What does a mall developer do when the economy weakens ?
[Responding to the downturn, General Growth, based in Chicago, said that, after conferring with some of its retail tenants, it would postpone the opening of some shopping centers and defer $500 million of development expenditures over the next 18 months.]
all these writedowns that the banks have taken are the writedowns of the inventory of mortgages they were stuck with and weren't able to sell once the "music stopped". While those writedowns have been huge, they are based only on that one "shapshot" inventory at that one point in time. (plus a bit extra since the banks didn't exit the toxic securitization business instantly).
But wassup with the vast turned-over inventory that the banks WERE able to sell for years prior to the credit crunch, the size which should be vastly greater than that one-time inventory the banks were stuck with??
shouldn't the writedowns on that be commensurately greater? how came we only hear and talk about the bank writedowns of toxic mortgage securities and not about the writedowns of whoever had been buying that toxic waste for years prior to the blowup (insurance companies? hedge funds? union pension plans? foreigners?)
On the other hand, a friend in Dubai told me her employer (large UK firm) is doing a great business in construction. You are financing this when you put gas in your car.
OT..I see the hedge funds that were short oil panicked and pumped up the indexes last minute today. Should be interesting the rest of the week, any geopolitical event and this puppy will be finished........
Investment sales activity also remained soft due to the turmoil in the credit markets and a widening gap between buyer and seller expectations of property values, CB Richard said.
CRE got absolutely stupid the past few years. Cap rates fell to half of their historic average, and new construction was rampant. The Bay Area is still full of vacant buildings from the dot-bomb era and yet new ones continue to break ground. WTF! People in the CRE industry will admit that deals make no sense, but they go through anyways. Lots and lots of pain coming to this sector.
"BAGHDAD Salem al-Taei has his finger on the pulse of security in Baghdad through one of the most reliable indicators known to mankind: the market.
"He's a real estate agent, and he can tell you where property is hotand where it is not. Where people yearn to live and the neighborhoods they shun. Where prices have tripled since the U.S. occupation of Iraq and where they have halved, or worse."
...
"The once glitzy Sunni neighborhoods that commanded some of the highest prices in the capital have fallen into decay, their residents having fled or been killed. The owner of a large house in Khadra, worth $400,000 before the invasion, would be lucky to sell for $80,000 now, he said.
"Most of the Sunni neighborhoods are on the western side of the Tigris River, previously considered the swankiest side of the city on which to live.
"Now demand is highest on the predominantly Shiite eastern bank of the Tigris. In middle-class Karradah, a majority Shiite area that has been much bombed but spared the sectarian killings of many other neighborhoods, both Sunnis and Shiites are lining up to buy at prices three to four times higher than those before the war.
"Further skewing the market is the large number of homes that have been occupied by squatters. Many are people forced out of their neighborhoods because they belonged to the wrong sect. They took up residence in the empty homes of others who fled elsewhere, making it impossible for the owners to sell the homes."
...
how came we only hear and talk about the bank writedowns of toxic mortgage securities and not about the writedowns of whoever had been buying that toxic waste for years prior to the blowup (insurance companies? hedge funds? union pension plans? foreigners?)
If you bought the securities and classified them as "Held to Maturity" you don't have to mark them to market. That explains everything but Hedge Funds and other private entities, who don't report public numbers at all.
Son of mp related to me, just this afternoon, the following:
Last year, a General Electric facility in upstate New York was being shut down. Management ordered twenty 40-yard dumpsters to clean the place out.
Son of mp's contact, who shall remain nameless, started going through the dumpsters looking for tools and materials to take home. What he found was one of the motherlodes of human invention. He forgot about scrounging some tools.
He found hundreds of laboratory notebooks inscribed by Thomas Edison and Nikola Tesla, inventor of polyphase power, acknowledged to be one of the greatest intellectual contributions in human history. He called the Smithsonian and told them, "You've got to get here within 36 hours, or it's going to the dump." They never returned his call.
So, this man returned to the plant during the middle of the night with a van and some friends. They managed to go through two dumpsters, and filled his garage.
Eighteen dumpsters were left unexamined. What was thrown away? We'll probably never know.
It is, boys and girls, part of the relentless drumbeat. Profits, profits, profits.
In fact if you're wealthy in today's economy, you don't make any money at all, because it's all a (tax deductible) cost. Corporations don't seem to make any money because they seem to have everything as an expense. For instance interest payments are the largest item that the IRS permits corporations to take off as an expense of doing business. But it's not an expense of doing business at all, it's a function of what outside raiders and corporate junk bond holders have paid to buy up the company, and instead of doing business, they're carving them (companies) up, closing them down, stopping their long term research and other projects, and doing just the opposite of what's needed for an industrial economy. That's why the book deals primarily with what the financial sector, which is not part of the economy at all, nor is the property sector part of the economy. They are a completely separate consumption process, more in the character of a parasite, than of (producing) actual goods and services....
Transcript of a Guns And Butter Radio Interview with Economist Michael Hudson by Bonnie Faulkner originally broadcast on KPFA radio June 25, 2008
The link, dear reader, is son of mp. He got it from the horse's mouth.
The didn't even bother to microfilm or scan. They just junked it because they figured it would cost too much to do.
Folks, we're on an express train to the dark ages and no one gets it. The manufacturing capability, and the knowledge that goes with, is literally being trashed.
If you want some funny quotes, watch Fred Mishkins recent speech. I was watching it on CSPAN last night and was amazed that people look up to this guy to be one of the leaders of our monetary system.
He likes to use the word "complicated" a lot. At one point when talking about the Federal funds rate, he said something to the effect of ... We could use the complicated models that we have developed, which I won't go into because of their complicated nature, but instead we use the mikey likey approach... and the "mikey likey" part was his actual words.
Also, he stressed how important Benny B's personality was for the smooth functioning of our monetary system...very reasuring.
One final mention to y'all. This shit happens every day. I see it or hear about it every damned day. This case, however, is the most damning and egregious.
Guys like Neutron Jack and Immelt will be treated by history as the bastards they truly are.
ditto to what mp says - I've seen dumpsters containing decades of unique international data leave the building. Only managed to (unexpectedly and temporarily?) get a stay of execution on US data going back to the 40s (at a minimum) by wailing so hard about getting it to a research library that they freaked out that it might have commercial value to their enemies and now I don't know what's going to happen. ahh, I've really got to go somewhere and rend my garments while wailing.
"Guys like Neutron Jack and Immelt will be treated by history as the bastards they truly are."
One never knows, does one? I saw that same kind of crap with the brand name I worked at, makes one damn proud to be an ex-shareholder now that I'm retired.
If anyone wants some insider scoop on GE under Jack Welch, check out Rigged Online. This is an book posted at the link which is a fictionalized account of the author's observations of GE business practices. The author's cred is as follows:
"Ross Miller...founded General Electric's quantitative finance research group and led the quantitative risk management task force at GE Capital. He taught finance and economics at the University of Houston, the California Institute of Technology, and Boston University where he conducted research into the application of experimental economics to financial markets...He has written three books, Paving Wall Street, What Went Wrong at Enron (with Peter C. Fusaro), and Computer-Aided Financial Analysis, and over twenty articles. He received a B.S. in mathematics from the California Institute of Technology and an A.M. and a Ph.D. in economics from Harvard University."
"lama writes:
On the other hand, a friend in Dubai told me her employer (large UK firm) is doing a great business in construction. You are financing this when you put gas in your car."
Lama: Less than you might think. They produce about 250,000 barrels per day, which is probably a quarter of what CA produces (what does CA produce?). Their big money is entrepot and a vaguely defined "trade."
"Dubai's gross domestic product as of 2005 was US$37 billion.[9] Although Dubai's economy was built on the back of the oil industry,[64] revenues from oil and natural gas currently account for less than 6% of the emirate's revenues.[8] It is estimated that Dubai produces 240,000 barrels of oil a day and substantial quantities of gas from offshore fields. The emirate's share in UAE's gas revenues is about 2%. Dubai's oil reserves have diminished significantly and are expected to be exhausted in 20 years.[65] Trade (16%), entrepôt (15%) and financial services (11%) are the largest contributors to Dubai's economy. [66] Dubai's top re-exporting countries include Iran (US$ 790 million), India (US$ 204 million) and Saudi Arabia (US$ 194 million). The emirate's top importing countries are Japan (US$ 1.5 billion), China (US$ 1.4 billion) and the United States (US$ 1.4 billion).[7]" (uncle wiki)
MLM, unfortunately you are spot on. The CMBX has been driven wider by macro hedge funds, and it can't last forever - at some point fundamentals have to come back to play.
Currently, virtually every tranche of every series in the CMBX is implying losses more severe than the Great Depression (many tranches are implying losses multiple times what corporates experienced during the Great Depression). Everyone believes there will be issues in CRE, but the great depression is a stretch.
When is somebody going to figure out that trusting a modern corporation with knowledge valuable to the culture of a nation is like trusting a child molestor to sub Ms. Gonzalez' kindergarten class?
Folks, we're on an express train to the dark ages and no one gets it. The manufacturing capability, and the knowledge that goes with, is literally being trashed.Yes, you can almost smell the rot.
I'm just a punter ex-tech guy, and I believe CR when he says that commercial wasn't horribly overbuilt. But in the face of Merrill and NAB writing down super-senior resi CDO's 90%+, I suggest there's two legitimate ways to look at the data the hedgies are driving.
The second way may be a stretch, but things are starting to look stretchy all over.
Folks, we're on an express train to the dark ages and no one gets it. The manufacturing capability, and the knowledge that goes with, is literally being trashed.
The Romans invented concrete. The formula was lost when the Empire collapsed. Fifteen hundred years passed before concrete was re-invented.
The only thing that progresses a civilization is its ability to retain, refine, and expand its fund of knowledge. In absence of this we get regression.
I always knew I was either born too early or too late.
how came we only hear and talk about the bank writedowns of toxic mortgage securities and not about the writedowns of whoever had been buying that toxic waste for years prior to the blowup --jackk
Hush. Stop talking about that elephant in the living room.
Wow, as an electrical engineer, I would just love to have one of Tesla's notebooks. If son of mp's friend ever needs to clear out his garage, post that info here.
The only consolation here is that long after Neutron Jack and Immelt and their snot-nosed MBA proteges have returned to dust, those notebooks and other items will be around. Small consolation, but something at least.
c&c - It will be terrible for July sales, but great for the stock market. I can hear it now: "Sales figures were impacted by a one-time event and would otherwise have been much higher than reported."
Thanks goodness I get my investment advice from Bizarro World.
Anonymous writes:
Edison's notes are worthless. Tesla's however...
Not worthless, but I'm sure it pales in comparison to Tesla's. Edison was a ruthless fiend only interested in fame and fortune. Tesla was a scientist whose work touches us every day. Edison invented the electric chair in an attempt to discredit alternating current to protect his work on direct current.
I would consider it highly ironic if Edison, one of the men most responsible for IP law as we know it today, had much of his life's work flushed due to IP concerns.
Son of mp has an engaging analogy for what's going on. He likens the activity in America to a flywheel. People toiled for decades to get the industrial flywheel spinning and, once it was, it took little effort to keep it going. At some point, however, people decided to stop adding energy to the wheel.
Now, they're extracting energy from the wheel. It's still spinning, but
not as fast as before. Everyone says, "Look, it's spinning, everything is fine!"
But, everything isn't fine. At some point, they'll no longer be able to extract any significant energy from the wheel and the game will be over.
As I write, America is selling off its machine tools, its productive capacity, for scrap value, sometimes less. The rest of the world is buying those tools and shipping goods back to us made with those same tools.
Why? I'm not sure, but I do know that part of the answer lies in the fact that most people today don't want to work in jobs where they get oil or grease on their hands. Young people go to college and get degrees, expecting to be managers of other people.
Friends, they are dead weight.
Oh, sure, you can argue that industry is obsolete. You can say that it's all about "information" now, but who's going to make your car, your airplane.
You want a defense industry? Sorry, it isn't going, it's gone. This country can no longer build a main battle tank. Hell, they barely have the capability to manufacture firearms. You want a nuclear reactor vessel? You won't get one here, you've got to go to Japan for it. And, here I was thinking that's "high tech."
Boys and girls, you've been bullshitted by the "captains" of industry.
As I write, America is selling off its machine tools, its productive capacity, for scrap value, sometimes less. The rest of the world is buying those tools and shipping goods back to us made with those same tools.
...
Boys and girls, you've been bullshitted by the "captains" of industry.
I understand what you are saying. There isn't any national allegiance any longer that top managers (anybody?) have. They are only well-paid servants to the ebbs and flows of global capital. That's it. It's a cancerous apathy on an enormous scale. That GE top dog, can't remember his name now, but I watched an interview with him on Charlie Rose last year and had to shut it off after about 10 minutes because I thought I was going to puke. I've been through a high-tech mfg. plant closure with several hundred employees and seen all of this first hand. There should be labor economists out there who could quantify the COSTS. Most folks have been under a naive assumption, which has been spoon-fed by the globalist evangelists that it all works out great and everybody gets "retrained" who gets dislocated, yadda, yaddah. Bullshit.
On writedowns, the origin is twofold: unsold bonds and loans in portfolio. It was fairly easy to sell all the AAA-rated bonds in a deal, but left over were the bonds most sensitive to losses, thus most likely to be downgraded. Thus was reborn the CDO, based on the rating agency mantra that diversity overcomes stench. When lower-rated bonds started taking losses, the ratings agencies got over their model worship, and got very busy downgraded bonds leading to immediate writedowns. In fact, a big problem was knowing how much to write down because markets had gone pffft. Loans in portfolio hurt worse at the commercial banks than at the investment banks, as the latter would not warehouse loans any longer than the date of the next deal.
MP let me second the previous help for your son's Tesla's collection. I have always been amazed by Tesla. One day when I get a chance, I plan to research Tesla's work.
Here in Charlotte NC we have had one big Condo complex go into foreclosure and it's half way built. Looks like crap. In my neighborhood I can tell that another planned condo complex has stopped being built. The fence company which put up a fence around the job site has come and taken the fencing back down.
All the realtors said our city is not effected... hmmm.....
first??
FWIW, Meredith Whitney is about to be on CNBC FINALLY
So he is calling a bottom in CRE?
Refreshing candor from CB Richard Ellis.
What does a mall developer do when the economy weakens ?
[Responding to the downturn, General Growth, based in Chicago, said that, after conferring with some of its retail tenants, it would postpone the opening of some shopping centers and defer $500 million of development expenditures over the next 18 months.]
an OT question:
all these writedowns that the banks have taken are the writedowns of the inventory of mortgages they were stuck with and weren't able to sell once the "music stopped". While those writedowns have been huge, they are based only on that one "shapshot" inventory at that one point in time. (plus a bit extra since the banks didn't exit the toxic securitization business instantly).
But wassup with the vast turned-over inventory that the banks WERE able to sell for years prior to the credit crunch, the size which should be vastly greater than that one-time inventory the banks were stuck with??
shouldn't the writedowns on that be commensurately greater? how came we only hear and talk about the bank writedowns of toxic mortgage securities and not about the writedowns of whoever had been buying that toxic waste for years prior to the blowup (insurance companies? hedge funds? union pension plans? foreigners?)
thx
On the other hand, a friend in Dubai told me her employer (large UK firm) is doing a great business in construction. You are financing this when you put gas in your car.
OT..I see the hedge funds that were short oil panicked and pumped up the indexes last minute today. Should be interesting the rest of the week, any geopolitical event and this puppy will be finished........
My favorite from CB Richard from CNNMoney
Investment sales activity also remained soft due to the turmoil in the credit markets and a widening gap between buyer and seller expectations of property values, CB Richard said.
5% cap rates coming back to haunt? Whoocoodanode?
CRE got absolutely stupid the past few years. Cap rates fell to half of their historic average, and new construction was rampant. The Bay Area is still full of vacant buildings from the dot-bomb era and yet new ones continue to break ground. WTF! People in the CRE industry will admit that deals make no sense, but they go through anyways. Lots and lots of pain coming to this sector.
Quote: "5% cap rates coming back to haunt? Whoocoodanode?"
Exactly! The insanity was clear to anyone who cared to look at things objectively.
This ensuing CRE clusterf*ck was predicated on ever-rising prices (rents), just like housing was. It too will end in many broken dreams and fortunes.
Semi-OT, but Housing and International:
War shifts housing market
"BAGHDAD Salem al-Taei has his finger on the pulse of security in Baghdad through one of the most reliable indicators known to mankind: the market.
"He's a real estate agent, and he can tell you where property is hotand where it is not. Where people yearn to live and the neighborhoods they shun. Where prices have tripled since the U.S. occupation of Iraq and where they have halved, or worse."
...
"The once glitzy Sunni neighborhoods that commanded some of the highest prices in the capital have fallen into decay, their residents having fled or been killed. The owner of a large house in Khadra, worth $400,000 before the invasion, would be lucky to sell for $80,000 now, he said.
"Most of the Sunni neighborhoods are on the western side of the Tigris River, previously considered the swankiest side of the city on which to live.
"Now demand is highest on the predominantly Shiite eastern bank of the Tigris. In middle-class Karradah, a majority Shiite area that has been much bombed but spared the sectarian killings of many other neighborhoods, both Sunnis and Shiites are lining up to buy at prices three to four times higher than those before the war.
"Further skewing the market is the large number of homes that have been occupied by squatters. Many are people forced out of their neighborhoods because they belonged to the wrong sect. They took up residence in the empty homes of others who fled elsewhere, making it impossible for the owners to sell the homes."
...
For perspective.
scav --
You sure that article is about Baghdad and not East L.A.?
"And I would have gotten away with it, if it wasn't for you meddling bloggers!" ...
They mentioned no earthquake and I think the Sunni/Shia signs are different from the Crips/Bloods/Yuppies ones.
CB Richard Ellis down almost 25 percent today? Aren't these kinds of things supposed to be already priced in?
how came we only hear and talk about the bank writedowns of toxic mortgage securities and not about the writedowns of whoever had been buying that toxic waste for years prior to the blowup (insurance companies? hedge funds? union pension plans? foreigners?)
If you bought the securities and classified them as "Held to Maturity" you don't have to mark them to market. That explains everything but Hedge Funds and other private entities, who don't report public numbers at all.
Here's the final tally today in real estate services.
SOLD +21.25%
REIS -3.27%
ZIPR -18.00%
HF -18.12%
CBG -19.33%
MOVE -22.22%
JLL -26.90%
FSRV -35.30%
EJ -41.15%
GBE -41.37%
Richard Ellis Group (CBG) was just average.
See you again in about 7 years commercial real estate construction. Maybe.
rich,
Take a look at the R2K P/E ratio today...
OFF TOPIC
CONJURE'S CORNER
Son of mp related to me, just this afternoon, the following:
Last year, a General Electric facility in upstate New York was being shut down. Management ordered twenty 40-yard dumpsters to clean the place out.
Son of mp's contact, who shall remain nameless, started going through the dumpsters looking for tools and materials to take home. What he found was one of the motherlodes of human invention. He forgot about scrounging some tools.
He found hundreds of laboratory notebooks inscribed by Thomas Edison and Nikola Tesla, inventor of polyphase power, acknowledged to be one of the greatest intellectual contributions in human history. He called the Smithsonian and told them, "You've got to get here within 36 hours, or it's going to the dump." They never returned his call.
So, this man returned to the plant during the middle of the night with a van and some friends. They managed to go through two dumpsters, and filled his garage.
Eighteen dumpsters were left unexamined. What was thrown away? We'll probably never know.
It is, boys and girls, part of the relentless drumbeat. Profits, profits, profits.
Isn't it all so... grand?
mp - I'm speechless.
And completely believe it.
Dang, wishing I was there with a pickup & flashlight.
mp - link to this story?
That calls for some Despair.com or the like...
Anonymous - It would be footnoted as "Private communication, 2008."
Somethings the intertubes haven't reached yet...
In fact if you're wealthy in today's economy, you don't make any money at all, because it's all a (tax deductible) cost. Corporations don't seem to make any money because they seem to have everything as an expense. For instance interest payments are the largest item that the IRS permits corporations to take off as an expense of doing business. But it's not an expense of doing business at all, it's a function of what outside raiders and corporate junk bond holders have paid to buy up the company, and instead of doing business, they're carving them (companies) up, closing them down, stopping their long term research and other projects, and doing just the opposite of what's needed for an industrial economy. That's why the book deals primarily with what the financial sector, which is not part of the economy at all, nor is the property sector part of the economy. They are a completely separate consumption process, more in the character of a parasite, than of (producing) actual goods and services....
Transcript of a Guns And Butter Radio Interview with Economist Michael Hudson by Bonnie Faulkner originally broadcast on KPFA radio June 25, 2008
Well, for all this hand wringing the CMBX indices are looking just fine:
http://markit.com/cache/curves/2e69d5527c7d777e4d55e8ae9d2.png
Oh crap, I forgot, up is down and down is up in the land of CMBX and the zit-faced hedgies that have driven it to such extremes.
Well, it's probably just a temporary market disruption. Nothing a printing press or its electronic equivalent won't be able to fix...
mp-
Depressing.
Now back to the entertainment of financial collapse while i try to get my mind off your story.
"mp - link to this story?"
The link, dear reader, is son of mp. He got it from the horse's mouth.
The didn't even bother to microfilm or scan. They just junked it because they figured it would cost too much to do.
Folks, we're on an express train to the dark ages and no one gets it. The manufacturing capability, and the knowledge that goes with, is literally being trashed.
Yup...we're a shell...there is going to be a new way and people aren't going to like it.
Awe, c'mon mp, I'm sure it's all available on the web. Just let me tweak my search a bit here...
If you want some funny quotes, watch Fred Mishkins recent speech. I was watching it on CSPAN last night and was amazed that people look up to this guy to be one of the leaders of our monetary system.
He likes to use the word "complicated" a lot. At one point when talking about the Federal funds rate, he said something to the effect of ... We could use the complicated models that we have developed, which I won't go into because of their complicated nature, but instead we use the mikey likey approach... and the "mikey likey" part was his actual words.
Also, he stressed how important Benny B's personality was for the smooth functioning of our monetary system...very reasuring.
Well, mp, on the bright side this person should be able to make a hefty profit down the road auctioning these notebooks to private collectors.
Kung Fu, there is no bright side.
Now, it's time to get back to my regularly programmed activities.
OT: 'Piggybacking' gets stay of execution from FICO
Controversial technique lets one consumer boost another's credit score
Authorized user 'piggybacking' for better credit score given reprieve by FICO
That is good news for those who want to artificially boost their credit score. WAY TO GO AMERIKA!!!
One final mention to y'all. This shit happens every day. I see it or hear about it every damned day. This case, however, is the most damning and egregious.
Guys like Neutron Jack and Immelt will be treated by history as the bastards they truly are.
I'm sorry to say I doubt it.
mp - Damn, dude. The natural archivist in me shudders at that story. If I'd been anywhere nearby I would happily have jumped into the other dumpsters.
ditto to what mp says - I've seen dumpsters containing decades of unique international data leave the building. Only managed to (unexpectedly and temporarily?) get a stay of execution on US data going back to the 40s (at a minimum) by wailing so hard about getting it to a research library that they freaked out that it might have commercial value to their enemies and now I don't know what's going to happen. ahh, I've really got to go somewhere and rend my garments while wailing.
"Guys like Neutron Jack and Immelt will be treated by history as the bastards they truly are."
One never knows, does one? I saw that same kind of crap with the brand name I worked at, makes one damn proud to be an ex-shareholder now that I'm retired.
If anyone wants some insider scoop on GE under Jack Welch, check out Rigged Online. This is an book posted at the link which is a fictionalized account of the author's observations of GE business practices. The author's cred is as follows:
"Ross Miller...founded General Electric's quantitative finance research group and led the quantitative risk management task force at GE Capital. He taught finance and economics at the University of Houston, the California Institute of Technology, and Boston University where he conducted research into the application of experimental economics to financial markets...He has written three books, Paving Wall Street, What Went Wrong at Enron (with Peter C. Fusaro), and Computer-Aided Financial Analysis, and over twenty articles. He received a B.S. in mathematics from the California Institute of Technology and an A.M. and a Ph.D. in economics from Harvard University."
"lama writes:
On the other hand, a friend in Dubai told me her employer (large UK firm) is doing a great business in construction. You are financing this when you put gas in your car."
Lama: Less than you might think. They produce about 250,000 barrels per day, which is probably a quarter of what CA produces (what does CA produce?). Their big money is entrepot and a vaguely defined "trade."
"Dubai's gross domestic product as of 2005 was US$37 billion.[9] Although Dubai's economy was built on the back of the oil industry,[64] revenues from oil and natural gas currently account for less than 6% of the emirate's revenues.[8] It is estimated that Dubai produces 240,000 barrels of oil a day and substantial quantities of gas from offshore fields. The emirate's share in UAE's gas revenues is about 2%. Dubai's oil reserves have diminished significantly and are expected to be exhausted in 20 years.[65] Trade (16%), entrepôt (15%) and financial services (11%) are the largest contributors to Dubai's economy. [66] Dubai's top re-exporting countries include Iran (US$ 790 million), India (US$ 204 million) and Saudi Arabia (US$ 194 million). The emirate's top importing countries are Japan (US$ 1.5 billion), China (US$ 1.4 billion) and the United States (US$ 1.4 billion).[7]" (uncle wiki)
Not a good day in the title business:
1)The Business Journal is reporting Financial Title Co. shuts down in California.
Financial Title Co. shuts down in California - Silicon Valley / San Jose Business Journal:
2)United Title of Texas shuts down statewide
United Title of Texas shuts down statewide | Business | Chron.com - Houston Chronicle
MLM, unfortunately you are spot on. The CMBX has been driven wider by macro hedge funds, and it can't last forever - at some point fundamentals have to come back to play.
Currently, virtually every tranche of every series in the CMBX is implying losses more severe than the Great Depression (many tranches are implying losses multiple times what corporates experienced during the Great Depression). Everyone believes there will be issues in CRE, but the great depression is a stretch.
When is somebody going to figure out that trusting a modern corporation with knowledge valuable to the culture of a nation is like trusting a child molestor to sub Ms. Gonzalez' kindergarten class?
Folks, we're on an express train to the dark ages and no one gets it. The manufacturing capability, and the knowledge that goes with, is literally being trashed.Yes, you can almost smell the rot.
Charlatan -
I'm just a punter ex-tech guy, and I believe CR when he says that commercial wasn't horribly overbuilt. But in the face of Merrill and NAB writing down super-senior resi CDO's 90%+, I suggest there's two legitimate ways to look at the data the hedgies are driving.
The second way may be a stretch, but things are starting to look stretchy all over.
Folks, we're on an express train to the dark ages and no one gets it. The manufacturing capability, and the knowledge that goes with, is literally being trashed.
The Romans invented concrete. The formula was lost when the Empire collapsed. Fifteen hundred years passed before concrete was re-invented.
It's an infuriating story you tell.
Edison's notes are worthless. Tesla's however...
The only thing that progresses a civilization is its ability to retain, refine, and expand its fund of knowledge. In absence of this we get regression.
I always knew I was either born too early or too late.
how came we only hear and talk about the bank writedowns of toxic mortgage securities and not about the writedowns of whoever had been buying that toxic waste for years prior to the blowup --jackk
Hush. Stop talking about that elephant in the living room.
I wonder how the MASSIVE title implosion today will impact the July sales closing??
Wow, as an electrical engineer, I would just love to have one of Tesla's notebooks. If son of mp's friend ever needs to clear out his garage, post that info here.
The only consolation here is that long after Neutron Jack and Immelt and their snot-nosed MBA proteges have returned to dust, those notebooks and other items will be around. Small consolation, but something at least.
c&c - It will be terrible for July sales, but great for the stock market. I can hear it now: "Sales figures were impacted by a one-time event and would otherwise have been much higher than reported."
Thanks goodness I get my investment advice from Bizarro World.
Anonymous writes:
Edison's notes are worthless. Tesla's however...
Not worthless, but I'm sure it pales in comparison to Tesla's. Edison was a ruthless fiend only interested in fame and fortune. Tesla was a scientist whose work touches us every day. Edison invented the electric chair in an attempt to discredit alternating current to protect his work on direct current.
I would consider it highly ironic if Edison, one of the men most responsible for IP law as we know it today, had much of his life's work flushed due to IP concerns.
Even Roubini is a little pollyannaish. This is "it."
Look around at the future tramps and gypsies.
Look around at the future tramps and gypsies.
I turned around and all I saw was a mirror.
Uh oh.
Son of mp has an engaging analogy for what's going on. He likens the activity in America to a flywheel. People toiled for decades to get the industrial flywheel spinning and, once it was, it took little effort to keep it going. At some point, however, people decided to stop adding energy to the wheel.
Now, they're extracting energy from the wheel. It's still spinning, but
not as fast as before. Everyone says, "Look, it's spinning, everything is fine!"
But, everything isn't fine. At some point, they'll no longer be able to extract any significant energy from the wheel and the game will be over.
As I write, America is selling off its machine tools, its productive capacity, for scrap value, sometimes less. The rest of the world is buying those tools and shipping goods back to us made with those same tools.
Why? I'm not sure, but I do know that part of the answer lies in the fact that most people today don't want to work in jobs where they get oil or grease on their hands. Young people go to college and get degrees, expecting to be managers of other people.
Friends, they are dead weight.
Oh, sure, you can argue that industry is obsolete. You can say that it's all about "information" now, but who's going to make your car, your airplane.
You want a defense industry? Sorry, it isn't going, it's gone. This country can no longer build a main battle tank. Hell, they barely have the capability to manufacture firearms. You want a nuclear reactor vessel? You won't get one here, you've got to go to Japan for it. And, here I was thinking that's "high tech."
Boys and girls, you've been bullshitted by the "captains" of industry.
/rant off
Doom......
Gloom.....
Doom and Gloom ... always doom, always gloom ... get yer doom and gloom here!!!!!!!!
CR does make mistakes, though. Once I saw some commentary posted that had a smidge of a positive economic slant.
Uh can I have some spam with my spam, spam, spam and spam....?
mp writes:
As I write, America is selling off its machine tools, its productive capacity, for scrap value, sometimes less. The rest of the world is buying those tools and shipping goods back to us made with those same tools.
...
Boys and girls, you've been bullshitted by the "captains" of industry.
I understand what you are saying. There isn't any national allegiance any longer that top managers (anybody?) have. They are only well-paid servants to the ebbs and flows of global capital. That's it. It's a cancerous apathy on an enormous scale. That GE top dog, can't remember his name now, but I watched an interview with him on Charlie Rose last year and had to shut it off after about 10 minutes because I thought I was going to puke. I've been through a high-tech mfg. plant closure with several hundred employees and seen all of this first hand. There should be labor economists out there who could quantify the COSTS. Most folks have been under a naive assumption, which has been spoon-fed by the globalist evangelists that it all works out great and everybody gets "retrained" who gets dislocated, yadda, yaddah. Bullshit.
So, if it is not kissing the doom-and-gloom ring, then it is spam?
Sorry, I haven't been drinking the Kool-Aid.
Good points to be made here, but balance does us all a lot of good.
On writedowns, the origin is twofold: unsold bonds and loans in portfolio. It was fairly easy to sell all the AAA-rated bonds in a deal, but left over were the bonds most sensitive to losses, thus most likely to be downgraded. Thus was reborn the CDO, based on the rating agency mantra that diversity overcomes stench. When lower-rated bonds started taking losses, the ratings agencies got over their model worship, and got very busy downgraded bonds leading to immediate writedowns. In fact, a big problem was knowing how much to write down because markets had gone pffft. Loans in portfolio hurt worse at the commercial banks than at the investment banks, as the latter would not warehouse loans any longer than the date of the next deal.
MP let me second the previous help for your son's Tesla's collection. I have always been amazed by Tesla. One day when I get a chance, I plan to research Tesla's work.
Here in Charlotte NC we have had one big Condo complex go into foreclosure and it's half way built. Looks like crap. In my neighborhood I can tell that another planned condo complex has stopped being built. The fence company which put up a fence around the job site has come and taken the fencing back down.
All the realtors said our city is not effected... hmmm.....
huh