Arent they moving into the Bear Stearns building? There was a huge building boom in the late 1920s. So overbuilt that they didnt need to build for decades.
Well, this would explain why my commercial landlord has been so friendly lately.
We're looking at a new place and basically being offered a much better rate per sq foot than we have now and about half a year with no rent to make changes to the place and move in.
For anyone who is in New York, you can see the vacany rate increasing day by day. MANY vacant store fronts are right in midtown. Judging from this article it is not getting better anythime soon.
Good thing I don't use diesel, though. That jumped 20 cents ($4.29/gallon to $4.49/gallon).
Maybe Dimon sees what's happening outside Manhattan and realizes what will happen to Wall St in the 2nd half.
You know I honestly think people in places like Manhattan don't understand how much people drive in the rest of the country or how much they're affected by higher gas prices. The way our suburbs are organized around city centers with highways, 50+ mile commutes round trip are common. People already under stress are getting killed at the margins now, and I honestly believe this is so Wall Street can make a few more bucks. (Either that or the existence of China was discovered on Aug 17, 2007.)
Seriously though this isn't about being right or ahead of the curve or "smart."
there are mega, macro, micro and locational trends all interplaying. NYC is more special than most in that it has managed to recreate its 1950 census population and density. An example of successful new urban America. By some measures the only success. That doesn't say anything to how it will fare in post urban America however. Going for it are location, critical mass, inertia and and a claimed extremely low per capita energy consumption. Against; congestion, raw cost of living, dependency upon public funding sources for core amenities. Making the net-net call is not only above my pay grade but likely unknowable. The wildcard in my opinion is whether corporations embrace the mobility their employees have adopted. Only time will tell.
1mm square ft of office up for sublease is not in-and-of-itself a huge amount of space to absorb in NYC. HOWEVER, in a market where 4 hedge funds are closing for every 1 being created (and financial firm contraction in general), this can and will change the pricing outlook for the worse over the next year. As we have all learned here from Resi RE, its the changes AT THE MARGIN that set prices.....
"(Either that or the existence of China was discovered on Aug 17, 2007.)"
What is this "China" you write of...
Cheers,
You know a friend told me about the existence of another little known nation of about a billion or so people and that when the broader markets find out about it oil will be up to $230/bbl in a heartbeat.
Frankly I'm skeptical that we could really have 2 nations of over a billion people and be able to buy gas at all.
Anonymous writes:
... There was a huge building boom in the late 1920s. So overbuilt that they didnt need to build for decades.
A lot of buildings were finished after the crash, Chrysler Building 1930, Empire State Building 1931, Waldorf-Astoria 1931... All, of course, started before the crash.
Eliminated?
Call Vinnie! We got a job to do help wid da excess inventory!
Full insurance, right?
Seriously, so the office property Reits have just recovered from that last swan dive....
Just one thing after another. I almost died laughing reading Ben Stein's column about how all is well.
Yeah, sure. Contained again.
It will be over when we finally hit bottom. At which point folks will start taking the armageddon bunch seriously. Last I checked they were still in tinfoil land.
Well, thanks for the NY coverage, CR. But as far as the impact on the Manhattan CRE market goes, this news is peanuts compared to the post I linked last week about the collapse of the West Side railyard project.
It's also peanuts compared to the dimming prospects for the Atlantic City railyard project of Bruce Ratner in Brooklyn.
I know you want to sound like a bi-coastal guy, CR. But why not let the people who know NYC better plug you into what's really important in CRE here? Just because Jamie Dimon speaks, people in California listen?
Meanwhile, the double inverse ETF on CRE REITs was down big today.
I guess it is the "dollar is up, so inflation will be moderated, so interest rates stay low, so CRE benefits and REIT payouts are more attractive" reaction.
What that tells me is that the great minds that were allocating investment dollars in denial of the looming problem with residential real estate lending are still in charge of allocating investment dollars and are still in denial about looming economic problems.
At least JP Morgan finally settled my mom's estate after five freaking years.
I don't really care what happens to them now, as long as they don't crater my sister and nephew's trust funds. I can't afford to take care of them with all their disabilities.
You know I honestly think people in places like Manhattan don't understand how much people drive in the rest of the country or how much they're affected by higher gas prices.
You are right, ac. The one great blessing of NYC is the world's best mass transit. What a lot of people don't realize is how much mass transit blankets the NYC metro. Some people only know about the NYC subway system, which is the world's largest. They don't know about:
3 Metro North lines into upstate and CT.
a huge NJ transit system of rail and bus.
a huge NYC and regional bus system.
water taxis.
Mass transit costs keep going up a lot. But it's become so much cheaper than driving as gas and tolls skyrocket. Transit ridership is way up all over the metro.
How are CRE projects 3-5 years from completion (likely or not), relevant to 1mm sq ft of prime office space hitting an already turning market all at once in the next few months?
In other words.....please share the NYC CRE genius you profess to have....
"At which point folks will start taking the armageddon bunch seriously. Last I checked they were still in tinfoil land."
No one here but us crickets.
Shoes just keep dropping. The local wacky DJ show in the morning here, is doing mortgage related sketches. And the water cooler talk is taking a marked black mood at work.
I've yet to hear..."You were right...".
When that happens, I think I shall fall over dead.
(Either that or the existence of China was discovered on Aug 17, 2007.)
ac | 05.12.08 - 7:32 pm | #
Que???
Chris
That was the day oil started skyrocketing to the moon due to "fundamental factors" after languishing for months. It was also, purely coincidentally, the day that the Fed began easing monetary policy in the most recent round (by cutting rates at the discount window).
Shoveling freshly minted liquidity at below the rate of inflation causes prices to rise?
Hoocoodanode!
Cheers,
Misean
Whodathunkit?
Certainly not a "Depression Expert"!
I mean it's not like the whole modern economics profession is a joke or something centered around a fraudulent premise:
The speculative fever had been intensified by the action of the Federal Reserve System in lowering the rediscount rate from 4 per cent to 3 1/2 per cent in August, 1927, and purchasing Government securities in the open market. This action had been taken from the most laudable motives: several of the European nations were having difficulty in stabilizing their currencies, European exchanges were weak, and it seemed to the Reserve authorities that the easing of American money rates might prevent the further accumulation of gold in the United States and thus aid in the recovery of Europe and benefit foreign trade. Furthermore, American business was beginning to lose headway; the lowering of money rates might stimulate it. But the lowering of money rates also stimulated the stock market...
FREDERICK LEWIS ALLEN
Scarsdale, New York
June, 1931
godihatejargon, I couldn't find a link online (it's a Bloomberg story), but they are freeing up 1 million square feet of office space in the combination of JPMorgan and Bear Stearns. The Bear building will be the main building.
The dark mood around the water cooler mentioned above is replicated in the late night call in shows. If you have to do an overnighter in the west and listen to Denver, LA, and SFO, it is proof that the average person is figuring out how collectively screwed we all are. It took a year, but the message is sinking in.
For anyone who is in New York, you can see the vacany rate increasing day by day. MANY vacant store fronts are right in midtown. Judging from this article it is not getting better anythime soon.
It'll probably get worse. What % do you think are occupied by a bank? Just imagine what Chase or Citi will do once they decide to cut expenses.
BTW, once again let's be reminded of the prelude to one of the biggest stock market melt-ups in history. It's one of my favorite stories of all time:
There had been such a marked recession during the latter part of 1927 that by February, 1928, the director of the Charity Organization Society in New York reported that unemployment was more serious than at any time since immediately after the war. During January and February the stock market turned ragged and unsettled, and no wonder -- for with prices still near record levels and the future trend of business highly dubious, it was altogether too easy to foresee a time of reckoning ahead.
The tone of the business analysts and forecasters -- a fraternity whose numbers had hugely increased in recent years and whose lightest words carried weight -- was anything but exuberant. On January 5, 1928, Moody's Investors Service said that stock prices had "over-discounted anticipated progress" and wondered "how much of a readjustment may be required to place the stock market in a sound position." On March 1st this agency was still uneasy: "The public," it declared, "is not likely to change its bearish state of mind until about the time when money becomes so plethoric as to lead the banks to encourage credit expansion." Two days later the Harvard Economic Society drew from its statistical graphs the chilly conclusion that "the developments of February suggest that business is entering upon a period of temporary readjustment"...
Anybody who had chosen this moment to predict that the bull market was on the verge of a wild advance which would make all that had gone before seem trifling would have been quite mad -- or else inspired with a genius for mass psychology.
BROOKLYN! writes:
As a user of 25 square feet of office space at JP Morgan, I can't afford to give any back. It is tight in those cubes
BROOKLYN! | 05.12.08 - 8:55 pm | #
What do you bet they have plans to free some of that space up.
Brooklyn: you have cubes? Try "bench style" seating, or better still, "modified trading desks". They allocate space in linear sq inches now; zero offices, even for MD's. Oh, and BTW, this is a trend that will never be reversed - get used to it.
ac, Have you watched King Vidor's "The Crowd"? It was filmed in 1928, depicting some "tough times" and long lines for work. People were realizing long before the "great crash" the there were problems stacking up.
ac, Have you watched King Vidor's "The Crowd"? It was filmed in 1928, depicting some "tough times" and long lines for work. People were realizing long before the "great crash" the there were problems stacking up.
Even at the time people were saying "the next guy to get elected president is going to be the most hated guy in history".
People knew they'd done wrong even before the hammer finally came down.
BTW, once again let's be reminded of the prelude to one of the biggest stock market melt-ups in history
ac, do you actually read things from the real world? do you, say, look at earnings across sectors to see what's up? Because by what you post, you're definately not living in the same world I'm in.
Let's see...TED spread the lowest it's been, earnings not diving in any sector except financials yet...even retail, signs of life in some housing markets, interest rates still low, and no matter how you slice it, still no actual recessionary numbers. Inflation still tame by historical standards, and unemployment low.
Yup, THE BIG MELTDOWN IS COMING!!! RUN AND HIDE!! lol
ac i get an historical feed from S&P and it goes directly into software i have. so i'm well aware of numbers, can screen on any criteria i want even setting datapoint mix/max's in combination, and run projections and trends across individual stocks and any groupings i can think up.
i've said that, with my forward earnings projections, the market is over valued, but you can put any idea of resemblence to the 1920's away. And yes, we're past any financial melt-down thanks to the fed...opinions here notwithstanding it looks like history will judge what was done kindly unless something really drastic comes along which is, now, getting more unlikely with each passing day.
I think what hits nerves is redonkulous posts about some similarieis to the 1920's and the hint that something like this is going to happen now. Frankly, it's just idiotic and makes me think that some people on here take some sort of fetishistic glee in the potential misery of others. Or are so unempowered in their lives that this is the only expression of control they ever get.
How about some analysis of the latest numbers? The easing of the TED spread? The latest economic indicators? The price of fuel? Food? What happening at the comsumer level now? Likely unemployment numbers through the summer?
In other words.....please share the NYC CRE genius you profess to have....
Credit Guy,
I don't have any genius. I just read the NYC media every day. The collapse of the West Side railyards and the continuing problems with the Atlantic railyards in Brooklyn are the two biggest stories in NYC CRE, next to Ground Zero.
They are both mega multi-purpose projects that were supposed to serve as anchors for whole neighborhood redevelopments. Their failure/problems mean: 1) huge gaps in tax revenues, employment and jobs, relative to what was budgeted; 2) lack of lender confidence in NYC CRE.
The 1 million square foot story is a nothing, in comparison. It's not going to be dumped on the market all at once, and so what if it was? It's a tiny amount of the NYC space that exists and even space now under construction.
The collapse of the West Side railyard project is like taking the keystone out of a gothic cathedral. Everything from the Javits Center expansion to the proposed multi-billion dollar west side subway extension was tied to it. Also, Bloomberg's credibility has been tied to it ever since the Jets West Side Stadium plan and Olympics propossal died.
The City budgets projected tax revenues out for many years, and now they are going to have to backtrack on budgets, infrastructure funding and hiring big time.
ipodious - quit bashing yer head. you gotta quit expecting that. these comments have taken a turn over time. starting to feel more like ben's housing bubble blog at times.
i read still but wish that we could all just say, OK WE FIGURED THIS OUT ITS ALL EFFED. SO, WHATS NEXT?
b/c there was a time when this blog had the next thing figgered. now it just reflects on whats obvious
ROTFLMAO! Dude, I'm in agreement with many of your comments, but this is just silly. When's the last time you took the subway to JFK?
I don't know what you're saying. In case you missed it, the subway + Airtrain extension has been going to JFK for several years. Ridership keeps increasing.
It's about $60 cheaper than taking a cab from Manhattan to JFK, counting tolls and tip. And it's just as fast.
b/c there was a time when this blog had the next thing figgered. now it just reflects on whats obvious
I sure wish I knew what was coming next. I don't forsee good times, but I think this is one of the most inscrutable periods in history precisely because everybody's trying to figure it out and place bets accordingly. That's my whole point to making that post about the "The Big Bull Market".
I get the impression at the time it was the last thing anybody was expecting.
Or maybe it was just the people looking at the situation most critically were those who were most wrong in the short term.
The real world has a curious way of defying expectations.
Jesse's Cafe Americain has some interesting things this evening - among them, that Indymac won't be paying AFN (Alesco Financial) this quarter on 8 large MBSs it owns part of. AFN will still pay its dividend to shareholders, out of its reserves, but after that, who knows? It's about the third or fourth item on his blog now.
rich - can't comment for Credit Guy, but to respond to some of your points from the perspective of (I assume?) a fellow New Yorker:
"I just read the NYC media every day. The collapse of the West Side railyards and the continuing problems with the Atlantic railyards in Brooklyn are the two biggest stories in NYC CRE, next to Ground Zero."
-- Perhaps on Curbed.com these are the main stories, but in the reality of people trying to negotiate leases and rent space, the fact of vacancies climbing to 6.1% and a million sq ft of office space coming on line on top of that is a huge deal. It was only a year ago that we were at record low office vacancies.
"The collapse of the West Side railyard project is like taking the keystone out of a gothic cathedral. "
-- The West Side railyard project was a vanity bid for the Olympics coupled with (yet another) citizen-financed sports stadium handout, which would have made west side traffic an absolute nightmare. I have about as much confidence in the developers' good intentions of creating affordable housing as I do in their outpourings of concern for the citizens of New York re:Ground Zero, which as I look out my window remains a gaping hole in the ground (though our ever-effective MTA shares the blame for this of course).
Furthermore, any "revenue" the city would have seen from the W. Side project would have been in the form of income taxes paid by all those fabulous hot dog vendor "jobs" the project would have created. Yes, there would have been construction jobs, but those are not long-term.
On a related note, the sky did not part and angels did not weep at the unveiling of the Atlantic Yards in Brooklyn, which last I checked looked to be a monstrosity plopped down in the middle of an already-vibrant neighborhood, one in which buildings are already being grabbed by Ratner Co under eminent domain.
"Also, Bloomberg's credibility has been tied to it ever since the Jets West Side Stadium plan and Olympics propossal died."
-- Total agreement on this. It was a truly odd mis-step by Bloomberg, who has otherwise been a surprisingly good mayor. That said, it's hard to see why his credibility being tied to the W. Side project gives it any extra validity, when it really just marks a sign of poor judgment.
Re:transport, the Airtrain does not connect to the subway, but to commuter trains that have no room for luggage. Not the easiest thing to navigate coming in from a long trip from JFK, but I agree that it's a hell of a lot better than sitting on the Van Wyck for 2 hours and paying $60 for the privelege.
"But it seems probable that the principal cause of the break in prices during that first hour on October 24th was not fear. Nor was it short selling. It was forced selling. It was the dumping on the market of hundreds of thousands of shares of stock held in the name of miserable traders whose margins were exhausted or about to be exhausted. The gigantic edifice of prices was honeycombed with speculative credit and was now breaking under its own weight."
"Jesse's Cafe Americain has some interesting things this evening"
He says, "In the short term, fundamentals have little or nothing to do with market performance in the type of market which we are in now, which is a speculator's market awash with desperate hedge funds and big trading banks loaded with hot money."
"How do you fight this? The best and most appropriate measure for most 'traders' is to lengthen your timeframes and shorten your leverage."
In case you missed it, the subway + Airtrain extension has been going to JFK for several years.
Ah yes, the Airtrain. Sounds so spiffy and high tech -- all 3 miles of it. An elevated white elephant to nowhere. Why is it that cities that have been around for thousands for years in Europe somehow manage to open mass transit corridors to their airports from downtown while NYC continues to depend on its nineteenth century infrastructure? No, rich, I didn't miss it -- but I will next time. Only 60 bucks to escape the creaking tracks, filthy platforms, antique switching systems, and rats the size of racoons -- what a bargain. TAXI!!
I don't have any genius. I just read the NYC media every day. The collapse of the West Side railyards and the continuing problems with the Atlantic railyards in Brooklyn are the two biggest stories in NYC CRE, next to Ground Zero.
Frankly, it's just idiotic and makes me think that some people on here take some sort of fetishistic glee in the potential misery of others. Or are so unempowered in their lives that this is the only expression of control they ever get.
ipodius, I like some of your comments, but this sort of pretentious psycho-babble is wearisome. This is a very puzzling time, and the fact that there's disagreement about where it's going is not indicative of character flaws.
ipodius- Although you obviously have a wealth of knowledge and expertise, I'd bet you never dreamed that lenders would offer NINJA loans to practically anybody. The weird housing market has led to losses that are still mounting, and no one knows where it will stop. That it might reach one trillion is still in the realm of possibility, even though less than a year ago we were told it would be what,..a hundred billion?,...and contained. Everything may turn around, but the key concept before the Great Crash was that most compelling of the surviving stories are of educated men blind to what was coming.
You know, unthinkable things are happening frequently now it seems, last December, who thought Bear Stearns would be gone? Who thought oil would reach $120? Crazy people, that's who. And yet things happen.
ac's comments kind of reflect the things I'm thinking, too, and when some one calmly corrects my misapprehensions, I'm thankful, but in the back of my mind, I'm thinking what CR always says- no one has a crystal ball.
dc1000 said that this blog used to have things figured out. Well, did the smart commenters all just go away? Or are things so unsettled that a whole lot of unlikely scenarios are in play? Yes we want answers, but a lot depends on the discovery process.
You want a prediction? The only one I'm sure of is the bottom will be reached when CR closes the confessional.
"But it seems probable that the principal cause of the break in prices during that first hour on October 24th was not fear. Nor was it short selling. It was forced selling. It was the dumping on the market of hundreds of thousands of shares of stock held in the name of miserable traders whose margins were exhausted or about to be exhausted. The gigantic edifice of prices was honeycombed with speculative credit and was now breaking under its own weight."
It's interesting how back then it was speculative credit that caused the great crash.
But today we know they were just stupid and it was simply lack of rate cuts.
These are the same people that were arguing that markets were efficient a few years back.
Quite a dose of historical revisionism it seems like to justify repeating the same actions that we're taken in the past.
Makes me think somebody makes a helluva lot of money or gains a lot of power from other peoples' personal disasters.
Also, how can a guy who writes like this be wrong about anything?
One thing more: as you look at the high prices recorded on September 3, 1929, remember that on that day few people imagined that the peak had actually been reached. The enormous majority fully expected the Big Bull Market to go on and on.
For the blood of the pioneers still ran in American veins; and if there was no longer something lost behind the ranges, still the habit of seeing visions persisted. What if bright hopes had been wrecked by the sordid disappointments of 1919, the collapse of Wilsonian idealism, the spread of political cynicism, the slow decay of religious certainty, and the debunking of love? In the Big Bull Market there was compensation. Still the American could spin wonderful dreams-of a romantic day when he would sell his Westinghouse common at a fabulous price and live in a great house and have a fleet of shining cars and loll at ease on the sands of Palm Beach. And when he looked toward the future of his country, he could envision an America set free-not from graft, nor from crime, nor from war, nor from control by Wall Street, nor from irreligion, nor from lust, for the utopias of an earlier day left him for the most part skeptical or indifferent; he envisioned an America set free from poverty and toil. He saw a magical order built on the new science and the new prosperity: roads swarming with millions upon millions of automobiles, airplanes darkening the skies, lines of high-tension wire carrying from hilltop to hilltop the power to give life to a thousand labor-saving machines, skyscrapers thrusting above one-time villages, vast cities rising in great geometrical masses of stone and concrete and roaring with perfectly mechanized traffic-and smartly dressed men and women spending, spending, spending with the money they had won by being far-sighted enough to foresee, way back in 1929, what was going to happen.
Morris said, most debtors were likely to have had unexpected health-care costs, lost their jobs, or found themselves in a slow downward spiral ending in bankruptcy court.
Today, she sees people who have been swallowed up by their debt much more quickly because of the subprime crisis.
"They have to make a choice: if they're going to make a credit card payment or if they are going to make the mortgage payment. And at $4 a gallon for gasoline and at the cost of food, they are probably making their credit card payments and not their mortgage payments because they know that they have to keep that credit card balance moving so that they can live."
You're being generous. I'm not sure anyone at BU has a 'wealth of knowledge and expertise', but at least iPod is accumulating some of the former here@CR. You are on a roll tonight, btw. Enjoyed the last pontification.
The 1 million square feet of space is a headline sound byte. It's something Jamie Dimon pulled out of his ass so people would think he got a good deal on Bear building and is going to use excess space to juice future earnings. It's not real, but it suckered in some people, including CR.
For the last two years, I've been visiting clients in Midtown and Downtown where there used to be whole floors full of employees and now they're almost empty. Whenever I ask where all the people went, the answer is always the same. "We had a reorg and they moved to the 5th floor."
But the 5th floor once was full, too. There's been a lot of closet downsizing and warehousing of vacant office space.
One of those vast, nearly empty floors can have up to 30,000 square feet of space. So, we're suppose to get JUMP UP AND DOWN EXCITED about 30 more empty floors?
[Whenever I ask where all the people went, the answer is always the same. "We had a reorg and they moved to the 5th floor." ]
FWIW - My employer, fortune5, has a 5 year old initiative to get people to work at home a good portion of the month. They supply common areas when employees come in to any facility. They have reduced their footprints and costs in many cities, without letting staff go...
Extrapolate. People shifting money to credit cards since they can no longer afford the gas/food like before. My neck of the woods? Food banks are begging and usage up about 35 -40% while Dow/S&P move back/forth and unemployment at 5%. Okay, so the market indicates how things are on main street?
Per CNBC today, some analyst is seeing data that folks are moving to inferior goods (duh, but MSM is a lagging indicator) and jettisoning the American made SUV/Pickup trucks for smaller models - none of which are mainstays for domestic manufacturers.
Domestic credit bills are higher than before and with 70% of the economic push from consumers, what picks up when they cut back? In late 1970s/early 1980s, the savings rate was well nigh 10%. What's the effect when the average consumer moves from no savings back to the retrenching rates of 9 - 10%?
Some time back, asked the question of whether the Bernanke Put backstopped the entire system or just the moneycenter banks? Response was to effect that if not a moneycenter bank, you're screwed. FWIW, my mortgage lender is FHN and I pulled my contract last week to see who gets the $$ if they go under.
Sorry ipodius, but I don't see things looking up. Average J6P is well and truly screwed. For a good while, at least.
BTW in other books I've read about the depression they make the rather provocative claim that Coolidge saw what was coming and that Hoover was basically set up. Again it suggests that people knew they'd wrecked the economy before Hoover became president, which makes it harder to put all the blame for the Depression on him as is commonly done today. I wonder if maybe Greenspan had similar plans for Bernanke.
This bit from "Only Yesterday" is interesting in that regard:
Let us glance for a moment at the next morning's paper, that arm-breaking load of reading-matter which bore the date of Sunday, March 4, 1928. It was now many months since Calvin Coolidge had stated, with that characteristic simplicity which led people to suspect him of devious meanings, that he did not "choose to run for President in 1928"...
FWIW, Halberstam's "The Fifties" has some interesting insights on the rise of advertising and why it occurred.
Push was to get people continuing to spend so that their money wouldn't just get shoved under the mattesses a la the 1930s.
Hey, does MBIA go bankrupt in Q2 (only $2.0 billion in equity left), or will they raise some money before the quarter is done? Seems like they had tough sledding last time they went out to raise money.
Second question -- if MBIA's liabilities move to greater than their assets, will that finally trigger a move down from AAA?
Ridiculous: $2 billion in equity against $1 trillion in guarantees.
Ht-Misean...you couldn't have said it any simpler re: the interest rate vs. inflation.
W/ apologies, I'd like to add that increased inflation (that is, prices-not anticipated future cash flows) will rise when interest rates are below the long term rate of price inflation in a given sector.
When prices rise, the value of future cash flows declines. IOW- expected returns must fall.
It doesn't bother me personally if "the market" is willing to accrue lower returns by pumping up prices. And, there is no need for a huge drop or crash if market participants are ok w/ returns below 3% over the course of the next 10 years.
PE/ H. Funds, Funds of Funds, etc. overpay for assets "most" of the time. Primarily b/c they receive vast sums of dough and "must" do something w/ them in short order, IMHO.
The question is the creditors and amount/ type of leverage in ANY market.
Sorry for the wonkish remarks, and Ipod, I don't think most people here want to see others fail so they'll feel better about themselves.
Granted, I could be wrong, but, I just feel like when things are so cloudy, people get a little antsy.
FWIW- If you're long OR short equities, good luck! Since june of 07 I've been in 1-2 year Treasuries and there I'll stay at 2.5% until I get a better sense of where our creditors decide they want to price our imports.
Per CNBC today, some analyst is seeing data that folks are moving to inferior goods (duh, but MSM is a lagging indicator) and jettisoning the American made SUV/Pickup trucks for smaller models - none of which are mainstays for domestic manufacturers.
I did my Taco Bell run today and loaded up on dozens of 89 cent tacos to get me through the week.
Inflation be damned.
You can store them in the freezer BTW since they don't have much lettuce.
Also if you're making budget iced coffee with non-dairy creamer I found out the hard way you need to mix the creamer in the coffee while it's still warm.
Things have gotten tight since I found out I don't qualify for an economic stimulus check.
Hey, ac and rich, yesterday I did some calculating. If household debt and GDP follow the same glidepath down over '29-'33 and glidepath up over '33-'39, our downturn will last SIX years and it will take us TEN years to return to 'normal' household debt to GDP.
jg writes:
Hey, ac and rich, yesterday I did some calculating. If household debt and GDP follow the same glidepath down over '29-'33 and glidepath up over '33-'39, our downturn will last SIX years and it will take us TEN years to return to 'normal' household debt to GDP.
Maybe so. I think what's coming in this glide path is a hard landing for most things "financial services." People are starting to feel that they've been sold a big bill of goods.
Maybe the first real awakening was the property-casualty insurance scams that happened after Katrina and the Florida hurricanes. Instead of paying their claims and taking their lumps, insurance companies started trying to nickel and dime people, jacking up rates and cancelling whole areas. Now, a lot of consumers no longer trust them.
Same since with Realtors, mortgage brokers, investment brokers who sold auction rate, etc. A lot of ordinary people feel things are no longer right with the stock market, the derivatives market, hedge funds, the ratings agencies, etc.
It takes a long time to build credibility for financial services. But only a short time to destroy it.
We could be looking at another era of investment regulation like the 30s that produced the SEC, the 33 Act, the 34 Act and the 40 Act.
homedad43 writes:
FWIW, Halberstam's "The Fifties" has some interesting insights on the rise of advertising and why it occurred.
Push was to get people continuing to spend so that their money wouldn't just get shoved under the mattesses a la the 1930s.
homedad43 | Homepage | 05.12.08 - 11:43 pm | #
I studied some of this when I was getting my MS.
Some of what you describe is a result of Schumpeter Effect - as major product cycles 'mature' it gets harder and harder to get consumers to pop premium prices for what they perceive as the same thing old thing. Think of it as 'new shades of pantyhose' or 'new flavors of toothpaste' - pretty much same old same old blah. So marketers push REAL hard to stimulate want for those blah products... the more blah the product offering the harder the task required to move it.
In that environment returns pretty much suck because there is increased selling cost and competition and discounting and the fundamental need really isn't there (I already have toothpaste - it tastes fine - I don't need a new flavor).
We've all heard some product or trend is the 'new black' - it's a tongue in cheek reference to this phenomenon. Its a tough & expensive sell.
The ugly part from a societal perspective is that the end phase of a mature product cycle is usually associated with two problems:
(1) Wages & profits are generally flat if not falling. Without the margins from exciting products - you can't pay a lot more to workers or investors. A vicious cycle sets up.
(2) Speculation. Investors who were conditioned to expect pretty hefty returns from the earlier phases of the product cycle aren't happy with the meager returns in the mature (commodity) phase... so they 'chase alpha' by either taking more risk or levering up or both.
I think we are seeing both effects occur right now.
We probably won't get fully free of this drag on the economy for another 10-15 years... until the next big high margin innovation dominates the world economy. Innovation waves take something like 40 years or longer to play out from start to finish... by that time we will have burned off a lot of the excess money & wealth from the last big boom and have laid the economic field bare for the next big thing to really take off free and clear of the worst of the baggage from the past (that's the final phase of creative destruction).
So until then enjoy the ride & get by as best you can.
4shzl | 05.12.08 - 10:33 pm | #
Only 60 bucks to escape the creaking tracks, filthy platforms, antique switching systems, and rats the size of racoons -- what a bargain. TAXI!!
I think you will change your mind when you miss your flight being stuck on mid-town tunnel, Van Vyck, BQE or LIE.
Tip: If you are doing a flight from LGA try the water taxi from Wall Street or 34th Street to the Delta Shuttle Terminal.
AJW "Re:transport, the Airtrain does not connect to the subway, but to commuter trains that have no room for luggage."
Huh? I've taken the subway (E train) many times to Jamaica station where it connects to the AirTrain. I've also taken the LIRR (commuter train) to the AirTrain with a suitcase. Maybe you should try it sometime. Much more reliable than getting stuff in traffic in a cab.
All the big Texas banks did the same thing in the 1980s. It's a repeat performance. Ultimately, all of them failed or merged except for Cullen-Frost Bank. Out of state banks were finally allowed into Texas to pick over the reamins. This is a repeat performance in so many ways on a much larger national scale. The last go around depleted FDIC's fund during Bill Seidman's chairmanship (which he denied). Buckle up and make sure your bank deposits have FDIC insurance coverage or move it.
Bernanke Lunched With Dimon, Rubin Before Bear Rescue
"Federal Reserve Chairman Ben S. Bernanke lunched on March 11 with a Who's Who of Wall Street leaders, including JPMorgan Chase & Co.'s Jamie Dimon, three days before the central bank rescued Bear Stearns Cos. from bankruptcy.
Other guests included Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein, Lehman Brothers Holdings Inc. CEO Richard Fuld, Morgan Stanley President James Gorman, Citigroup Inc.'s Robert Rubin, Blackstone Group CEO Stephen Schwarzman and Merrill Lynch & Co. CEO John Thain. Alan Schwartz, the CEO of Bear Stearns, was not listed among the attendees." Bernanke Lunched With Dimon, Rubin Before Bear Rescue (Update1) - Bloomberg.com
tj&tb, My guess and that is all it is would be to count up the numbers in the 1980s that depleted the fund. It's hard to know because some banks are very costly to resolve and others are not. Now there are bank products and hedge funds that will hit FDIC that were not fully developed or even invented 20 years ago. It's a different age and unfortunately FDIC did not keep up with the rapid inovations in banking. I think we are all pretty fucking clueless including our leaders.
FFDIC,
Great... so it'll be national banks in trouble and out of country banks will pick over the remains... at least they'll need some locals to work the American branches... I hear Saudi Arabia has some great 401k plans... oh... what? You mean those are plans for a 401 km tall building?
Although some of the official numbers look good for the economy (the stock market is holding steady, for example) and other numbers are very bad (oil prices up, house prices dropping), another measure the economy is in the ability to deal with disasters.
A cyclone hit Burma and the response has been disturbingly bad, causing all of us to make (conscious or unconscious) assumptions about the overall political and economic health of that country.
We can do the same with the US. The reaction to Hurricane Katrina was an embarassment. But last year's fires in southern California were handled very well, all things considered.
Now we have above-average rainfall and tornados from Minnesota down to Georgia --- unusual temperatures, destructive storms, and more.
I'm not getting into the global warming debate here --- this little bottom-of-the-thread essay isn't THAT far off-topic --- but I think everyone should pay attention to these facts just as much as Fed rates and Housing Starts. They are key indicators of the current crisis.
"Confidence in Britain's housing market has sunk to its lowest level for more than 30 years, figures to be published today will reveal, as property prices continue to fall and mortgage lenders restrict home loan finance. The Royal Institute of Chartered Surveyors (Rics) says that 95 per cent more surveyors reported a fall in house prices in April than a rise, the worst figure it has reported since it began publishing monthly property market surveys in January 1978. ..."
Another vote here for the LIRR to the Airtrain. I've taken limos, the A train, and even the helicopter once or twice. I don't like stressing about traffic. The A train is only marginally better than a taxi, but the LIRR is great.
The only way you get me in a cab is if I'm travelling with the kids and extra bags.
(That said, I avoid JFK when at all possible, and will happily pay more to fly out of EWR.)
dc1000 said that this blog used to have things figured out. Well, did the smart commenters all just go away?
dc1000 has also told us he recently borrowed something like $20 million to develop a large number of residential lots outside of DC. Based on my experience, that makes one look on the sunny side of things. Because the alternative isn't something you want to ponder.
Unless the american economy has decoupled from the american consumer, there is going to be a noticeable change in the future.
Libor Poised for Shake-Up as Credibility Is Doubted (Update2)
By Ben Livesey and Gavin Finch
May 13 (Bloomberg) -- The benchmark interest rate for $62 trillion of credit derivatives and mortgages for 6 million U.S. homeowners faces its biggest shakeup in a decade as lawmakers question if banks are understating borrowing costs.
byzantine ruins, I think this LIBOR story bears watching. Motive for alleged manipulation has not been clearly explained. Even if there has NOT been deliberate manipulation, the dependence of so much other stuff on what seems the unregulated activities of a small ad hoc group makes me nervous. Suppose some natural disaster made LIBOR unable to function. What would happen to all the contracts built around LIBOR?
Try comparing relevant facts between now & '29 and you'll see that we're actually in worse shape, not better.
This is the type of comment I'm talking about. Utterly idiotic. Sure, we're in worse shape. I mean look around you...look at the figures, the facts and the stats. And you call me a troll? If this statement isn't troll-like I have no idea what is.
I agree with dc1000. It is like the housing bubble blog. I used to read that constantly when things were inflating and it was really, really good. The comments were excellent, people had great insight and then something happened. The invasion of the strange segment that, as I said, fethisizes misery. Looks like that happened here too.
And where did all the people go that actually knew something and contributed here? The same place all the real conservatives in the republican party went...they left and went elsewhere because of all the nuts drowning them out.
Now, let's look at the retail numbers today. I'm sure someone here will find some parallel to the 1920's again...ugh.
As for transport to airports, living in the DC area I'm a big fan of the B30 metrobus route, an express that leaves from a stop 4 blocks from my house nonstop to BWI. $3.00, 30-50 minutes depending on time of day.
People, people, you crack me up, you guys fighting over the worst NYC CRE debacle. I remember back in 05 when you were starved for meltdowns -- just be happy you have buffet from which to choose now.
The big picture is the most interesting - huge office vacancy rate, projects scrapped, condos going unfinished or turned into rentals, foreclosures spiking, net outmigration of all those potential owners/renters, and amid the ruins, a few remaining real estate firms weakly warble the same 'it's different here' tune. At least the Times has stopped the inane singing (although the ad slaves at Timeout NY had to craft a tragicomic cover this week on why it's a great time to buy)
ps. the nyc subway ain't perfect, but rich is right - ridership is increasing steadily due to the gas crisis- and cab ridership has taken a dive. Most u.s. cities can only wish they had our mass transit infrastructure in place.
We all know what's coming. It's just a matter of when. The dot com bubble was largely contained to foolish stock investors to the tune of $1trill in losses and contributed to a mild recession. This time the Fed and Wall St. have blown up not only the housing market for the next 5 years or more, but the entire global financial system. And the "fix" is only making it worse, with runaway inflation and destruction of savings and credit. This has been the largest Ponzi scheme ever perpetrated on mankind, and the consequences are now unfolding like the beginning of an avalanche. Yes, look at the big picture--as ugly as it is now, how can it not get much worse?
I don't think that's the same Banker that used to post here. I've seen occasional posts on here recently for someone calling themselves Banker, but their "homepage" links to some strange fx trading website. I think the one on Big Picture does as well.
Gosh, Dryfly, you forgot the part of the marketing cycle wherein the firm goes to Washington or local government and lobbies for a law to mandate that consumers buy product for the betterment of all... or, get permission to charge incremental fees for your sales and marketing efforts like 12-b. Other rich legal possibilities...
hmmmmmmmmmm
Harry Macklowe says "Uh oh"
Office Space? Loved that movie.
Well, this would explain why my commercial landlord has been so friendly lately.
Arent they moving into the Bear Stearns building? There was a huge building boom in the late 1920s. So overbuilt that they didnt need to build for decades.
CR-
What does this mean? I searched the Bloomberg site and couldn't find this title. Could we get a link?
Thanks
"We've already identified a million feet that will be eliminated," [CEO] Dimon said.
Wait a minute, he didn't actually say square feet.
OH... MY... GOD...
Drove past my gas station this morning, regular unleaded was $3.64/gallon. Driving past it tonight, $3.77/gallon.
Good thing I don't use diesel, though. That jumped 20 cents ($4.29/gallon to $4.49/gallon).
Maybe Dimon sees what's happening outside Manhattan and realizes what will happen to Wall St in the 2nd half.
Well, this would explain why my commercial landlord has been so friendly lately.
We're looking at a new place and basically being offered a much better rate per sq foot than we have now and about half a year with no rent to make changes to the place and move in.
Wait a minute, he didn't actually say square feet.
OH... MY... GOD...
500,000 traders in the soup line sounds like a good start to me.
Isn't there a lawyer joke along those lines?
For anyone who is in New York, you can see the vacany rate increasing day by day. MANY vacant store fronts are right in midtown. Judging from this article it is not getting better anythime soon.
Good thing I don't use diesel, though. That jumped 20 cents ($4.29/gallon to $4.49/gallon).
Maybe Dimon sees what's happening outside Manhattan and realizes what will happen to Wall St in the 2nd half.
You know I honestly think people in places like Manhattan don't understand how much people drive in the rest of the country or how much they're affected by higher gas prices. The way our suburbs are organized around city centers with highways, 50+ mile commutes round trip are common. People already under stress are getting killed at the margins now, and I honestly believe this is so Wall Street can make a few more bucks. (Either that or the existence of China was discovered on Aug 17, 2007.)
I knew that Blackstone acquisition of Equity Office with the flip of prime properties to Tishman Speyer was the sign of a market top.
ac,
"(Either that or the existence of China was discovered on Aug 17, 2007.)"
What is this "China" you write of...
Cheers,
The Dawg just stands here looking smug.
Seriously though this isn't about being right or ahead of the curve or "smart."
there are mega, macro, micro and locational trends all interplaying. NYC is more special than most in that it has managed to recreate its 1950 census population and density. An example of successful new urban America. By some measures the only success. That doesn't say anything to how it will fare in post urban America however. Going for it are location, critical mass, inertia and and a claimed extremely low per capita energy consumption. Against; congestion, raw cost of living, dependency upon public funding sources for core amenities. Making the net-net call is not only above my pay grade but likely unknowable. The wildcard in my opinion is whether corporations embrace the mobility their employees have adopted. Only time will tell.
1mm square ft of office up for sublease is not in-and-of-itself a huge amount of space to absorb in NYC. HOWEVER, in a market where 4 hedge funds are closing for every 1 being created (and financial firm contraction in general), this can and will change the pricing outlook for the worse over the next year. As we have all learned here from Resi RE, its the changes AT THE MARGIN that set prices.....
Forget HM....uhoh DB and LEH......
How many ex-employees does it take to fill 1M^2ft of office space?
Back of napkin at 100 sq feet per person...10,000.
Cheers,
1 million square feet of office space is the equivalent of 32 floors of a World Trade Center tower, approximately.
ac,
"(Either that or the existence of China was discovered on Aug 17, 2007.)"
What is this "China" you write of...
Cheers,
You know a friend told me about the existence of another little known nation of about a billion or so people and that when the broader markets find out about it oil will be up to $230/bbl in a heartbeat.
Frankly I'm skeptical that we could really have 2 nations of over a billion people and be able to buy gas at all.
Nemo writes:
\t"We've already identified a million feet that will be eliminated," [CEO] Dimon said.
Wait a minute, he didn't actually say square feet.
OH... MY... GOD...
Could be worse, they could actually be considering hobbling the employees they intend to retain. That would make an even million.
(Either that or the existence of China was discovered on Aug 17, 2007.)
ac | 05.12.08 - 7:32 pm | #
Que???
Chris
Anonymous writes:
... There was a huge building boom in the late 1920s. So overbuilt that they didnt need to build for decades.
A lot of buildings were finished after the crash, Chrysler Building 1930, Empire State Building 1931, Waldorf-Astoria 1931... All, of course, started before the crash.
Eliminated?
Call Vinnie! We got a job to do help wid da excess inventory!
Full insurance, right?
Seriously, so the office property Reits have just recovered from that last swan dive....
Just one thing after another. I almost died laughing reading Ben Stein's column about how all is well.
Yeah, sure. Contained again.
It will be over when we finally hit bottom. At which point folks will start taking the armageddon bunch seriously. Last I checked they were still in tinfoil land.
Someday this war's gonna end...
Time to "GO EUROS"
ECB's Trichet: Banks Must Disclose Risks In 1st Half Results
http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20080512%5CACQDJON200805121156DOWJONESDJONLINE000321.htm&&mypage=newsheadlines&title=ECB's%20Trichet:%20Banks%20Must%20Disclose%20Risks%20In%201st%20Half%20Results
So do JPMorgan's employees now all get smaller offices, or are they laying off employees?
Que???
Chris
Something about the price of oil.
"Eliminated?
Call Vinnie! We got a job to do help wid da excess inventory!
Full insurance, right?"
In Santa Cruz, we call that "Santa Cruz Redevelopment." Inconvenient buildings tend to catch fire. They always blame it on transients.
Bailout Update - House FHA & FNM/FRE bill in senate banking committee...
[Shelby, who has been a vociferous critic of Fannie Mae and Freddie Mac, said on Monday that he was content to let a bad bill fail.]
Senate panel set for housing vote Thursday: source
| Reuters
Well, thanks for the NY coverage, CR. But as far as the impact on the Manhattan CRE market goes, this news is peanuts compared to the post I linked last week about the collapse of the West Side railyard project.
Here's another link:
WEST SIDE MESS - NYPOST.com
It's also peanuts compared to the dimming prospects for the Atlantic City railyard project of Bruce Ratner in Brooklyn.
I know you want to sound like a bi-coastal guy, CR. But why not let the people who know NYC better plug you into what's really important in CRE here? Just because Jamie Dimon speaks, people in California listen?
Meanwhile, the double inverse ETF on CRE REITs was down big today.
I guess it is the "dollar is up, so inflation will be moderated, so interest rates stay low, so CRE benefits and REIT payouts are more attractive" reaction.
What that tells me is that the great minds that were allocating investment dollars in denial of the looming problem with residential real estate lending are still in charge of allocating investment dollars and are still in denial about looming economic problems.
At least JP Morgan finally settled my mom's estate after five freaking years.
I don't really care what happens to them now, as long as they don't crater my sister and nephew's trust funds. I can't afford to take care of them with all their disabilities.
You are right, ac. The one great blessing of NYC is the world's best mass transit. What a lot of people don't realize is how much mass transit blankets the NYC metro. Some people only know about the NYC subway system, which is the world's largest. They don't know about:
3 Metro North lines into upstate and CT.
a huge NJ transit system of rail and bus.
a huge NYC and regional bus system.
water taxis.
Mass transit costs keep going up a lot. But it's become so much cheaper than driving as gas and tolls skyrocket. Transit ridership is way up all over the metro.
Rich....quick question....
How are CRE projects 3-5 years from completion (likely or not), relevant to 1mm sq ft of prime office space hitting an already turning market all at once in the next few months?
In other words.....please share the NYC CRE genius you profess to have....
AllenM,
"At which point folks will start taking the armageddon bunch seriously. Last I checked they were still in tinfoil land."
No one here but us crickets.
Shoes just keep dropping. The local wacky DJ show in the morning here, is doing mortgage related sketches. And the water cooler talk is taking a marked black mood at work.
I've yet to hear..."You were right...".
When that happens, I think I shall fall over dead.
Cheers,
(Either that or the existence of China was discovered on Aug 17, 2007.)
ac | 05.12.08 - 7:32 pm | #
Que???
Chris
That was the day oil started skyrocketing to the moon due to "fundamental factors" after languishing for months. It was also, purely coincidentally, the day that the Fed began easing monetary policy in the most recent round (by cutting rates at the discount window).
See for yourself:
Aug 17, 2007 is China Discovery Day
That's deflationary.
ac,
Shoveling freshly minted liquidity at below the rate of inflation causes prices to rise?
Hoocoodanode!
Cheers,
ac,
Shoveling freshly minted liquidity at below the rate of inflation causes prices to rise?
Hoocoodanode!
Cheers,
Misean
Whodathunkit?
Certainly not a "Depression Expert"!
I mean it's not like the whole modern economics profession is a joke or something centered around a fraudulent premise:
The speculative fever had been intensified by the action of the Federal Reserve System in lowering the rediscount rate from 4 per cent to 3 1/2 per cent in August, 1927, and purchasing Government securities in the open market. This action had been taken from the most laudable motives: several of the European nations were having difficulty in stabilizing their currencies, European exchanges were weak, and it seemed to the Reserve authorities that the easing of American money rates might prevent the further accumulation of gold in the United States and thus aid in the recovery of Europe and benefit foreign trade. Furthermore, American business was beginning to lose headway; the lowering of money rates might stimulate it. But the lowering of money rates also stimulated the stock market...
FREDERICK LEWIS ALLEN
Scarsdale, New York
June, 1931
ac,
"Certainly not a "Depression Expert"! "
Isn't B.S. Bernutty a depression exper?
Hoo boy....
A modern day Fischer if there ever was one.
Cheers,
godihatejargon, I couldn't find a link online (it's a Bloomberg story), but they are freeing up 1 million square feet of office space in the combination of JPMorgan and Bear Stearns. The Bear building will be the main building.
Best to all.
The dark mood around the water cooler mentioned above is replicated in the late night call in shows. If you have to do an overnighter in the west and listen to Denver, LA, and SFO, it is proof that the average person is figuring out how collectively screwed we all are. It took a year, but the message is sinking in.
As a user of 25 square feet of office space at JP Morgan, I can't afford to give any back. It is tight in those cubes
For anyone who is in New York, you can see the vacany rate increasing day by day. MANY vacant store fronts are right in midtown. Judging from this article it is not getting better anythime soon.
It'll probably get worse. What % do you think are occupied by a bank? Just imagine what Chase or Citi will do once they decide to cut expenses.
This must be a response to new tax to drive into Manhattan
Viewing with alarm,
Sorry to break it to you, but the entire US doesn't revolve around SFO, LAX, and Denver. Many of those offices are moving elsewhere.
BTW, once again let's be reminded of the prelude to one of the biggest stock market melt-ups in history. It's one of my favorite stories of all time:
There had been such a marked recession during the latter part of 1927 that by February, 1928, the director of the Charity Organization Society in New York reported that unemployment was more serious than at any time since immediately after the war. During January and February the stock market turned ragged and unsettled, and no wonder -- for with prices still near record levels and the future trend of business highly dubious, it was altogether too easy to foresee a time of reckoning ahead.
The tone of the business analysts and forecasters -- a fraternity whose numbers had hugely increased in recent years and whose lightest words carried weight -- was anything but exuberant. On January 5, 1928, Moody's Investors Service said that stock prices had "over-discounted anticipated progress" and wondered "how much of a readjustment may be required to place the stock market in a sound position." On March 1st this agency was still uneasy: "The public," it declared, "is not likely to change its bearish state of mind until about the time when money becomes so plethoric as to lead the banks to encourage credit expansion." Two days later the Harvard Economic Society drew from its statistical graphs the chilly conclusion that "the developments of February suggest that business is entering upon a period of temporary readjustment"...
Anybody who had chosen this moment to predict that the bull market was on the verge of a wild advance which would make all that had gone before seem trifling would have been quite mad -- or else inspired with a genius for mass psychology.
The Big Bull Market
BROOKLYN! writes:
As a user of 25 square feet of office space at JP Morgan, I can't afford to give any back. It is tight in those cubes
BROOKLYN! | 05.12.08 - 8:55 pm | #
What do you bet they have plans to free some of that space up.
Brooklyn: you have cubes? Try "bench style" seating, or better still, "modified trading desks". They allocate space in linear sq inches now; zero offices, even for MD's. Oh, and BTW, this is a trend that will never be reversed - get used to it.
The one great blessing of NYC is the world's best mass transit.
ROTFLMAO! Dude, I'm in agreement with many of your comments, but this is just silly. When's the last time you took the subway to JFK?
ac, Have you watched King Vidor's "The Crowd"? It was filmed in 1928, depicting some "tough times" and long lines for work. People were realizing long before the "great crash" the there were problems stacking up.
dryfly,
"What do you bet they have plans to free some of that space up."
$100....
Stop hitting me..sheesh.
Cheers,
ac, Have you watched King Vidor's "The Crowd"? It was filmed in 1928, depicting some "tough times" and long lines for work. People were realizing long before the "great crash" the there were problems stacking up.
Even at the time people were saying "the next guy to get elected president is going to be the most hated guy in history".
People knew they'd done wrong even before the hammer finally came down.
BTW, once again let's be reminded of the prelude to one of the biggest stock market melt-ups in history
ac, do you actually read things from the real world? do you, say, look at earnings across sectors to see what's up? Because by what you post, you're definately not living in the same world I'm in.
Let's see...TED spread the lowest it's been, earnings not diving in any sector except financials yet...even retail, signs of life in some housing markets, interest rates still low, and no matter how you slice it, still no actual recessionary numbers. Inflation still tame by historical standards, and unemployment low.
Yup, THE BIG MELTDOWN IS COMING!!! RUN AND HIDE!! lol
BTW, once again let's be reminded of the prelude to one of the biggest stock market melt-ups in history.
Been there, seen that .... in 1999/2000. Not likely to see it again in my lifetime.
Yup, THE BIG MELTDOWN IS COMING!!! RUN AND HIDE!! lol
I didn't say anything about a meltdown. =/
Here's real world earnings BTW:
<a href="http://online.wsj.com/mdc/public/page/2_3024-industryearn.html>Industry-by-Industry Quarterly Earnings
Companies reporting as of May 08, 2008
At least you can take mass transit to JFK now
Also, I notice that people frequently post insulting comments on related financials sites using the moniker "ac".
FWIW this is the only site that I post to using that name.
Guess I hit a few nerves.
ac i get an historical feed from S&P and it goes directly into software i have. so i'm well aware of numbers, can screen on any criteria i want even setting datapoint mix/max's in combination, and run projections and trends across individual stocks and any groupings i can think up.
i've said that, with my forward earnings projections, the market is over valued, but you can put any idea of resemblence to the 1920's away. And yes, we're past any financial melt-down thanks to the fed...opinions here notwithstanding it looks like history will judge what was done kindly unless something really drastic comes along which is, now, getting more unlikely with each passing day.
I think what hits nerves is redonkulous posts about some similarieis to the 1920's and the hint that something like this is going to happen now. Frankly, it's just idiotic and makes me think that some people on here take some sort of fetishistic glee in the potential misery of others. Or are so unempowered in their lives that this is the only expression of control they ever get.
How about some analysis of the latest numbers? The easing of the TED spread? The latest economic indicators? The price of fuel? Food? What happening at the comsumer level now? Likely unemployment numbers through the summer?
ipodius,
"I think what hits nerves is redonkulous posts about some similarieis to the 1920's and the hint that something like this is going to happen now"
It's not idiotic.
But have a nice day pretending it is so.
Cheers,
Credit Guy,
I don't have any genius. I just read the NYC media every day. The collapse of the West Side railyards and the continuing problems with the Atlantic railyards in Brooklyn are the two biggest stories in NYC CRE, next to Ground Zero.
They are both mega multi-purpose projects that were supposed to serve as anchors for whole neighborhood redevelopments. Their failure/problems mean: 1) huge gaps in tax revenues, employment and jobs, relative to what was budgeted; 2) lack of lender confidence in NYC CRE.
The 1 million square foot story is a nothing, in comparison. It's not going to be dumped on the market all at once, and so what if it was? It's a tiny amount of the NYC space that exists and even space now under construction.
The collapse of the West Side railyard project is like taking the keystone out of a gothic cathedral. Everything from the Javits Center expansion to the proposed multi-billion dollar west side subway extension was tied to it. Also, Bloomberg's credibility has been tied to it ever since the Jets West Side Stadium plan and Olympics propossal died.
The City budgets projected tax revenues out for many years, and now they are going to have to backtrack on budgets, infrastructure funding and hiring big time.
Stop being such a snide ass, Credit Guy.
ipodious - quit bashing yer head. you gotta quit expecting that. these comments have taken a turn over time. starting to feel more like ben's housing bubble blog at times.
i read still but wish that we could all just say, OK WE FIGURED THIS OUT ITS ALL EFFED. SO, WHATS NEXT?
b/c there was a time when this blog had the next thing figgered. now it just reflects on whats obvious
I don't know what you're saying. In case you missed it, the subway + Airtrain extension has been going to JFK for several years. Ridership keeps increasing.
It's about $60 cheaper than taking a cab from Manhattan to JFK, counting tolls and tip. And it's just as fast.
b/c there was a time when this blog had the next thing figgered. now it just reflects on whats obvious
I sure wish I knew what was coming next. I don't forsee good times, but I think this is one of the most inscrutable periods in history precisely because everybody's trying to figure it out and place bets accordingly. That's my whole point to making that post about the "The Big Bull Market".
I get the impression at the time it was the last thing anybody was expecting.
Or maybe it was just the people looking at the situation most critically were those who were most wrong in the short term.
The real world has a curious way of defying expectations.
Jesse's Cafe Americain has some interesting things this evening - among them, that Indymac won't be paying AFN (Alesco Financial) this quarter on 8 large MBSs it owns part of. AFN will still pay its dividend to shareholders, out of its reserves, but after that, who knows? It's about the third or fourth item on his blog now.
Jesse's Café Américain
rich - can't comment for Credit Guy, but to respond to some of your points from the perspective of (I assume?) a fellow New Yorker:
"I just read the NYC media every day. The collapse of the West Side railyards and the continuing problems with the Atlantic railyards in Brooklyn are the two biggest stories in NYC CRE, next to Ground Zero."
-- Perhaps on Curbed.com these are the main stories, but in the reality of people trying to negotiate leases and rent space, the fact of vacancies climbing to 6.1% and a million sq ft of office space coming on line on top of that is a huge deal. It was only a year ago that we were at record low office vacancies.
"The collapse of the West Side railyard project is like taking the keystone out of a gothic cathedral. "
-- The West Side railyard project was a vanity bid for the Olympics coupled with (yet another) citizen-financed sports stadium handout, which would have made west side traffic an absolute nightmare. I have about as much confidence in the developers' good intentions of creating affordable housing as I do in their outpourings of concern for the citizens of New York re:Ground Zero, which as I look out my window remains a gaping hole in the ground (though our ever-effective MTA shares the blame for this of course).
Furthermore, any "revenue" the city would have seen from the W. Side project would have been in the form of income taxes paid by all those fabulous hot dog vendor "jobs" the project would have created. Yes, there would have been construction jobs, but those are not long-term.
On a related note, the sky did not part and angels did not weep at the unveiling of the Atlantic Yards in Brooklyn, which last I checked looked to be a monstrosity plopped down in the middle of an already-vibrant neighborhood, one in which buildings are already being grabbed by Ratner Co under eminent domain.
"Also, Bloomberg's credibility has been tied to it ever since the Jets West Side Stadium plan and Olympics propossal died."
-- Total agreement on this. It was a truly odd mis-step by Bloomberg, who has otherwise been a surprisingly good mayor. That said, it's hard to see why his credibility being tied to the W. Side project gives it any extra validity, when it really just marks a sign of poor judgment.
Re:transport, the Airtrain does not connect to the subway, but to commuter trains that have no room for luggage. Not the easiest thing to navigate coming in from a long trip from JFK, but I agree that it's a hell of a lot better than sitting on the Van Wyck for 2 hours and paying $60 for the privelege.
I enjoyed this bit from Big Bull Market:
"But it seems probable that the principal cause of the break in prices during that first hour on October 24th was not fear. Nor was it short selling. It was forced selling. It was the dumping on the market of hundreds of thousands of shares of stock held in the name of miserable traders whose margins were exhausted or about to be exhausted. The gigantic edifice of prices was honeycombed with speculative credit and was now breaking under its own weight."
"Jesse's Cafe Americain has some interesting things this evening"
He says, "In the short term, fundamentals have little or nothing to do with market performance in the type of market which we are in now, which is a speculator's market awash with desperate hedge funds and big trading banks loaded with hot money."
"How do you fight this? The best and most appropriate measure for most 'traders' is to lengthen your timeframes and shorten your leverage."
In case you missed it, the subway + Airtrain extension has been going to JFK for several years.
Ah yes, the Airtrain. Sounds so spiffy and high tech -- all 3 miles of it. An elevated white elephant to nowhere. Why is it that cities that have been around for thousands for years in Europe somehow manage to open mass transit corridors to their airports from downtown while NYC continues to depend on its nineteenth century infrastructure? No, rich, I didn't miss it -- but I will next time. Only 60 bucks to escape the creaking tracks, filthy platforms, antique switching systems, and rats the size of racoons -- what a bargain. TAXI!!
Or are so unempowered in their lives that this is the only expression of control they ever get.
Hey... ouch, come on Ipod lets us wallow in our hubris for a little bit.
You may have a point though
YouTube
- Global Crisis of American Capitalism 2/2
I don't have any genius. I just read the NYC media every day. The collapse of the West Side railyards and the continuing problems with the Atlantic railyards in Brooklyn are the two biggest stories in NYC CRE, next to Ground Zero.
And here I thought Rich lived in Toledo...
He's Rich Eisen and he is on ESPN everyday.
Frankly, it's just idiotic and makes me think that some people on here take some sort of fetishistic glee in the potential misery of others. Or are so unempowered in their lives that this is the only expression of control they ever get.
ipodius, I like some of your comments, but this sort of pretentious psycho-babble is wearisome. This is a very puzzling time, and the fact that there's disagreement about where it's going is not indicative of character flaws.
Us disempowered make mistakes often
YouTube - The Evolution of Fairness - Michael Shermer
ipodius- Although you obviously have a wealth of knowledge and expertise, I'd bet you never dreamed that lenders would offer NINJA loans to practically anybody. The weird housing market has led to losses that are still mounting, and no one knows where it will stop. That it might reach one trillion is still in the realm of possibility, even though less than a year ago we were told it would be what,..a hundred billion?,...and contained. Everything may turn around, but the key concept before the Great Crash was that most compelling of the surviving stories are of educated men blind to what was coming.
You know, unthinkable things are happening frequently now it seems, last December, who thought Bear Stearns would be gone? Who thought oil would reach $120? Crazy people, that's who. And yet things happen.
ac's comments kind of reflect the things I'm thinking, too, and when some one calmly corrects my misapprehensions, I'm thankful, but in the back of my mind, I'm thinking what CR always says- no one has a crystal ball.
dc1000 said that this blog used to have things figured out. Well, did the smart commenters all just go away? Or are things so unsettled that a whole lot of unlikely scenarios are in play? Yes we want answers, but a lot depends on the discovery process.
You want a prediction? The only one I'm sure of is the bottom will be reached when CR closes the confessional.
I enjoyed this bit from Big Bull Market:
"But it seems probable that the principal cause of the break in prices during that first hour on October 24th was not fear. Nor was it short selling. It was forced selling. It was the dumping on the market of hundreds of thousands of shares of stock held in the name of miserable traders whose margins were exhausted or about to be exhausted. The gigantic edifice of prices was honeycombed with speculative credit and was now breaking under its own weight."
It's interesting how back then it was speculative credit that caused the great crash.
But today we know they were just stupid and it was simply lack of rate cuts.
These are the same people that were arguing that markets were efficient a few years back.
Quite a dose of historical revisionism it seems like to justify repeating the same actions that we're taken in the past.
Makes me think somebody makes a helluva lot of money or gains a lot of power from other peoples' personal disasters.
Also, how can a guy who writes like this be wrong about anything?
One thing more: as you look at the high prices recorded on September 3, 1929, remember that on that day few people imagined that the peak had actually been reached. The enormous majority fully expected the Big Bull Market to go on and on.
For the blood of the pioneers still ran in American veins; and if there was no longer something lost behind the ranges, still the habit of seeing visions persisted. What if bright hopes had been wrecked by the sordid disappointments of 1919, the collapse of Wilsonian idealism, the spread of political cynicism, the slow decay of religious certainty, and the debunking of love? In the Big Bull Market there was compensation. Still the American could spin wonderful dreams-of a romantic day when he would sell his Westinghouse common at a fabulous price and live in a great house and have a fleet of shining cars and loll at ease on the sands of Palm Beach. And when he looked toward the future of his country, he could envision an America set free-not from graft, nor from crime, nor from war, nor from control by Wall Street, nor from irreligion, nor from lust, for the utopias of an earlier day left him for the most part skeptical or indifferent; he envisioned an America set free from poverty and toil. He saw a magical order built on the new science and the new prosperity: roads swarming with millions upon millions of automobiles, airplanes darkening the skies, lines of high-tension wire carrying from hilltop to hilltop the power to give life to a thousand labor-saving machines, skyscrapers thrusting above one-time villages, vast cities rising in great geometrical masses of stone and concrete and roaring with perfectly mechanized traffic-and smartly dressed men and women spending, spending, spending with the money they had won by being far-sighted enough to foresee, way back in 1929, what was going to happen.
Morris said, most debtors were likely to have had unexpected health-care costs, lost their jobs, or found themselves in a slow downward spiral ending in bankruptcy court.
Today, she sees people who have been swallowed up by their debt much more quickly because of the subprime crisis.
"They have to make a choice: if they're going to make a credit card payment or if they are going to make the mortgage payment. And at $4 a gallon for gasoline and at the cost of food, they are probably making their credit card payments and not their mortgage payments because they know that they have to keep that credit card balance moving so that they can live."
Page Not Found | Reuters.com
Can't take care of tomorrow if you can't take care of today.
sdtfs -
You're being generous. I'm not sure anyone at BU has a 'wealth of knowledge and expertise', but at least iPod is accumulating some of the former here@CR. You are on a roll tonight, btw. Enjoyed the last pontification.
The 1 million square feet of space is a headline sound byte. It's something Jamie Dimon pulled out of his ass so people would think he got a good deal on Bear building and is going to use excess space to juice future earnings. It's not real, but it suckered in some people, including CR.
For the last two years, I've been visiting clients in Midtown and Downtown where there used to be whole floors full of employees and now they're almost empty. Whenever I ask where all the people went, the answer is always the same. "We had a reorg and they moved to the 5th floor."
But the 5th floor once was full, too. There's been a lot of closet downsizing and warehousing of vacant office space.
One of those vast, nearly empty floors can have up to 30,000 square feet of space. So, we're suppose to get JUMP UP AND DOWN EXCITED about 30 more empty floors?
[Whenever I ask where all the people went, the answer is always the same. "We had a reorg and they moved to the 5th floor." ]
FWIW - My employer, fortune5, has a 5 year old initiative to get people to work at home a good portion of the month. They supply common areas when employees come in to any facility. They have reduced their footprints and costs in many cities, without letting staff go...
Okay, so what is going to happen?
Extrapolate. People shifting money to credit cards since they can no longer afford the gas/food like before. My neck of the woods? Food banks are begging and usage up about 35 -40% while Dow/S&P move back/forth and unemployment at 5%. Okay, so the market indicates how things are on main street?
Per CNBC today, some analyst is seeing data that folks are moving to inferior goods (duh, but MSM is a lagging indicator) and jettisoning the American made SUV/Pickup trucks for smaller models - none of which are mainstays for domestic manufacturers.
Domestic credit bills are higher than before and with 70% of the economic push from consumers, what picks up when they cut back? In late 1970s/early 1980s, the savings rate was well nigh 10%. What's the effect when the average consumer moves from no savings back to the retrenching rates of 9 - 10%?
Some time back, asked the question of whether the Bernanke Put backstopped the entire system or just the moneycenter banks? Response was to effect that if not a moneycenter bank, you're screwed. FWIW, my mortgage lender is FHN and I pulled my contract last week to see who gets the $$ if they go under.
Sorry ipodius, but I don't see things looking up. Average J6P is well and truly screwed. For a good while, at least.
BTW in other books I've read about the depression they make the rather provocative claim that Coolidge saw what was coming and that Hoover was basically set up. Again it suggests that people knew they'd wrecked the economy before Hoover became president, which makes it harder to put all the blame for the Depression on him as is commonly done today. I wonder if maybe Greenspan had similar plans for Bernanke.
This bit from "Only Yesterday" is interesting in that regard:
Let us glance for a moment at the next morning's paper, that arm-breaking load of reading-matter which bore the date of Sunday, March 4, 1928. It was now many months since Calvin Coolidge had stated, with that characteristic simplicity which led people to suspect him of devious meanings, that he did not "choose to run for President in 1928"...
FWIW, Halberstam's "The Fifties" has some interesting insights on the rise of advertising and why it occurred.
Push was to get people continuing to spend so that their money wouldn't just get shoved under the mattesses a la the 1930s.
Hey, does MBIA go bankrupt in Q2 (only $2.0 billion in equity left), or will they raise some money before the quarter is done? Seems like they had tough sledding last time they went out to raise money.
Second question -- if MBIA's liabilities move to greater than their assets, will that finally trigger a move down from AAA?
Ridiculous: $2 billion in equity against $1 trillion in guarantees.
Ht-Misean...you couldn't have said it any simpler re: the interest rate vs. inflation.
W/ apologies, I'd like to add that increased inflation (that is, prices-not anticipated future cash flows) will rise when interest rates are below the long term rate of price inflation in a given sector.
When prices rise, the value of future cash flows declines. IOW- expected returns must fall.
It doesn't bother me personally if "the market" is willing to accrue lower returns by pumping up prices. And, there is no need for a huge drop or crash if market participants are ok w/ returns below 3% over the course of the next 10 years.
PE/ H. Funds, Funds of Funds, etc. overpay for assets "most" of the time. Primarily b/c they receive vast sums of dough and "must" do something w/ them in short order, IMHO.
The question is the creditors and amount/ type of leverage in ANY market.
Sorry for the wonkish remarks, and Ipod, I don't think most people here want to see others fail so they'll feel better about themselves.
Granted, I could be wrong, but, I just feel like when things are so cloudy, people get a little antsy.
FWIW- If you're long OR short equities, good luck! Since june of 07 I've been in 1-2 year Treasuries and there I'll stay at 2.5% until I get a better sense of where our creditors decide they want to price our imports.
PS- Elvis, you are one funny bastard.
Per CNBC today, some analyst is seeing data that folks are moving to inferior goods (duh, but MSM is a lagging indicator) and jettisoning the American made SUV/Pickup trucks for smaller models - none of which are mainstays for domestic manufacturers.
I did my Taco Bell run today and loaded up on dozens of 89 cent tacos to get me through the week.
Inflation be damned.
You can store them in the freezer BTW since they don't have much lettuce.
Also if you're making budget iced coffee with non-dairy creamer I found out the hard way you need to mix the creamer in the coffee while it's still warm.
Things have gotten tight since I found out I don't qualify for an economic stimulus check.
I just assumed everybody was getting one.
Hey, ac and rich, yesterday I did some calculating. If household debt and GDP follow the same glidepath down over '29-'33 and glidepath up over '33-'39, our downturn will last SIX years and it will take us TEN years to return to 'normal' household debt to GDP.
Ugly. And coming now to our neighborhood.
Uh- "imports" being both capital and goods.
Also, no more small batch single malt whisky debauches.
These are silver bullet times.
Upon reflection, I think the downturn will be shorter than six years.
No way will the Feds have the wherewithal to grow spending like they did in the '30s.
Shorter and steeper down.
If we do not fall into anarchy or a dictatorship, the recovery should be faster, too, given limited leeway for dumb government tricks.
For Angelenos...a little drop in price in just one month: Poof
Maybe so. I think what's coming in this glide path is a hard landing for most things "financial services." People are starting to feel that they've been sold a big bill of goods.
Maybe the first real awakening was the property-casualty insurance scams that happened after Katrina and the Florida hurricanes. Instead of paying their claims and taking their lumps, insurance companies started trying to nickel and dime people, jacking up rates and cancelling whole areas. Now, a lot of consumers no longer trust them.
Same since with Realtors, mortgage brokers, investment brokers who sold auction rate, etc. A lot of ordinary people feel things are no longer right with the stock market, the derivatives market, hedge funds, the ratings agencies, etc.
It takes a long time to build credibility for financial services. But only a short time to destroy it.
We could be looking at another era of investment regulation like the 30s that produced the SEC, the 33 Act, the 34 Act and the 40 Act.
Could be, rich; makes sense. I admit I have a tin ear for public sentiment, though.
But, I track the consumer confidence, consumer expectations, and small business optimism indices, and those are showing frightening numbers.
homedad43 writes:
FWIW, Halberstam's "The Fifties" has some interesting insights on the rise of advertising and why it occurred.
Push was to get people continuing to spend so that their money wouldn't just get shoved under the mattesses a la the 1930s.
homedad43 | Homepage | 05.12.08 - 11:43 pm | #
I studied some of this when I was getting my MS.
Some of what you describe is a result of Schumpeter Effect - as major product cycles 'mature' it gets harder and harder to get consumers to pop premium prices for what they perceive as the same thing old thing. Think of it as 'new shades of pantyhose' or 'new flavors of toothpaste' - pretty much same old same old blah. So marketers push REAL hard to stimulate want for those blah products... the more blah the product offering the harder the task required to move it.
In that environment returns pretty much suck because there is increased selling cost and competition and discounting and the fundamental need really isn't there (I already have toothpaste - it tastes fine - I don't need a new flavor).
We've all heard some product or trend is the 'new black' - it's a tongue in cheek reference to this phenomenon. Its a tough & expensive sell.
The ugly part from a societal perspective is that the end phase of a mature product cycle is usually associated with two problems:
(1) Wages & profits are generally flat if not falling. Without the margins from exciting products - you can't pay a lot more to workers or investors. A vicious cycle sets up.
(2) Speculation. Investors who were conditioned to expect pretty hefty returns from the earlier phases of the product cycle aren't happy with the meager returns in the mature (commodity) phase... so they 'chase alpha' by either taking more risk or levering up or both.
I think we are seeing both effects occur right now.
We probably won't get fully free of this drag on the economy for another 10-15 years... until the next big high margin innovation dominates the world economy. Innovation waves take something like 40 years or longer to play out from start to finish... by that time we will have burned off a lot of the excess money & wealth from the last big boom and have laid the economic field bare for the next big thing to really take off free and clear of the worst of the baggage from the past (that's the final phase of creative destruction).
So until then enjoy the ride & get by as best you can.
Yep, d-.
Buenas noches.
Hey, rich, nice work on the reduced periodicity of 'credit events' these past 18 months. Hope the trend continues and accelerates!
4shzl | 05.12.08 - 10:33 pm | #
Only 60 bucks to escape the creaking tracks, filthy platforms, antique switching systems, and rats the size of racoons -- what a bargain. TAXI!!
I think you will change your mind when you miss your flight being stuck on mid-town tunnel, Van Vyck, BQE or LIE.
Tip: If you are doing a flight from LGA try the water taxi from Wall Street or 34th Street to the Delta Shuttle Terminal.
regards
sbarrkum
"We could be looking at another era of investment regulation like the 30s that produced the SEC, the 33 Act, the 34 Act and the 40 Act"
Oh, you mean like the regulation that followed the junk bond scandal, the dotcom bust or Sabox that followed Enron/WCOM?
There no money for regulation nor the will to implment anything meaningful because that would destroy the essence of Wall St. Forget that angle.
AJW "Re:transport, the Airtrain does not connect to the subway, but to commuter trains that have no room for luggage."
Huh? I've taken the subway (E train) many times to Jamaica station where it connects to the AirTrain. I've also taken the LIRR (commuter train) to the AirTrain with a suitcase. Maybe you should try it sometime. Much more reliable than getting stuff in traffic in a cab.
Nemo writes:
Office Space? Loved that movie.
Nemo | Homepage | 05.12.08 - 7:17 pm | #
"My stapler...That's it...I'm setting this place on fire."
Office Space (1999)
All the big Texas banks did the same thing in the 1980s. It's a repeat performance. Ultimately, all of them failed or merged except for Cullen-Frost Bank. Out of state banks were finally allowed into Texas to pick over the reamins. This is a repeat performance in so many ways on a much larger national scale. The last go around depleted FDIC's fund during Bill Seidman's chairmanship (which he denied). Buckle up and make sure your bank deposits have FDIC insurance coverage or move it.
I'll have a BLT and Pinot Grigio.
Bernanke Lunched With Dimon, Rubin Before Bear Rescue
"Federal Reserve Chairman Ben S. Bernanke lunched on March 11 with a Who's Who of Wall Street leaders, including JPMorgan Chase & Co.'s Jamie Dimon, three days before the central bank rescued Bear Stearns Cos. from bankruptcy.
Other guests included Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein, Lehman Brothers Holdings Inc. CEO Richard Fuld, Morgan Stanley President James Gorman, Citigroup Inc.'s Robert Rubin, Blackstone Group CEO Stephen Schwarzman and Merrill Lynch & Co. CEO John Thain. Alan Schwartz, the CEO of Bear Stearns, was not listed among the attendees."
Bernanke Lunched With Dimon, Rubin Before Bear Rescue (Update1) - Bloomberg.com
Sometimes I can't help but wonder if ipodius isn't just playing the troll.
Nothing like a stupid, incendiary comment to send us all into a tizzy.
Spyboy,
Where do I find that law that is clear in NY?
I need competent counsel, too.
Are you a lawyer in NY? If so, where do I contact you offline?
The foul troll... .. .
We probably won't get fully free of this drag on the economy for another 10-15 years... So until then enjoy the ride & get by as best you can.
Great stuff as always, dryfly.
Rubenstein Says `Enormous' Bank Losses Unrecognized (Let me act surprised.)
Rubenstein Says `Enormous' Bank Losses Unrecognized (Update2) - Bloomberg.com
FFDIC,
Sooooo, how many average-sized bank failures can the FDIC withstand without requiring it's own bailout?
tj&tb, My guess and that is all it is would be to count up the numbers in the 1980s that depleted the fund. It's hard to know because some banks are very costly to resolve and others are not. Now there are bank products and hedge funds that will hit FDIC that were not fully developed or even invented 20 years ago. It's a different age and unfortunately FDIC did not keep up with the rapid inovations in banking. I think we are all pretty fucking clueless including our leaders.
FFDIC,
Great... so it'll be national banks in trouble and out of country banks will pick over the remains... at least they'll need some locals to work the American branches... I hear Saudi Arabia has some great 401k plans... oh... what? You mean those are plans for a 401 km tall building?
Although some of the official numbers look good for the economy (the stock market is holding steady, for example) and other numbers are very bad (oil prices up, house prices dropping), another measure the economy is in the ability to deal with disasters.
A cyclone hit Burma and the response has been disturbingly bad, causing all of us to make (conscious or unconscious) assumptions about the overall political and economic health of that country.
We can do the same with the US. The reaction to Hurricane Katrina was an embarassment. But last year's fires in southern California were handled very well, all things considered.
Now we have above-average rainfall and tornados from Minnesota down to Georgia --- unusual temperatures, destructive storms, and more.
I'm not getting into the global warming debate here --- this little bottom-of-the-thread essay isn't THAT far off-topic --- but I think everyone should pay attention to these facts just as much as Fed rates and Housing Starts. They are key indicators of the current crisis.
could not agree more with ipodius
Housing market worst for 30 years
"Confidence in Britain's housing market has sunk to its lowest level for more than 30 years, figures to be published today will reveal, as property prices continue to fall and mortgage lenders restrict home loan finance. The Royal Institute of Chartered Surveyors (Rics) says that 95 per cent more surveyors reported a fall in house prices in April than a rise, the worst figure it has reported since it began publishing monthly property market surveys in January 1978. ..."
Another vote here for the LIRR to the Airtrain. I've taken limos, the A train, and even the helicopter once or twice. I don't like stressing about traffic. The A train is only marginally better than a taxi, but the LIRR is great.
The only way you get me in a cab is if I'm travelling with the kids and extra bags.
(That said, I avoid JFK when at all possible, and will happily pay more to fly out of EWR.)
could not agree more with ipodius
On what point? I didn't see that he made any.
Try comparing relevant facts between now & '29 and you'll see that we're actually in worse shape, not better.
Of course, the presence of naysayers (prominent or otherwise) is a common theme.
Trouble, possibly related to real estate, at the California Public Employees' Retirement System (CALpers)?
404 - Not Found - sacbee.com
tj & the bear writes:
Sometimes I can't help but wonder if ipodius isn't just playing the troll.
Rymes w/ scroll
"I don't really care what happens to them [JP Morgan] now, as long as they don't crater my sister and nephew's trust funds..."
I never could understand why anyone would let a bank run one's money when a Vanguard index fund is available.
"The one great blessing of NYC is the world's best mass transit."
ROTFLMAO! Dude, I'm in agreement with many of your comments, but this is just silly. When's the last time you took the subway to JFK?
Or visited Tokyo?
As this is an options expiration week, don't be surprised if the market rises.
dc1000 said that this blog used to have things figured out. Well, did the smart commenters all just go away?
dc1000 has also told us he recently borrowed something like $20 million to develop a large number of residential lots outside of DC. Based on my experience, that makes one look on the sunny side of things. Because the alternative isn't something you want to ponder.
Unless the american economy has decoupled from the american consumer, there is going to be a noticeable change in the future.
Now, I'm going boat shopping.
Libor Set for Overhaul as Credibility Is Doubted (Update1) - Bloomberg.com
Libor Poised for Shake-Up as Credibility Is Doubted (Update2)
By Ben Livesey and Gavin Finch
May 13 (Bloomberg) -- The benchmark interest rate for $62 trillion of credit derivatives and mortgages for 6 million U.S. homeowners faces its biggest shakeup in a decade as lawmakers question if banks are understating borrowing costs.
"The one great blessing of NYC is the world's best mass transit."
Oh right, better than Paris.
1,000,000 sq ft? feh, I spent six years working in a 6,636,36 sq ft building.
US tax rebates headed for the pump, grocer -survey
Tax rebates headed for the pump, grocer: survey
| Reuters
"Bernanke Lunched With Dimon, Rubin Before Bear Rescue"
Bernankie is butt humping Main street to bail out Wall street. That's his job man. Let the rest of them eat cake. Maybe.
byzantine ruins, I think this LIBOR story bears watching. Motive for alleged manipulation has not been clearly explained. Even if there has NOT been deliberate manipulation, the dependence of so much other stuff on what seems the unregulated activities of a small ad hoc group makes me nervous. Suppose some natural disaster made LIBOR unable to function. What would happen to all the contracts built around LIBOR?
Try comparing relevant facts between now & '29 and you'll see that we're actually in worse shape, not better.
This is the type of comment I'm talking about. Utterly idiotic. Sure, we're in worse shape. I mean look around you...look at the figures, the facts and the stats. And you call me a troll? If this statement isn't troll-like I have no idea what is.
I agree with dc1000. It is like the housing bubble blog. I used to read that constantly when things were inflating and it was really, really good. The comments were excellent, people had great insight and then something happened. The invasion of the strange segment that, as I said, fethisizes misery. Looks like that happened here too.
And where did all the people go that actually knew something and contributed here? The same place all the real conservatives in the republican party went...they left and went elsewhere because of all the nuts drowning them out.
Now, let's look at the retail numbers today. I'm sure someone here will find some parallel to the 1920's again...ugh.
"We've already identified a million feet that will be eliminated," [CEO] Dimon said.
Wait a minute, he didn't actually say square feet.
OH... MY... GOD...
Nemo | Homepage | 05.12.08 - 7:20 pm | #
Sounds like a chance to go long the wheelchair makers, heck that's incremental demand for 500K units.
As for transport to airports, living in the DC area I'm a big fan of the B30 metrobus route, an express that leaves from a stop 4 blocks from my house nonstop to BWI. $3.00, 30-50 minutes depending on time of day.
Sounds like a chance to go long the wheelchair makers, heck that's incremental demand for 500K units.
Dirk | Homepage | 05.13.08 - 8:23 am | #
Now that's the sort of sloppy thinking that can get you in trouble...It's just as likely that there'll be an incrimental demand for 1m prostetic feet.
People, people, you crack me up, you guys fighting over the worst NYC CRE debacle. I remember back in 05 when you were starved for meltdowns -- just be happy you have buffet from which to choose now.
The big picture is the most interesting - huge office vacancy rate, projects scrapped, condos going unfinished or turned into rentals, foreclosures spiking, net outmigration of all those potential owners/renters, and amid the ruins, a few remaining real estate firms weakly warble the same 'it's different here' tune. At least the Times has stopped the inane singing (although the ad slaves at Timeout NY had to craft a tragicomic cover this week on why it's a great time to buy)
ps. the nyc subway ain't perfect, but rich is right - ridership is increasing steadily due to the gas crisis- and cab ridership has taken a dive. Most u.s. cities can only wish they had our mass transit infrastructure in place.
OT -
The real 'Banker' is alive and well and posting on the BP.
The Big Picture
The real Banker started to look increasingly foolish as his 'nothingburger' morphed into the worst financial crisis he had ever experienced.
Prior to that he was endlessly arrogantly telling us we we did not have the tools to understand what we were looking at.
And even as he began to quiver in his bankerdome nothing much had happened at that point relative to way it has panned out.
So no wonder he hangs out some place different now.
We all know what's coming. It's just a matter of when. The dot com bubble was largely contained to foolish stock investors to the tune of $1trill in losses and contributed to a mild recession. This time the Fed and Wall St. have blown up not only the housing market for the next 5 years or more, but the entire global financial system. And the "fix" is only making it worse, with runaway inflation and destruction of savings and credit. This has been the largest Ponzi scheme ever perpetrated on mankind, and the consequences are now unfolding like the beginning of an avalanche. Yes, look at the big picture--as ugly as it is now, how can it not get much worse?
Hold on - $3 BILLION on a corporate headquarters? Does that strike anyone else as a little ostentatiously high?
I don't think that's the same Banker that used to post here. I've seen occasional posts on here recently for someone calling themselves Banker, but their "homepage" links to some strange fx trading website. I think the one on Big Picture does as well.
Hapsburger,
If you click the Homepage URL of the new Banker on CR and BP, it goes to the same site.
Ergo, CR's new Banker = BP's Banker.
Gosh, Dryfly, you forgot the part of the marketing cycle wherein the firm goes to Washington or local government and lobbies for a law to mandate that consumers buy product for the betterment of all... or, get permission to charge incremental fees for your sales and marketing efforts like 12-b. Other rich legal possibilities...
Otherwise, rings a bell.
Love free-market capitalism at work!