NJ’s “new normal” an unwelcome reality

From Bloomberg:

NJ Assembly panel to discuss possible shortfall

Just weeks after New Jersey’s current budget went into effect, a dispute is simmering over projections of a possible $10.5 billion shortfall when officials start compiling next year’s spending plan.

The Assembly Budget Committee plans to meet this week to get some answers on the state’s long-term outlook.

The budget brouhaha began in late July, when the Office of Legislative Services, the legislature’s research arm, issued a report that said the state could be facing a $10.5 billion deficit for the fiscal year that begins July 1, 2011.

“The ($10.5 billion) number is completely fake and doesn’t understand the new reality, which is I’m not going to approve spending that goes over” the current budget, Christie said.

Legislative Services, though, noted that many big-ticket items that contributed to the current year’s budget deficit still will be in place next year. Those include $3.5 billion for pensions, $2.3 billion to fully fund schools and $2.1 billion for rebates.

“This is obviously a big concern that needs to be addressed,” said Greenwald, D-Voorhees.

To plug this year’s deficit, Christie slashed aid to schools and municipalities, suspended property tax rebates and skipped a $3 billion payment to state employee pension funds.

Greenwald, though, said the state cannot continue to rely on such fiscal maneuvering.

“Real change and plans to stimulate our economy, create jobs and put people back to work are what’s needed,” he said. “We cannot continue to do the same old things.”

“There are systemic issues with budgeting that (the legislature has) faced year in and year out, but people kept passing legislation despite knowing that we didn’t have the money for it at the time and/or down the road,” said Assemblyman Joe Malone, the chamber’s GOP lawmaker on the budget. “We kept living high on the hog, but the hog is gone now.”

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97 Responses to NJ’s “new normal” an unwelcome reality

  1. grim says:

    From the Star Ledger:

    Deadline ticking for nearly bankrupt N.J. Transportation Trust Fund

    State Transportation Commissioner Jim Simpson likens the situation over the state’s beleaguered Transportation Trust Fund to a homeowner who for years spent too much on credit cards and now is living paycheck to paycheck.

    Next month, the Transportation Trust Fund Authority plans to refinance $300 million to $400 million in existing bonds to take advantage of lower rates and also issue $800 million to $900 million in bonds to get the fund through March, it was announced today.

    “We are now going to be completely tapped out and borrowed out for the trust fund,” authority Treasurer Steve Petrecca said after a board meeting in Trenton.

    By March, authority members hope to know what is needed to get the fund through the fiscal year that begins July 1, 2011, and how they hope to replenish the fund that pays for New Jersey’s road and bridge repairs and transit services.

    Past administrations paid for road maintenance by going into more debt.

  2. grim says:

    From Bloomberg:

    Pending Sales of Existing U.S. Homes Probably Rose in June

    The number of contracts to purchase U.S. previously owned homes probably rose in June, a sign demand may be stabilizing after a record plunge the prior month, economists said before a private report today.

    The index of pending home resales increased 4 percent last month, according to the median forecast in a Bloomberg News survey of 37 economists. The expiration of a government tax credit on April 30 caused the gauge to drop 30 percent in May, the most since data began in 2001.

    “Until we get an improvement in job growth we’re not going to see growth in housing,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina.

    The National Association of Realtors in Washington is scheduled to release its pending sales report at 10 a.m. Estimates in the Bloomberg survey ranged from a drop of 8 percent to an increase of 15 percent.

  3. grim says:

    From HousingWire:

    Strategic Defaults Falling on Jumbo Mortgages, Relative to Smaller Loans: Moody’s

    According to a weekly credit report from Moody’s Investors Service, jumbo mortgage delinquencies, in this case delinquencies on mortgages over $1m, are almost equal to mortgage delinquencies for smaller mortgages. The agency monitors the risk of default across mortgages that are bundled into bonds and sold as residential mortgage-backed securitizations.

    America’s more well-to-do, it seems, is not walking away from financial obligations at a greater rate, the rating agency finds, with alleged strategic defaults decreasing across all categories.

    “Our findings contradict conventional wisdom, which holds that richer borrowers are more likely than the average borrower to strategically default because of the relative size of their investment and their higher level of financial savvy,” said Peter McNally, the analyst who authored the report. “The size of the loan does not appear to indicate the likelihood of a borrower walking away from an underwater mortgage.”

  4. grim says:

    Off topic, from the AP:

    De Niro, Brooklyn, India on last Kodachrome roll

    What should a photographer shoot when he’s entrusted with the very last roll of Kodachrome?

    Steve McCurry took aim at the Brooklyn Bridge, Grand Central Terminal and a few human icons, too. Paul Simon, the singer-songwriter synonymous with the fabled film’s richly saturated colors, shied away. But Robert De Niro stood in for the world of filmmaking.

    Then McCurry headed from his base in New York City to southern Asia, where in 1984 he shot a famous portrait of a green-eyed Afghan refugee girl that made the cover of National Geographic. In India, he snapped a tribe whose nomadic way of life is disappearing — just as Kodachrome is.

    The world’s first commercially successful color film, extolled since the Great Depression for its sharpness, archival durability and vibrant yet realistic hues, “makes you think,” as Simon sings, “all the world’s a sunny day.”

  5. me@work says:

    good morning. another grim day…


  6. grim says:

    From Zachs:

    Housing: Still Flooded

    One of the central reasons for the recession — and for the anemic recovery from it so far — has been the issue of the popping housing bubble. Housing is, for most homeowners, a highly leveraged investment. Even the old conservative rule of a 20% down payment is a far more leveraged position than is allowed when buying stocks, where at least 50% down is required. During the housing bubble, almost no one was putting 20% down anymore, and down payments of under 5% were common.

    Even long-time owners were encouraged by the banks to treat their houses as if there was an ATM in the kitchen next to the toaster oven. Cash-out refinancing and homeowners lines of credit were common. In fact, even during the huge run-up in housing prices, the percentage of equity people had in their houses did not rise significantly on average nationwide. People assumed that housing prices would never fall and so it was safe to spend the equity gains that occurred as housing prices rose.

    Then, as prices fell, the equity in houses fell even more sharply as a result, wiping out trillions of dollars of wealth. It also resulted in huge numbers of people being “underwater on their mortgages, owing more than the house is worth.

    Being underwater is a necessary condition for a foreclosure to happen. If the homeowner has positive equity in a house, he will always be better off simply selling the house rather than let it slip into foreclosure. It is, of course, not a sufficient condition.

  7. Final Doom says:

    Stench of death intensifying. Oblivion beckons.

  8. Final Doom says:

    Who will be the next Lemon Bros?

  9. Final Doom says:

    Wheels are coming off now:

    “If small business hiring does not pick up and it sure does not look like it will, then barring huge changes in the participation rate, unemployment will rise. If employment does not pick up, neither will housing nor consumer spending.

    Yet somehow Bernanke thinks consumer spending is poised to lead the recovery. “Growth in real consumer spending seems likely to pick up in coming quarters from its recent modest pace, supported by gains in income and improving credit conditions” said Bernanke.

    I think he is off his rocker. With 10-year treasuries under 3%, the treasury market seems to agree Bernanke is off his rocker as well.”


  10. Fiddy Cents on the Dollar says:

    So this Transportation Trust Fund needs $900M just to make it to next March. Every year they spend over a Billion Bucks…..and we still have the worst roads in the nation. The older bridges have weight limits that are regularly exceded by every SUV that crosses them. And they want to build another tunnel to carry traffic into the declining job centers in NYC.

    Get ready for a big hike in your gas tax. When the leeches in Trenton find out that 14.5c per gallon is the 3rd lowest in the nation, and that Pennsy is 17c higher than NJ…….you know where this is headed.

    How much longer til we’re pumping our own gas ???

  11. grim says:


    Please raise the gas tax, I’m begging you.

  12. #4 – *sigh* – Ektar 100 is a pretty nice alternative though, and they make it in 120. Kodachrome hadn’t been available in medium format for a long time.

  13. jj says:

    Was Jersey ever normal> I love Kodak!! The bonds I bought last year keep on chugging on I even bought a Kodak camera for $120 bucks out of guilt that the 9.75% coupon bond I bought at 50 cents means Kodak will be paying me almost 20. Now if % interest for the nest 20 years. When I am charitable I like to give a little back, wonder if I can write off that $120 camera. Kodak Rocks.

    Now I am tempted to buy a new Ford with their only money from the interest I get from them. What a wonderful circle of life. This truely is a goldilocks economy where free market capitalism reigns supreme. Sadly my 7% tobacco munis won’t tempt me to smoke, however, I might buy a pack or two of cancer sticks for one of my enemies if it helps the cause.

  14. Shore Guy says:

    Big Ben is not deluded. He knows the score. But, he also knows that, if he is straight with the public, they will head for the proverbial economic exits and pull-back spending even more.

    We should just get him a cheerleader’s outfit, complete with pom pons. At least that way when he speaks, his role will be clear.

  15. Final Doom says:

    Shore (14)-

    We should give Bergabe a last meal, a blindfold, a fife-and-drum corps and a short walk to a high gallows.

  16. tbiggs says:

    #10 – fiddy

    “we still have the worst roads in the nation”

    I ride my motorcycle all around the East Coast, and I can say that NJ doesn’t have the worst roads on this coast, at least.

    However, considering how many people there are to tax in NJ, they are pretty bad. I don’t know what NJ’s miles_of_road per capita figure is.

    Worse still is that they’re borrowing money just to do *maintenence*!!!??? THAT is a dead-end road, if you’ll pardon the pun.

  17. NJGator says:

    Grim 11 – I’m with you. However I do think my Essex County monthly NJT pass will go up to $400 before Fat Man does that.

  18. #16 – tbiggs – I ride my motorcycle all around the East Coast, and I can say that NJ doesn’t have the worst roads on this coast, at least.

    I’d agree with that. CT has positively abysmal roads… and a-holes behind the wheel.

  19. Final Doom says:

    Liverpool equity worthless. Looks like A-Rod’s chances of getting paid by Hicks are dwindling:

    “Liverpool’s potential investors, a Far East Sovereign Wealth Fund that includes Kenny Huang, are looking to secure a takeover of the club at a knockdown price.

    The investors intend to use their funds to pay for the new stadium and new players rather than line the pockets of owners George Gillett and Tom Hicks as the shares are “worthless”.

    “The owners will be a Far East Sovereign Wealth Fund of which Kenny Huang will be one of two main partners and owners of Liverpool football club,” a source close to the talks revealed. “The Sovereign Wealth Fund has been in touch with the Royal Bank of Scotland and the Liverpool board to inform them that they do not value the equity of the company higher than the debt.

    “The debt stands at around £350 million and at the moment the valuation is based on between 80p to £1 in the pound, but no more. In layman’s terms the shares are worthless, and therefore there is no offer to the current shareholders.”

    That means that the offer from the Sovereign Wealth Fund is to cover all of Liverpool’s current debts, most of which are with the RBS at close to £240 million. A guarantee that RBS will get its money back is extremely appealing to the bank, but not to Hicks and Gillett.”

  20. jj says:

    Chifi, you flatleaver, where is my AMBAC beer? IBM issued three year bonds yesterday at par with a 1% coupon, talk about signs of a top of a bubble. Please god tell me before they reflate the RE bubble so I can get back in.

  21. NotBottomYet says:

    I planned to buy a house in Essex county (Millburn, Summit area). Is there any public website where I can check the tax/sales history of property in Essex county?


  22. Libtard in the City says:

    Stock market goes up, ten year goes down. The disconnect worsens. What does this mean?

  23. Orion says:

    “The economy’s stranguflation is the result of wealth destruction and the quadruple threat of the weak economy, high government debt load, asset deflation with price inflation of essentials, and the fear of future overall inflation.” – Janet Tavakoli (Chicago-based institutional invest. services)

  24. 30 year Realtor says:

    When will real estate prices stop going down?

    My answer to this question is the same today as it was when the bubble first began leaking. Prices will go down until the median income can afford the median priced home.
    Trouble is that property taxes keep rising, incomes are stagnant and interest rates will eventually rise. It looked like the perfect storm three years ago and the storm continues to intensify.

  25. All "H-Train" Hype says:

    Let’s not look over the fact that factory orders dropped too. The gubbmint will find a way to magically make manufacturing jobs come Friday.

  26. Shore Guy says:

    I don’t know that the link between the median income and the median home price is key. After all, not every wage earner can buy a house. That said, a median wage earner should be able to buy a wide range of homes, not just the very-lowest priced homes after stretching way too far.

  27. Libtard in the City says:

    Shoreguy (28):

    He was obviously sampling the product. Do’h!

  28. Confused in NJ says:

    Steve Wynn tells it like it is & washington doesn’t like it.


  29. jj says:

    who cares about median income, a guy in BC making 400k has a nice house, his gardner, maid, lawn guy, baby sitter, gutter guy also all live in his town and rent. If you add up median income it appears homes are overpriced but they may not be. Not everyone can or should afford or buy a home. It should be median income of potential home owners not overal median income which includes illegals, HS, dropouts and the girls at the nail salon.

  30. Comrade Nom Deplume aux maison says:

    [107 [ prior thread] PGC-bius

    Normally, Kelly Erb (a.k.a. TaxGirl) is fairly knowledgeable on tax matters, but I don’t find her to be as informed as others. Also, the ideas she puts out for why nonpayers have increased are contributing factors to lowering taxes, but not to eliminating them. Probably because it is a short piece for walletpop, and because TaxGirl is an okay, but not stellar, tax attorney, one gets the impression that these factors (excluding the EITC) can cause large numbers to avoid federal income tax. Rather, it is true only in extremis, for a very small number of cases. As for retirement income or tax-preferred income (or even tax-free income) these don’t get you closer to the goal of no tax status. Rather, they are at best neutral factors.

    Interesting point about how this number has been rising steadily since 2000; one contributing factor is the Bush tax cut on the lower earners. Because the amount of tax was reduced (by 50% for the lowest bracket), it was easier for people who had deductions, exemptions, and EITC to eliminate their taxes. This suggests that the overall tax burden was skewed from the lower to the middle and upper brackets (even with rate reductions, this is possible). Would like to see a comprehensive study over that period to see exactly how the tax burden fell on the various cohorts. Could open some eyes.

  31. chicagofinance says:

    Yes. I just want to make sure that we get everyone to show up who wants in….as a public service as it were….people…please weigh in…..

    20.jj says:
    August 3, 2010 at 9:35 am
    Chifi, you flatleaver, where is my AMBAC beer? IBM issued three year bonds yesterday at par with a 1% coupon, talk about signs of a top of a bubble. Please god tell me before they reflate the RE bubble so I can get back in.

  32. chicagofinance says:

    JJ: you agree with this, yes?

    102.chicagofinance says:
    August 2, 2010 at 6:41 pm
    JJ: I got fcuked like a $2 whore…..

    check these bichez……it was rigged…..

    Ambac Has Alternatives to Bankruptcy, Chairman Says
    By Christine Richard – Jun 14, 2010 6:09 PM EDT Mon Jun 14 22:09:45 UTC 2010

    Ambac Financial Group Inc. has alternatives to bankruptcy, including a possible infusion of capital from financial companies that have sold credit-default swap protection on it, the bond insurer’s chairman said.

    “Someone who has sold protection has a strong interest in preventing a bankruptcy,” Michael Callen said today at Ambac’s annual shareholder meeting in New York. “Someone who sold protection could put money into your company.”

  33. jj says:

    Chifi, I don’t give a hoot about shareholders, god damm communists in my opinion that should be crushed when necessary.

    Amac was not rigged, scare the CDS holders to capitulate for pennies on the dollar, dilute the hell out of shareholders , use Insurance regulators to ringfence assests and bully people and then strong arm the people who will be hurt most in a bk to pony up more cash, double down.

    You were looking at financial statements, I was looking at the reality of our brave new world.

    In 2009 Citi, BAC, GMAC, AIG, F, GNW you were blinded by facts, analysis and logic. I slept like a baby 500K long this stuff.

  34. jj says:

    Chifi, how much BP bonds did you buy in June/July, just curious? What is next. I for once don’t know. I never really look or care if a bond is callable when I bought below par. With interest rates so low and so many of my bonds callable I don’t want to sell.

  35. Shore Guy says:

    “It should be median income of potential home owners not overal median income”


  36. grim says:

    No bingo, go sit back down.

    The median income family was never able to afford the median home in the area they live. I’m sure there are some exceptions out there, but realize that the lower incomes tend to drag the median down.

    If you really mean middle class income afford a middle class house, I’d agree.

  37. NJCoast says:

    chicagofinance says:
    August 3, 2010 at 12:02 pm
    Yes. I just want to make sure that we get everyone to show up who wants in….as a public service as it were….people…please weigh in…

    A chance to meet JJ in person? I’ll leave the beach for that. Just tell me when and where.

  38. This will never happen. JJ is some wingnut, killing time in his mom’s basement.

  39. 30 year Realtor says:

    Median income in suburban North Jersey is around $100,000 +. Interested in what folks on the blog believe that $100,000 should afford a buyer in North Jersey.

    Most recent median housing price I have found for Bergen County is about 450k.

    If you assume $800 per month real estate tax, $100 per month insurance and $1600 per month principal and interest (297,500 @ 5% for 30 years) total PITI of $2500 based upon 30% of $100,000 household income. With 3.5% down FHA it gets you a POS Cape.

  40. chicagofinance says:

    jj: Zero BP exposure, or any integrated oil U.S. In this space I always focus on who has the reserves. I hate anyone that has refinery exposure. Crap business in this environment. I was a huge fan of offshore drillers, but I had to wipe my hands clean. I think Transocean was a great company that was taken to the woodshed by BP. They really fcuked them over good.

    I would say any debt on the good faith and credit of any of the U.S. domiciled subs (ostensibly legacy-Amoco et al.) is under serious danger of instant deafult at the whim of Congress. If you have BP debt exposure, then I would assume it is either at the parent or a non-U.S. sub. This situation is just different than the financial stuff. The BP assets are valuable, and with an election coming etc., there is just too much temptation for pure fascism. There is no reason to protect debt holders this time. Recognize that they can nationalize/bankrupt the U.S. sub without taking out parent-BP from what I hear…obviously you cannot rely on these comments and you must perform you own research, up to and including hiring professional financial advice etc….

    37.jj says:
    August 3, 2010 at 12:34 pm
    Chifi, how much BP bonds did you buy in June/July, just curious? What is next. I for once don’t know. I never really look or care if a bond is callable when I bought below par. With interest rates so low and so many of my bonds callable I don’t want to sell.

  41. jj says:

    30 year Realtor says:
    August 3, 2010 at 1:15 pm
    Median income in suburban North Jersey is around $100,000 +. Interested in what folks on the blog believe that $100,000 should afford a buyer in North Jersey.

    No way is it anywhere near that little. College graduates marry College graduates. Kids today get married around 32. At that age they are easily making 100k each. So 200k would be median income. So 450K starter homes are 2.5X income. Perfect!!

    I say median income of homeowners who purchased in last ten years and still have house and did it through a regular mortgage in a good BC neighborhood is more like 300K

  42. chicagofinance says:

    To simplify the BP-thing.

    With the banks, the net assets were the problem, so even if the U.S. nationalized the banks, they are not really immunized from losses. With BP, what it owns is very valuable, so the U.S. can invent grounds to just take it away and use it for their own purposes. The damage creates the liability, but once the BP entity is hollowed out, there is no longer any culpably party and the U.S. is left with clean-up and a lot of fungible cash flow generators.

  43. sas says:

    “Who will be the next Lemon Bros?”



  44. jj says:

    Chifi went long Atlantic Richfield bonds (BP) pre-plus with a 8+ coupon under par for an investment grade company that is number four on the fortune 500 international list. England is our ally buddy, ain’t no way we are taking to the woodshed over a few buckets of oil spilt in the gulf.

    BO was stamping his feet like a toddler having a tantrum back in June/July so the little fisherman would see he feels their pain. That is old news.

    Hire professional financial advice? I give it away for free. Stupid broker I use when Fidelity does not have what I want in inventory shadows my trades and recommends my picks for commission.

    BTW I only bought AMBAC for fun cause you were so convinced it would die by 8-1-2010. I did no research at all. It was a senior under 50 cents on a dollar and with a 9+ coupon I figured what the heck.

  45. chicagofinance says:

    47.jj says:
    August 3, 2010 at 1:35 pm
    Hire professional financial advice? I give it away for free.

    Dude: I have to write that…it is an open board…it was not you.

  46. chicagofinance says:

    Stu: where are you? set up the beers….

  47. Mikeinwaiting says:

    Sorry JJ 44 real numbers median income per US Census Bureau:
    New Jersey
    Total: 85,761 793
    No earners (dollars) 36,310 1,309
    1 earner (dollars) 60,026 1,185
    2 earners (dollars) 101,923 901
    3 or more earners (dollars) 124,344 2,198

  48. Libtard in the City says:

    John says:
    February 1, 2010 at 9:02 am

    Chifi, 8-1-2010 Capital Grill downtown you are buying me a beer after work if Ambac makes the interest payment.

    Did I miss it?

  49. I’m finding it hard to want to buy bonds in an environment where the gubmint has already suspended the rule of law and essentially handed a company to a workers’ union in preference to holders of debt.

    As things continue to unravel, I suspect the gubmint will act with greater impunity and with even less regard of the law…or common sense. The primary motivation behind the gubmint’s actions in any matter appear to be the desire to appease the largest sympathetic constituency involved.

  50. Of course, the biggest bond bust of all time is going to be what happens to the UST.

    When the UST gets plowed under by the vigilantes, it will be the signal that we’re back to the 16th century.

  51. Libtard in the City says:

    I’m in the city Tuesdays and Fridays these days. How about next Friday, August 13th. It’s scary enough that we might meet the legend of John. I just hope he does not look like this.


    So are we going to high brow it or slum it? JJ?

  52. Sas3 says:

    Chi, JJ, and others:

    What low-risk bonds should a newbie buy (40-50k)? I am looking at something that beats 4.4% pre-tax interest on 30-yr mortgage (money allocated for extra payment during refi; but it didn’t get in — looking back, it may be a good idea to have the additional money just in case the SHTF). Current options I have are savings/CD account or prepay mortgage. Stocks/index funds ruled out.

    I saw this on

    Is the 5% tax free return real?

    Dear R.K.: With the possible exception of the general obligation bonds of California or New York state, I wouldn’t touch an excise tax bond, a tax anticipation bond, a school district bond, or a water, bridge, road or sewer revenue bond. And I wouldn’t touch a hospital district bond, an improvement district bond, an airport bond or a utility district bond. And I wouldn’t touch them if they were Triple A plus and insured collectively by Ambac, FIGI, MBIA and the Mafia.

    No, I take that back. If those bonds were insured by the Mafia, then I’d buy them in a Sioux City second because I trust the Mafia’s honor and ability to pay. But I’d sooner trust the Devil than Moody’s or Standard & Poor’s, whose management ought to be pilloried, tarred and feathered and drawn and quartered for villainously violating the public’s trust, along with hundreds of corrupt state legislators who have no more conscience than a fox in a poultry farm.

    Rather, consider an honest alternative like the T. Rowe Price Tax-Free Fund (PRFSX – $5.62), which pays monthly and has an annual yield of 5.22 percent. This $1.9 billion no-load fund has a 10-year average annual total return of 5.04 percent, and the managers know how to sift through the detritus of the soiled and foul municipal bond landscape.

  53. chicagofinance says:

    sastry: here are the top 50 holdings of that fund….at a minimum you need to know bond math and the accounting and distribution conventions for bond mutual funds. Everything that a%%wipe writes is factually correct, but wholly misleading. He has a lot of stones writing that crap, but he probably has way too much hubris….
    Virginia Small Busn Fing A Var Rate
    Montgomery Cnty Md Pub Impt 5%
    Florida St Div Bd Fin Dept Gen Ref Re 6%
    Engy Northwest Wash Elec Rev Rev Bds 5%
    Missouri St Environmental Impt Imp 5.25%
    Virginia St Pub Bldg Auth 5%
    Washington St Motor Veh 5%
    New York St Urban Dev Corp Rev Income 5%
    Orange Cnty Fla Tourist Dev Ta Tax Re 5%
    Gwinnett Cnty Ga Sch Dist 5%
    Tennessee Engy Acquisition C Gas Rev 5%
    Charlotte-Mecklenberg Hosp Aut Var-Carol
    Highlands Cnty Fla Health Facs Hosp 6%
    Allegheny Cnty Pa Hosp Dev Aut Rev Bd 5%
    South Carolina Transn Infrastr Rev 5.1%
    Oregon St Dept Transn Hwy User Var Sub L
    New York St Dorm Auth 5%
    Florida St Brd Ed Pub Ed Cap Outla 5%
    California Statewide Cmntys De Rev Bd 5%
    Tulsa Okla Tulsa Indl Auth 5.375%
    New York N Y Go Ref Bd 5%
    Virginia College Bldg Auth 5%
    New Jersey St Transn Tr Fd Aut Tran 5.5%
    California St Econ Recover Economic 5%
    California St Econ Recover Economic 5%
    Prince Georges Cnty Md Go Consld 5%
    New York St Loc Govt Assistanc Ref Bd 5%
    Pennsylvania St Go Bds 5%
    Washington D C Convention Ctr Tax Rev 5%
    District Columbia Go Bds 5%
    Florida St Brd Ed Lottery Rev Rev Bds 5%
    Burke Cnty Ga Dev Auth 4.75%
    Gaithersburg Md Econ Dev R Asbury Md
    Florida St Brd Ed Cap Outlay Pub Ed C 5%
    California Mun Fin Auth 1%
    Jea Fla Elec Sys Rev Rev Bds 5%
    Clark Cnty Nev Sch Dist 5%
    California St Various P 5.25%
    Jefferson Cnty Ala Swr Rev Cap Impt 5.5%
    Washington D C Convention Ctr Tax Rev 5%
    New York N Y City Transitional Future 5%
    Florida St Brd Ed Lottery Rev Lottery 5%
    Chicago Ill O Hare Intl Arpt R Rev 5.25%
    New York N Y Go Bds 5%
    Maryland St Health & Higher Ed Rev 6.75%
    Indiana Health Fac Fing Auth 3.625%
    Northeast Md Waste Disp Auth 5.5%

  54. Libtard in the City says:

    Speaking of hubris…Does next Friday work for you JJ? Chifi?

  55. chicagofinance says:

    Sastry…just remember that any of the interest derived from sources other than NJ will be taxable to you at the state level as a NJ resident, so you cannot view the interest as double/triple tax-free.

  56. chicagofinance says:

    58.Libtard in the City says:
    August 3, 2010 at 2:49 pm
    Speaking of hubris…Does next Friday work for you JJ? Chifi?

    Why a Friday? Fridays and weekends no……reserved for family….

  57. Final Doom says:

    I’d sooner take a handwritten IOU from Wimpy on payment Tuesday for today’s hamburger than buy any bond of any type.

  58. Final Doom says:

    2.4% GDP growth? Try 1.7%:

    “The assumption that the Bureau of Economic Analysis had made regarding factory inventories in their initial estimate for Q2 GDP was a bit off the mark, and it now appears that growth last quarter was closer to 1.7%, rather than the 2.4% reported last Friday. (Of this downward revision, 0.1%-point came in yesterday’s construction report).

    Inventories at manufacturers of nondurable goods decreased around $4 billion in June, rather than increasing $1 billion as BEA had assumed. As a result, it now appears economy-wide nonfarm inventories increased at a $55 billion annual rate last quarter, and stcokbuilding contributed 0.5%-point to GDP growth, rather than the 1.1%-point initially reported.

    With the implied revisions, second quarter growth is now looking especially soft. On the brighter side, the prospect of a big inventory overhang weighing on third quarter production — which loomed large in the initial estimate — now appears less threatening.”

  59. chicagofinance says:

    Sastry: here is some prima facie evidence of intent to mislead….10-year was quoted on purpose……

    T. Rowe Price Tax-Free Shrt-Interm
    Annual Return 2000 6.76
    Annual Return 2001 5.81
    Annual Return 2002 6.16
    Annual Return 2003 2.78
    Annual Return 2004 1.60
    Annual Return 2005 0.97
    Annual Return 2006 3.26
    Annual Return 2007 3.86
    Annual Return 2008 3.00
    Annual Return 2009 7.24

    Also, your bond mutual fund can yield anything you want, but as a buy in August 2010, you will probably be receiving chunks of your principal back in each divd….

  60. jj says:

    Ally Financial Inc., the lender that’s 56 percent owned by the U.S., may stage an initial public offering next year and could be worth as much as $30 billion, according to Chief Executive Officer Michael Carpenter.

    Ally’s auto unit alone may be valued at $25 billion, based on the $3.5 billion General Motors Co. agreed to pay for subprime car lender AmeriCredit Corp., Carpenter said today during a conference call about second-quarter results. An IPO may be conducted next year if a bid for the entire company doesn’t emerge first, Carpenter said.

    “I love the AmeriCredit deal because it values our automotive segment alone at $25 billion,” Carpenter said. “I don’t have any doubt about our ability to repay the U.S. Treasury. So I think it’s great.”

    Ally, formerly known as GMAC Inc., may offer shares to the public after benefiting from $17 billion of U.S. bailouts. Carpenter’s estimate of the market value for Detroit-based Ally exceeds all but six of the biggest U.S. commercial banks, ranking after PNC Financial Services Group Inc. with $32 billion.

    An IPO “is very clearly within our sights” in 2011, Carpenter said. “The obvious route to repay Treasury is an IPO, unless somebody comes along with a check for $30 billion, based on the AmeriCredit valuation.”

  61. Final Doom says:

    Translation: BOHICA

    “I don’t have any doubt about our ability to repay the U.S. Treasury. So I think it’s great.”

  62. Libtard and the City says:


    Next Tuesday night (8/10) would work for me as well. Wanna dance?

  63. Simply Ravishing HEHEHE says:

    The Biggest Lie About U.S. Companies

    “American companies are not in robust financial shape. Federal Reserve data show that their debts have been rising, not falling. By some measures, they are now more leveraged than at any time since the Great Depression.”


  64. Sas3 says:

    chifi, thanks. I need to read a “bonds for dummies”. As a newbie, I took the 5% at face value.

  65. Satara says:

    It’s clear that the bond market is now giving at least as strong a signal about its desired fiscal policy as it did in the early 1990s. But instead of demanding reductions in the deficit and government borrowing and threatening higher interest rates if those don’t happen, today’s vigilantes are unmistakably saying just the opposite. They want Washington to do more to stimulate the economy, and they welcome the deficit and debt it will take to do it.

    In other words, the former bond market vigilantes have now become the biggest supporters of federal deficits and borrowing. I’ll follow in Yardeni’s footsteps and call them bond market deficit cheerleaders.


  66. Shore Guy says:

    “The median income family was never able to afford the median home in the area they live”


    We do not disagree. That was my point several posts above the one in which I agreed with John (which agrees with your statement).

    The median income is meaningless, if one does not first drop the low earners.

  67. jj says:

    IBM three year bond deal at 1% coupon yesterday is a sign of possible deflation, remember that is taxable interest and at 1% only makes sense if deflation is coming.

  68. jcer says:

    Shore in my mind it is simpler, look around these neighborhoods. If the people living in these homes had to buy today would their income support their current residences? I think you’d find many people who would be woefully unable to purchase their current residences if they had to buy at todays price. The income to price ratio is off historical norms for the area. Will the median home in NJ be 200k, emphatically no, but should it be 500k? probably not. Income growth has not kept up with property appreciation. Yes people here have a lot of money, all that has done is cause the prices to drop more slowly because the inventory is low and there are still moneyed buyers who want to buy.

  69. Satara says:

    73 You are suggesting there are more homeowners living in this homes that bought years ago and did not do a “cash in refi” or exagerated 2nd mortgages,for their incomes will not justify owning a home in Bergen.And the new buyers are the high income,way above median to be able to afford the homes. I can go with that.The next generation are scre wed!

  70. Shore Guy says:

    Naw, the next generation will not get screwed. By voting with their feet and refusing to buy, they will leave current owners holding a very hot potato.

  71. Shore Guy says:

    With state retirement systems, I understand that a cop may not be able to patrol until he or she is 65, but that does not mean that they can’t come off the road/street and then do some other state employment, say collecting parking fees at state parks, etc., until they are 65. Let the pension be based on the highest salary, fine. But, working for 25 years and then collecting retirement for 30-40 years is not a sustainable system.

  72. Shore Guy says:

    Everyone here who is glad that Pakistan has nuclear weapons (most, it seems without PALs) say “how much longer until the government there crumbles?”:


  73. Shore Guy says:

    From the link above:

    “Gunmen Rampage in Pakistan, at Least 45 Killed

    KARACHI, Paksitan, Aug. 3, 2010

    Updated at 3:36 p.m. EasternSecurity forces are struggling to regain control of Pakistan’s largest city after 45 shooting deaths and unrest that saw dozens of vehicles and shops set ablaze. The violence in Karachi began with the assassination of a prominent lawmaker Monday, which set off a cycle of revenge attacks. Police said that in addition to those killed, 93 people were injured, according to data from state-run hospitals. On Tuesday police and paramilitary troops patrolled deserted streets in Pakistan’s main commercial hub. Most business in the southern city of more than 16 million had ground to a halt, and schools were closed. But gunfire could still be heard Tuesday morning, and fires were still being set in some areas.”

  74. Confused in NJ says:

    Everyone here who is glad that Pakistan has nuclear weapons (most, it seems without PALs) say “how much longer until the government there crumbles?”:


  75. Sas3 says:

    Shore, I think most retirement plans will move from Pension to “40X-y”plans. Simple and reasonable way to handle the mess. A generation or two (over the next 50 years) will keep propping up current and soon to be retirees, but tough luck. Long (really long) term, things will be fine.


  76. Final Doom says:

    satara (70)-

    Those are the phony vigilantes. When the real ones strike, it will be unmistakable.

    They have plenty of work to do in Europe and Japan. But, it is inevitable that they will end here.

  77. Final Doom says:

    We should leave the Pakis to kill each other. The natural disasters can finish off the rest. That is the best possible outcome.

    It is disgusting that they take our money, support AQ, then beg us for aid when the usual flood/tsunami/earthquake hits. I say we tell ’em to pound salt…maybe ask Bin Laden for some humanitarian aid.

  78. Final Doom says:

    sastry (81)-

    There is no long term. We are in the end of days.

  79. Ben says:

    The Keynesian call to borrow now while the rates are low echos the NAR circa 2006. Buy now. Enjoy the teaser rate. Then, once all your debt in 2 year T-bills is due for refinancing, hope the rates didn’t go up.

  80. willwork4beer says:

    Would someone with GSMLS access please give me the status of 6 John Ringo Rd in East Amwell?

    For sale sign, then under contract, then the sign was gone and the house appears to be vacant.

    I drive by it all the time. Just curious.

    Thanks in advance.

  81. Yikes says:

    If you assume $800 per month real estate tax, $100 per month insurance and $1600 per month principal and interest (297,500 @ 5% for 30 years) total PITI of $2500 based upon 30% of $100,000 household income. With 3.5% down FHA it gets you a POS Cape.

    it is depressing to think about it in terms like that. strategy?
    a) saving $ for 5 years while renting and putting 20% down on a house to buy a place
    b) if you can put down 30%, then that’s even better – your mortgage will be lower, and you won’t need to worry about it as much (if you lose your job and can only make 75% of what you made, you’re still OK

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