In other words, I don't care what the spinmeisters in DC say, my data, which happens to cover a nice piece of American business, says recession.

Oh yeah, not buyin' any of those muni bond insurers either.

Inflation, yup, we have it. Volcker anyone?

Not yet? Okay, I'll be buying overseas where there is money to be made.

Dealy common sense.

Someday this war's gonna end...

Spoken from a True American Business Hero......with Billions and Billions invested in NON-$USD ASSETS....

Anything to make a peso, I guess...

Politicians and most others hear the squeakiest wheels.

People who have abused debt recently are going to be the squeakiest wheels, along with the business folks who enabled them(and also whom probably happen to be the biggest campaign contributors).

Bailout is all but a certainty.

Actually, they probably will listen to Buffett and a host of experts. That "listening" is the sort of policy wonk discussion that was common in the Clinton White House, and is unheard in the current one. Suskind's book cites numerous examples where Treasury Sec. O'Neil witnessed real economic policy discussions contempuously shut down in favor of whatever was politicaly expedient. Neither one of the Dem candidates is that type. This disdain for policy and it's consequences was the reason Delilo called the Bushies the "Mayberry Machiavelli's".

And while buffet is right to warn against uninteneded consequences, at some point we might have to act to address our economic problems with government intervention, regardless of the consequences. When that point is reached is the 64,000 dollar question.

"I think, 82,000 listings and about 1500 sales a month."

5 years inventory. Let me say this. There is at LEAST that much here in Florida yet again empty,not REO'd yet. Also add in FSBO which,I am going to guess, is in the neighborhood of 25-30%.
This is one small area. SW Fl is as bad or worse.

Oh,and the numbers are getting worse.

Chris

"That "listening" is the sort of policy wonk discussion that was common in the Clinton White House"

Oh geez, have some more Koolaide.

Clinton did nothing to "help" the economy, to his credit. If you want to call that the result of "listening", fine but the evidence of any action by his administration to improve the economy in the 90s is pretty thin.

The gains in the 90s, the expolsion in tech developments mostly, were coming forward organically, regardless of who was in the White House. That they peaked, in 2000, while Clinton was in office, had nothing to do with Clinton either.

Who should I believe?

The imaginary minds of O-Joe and Sebation or Warren Buffet? Recession?

He is saying it know because it is safe to say it.

The commercial banks in North Carolina also have very broad amount of non-public data to pull from and they started going into a hiring freezes or laying-off a year ago.

c&c,

Well, obviously Buffett hasn't seen the "Wright B Model"... or is it the "Wrong B Model"???

Three hours on CNBC? And he didn't throw up once?

I heard Buffet can walk on water. He said recession, and the stock market went down. He went to the GM car dealership last quarter but was unimpressed with their selection. Today, GM reported slumping sales. Coincidence? I think not.

Quincy K - Sean Hannuty thinks the economy is great. He must be blind!

I am Warren's illegitimate lost son Sailor, and here is what dad taught me, he said run a screen in the market, which I just did. Dad said to take the entire universe of stocks as a start then, narrow that down to stocks with market caps of $1 billion, just to be safe. He then said, simply look at the P/e ratio of stocks in this universe. he then said, you will find stocks that are held in high regard and sometimes they will be part of the S&P 500 or other indexes, so by random chance I came up with this example (for Dahdah):

PSA: Profile for PUBLIC STG - Yahoo! Finance

Turns out, they have a P/E of 843.16 and EPS of ten cents (ttm).

Daddy's depends would be damp at this point, just from that, but the real reason this is of interest, is because the P/E of this screen suggests a vast amount of highly overvalued companies that have very high P/Es and thus, yes, very low earnings yields.

This stock currently sells for $82.63 and helps The S&P500 to maintain its current overvalued status, e.g, this stock has a yield of 0.1210 which compared to our shrinking 10 Year Treasury of 3.55 would help some of us see this is what Daddy would call stupid and risky and then he would yell at me and swear and stuff like that....but gads, when you run that dumb screen there are 975 companies that are overvalued and the funniest part of all, is that one of the better yielding of the group is SARA LEE CP.....LOL! Dad is so pissed that wheat is gonna make those treats too expensive to buy.

Gotta run!

It is so refreshing and uplifting to read Warren Buffett after reading about such incompetence, arrogance and moral corruption from the many government and corporate "leaders".

Finally, we are all recession now.

Except for the data... and a few contrarians like Sebastian and oh myself.

O-Joe

Joint Legislative Budget Committee - Monthly Fiscal Highlights 

Hey this is completely off topic, but I was wondering what the history of subprime was? While doing some looking around online I found this. It relates to the failure of Superior Bank (of Illinois) in about 2001 (due to subprime losses) and seems to be a pretty early example (and has the added benefit of some Enron like features as well).

Ideas?

Must read, MBIA 8k, letter to owners-

The resource cannot be found.

AllenM,

"What do you call it when the tinfoil brigade is right?"

Alarming. I need to replace the batteries now.

Cheers,

r_c,

Well Indy is looking healthy.

I need another 'tini.

Cheers,

ipodius-

it is quite onbvious that confidence continues to wane, the tone of the letter and the fact that it was even filed in the first place suggests specifically the challenges that lie ahead.

Warren's likely reading that letter, pounding a couple of burgers, and thinking that time is on his side & of course, actual confidence.

Ambrose Evans-Pritchard (UK Telegraph)

The Federal Reserve's rescue has failed

The Federal Reserve's rescue has failed - Telegraph

Continental Breakfast Quote:

"As the once unthinkable unfolds, the leaders of global finance dither. The Europeans are frozen in the headlights: trembling before a false inflation; cowed by an atavistic Bundesbank; waiting passively for the Atlantic storm to hit."

Ebola Watch: People are calling it financial Ebola,'' Ed Steffelin, a senior managing director at GSC Group in New York, said in a telephone interview last week, referring to the deadly, contagious virus named after the Ebola River Valley in the Democratic Republic of the Congo.

I listened to the whole Buffett interview (Monday morning is "paperwork morning" and I wake up early). I don't think he sounded so negative on the US. Remember - for years - he had an incredibly large portfolio that was almost exclusively US. Now he has overseas positions. Sounds in line considering the billions he's handling.

I kind of agree with Texalope. Granted I am not the most "average in touch with the average person" person in the world. But I do deal with average people. Like in the last week - my hairdresser - my housekeeper - the super/construction guy who helped build our house and still does "house things" for us - etc. All are homeowners. All have spouses who work (respectively as a systems analyst - a yard guy - and a nurse). I have asked all of them quite delicately if they are ok - and surprise - they all are. The biggest problem our construction guy has is he's planning to go to Daytona on his Harley this weekend - and it looks like it's going to rain. FWIW - he is supposed to replace a door for us - and he is so backed up with "overtime work" (he's still working regular time as a super building houses) that our project is about 3 months late.

I know things aren't wonderful everywhere. But I wonder if we're not seeing huge problems in some areas (like California and south Florida - perhaps the 2 largest speculative real estate areas in the US for decades) - while the rest of the country in more normal places is kind of muddling along. Not great - but not a disaster. BTW - I leave the midwest disaster areas out of the equation - because they were having problems long before this current "housing crisis" as a result of the demise of the auto and related industries (this I know from personal knowledge - my BIL lives in the Detroit area and was in chemical sales to the auto industry).

So show of hands. Exactly how many of you people who post hundreds of messages a week aren't from California - south Florida - or the midwest disaster areas like Detroit? Or relying on anecdotes from people in those parts of the country?

BTW Bob from Massachusetts - I am buying munis. Roby

Oh and risk capital, anecdotally, take a look at those delinquency rates you posted about and ask yourself if the percentage of claims in that 8k (that he talks about having to pay on) makes any sense. Hmmm....300M of 3.7B of outstanding contracts?

I think he must be eating tofu. If he'd just have a burger it would all become clear....

r_c,

"Did you see that subprime delinquency rate, WTF??"

The entire article gave me the heebie jeebies.

Robyn,

CA is like 30% of GDP. You might want to weight your analysis.

Cheers,

MBIA 8-k
It is not surprising that Fitch’s capital requirements for Public and Structured Finance is so different from the other rating agencies’ capital models, given their relatively modest share of both new business and our in-force portfolio. Incidentally, MBIA’s own assessment of its Public and Structured Finance capital requirements is much more similar to that of Moody’s and S&P.

probert-

It almost leads you to the conclusion that an action is imminent by Fitch and this was an obvious ploy to discredit.

If so, I too, am at a loss for words(not really).(:

Jay Brown is essentially saying: "everyone who disagrees is wrong, Fitch is wrong, Ackman is wrong, Buffett's offer is bad".

Look:

In trying to understand the financials, I would suggest that you focus on these three major items: Mark-to-Market (MTM) impact, actual loss provisions and after-tax operating earnings adjusted for extraordinary credit losses and credit impairments.

"Pay no attention to the man behind the curtain"

PRICELESS sentence from MBIA letter:

I note that Wilbur Ross has joined Warren Buffet in deciding that maybe there are a few dollars to be made in this business.

Buffett with one T

...amazing.... speechless...

Yup,

By crucifying Fitch, MBIA is automatically instilling terror at S&P and Moody's - i.e. "this is what might happen to you if you don't give us the right rating". So now the agencies are getting closer to catch-22: they're publicly crucified (or at least treated like crap) by MBIA if they downgrade, yet crucified by the rest of us if they maintain an undeserved rating. This is mafia behavior.

As for this:

It also didn’t surprise me at all that Mr. Ross decided to invest in Assured Guaranty, Ltd., after all it is a NYSE-listed Bermuda domiciled company which has significant tax advantages under the current U.S. tax code.

Very sarcastic, a sign of frustration and failure, which is weird coming after the 2x affirmation of AAA . Must be some new pieve of info we don't know about.

Smiling happily..is nice to be finally at the crux/tipping point/rebound/whatever...to be able to show buyers the tip up and suggest they would be wise to buy now, and to show sellers the longer term down trend and suggest they price lower.

Is that my money I see in your pocket???

Life is good...if you live in Hampton Roads, Virginia

oh...i voted for Hillary in the primary...didn't matter. Nor do my opinions, but the bank likes my deposits.

r_c,

I should expect two words. Not and good.

Gotta look at the RE's tomorrow. Too quite on that front lately.

OT. Liking PM's.

Cheers,

swampfella, i have two good friends that are RE brokers. One owns a "botique" agency in Boston, the other works for a well-known affiliate on Cape Cod. Both have told me that traffic is up a lot and there are a lot of buyers coming out now. They tell me that you have to work to put deals together, and that financing is hard, but there you go.

The one on the Cape had his best year ever last year in the worst market since the depression. The one in Boston also had a good year and has closings lined up for the next three months. They both seem to sense a change. We'll see if it marks a turning point, or it's a temporary inflection.

Ray (duck and cover man)
RayOnTheFarm | 03.03.08 - 7:28 pm |

Naaaa,not for me. Run to the parents,slap up the shutters,load the rv and head for da hills. O.K.,Away from shore. But I agree,another 04 would eventually run more people off. The only problem? Most people would rebuild before bailing and we would get another influx of people looking for housing.
At least they move slow enough to get outta the way...If you plan. Heck,I have enough supplies for 2 full weeks if I should need to ride it out.

Chris

Robyn, you have a point that not all are suffering. But, why then are our policymakers destroying our currency and causing such commodity price increases. Biggest concern I hear from many is food prices. People are getting very concerned about them.

Its like watching the Hindenburg, Oh the hubris.

Buffett's had a good run, but shorting America is getting much more inviting these days: TinyURL.com - shorten that long URL into a tiny URL

As an old fart student of history who has lived thru measles, chicken pox, lost first love, lost first wife, friends dead in Korea & Vietnam, and assorted (quite minor in the scale of human suffering, actually) I am a bit more optimistic than the gist of this board, but do appreciate it's doomsday bent to keep my optimistic bent realistic.

Life goes in cycles, but it goes on. If all is lost..go sit in the car in the garage with a hose to exhaust in the back window and depart this vail of travail. Otherwise, and there is always otherwise, put your good mind and hard efforts to making the world better with your positive efforts...and most folks do.

In the spirit of the thing I have hose and instructions available for a nominal price, plus shipping. Hell, it's only $14,500 and you won't be here to pay the mastercard/visa (american express not accepted) charge anyway....splurge one last time.

Smiling happily, life is good, and in my case, thankfully long.

favorite Buffett quote from cnbc interview:

BUFFETT: But it shows you--when things get that complex, you're going to have a lot of problems. And CDO squared--I figured out, on a CDO squared you had to read 750,000 pages to understand the instruments that were underneath it.

QUICK: Oh, my gosh.

BUFFETT: Yeah. Well, you start with the RMB, that's the residential mortgage-backed securities, and that would have 30 tranches. And then you'd take--and that would be a 300-page document--you'd take a tranche from each one of that and create a CDO, 50 of those times three--300, you know, it becomes 15,000. Then you take a CDO squared with 50 more, and now you're up to 750,000 pages. QUICK: You have to read through it.

BUFFETT: And the mind can't comprehend that. What people did comprehend was that the fees were terrific in selling them to the people.

So why was Buffett on CNBC:

1. He likes Becky's cleavage
2. He likes being on telebision
3. He is looking for overseas investments and is looking for exposure, and hopes he will be getting the "call".

I say no. 3, could be number one but he is up in years, so maybe no.3 makes more sense.

Buffet is always good to listen to. you can learn a lot from the man, and if you haven't you should check out his annual reports at:

BERKSHIRE HATHAWAY INC.

Well worth the read. Go back to about 2000 and start there would be my recommendation.

No way, if you wanna learn Buffett go all the way back to 1977. Lots of work but... people say it's like an MBA and I tend to agree.

WSF - I sure don't understand the drastic rate cuts which have caused the dollar to go down - and commodities to go up. IMO - they are - at best - worthless - and - at worst - counterproductive.

I don't think the average American really understands - or likes - a lot of California or south Florida. I know I don't (even though I lived in south Florida for over 20 years). Last time I went to LA - my friends treated their Mexican gardeners like slaves - and last time I went to San Francisco - there seemed to be more concern about the "rights" of bums to "do their thing" on the streets than a genuine interest in the education of the city's children - all 50 of them. I kind of liked San Jose. Seemed - to me - somewhat normal and surburban - except for the truly absurd real estate prices (this was a couple of years ago). I don't know exactly what my house is worth - but I'm sure it wouldn't be an even trade for a 700 sf 60 year old bungalow near San Jose.

Not that where I live is perfect (although it is probably not unique). It is the proverbial "Tale of Two Cities". The incarceration rate in my almost all white neighborhood (our black neighbors are mostly lawyers - doctors - and football players) is probably 1 in 500 men - maybe less. Go 30 miles north to northside Jacksonville and the incarceration rate is probably 1 in 10 - maybe more. And the murder rate up on the northside is horrific - perhaps the worst in the state. Averages can mask huge differences (like the old saw that if you're the only person in a bar with Bill Gates - your average net worth is about $10 billion). You have to be living in a cave to realize that we have at least 2 "Americas" - probably more depending how fine you want to slice and dice things.

Bob in Massachusetts - Don't know where you buy your munis. Take a look at Zionsdirect's web site (Bonds for Less). You can usually save a couple of points off your purchases (e.g., buy at 99 instead of 101). E*Trade is sometimes pretty good too. I rank Fidelity a distant third. I do have full service brokerage accounts as well - but their muni pricing has almost always been lousy. Roby

Big Picture has a great
cartoon

So, why aren't those $1.50 Euros coming out here, 15 miles from Manhattan?

Because RE investing (all real investing actually, as opposed to speculation) is about yield and a falling US dollar does not improve yield.

Where's my stuffed animal?

Thanks, r-c-, for the link to IndyMac. Those delinquency rates are shocking.

Hey, Jas, if Buffett is so smart (I thought he was until one year ago), why in the heck is he buying railroads and insuring munis now? The freight train barreling towards us called the Greater Depression should be patently obvious to a guy like him.

Geez, does he not do periodic household debt/GDP calculations?

Asian stocks fell for a fourth day, the longest stretch of losses this year, on concern record commodity prices and a U.S. slowdown will weigh on earnings.

How about this:

Three seven-figure dream homes went up in flames early Monday in a Seattle suburb, apparently set by eco-terrorists who left a sign mocking the builders’ claims that the 4,000-plus-square-foot houses were environmentally friendly.

The sign — a sheet marked with spray paint — bore the initials ELF, for Earth Liberation Front, a loose collection of radical environmentalists that has claimed responsibility for dozens of attacks since the 1990s.

The sheriff’s office estimated that Monday’s pre-dawn fires did $7 million in damage to the “Street of Dreams,” a row of unoccupied, furnished luxury model homes where tens of thousands of visitors last summer eyed the latest in high-end housing, interior design and landscaping.

Risk Capital:

Thanks for the link to the letter. I glanced at the 10k and then never got back to it.

I thought that they were laying the groundwork for a Fitch downgrade. At the very least, Fitch seems to have a much more negative view of structured finance.

The letter was weird, but the inherent situation is weird.

They have their story and it is called fas 113 doesn't work and they are sticking to it.