Lots of empty stripmall out here. Lots more when Countrywide implodes and takes the Furniture stores with them.

But the stock market is up again today. Way up. Until inflation rears its ugly head and is seen as such, nothing will happen to the stock market. Our teflon stockmarket.

Thanks FFDIC,
I was wondering where to get the quarterly banking report.

I am crossing my fingers for another round of rate cut. I need to buy more SRS.

Certainly hedge funds who bought CMBS...are most levered to this stuff but one wonders what companies? Some regional or community banks?

rich,

How right you are. A little snip from the Bakersfield Bubble:

"“Delia DeYulia was recently forced to take her first retail job. For the holiday shopping season, DeYulia is working part-time at Kohl’s, placing clothes on racks and cleaning dressing rooms. She resorted to taking the temporary work after not finding other employment.”

“After 15 years with Fremont Investment and Loan, she lost her mortgage job in Anaheim Hills in March.”

“‘I’m used to sitting in an office,’ said DeYulia, who audited loans at Fremont. ‘Now, I’m on my feet all day. I’m carrying a lot of stuff and my body has to get used to it. It’s hard work for a minimum-wage job.’...

Robert Harrington and Shad and Corinna Vickers, are looking for retail jobs. Harrington of Tustin, was let go in September from Bankers Mortgage in Santa Ana. As its loan originator, he made about $75,000 last year. More than half of that was from commissions.

Corinna Vickers was let go a year ago from Secured Funding in Costa Mesa. Then two months ago, her husband Shad Vickers, lost his job at Lending Tree in Irvine.”

“Combined, they had been making $200,000 a year.”

“Now they’re both unemployed and have been hunting for work to pay their bills and help them save for retirement and college tuitions for their four daughters. They have not had any luck and now the Vickers are both willing to take on holiday retail work.”

Massive mal-investment of human capital, massive mal-investment of physical capital, and staggering debts. Yep looks like we're entering a minor "slow-down".

And I got a nice bride in Brooklyn I'm willing to let go for cheap.

Cheers,

Misean

These individual stories are very sad indeed. But they seem to be just that, individual stories. There is yet to be any significant overall decline in employment, any significant overall inflation, any significant overall slowdown of the whole economy. In a sense this housing recession (depression) seems in fact "contained" and not to have dragged down the whole economy with it. Lots of us are happy to see hedge funds go bust and the investors lose, ditto SIVs and greedy reckless banks and their shareholders.

From the quarterly Banking report:

"Losses were up in most of the major loan categories. The largest increase
occurred in loans to commercial and industrial (C&I) borrowers, where charge-offs were $796 million
(91.4 percent) higher than a year earlier"

ouch

More from the FDIC report:Must read for the optimists.

"Noncurrent loans and leases registered their largest quarterly increase in 20 years during the third
quarter, rising by $16.0 billion (23.8 percent)."

oy,vey

apolean, shoot me down if im' wrong, but that reads like socialism to me...
maybe another ism, but not one containing capital-ism

Wait, so there are STILL people out there who think "all is well?"

Okay, so explain the trends on the dollar to me? You know, the massive devaluation that has been steadily taking place? How is that good considering that we produce almost nothing and import everything? Oh, and note that wages have not been increasing, so the dollar devaluation is making us all poorer. Good thing the Wall Street crooks make so much money that this doesn't harm them!

Then there's the job situation: I hope you like minimum-wage, service jobs with no benefits since that's the future for our country. But that's not part of a "recession" I guess - massive numbers of people slipping from middle class to poverty is just fine as long as the market is up for the day, right?

How can people be so clueless? Inflation is out of control and our economy is a hollow shell. Are people like O-Joe, Sebestian, and the rest going to keep denying reality until they wake up in a soup kitchen after all the local Wal-mart jobs (only employer left) are taken by illegals? Yeesh...

me too! anecdotal or not, I'm still waiting for more details about that bride in Brooklyn Misean has up for sale. Does she come on a bridge with brie?

James,

Apparently you don't live in So-Cal. It's appallingly bad. Sure the Old-Timers are sitting tight and know how to save for a rainy day. But there's a bunch of 30 year olds here who only knew UP. They didn't save much and spent like there was no tomorrow. Tomorrow's here are the brand new custom kitchen cubbards in the McMansion are bare.

It really is getting that bad out here.

scav, sn,

Cheap. Just transfer the funds to my Nigerian bank account and I'll fed-ex you the deed.

Cheers,

Misean: bad in SoCal, eh? Well Hollyweird and its hangers-on richly deserve it. Anyways, I haven't noticed any stars or celebrities hurting. And who thinks SoCal is the US? I tell you the "negativity" on this blog is just terrible, just terrible. LOL.

According to some recent studies (as reported in a recent WSJ) the human brain is wired for optimism and except for lawyers the optimistic are more successful than the pessimistic.

James provides a good example. He sees the malls full of shoppers, so being optimistic he thinks that means the economy is ok—they have money to spend. Of course it’s all on credit. Even the wealthy are overspend with credit. A classmate of my daughter in law school has a good job in a big law firm (like my daughter). But she buys $500 underwear and $5,000 watches. On the other hand, my daughter the offspring of a pessimist, saves her money and buys a Timex.

James, read the history of the Great Depression, and you will see few people saw it coming.

Pessimists aren’t popular. They rain on people’s parade. Even when they turn out to be right, they can actually get blamed for the bad news—people are not rational. They are only human.

A couple of up days in the market and Sebastien, James and O-Joe are in full Goldilocks drag again.

I wonder why the market is up? Is it perhaps that the Fed has dropped major hints (promises) that rates will be cut again?

Now push those golden curls out of your eyes and ask yourself--why did the Fed cut before and why will they cut again?

Is it because the economy is just right?

Or is it that mama, papa and baby bear are eating the rotten carcasses of the excesses of this decade?

Zarkov: I don't need to read about the Great Depression. I was born in 1931 and lived my childhood in the midst of it. Fortunately my father, a small businessman, was very conservative and prudent and so we managed quite well. No luxuries, but then few if any families that we knew had luxuries. Those were seen only in the silly Hollywood movies of the time all of which seemed to center around people residing in mansions with muliple servants and hangers on. In fact we did have a live-in maid, something that was not so rare in those days, but our house was small and cramped by today's standards and no one in our small town had a Cadillac; those appeared only after the war, when there was a lot more money to spend. My depression upbringing taught me to underspend my income and save and that has served me very very well ever since.

AllenM:

What are MLP structures? Thanks.

S.
Really now. I have pretty consistent in my viewpoint over the year and a half I have been posting here. You have been consistent in yours. Now that my viewpoint is starting to prevail in reality, you start just slamming us with the surface bears slight.

As a member of a profession that is consistently called "dismal", did you expect anything but a reality based argument?

I find that eternal optimism usually leads to foolish predictions. I find that Herbert Stein was right: "Things go on until they stop."

We have reached a point where what has been working for a decade plus won't. As for the implosion in real estate finance, who is going to take the place of the hot money folks?

Maybe some deep pocket insurance companies, but that will take a very long time for them to decide the profits are large enough to justify the risks.

Calculated Risk implies that you can metric some of the risk associated with an activity and value the outcomes accordingly. What we are entering is a period where you can throw nearly all of your past experience out the window, as crisis manuals are rewritten daily as events blow economic planners out the door.

Someday this war's gonna end...

Calvert,
Master Limited Partnerships.
Typically used to limit liability for partners, with the master partnership interest held by a special purpose entity or a corporate subsidiary.

It makes sharing the profits real easy, while limiting the downside to what you have in it.

According to some recent studies (as reported in a recent WSJ) the human brain is wired for optimism and except for lawyers the optimistic are more successful than the pessimistic.

Woa, my future looks bright, then.

O-Joe

I don't think anyone will disagree(too much) that the US is service dominated. What is a service? To me it is paying someone else to do what i don't have time to do OR that I cannot do well...and also because I have the opportunity cost of not working and earning money in another service-driven job.

So what happens when I loose my job and suddenly I have nothing but time on my hands and no opportunity costs whatsoever(and no money to spend on services)?

To me this thought screams two things. RIP current economy, welcome in the world the next industrial growth opportunity. I for one hope it's centers on food and energy. I sure as hell don't need anymore Ipods or Crocs.

I feel sorry for those four daughters, they're gonna get a nice Xmas this year...
I just hope they all have nice boyfriends like O-Joe.

Well sure, lets all be nice, but can any of the bulls tell us why they believe the Fed should be cutting rates if things are so great?

Goldilocks is back. This is the greatest story never told. Problems are behind us. The crisis is contained. The dollar is rising. Did I miss anything in the flood of good news today?

If you don't believe me. Watch CNBC tonight.

"What are CAP rates?" --Alex
Pick a definition, or make up your own:

Wikipedia says annual cash flow divided by cost (or value) = Capitalization Rate

real-estate-and-urban.blogspot.com says capitalization rate is (roughly) the after-tax required rate of return, plus depreciation and expenses less expected appreciation.

e.g.
$12,000/year rent divided by 6% cap rate = $200,000 value
or
$12,000/year rent divided by 16% cap rate = $75,000 value

Misean ,
I'll take the Bride.
terms:required 100 percent financing.
no doc.
no cashback required ;
if she is a hottie !
note: I will default after one year;
or when foreclosed due to non-payment

hallo poszi, i have a small question
we have a new online bank in slovakia, mBank which is subsidiary of polish bank Bre which is subsidiary of german Commerzbank. do you know some info about Bre whether they might be heavily invested in polish RE ?
thanks

my bad i should have know to ask Dr.Google first. the Bre bank has a 45% share in the entire polish mortgage bond market, i guess i wont place my money in that bank xD

energyecon -
S's NEW call is old news.
No one's calls are always right.
By now, it's kind of beside the point, isn't it?

Revro,

I think all Polish banks are involved in quite a lot of a real estate lending. I'm not sure if BRE is outside of average. As far as I know, Polish mortgage bond market is minuscule, most banks keep the mortgages on the balance sheets so this 45% share probably means nothing. BRE is traded on the Warsaw stock exchange (ticker BRE). The majority of its shares is owned by Commerzbank.
Their website is here

mBank is actually quite nice. I have an account with them since they started in Poland 7 years ago and I had no major complaints. But of course caveat emptor.

One thing the markets are over looking with the recent bounce....each time the fed lowers, stocks go lower. It happened in corrections before and it's happening again. The interesting thing about this market correction is that we are seeing massive selloffs because of obscure financial instruments that no-one fully understands. So ths temporary bounce means nothing. As we head into the final days of the current quater of some major financial institutions, we will soon see more problems. The head of Goldman Sachs got it right: Most people in the financial community have no idea what they've gotten themselves into.

The painful thing will be after another quater of banks and other financial instutions taking massive writedowns, the economy will finaly show the signs of weakness. And when we see GDP dip below 0%, jobs lost and tighter lending standards we will see another leg down in this market correction.

When the #1 bank in the world has to get handout at junk rates, there is a problem. When he #1 mortgage lender has to borrow over 50 billion to keep the doors open it's a problem. When money mark accounts have to be supported with company funds that's a problem.

The next 3-6 weeks will bring some painful days as the financial base of the US economy continue to fall apart.

I believe we just completed the first of three stages of a bear market. Rally another couple of days..another week. But sometime in the next 3-6 weeks you will another 10% loss for the major indexes (not in one day but over a period of time).

The failed policy of current administration has also caused a lot of inequality, deficit, and surge of oil prices. I hope the spendthrift in whitehouse will be replaced with a more prudent one in future.
Here everyone is looking at the headlines of surging oil price (which include a lot of political premium) , none is paying attention to the relative stable natural gas price. At least, some energy consumption is coming from domestically produced natural gas and will contribute in part to the relative tame inflation. Of course, the flat price of natural gas is not going to be sensational for most folks.