. "Bones" Deplume says:

    [115] clot

    Mish should be required reading this week.

  118. sas (117)-

    You are a very useful guy. We should meet up sometime.

  119. plume (118)-

    I find him essential reading on a daily basis. He’s one of the few who understands the magnitude of the problem.

  120. "Bones" Deplume says:

    [117] sas

    Not only are corporations really de facto pass through entities, meaning that consumers, employees and shareholders actually bear it, taxes of this sort are also anticompetitive. I’ve railed about this here before, so I won’t be redundant.

    It is almost as if we WANT foreign companies to come in and pick clean the carcass of American commerce.

  121. escape (116)-

    Interesting thought. Pass the damn bill, let the Supreme Court strike it down, and everybody in Congress gets to look like a hero to their constituencies.

    Probably true.

  122. "Bones" Deplume says:

    [122] clot

    This is part of the contingency planning as it (a) allows the dems to set up a new round of court-bashing and get new liberal judges through, and (b) sets up a new run at single payer, which won’t include the taxes on non-participants since everyone will be a participant.

  123. "Bones" Deplume says:

    [119] clot

    “You are a very useful guy. We should meet up sometime”

    Be sure you sit back to the wall, facing the door.

  124. plume (123)-

    I’m as maverick as anybody can be, but single-payer makes a helluva lot more sense than the illegal mess now being proposed.

  125. plume (124)-

    I started following that simple rule at the age of 15.

  126. John says:

    Stu, I think a lot of people did by pure luck time the market correctly. In December 2008 there was 8 trillion in low yielding investments, short term money mkt funds, bank accounts, CDs, T-bills etc. held by private investors. During 2009 as CDs matured and short term t-bills matured investors refused to re-roll into .001% yields and bought junk, munis, mbs, corporates, stock and commodities. People long cash in 2007 and light on stock did very well in 2009 when they were forced into riskier assets.

  127. Yeah, and this is definitely the kind of thing you want to see across all spectrums of the investor class.

    This is like holding a gun to grandpa’s head and forcing him to go wager like a wild man at the dog track. Inevitably, people forced to gamble end up like that pizza delivery guy with the bomb collar locked around his neck. Messy.

    “People long cash in 2007 and light on stock did very well in 2009 when they were forced into riskier assets.”

  128. sas says:

    “Parsippany, NJ-based Medicines Company says in a regulatory filing today that it is cutting 31 employees”

  129. NJCoast says:

    Nom or anyone- Off topic

    Pertaining to NJ inheritance and estate taxes, when one dies are all the $13,000 gifts given to the class A descendants within 3 years of their death figured back into the estate? I’ve read something about an anticipation of death clause, but can’t find a definate answer.

    How about if the gifts in the last three years of life bring the estate below the NJ threshold of $675,000? Will they be added back into the estate-hence taxes?

  130. Barf.

    “More U.S. prime jumbo borrowers are falling and staying behind on their monthly mortgage payments, with states such as California and Florida driving the elevated underperformance, according to Fitch Ratings in the latest edition of its U.S. RMBS delinquency updates through Performance Metrics.

    Overall, prime RMBS 60+ days delinquencies rose to 9.2% for December 2009, up almost three times compared to the same period last year (3.2% in December 2008). The 2006/2007 vintages combined rose to 12.7% from 4.3%.

    The five states with the highest volume of prime jumbo loans outstanding (California, New York, Florida, Virginia, and New Jersey) comprise approximately two-thirds of the loans in question. Prime jumbo RMBS 60+ day delinquencies for these states at December 2009 compared to December 2008, and their approximate share of the $388 billion market, are as follows:

    –California: 10.8%, up from 3.5% (44% share)
    –New York: 5.8%, up from 1.8% (7% share)
    –Florida: 16%, up from 7.3% (6% share)
    –Virginia: 5.4%, up from 2.3% (5% share)
    –New Jersey: 7.1%, up from 2.3% (4% share)

    Prime jumbo borrowers that were current on their mortgage the previous month but missed a payment the following month (roll rates) averaged about 1% a month for the last 12 months, reaching a seasonal high of 1.3% in December 2009. ‘While some of these borrowers caught up, many either remained a payment late or became more delinquent in the succeeding months,’ said Managing Director Vincent Barberio.

    Despite some improvement in home prices and slowdown in employment loss, roll rates have not improved primarily due to the number of prime jumbo borrowers who owe more on their mortgages than their home is worth. ‘Over one-third of prime jumbo borrowers that are current on their mortgages also are ‘underwater’ on their mortgages,’ said Barberio.

  131. meter says:

    “Paying out 40% of profits is just not acceptable…”

    That makes no sense. Paying out profits to employees is exactly what a fair corporation ought to be doing.

    The problem is that the profits themselves are what some might call ‘ill-gotten.’

  132. Zack says:


    Wrong..It is the shareholders that are entitled to profits.

  133. John says:

    My friend for example had seed money from rich friends and family, he actually went and hired two top notch traders and that was his whole company. He gave them 100 million and said after expenses are paid you can have 50% of profits, this mofos were banging like 40% a year, his rich parents friends were doing nicely at 20% return. So what. Remember a trader has to cover his nut, they allocate out the rent, phones, benefits, heck I saw on a cit trader p&l the 1/200,000 cost of the red travelers umbrella at 388 greenwich, around 200,000 employees so he had to pay 1/200,000 the upkeep cost and electricity. Additionally, they back out risk free rate. lets say risk free rate is 1% that goes on top of the costs in transfer pricing, so if they get 40% big deal. My problem is they paid out when they lost money.

    “Paying out 40% of profits is just not acceptable…”

  134. John says:

    Actually first employee salaries then secured bank loans then senior bonds then sub bonds, then pref stk then common shareholders.

    Zack says:
    January 12, 2010 at 1:53 pm

    Wrong..It is the shareholders that are entitled to profits.

  135. jcer says:

    Tell me this what employees get the bonus and how big are they, it is hard to justify 5+ million dollar bonuses for people. Are they really adding all that value? I think you’d find out that they aren’t and are indeed relatively easily replaced(at that price).

  136. chicagofinance says:

    jcer says:
    January 12, 2010 at 2:03 pm
    Tell me this what employees get the bonus and how big are they, it is hard to justify 5+ million dollar bonuses for people. Are they really adding all that value? I think you’d find out that they aren’t and are indeed relatively easily replaced(at that price).

    jcer: You are an engineer or tech guy?

  137. chicagofinance says:

    If you are a farmer, what is the value to you of the man that can make rain?

  138. make money says:

    If you are a farmer, what is the value to you of the man that can make rain?

    I love it. You’re the man.

  139. lisoosh says:

    #132- I was under the impression that bonus percentages were based on revenues, not profits.

    Pays to move money around a lot.

  140. Barbara aka B-Cat says:

    “maybe the insurance purchase mandate is supposed to be a poison pill to ensure its failure to become law”

    mos def. I can rattle off 4 simple actions that could have had real impact on health care costs. The wheel did not need to be reinvented.

    I put health insurers in the same camp as the banksters

  141. ruggles says:

    “If you are a farmer, what is the value to you of the man that can make rain?”

    $1000 at an Atlanta strip club can make it rain.

  142. John says:

    Bu that is a “golden shower”

  143. jcer says:

    Chi, the way I see it is more akin to I am the Farmer and the person who proclaims to be able to make it rain is a charlatan. Meaning their value is minimal! In my view, the market based capitalist system in the US, WS, in it’s current incarnation exists to distort and corrupt not to promote market efficiency. Value even in markets must somehow be correlated to intrinsic value. Intrinsically the current incarnation of WS has contributed nothing, perhaps is even a negative producer. It has stripped companies down to nothing, destroyed american manufacturing, promoted chinese slave labor, and gutted the innovative backbone of this nation in the name of short term earnings and at the expense of long term prosperity. Now they expect huge bonuses, get real, actually produce something of value, as a technologist and a mathematician I would argue that computers could fill the role of these traders in making the market efficient and then the actual investors and creators could do their thing without the interference of the middle man. Yes these people drive big revenues for their firms, but should they, is it safe to play with such large sums of money, doesn’t it have the net effect of artificially inflating values? All very interesting questions, I don’t believe there is place for such large proprietary trading operations and I think the former shareholders or lehman, bear, and even current holders of UBS. Easy money profits made now are a result of government intervention, not anything “these people”, so deserving of a bonus are doing! They should consider themselves lucky to have a job and receive a decent bonus in a decent year. I stand by my thoughts on I-Banks, they exist for a few reasons raising funds for companies to produce, advisory to promote efficiency, market making and trading to promote market efficiency, and brokerage to enable markets to exist. Until the banks go back to the fundamentals they do not deserve a dime, traditional investment banks were cautious and served a real purpose, they made money because their clients benefitted and succeeded in real business. The current incarnation of bank conglomerates tends to be incompetent and driven by greed and short term gain, the ponzi banking system needed to fail, the Madoff style markets don’t work. The old ibanks made big money but it is peanuts compared to what the prop trading brings in and we all know the old saying, if it seems to good to be true, it is. Most WS traders and banksters are no different from a common street drug dealer, they know the game that’s all.

  144. Essex says:

    Rain on scorched earth just makes mud.

  145. BeachBum says:

    And all systems tend to chaos – be they capitalist, socialist, agricultural or technological.

  146. "Bones" Deplume says:

    I seem to recall that there were some on this board who called BS when I suggested this very scenario about a year ago:

    “A potential wave of new regulation and higher taxes may be scaring many businesses from hiring, prolonging any rebound in employment, say business groups and economists.

    The prospect of increased federal and state regulation and taxes has been particularly disruptive to the hiring plans of small- and medium-sized businesses, which have historically generated about two-thirds of the nation’s jobs.

    “I don’t really see the private sector hiring much in the next few months,” says Brian Bethune, an economist at Global Insight. “For the small-business sector there is just too much uncertainty about what happens beyond 2010.”

    Not only is the Obama administration seeking to push through major overhauls of energy and health care policy, it is also expected to impose dozens of new workplace rules and raise income taxes.

    In reporting that its small business optimism index fell for the second straight month in December, the National Federation of Independent Business Tuesday said members’ No. 2 reason for not expanding payrolls was the prospect of government policy initiatives.

    Twelve percent said it was not a good time to expand because of the political environment. Over the next three months, 15 percent said they plan to reduce employment, while eight percent plan to create new jobs. . . .

    “We’re hearing it more and more from our membership,” says Bill Rys, the NFIB’s tax counsel. “At the federal level, there’s uncertainty about tax rates, health care costs, energy costs. You also have what’s going on at the state and local levels, with new fees and taxes. They’re reluctant to jump back in.”


  147. Jcer(144):

    Well said. This has been my argument all along. IBs are a detractor to our way of life. I wonder if their meteoric rise parallels the meteoric increase in the income gap. I know that from 1945 to 1979, the gap was decreasing. From 1980 forward, the gap has been growing exponentially. I do know that John’s hero, Lloyd Blankfein joined GS in the early 80s.

  148. Schumpeter says:

    Stu (149)-

    I think the most interesting- and precise- parallel will be revealed when you graph the growth of the income gap vs IBs from the time when they stopped betting their own money and started betting with the public’s money (aka, “went public”).

    That’s when you saw the crazy risk and outsize leverage begin to creep into the IB strategies.

  149. Schumpeter says:

    Prop trading = metastatic cancer

  150. Schumpeter says:

    Remember, cancer is growth.

  151. lisoosh says:

    #144- hear hear!

  152. lisoosh says:

    #150 – heads I win, tails you lose.

  153. Schumpeter says:

    The only thing more preposterous than “heads I win, tails you lose” is the mentality that says, “pay me an outsized bonus, or I will take my talent at pissing away capital and creating systemic risk to another shop filled with coke-addled monkeys in suits”.

  154. John says:

    Are you trying to imply that it is no longer feasible for me to day trade 15 minutes a day while on a little coffee break and make 10K a month forever. That does seem very unamerican. I utilize a risk free strategy that simply waits for the bail out and then the greater fool to buy what I am selling. BTW I have some nice GMAC, AIG and Citi bonds for sale that are barely used. Most of the coupons are still attached.

    Schumpeter says:
    January 12, 2010 at 3:29 pm
    Prop trading = metastatic cancer

  155. skep-tic says:


    “Those in the know, and admittedly, it’s a small percentage, realize that Wall Street does not provide any benefit to the greater society. It exists to further enrich the rich and for no other purpose.”

    this is just wrong. I think it is fair to say some on Wall St are overcompensated (almost anyone can be replaced), but Wall St does serve a real purpose. It generally takes idle money and puts it to productive use. Note that I said generally. You can look at societies where there are no functioning capital markets and see their standard of living. It is poor, to say the least.

  156. John says:

    Ivan Boesky, Dennis Levin and Michael Milkin are my top three.

  157. "Bones" Deplume says:

    [147] nj

    Actually, the article suggests that the prospect of bankruptcy would be good (in that it would force hard choices).

    Actual default (since there is no chp. 11 procedure here), would be bad. Very bad, and would lead to dissolution (if not actually caused by dissolution, itself caused by rejection of the austerity measures that would be forced on us).

  158. John says:

    Wait I want a rate cut!!!! I really do!!! Please big ben give it up and I will take you to the prom.

  159. Schumpeter says:

    John (156)-

    I have a girlfriend who’s just a little pregnant. Wanna swap?

    “BTW I have some nice GMAC, AIG and Citi bonds for sale that are barely used.”

  160. "Bones" Deplume says:

    [133] zack

    “Wrong..It is the shareholders that are entitled to profits.”

    Not after Obama names Michael Moore as Deputy Treasury Secretary.

  161. “It generally takes idle money and puts it to productive use.”

    It sure does Skep-tic. The rich get richer, the rest of us, if we are lucky, will not see our salary cut.

  162. skep-tic says:


    “Don’t you love how deductions are considered a payment by the feds, rather than them letting you keep some of your money? Remember, as far as the USG is concerned, it is not your money (legally and figuratively).”

    when I took tax in law school, that blew my mind. my tax prof thought is was such an obvious idea, but I still think it is a totally backward way of thinking.

    My prediction is that the mortgage interest deduction will be gone/capped for top 2 brackets within 5 yrs.

  163. njescapee says:

    159, I agree. Bet congress is going to spring a VAT on us just as we get to that tipping point.

  164. make money says:

    The poor want to be rich. Rich want to be subsidized. The subsidized don’t stop until they rule everything.

    This is the Pyramid of civilization 2010. Where do you belong?

  165. Skep (164):

    Leaving only charitable contributions as the last deduction available to us members of the upper middle class. Perhaps we can figure out a way to tax charitable contributions as well?

  166. skep-tic says:

    Stu– the pie is expanded because wall st is there. I agree that the distribution of the pie is lopsided, but the situation is better than if wall st didn’t exist. if that was the case, we’d all be going to loan sharks and many, many businesses would not exist.

  167. Oops. Should have mentioned AMT in there at some point.

  168. Schumpeter says:

    escape (165)-

    VAT, plus a declaration of war.

    Good that Bush saved Iran for later.

  169. zieba says:


    Good stuff over at Jesse’s today, a nice primer on “doomed to fail”.

  170. I suppose you are right about the IBs Skep, but I think our buddy Schumpy put it best when he mentioned the prop trading as the unnecessary evil.

    I still can’t believe what these guys got away with. The ratings agencies should all be regulated as well.

    The worst part of this whole nightmare is that our bailout method of resolving the crisis has actually encouraged the risk takers to take on more risk. I mean, one year with reduced bonuses and record bonuses the year after?

  171. Schumpeter says:

    skep (168)-

    If markets are allowed to clear themselves, WS and top 20 banks go poof.

    If these institutions go poof, any number of firms can fill the void.

    How is any of this bad?

    Skep, you’re recycling the tired, old bailout meme. How’d that bailout work out?

  172. njescapee says:

    Clot, maybe USG will deploy those new s_ex robots to the front lines instead of our kids in that war. will make those ayotollahs crazy as he-ll.

  173. “How’d that bailout work out?”

    We won’t know until we are forced to pay for it. So far, all we’ve done is write the checks. If and when inflation comes along, the massive expansion of our Federal debt is gonna be like using nitroglycerin to power the steam train instead of coal.

  174. PGC says:

    #148 Nom

    A right wing lobbyist puff piece.

    Using their own numbers 88% of respondents it may be a good time to expand or stay neutral because of the political environment

  175. "Bones" Deplume says:

    [164] skep,

    I think further out. It won’t even be seriously discussed until after 2012 unless it is a cap only.

  176. relo says:

    aka “setting Fatso up to fail”.

  177. "Bones" Deplume says:

    [176] PGC

    Staring with the premisd that you don’t agree with it, otherwise it would not be a puff piece, the mere fact that you disagree doesn’t make it plausible.

    A year ago, based solely on prognostication, I predicted that Obama’s regulatory regimen would have a deleterious effect on hiring and even on retention if the policies were bad enough. The fact that 12% of the polled owners also think that validates my conclusion, that it would have an effect (unless you think that they are all GOP trolls, lying to the pollsters).

    I concede that 12% is a low number, but statistically significant, especially when it went from zero, and because a lot of other factors will go into what actually happens (no one is going to not hire if the need and jusification is there). Know that I am not willing to go to an unreasonably high number for validation. So what percentage would you want to see before you decide that I called this one?

  178. "Bones" Deplume says:

    “implausible” even

  179. skep-tic says:

    I still think the bailout was necessary to prevent armagheddon, but the gov’t has not done what was necessary post bailout– they have actually increased the risk to the system.

    in order to eliminate the systemic risk, you need to break up the biggest firms, but you cannot do this unilaterally because scale matters and foreign banks will just take the advantage. there needs to be coordinated international planning to eliminate this risk– I believe Sarkozy has made this point a bunch of times. unfortunately, our president came into office with an agenda of issues he wanted to address rather than a resolution to address the hand he was dealt.

  180. freedy says:

    here’s a dirtbag that goes right to the
    end. suprised he doesnt have a gig for carla

  181. John says:

    Reminds me of the night we nailed some Pagan chicks. Friend is putting on the rubber and she goes don’t worry already pregant. My pagan girl says to me don’t worry, I said you pregant too? She said no. I worried. I also worried when friend wanted to ditch them afterwards and not drive them back. I faintly remember that motorcycle gangs are not nice and drove them home to some good foresaken place at four am in a bad fog where I almost ended up in a ditch. Kept thinking did not want want to hit a tree and either be killed with two biker girls or kill the girls and then have bikers kill me. I swore off biker girls after that night. Buying GMAC/AIG and C bonds back in March was just as thrilling.

    Schumpeter says:
    January 12, 2010 at 3:39 pm
    John (156)-

    I have a girlfriend who’s just a little pregnant. Wanna swap?

    “BTW I have some nice GMAC, AIG and Citi bonds for sale that are barely used.”

  182. Schumpeter says:

    freedy, he didn’t do Carla. Carla did him. With a strap-on.

    Her stones are 2x as big as his.

  183. Schumpeter says:

    John (185)-

    Sometimes, all I have to do is warm the chum, toss it out on the water, sit back and wait.

  184. skep-tic says:


    I agree that the trading is out of control and should probably be separated from banking. Certainly it seems appropriate to separate it from commercial/retail banking. I also think it makes sense for the gov’t to monitor the positions of large firms (including hedge funds) and have the ability to step in when they get too big.

  185. Schumpeter says:

    relo (179)-

    Anybody know if there’s a way Christie can pull the plug on that thing before it gets off the ground?

    Corzine deserves a bullet for that one.

    Hows about this? Bring all the illegals to that office in Trenton, slap handcuffs on them, and send them the fcuk back to whence they came.

  186. jcer says:

    Skep, I agree capital markets are necessary, investment banks are necessary, without them many great american companies would not exist. The problem is in the quest for the mighty dollar, large corporate banks changed the rules, acquired ibanks that were former partnerships, stakeholders were no longer the partners but rather shareholders, shareholders never understood the business or the risks and bankers exploited to make oversized profits at the expense of the firms very existence. Prop trading is a market manipulation akin to insider trading, and really is a cancer that killed the ibanks. Ibanks with oversized balance sheet risk, making issues without any concern for the quality of said issues==disaster. Ibanking went from being a client business, i.e how good is my client, how can we help them, and how much can we collect off of this client if they are successful(gasp syndicated banks bought offered securities and often held them in the old days, hmm sharp contrast to GS selling it’s offerings short!), the repeal of glass steagall basically dug the knife in and as banks tried to imitate gs things finally blew up. Ibanks, yes, casino banking system, I think is bad.

  187. Schumpeter says:


    File under: Beavis, meet Butthead.

    “I also think it makes sense for the gov’t to monitor the positions of large firms (including hedge funds) and have the ability to step in when they get too big.”

  188. John says:

    Thain, Ex-Merrill Lynch CEO, Said to Be in Talks to Run CIT

  189. Schumpeter says:

    jcer (190)-

    They’ve been so long in the desert of stupid, nobody can tell the difference between gambling and investment.

    I can’t either, but I don’t have 11 figures under management.

  190. freedy says:

    i think CC can cancel it day one. thats if he’s got a pair on him.

  191. Schumpeter says:

    John (192)-

    Charles Manson given reprieve of night out in Hollywood.

  192. Schumpeter says:

    freedy (194)-

    Just for giggles, CC should sic Homeland Security on the liberal crybaby journalist C-Slime hired to run that shitshow.

  193. relo says:

    190: This is SOP for Goldman, going back to at least LTCM.

  194. Barbara aka B-Cat says:

    Besides strategic default, what are some other ways to “legally” take your ball and go home?

  195. relo says:

    189: That’s the gambit, if CC squashes, as he should, not going to make any amigos.

  196. jcer says:

    Banks attached to ibanks, hmm BAD! Commercial banks don’t understand Ibanking and pump too much money into operations that are not meant to have access to such capital. My answer to addressing this is the same as what happened in the 1930’s, keep them separate, no market making with ibanking, no brokerage of any kind with ibanking, and no banking with ibanking. Money cannot flow between these businesses because what happens is just what happened. large sums of money go to the ibanking and trading divisions because they make a good return on investment, but they can’t grow it doing what they have always done so they do risky and down right manipulative things to keep it growing until it collapses. There are only so many issues worth doing, only so many opportunities in the markets to exploit, etc the volumes of money pumped in were unsustainable, it was impossible to do so many issues and have then be any good, it was impossible to takes so many positions and profit without manipulating.

    I also would support legislation requiring voting anytime a company is taking on liabilities in excess of a certain level, cough, derivatives contracts, cough! under normal circumstances 30-1 leverage seems very risky, now add in liabilities from casino contracts and you have a recipe for too big to fail. I say burn it down, put the insolvent firms in something like bankruptcy and auction off the good pieces and leave the failed pieces, bad debt and bad management behind to die a slow agonizing death.

  197. Schumpeter says:

    Wonder if CC will try to get some executions going as a pet project.

    Lots of guys getting a little too confident on death row here.

  198. freedy says:

    suprised that he has not put jimmy boy
    into a slot, on the way out the door.

    how about turnpike bathroom czar

  199. relo says:

    200: Bulls ear, catnip.

    can’t grow it doing what they have always done so they do risky and down right manipulative (not to mention illegal) things to keep it growing until it collapses

  200. jcer says:

    public ibanks and banks acquiring ibanks put the nail in the coffin, too much capital flowing into a business no one outside really understood terribly well. Partners no longer making decisions, decisions are made by bankers for their personal benefit… maximize revenues, profits, call yourself a genius … pay yourself oversized bonus because you are a needed, and a genius who made them money and do this at any cost.

    Schump, there hasn’t been risk pricing in at least the last 15 years. So everything is basically a casino. I have been ranting about this for the last 6 or 7 years talking about market crashes, people thought I was crazy. That is probably why I am ranting like a lunatic!

  201. relo says:

    That reminds me, one time I was, oh wait, that wasn’t me. Never mind, it was John.

    how about turnpike bathroom czar

  202. RayC says:

    Someone asked for Comp Killers.

    Westfield Comp Killers

    738 CASTLEMAN DR 01/05 $730,260
    738 CASTLEMAN DR 12/09 $730,000
    Same price as January 2005.

    642 SUMMIT AVE 07/04 $650,000
    642 SUMMIT AVE 12/09 $675,000
    $25k appreciation from July 2004. Its TRUE, RE always increases!

    824 COOLIDGE ST 09/03 $599,900
    824 COOLIDGE ST 12/09 $590,900
    $9k less than Sept 2003 – I might be ready to buy at those prices.

    All of them were held for 4.5 years or longer, all before the peak, and all lost money on the transaction.

  203. Schumpeter says:

    What up, relo? Never banged a Pagan chick?

  204. Barbara aka B-Cat says:

    John is pretty slutty, just sayin.

  205. relo says:

    pagan, yes, Pagan, no. Not on my bucket list either.

    That definitely goes in my top 5 favorite J stories. Which, by the way changes daily based on volume.

  206. relo says:

    209: So then only applies to small co’s? That doesn’t strike me as positive.

    They also may jettison a requirement for large corporations to offer coverage to their employees

  207. chicagofinance says:

    jcer: I think you should replace your populist rage and blind anger with a bit more appreciation of the issues skep raises. The topics you discuss are not black and white, and I think we probably agree quite a bit and view things very similarly. That said, to ignore the value creation of investment banks in this economy really limits your arguments.

    What is valid is the role of unchecked prop trading in the face of what has occurred in the last 15 months.

    I think the real concern should be leveled at those responsible for structuring compensation in its traditional forms. Further, the boards of these publicly traded firms have not been held accountable, nor do they seem particularly adept at oversight.

  208. Issac Maez says:

    Are you prepared to consistently keep long hours?

  209. Fresh. I like where you are coming from. ;)

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