The WSJ reports: From Ordering Steak and Lobster, to Serving It.
Carlos Araya used to order lobster, filet mignon and $200 bottles of red wine at the Palm Restaurant in midtown Manhattan.
Now, he seats customers at its Tribeca branch.
Mr. Araya, 38 years old, lost his job in 2007 as a crude oil trader on the New York Mercantile Exchange. After visiting dozens of headhunters with no luck, he applied in August 2008 to be a host at the Palm to support his wife, two young daughters and mortgage payments. His salary has plunged from $200,000 to $25,000.
Last month, for the first time, the Arayas didn't make a mortgage payment. Their savings are almost depleted. The mortgage, taxes and fees for the family's condo cost $6,200. Combined, he and Denise bring in $4,000 a month. Three months ago, he and his wife applied to restructure their mortgage. The bank told them it is still processing the request. They fear foreclosure and bankruptcy.
Mr. Araya, the son of a cab driver, grew up in a working-class neighborhood in nearby Queens. Like thousands of New Yorkers, he used a Wall Street job to vault into a comfortable lifestyle that included his apartment -- bought for $960,000 four years ago -- in Manhattan's Battery Park City neighborhood and family vacations to Cabo San Lucas, Disneyland and Las Vegas.
The Arayas purchased the condo in 2005 with a 20% down payment and a pre-construction price. The proximity of the two-bedroom, two-bathroom apartment to the trading pit allowed Mr. Araya to spend more time with his family and less time commuting. Ms. Araya diligently managed the family budget with Excel charts to ensure that they had no credit card debt, good credit histories even an emergency fund saved over five years that is now depleted. Mr. Araya says he would be lucky to find a buyer and break even on the apartment now.
$960K for a two-bedroom.
Carrying cost = $6,200
Monthly income = $4,000
Stupid is as stupid does.
Tuesday, June 02, 2009
Monday, June 01, 2009
Laughter - The "Only" Medicine
Reuters reports: Geithner tells China its dollar assets are safe.
U.S. Treasury Secretary Timothy Geithner on Monday reassured the Chinese government that its huge holdings of dollar assets are safe and reaffirmed his faith in a strong U.S. currency.
"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.
His answer drew loud laughter from his student audience.
When students openly laugh at a Treasury Secretary, perhaps it's wiser to shut the fuck up!
U.S. Treasury Secretary Timothy Geithner on Monday reassured the Chinese government that its huge holdings of dollar assets are safe and reaffirmed his faith in a strong U.S. currency.
"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.
His answer drew loud laughter from his student audience.
When students openly laugh at a Treasury Secretary, perhaps it's wiser to shut the fuck up!
Thursday, May 28, 2009
Sex me up, Sex me down
Time reports: From Bangkok to Berlin, Hard Times Hit the Sex Trade.
In Patpong, one of Bangkok's most notorious red-light districts, go-go girls count their livelihood by the number of sex tourists they entertain. "Three inches, three minutes, 3,000 baht ($87)," laughs Goy, a 25-year-old bargirl. Last summer, she and her fellow pole dancers at the Camelot Castle entertained scores of men every night — first in the bar, where they earn a monthly salary, then at the customer's hotel, where they negotiate their own rates. But as cash-strapped tourists have turned their backs on Thailand — tourism officials say revenues will plunge 35% this year — the ranks of men cruising Patpong have thinned dramatically. On a recent Wednesday evening, just three tourists watched a visibly disgruntled Goy wiggle around her pole. "My base salary was 8,000 baht ($232) a month, but now they are giving me 6,000 baht ($174)," she says. "I haven't had a customer in five nights, and I'm lucky if someone buys me a drink."
In the Czech Republic, where 14% of men admit to having slept with a prostitute, up to half of all sex establishments outside of Prague have closed in the past year, says Hana Malinova, director of Bliss Without Risk, a prostitution-outreach group in the capital. Others have simply reduced their workforce. "In villages where there used to be 10 girls, there are now two," she says. America's working girls have suffered too. The Mustang Ranch in Reno, Nev., recently laid off 30% of its staff after its highest-spending clients started staying away.
Back in Bangkok, the relative strength of foreign currencies isn't helping local businesses. The cost of traveling to Thailand from far-flung places like Australia and Japan offsets any gains from the exchange rate. Pong, the female manager of Bangkok's Babylon Sauna, Bed and Breakfast, knows that all too well, as her business depends on foreign revenue to stay afloat. Described as "the most stylish and lavish sauna ever seen" by online gay guide Pink Banana World, Babylon welcomed an average of 800 visitors per day before the recession hit. That number now hovers around 500. "The entrance fee is already low, so dropping it won't make a difference," Pong says. So what's a sauna manager to do? "Pray for us," is all she can say.
Well, there's that deflating feeling again!
In Patpong, one of Bangkok's most notorious red-light districts, go-go girls count their livelihood by the number of sex tourists they entertain. "Three inches, three minutes, 3,000 baht ($87)," laughs Goy, a 25-year-old bargirl. Last summer, she and her fellow pole dancers at the Camelot Castle entertained scores of men every night — first in the bar, where they earn a monthly salary, then at the customer's hotel, where they negotiate their own rates. But as cash-strapped tourists have turned their backs on Thailand — tourism officials say revenues will plunge 35% this year — the ranks of men cruising Patpong have thinned dramatically. On a recent Wednesday evening, just three tourists watched a visibly disgruntled Goy wiggle around her pole. "My base salary was 8,000 baht ($232) a month, but now they are giving me 6,000 baht ($174)," she says. "I haven't had a customer in five nights, and I'm lucky if someone buys me a drink."
In the Czech Republic, where 14% of men admit to having slept with a prostitute, up to half of all sex establishments outside of Prague have closed in the past year, says Hana Malinova, director of Bliss Without Risk, a prostitution-outreach group in the capital. Others have simply reduced their workforce. "In villages where there used to be 10 girls, there are now two," she says. America's working girls have suffered too. The Mustang Ranch in Reno, Nev., recently laid off 30% of its staff after its highest-spending clients started staying away.
Back in Bangkok, the relative strength of foreign currencies isn't helping local businesses. The cost of traveling to Thailand from far-flung places like Australia and Japan offsets any gains from the exchange rate. Pong, the female manager of Bangkok's Babylon Sauna, Bed and Breakfast, knows that all too well, as her business depends on foreign revenue to stay afloat. Described as "the most stylish and lavish sauna ever seen" by online gay guide Pink Banana World, Babylon welcomed an average of 800 visitors per day before the recession hit. That number now hovers around 500. "The entrance fee is already low, so dropping it won't make a difference," Pong says. So what's a sauna manager to do? "Pray for us," is all she can say.
Well, there's that deflating feeling again!
Fashion Folly
The New York Times reports: Lacroix Files for Bankruptcy Protection.
Christian Lacroix, the French couturier whose artistic and exuberant pouf dresses propelled him to fame in the 1980s, became the latest victim of the global financial crisis Thursday as the U.S.-owned fashion house bearing his name filed for court protection from creditors.
Although Lacroix’s chief executive officer, Nicolas Topiol, emphasized that the brand intended to continue operating during the process, the news brings an end to a luxury business model for which Lacroix was the last of the Mohicans.
Très passé.
Christian Lacroix, the French couturier whose artistic and exuberant pouf dresses propelled him to fame in the 1980s, became the latest victim of the global financial crisis Thursday as the U.S.-owned fashion house bearing his name filed for court protection from creditors.
Although Lacroix’s chief executive officer, Nicolas Topiol, emphasized that the brand intended to continue operating during the process, the news brings an end to a luxury business model for which Lacroix was the last of the Mohicans.
Très passé.
Sunday, May 24, 2009
Bored of the Rings
From Oregonlive.com: After storybook boom, Bend faces a tough chapter.
Once upon a time not so long ago, developers seeking magic money poured $4 million into a "Lord of the Rings" subdivision here complete with hobbit holes and thatch-roof houses.
This month Umpqua Bank, which foreclosed on The Shire, unloaded the moribund development for just $750,000.
It's hardly the storybook ending J.R.R. Tolkien might have written for a project that symbolized the extremes of Bend's legendary boom. But central Oregon has become the Middle Earth of unemployment -- at 17 percent, Bend suffers the second-highest rate among metro areas nationally -- as retirees scramble for work and homeless people supplant outdoor enthusiasts.
Down the road, more bargain hunters cruise the aisles at Gottschalks, an apparel chain that's liquidating six months after opening its newly built Bend outlet. Along the same highway, the Westward Ho Motel promotes a $29 "stimulus special."
At the hobbit-themed Shire development, Greg Steckler, the lone homeowner, yearns for an economic recovery that would give him some neighbors. "I want some help mowing these lawns," he says.
Lawd, it's a dumbfest out there!
Once upon a time not so long ago, developers seeking magic money poured $4 million into a "Lord of the Rings" subdivision here complete with hobbit holes and thatch-roof houses.
This month Umpqua Bank, which foreclosed on The Shire, unloaded the moribund development for just $750,000.
It's hardly the storybook ending J.R.R. Tolkien might have written for a project that symbolized the extremes of Bend's legendary boom. But central Oregon has become the Middle Earth of unemployment -- at 17 percent, Bend suffers the second-highest rate among metro areas nationally -- as retirees scramble for work and homeless people supplant outdoor enthusiasts.
Down the road, more bargain hunters cruise the aisles at Gottschalks, an apparel chain that's liquidating six months after opening its newly built Bend outlet. Along the same highway, the Westward Ho Motel promotes a $29 "stimulus special."
At the hobbit-themed Shire development, Greg Steckler, the lone homeowner, yearns for an economic recovery that would give him some neighbors. "I want some help mowing these lawns," he says.
Lawd, it's a dumbfest out there!
An Artful Bankruptcy
Gawker reports: Will Annie Leibovitz Be Forced Into Bankruptcy?
Über-photographer Annie Leibovitz was forced to mortgage the rights to all her photographs last year in exchange for $15 million, and she's been the target of multiple creditor lawsuits for not paying bills. Now a source tells Gawker that one of them is preparing to force her into bankruptcy.
Our source got a hold of an involuntary bankruptcy petition drawn up by photo supplier B2Pro, which has sued Leibovitz and Vanity Fair publisher Condé Nast for unpaid bills.
Earlier this year, it was revealed that Leibovitz has pawned the rights to every photograph she has ever or will ever take to Art Capital Group, along with her homes in Rhinebeck, N.Y., and Manhattan. If she pays back the $15 million, she keeps the photos and the houses. If she doesn't, Art Capital gets them.
Über-photographer Annie Leibovitz was forced to mortgage the rights to all her photographs last year in exchange for $15 million, and she's been the target of multiple creditor lawsuits for not paying bills. Now a source tells Gawker that one of them is preparing to force her into bankruptcy.
Our source got a hold of an involuntary bankruptcy petition drawn up by photo supplier B2Pro, which has sued Leibovitz and Vanity Fair publisher Condé Nast for unpaid bills.
Earlier this year, it was revealed that Leibovitz has pawned the rights to every photograph she has ever or will ever take to Art Capital Group, along with her homes in Rhinebeck, N.Y., and Manhattan. If she pays back the $15 million, she keeps the photos and the houses. If she doesn't, Art Capital gets them.
Friday, May 15, 2009
Wednesday, May 13, 2009
Wednesday, May 06, 2009
That Electrifying Elated Feeling
The LA Times reports: Orange County contractor kills girlfriend, young son and himself.
An electrical contractor who was having financial problems shot to death his live-in girlfriend and 3 1/2-year-old son before killing himself, police said today.
Officers called to an apartment in Orange on Tuesday afternoon found the bodies of Craig Rubin, 44, and Mary Striley, 42, on beds in separate bedrooms while the body of their son, Jake, was in a high chair in the kitchen, Sgt. Dan Adams said.
Each had been shot once in the head.
A work van labeled Rubin Electric was parked outside the apartment.
An electrical contractor who was having financial problems shot to death his live-in girlfriend and 3 1/2-year-old son before killing himself, police said today.
Officers called to an apartment in Orange on Tuesday afternoon found the bodies of Craig Rubin, 44, and Mary Striley, 42, on beds in separate bedrooms while the body of their son, Jake, was in a high chair in the kitchen, Sgt. Dan Adams said.
Each had been shot once in the head.
A work van labeled Rubin Electric was parked outside the apartment.
Tuesday, May 05, 2009
Donating Excess Liquidity
MSN reports: You know it's a recession when ...
Strapped men are lining up to donate sperm at Xytex's two Georgia sperm bank centers. Spokesman Christopher Karow believes financial pressure is driving the 9% increase in volunteers since September. Men make $195 to $300 donating three times a week, the limit. "Students are doing it to offset the cost of their education, books and housing, where before they did it for recreation money," Karow says.
Women, too, are asking their reproductive organs for some return on investment. The World Egg Bank in Phoenix fields about 450 inquiries a week, up from 250 last fall. "I believe that egg donors are not any different from the general population looking for quick and creative ways of coping with the quick turn in our economy," says Diana Thomas, the company president.
All y'all men might want to make a "deposit" ...
Strapped men are lining up to donate sperm at Xytex's two Georgia sperm bank centers. Spokesman Christopher Karow believes financial pressure is driving the 9% increase in volunteers since September. Men make $195 to $300 donating three times a week, the limit. "Students are doing it to offset the cost of their education, books and housing, where before they did it for recreation money," Karow says.
Women, too, are asking their reproductive organs for some return on investment. The World Egg Bank in Phoenix fields about 450 inquiries a week, up from 250 last fall. "I believe that egg donors are not any different from the general population looking for quick and creative ways of coping with the quick turn in our economy," says Diana Thomas, the company president.
All y'all men might want to make a "deposit" ...
Friday, May 01, 2009
Everybody Mambo - How Low can the Rising Sun Go?
The BBC reports: Japan moves back into deflation.
Japan's economy has fallen back into deflation for the first time in more than a year, new data for March shows.
On Thursday the Bank of Japan said GDP would shrink by 3.1% in the year to March 2010, compared to an earlier forecast of 2%, but it has argued that a recovery will begin in 2010.
But in its latest update earlier this week it also warned that consumer prices will fall by 1.5%, pushing Japan into deflation.
The Bank of Japan has forecast two years of deflation, which stalked the Japanese economy in the 1990s.
Japan's economy has fallen back into deflation for the first time in more than a year, new data for March shows.
On Thursday the Bank of Japan said GDP would shrink by 3.1% in the year to March 2010, compared to an earlier forecast of 2%, but it has argued that a recovery will begin in 2010.
But in its latest update earlier this week it also warned that consumer prices will fall by 1.5%, pushing Japan into deflation.
The Bank of Japan has forecast two years of deflation, which stalked the Japanese economy in the 1990s.
Tuesday, April 28, 2009
Double-Digitally Dubious Dubai
From Yahoo! Finance: Research firm: Dubai home prices drop 41 pct in 1Q.
Home prices in the once red-hot Middle East boomtown of Dubai plunged 41 percent in the first three months of 2009 as the global economic slowdown raised concerns about job security and dried up financing, according to figures released Tuesday that suggest nearly two years of gains have evaporated.
That's just one quarter folks! - three months - not a year, not a few years, just three months.
Of course, the EE had explained the concept right here.
Dubai is toasted! Prices will fall a lot further.
Home prices in the once red-hot Middle East boomtown of Dubai plunged 41 percent in the first three months of 2009 as the global economic slowdown raised concerns about job security and dried up financing, according to figures released Tuesday that suggest nearly two years of gains have evaporated.
That's just one quarter folks! - three months - not a year, not a few years, just three months.
Of course, the EE had explained the concept right here.
Dubai is toasted! Prices will fall a lot further.
Sunday, April 26, 2009
The Lien Gangrene Acts Meanly on the Has-Been!
The Houston Chronicle reports: The logjam in lending inflicts pain.
The office is at the end of a nondescript hallway in one of the countless midrise office buildings that dot the Greater Houston area.
No receptionist sits inside, but it’s a small enough operation that the sound of the door opening brings one of the principals to the front. Two others join us in the windowless conference room, where they begin discussing the crisis they face.
Their company develops, builds and manages real estate, especially multi-family properties, and they feel it slipping away. In recent weeks, three of their projects were thrown into default, even though they say they’ve been current on all payments and had a 50 percent equity stake in the deal.
Their lender called for a new appraisal, and because the appraised value fell, the loan was deemed under-collateralized. The bank declared them in default and has refused offers for a compromise, they say.
The frustration of area builders and developers indicates a bigger problem in commercial real estate. Almost $500 billion in loans is coming due this year nationally, but the decline in property values and the tighter lending practices mean there’s only enough capital available to refinance 10 percent of them, Fish said.
“Losses in the commercial real estate sector for the most part have yet to be realized,” Fish said. “This is going to be an extended period of time that it takes for de-leveraging, and de-leveraging is just about as ugly a process as there is.”
In the 1980s, a wrenching revaluation of Texas’ real estate market took seven years to complete, and it may take years for the local market to fully recover this time, too, he added.
So you mean that borrowing a crapload a money is not the path to riches?
Shit, kid, wish you could've said something earlier!
The office is at the end of a nondescript hallway in one of the countless midrise office buildings that dot the Greater Houston area.
No receptionist sits inside, but it’s a small enough operation that the sound of the door opening brings one of the principals to the front. Two others join us in the windowless conference room, where they begin discussing the crisis they face.
Their company develops, builds and manages real estate, especially multi-family properties, and they feel it slipping away. In recent weeks, three of their projects were thrown into default, even though they say they’ve been current on all payments and had a 50 percent equity stake in the deal.
Their lender called for a new appraisal, and because the appraised value fell, the loan was deemed under-collateralized. The bank declared them in default and has refused offers for a compromise, they say.
The frustration of area builders and developers indicates a bigger problem in commercial real estate. Almost $500 billion in loans is coming due this year nationally, but the decline in property values and the tighter lending practices mean there’s only enough capital available to refinance 10 percent of them, Fish said.
“Losses in the commercial real estate sector for the most part have yet to be realized,” Fish said. “This is going to be an extended period of time that it takes for de-leveraging, and de-leveraging is just about as ugly a process as there is.”
In the 1980s, a wrenching revaluation of Texas’ real estate market took seven years to complete, and it may take years for the local market to fully recover this time, too, he added.
So you mean that borrowing a crapload a money is not the path to riches?
Shit, kid, wish you could've said something earlier!
Thursday, April 23, 2009
The Education Bubble Collapses
Time reports: Cash-Strapped State Schools Being Forced to Privatize.
The cash-strapped state of Michigan is looking to save money any way it can, and some political leaders have suggested essentially privatizing the state's flagship university. While formally turning the school into a private university would be tricky — requiring legislative approval, a constitutional amendment, and the support of the university's Board of Regents — legislators have proposed eliminating the $327 million in funding that the state provides to the university each year. Making up the state's contribution, however, would require an endowment on the order of $16 billion, a nearly impossible task even in flush times.
Traditionally, state universities provided an affordable education for its residents by offering subsidized in-state tuition. For Lansing native Anneke Stadt, a sophomore nursing student, the $11,037 tuition is the main reason she's at the University of Michigan. Stadt says she looked into private schools like Hope College ($33,000 tuition) and Kalamazoo College ($38,000 tuition). "I couldn't really afford them, though," she explains, "so I hedged my bets with the public school."
The struggling economy is forcing even wealthy families to look for the best value for their tuition dollars. For just $5,000 more in tuition, an out-of-state student could forgo Michigan for New York University, the nation's largest private school with nearly double the number of faculty.
Are you freakin' kiddin' me? $160K to attend Kalamazoo College?!?
You're better off taking that money, running off to Mexico and blowing it all on hookers and weed.
You'd have to be completely and utterly insane to pay those prices to go to those colleges. You'll never be able to pay back the opportunity cost of capital ever!
Education is a good thing. This is hardly worth debating about.
However, it doesn't have infinite value. It has finite value in relation to the income that you are going to pull down on the basis of that education. This should also be obvious!
Not understanding this, these kids are totally screwed.
The cash-strapped state of Michigan is looking to save money any way it can, and some political leaders have suggested essentially privatizing the state's flagship university. While formally turning the school into a private university would be tricky — requiring legislative approval, a constitutional amendment, and the support of the university's Board of Regents — legislators have proposed eliminating the $327 million in funding that the state provides to the university each year. Making up the state's contribution, however, would require an endowment on the order of $16 billion, a nearly impossible task even in flush times.
Traditionally, state universities provided an affordable education for its residents by offering subsidized in-state tuition. For Lansing native Anneke Stadt, a sophomore nursing student, the $11,037 tuition is the main reason she's at the University of Michigan. Stadt says she looked into private schools like Hope College ($33,000 tuition) and Kalamazoo College ($38,000 tuition). "I couldn't really afford them, though," she explains, "so I hedged my bets with the public school."
The struggling economy is forcing even wealthy families to look for the best value for their tuition dollars. For just $5,000 more in tuition, an out-of-state student could forgo Michigan for New York University, the nation's largest private school with nearly double the number of faculty.
Are you freakin' kiddin' me? $160K to attend Kalamazoo College?!?
You're better off taking that money, running off to Mexico and blowing it all on hookers and weed.
You'd have to be completely and utterly insane to pay those prices to go to those colleges. You'll never be able to pay back the opportunity cost of capital ever!
Education is a good thing. This is hardly worth debating about.
However, it doesn't have infinite value. It has finite value in relation to the income that you are going to pull down on the basis of that education. This should also be obvious!
Not understanding this, these kids are totally screwed.
Wednesday, April 22, 2009
Stimulate Me, Baby!
Reuters reports: Global economic crisis hits German sex industry
BERLIN (Reuters) - It did not take long for the world financial crisis to affect the world's oldest profession in Germany.
In one of the few countries where prostitution is legal, and unusually transparent, the industry has responded with an economic stimulus package of its own: modern marketing tools, rebates and gimmicks to boost falling demand.
Some brothels have cut prices or added free promotions while others have introduced all-inclusive flat-rate fees. Free shuttle buses, discounts for seniors and taxi drivers, as well as "day passes" are among marketing strategies designed to keep business going.
"Times are tough for us too," said Karin Ahrens, who manages the "Yes, Sir" brothel in Hanover. She told Reuters revenue had dropped by 30 percent at her establishment while turnover had fallen by as much as 50 percent at other clubs.
"We're definitely feeling the crisis. Clients are being tight with their money. They're afraid. You can't charge for the extras any more and there is pressure to cut prices. Everyone wants a deal. Special promotions are essential these days."
It's time for a "stimulus" package!
BERLIN (Reuters) - It did not take long for the world financial crisis to affect the world's oldest profession in Germany.
In one of the few countries where prostitution is legal, and unusually transparent, the industry has responded with an economic stimulus package of its own: modern marketing tools, rebates and gimmicks to boost falling demand.
Some brothels have cut prices or added free promotions while others have introduced all-inclusive flat-rate fees. Free shuttle buses, discounts for seniors and taxi drivers, as well as "day passes" are among marketing strategies designed to keep business going.
"Times are tough for us too," said Karin Ahrens, who manages the "Yes, Sir" brothel in Hanover. She told Reuters revenue had dropped by 30 percent at her establishment while turnover had fallen by as much as 50 percent at other clubs.
"We're definitely feeling the crisis. Clients are being tight with their money. They're afraid. You can't charge for the extras any more and there is pressure to cut prices. Everyone wants a deal. Special promotions are essential these days."
It's time for a "stimulus" package!
Jump, Jump
The New York Times reports: Freddie Mac Executive Is Found Dead
David B. Kellermann, the acting chief financial officer of the troubled mortgage giant Freddie Mac, was found dead Wednesday morning at his home in Northern Virginia, the police said.
The executive apparently committed suicide by hanging himself, according to people with knowledge of the investigation.
Mood Music:
David B. Kellermann, the acting chief financial officer of the troubled mortgage giant Freddie Mac, was found dead Wednesday morning at his home in Northern Virginia, the police said.
The executive apparently committed suicide by hanging himself, according to people with knowledge of the investigation.
Mood Music:
Sunday, April 19, 2009
Earth to Planet Harvard, Earth to Planet Harvard ...
The New York Times has an article by Greg Mankiw: It May Be Time for the Fed to Go Negative.
Let’s start with the basics: What is the best way for an economy to escape a recession?
Until recently, most economists relied on monetary policy. Recessions result from an insufficient demand for goods and services — and so, the thinking goes, our central bank can remedy this deficiency by cutting interest rates. Lower interest rates encourage households and businesses to borrow and spend. More spending means more demand for goods and services, which leads to greater employment for workers to meet that demand.
The problem today, it seems, is that the Federal Reserve has done just about as much interest rate cutting as it can. Its target for the federal funds rate is about zero, so it has turned to other tools, such as buying longer-term debt securities, to get the economy going again. But the efficacy of those tools is uncertain, and there are risks associated with them.
The problem with negative interest rates, however, is quickly apparent: nobody would lend on those terms. Rather than giving your money to a borrower who promises a negative return, it would be better to stick the cash in your mattress. Because holding money promises a return of exactly zero, lenders cannot offer less.
Unless, that is, we figure out a way to make holding money less attractive.
Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.
That move would free the Fed to cut interest rates below zero. People would be delighted to lend money at negative 3 percent, since losing 3 percent is better than losing 10.
Of course, some people might decide that at those rates, they would rather spend the money — for example, by buying a new car. But because expanding aggregate demand is precisely the goal of the interest rate cut, such an incentive isn’t a flaw — it’s a benefit.
Or they could just move their money into commodities or gold or a foreign currency.
Did that thought occur to you, Professor?
The reason that zero is the lower bound for interest rates is because you can always hold "stuff" - non-perishables ideally, but even "suitable" perishables.
People in Romania hoarded cars during the post-communist regime because a depreciating car "appreciated" faster than inflation.
It's the same reason that the Chinese and Indians hoard land and gold. Completely non-productive land and completely non-productive gold - a totally asinine thing in any economic paradigm actually.
So you could just hold gold. Or silver. Or even a foreign currency that didn't have such an asinine policy.
If they outlaw holding gold, you can hold copper, or toilet paper. It simply doesn't matter as long as it is suitably non-perishable.
And then you go out and borrow with the rest of society at that negative rate, and stick it in more gold or more copper.
Isn't this freakin' obvious? Do you have to be a Warren Buffett to grasp this basic point?
And this man is a Professor at Harvard? Jeebus! No wonder we're screwed.
Let’s start with the basics: What is the best way for an economy to escape a recession?
Until recently, most economists relied on monetary policy. Recessions result from an insufficient demand for goods and services — and so, the thinking goes, our central bank can remedy this deficiency by cutting interest rates. Lower interest rates encourage households and businesses to borrow and spend. More spending means more demand for goods and services, which leads to greater employment for workers to meet that demand.
The problem today, it seems, is that the Federal Reserve has done just about as much interest rate cutting as it can. Its target for the federal funds rate is about zero, so it has turned to other tools, such as buying longer-term debt securities, to get the economy going again. But the efficacy of those tools is uncertain, and there are risks associated with them.
The problem with negative interest rates, however, is quickly apparent: nobody would lend on those terms. Rather than giving your money to a borrower who promises a negative return, it would be better to stick the cash in your mattress. Because holding money promises a return of exactly zero, lenders cannot offer less.
Unless, that is, we figure out a way to make holding money less attractive.
Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.
That move would free the Fed to cut interest rates below zero. People would be delighted to lend money at negative 3 percent, since losing 3 percent is better than losing 10.
Of course, some people might decide that at those rates, they would rather spend the money — for example, by buying a new car. But because expanding aggregate demand is precisely the goal of the interest rate cut, such an incentive isn’t a flaw — it’s a benefit.
Or they could just move their money into commodities or gold or a foreign currency.
Did that thought occur to you, Professor?
The reason that zero is the lower bound for interest rates is because you can always hold "stuff" - non-perishables ideally, but even "suitable" perishables.
People in Romania hoarded cars during the post-communist regime because a depreciating car "appreciated" faster than inflation.
It's the same reason that the Chinese and Indians hoard land and gold. Completely non-productive land and completely non-productive gold - a totally asinine thing in any economic paradigm actually.
So you could just hold gold. Or silver. Or even a foreign currency that didn't have such an asinine policy.
If they outlaw holding gold, you can hold copper, or toilet paper. It simply doesn't matter as long as it is suitably non-perishable.
And then you go out and borrow with the rest of society at that negative rate, and stick it in more gold or more copper.
Isn't this freakin' obvious? Do you have to be a Warren Buffett to grasp this basic point?
And this man is a Professor at Harvard? Jeebus! No wonder we're screwed.
Thursday, April 16, 2009
Soundness and Correctness
The New York Times reports: General Growth Properties Files for Bankruptcy
General Growth Properties, one of the largest mall operators in the nation, filed for bankruptcy early Thursday morning in one of the biggest commercial real estate collapses in United States history.
Founded in 1954 and expanded through a series of acquisitions — topped by a $12.6 billion deal for the Rouse Company in 2004 — the company has a huge retail presence that has served as a barometer for the troubles bedeviling the American retail market.
“Our operational model is sound,” Thomas H. Nolan Jr., the company’s president and chief operating officer, said on a conference call early Thursday morning.
Clearly, so "sound" that you went bankrupt.
General Growth Properties, one of the largest mall operators in the nation, filed for bankruptcy early Thursday morning in one of the biggest commercial real estate collapses in United States history.
Founded in 1954 and expanded through a series of acquisitions — topped by a $12.6 billion deal for the Rouse Company in 2004 — the company has a huge retail presence that has served as a barometer for the troubles bedeviling the American retail market.
“Our operational model is sound,” Thomas H. Nolan Jr., the company’s president and chief operating officer, said on a conference call early Thursday morning.
Clearly, so "sound" that you went bankrupt.
Tuesday, April 14, 2009
Boozie Ozzie
CBS Marketwatch reports: Australia's leading growth index falls to 26-year low.
A leading economic index for Australia fell in February to its weakest level in more than two decades, pointing to a possible heavy contraction for the nation's economy, according to data released Wednesday.
The headline month-on-month rate contracted 0.3% in February from January to an annualized rate of 5.1%.
Westpac now expects the Australian economy to contract by 1% in 2009 -- the first time it would do so since World War II, according to chief economist Bill Evans. But Westpac also predicted that will be the low point of the cycle.
So it's currently contracting at 5.1% (annualized) and you expect some "magic" to temper it to 1% over the rest of the year?
Care to share what this "magic" will be?
A leading economic index for Australia fell in February to its weakest level in more than two decades, pointing to a possible heavy contraction for the nation's economy, according to data released Wednesday.
The headline month-on-month rate contracted 0.3% in February from January to an annualized rate of 5.1%.
Westpac now expects the Australian economy to contract by 1% in 2009 -- the first time it would do so since World War II, according to chief economist Bill Evans. But Westpac also predicted that will be the low point of the cycle.
So it's currently contracting at 5.1% (annualized) and you expect some "magic" to temper it to 1% over the rest of the year?
Care to share what this "magic" will be?
Sing-a-poor?
Yahoo! reports: Singapore economy plummets 20 pct in first quarter.
Singapore's economy plummeted nearly 20 percent in the first quarter, its biggest contraction ever, flagging a miserable start to the year for other export-dependent Asian nations grappling with the worst global slump in decades.
The government now expects the economy to shrink between 6 percent and 9 percent this year from a previous forecast of a drop between 2 percent and 5 percent, the ministry said in a statement. The 2009 growth forecast has now been cut three times.
If you need to cut your forecast thrice in three months, your forecast is shit!
And you've already dropped 20% and your forecast is 9%? How exactly does that work?
FAIL.
Singapore's economy plummeted nearly 20 percent in the first quarter, its biggest contraction ever, flagging a miserable start to the year for other export-dependent Asian nations grappling with the worst global slump in decades.
The government now expects the economy to shrink between 6 percent and 9 percent this year from a previous forecast of a drop between 2 percent and 5 percent, the ministry said in a statement. The 2009 growth forecast has now been cut three times.
If you need to cut your forecast thrice in three months, your forecast is shit!
And you've already dropped 20% and your forecast is 9%? How exactly does that work?
FAIL.
Sunday, April 12, 2009
The "Charitable" Impulse
Tufts Daily reports: Tufts accepts 26 percent of pool, suspends need-blind admissions.
The Office of Undergraduate Admissions reported a 4 percent drop in applications this year but accepted 26 percent of applicants to the Class of 2013 -- down less than 1 percent from last year, the Daily learned yesterday, the date by which all applicants were notified of a decision.
The admissions office also stopped practicing a need-blind admissions policy toward the tail end of the process, a decision that affected five percent of applicants, Dean of Undergraduate Admissions Lee Coffin said.
So now that you can no longer pretend not to be a business, you aren't?
You need cash, you are selling a service, and you need to survive? SHOCKER!!!
The Office of Undergraduate Admissions reported a 4 percent drop in applications this year but accepted 26 percent of applicants to the Class of 2013 -- down less than 1 percent from last year, the Daily learned yesterday, the date by which all applicants were notified of a decision.
The admissions office also stopped practicing a need-blind admissions policy toward the tail end of the process, a decision that affected five percent of applicants, Dean of Undergraduate Admissions Lee Coffin said.
So now that you can no longer pretend not to be a business, you aren't?
You need cash, you are selling a service, and you need to survive? SHOCKER!!!
Wednesday, April 08, 2009
The Other Emerald City Shaketh (and it's not the Big One)
Reuters reports: San Francisco Office Rents Fall Most Since 2001
San Francisco office rents dropped 24 percent in the first quarter from a year earlier, the biggest decline since the dot-com crash in 2001, as the recession cut jobs and companies returned space to the market.
It's the beauty of rents. Either you got it or you don't got it. There's no fakin' it!
San Francisco office rents dropped 24 percent in the first quarter from a year earlier, the biggest decline since the dot-com crash in 2001, as the recession cut jobs and companies returned space to the market.
It's the beauty of rents. Either you got it or you don't got it. There's no fakin' it!
In Which We Plumb Yet Another "First"...
The New York Times reports: Muni Bonds May Face Downgrade.
Moody’s Investors Service assigned a negative outlook to the creditworthiness of all local governments in the United States, the agency said Tuesday, the first time it had ever issued such a blanket report on municipalities.
There do seem to be an awful lot of "first times" these days, don't they?
Moody’s Investors Service assigned a negative outlook to the creditworthiness of all local governments in the United States, the agency said Tuesday, the first time it had ever issued such a blanket report on municipalities.
There do seem to be an awful lot of "first times" these days, don't they?
Tuesday, April 07, 2009
The Gilded Cage
The AP reports: Hard-up Nicolas Cage sells German castle.
The global recession has forced Hollywood star Nicolas Cage to tighten his purse strings and sell his sumptuous castle in Bavaria in southern Germany, the actor told a magazine Tuesday.
Cage bought the 28-room Neidstein castle with 165 hectares (410 acres) of forest and gardens two years ago, reportedly paying 2.6 million dollars for the property, which dates back to the 16th century.
Perhaps this explains why he's in a whole buncha C-movies lately!
The global recession has forced Hollywood star Nicolas Cage to tighten his purse strings and sell his sumptuous castle in Bavaria in southern Germany, the actor told a magazine Tuesday.
Cage bought the 28-room Neidstein castle with 165 hectares (410 acres) of forest and gardens two years ago, reportedly paying 2.6 million dollars for the property, which dates back to the 16th century.
Perhaps this explains why he's in a whole buncha C-movies lately!
The Emerald City Shaketh
Bloomberg reports: Manhattan Office Rents Fall Most in Quarter Century.
Manhattan office rents fell the most in at least 25 years in the first quarter as financial companies slashed jobs and relinquished space in the U.S. recession.
Rents dropped 6 percent from the fourth quarter to $65.01 a square foot, commercial property broker Cushman & Wakefield Inc. said in a report today. The decline is the most in records dating back to 1984.
Rents are “falling faster than they did in the last two recessions,” Harbert said.
Firstly, any fool could've seen this. The optimistic cash-flow projections of the cheerleaders are going to get torpedoed.
Same for the home-pawners who plan to sit this out by "renting their place". Rents adjust very rapidly because you can either pay it or you can't. There's no "magical" place that rents can come from. Either you have the means or you don't.
Manhattan office rents fell the most in at least 25 years in the first quarter as financial companies slashed jobs and relinquished space in the U.S. recession.
Rents dropped 6 percent from the fourth quarter to $65.01 a square foot, commercial property broker Cushman & Wakefield Inc. said in a report today. The decline is the most in records dating back to 1984.
Rents are “falling faster than they did in the last two recessions,” Harbert said.
Firstly, any fool could've seen this. The optimistic cash-flow projections of the cheerleaders are going to get torpedoed.
Same for the home-pawners who plan to sit this out by "renting their place". Rents adjust very rapidly because you can either pay it or you can't. There's no "magical" place that rents can come from. Either you have the means or you don't.
In Which the Media Makes GD1 Comparisons Again
Bloomberg reports: Default Rate Surges to Highest Since Depression, Moody’s Says.
Thirty-five companies defaulted in March, the highest number in a single month since the Great Depression, according to Moody’s Investors Service.
The rate at which speculative-grade corporate borrowers worldwide failed to meet their obligations rose to 7 percent from 4.1 percent at the end of last year, Moody’s said in a report today. So far this year, 79 companies rated by Moody’s have defaulted, the New York-based ratings firm said.
Thirty-five companies defaulted in March, the highest number in a single month since the Great Depression, according to Moody’s Investors Service.
The rate at which speculative-grade corporate borrowers worldwide failed to meet their obligations rose to 7 percent from 4.1 percent at the end of last year, Moody’s said in a report today. So far this year, 79 companies rated by Moody’s have defaulted, the New York-based ratings firm said.
Friday, April 03, 2009
Thursday, April 02, 2009
The Green Revolution
Reuters reports: One in 10 Americans receiving food stamps.
A record 32.2 million people -- one in every 10 Americans -- received food stamps at latest count, the government said on Thursday, a reflection of the recession now in its 16th month.
A record 32.2 million people -- one in every 10 Americans -- received food stamps at latest count, the government said on Thursday, a reflection of the recession now in its 16th month.
Wednesday, April 01, 2009
In Which the EE Explains Bayesian Priors ...
Reuters reports: U.S. private sector axes 742,000 jobs in March.
Private employers cut jobs by a record 742,000 in March versus a 706,000 revised cut in February that was originally reported at 697,000 jobs, said ADP, which has been carrying out the survey since 2001.
Economists had expected 655,000 private-sector job cuts in March in the ADP report, according to a recent Reuters poll.
These economists are total morons.
The base case Bayesian prior has to be last-month's estimate ("this month will look exactly like last month.") If you can't even beat this, you haven't a freakin' clue. (And we're not at an inflection so this criticism is perfectly justified.)
Even more shockingly, since this is the "consensus" which is like an "average" or a "central tendency", we can conclude that virtually ALL of these so-called economists have to have been wrong.
They should just use chicken entrails instead. Would be more honest.
Private employers cut jobs by a record 742,000 in March versus a 706,000 revised cut in February that was originally reported at 697,000 jobs, said ADP, which has been carrying out the survey since 2001.
Economists had expected 655,000 private-sector job cuts in March in the ADP report, according to a recent Reuters poll.
These economists are total morons.
The base case Bayesian prior has to be last-month's estimate ("this month will look exactly like last month.") If you can't even beat this, you haven't a freakin' clue. (And we're not at an inflection so this criticism is perfectly justified.)
Even more shockingly, since this is the "consensus" which is like an "average" or a "central tendency", we can conclude that virtually ALL of these so-called economists have to have been wrong.
They should just use chicken entrails instead. Would be more honest.
Adrift
From the New York Times: Boats Too Costly to Keep Are Littering Coastlines.
Boat owners are abandoning ship.
They often sandpaper over the names and file off the registry numbers, doing their best to render the boats, and themselves, untraceable. Then they casually ditch the vessels in the middle of busy harbors, beach them at low tide on the banks of creeks or occasionally scuttle them outright.
The bad economy is creating a flotilla of forsaken boats. While there is no national census of abandoned boats, officials in coastal states are worried the problem will only grow worse as unemployment and financial stress continue to rise. Several states are even drafting laws against derelicts and say they are aggressively starting to pursue delinquent owners.
Some of those disposing of their boats are in the same bind as overstretched homeowners: they face steep payments on an asset that is diminishing in value and decide not to continue. They either default on the debt or take bolder measures.
Marina and maritime officials around the country say they believe, however, that most of the abandoned vessels cluttering their waters are fully paid for. They are expensive-to-maintain toys that have lost their appeal.
The owners cannot sell them, because the secondhand market is overwhelmed. They cannot afford to spend hundreds of dollars a month mooring and maintaining them. And they do not have the thousands of dollars required to properly dispose of them.
If you knew this ahead of time as "inevitable," pat yourself on the back!
Boat owners are abandoning ship.
They often sandpaper over the names and file off the registry numbers, doing their best to render the boats, and themselves, untraceable. Then they casually ditch the vessels in the middle of busy harbors, beach them at low tide on the banks of creeks or occasionally scuttle them outright.
The bad economy is creating a flotilla of forsaken boats. While there is no national census of abandoned boats, officials in coastal states are worried the problem will only grow worse as unemployment and financial stress continue to rise. Several states are even drafting laws against derelicts and say they are aggressively starting to pursue delinquent owners.
Some of those disposing of their boats are in the same bind as overstretched homeowners: they face steep payments on an asset that is diminishing in value and decide not to continue. They either default on the debt or take bolder measures.
Marina and maritime officials around the country say they believe, however, that most of the abandoned vessels cluttering their waters are fully paid for. They are expensive-to-maintain toys that have lost their appeal.
The owners cannot sell them, because the secondhand market is overwhelmed. They cannot afford to spend hundreds of dollars a month mooring and maintaining them. And they do not have the thousands of dollars required to properly dispose of them.
If you knew this ahead of time as "inevitable," pat yourself on the back!
Tuesday, March 31, 2009
Boom Boom Pow
The Telegraph reports: 'Neighbour from hell' blew up his own home before bailiffs could evict him.
Donald Joyce, 58, was due to be removed from his two-bedroom bungalow in Cherry Hinton, Cambridge, by council bailiffs at 10.30am.
But at 9.45am several explosions obliterated the building, blasting off the roof, flattening a brick wall and launching a giant radio aerial across the cul-de-sac.
The whereabouts Mr Joyce, who is wheelchair-bound and partially sighted, are unknown. He has not been seen since the explosion.
Donald Joyce, 58, was due to be removed from his two-bedroom bungalow in Cherry Hinton, Cambridge, by council bailiffs at 10.30am.
But at 9.45am several explosions obliterated the building, blasting off the roof, flattening a brick wall and launching a giant radio aerial across the cul-de-sac.
The whereabouts Mr Joyce, who is wheelchair-bound and partially sighted, are unknown. He has not been seen since the explosion.
Reality is Better than Statistics
From Reuters: Most housing indexes overstate downturn -analysts.
Most closely watched U.S. home price measures lack enough local data to truly reflect house values and are overstating the extent of price drops, executives at a real estate analytics firm said on Monday.
An index is merely an average. It can be badly constructed but otherwise it is exactly what it is - an average, and indicative of the tendency of a population even though it may not reflect the distribution.
Now, the real question is whether the RE analytics firm might actually have a self-interest in "boosting confidence".
Of course, one cannot expect the "superior brain trust" of the MSM to think through these things.
Most closely watched U.S. home price measures lack enough local data to truly reflect house values and are overstating the extent of price drops, executives at a real estate analytics firm said on Monday.
An index is merely an average. It can be badly constructed but otherwise it is exactly what it is - an average, and indicative of the tendency of a population even though it may not reflect the distribution.
Now, the real question is whether the RE analytics firm might actually have a self-interest in "boosting confidence".
Of course, one cannot expect the "superior brain trust" of the MSM to think through these things.
Negative Home Prices (or Pass the Ticking Tax Time Bomb)
The New York Times reports: Banks Starting to Walk Away on Foreclosures.
Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.
Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.
So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.
City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.
Without jobs in the region, the house is worthless. Who's going to pay the insurance, maintenance and property tax year after year?
So it shouldn't be a terrible surprise that the banks find it cheaper to just hand the house back to the mortgagee and say, "Your problem."
“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.
Not a game that you seem to be very good at, daah-link!
Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.
Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.
So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.
City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.
Without jobs in the region, the house is worthless. Who's going to pay the insurance, maintenance and property tax year after year?
So it shouldn't be a terrible surprise that the banks find it cheaper to just hand the house back to the mortgagee and say, "Your problem."
“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.
Not a game that you seem to be very good at, daah-link!
Monday, March 30, 2009
Queer Eye for the Banker Guy
The Audacity of Dopes
From the Washington News Tribune: What you learn when big money goes away.
As a rookie broker at a mom-and-pop mortgage company in Federal Way, Rob Collins had a killer month writing loans in the frothy, frenzied 2005 housing market.
He made $37,000. So he took $5,000 in cash and his fiancée, Heidi, to Bellevue Square.
“I told her, ‘We’re not leaving here until we spend it all,’” Rob recalled this week.
They spent it all right. Heidi bought a pair of designer Richmond jeans, diamond stud earrings, and some odds and ends to supplement her wardrobe. Rob, always impeccably dressed, bought clothes too, including an Italian leather jacket.
Over the following 18 plentiful months, Rob bought a used BMW M3 high-performance sports car, upgraded to a better mortgage company, bought a Hilltop house in Tacoma with Heidi, then married her.
He thought life couldn’t get much better than that.
It didn’t.
Last June, Rob, 29, lost his job writing mortgages for U.S. Bank because he couldn’t write enough approved loans to reach the $1 million minimum his bosses set for him. He sold the M3 immediately and hasn’t owned a car since. He and Heidi, 26, have fallen four months behind paying Countrywide, which owns the loan on their home. Countrywide calls every day asking for its money.
By chance, on a trip to Starbucks in Federal Way last month, I found Collins sweeping the floor before his turn taking orders at the drive-through window. He rides the bus to and from work.
“Starbucks is a great place to work,” Rob said. “I make $8.65 an hour. But I’m up for a raise here shortly.”
And Heidi? She just took a third job. Rob calls the job “swimsuit model.” The wisp of a woman walks the edge of the boxing ring at the Tulalip Casino Resort in Marysville between rounds holding up a placard with the number of the next round.
How are you doing with all this? I asked her.
“Not well,” Heidi said. She choked up. She doesn’t like to talk about it much. The mental and emotional strain, at times, becomes unbearable.
This is just freakin' AWWWWSUMMMMMMMMMMMM!!!
BWAHAHAHAHHAHAHAHHAHAHAHHAHHHHHHHHHHHHHH!!!
As a rookie broker at a mom-and-pop mortgage company in Federal Way, Rob Collins had a killer month writing loans in the frothy, frenzied 2005 housing market.
He made $37,000. So he took $5,000 in cash and his fiancée, Heidi, to Bellevue Square.
“I told her, ‘We’re not leaving here until we spend it all,’” Rob recalled this week.
They spent it all right. Heidi bought a pair of designer Richmond jeans, diamond stud earrings, and some odds and ends to supplement her wardrobe. Rob, always impeccably dressed, bought clothes too, including an Italian leather jacket.
Over the following 18 plentiful months, Rob bought a used BMW M3 high-performance sports car, upgraded to a better mortgage company, bought a Hilltop house in Tacoma with Heidi, then married her.
He thought life couldn’t get much better than that.
It didn’t.
Last June, Rob, 29, lost his job writing mortgages for U.S. Bank because he couldn’t write enough approved loans to reach the $1 million minimum his bosses set for him. He sold the M3 immediately and hasn’t owned a car since. He and Heidi, 26, have fallen four months behind paying Countrywide, which owns the loan on their home. Countrywide calls every day asking for its money.
By chance, on a trip to Starbucks in Federal Way last month, I found Collins sweeping the floor before his turn taking orders at the drive-through window. He rides the bus to and from work.
“Starbucks is a great place to work,” Rob said. “I make $8.65 an hour. But I’m up for a raise here shortly.”
And Heidi? She just took a third job. Rob calls the job “swimsuit model.” The wisp of a woman walks the edge of the boxing ring at the Tulalip Casino Resort in Marysville between rounds holding up a placard with the number of the next round.
How are you doing with all this? I asked her.
“Not well,” Heidi said. She choked up. She doesn’t like to talk about it much. The mental and emotional strain, at times, becomes unbearable.
This is just freakin' AWWWWSUMMMMMMMMMMMM!!!
BWAHAHAHAHHAHAHAHHAHAHAHHAHHHHHHHHHHHHHH!!!
Sunday, March 29, 2009
The Race to the Bottom
The Economist reports on: Sink or swim.
LIKE unwelcome guests who will not leave, 453 container ships, 11% of global capacity, now float outside the harbours of Hong Kong, Singapore and other South-East Asian ports. They are unwanted by their hosts as well as their customers. In recent days China has quietly let it be known that it wants to rid its territorial waters of these nautical squatters.
Only five years ago huge demand from China meant that all these ships, and more, were desperately needed. This had a dramatic impact first on shipping rates, and then on supply (see chart). Between the end of 2006 and July 2008, shipyards received enough commissions to double the world’s fleet. Now these new ships—more than 9,000 vessels—are taking to the water just as demand has collapsed. The world is awash with ships.
To see how the recent boom and bust has affected value, a Hong Kong broker cites a 150-tonne “Cape class” ship that sold in 2003 for $18.5m in the used market. Critical to the price was the prevailing charter rate, then $15,000 a day. By last summer this had risen to $175,000 a day, and an identical ship sold for $85m. Rates peaked shortly thereafter at $300,000. Today rates are back where they were in 2003. Rather than try to find a buyer for another identical ship, albeit one that needed repairs, the owner dumped it for $7m to be used as scrap.
Orders for new ships have, not surprisingly, collapsed and scrutiny has shifted from what can be bought to what can be cancelled: nothing, it turns out, without great effort. South Korea’s shipyards, the global leaders, have learnt from previous busts. They typically demand 20% up front, a further 60% during construction, and the final 20% payment upon delivery. Walk away and you lose a fortune.
Somebody actually learnt from the past?!?
WOW!!! That's quite a feat. Send out the Nobel committee!
Of course, that just means that somebody's bondholders or stockholders are going to be taking that bloodbath not the shipbuilders.
But the real point is that the world is awash in an absurd amount of excess capacity. It will be more than a decade before this stuff normalizes.
And that in case you didn't notice is also extraordinarily deflationary.
LIKE unwelcome guests who will not leave, 453 container ships, 11% of global capacity, now float outside the harbours of Hong Kong, Singapore and other South-East Asian ports. They are unwanted by their hosts as well as their customers. In recent days China has quietly let it be known that it wants to rid its territorial waters of these nautical squatters.
Only five years ago huge demand from China meant that all these ships, and more, were desperately needed. This had a dramatic impact first on shipping rates, and then on supply (see chart). Between the end of 2006 and July 2008, shipyards received enough commissions to double the world’s fleet. Now these new ships—more than 9,000 vessels—are taking to the water just as demand has collapsed. The world is awash with ships.
To see how the recent boom and bust has affected value, a Hong Kong broker cites a 150-tonne “Cape class” ship that sold in 2003 for $18.5m in the used market. Critical to the price was the prevailing charter rate, then $15,000 a day. By last summer this had risen to $175,000 a day, and an identical ship sold for $85m. Rates peaked shortly thereafter at $300,000. Today rates are back where they were in 2003. Rather than try to find a buyer for another identical ship, albeit one that needed repairs, the owner dumped it for $7m to be used as scrap.
Orders for new ships have, not surprisingly, collapsed and scrutiny has shifted from what can be bought to what can be cancelled: nothing, it turns out, without great effort. South Korea’s shipyards, the global leaders, have learnt from previous busts. They typically demand 20% up front, a further 60% during construction, and the final 20% payment upon delivery. Walk away and you lose a fortune.
Somebody actually learnt from the past?!?
WOW!!! That's quite a feat. Send out the Nobel committee!
Of course, that just means that somebody's bondholders or stockholders are going to be taking that bloodbath not the shipbuilders.
But the real point is that the world is awash in an absurd amount of excess capacity. It will be more than a decade before this stuff normalizes.
And that in case you didn't notice is also extraordinarily deflationary.
Friday, March 27, 2009
The Sexy Seven Sisters
Bloomberg reports: Jobless Rate Exceeds 10% in Three More U.S. States.
Nevada, North Carolina and Oregon last month joined the four other states that had previously climbed above 10 percent, according to Labor Department data released today in Washington. Michigan, at 12 percent, remained the state with the highest unemployment rate, followed by South Carolina at 11 percent and Oregon at 10.8. California and Rhode Island bring the total number of states to seven.
Nevada, North Carolina and Oregon last month joined the four other states that had previously climbed above 10 percent, according to Labor Department data released today in Washington. Michigan, at 12 percent, remained the state with the highest unemployment rate, followed by South Carolina at 11 percent and Oregon at 10.8. California and Rhode Island bring the total number of states to seven.
Whitey Whitey, Quite McTightey
The Financial Times reports: Brazil’s leader blames white people for crisis.
Brazil’s President Luiz Inácio Lula da Silva on Thursday blamed the global economic crisis on “white people with blue eyes” and said it was wrong that black and indigenous people should pay for white people’s mistakes.
This is so unbelievably stupid that it's not even worth writing a tirade about.
Brazil’s President Luiz Inácio Lula da Silva on Thursday blamed the global economic crisis on “white people with blue eyes” and said it was wrong that black and indigenous people should pay for white people’s mistakes.
This is so unbelievably stupid that it's not even worth writing a tirade about.
Thursday, March 26, 2009
That Decoupling Feeling
From Bloomberg: China Industrial Profits Fall First Time on Record.
Chinese industrial companies’ profits dropped for the first time on record as the global recession cut demand for exports from the world’s third-largest economy.
Net income sank 37.3 percent in the first two months of 2009 from a year earlier to 219.1 billion yuan ($32 billion), the statistics bureau said today. Profits expanded 16.5 percent in the same period last year. Records began in February 2007.
You know,if you had asked any 19th-century economist, they would've told you that the fate of borrower and borrowee hung in tandem.
Only in this absurd 21st-century did we come up with the equally absurd notion known as "decoupling".
Now that Brazorussia-Chindia have "decoupled", how's that working out for them, huh?
Chinese industrial companies’ profits dropped for the first time on record as the global recession cut demand for exports from the world’s third-largest economy.
Net income sank 37.3 percent in the first two months of 2009 from a year earlier to 219.1 billion yuan ($32 billion), the statistics bureau said today. Profits expanded 16.5 percent in the same period last year. Records began in February 2007.
You know,if you had asked any 19th-century economist, they would've told you that the fate of borrower and borrowee hung in tandem.
Only in this absurd 21st-century did we come up with the equally absurd notion known as "decoupling".
Now that Brazorussia-Chindia have "decoupled", how's that working out for them, huh?
Wednesday, March 25, 2009
Unicorn Stories for Everyone!
From the San Diego Union Tribune: Housing construction remains low in county.
Borre Winckel, chief executive of the San Diego County Building Industry Association, said building might improve by year's end if the economy improves, foreclosures drop and builders sell off their existing inventory.
That's a lot of "if's" big-boy!
If there was a unicorn, and if the unicorn were to fly, and if the unicorn were to crap candy out of its ass while flying then I too would be able to collect the candy raining from the sky.
Borre Winckel, chief executive of the San Diego County Building Industry Association, said building might improve by year's end if the economy improves, foreclosures drop and builders sell off their existing inventory.
That's a lot of "if's" big-boy!
If there was a unicorn, and if the unicorn were to fly, and if the unicorn were to crap candy out of its ass while flying then I too would be able to collect the candy raining from the sky.
Lies, Damn Lies and Statistics
From the AP: Home prices post 6.3 pct annual decline in January.
A government report says U.S. home prices fell 6.3 percent in January from the same month last year.
The Federal Housing Finance Agency says prices, on a seasonally adjusted basis, rose 1.7 percent from December to January.
Home sales included in January's data were weighted toward areas that haven't borne as much of the brunt of the housing recession, the agency says.
Oh good! We thought you might be trying to manipulate the data or something. But nooooooooooo!!! You just weighted the data towards areas that didn't fall as much. Of course, that would make the data particularly useful.
FAIL!!!
A government report says U.S. home prices fell 6.3 percent in January from the same month last year.
The Federal Housing Finance Agency says prices, on a seasonally adjusted basis, rose 1.7 percent from December to January.
Home sales included in January's data were weighted toward areas that haven't borne as much of the brunt of the housing recession, the agency says.
Oh good! We thought you might be trying to manipulate the data or something. But nooooooooooo!!! You just weighted the data towards areas that didn't fall as much. Of course, that would make the data particularly useful.
FAIL!!!
Monday, March 23, 2009
The Japanese Example
Bloomberg reports: Japan Home Prices Slump to 24-Year Low as Recession Deepens.
Japanese residential land prices fell to a 24-year low as job losses and wage cuts discouraged homebuyers, while tighter credit markets choked off funding for property developers.
Residential land prices fell 3.2 percent in 2008 to the lowest since 1984 and average commercial land prices dropped 4.7 percent to a three-year low, the Ministry of Land, Infrastructure, Transport and Tourism said today in a report. Overall property prices declined 3.5 percent, erasing two years of gains that followed a 15-year slump.
Well, hello there! America-of-the-future!
Japanese residential land prices fell to a 24-year low as job losses and wage cuts discouraged homebuyers, while tighter credit markets choked off funding for property developers.
Residential land prices fell 3.2 percent in 2008 to the lowest since 1984 and average commercial land prices dropped 4.7 percent to a three-year low, the Ministry of Land, Infrastructure, Transport and Tourism said today in a report. Overall property prices declined 3.5 percent, erasing two years of gains that followed a 15-year slump.
Well, hello there! America-of-the-future!
Saturday, March 21, 2009
The Florida Death Spiral
The AP reports: New condo loan rules could hurt distressed areas.
Money is already tight at The Wilshire Condominium, and new lending rules threaten to make life even more difficult for it and other condos around the country.
Arthur Barr, a board member of the Wilshire homeowners association, estimates 30 percent of the owners in the 378-unit building in North Miami Beach are behind on their fees. That makes it difficult to pay for things like elevator repairs and gardening.
Now, Fannie Mae — the biggest player in the mortgage market — wants to ensure that if it's backing a loan for a condominium, the building is in good shape. If the building is brand new, Fannie Mae wants to be certain there are enough owners to pay for maintenance and preserve the value of the property.
Under the new regulations, Fannie Mae will reject any mortgage for a condo buyer if more than 15 percent of the other owners are delinquent on their association fees. What's more, Fannie Mae will only guarantee mortgages in new or newly converted condo developments if 70 percent of the units are sold or under contract.
They're toasted. They have, what? A fourteen-year supply of condos assuming "normal" growth.
Ooh, Florida! Ooh, Florida!
How fucked are you, good Florida!
Money is already tight at The Wilshire Condominium, and new lending rules threaten to make life even more difficult for it and other condos around the country.
Arthur Barr, a board member of the Wilshire homeowners association, estimates 30 percent of the owners in the 378-unit building in North Miami Beach are behind on their fees. That makes it difficult to pay for things like elevator repairs and gardening.
Now, Fannie Mae — the biggest player in the mortgage market — wants to ensure that if it's backing a loan for a condominium, the building is in good shape. If the building is brand new, Fannie Mae wants to be certain there are enough owners to pay for maintenance and preserve the value of the property.
Under the new regulations, Fannie Mae will reject any mortgage for a condo buyer if more than 15 percent of the other owners are delinquent on their association fees. What's more, Fannie Mae will only guarantee mortgages in new or newly converted condo developments if 70 percent of the units are sold or under contract.
They're toasted. They have, what? A fourteen-year supply of condos assuming "normal" growth.
Ooh, Florida! Ooh, Florida!
How fucked are you, good Florida!
Haircuts in Florida!
From the News Press: North Fort Myers country club on the auction block.
The old Lochmoor Country Club in North Fort Myers will be auctioned April 14 on the courthouse steps for more than $94 million - the biggest foreclosure in Lee County history, according to local real estate experts
The auction won't bring close to the $94 million, which consists of $79.1 million in loans plus interest and fees, said Fort Myers real estate broker Ed Bonkowski, who handled the Sheraton's sale in 1990.
Essentially, he said, the property is "a nondescript golf course and the water views" for homes that could be built there.
It probably would go for about $7 million, Bonkowski said.
So it will be auctioned for $94M but is likely to go for $7M. Chances are that anyone who is paying even that much is taking a hell of a risk because it's a freakin' golf course. If there's something that is disposable in this climate, it's a golf membership even if you're a golf fanatic (you can always play by paying cash.)
$94M to $7M.
Now that's a real fuckin' haircut!
The old Lochmoor Country Club in North Fort Myers will be auctioned April 14 on the courthouse steps for more than $94 million - the biggest foreclosure in Lee County history, according to local real estate experts
The auction won't bring close to the $94 million, which consists of $79.1 million in loans plus interest and fees, said Fort Myers real estate broker Ed Bonkowski, who handled the Sheraton's sale in 1990.
Essentially, he said, the property is "a nondescript golf course and the water views" for homes that could be built there.
It probably would go for about $7 million, Bonkowski said.
So it will be auctioned for $94M but is likely to go for $7M. Chances are that anyone who is paying even that much is taking a hell of a risk because it's a freakin' golf course. If there's something that is disposable in this climate, it's a golf membership even if you're a golf fanatic (you can always play by paying cash.)
$94M to $7M.
Now that's a real fuckin' haircut!
Friday, March 20, 2009
Hey there, Pizza Boy!
From ABC News: Down But Not Out: From Hedge Funds to Pizza Delivery.
For the first 45 years of Ken Karpman's life, everything was close to perfect.
He graduated from UCLA with a bachelor's degree and M.B.A., then got a high-paying job as an institutional equity sales trader. He married his dream girl, had two children and traveled the world on expensive vacations.
Over the span of Karpman's impressive 20-year career as a trader, he climbed the company ladder, reaching a salary of $750,000 a year.
Karpman was so confident in his good fortune and the strong economy that he left his job in 2005 to start his own hedge fund. To pay for the new business and their standard of living, Karpman quickly burned through $500,000 in savings and, like so many Americans, took a line of credit against his house.
After a lengthy and fruitless job search, the Karpmans were shocked to find themselves in financial dire straits, with zero savings, hundreds of thousands of dollars in debt and their home in foreclosure.
Desperate for quick cash, Karpman tried to find a job bartending but came up empty. Finally, he drove his Mercedes to Mike's Pizza & Deli Station in Clearwater and applied for a job. Mike Dodaro, the owner of the pizza shop, said he was shocked when he read his application but he offered him the job despite some reluctance to hire an over-qualified candidate.
Karpman's salary plummeted from six figures to $7.29 an hour -- plus tips -- but it's money that he's grateful to earn.
The Karpmans are now on food stamps and a tight budget.
As Karpman counts every penny he earns, he still hopes he can come back from the financial brink and reclaim a lifestyle he, like so many Americans, never imagined he could lose.
"I need a couple of wins," he said, "and I think that, hopefully, it'll mushroom up like it caved in."
And they still don't fuckin' get it! They think there will be another bubble to bail them out.
Captain of our fairy band,
Helena is here at hand,
And the youth, mistook by me,
Pleading for a lover's fee.
Shall we their fond pageant see?
Lord, what fools these mortals be!
For the first 45 years of Ken Karpman's life, everything was close to perfect.
He graduated from UCLA with a bachelor's degree and M.B.A., then got a high-paying job as an institutional equity sales trader. He married his dream girl, had two children and traveled the world on expensive vacations.
Over the span of Karpman's impressive 20-year career as a trader, he climbed the company ladder, reaching a salary of $750,000 a year.
Karpman was so confident in his good fortune and the strong economy that he left his job in 2005 to start his own hedge fund. To pay for the new business and their standard of living, Karpman quickly burned through $500,000 in savings and, like so many Americans, took a line of credit against his house.
After a lengthy and fruitless job search, the Karpmans were shocked to find themselves in financial dire straits, with zero savings, hundreds of thousands of dollars in debt and their home in foreclosure.
Desperate for quick cash, Karpman tried to find a job bartending but came up empty. Finally, he drove his Mercedes to Mike's Pizza & Deli Station in Clearwater and applied for a job. Mike Dodaro, the owner of the pizza shop, said he was shocked when he read his application but he offered him the job despite some reluctance to hire an over-qualified candidate.
Karpman's salary plummeted from six figures to $7.29 an hour -- plus tips -- but it's money that he's grateful to earn.
The Karpmans are now on food stamps and a tight budget.
As Karpman counts every penny he earns, he still hopes he can come back from the financial brink and reclaim a lifestyle he, like so many Americans, never imagined he could lose.
"I need a couple of wins," he said, "and I think that, hopefully, it'll mushroom up like it caved in."
And they still don't fuckin' get it! They think there will be another bubble to bail them out.
Captain of our fairy band,
Helena is here at hand,
And the youth, mistook by me,
Pleading for a lover's fee.
Shall we their fond pageant see?
Lord, what fools these mortals be!
The Ponzimonium Strikes Back!
Reuters reports: U.S. regulator probing "rampant Ponzimonium".
Hundreds of people in the United States are under investigation for financial scams, many involving Ponzi schemes, a U.S. regulator said, calling the phenomenon "rampant Ponzimonium."
While none are as mammoth as disgraced financier Bernard Madoff's $65 billion fraud, multimillion-dollar "mini Madoffs" are proliferating from New York to Hawaii, the head of the Commodity Futures Trading Commission said.
So far this year, the agency has uncovered 19 Ponzi schemes, which depend on an influx of new capital instead of investment profits to pay existing investors.
That compares with just 13 for all of 2008.
Chilton called the problem "rampant Ponzimonium" and "Ponzipalooza" -- a play on the word "Lollapalooza," an American music festival featuring a long list of acts.
You didn't exactly expect the greatest Credit Orgy in World History to not end like this, did you?
Every bubble ends with the revelation of a massive number of frauds. It's how the game works.
Hundreds of people in the United States are under investigation for financial scams, many involving Ponzi schemes, a U.S. regulator said, calling the phenomenon "rampant Ponzimonium."
While none are as mammoth as disgraced financier Bernard Madoff's $65 billion fraud, multimillion-dollar "mini Madoffs" are proliferating from New York to Hawaii, the head of the Commodity Futures Trading Commission said.
So far this year, the agency has uncovered 19 Ponzi schemes, which depend on an influx of new capital instead of investment profits to pay existing investors.
That compares with just 13 for all of 2008.
Chilton called the problem "rampant Ponzimonium" and "Ponzipalooza" -- a play on the word "Lollapalooza," an American music festival featuring a long list of acts.
You didn't exactly expect the greatest Credit Orgy in World History to not end like this, did you?
Every bubble ends with the revelation of a massive number of frauds. It's how the game works.
California Failing!
From CBS Marketwatch: Lawmaker suggests San Quentin sale.
A California state senator is calling for San Quentin State Prison to be closed and the land auctioned to private developers.
State Sen. Jeff Denham, R-Merced, said the 158-year-old prison was built on what was once a remote peninsula on San Francisco Bay but the property is now surrounded by some of the most prized real estate in the region.
Denham, who has previously introduced legislation to sell the prison without success, estimated the property could sell for as much as $2 billion.
Now, we could go all nucular on the Senator's ass with fancy analysis and witty rhetoric but let's just stick to the basic numbers.
San Quentin is 432 acres.
Price = $2B/432 = $4.6M
That's what the developer would have to pay. So the houses would have to be much higher. The land is nice but not that nice. Plus, where are the incomes to support that?
And never mind all the cleanup costs, moving the inmates, building a new facility, etc., etc., etc.
See, senator, one quick long division shows the smoke you're blowing up everyone's ass.
Long division, the marvel of financial wizardry!
A California state senator is calling for San Quentin State Prison to be closed and the land auctioned to private developers.
State Sen. Jeff Denham, R-Merced, said the 158-year-old prison was built on what was once a remote peninsula on San Francisco Bay but the property is now surrounded by some of the most prized real estate in the region.
Denham, who has previously introduced legislation to sell the prison without success, estimated the property could sell for as much as $2 billion.
Now, we could go all nucular on the Senator's ass with fancy analysis and witty rhetoric but let's just stick to the basic numbers.
San Quentin is 432 acres.
Price = $2B/432 = $4.6M
That's what the developer would have to pay. So the houses would have to be much higher. The land is nice but not that nice. Plus, where are the incomes to support that?
And never mind all the cleanup costs, moving the inmates, building a new facility, etc., etc., etc.
See, senator, one quick long division shows the smoke you're blowing up everyone's ass.
Long division, the marvel of financial wizardry!
Tuesday, March 17, 2009
Jingle, Jingle, it's Jingle Mail!
The Detroit News reports: Detroit councilman Kenyatta, candidate for mayor, defaults on mortgage.
Kwame Kenyatta, a city councilman and newly announced mayoral candidate, and his wife have handed the bank the keys to their North Rosedale Park house and walked away from the mortgage.
The councilman said the couple moved out in December and decided to default on their mortgage after unsuccessfully seeking a solution with a mortgage company. He said they considered selling the house at a loss and turning over the deed to the mortgage company in exchange for forgiving their debt. Kenyatta said the house goes up for a foreclosure sale in April.
Kenyatta and his wife walked away from a monthly tax, insurance and mortgage payment of $2,600, one year before the interest would jump to 11.625 percent from 6.625 percent and the payment would hit $3,600. Kenyatta said that even though his monthly payment has remained the same for years, he felt it made no sense to remain in a house whose value had plummeted to $100,000.
That whooshing sound, that's deflation!
Kwame Kenyatta, a city councilman and newly announced mayoral candidate, and his wife have handed the bank the keys to their North Rosedale Park house and walked away from the mortgage.
The councilman said the couple moved out in December and decided to default on their mortgage after unsuccessfully seeking a solution with a mortgage company. He said they considered selling the house at a loss and turning over the deed to the mortgage company in exchange for forgiving their debt. Kenyatta said the house goes up for a foreclosure sale in April.
Kenyatta and his wife walked away from a monthly tax, insurance and mortgage payment of $2,600, one year before the interest would jump to 11.625 percent from 6.625 percent and the payment would hit $3,600. Kenyatta said that even though his monthly payment has remained the same for years, he felt it made no sense to remain in a house whose value had plummeted to $100,000.
That whooshing sound, that's deflation!
Thursday, March 12, 2009
God Bless America!
US News & World Report reports: Half of Americans Are Two Paychecks Away from Hardship.
Without a steady paycheck, 50% of Americans say they could not meet their financial obligations for more than a month — and, of that, a disturbing 28% couldn’t support themselves for more than two weeks of unemployment.
(Source: US News & World Report.)
Without a steady paycheck, 50% of Americans say they could not meet their financial obligations for more than a month — and, of that, a disturbing 28% couldn’t support themselves for more than two weeks of unemployment.
(Source: US News & World Report.)
Wednesday, March 11, 2009
Slumdog Half-Millionaire
From CNN: Millions are no longer millionaires.
The financial crisis has weighed heavily on American households, and millionaires are no exception, according to a report released Wednesday.
The number of American households with a net worth of $1 million or more, excluding the value of their primary residence, fell 27% to 6.7 million in 2008 from an all-time high of 9.2 million the year before, according to a report from market research firm Spectrem Group.
Affluent households, defined as those with a net worth of $500,000 or more, declined 28% to 11.3 million from 15.7 million.
Even the very rich have not been immune. Households worth $5 million or more, excluding primary residence, fell 28% to 840,000 last year from 1.16 million households in 2007.
"The culprit is not just the stock market, which we all know has dropped precipitously, but broad declines in the asset classes available to the nation's wealthiest investors," Walper said.
Er, the culprit is loose credit which inflated ALL asset classes, dumbass!
The financial crisis has weighed heavily on American households, and millionaires are no exception, according to a report released Wednesday.
The number of American households with a net worth of $1 million or more, excluding the value of their primary residence, fell 27% to 6.7 million in 2008 from an all-time high of 9.2 million the year before, according to a report from market research firm Spectrem Group.
Affluent households, defined as those with a net worth of $500,000 or more, declined 28% to 11.3 million from 15.7 million.
Even the very rich have not been immune. Households worth $5 million or more, excluding primary residence, fell 28% to 840,000 last year from 1.16 million households in 2007.
"The culprit is not just the stock market, which we all know has dropped precipitously, but broad declines in the asset classes available to the nation's wealthiest investors," Walper said.
Er, the culprit is loose credit which inflated ALL asset classes, dumbass!
Bert and Ernie File for Unemployment
Bloomberg reports: ‘Sesame Street’ Producer to Reduce Workforce by 20%.
Sesame Workshop, the nonprofit organization that produces “Sesame Street,” is cutting 20 percent of its workforce because of the recession.
“After careful review, we have concluded that we will have to operate with fewer resources in order to achieve our strategic priorities,” New York-based Sesame Workshop said today in an e-mailed statement. The company said it eliminated 67 of 355 staff positions.
“Sesame Street,” featuring characters such as Big Bird and Oscar the Grouch, has been on the air since 1969 and is the most widely viewed children’s TV show in the world, according to the producers. Three months ago, Sesame Workshop Chief Executive Officer Gary Knell told Bloomberg Radio that while the company was “able to withstand” recessions, it was not “immune.”
Sesame Workshop, the nonprofit organization that produces “Sesame Street,” is cutting 20 percent of its workforce because of the recession.
“After careful review, we have concluded that we will have to operate with fewer resources in order to achieve our strategic priorities,” New York-based Sesame Workshop said today in an e-mailed statement. The company said it eliminated 67 of 355 staff positions.
“Sesame Street,” featuring characters such as Big Bird and Oscar the Grouch, has been on the air since 1969 and is the most widely viewed children’s TV show in the world, according to the producers. Three months ago, Sesame Workshop Chief Executive Officer Gary Knell told Bloomberg Radio that while the company was “able to withstand” recessions, it was not “immune.”
Tuesday, March 10, 2009
Boom Boom, Bust Bust!
Alternet.org reports: Is the Future Going Down the Drain? Baby Boomers Going Bust.
Millions of baby boomers born into the dawn of the most spectacular economic expansion in history are being forced to re-imagine their retirement futures. Few news outlets have failed to seize upon the low-hanging pun: the boomers have gone bust.
Among the adjustments forced by the new circumstances, perhaps the cruelest twist for many boomers is the need to join younger generations in the roommate queue. The housing crash has forced record numbers of late-middle age homeowners to take in boarders or risk becoming boarders themselves. From California to Vermont, home-share organizations founded to assist the elderly are scrambling to meet the demands of newly bust boomers.
The extent to which boomer wealth was based on home values is highlighted by a new report from the Center for Economic and Policy Research, entitled "The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble." The report details how the collapse has left the majority of those around retirement-age almost completely reliant on entitlements. The net worth of median households in the 45 to 54 age bracket has dropped by more than 45 percent since 2004, to just over $80,000. Households headed by those aged 55 to 64, meanwhile, have lost 38 percent of net wealth.
“The collapse of the housing bubble has already destroyed almost $6 trillion dollars in housing wealth for homeowners," says report co-author Dean Baker, who testified last month before the Senate Special Committee on Aging. “This is compounded by the recent collapse of the stock market. The result is that many baby boomers will only have entitlements to rely on in their retirement.”
Make that entitlements, roommates, and each other.
As more and more boomers scale down their retirement plans and consider alternative living arrangements, it's worth asking: Is shared housing such a bad thing for aging boomers? Does a return to the Communal idea, borne of economic necessity, also have emotional, social, and environmental benefits? Why wait for the retirement home or hospice to live with other people? With the nation full of worthless, ridiculously large, and mostly empty houses, why not fill them with the newly penurious and like-minded boomers in need of housing?
Better yet: why not abandon these suburban houses altogether, and find more appropriate housing arrangements closer to urban cores, or build tightly knit communities on cheap rural land?
Let me first remind you about: Blinding Flash of the Obvious.
Every one of the seven points is coming true for the Boomers. They are pretty much screwed.
Millions of baby boomers born into the dawn of the most spectacular economic expansion in history are being forced to re-imagine their retirement futures. Few news outlets have failed to seize upon the low-hanging pun: the boomers have gone bust.
Among the adjustments forced by the new circumstances, perhaps the cruelest twist for many boomers is the need to join younger generations in the roommate queue. The housing crash has forced record numbers of late-middle age homeowners to take in boarders or risk becoming boarders themselves. From California to Vermont, home-share organizations founded to assist the elderly are scrambling to meet the demands of newly bust boomers.
The extent to which boomer wealth was based on home values is highlighted by a new report from the Center for Economic and Policy Research, entitled "The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble." The report details how the collapse has left the majority of those around retirement-age almost completely reliant on entitlements. The net worth of median households in the 45 to 54 age bracket has dropped by more than 45 percent since 2004, to just over $80,000. Households headed by those aged 55 to 64, meanwhile, have lost 38 percent of net wealth.
“The collapse of the housing bubble has already destroyed almost $6 trillion dollars in housing wealth for homeowners," says report co-author Dean Baker, who testified last month before the Senate Special Committee on Aging. “This is compounded by the recent collapse of the stock market. The result is that many baby boomers will only have entitlements to rely on in their retirement.”
Make that entitlements, roommates, and each other.
As more and more boomers scale down their retirement plans and consider alternative living arrangements, it's worth asking: Is shared housing such a bad thing for aging boomers? Does a return to the Communal idea, borne of economic necessity, also have emotional, social, and environmental benefits? Why wait for the retirement home or hospice to live with other people? With the nation full of worthless, ridiculously large, and mostly empty houses, why not fill them with the newly penurious and like-minded boomers in need of housing?
Better yet: why not abandon these suburban houses altogether, and find more appropriate housing arrangements closer to urban cores, or build tightly knit communities on cheap rural land?
Let me first remind you about: Blinding Flash of the Obvious.
Every one of the seven points is coming true for the Boomers. They are pretty much screwed.
In Which Turbo-Tax Timmay Tries Learning Econ 101
The New York Post reports: FOR SALE SIGN AT GEITHNER'S.
He's been tapped to lead the country through a massive financial crisis, but Timothy Geithner will be lucky to break even on the sale of his own New York house.
The newly minted treasury secretary and his wife, Carole, have put their five-bedroom, 4.5-bathroom West chester home on the market for $1.635 million - just a tad north of the $1.602 million they paid for it in 2004.
The Geithners want to unload the stately Larchmont Tudor and move to Washington.
The time to sell is when everyone wants to buy not after the fact.
Oh, and you lower the price until it sells.
Louche-y McDouche is gonna learn some basic lessons in finance.
He's been tapped to lead the country through a massive financial crisis, but Timothy Geithner will be lucky to break even on the sale of his own New York house.
The newly minted treasury secretary and his wife, Carole, have put their five-bedroom, 4.5-bathroom West chester home on the market for $1.635 million - just a tad north of the $1.602 million they paid for it in 2004.
The Geithners want to unload the stately Larchmont Tudor and move to Washington.
The time to sell is when everyone wants to buy not after the fact.
Oh, and you lower the price until it sells.
Louche-y McDouche is gonna learn some basic lessons in finance.
Sunday, March 08, 2009
Trump that!
The AP reports: Trump venture folds, leaving buyers strapped.
Stephen and Linda Drake cast aside concerns about owning property in Mexico because they believed in Donald Trump.
The Southern California couple paid $250,000 down payment on a 19th-floor oceanfront condo in Trump Ocean Resort Baja in 2006 before the first construction crew arrived.
But admiration for the celebrity developer and star of "The Apprentice" has now turned into anger and disbelief as Trump's luxury hotel-condo plan collapsed, leaving little more than a hole in the ground and investors out of their deposits, which totaled $32.2 million.
"I can't even stand to see Trump's face on TV," says Linda Drake, a psychologist, whose husband is a commercial airline pilot and financial adviser.
Investors were told last month their money was spent and they won't get a penny back. A single mother in suburban Los Angeles lost $200,000 and won't be able to send her sons to private universities. A Los Angeles-area businessman lost a deposit of more than $1 million on four Trump units, including two penthouses.
Trump and his children heavily promoted the northern tip of Mexico's Baja California coast. He sold 188 units for $122 million the first day they went on a sale at a lavish event in a downtown San Diego hotel in December 2006.
Trump's condos went on sale when Southern California home prices were near their peak, offering a lower-cost alternative in the Mexican border city of Tijuana. The Trump Organization teamed up with Los Angeles developer Irongate Capital Partners LLC, the partnership behind Trump International Hotel & Tower Waikiki in Honolulu.
Guadalupe Mendoza, 47, paid a $200,000 deposit at the first-day sale in San Diego, refinancing her Downey home and getting a loan from a sister. She watched a giant screen show units getting snapped up.
After signing papers, buyers were ushered to a buffet of sirloin tip and fish tacos. Cheers erupted in the hotel ballroom for each new owner.
"I did it in less than a minute," said Mendoza, an administrator in the Los Angeles County Office of Education. "I remember my head was hurting and thinking, 'My God, what was that?' I was thinking maybe I should have asked questions. It was like a roller-coaster ride."
The December letter says Trump was not an investor, but buyers said they were sold on his imprimatur.
BWAHAHAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHHHHHHHHHH!!!
Stephen and Linda Drake cast aside concerns about owning property in Mexico because they believed in Donald Trump.
The Southern California couple paid $250,000 down payment on a 19th-floor oceanfront condo in Trump Ocean Resort Baja in 2006 before the first construction crew arrived.
But admiration for the celebrity developer and star of "The Apprentice" has now turned into anger and disbelief as Trump's luxury hotel-condo plan collapsed, leaving little more than a hole in the ground and investors out of their deposits, which totaled $32.2 million.
"I can't even stand to see Trump's face on TV," says Linda Drake, a psychologist, whose husband is a commercial airline pilot and financial adviser.
Investors were told last month their money was spent and they won't get a penny back. A single mother in suburban Los Angeles lost $200,000 and won't be able to send her sons to private universities. A Los Angeles-area businessman lost a deposit of more than $1 million on four Trump units, including two penthouses.
Trump and his children heavily promoted the northern tip of Mexico's Baja California coast. He sold 188 units for $122 million the first day they went on a sale at a lavish event in a downtown San Diego hotel in December 2006.
Trump's condos went on sale when Southern California home prices were near their peak, offering a lower-cost alternative in the Mexican border city of Tijuana. The Trump Organization teamed up with Los Angeles developer Irongate Capital Partners LLC, the partnership behind Trump International Hotel & Tower Waikiki in Honolulu.
Guadalupe Mendoza, 47, paid a $200,000 deposit at the first-day sale in San Diego, refinancing her Downey home and getting a loan from a sister. She watched a giant screen show units getting snapped up.
After signing papers, buyers were ushered to a buffet of sirloin tip and fish tacos. Cheers erupted in the hotel ballroom for each new owner.
"I did it in less than a minute," said Mendoza, an administrator in the Los Angeles County Office of Education. "I remember my head was hurting and thinking, 'My God, what was that?' I was thinking maybe I should have asked questions. It was like a roller-coaster ride."
The December letter says Trump was not an investor, but buyers said they were sold on his imprimatur.
BWAHAHAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHHHHHHHHHH!!!
Saturday, March 07, 2009
The Jobs Report
The Canton Review reports: Stark’s hottest job: Janitor.
Nearly 700 people have applied for a single job as a school custodian.
Perry Local Schools have an open position — full time with benefits — at Edison Junior High School after its afternoon janitor retired. It pays $15 to $16 an hour.
The job opened last Saturday, and district officials say the stack of applications continues to expand daily.
Nearly 700 people have applied for a single job as a school custodian.
Perry Local Schools have an open position — full time with benefits — at Edison Junior High School after its afternoon janitor retired. It pays $15 to $16 an hour.
The job opened last Saturday, and district officials say the stack of applications continues to expand daily.
Friday, March 06, 2009
The Pain Factor
U-6 is the broadest measure of unemployment. This is what it feels like on the street, and this is how it was measured in 1930. U-3 is completely bogus. As if the rest of the people don't have to eat!By that measure, we are within striking distance of GD1 (which topped out around 20%!) In fact, most rust-belt cities have already exceeded that number - Detroit being the prime example soon to be joined by such luminaries as Cleveland, Rochester, Buffalo, Phoenix, etc.
Please note that both numbers are accelerating not slowing.
This graph shows how many people are searching for part-time work for "economic reasons" (Ed: as opposed to what?)The EE would like to take this opportunity to make a point about statistics. He hates the second graph because it doesn't take into account population growth. You really need to adjust by either (a) number of adults, or (b) number of households (economic units.)
That having been said, the pain is obvious.
Thursday, March 05, 2009
The Four Most Expensive Words in the English Language
Bloomberg reports: Rolls-Royce, Ferrari Suffer as Slump Reaches New Rich.
Rolls-Royce, Lamborghini and rival luxury carmakers that just five months ago said they’d buck the recession are finding they’re not immune.
The new millionaires of Asia and the Middle East have curbed spending, executives from companies including Rolls and Ferrari said in interviews at the Geneva Motor Show this week, torpedoing a market they’d counted on to spur growth after the banking crisis eroded orders in Europe and the U.S.
“Conventional wisdom has it that premium manufacturers do better in a downturn because people with more money can weather the storm,” said Michael Tyndall, an automotive specialist with Nomura in London. “This time it’s different.”
Errr... that's not conventional wisdom.
That would be that luxury goods do really badly in a downturn for obvious reasons. Especially mass luxury like the car makers or jewelry or "upscale" candy.
And, of course, the justification: "This time it's different."
The most expensive words in the English language!
Rolls-Royce, Lamborghini and rival luxury carmakers that just five months ago said they’d buck the recession are finding they’re not immune.
The new millionaires of Asia and the Middle East have curbed spending, executives from companies including Rolls and Ferrari said in interviews at the Geneva Motor Show this week, torpedoing a market they’d counted on to spur growth after the banking crisis eroded orders in Europe and the U.S.
“Conventional wisdom has it that premium manufacturers do better in a downturn because people with more money can weather the storm,” said Michael Tyndall, an automotive specialist with Nomura in London. “This time it’s different.”
Errr... that's not conventional wisdom.
That would be that luxury goods do really badly in a downturn for obvious reasons. Especially mass luxury like the car makers or jewelry or "upscale" candy.
And, of course, the justification: "This time it's different."
The most expensive words in the English language!
That Sinking Feeling
Yahoo! reports: 12 pct. are behind on mortgage or in foreclosure.
An industry survey shows a record 5.4 million American homeowners with a mortgage, or nearly 12 percent, were either behind on their payments or in foreclosure at the end of last year.
The sharpest increases in loans 90-days past due were in Louisiana, New York, Georgia, Texas and Mississippi, reflecting a spreading recession and massive job losses nationwide
The report also showed the delinquency rates for fixed-rate mortgages climbed in the fourth quarter, another sign that layoffs are taking a toll on homeowners.
An industry survey shows a record 5.4 million American homeowners with a mortgage, or nearly 12 percent, were either behind on their payments or in foreclosure at the end of last year.
The sharpest increases in loans 90-days past due were in Louisiana, New York, Georgia, Texas and Mississippi, reflecting a spreading recession and massive job losses nationwide
The report also showed the delinquency rates for fixed-rate mortgages climbed in the fourth quarter, another sign that layoffs are taking a toll on homeowners.
Wednesday, March 04, 2009
The Candy Crappin' Unicorn™'s "Plan"
The Financial Times reports: Obama home rescue plan welcomed.
The US Treasury on Wednesday unveiled the details of Barack Obama’s housing rescue plan, which will pay mortgage servicers to modify troubled home loans while reducing borrowers’ interest rates to as low as 2 per cent.
In an effort to ensure that a relaxation of mortgage terms is only given to borrowers who need them, those hoping to qualify for changes will have to fully document their income and sign an affidavit declaring financial hardship.
Servicers, which collect home loan payments and work with troubled borrowers, will have to conduct detailed assessments of a borrower’s ability to pay and adhere to strict reporting requirements in order to collect incentive payments from the Treasury. Fannie Mae and Freddie Mac, the government-run mortgage financiers, will administer the programme to ensure that servicers only receive payments for successful mortgage modifications.
This is one of the most cynical ploys the EE has ever seen.
Even if these people could pay, they are far better off just handing the keys back to the bank and buying a place in the future. No amount of "interest-rate differential" for five years can make up for the fundamental fact that prices are collapsing.
In fact, they are far better off just walking away, and not looking back.
What this really is is a plan to keep the people who are already in "financial hardship" in hock to the bank. Simply put, they are mortgage slaves who are toiling away month after month to keep their bank in solvency. If they just walked away, they would be able to rent for less, and have a lot more disposable income to boot which they could save to buy a house in the future.
If this be liberalism from the Candy-Crappin' Unicorn™ then the EE has no fuckin' clue what the "right-wing" really looks like.
This is about as illiberal a plan as it gets, and since the EE is really a pragmatic "liberal" at heart, this really pisses him off!
The US Treasury on Wednesday unveiled the details of Barack Obama’s housing rescue plan, which will pay mortgage servicers to modify troubled home loans while reducing borrowers’ interest rates to as low as 2 per cent.
In an effort to ensure that a relaxation of mortgage terms is only given to borrowers who need them, those hoping to qualify for changes will have to fully document their income and sign an affidavit declaring financial hardship.
Servicers, which collect home loan payments and work with troubled borrowers, will have to conduct detailed assessments of a borrower’s ability to pay and adhere to strict reporting requirements in order to collect incentive payments from the Treasury. Fannie Mae and Freddie Mac, the government-run mortgage financiers, will administer the programme to ensure that servicers only receive payments for successful mortgage modifications.
This is one of the most cynical ploys the EE has ever seen.
Even if these people could pay, they are far better off just handing the keys back to the bank and buying a place in the future. No amount of "interest-rate differential" for five years can make up for the fundamental fact that prices are collapsing.
In fact, they are far better off just walking away, and not looking back.
What this really is is a plan to keep the people who are already in "financial hardship" in hock to the bank. Simply put, they are mortgage slaves who are toiling away month after month to keep their bank in solvency. If they just walked away, they would be able to rent for less, and have a lot more disposable income to boot which they could save to buy a house in the future.
If this be liberalism from the Candy-Crappin' Unicorn™ then the EE has no fuckin' clue what the "right-wing" really looks like.
This is about as illiberal a plan as it gets, and since the EE is really a pragmatic "liberal" at heart, this really pisses him off!
Tuesday, March 03, 2009
Dog Chasing Tail Saga
From the New York Times: Fed Chief Vows to Use Every Tool to Stem Financial Crisis.
While the United States economy is likely to worsen significantly over the next year, the Federal Reserve is “committed to using all available tools” to stanch the financial crisis and unfreeze credit markets, the Fed chairman, Ben S. Bernanke, told the Senate Banking Committee on Tuesday.
“If actions taken by the administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability — and only if that is the case, in my view — there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,” Mr. Bernanke said.
So if it succeeds, it will succeed; and if it fails, it will fail.
It must be glorious to have a such a knack for clarity and concision!
While the United States economy is likely to worsen significantly over the next year, the Federal Reserve is “committed to using all available tools” to stanch the financial crisis and unfreeze credit markets, the Fed chairman, Ben S. Bernanke, told the Senate Banking Committee on Tuesday.
“If actions taken by the administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability — and only if that is the case, in my view — there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,” Mr. Bernanke said.
So if it succeeds, it will succeed; and if it fails, it will fail.
It must be glorious to have a such a knack for clarity and concision!
Sunday, March 01, 2009
The Hungarian Horntail
BBC reports: Hungarians feel force of economic storm.
Everyone in Hungary seems to be crying out for help.
Where is the money to come from now that the easy credit that fuelled Hungary's good times has disappeared?
German and Austrian banks are nervously eyeing their indebted Hungarian subsidiaries.
When easy capital swirled around the world, the governments and citizens of central and eastern Europe were a fine sales opportunity.
Now, things are very different. Hungary has been left with a towering debt to GDP ratio.
Borrowing its way out of this situation is impossible.
And its debt burden has made international exchanges worry about - and heavily sell - the national currency, the forint.
Which wouldn't be the end of the world - a cheap currency can boost exports - but for the fact that Hungary has an awful lot of of foreign currency loans to pay back.
Everyone - including the former central bank governor - seems to have a mortgage in Swiss francs.
And as the value of the forint has fallen, day after day, so the cost of a Swiss franc-backed mortgage has risen.
All this has left Janos Keller, 51, high and dry.
His day job as a restaurant maintenance worker was never going to make him rich.
Nor does his hobby of building and repairing stereo equipment; the small desk in his very small apartment in a block off one of Budapest's bigger highways is littered with spare parts and soldering equipment.
His monthly mortgage bills - a 100% mortgage in Swiss francs - have more than tripled since he started repayment at the height of the forint's strength back in the summer of 2008.
The bill is greater than his entire post tax monthly salary.
Didn't he know? Wasn't he warned? His reply is a sad, self deprecating monotone:
"I'm not an expert on these things. I think I wasn't warned and informed well enough by the bank."
Next up: Polish sausage. Mmmmm, mmmmm, you know you want some!
Everyone in Hungary seems to be crying out for help.
Where is the money to come from now that the easy credit that fuelled Hungary's good times has disappeared?
German and Austrian banks are nervously eyeing their indebted Hungarian subsidiaries.
When easy capital swirled around the world, the governments and citizens of central and eastern Europe were a fine sales opportunity.
Now, things are very different. Hungary has been left with a towering debt to GDP ratio.
Borrowing its way out of this situation is impossible.
And its debt burden has made international exchanges worry about - and heavily sell - the national currency, the forint.
Which wouldn't be the end of the world - a cheap currency can boost exports - but for the fact that Hungary has an awful lot of of foreign currency loans to pay back.
Everyone - including the former central bank governor - seems to have a mortgage in Swiss francs.
And as the value of the forint has fallen, day after day, so the cost of a Swiss franc-backed mortgage has risen.
All this has left Janos Keller, 51, high and dry.
His day job as a restaurant maintenance worker was never going to make him rich.
Nor does his hobby of building and repairing stereo equipment; the small desk in his very small apartment in a block off one of Budapest's bigger highways is littered with spare parts and soldering equipment.
His monthly mortgage bills - a 100% mortgage in Swiss francs - have more than tripled since he started repayment at the height of the forint's strength back in the summer of 2008.
The bill is greater than his entire post tax monthly salary.
Didn't he know? Wasn't he warned? His reply is a sad, self deprecating monotone:
"I'm not an expert on these things. I think I wasn't warned and informed well enough by the bank."
Next up: Polish sausage. Mmmmm, mmmmm, you know you want some!
A Vision of the Future
From the Chicago Tribune: Detroit's outlook falls along with home prices.
It may be tough to get financing for a new car these days, but in Detroit you can buy a house with a credit card.
The median price of a home sold in Detroit in December was $7,500, according to Realcomp, a listing service.
Not $75,000. Remove a zero—it's seven thousand five hundred dollars, substantially less than the lowest-price car on the new-car market.
Among the many dispiriting numbers that bleakly depict the decrepitude of this onetime industrial behemoth, the steep slide of housing values helps define the daunting challenge to anyone who wants to lead this shrinking, poverty-pocked city of about 800,000 people.
Detroit, which has lost half its population in the past 50 years, is deceptively large, covering 139 square miles. Manhattan, San Francisco and Boston could, as a group, fit inside the city's boundaries. There is no major grocery chain in the city, and only two movie theaters. Much of the neighborhood economy revolves around rib joints, hot dog stands and liquor stores.
The problem is more than a $300 million budget shortfall, said John Mogk, a professor at Wayne State University Law School.
"A thousand people are leaving the city every month," Mogk said, "and the city does not have the financial resources and the economic base to solve its own problems."
This is pretty much the future of Cleveland and all the remaining second-tier Rust Belt cities.
It may be tough to get financing for a new car these days, but in Detroit you can buy a house with a credit card.
The median price of a home sold in Detroit in December was $7,500, according to Realcomp, a listing service.
Not $75,000. Remove a zero—it's seven thousand five hundred dollars, substantially less than the lowest-price car on the new-car market.
Among the many dispiriting numbers that bleakly depict the decrepitude of this onetime industrial behemoth, the steep slide of housing values helps define the daunting challenge to anyone who wants to lead this shrinking, poverty-pocked city of about 800,000 people.
Detroit, which has lost half its population in the past 50 years, is deceptively large, covering 139 square miles. Manhattan, San Francisco and Boston could, as a group, fit inside the city's boundaries. There is no major grocery chain in the city, and only two movie theaters. Much of the neighborhood economy revolves around rib joints, hot dog stands and liquor stores.
The problem is more than a $300 million budget shortfall, said John Mogk, a professor at Wayne State University Law School.
"A thousand people are leaving the city every month," Mogk said, "and the city does not have the financial resources and the economic base to solve its own problems."
This is pretty much the future of Cleveland and all the remaining second-tier Rust Belt cities.
Saturday, February 28, 2009
Going for the Gold
From the LA Times: Beijing's Olympic building boom becomes a bust.
Reporting from Beijing -- "Empty," says Jack Rodman, an expert in distressed real estate, as he points from the window of his 40th-floor office toward a silver-skinned prism rising out of the Beijing skyline.
"Beautiful building, but not a single tenant.
Beijing went through a building boom before the 2008 Summer Olympics that filled a staid communist capital with angular architectural feats that grace the covers of glossy design magazines.
Now, six months after the Games ended, the city continues to dazzle by night, with neon and floodlights dancing across the skyline. By day, though, it is obvious that many are "see-through" buildings, to use the term coined during the Texas real estate bust of the 1980s.
By Rodman's calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn't include huge projects developed by the government. He says 100 million square feet of office space is vacant -- a 14-year supply if it filled up at the same rate as in the best years, 2004 through '06, when about 7 million square feet a year was leased.
More capacity built just in 2006 than all the office space in Manhattan. Anybody see the problem?
Naturally, it goes without saying that there banking sector is kaput too.
Decouple that, bitches!
Reporting from Beijing -- "Empty," says Jack Rodman, an expert in distressed real estate, as he points from the window of his 40th-floor office toward a silver-skinned prism rising out of the Beijing skyline.
"Beautiful building, but not a single tenant.
Beijing went through a building boom before the 2008 Summer Olympics that filled a staid communist capital with angular architectural feats that grace the covers of glossy design magazines.
Now, six months after the Games ended, the city continues to dazzle by night, with neon and floodlights dancing across the skyline. By day, though, it is obvious that many are "see-through" buildings, to use the term coined during the Texas real estate bust of the 1980s.
By Rodman's calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn't include huge projects developed by the government. He says 100 million square feet of office space is vacant -- a 14-year supply if it filled up at the same rate as in the best years, 2004 through '06, when about 7 million square feet a year was leased.
More capacity built just in 2006 than all the office space in Manhattan. Anybody see the problem?
Naturally, it goes without saying that there banking sector is kaput too.
Decouple that, bitches!
Friday, February 27, 2009
Baltic Blowout
CBS Marketwatch: New Latvian prime minister faces economic crisis
President Valdis Zatlers named Valdis Dombrovskis as prime minister and asked him to form a new government, according to media reports on Thursday. Dombrovskis, a 37-year-old former finance minister, is from the centre-right party, New Era.
Following his nomination, Dombrovskis said that Latvia was "on the verge of bankruptcy" and would need to cut the budget by at least $1.27 billion or risk financial collapse, the BBC reported.
President Valdis Zatlers named Valdis Dombrovskis as prime minister and asked him to form a new government, according to media reports on Thursday. Dombrovskis, a 37-year-old former finance minister, is from the centre-right party, New Era.
Following his nomination, Dombrovskis said that Latvia was "on the verge of bankruptcy" and would need to cut the budget by at least $1.27 billion or risk financial collapse, the BBC reported.
Junky Punky Girlz!!!
The Telegraph reports: Moody's predicts default rate will exceed peaks hit in Great Depression.
In what will be seen by many as die-cast confirmation that the world economy is plummeting towards an economic and corporate implosion of unprecedented proportions, Moody's said it anticipated a tidal wave of defaults was approaching.
It said that in the coming months more than 15pc of speculative-grade bonds and loans - all but the most highly-rated - would default on their debts.
This peak is even higher than the peak reached in 1933, when bank after bank throughout America was collapsing, taking hoards of other companies with them. Back then, the default rate peaked at 15.4pc; moreover these companies were former investment grade issuers regarded as more reliable credit prospects than their contemporary counterparts.
Not that the EE would listen to Moody's, who are like the cheerleaders of this absurd credit boom, but it should be sobering to anyone willing to wade into the minefield that are corporate bonds particularly the junky punky ones.
Keep your powder dry. They can't bail out everyone.
In what will be seen by many as die-cast confirmation that the world economy is plummeting towards an economic and corporate implosion of unprecedented proportions, Moody's said it anticipated a tidal wave of defaults was approaching.
It said that in the coming months more than 15pc of speculative-grade bonds and loans - all but the most highly-rated - would default on their debts.
This peak is even higher than the peak reached in 1933, when bank after bank throughout America was collapsing, taking hoards of other companies with them. Back then, the default rate peaked at 15.4pc; moreover these companies were former investment grade issuers regarded as more reliable credit prospects than their contemporary counterparts.
Not that the EE would listen to Moody's, who are like the cheerleaders of this absurd credit boom, but it should be sobering to anyone willing to wade into the minefield that are corporate bonds particularly the junky punky ones.
Keep your powder dry. They can't bail out everyone.
Peeing on the Electric Fence
The AP reports: Ryanair could make passengers pay for toilets.
Is a toilet an optional extra when you're at 30,000 feet? Ryanair boss Michael O'Leary seems to think so — as his no-frills carrier plumbs new depths by thinking of charging customers to use the aircraft loo.
As always, O'Leary suggested a separate toilet free would lower ticket costs and make flying, somehow, easier for all. Nobody, even his own aides, seemed to be sure if he was serious or pursuing his well-documented penchant for making brazen declarations to win free advertising.
"One thing we have looked at in the past, and are looking at again, is the possibility of maybe putting a coin slot on the toilet door, so that people might have to actually spend a pound to `spend a penny' in future," O'Leary said, using a local euphemism for relieving one's self.
Do you need a Harvard MBA to realize that this is a terrible idea? How much additional money will you make compared to pissing people off (pardon the pun!)?
And just compare it to the damage that these irate passengers are likely to wreak, and this is Bastiat all over again. Ignore the unseen consequences in favor of the seen ones.
The first person who pees on the floor is likely to cause more damage both directly and indirectly (bad publicity) than all the revenue that you are likely to make from this move.
Dumb, dumb, dumb.
Is a toilet an optional extra when you're at 30,000 feet? Ryanair boss Michael O'Leary seems to think so — as his no-frills carrier plumbs new depths by thinking of charging customers to use the aircraft loo.
As always, O'Leary suggested a separate toilet free would lower ticket costs and make flying, somehow, easier for all. Nobody, even his own aides, seemed to be sure if he was serious or pursuing his well-documented penchant for making brazen declarations to win free advertising.
"One thing we have looked at in the past, and are looking at again, is the possibility of maybe putting a coin slot on the toilet door, so that people might have to actually spend a pound to `spend a penny' in future," O'Leary said, using a local euphemism for relieving one's self.
Do you need a Harvard MBA to realize that this is a terrible idea? How much additional money will you make compared to pissing people off (pardon the pun!)?
And just compare it to the damage that these irate passengers are likely to wreak, and this is Bastiat all over again. Ignore the unseen consequences in favor of the seen ones.
The first person who pees on the floor is likely to cause more damage both directly and indirectly (bad publicity) than all the revenue that you are likely to make from this move.
Dumb, dumb, dumb.
Those Bitter Jealous Renters
CNN reports: Boomers: 30% underwater.
What a turnaround for the American Dream!
According to a report released Wednesday, the real estate market bust and stock market declines have carved a huge chunk out of the assets of baby boomers.
So much home equity has been lost that 30% of boomers, aged 45 to 54, are underwater in their homes, according to "The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble. " The report, released by D.C.-based think tank the Center for Economic and Policy Research, also found that 18% of boomers aged 55 to 64 would owe money at close if they sold their homes.
The CEPR also found that people who were renting homes in 2004 will have more wealth in 2009 than those who were owners. That's true for all five wealth groups the study analyzed, from the poorest to the wealthiest.
BWAHAHAHHAHAHAHHAHAHAHHAHAHHHHHHHHHHHHHHHHHHH!!!
What a turnaround for the American Dream!
According to a report released Wednesday, the real estate market bust and stock market declines have carved a huge chunk out of the assets of baby boomers.
So much home equity has been lost that 30% of boomers, aged 45 to 54, are underwater in their homes, according to "The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble. " The report, released by D.C.-based think tank the Center for Economic and Policy Research, also found that 18% of boomers aged 55 to 64 would owe money at close if they sold their homes.
The CEPR also found that people who were renting homes in 2004 will have more wealth in 2009 than those who were owners. That's true for all five wealth groups the study analyzed, from the poorest to the wealthiest.
BWAHAHAHHAHAHAHHAHAHAHHAHAHHHHHHHHHHHHHHHHHHH!!!
Thursday, February 26, 2009
The Flower of Romance
The Washington Post reports: Market for Romance Goes From Bullish to Sheepish.
See the tall, gregarious young man in the Eighteenth Street Lounge, moving easily toward a group of receptive women as the floor vibrates with reggae music? He's dressed in a sharp Hugo Boss suit, and he knows that the minimum for a table is $240.
But he's not offering to buy the drinks. And the suit? He bought it a year ago, when he had a six-figure salary.
Dating in the time of the pink slip means feeling the squeeze of the drastically reduced paycheck, the sudden sting of the layoff. From investment bankers to real estate developers to construction workers, no job means no buying rounds of $15 martinis for a pretty woman and her girlfriends. No hosting parties in the bachelor loft. And often, no idea how to present one's new self on the dating market.
"It's been incredibly stressful for me," said Neil Welsh, 27, the guy in the suit, who until last year was marketing director for a booming real estate company. "I was so used to using my financial situation to leverage my dating."
For many affected by the recession, dating is the least of their worries. But the market crash has had a particular impact on young adults who developed their dating skills in fat times, the twentysomethings who spent lavishly to show that they could afford the finer things. Now, with national unemployment rates at 8.8 percent for people 25 to 34, they are looking for more creative ways to attract partners -- and reassessing what all that big spending really meant.
Alexandria native Niko Papademitriou, 27, became an investment banker with a Cleveland firm soon after he graduated from college. The money was steady enough for him to fly regularly to Manhattan to see his girlfriend and take her to upscale restaurants such as Bond Street and Cafe Gray.
"A large aspect of my life -- three out of the first five conversations that we had -- I told her, 'You're not going to see much of me in the next 15 years if we start dating, because I'm going to be making a lot of money.' " He thinks that worked in his favor, "not so much for the money, but for the drive. It's one of those things in men that women find attractive."
Since being laid off in November, he has moved back to Alexandria to live with his mother. He now takes the Chinatown bus -- for as little as $5 each way -- to visit his girlfriend. Round-trip airfare between Cleveland and New York City averages more than $200.
"It's definitely putting stress on our relationship," he said recently, sitting in an Old Town cafe. "It comes back to this whole manhood thing. Like, can you be the provider, not just for yourself but for others?"
It's been tough on his girlfriend, he said. "She knows that she needs to be this understanding, positive influence in my life. At the same time, there is a lot of fear on her part, knowing that my industry and the one that we had kind of mentally projected ourselves and our way of life on could be over, or at least on pause for a while."
Lindsey Schwalb, 22, of Arlington said the financial crunch has made men she knows more amenable to settling down. "People are looking for some form of stability. Instead of someone you have to impress monetarily, they want someone they can concentrate on spending quality time with."
Welsh said he is scaling back on dating costs while he builds a new business, an Internet marketing company.
"Now I'm more inclined to take a girl to a good ethnic restaurant," he said, whereas before, "I was constantly worried about being judged for how much money I was spending."
See the tall, gregarious young man in the Eighteenth Street Lounge, moving easily toward a group of receptive women as the floor vibrates with reggae music? He's dressed in a sharp Hugo Boss suit, and he knows that the minimum for a table is $240.
But he's not offering to buy the drinks. And the suit? He bought it a year ago, when he had a six-figure salary.
Dating in the time of the pink slip means feeling the squeeze of the drastically reduced paycheck, the sudden sting of the layoff. From investment bankers to real estate developers to construction workers, no job means no buying rounds of $15 martinis for a pretty woman and her girlfriends. No hosting parties in the bachelor loft. And often, no idea how to present one's new self on the dating market.
"It's been incredibly stressful for me," said Neil Welsh, 27, the guy in the suit, who until last year was marketing director for a booming real estate company. "I was so used to using my financial situation to leverage my dating."
For many affected by the recession, dating is the least of their worries. But the market crash has had a particular impact on young adults who developed their dating skills in fat times, the twentysomethings who spent lavishly to show that they could afford the finer things. Now, with national unemployment rates at 8.8 percent for people 25 to 34, they are looking for more creative ways to attract partners -- and reassessing what all that big spending really meant.
Alexandria native Niko Papademitriou, 27, became an investment banker with a Cleveland firm soon after he graduated from college. The money was steady enough for him to fly regularly to Manhattan to see his girlfriend and take her to upscale restaurants such as Bond Street and Cafe Gray.
"A large aspect of my life -- three out of the first five conversations that we had -- I told her, 'You're not going to see much of me in the next 15 years if we start dating, because I'm going to be making a lot of money.' " He thinks that worked in his favor, "not so much for the money, but for the drive. It's one of those things in men that women find attractive."
Since being laid off in November, he has moved back to Alexandria to live with his mother. He now takes the Chinatown bus -- for as little as $5 each way -- to visit his girlfriend. Round-trip airfare between Cleveland and New York City averages more than $200.
"It's definitely putting stress on our relationship," he said recently, sitting in an Old Town cafe. "It comes back to this whole manhood thing. Like, can you be the provider, not just for yourself but for others?"
It's been tough on his girlfriend, he said. "She knows that she needs to be this understanding, positive influence in my life. At the same time, there is a lot of fear on her part, knowing that my industry and the one that we had kind of mentally projected ourselves and our way of life on could be over, or at least on pause for a while."
Lindsey Schwalb, 22, of Arlington said the financial crunch has made men she knows more amenable to settling down. "People are looking for some form of stability. Instead of someone you have to impress monetarily, they want someone they can concentrate on spending quality time with."
Welsh said he is scaling back on dating costs while he builds a new business, an Internet marketing company.
"Now I'm more inclined to take a girl to a good ethnic restaurant," he said, whereas before, "I was constantly worried about being judged for how much money I was spending."
Tuesday, February 24, 2009
Adsense Nonsense
Crap that candy out, babe
Crap that candy out
Candy crappin' mama
Crap that candy out.
Wednesday, February 18, 2009
Long Division v/s the Candy Crappin' Unicorn™
Yahoo! reports: Obama unveils $75 billion mortgage relief plan.
President Barack Obama says his $75 billion plan to tackle "a crisis unlike any we've ever known" in home foreclosures is necessary to help save the economy.
Obama unveiled the plan in Arizona, hard-hit by the housing crunch. More expensive than expected, it aims to keep 9 million people from losing their homes.
$75B/9M = $8,333.33.
Assuming a $200K house, that means a principal reduction of 4%. It's even less for higher priced houses.
This is a waste of the piece of paper it was written on. And everyone's carryin' on as if the Candy-Crappin' Unicorn™ actually crapped out some candy.
FAIL!!!
President Barack Obama says his $75 billion plan to tackle "a crisis unlike any we've ever known" in home foreclosures is necessary to help save the economy.
Obama unveiled the plan in Arizona, hard-hit by the housing crunch. More expensive than expected, it aims to keep 9 million people from losing their homes.
$75B/9M = $8,333.33.
Assuming a $200K house, that means a principal reduction of 4%. It's even less for higher priced houses.
This is a waste of the piece of paper it was written on. And everyone's carryin' on as if the Candy-Crappin' Unicorn™ actually crapped out some candy.
FAIL!!!
Tuesday, February 17, 2009
The Toupee Files for Bankruptcy!
Reuters reports: Trump Entertainment files for bankruptcy.
Trump Entertainment Resorts Inc, the casino operator named for Donald Trump, filed for bankruptcy protection on Tuesday as recession and declining gambling revenues battered the company and its rivals.
The Chapter 11 filing marks the third plunge into bankruptcy for the company, which was created out of a restructuring in 2005.
Trump, a very public and flamboyant figure in an industry filled with colorful, headstrong executives, said the company represents less than 1 percent of his net worth, and that "my investment in it is worthless to me now."
BTW, it should be entertaining to note that his father (who built the famous "Trump" fortune) would be positively spinning in his grave.
Oh, and good luck to all the bozos living in all the various Trump Towers. Every single one of those corporations is probably in fuck-a-holic-pre-pubescent-bankruptcy.
Oh, and the EE doesn't own a tee-vee. So how does that phrase go again?
YOU'RE FIRED!!!
Trump Entertainment Resorts Inc, the casino operator named for Donald Trump, filed for bankruptcy protection on Tuesday as recession and declining gambling revenues battered the company and its rivals.
The Chapter 11 filing marks the third plunge into bankruptcy for the company, which was created out of a restructuring in 2005.
Trump, a very public and flamboyant figure in an industry filled with colorful, headstrong executives, said the company represents less than 1 percent of his net worth, and that "my investment in it is worthless to me now."
BTW, it should be entertaining to note that his father (who built the famous "Trump" fortune) would be positively spinning in his grave.
Oh, and good luck to all the bozos living in all the various Trump Towers. Every single one of those corporations is probably in fuck-a-holic-pre-pubescent-bankruptcy.
Oh, and the EE doesn't own a tee-vee. So how does that phrase go again?
YOU'RE FIRED!!!
Sunday, February 15, 2009
Setting Sun? Hai! Fucked Economy? Hai!
Bloomberg reports: Japan’s GDP Shrinks 12.7%, Most Since 1974 Oil Shock.
Japan’s economy shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, amid an unprecedented collapse in exports and production.
Gross domestic product fell for a third straight quarter in the three months ended Dec. 31, the Cabinet Office said today in Tokyo. The median estimate of 26 economists surveyed by Bloomberg News was for an 11.6 percent contraction.
“The economy is in terrible shape and the scary part is that we’re likely to see a similar drop this quarter,” said Seiji Adachi, a senior economist at Deutsche Securities Inc. in Tokyo. “All we can do is wait for overseas demand to pick up.”
Yep, overseas demand will pick up any day now. Hai!
Keep waiting? Hai!
Wonderful to see global "decoupling" in action? Hai!
Japan’s economy shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, amid an unprecedented collapse in exports and production.
Gross domestic product fell for a third straight quarter in the three months ended Dec. 31, the Cabinet Office said today in Tokyo. The median estimate of 26 economists surveyed by Bloomberg News was for an 11.6 percent contraction.
“The economy is in terrible shape and the scary part is that we’re likely to see a similar drop this quarter,” said Seiji Adachi, a senior economist at Deutsche Securities Inc. in Tokyo. “All we can do is wait for overseas demand to pick up.”
Yep, overseas demand will pick up any day now. Hai!
Keep waiting? Hai!
Wonderful to see global "decoupling" in action? Hai!
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