Promenade shops is an interesting shopping center. The only real anchor is the movie theater, unless you count the Victoria's Secret or Frederick's of Hollywood outlets. Kinky crowd out there in Corona?
Actually I think the real news is the third paragraph in the Bloomberg article:
"... cost to protect top-rated commercial mortgage bonds from default to soar 130 basis points to 570 basis points on Markit Group Ltds CMBX credit default swap index as of 4:05 p.m. in New York"
Looks like the rating system works as poorly for commercial bonds as for the other kinds.
EHP (EvilHenryPaulson), if you are around, would earnestly like to ask you another question regarding a comment you made a couple days back: "Before the USD can become the target, there is first Switzerland and Britain facing devaluations among the big currencies"
If I am reading your comments correctly, I think I'm at similar conclusions. However, would you then further conclude that GBP and CHF would bottom first (way down the road, like late 2009/2010ish) and be the first major, non-commodity related currencies to recover some strength?
That's the further conclusion I am imagining/hypothesizing at this point. Any thoughts or comments on this would be appreciated. Thanks in advance.
Did you see the trick Corus pulled on the foreclosure of one of its loans for $146 million to a Panama City hi-rise developer? Only 10% of units were sold.
They foreclosed on a not-finished building and quickly put the Corus subsidiary that took possession into bankruptcy, to avoid claims and liens. That might work once or even twice.
But how many subsidiaries do they have to waste?
The story is that Corus wants to complete Laketown Wharf, rent it up, make it real. Don't hold your breath.
FWIW
Harrah's, Realogoy, and presumably others, were offering conversion from junior to senior debt for a 50% haircut -- the slang term the kids use is accordion debt
There are a few options creditors can take, but mostly they just rearrange when the losses will be fully recognized.
The real tragedy may be all the vacant buildings that fall in to disrepair to represent total destruction of value
I do worry about the former construction labour force will do in the interim. Building material and labour costs will drop to near minimum levels
Not sure if any of you follow my lousy blog, but...Suncal has now defaulted on 15 different projects on the west coast...not sure how long they will be around
Does anyone know how this real estate market is affecting Vegas? Twas a time where they couldn't build fast enough....have they stopped their ridiculous raize/develop/repeat schedule?
Berkshire's Credit Risk Soars on $37 Billion Bet (Update2)
By Erik Holm and Shannon D. Harrington
Nov. 18 (Bloomberg) -- The cost of protecting against default by Warren Buffett's AAA rated Berkshire Hathaway Inc. has almost tripled in two months, a sign of just how skittish investors have become amid the global financial crisis.
The cost to protect against Berkshire being unable to meet its debt payments, based on credit-default swaps, is more than four times that of rival insurer Travelers Cos. At those levels, the swaps are typical of companies rated Baa3 by Moody's Investors Service, one level above junk. The price may have risen on concern that the billionaire's firm could lose a $37 billion bet on world stock market values more than a decade from now.
Quantitative Easing = Printing More Money (electronic or otherwise), as far as I can tell.
c&c: blog link would be welcomed and added to future blogroll at ic4mg.com
Broward, if you're still reading - had the thought that a systems engineering approach might be very useful in designing new financial and business systems that are more resistant to fraud and falsehoods. Seems like the current systems (down to and including a resume-to-hire process filled with unverifiable data) have almost been built for minimum transparency and maximum potential for abuse. Back in the days of small towns, folks all knew each other and knew whom to trust from their "in" circle, and distrusted outsiders. Seems civilization hasn't figured out how to replicate that very well in our urban/suburban situations.
Will Buffet be part of a future CR post like this?
I loved this quote: "The swap buyers are projecting present circumstances into infinity'' and concluding Buffett's bet will cost the company $40 billion, Pabrai said.It will never happen,'' he said. "
Considering how often "25 standard deviation" longshots have been coming up winners recently, Pabrai should be cautious.
Old trading proverb: "Always fade 'always', and always fade 'never'".
c&c: thanks, will be reading... see I was slow; Should've saved that last paragraph and gotten previous post in sooner!
Re: Quant easing - another way to think of it, from a physical sciences perspective, is to realize that the amount of fiat money is not a conserved quantity - and someone else controls the source.
A useful thought exercise: Imagine living in a house that gets bigger and smaller every day depending on what Bernanke and Paulson do. The size of the house is like the national money supply.
Or, imagine sitting down to split a pie with your fellow countrymen, except just when you're about to take your slice, the banksters decide to shrink the whole thing... then they take half of your slice and all of your kids' slices for themselves...
Even physical money (gold etc.) wasn't really conserved, because on the one hand it could be discovered/plundered (the bane of Spain!), and on the other hand it was also hoarded.
The question everyone should be asking, but isn't (exactly) is if Bernanke is going into Quantitative Easing, who gets the new money and why?
v,
Well I see national currencies being treated like the banks were earlier this year with the weakest at any given time facing insurmountable pressure.
I just threw out the GBP and CHF for general structural reasons. Britain has heavy exposure to real estate losses domestically, a troubled federal budget (North Sea oil decline, existing deficits from vast program spending, etc), and a dependence on acting as a financial conduit. The BoE will continue to cut rates, and there is really nothing to suggest the GBP will appreciate. I believe they made sensible decisions with their recaptilization plan, but now they have to begin to fund it and their auctions performed less than desired at this early juncture.
As for the Swiss Franc, they did/do have good central bank reserves. In the best case scenario, the Franc has to depreciate to remain competitive with Euro area based businesses. The worst case scenario is very much like an Icelandic problem -- it is binary outcome. Credit Suisse and UBS alone should have enough losses to wipe out the Swiss central bank. Foreign governments could help out, or there is a very slim possibility of being able to spread out recognition of the losses such that they can be paid for over time. However in the case of foreign intervention, there is no free lunch. If there is a failure, then depositors of the banks still standing will withdraw funds from Switzerland in a currency run like we've never seen before. Add to that private banking (/tax evasion) will be under increased pressure from foreign governments (Lichenstein, UBS, those scandals are still fresh), and the cantons may have to bring in new taxes to offset the amount received from the financial industry. I still can't believe UBS hired Phil Gramm...
So I haven't constructed any specific metrics, but both are currencies certainly at risk.
I do expect central banks to arm themselves while they can by selling gold at what could be a futures delivery demand crush come December, and the Swiss have a big portion of reserves in gold.
Short summary: the UK and Switzerland have been very dependent on hosting financial institutions, and are now exposed to a shrinking financial industry. Unless we see private credit growth remerge with some new bubble asap, there won't be a bounce back for that sector
``There is a concern that if the name is put in the newspaper that such-and-such bank came to the Fed to borrow overnight for a perfectly good reason, that others might begin to worry is this bank creditworthy and that might create a stigma, a problem..."
The Canadian Real Estate Association said last week that nationally, the average price of a resale home in October fell the most, percentage-wise, since August, 1982, sinking 10 per cent from the year before to $281,133. It was the fifth consecutive month with year-over-year price declines.
The CAAMP survey also found that most Canadians are unaware of the federal government's decision, which took effect last month, to stop guaranteeing mortgage insurance on mortgages with 40-year amortization periods or down payments of less than 5 per cent of the property value, or those granted to borrowers with low credit scores.
lawyerliz writes:
What happens when nothing is worth anything, or maybe we are there already?
Every day you can buy groceries evidences the fact that someone picked product [and was likely paid]; someone washes and boxed the product [and was likely paid]; someone stored and loaded the product for shipment [and was likely paid]; someone delivered the shipment; someone unloaded it; someone else detrashed it and moved it onto the buying floor; someone else priced and located it on the appropriate shelf unit; someone else washed and waxed the floor behind that work; and someone else unlocked the door to allow you in to buy your groceries.
How fast does that fall apart ?
EHP: On previous thread you said "It's useless to be right about a downturn if you cannot prove that same judgment on an upturn."
I respectfully disagree. You can lose a lot of wealth if you miss a downturn, you won't lose anything missing the upturn (except the opportunity).
But I do get your point. I'm trying to do a better job timing my re-entry than after the dot.com bust. I was out until summer 2004 and missed a good bit of the run back up. That's one reason I've been hanging here for the last few months - trying to learn from people who know things I don't.
my long ago younger days there was a teevee program called " the outer limits "
it began with the screen going blank then a deep voice saying
" do not attempt to adjust your television, we control the horizontal
we control the vertical, you are now in the outer limits "
very spooky long ago stuff
Intro
You must enter an Intro for your Diary Entry between 300 and 1150 characters long.
in my long ago younger days there was a teevee program called " the outer limits "
it began with the screen going blank then a deep voice saying
" do not attempt to adjust your television, we control the horizontal
we control the vertical, you are now in the outer limits "
very spooky long ago stuff
but not as spooky as this current era
the question everyone refuses to ask is how in god's name is obama the democratic nominee ?
why is this happening ?
when the campaign began it was a forgone conclusion hilary would chosen. she was beside her husband bill while he guided the nation through a period of peace and prosperity.
how could anyone else even be considered ?
and with eights years of republican management as an indictment the election would be for show only. a historical landslide never to be duplicated !
but instead where do we find ourselves ?
we find ourselves with a complete novice with a foreign name. a nominee that would be an excellent choice in a nation on the economic upswing, and a president who would be quite persuasive in convincing america that prosperity is just around the corner
however
every and all indicators report that the good ship lollipop has struck a chocolate bar and that we are heading ten deep fathoms to the gates of hell. yet we want to take the cabin boy place him at the ship's helm and say
my name is Joeseph and am rich CRE guy, and I am looking for some help on completing a financial transaction. i have many properties hear in this great country, yet my cash is located in nother country. if you could forward $10 billoin to me, i will exchange these wonderful properties to you for free and will pay back the money as well! such a deal! please forward this help to my account in Credit Suisse, and I wll give title to wnderful mall and lovely hotels. thanks you so much! i love this country!
citizen energyecon writes:
Speaking of soaring CDS...
Berkshire's Credit Risk Soars on $37 Billion Bet (Update2)
Thanks for catching that. I remember bring up the subject of the futures he wrote when it was disclosed at earnings on one of these threads. I said he effectively bet the company, others did not feel the same
The only saving grace I can give Buffet is that if the stock markets don't rise above 2003-2008 levels by 2019, then there wasn't a much better option available and all other insurance companies will be broke as well
Seems like the current systems (down to and including a resume-to-hire process filled with unverifiable data) have almost been built for minimum transparency and maximum potential for abuse.
Very similar things happen in the world of information processing. Many times, when you deconstruct a tightly-coupled system, you find it was created that way out of a concern for external security and internal opacity.
The loosely-coupled systems I seem to be arriving at wind up looking a lot like eBay.
It is simply over for this nation and much of the world. These individuals in high place are incredibly evil. Deception abounds. What kind of F**king
morons would dream up this packaging of debt, chopping it up hundreds of time, not to say anything about the fools that bought this package shit. Even I could see that from ten miles away, make that a hundred miles. God help us all.
The Berkshire CDS thing is really pretty astonishing. I actually agree with Pabrai; Berkshire's odds of default are lower than almost any company and many sovereign nations.
"The only real anchor is the movie theater, unless you count the Victoria's Secret or Frederick's of Hollywood outlets. Kinky crowd out there in Corona?"
"The Berkshire CDS thing is really pretty astonishing. I actually agree with Pabrai; Berkshire's odds of default are lower than almost any company and many sovereign nations."
How do I bet for BRK? The best opportunities are presented when the majority is dead wrong. Clowns.
Chainsaw,
Broward Horne made a similar comment but I thought the thread was dead, and there was no point to respond so this will suffice for both.
I was a bit strong in my wording, but I stand by the sentiment. If you only ever make one directional call, and stick to it then you will inevitably suffer from confirmation bias.
What I think both of you wanted to communicate was not only direction, but magnitude. If there's a 90% chance of a 10% upturn, it's hardly worth it when there is a 10% chance of a 90% downturn (eg concave utility rates)
The comment itself was mostly intended to encourage sober evaluation of the medium term, to challenge others about the strength of the ground they stand o
@ZackAttack - agreed, especially when thinking that financial systems are fundamentally information systems. If mortgages were simpler, they'd be a lot less fraud-prone. Also, once thesystem is made complicated, it requires regulators to protect the naive from abuse by self-interested greedy experts ... then after a while, people get complacent and start to trust that the regulated system protects them ... and when the regulators go into nonfeasance everyone who trusted the system gets screwed.
(On the other hand, a complex system creates so many more stable jobs and sinecures for "experts"... maybe it's better at reducing unemployment? except those people could be much more productive in other areas if their labor was liberated from sustaining the complexity...)
...Meanwhile, not to worry, the way eBay is going, they'll be properly obfuscated before long! LOL
The U.S. economy would suffer a ``catastrophic collapse'' if domestic carmakers fail, General Motors Corp. Chief Executive Rick Wagoner said, as the nation's auto industry renewed appeals to Congress for federal aid.
``The recent plunge in vehicle sales threatens not only GM's ongoing turnaround but our very survival,'' he said.
my name is Joeseph and am rich CRE guy, and I am looking for some help on completing a financial transaction. i have many properties hear in this great country, yet my cash is located in nother country. if you could forward $10 billoin to me, i will exchange these wonderful properties to you for free and will pay back the money as well! such a deal! please forward this help to my account in Credit Suisse, and I wll give title to wnderful mall and lovely hotels. thanks you so much! i love this country!
Nice CRE freind | 11.18.08 - 5:59 pm
Please send me your email addy. Meanwhile, I'll check my other pair of pants for the ten billion.
Nemo,
You know Buffet the guy in the token newspaper articles, not Berkshire Hathaway.
It's an insurance company, that takes more of a personal touch on its investments. Compare it to other insurance companies, it's no where near as special as assumed. It doesn't split, and it's got a good folk story. It's good, but not exceptional
I agree with the trading approach that one has to be able to call both tops and bottoms. In a fiat money system with this much economic turbulence, even cash isn't particularly stable (while the number won't change, its purchasing power might). I am thinking that everything, even a simple move in/out of cash, is effectively a trade these days.
Along those lines - T-bills are a pretty darn crowded trade right now, and the herd is usually soon proven to be wrong.
Heck - by the time we get done with this crisis, and especially if they overdo the monetary reinflation, real estate (carefully selected) may actually prove to have been the best investment after all! (What would you rather buy here, a T-bill at near-ZIRP, the S&P 500, or a house at foreclosure prices? Hmm...)
OK. Taking logic, nothing is exceptional. Tiger Woods is good but not exceptional. Einstein was good but not exceptional. Sex with three Playmates for eight hours is good but not exceptional.
"What would you rather buy here, a T-bill at near-ZIRP, the S&P 500, or a house at foreclosure prices? Hmm...)"
I'd rather short longer term Treasuries. And homes do have holding cost. The opportunity costs of the lost cash is itself significant reason enough to hold off buying foreclosures right now.
Elvis,
AIG was exceptional. Swiss RE is the other big reinsurer that I know of. The insurance business happens to be very oligopolistic and lucartive, it has much less to do with investing wisdom
@EHP - don't forget that the CEO is an octogenarian and the market value sans-CEO is unknown!
@Elvis - Tiger Woods was exceptional, as was Warren Buffett. Past performance is not a guarantee of future returns. In fact, in the latter case we can pretty much guarantee a limited supply of future returns, and while his successor might be equally gifted, the market will have doubts until proven otherwise.
@EHP - agree re: shorting long treasuries, although the 1930s-1940s treasury yield history suggests even that could be a losing trade for a decade. But you were supposed to pick from the limited menu of options! One that I didn't mention was to be long corporate bonds...
"## Please send me your email addy. Meanwhile, I'll check my other pair of pants for the ten billion."
please to forward transaction gaillee@creditsuisse.ru. Also, may check Paulson's pance for loose change such as this. It is a small amount! Hurry before pants go to dry cleaners.
Corporate Wisdom Seeker,
You might want to check out Brad Setser's post today from the new TIC data. General thesis of sovereign wealth funds tried riskier assets in recent years while the USD devalued, got burned, and now account for increased yields on agency/corporate while lower treasuries.
Elvis,
He looked terrible in the 1970s, and he'll look terrible again in his lifetime. It's the sector, not the man, which has provided the strong returns.
I do expect central banks to arm themselves while they can by selling gold at what could be a futures delivery demand crush come December, and the Swiss have a big portion of reserves in gold.
Unless a severe emergency develops in Switzerland there will be no more gold sales for a long time and by no means any in the next few months.
``We are always ready to trade increased volatility in reported earnings in the short run for greater gains in net worth in the long run. That is our philosophy in derivatives as well.''
Essentially that is the opposite of the standard operating procedure of public companies today. In other words, CEO's manage reported earnings quarter by quarter to please Wall ST analysts, at the cost of long term investment in product development. I have to say I'm with Buffett on this one.
"He looked terrible in the 1970s, and he'll look terrible again in his lifetime. It's the sector, not the man, which has provided the strong returns.
EvilHenryPaulson"
EHP, I know. It is all luck. He started with virtually nothing and became the richest man in the world based on luck. Not from understanding cycles. Not from understanding businesses and what to pay for them. It was all luck man. You understand it exactly. That lucky SOB. I'm thinking you could have been him if not for some unlucky choices.
RE, re: gold sales
thanks for the post, but I'll be cynical and take the position they are being deceitful. They haven't limited themselves for selling more gold, especially for an unpredictable crisis. They probably just won't be selling in the near future
I did mention December, and for that I was thinking of the overall global central bank community. They can bail out their own banks that wrote the futures, by reaping strong profits and implicitly suggesting financial stability (through a lower gold price)
Elvis,
Hank Greenberg made his own fortune too. I'm not calling Buffet stupid, for such an ardent student you should realize that Buffet recognizes his own limitations -- which is exactly what I'm pointing out
"Elvis - are you serious? You think he started with zero?
crispy&cole"
I'm saying he starting working and making his own money when he was about 8. Paper routes, selling gum, pinball machines, you name it. He made his own money and used it to make other money. How is that so hard to understand?
"Buffet recognizes his own limitations -- which is exactly what I'm pointing out
EvilHenryPaulson"
No you are just saying a clearly exceptional man is not exceptional which is a completely ludicrous argument. And you are saying he is just lucky. Just like saying the fastest man in the world isn't fast. He is just lucky.
Elvis,
Are you trying to say that all children who had a paper route and saved their money are bound to be exceptional men? Otherwise I don't see the point of sugar coated anecdotes
"I have a bridge for sale...would you like to buy it?
crispy&cole"
Really, crispy, you have no clue on this subject. You should just quit. By the way, virtually every politician has kids. Why aren't they all one of the richest people in the world? Luck, I tell you. That Warren Buffett is so lucky, it is not fair.
Look at AIG and look at Berkshire. Their performance was until recently highly correlated. Ergo, yes being one of an oligopoly of reinsurers has more to do with their success than do their individual investments
You are beginning to remind me of a man I once met who refused to believe that Trump's companies had gone bankrupt because he never mentioned that in the autobiography
Buffett also served on the Omaha board of education from 1939 to 1942. In 1942 he ran for the U.S. House of Representatives in the Nebraska district in which Omaha was located, winning the Republican nomination in the primary and then the subsequent general election; he was reelected twice. In 1948 he again was the Republican nominee for another term, but was defeated for reelection; however, he was the Republican nominee for the office again in 1950 and won the office back. In 1952 Buffett decided against seeking another term and returned to his investment business Buffett-Falk & Co. in Omaha
"Are you trying to say that all children who had a paper route and saved their money are bound to be exceptional men? Otherwise I don't see the point of sugar coated anecdotes
EvilHenryPaulson"
Not unless they save their money to buy other businesses that make money, and they continue to use that money to buy more and more business that make money. But, the problem is, others don't do that or, if they try, they fail or don't succeed to the level of Warren Buffett.
I just think you are jealous or something. No other reason to make the arguments, because your points hold no water.
I don't think that the SNB can conduct any gold sales in the present political climate. Gold sales (not leases) have to be made public and justified.
Any public admittance by the SNB, at this time, that gold sales have to be conducted would get the electorate on the barricades. The key thing to understand is that the public in Switzerland is concerned about the financial crisis but still is under the firm belief that it will not affect Switzerland anywhere near as much as its neighbors and the U.S.
Therefore any gold sale would destroy public confidence its banking system and in government to a huge degree. Much more so than than the recent forced resignation of federal councilor Samuel Schmid.
Again, only a huge emergency will force the Swiss to dip into their gold reserves in the next few years.
RE,
Interesting stuff about the domestic political nature of gold sales in Switzerland. What would you expect to happen if one of UBS or Citigroup was ready to declare bankruptcy and no offers of foreign aid were available.
It seemed to me that the Treasury saying "No Mas" (thanks Roberto Duran) to any more TARP tomfoolery was a big deal. Kicking the can over to the US Congress makes me even more worried going forward. This is what I wrote about the new development:
"While I am pleased the Treasury has given up the ghost on more cash plowing before years end, I am unsettled thinking about what the new Congress may do come the new year. At least the Treasury and FED guys are schooled in things economic, the Congress only knows how to burn cash for votes. Now they will be at the helm of the USS Bailout, a new class of aircraft super carrier that can rain dollar bills down on any enemy anywhere in the world! It even has it's own helicopters to aid in cash dispersion!"
2009, what year on the chines calendar is it? Year of the Dog or Pig?
Recent market activity (DJIA) sure reminds me of the Elway era Denver Broncos. Commanding leads blown for a loss and insurmountable deficits overcome for a win, all in the final 2 minutes, just like clockwork.
Today's stats certainly tell a different story, what with 8 new highs vs. 634 new lows. Its probably more prudent to play Russian roulette than to play the market these days.
What would you expect to happen if one of UBS or Citigroup was ready to declare bankruptcy and no offers of foreign aid were available.
I assume you mean Credit Suisse instead of Citigroup.
Obviously this is a very difficult question. IMO the Swiss would attempt to find any avenue possible to rescue the companies first in order to preserve Switzerland as a financial center. That is clearly priority one for ANY Swiss politician. If the very survival of these companies threatens the financial center's survival, they will be let go however unpopular that may be outside Switzerland. As you know, private banking in Switzerland is extremely important to Switzerland if not more important and carries far less systemic risk.
Elvis writes:
"The U.S. economy would suffer a ``catastrophic collapse'' if domestic carmakers fail, General Motors Corp. Chief Executive Rick Wagoner said,"
Wash, rinse, repeat.
Maybe, just maybe they dont like your product, Sir!
I should buy the factory that made Bennie Babies and then ask for a government bailout because the market changed and I was just stupid enough to think "if I made them, they will buy 'em".
Why not buy all three companies. Fire the mgmt, hire retired Honda execs give 'em half of the three companies. Make a usefull enterprise and then go public with a company that has some value. Oh, and drop that (specific) Viagra is a covered med. clause the the Union negotiated into the last few contracts. Better yet boot the unions and hire some unemployed WS boys and girls.
Did this blog ever reach a consensus on a name for the upcoming depression? I'm starting to think it might end up being called the Criminal Depression--both for the way we got there and the ensuing action in the streets. This is a very urbanized country with little means to subsist on the land without violence. Guns and butter will have a new meaning.
Totally OT, but does anybody know if stopping the Somaii pirates is possible? BBC says US 5th Fleet command has warned that it cannot be "everywhere", and the Saudi's want international effort, presumably the US, to do something. But are nations with a credible navy already overextended..UK, US, and possibly Japan? This as got to add to the problems with shipping.
I know Hilton Head very well, spend a lot of time there. Would love to see Four Seasons pick up the Westin asset on the cheap, the island needs a true luxury hotel.
Either way the leisure economy is in trouble for a little while, frankly so is the main economy....
At least the Treasury and FED guys are schooled in things economic, the Congress only knows how to burn cash for votes. JJL | Homepage | 11.18.08 - 7:01 pm | #
Yep, I'm sure glad the smartest guys in the room were running things these past several years. Otherwise we might have accumulated a bunch of debt right before the beginning of a depression.
Honestly, as some previous commenters have surmised, this shouldn't be a surprise. It's one of the worst CMBS deals out there (JPMCC 2008-C2), and you don't have to reach to find credit problems with several of the big loans. I think if you ask buysiders, they'll tell you they avoided this deal.
Not to diminish the fact that 20% of a 8 month old deal is delinquent - that is just unheard of. The overall delinquency in CMBS is like 1/2 a percent - everyone knows it'll go higher, but not 20% - wow!
Fried "Totally OT, but does anybody know if stopping the Somaii pirates is possible?"
How about the gulf oil states hire us mercenaries and hi-tec equipments from the US armed forces who will be manning the hi-tec guns, radar, torpedoes etc. on these ships to ensure safe passage. Purge the pirates so to speak.
CRE to the rescue to bring more bad news for the economy...it's about time. Eternal optimists think it's a good time to buy stocks. They won't know what hit them after the CRE pop.
crispy&cole writes:
Sorry - I change my URL on here all the time send hidden messages to Sheila Bair Bakersfield Bubble
Crispy: checked out your blog and liked what I found. Especially the part about SunCal being run by morons! Man, you are so right on there; that is one idiotic development firm and I take great pleasure each time I see one of their hare brained schemes come unraveled. Up here in the bay area they are f-ing up large on Oak Knoll Naval Hospital, Alameda, and also some massive clusterfu*k on Bethel Island east of Brentwood. Seeing as how they were in bed with Lehman their incompetence should come as no surprise to all. Unfortunately the Army Reserve recently chose them to redevelop a portion of the Camp Parks facility in Dublin. Can't wait to see how that one turns out!
Hilton head? The joke practically writes itself.
Promenade shops is an interesting shopping center. The only real anchor is the movie theater, unless you count the Victoria's Secret or Frederick's of Hollywood outlets. Kinky crowd out there in Corona?
2nd third??
More shelter for the homeless...
GGP sporting a 454% divy...no default risk in the largest mall operator?
Big loans for big empty buildings.
Hoocoodanode!
Nostrovia,
I hate Haloscan.
And if you look along the coasts, you will see where high tide for the madness broke, and then slowly began to recede.
Any default notices filed on the HQ of GM yet?
When I got to Hilton Head, I had just $1,000 in my pocket.
As soon as I get it back - I'm leaving!
- Old Hilton Head Tale
Actually I think the real news is the third paragraph in the Bloomberg article:
"... cost to protect top-rated commercial mortgage bonds from default to soar 130 basis points to 570 basis points on Markit Group Ltds CMBX credit default swap index as of 4:05 p.m. in New York"
Looks like the rating system works as poorly for commercial bonds as for the other kinds.
EHP (EvilHenryPaulson), if you are around, would earnestly like to ask you another question regarding a comment you made a couple days back: "Before the USD can become the target, there is first Switzerland and Britain facing devaluations among the big currencies"
If I am reading your comments correctly, I think I'm at similar conclusions. However, would you then further conclude that GBP and CHF would bottom first (way down the road, like late 2009/2010ish) and be the first major, non-commodity related currencies to recover some strength?
That's the further conclusion I am imagining/hypothesizing at this point. Any thoughts or comments on this would be appreciated. Thanks in advance.
Did you see the trick Corus pulled on the foreclosure of one of its loans for $146 million to a Panama City hi-rise developer? Only 10% of units were sold.
Corus's Condo Crater - WSJ.com
Bank Says Laketown Wharf will be ‘taken care of’
They foreclosed on a not-finished building and quickly put the Corus subsidiary that took possession into bankruptcy, to avoid claims and liens. That might work once or even twice.
But how many subsidiaries do they have to waste?
The story is that Corus wants to complete Laketown Wharf, rent it up, make it real. Don't hold your breath.
FWIW
Harrah's, Realogoy, and presumably others, were offering conversion from junior to senior debt for a 50% haircut -- the slang term the kids use is accordion debt
There are a few options creditors can take, but mostly they just rearrange when the losses will be fully recognized.
The real tragedy may be all the vacant buildings that fall in to disrepair to represent total destruction of value
I do worry about the former construction labour force will do in the interim. Building material and labour costs will drop to near minimum levels
Perhaps one should link failed banks to geographic locations where large commercial projects had been started... "had"
Re: defaults on mortgages for a shopping center near ground zero of the housing bust
Not sure if any of you follow my lousy blog, but...Suncal has now defaulted on 15 different projects on the west coast...not sure how long they will be around
Does anyone know how this real estate market is affecting Vegas? Twas a time where they couldn't build fast enough....have they stopped their ridiculous raize/develop/repeat schedule?
Can anyone please explain Quantitative Easing for me?
crispy,
your home page is dead
Products and Services Overview
more abx cliff diving like PENAAA-06-1! (I thought yesterday I saw 93 or so but 87.11 today)
Sorry - I change my URL on here all the time send hidden messages to Sheila Bair
Bakersfield Bubble
GGP sporting a 454% divy...no default risk in the largest mall operator?
You can make a profit if they make a SINGLE quarterly payment. LOL, and nobody thinks they'll do that.
Anonymous writes:
Can anyone please explain Quantitative Easing for me?
Certainly. Don't bet on games in which you don't know the rules. Clear nuf ?
What to do when the rules change daily...
Dear Calculatedriskreaders:
Chinese
may buy GM and Chrysler.
Why not Ford, too?
Cordially,
Килгор Траут
Speaking of soaring CDS...
Berkshire's Credit Risk Soars on $37 Billion Bet (Update2)
By Erik Holm and Shannon D. Harrington
Nov. 18 (Bloomberg) -- The cost of protecting against default by Warren Buffett's AAA rated Berkshire Hathaway Inc. has almost tripled in two months, a sign of just how skittish investors have become amid the global financial crisis.
The cost to protect against Berkshire being unable to meet its debt payments, based on credit-default swaps, is more than four times that of rival insurer Travelers Cos. At those levels, the swaps are typical of companies rated Baa3 by Moody's Investors Service, one level above junk. The price may have risen on concern that the billionaire's firm could lose a $37 billion bet on world stock market values more than a decade from now.
Berkshire's Credit Risk Soars on $37 Billion Bet (Update2) - Bloomberg.com
Will Buffet be part of a future CR post like this?
Berkshire's Credit Risk Soars on $37 Billion Bet (Update2) - Bloomberg.com
Quantitative Easing = Printing More Money (electronic or otherwise), as far as I can tell.
c&c: blog link would be welcomed and added to future blogroll at ic4mg.com
Broward, if you're still reading - had the thought that a systems engineering approach might be very useful in designing new financial and business systems that are more resistant to fraud and falsehoods. Seems like the current systems (down to and including a resume-to-hire process filled with unverifiable data) have almost been built for minimum transparency and maximum potential for abuse. Back in the days of small towns, folks all knew each other and knew whom to trust from their "in" circle, and distrusted outsiders. Seems civilization hasn't figured out how to replicate that very well in our urban/suburban situations.
jinx
Danny,
Yah, noting but trouble there; look at JPMorgan crap!
J.P. MORGAN MORTGAGE ACQUISITION CORP. 2005-OPT1, etc, etc...
https://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/ratings_sf_rmbs/2,1,9,4,74,0,0,0,0,0,3,0,18,0,3,1.html
All that shit is rated about CCC and not worth the cost of the paper!
Comrade Wisdom Seeker,
Thanks.
Hah!
Will Buffet be part of a future CR post like this?
I loved this quote: "The swap buyers are projecting present circumstances into infinity'' and concluding Buffett's bet will cost the company $40 billion, Pabrai said.It will never happen,'' he said. "
Considering how often "25 standard deviation" longshots have been coming up winners recently, Pabrai should be cautious.
Old trading proverb: "Always fade 'always', and always fade 'never'".
just wait till VNBC goes down as well. corona sucks. only getting worse.
What happens when nothing is worth anything, or maybe we are there already?
c&c: thanks, will be reading... see I was slow; Should've saved that last paragraph and gotten previous post in sooner!
Re: Quant easing - another way to think of it, from a physical sciences perspective, is to realize that the amount of fiat money is not a conserved quantity - and someone else controls the source.
A useful thought exercise: Imagine living in a house that gets bigger and smaller every day depending on what Bernanke and Paulson do. The size of the house is like the national money supply.
Or, imagine sitting down to split a pie with your fellow countrymen, except just when you're about to take your slice, the banksters decide to shrink the whole thing... then they take half of your slice and all of your kids' slices for themselves...
Even physical money (gold etc.) wasn't really conserved, because on the one hand it could be discovered/plundered (the bane of Spain!), and on the other hand it was also hoarded.
The question everyone should be asking, but isn't (exactly) is if Bernanke is going into Quantitative Easing, who gets the new money and why?
What happens when nothing is worth anything, or maybe we are there already?
I beg to differ, anything is worth something and nothing is worth everything.
Ah, a nice pretty picture of today's futures pump:
Quote.com U.S. Markets - Futures Quotes and Charts - Chart for ES Z8
v,
Well I see national currencies being treated like the banks were earlier this year with the weakest at any given time facing insurmountable pressure.
I just threw out the GBP and CHF for general structural reasons. Britain has heavy exposure to real estate losses domestically, a troubled federal budget (North Sea oil decline, existing deficits from vast program spending, etc), and a dependence on acting as a financial conduit. The BoE will continue to cut rates, and there is really nothing to suggest the GBP will appreciate. I believe they made sensible decisions with their recaptilization plan, but now they have to begin to fund it and their auctions performed less than desired at this early juncture.
As for the Swiss Franc, they did/do have good central bank reserves. In the best case scenario, the Franc has to depreciate to remain competitive with Euro area based businesses. The worst case scenario is very much like an Icelandic problem -- it is binary outcome. Credit Suisse and UBS alone should have enough losses to wipe out the Swiss central bank. Foreign governments could help out, or there is a very slim possibility of being able to spread out recognition of the losses such that they can be paid for over time. However in the case of foreign intervention, there is no free lunch. If there is a failure, then depositors of the banks still standing will withdraw funds from Switzerland in a currency run like we've never seen before. Add to that private banking (/tax evasion) will be under increased pressure from foreign governments (Lichenstein, UBS, those scandals are still fresh), and the cantons may have to bring in new taxes to offset the amount received from the financial industry. I still can't believe UBS hired Phil Gramm...
So I haven't constructed any specific metrics, but both are currencies certainly at risk.
I do expect central banks to arm themselves while they can by selling gold at what could be a futures delivery demand crush come December, and the Swiss have a big portion of reserves in gold.
Short summary: the UK and Switzerland have been very dependent on hosting financial institutions, and are now exposed to a shrinking financial industry. Unless we see private credit growth remerge with some new bubble asap, there won't be a bounce back for that sector
Thanks, Ben, for keeping taxpayers away from bad banks:
Bernanke Says Federal Reserve Won't Reveal Details on Loans - Bloomberg.com
``There is a concern that if the name is put in the newspaper that such-and-such bank came to the Fed to borrow overnight for a perfectly good reason, that others might begin to worry is this bank creditworthy and that might create a stigma, a problem..."
You are a schmuck, a shylock, and a shyster.
Ca revenue stream must be getting real bad:
Max Mobile: Revenue Generation
A third of Canadians see lower house prices: survey
This page is available to GlobePlus subscribers
The Canadian Real Estate Association said last week that nationally, the average price of a resale home in October fell the most, percentage-wise, since August, 1982, sinking 10 per cent from the year before to $281,133. It was the fifth consecutive month with year-over-year price declines.
The CAAMP survey also found that most Canadians are unaware of the federal government's decision, which took effect last month, to stop guaranteeing mortgage insurance on mortgages with 40-year amortization periods or down payments of less than 5 per cent of the property value, or those granted to borrowers with low credit scores.
lawyerliz writes:
What happens when nothing is worth anything, or maybe we are there already?
Every day you can buy groceries evidences the fact that someone picked product [and was likely paid]; someone washes and boxed the product [and was likely paid]; someone stored and loaded the product for shipment [and was likely paid]; someone delivered the shipment; someone unloaded it; someone else detrashed it and moved it onto the buying floor; someone else priced and located it on the appropriate shelf unit; someone else washed and waxed the floor behind that work; and someone else unlocked the door to allow you in to buy your groceries.
How fast does that fall apart ?
EHP: On previous thread you said "It's useless to be right about a downturn if you cannot prove that same judgment on an upturn."
I respectfully disagree. You can lose a lot of wealth if you miss a downturn, you won't lose anything missing the upturn (except the opportunity).
But I do get your point. I'm trying to do a better job timing my re-entry than after the dot.com bust. I was out until summer 2004 and missed a good bit of the run back up. That's one reason I've been hanging here for the last few months - trying to learn from people who know things I don't.
saw this while rooting around at daily kos
WHY OBAMA 08
my long ago younger days there was a teevee program called " the outer limits "
it began with the screen going blank then a deep voice saying
" do not attempt to adjust your television, we control the horizontal
we control the vertical, you are now in the outer limits "
very spooky long ago stuff
Intro
You must enter an Intro for your Diary Entry between 300 and 1150 characters long.
in my long ago younger days there was a teevee program called " the outer limits "
it began with the screen going blank then a deep voice saying
" do not attempt to adjust your television, we control the horizontal
we control the vertical, you are now in the outer limits "
very spooky long ago stuff
but not as spooky as this current era
the question everyone refuses to ask is how in god's name is obama the democratic nominee ?
why is this happening ?
when the campaign began it was a forgone conclusion hilary would chosen. she was beside her husband bill while he guided the nation through a period of peace and prosperity.
how could anyone else even be considered ?
and with eights years of republican management as an indictment the election would be for show only. a historical landslide never to be duplicated !
but instead where do we find ourselves ?
we find ourselves with a complete novice with a foreign name. a nominee that would be an excellent choice in a nation on the economic upswing, and a president who would be quite persuasive in convincing america that prosperity is just around the corner
however
every and all indicators report that the good ship lollipop has struck a chocolate bar and that we are heading ten deep fathoms to the gates of hell. yet we want to take the cabin boy place him at the ship's helm and say
" son, our fate is in your hands "
very very spooky stuff
Hello Dear Washington friend,
my name is Joeseph and am rich CRE guy, and I am looking for some help on completing a financial transaction. i have many properties hear in this great country, yet my cash is located in nother country. if you could forward $10 billoin to me, i will exchange these wonderful properties to you for free and will pay back the money as well! such a deal! please forward this help to my account in Credit Suisse, and I wll give title to wnderful mall and lovely hotels. thanks you so much! i love this country!
Without transparency the FED and Treasury have no credibility and will not gain any confidence of the general public.
Till then there will be lower highs and higher lows.
citizen energyecon writes:
Speaking of soaring CDS...
Berkshire's Credit Risk Soars on $37 Billion Bet (Update2)
Thanks for catching that. I remember bring up the subject of the futures he wrote when it was disclosed at earnings on one of these threads. I said he effectively bet the company, others did not feel the same
The only saving grace I can give Buffet is that if the stock markets don't rise above 2003-2008 levels by 2019, then there wasn't a much better option available and all other insurance companies will be broke as well
Seems like the current systems (down to and including a resume-to-hire process filled with unverifiable data) have almost been built for minimum transparency and maximum potential for abuse.
Very similar things happen in the world of information processing. Many times, when you deconstruct a tightly-coupled system, you find it was created that way out of a concern for external security and internal opacity.
The loosely-coupled systems I seem to be arriving at wind up looking a lot like eBay.
CDS traders are not to be admired. They are prime product for toast - preferably burnt toast.
It is simply over for this nation and much of the world. These individuals in high place are incredibly evil. Deception abounds. What kind of F**king
morons would dream up this packaging of debt, chopping it up hundreds of time, not to say anything about the fools that bought this package shit. Even I could see that from ten miles away, make that a hundred miles. God help us all.
citizen energyecon and crispy&cole --
The Berkshire CDS thing is really pretty astonishing. I actually agree with Pabrai; Berkshire's odds of default are lower than almost any company and many sovereign nations.
P.S. It is spelled "Buffett".
"The only real anchor is the movie theater, unless you count the Victoria's Secret or Frederick's of Hollywood outlets. Kinky crowd out there in Corona?"
Can you give me an address and directions?
"The Berkshire CDS thing is really pretty astonishing. I actually agree with Pabrai; Berkshire's odds of default are lower than almost any company and many sovereign nations."
How do I bet for BRK? The best opportunities are presented when the majority is dead wrong. Clowns.
Chainsaw,
Broward Horne made a similar comment but I thought the thread was dead, and there was no point to respond so this will suffice for both.
I was a bit strong in my wording, but I stand by the sentiment. If you only ever make one directional call, and stick to it then you will inevitably suffer from confirmation bias.
What I think both of you wanted to communicate was not only direction, but magnitude. If there's a 90% chance of a 10% upturn, it's hardly worth it when there is a 10% chance of a 90% downturn (eg concave utility rates)
The comment itself was mostly intended to encourage sober evaluation of the medium term, to challenge others about the strength of the ground they stand o
@ZackAttack - agreed, especially when thinking that financial systems are fundamentally information systems. If mortgages were simpler, they'd be a lot less fraud-prone. Also, once thesystem is made complicated, it requires regulators to protect the naive from abuse by self-interested greedy experts ... then after a while, people get complacent and start to trust that the regulated system protects them ... and when the regulators go into nonfeasance everyone who trusted the system gets screwed.
(On the other hand, a complex system creates so many more stable jobs and sinecures for "experts"... maybe it's better at reducing unemployment? except those people could be much more productive in other areas if their labor was liberated from sustaining the complexity...)
...Meanwhile, not to worry, the way eBay is going, they'll be properly obfuscated before long! LOL
Carmaker Failure Would Be Catastrophe, Wagoner Says
Carmaker Failure Would Be Catastrophe, Wagoner Says (Update3) - Bloomberg.com
The U.S. economy would suffer a ``catastrophic collapse'' if domestic carmakers fail, General Motors Corp. Chief Executive Rick Wagoner said, as the nation's auto industry renewed appeals to Congress for federal aid.
``The recent plunge in vehicle sales threatens not only GM's ongoing turnaround but our very survival,'' he said.
my name is Joeseph and am rich CRE guy, and I am looking for some help on completing a financial transaction. i have many properties hear in this great country, yet my cash is located in nother country. if you could forward $10 billoin to me, i will exchange these wonderful properties to you for free and will pay back the money as well! such a deal! please forward this help to my account in Credit Suisse, and I wll give title to wnderful mall and lovely hotels. thanks you so much! i love this country!
Nice CRE freind | 11.18.08 - 5:59 pm
Please send me your email addy. Meanwhile, I'll check my other pair of pants for the ten billion.
FDIC leases space in Irvine:
FDIC: Press Releases - PR-119-2008 11/18/2008
I wonder why they just didn't wait to move into Downey's headquarters.
"The U.S. economy would suffer a ``catastrophic collapse'' if domestic carmakers fail, General Motors Corp. Chief Executive Rick Wagoner said,"
I take it Rick Wagoner doesn't want to be at the helm when the ship sinks. Can't blame him, but I cannot believe him either.
Nemo,
You know Buffet the guy in the token newspaper articles, not Berkshire Hathaway.
It's an insurance company, that takes more of a personal touch on its investments. Compare it to other insurance companies, it's no where near as special as assumed. It doesn't split, and it's got a good folk story. It's good, but not exceptional
Anon 6:08
So does Wagoner want $700B with no strings attached too? And we better approve it right frickin now.
So does Wagoner want $700B with no strings attached too? And we better approve it right frickin now.
It sure looks that way. 25B+25B more and who knows how much more to go.
@EHP / Chainsaw / Broward -
I agree with the trading approach that one has to be able to call both tops and bottoms. In a fiat money system with this much economic turbulence, even cash isn't particularly stable (while the number won't change, its purchasing power might). I am thinking that everything, even a simple move in/out of cash, is effectively a trade these days.
Along those lines - T-bills are a pretty darn crowded trade right now, and the herd is usually soon proven to be wrong.
Heck - by the time we get done with this crisis, and especially if they overdo the monetary reinflation, real estate (carefully selected) may actually prove to have been the best investment after all! (What would you rather buy here, a T-bill at near-ZIRP, the S&P 500, or a house at foreclosure prices? Hmm...)
"It's good, but not exceptional
EvilHenryPaulson"
OK. Taking logic, nothing is exceptional. Tiger Woods is good but not exceptional. Einstein was good but not exceptional. Sex with three Playmates for eight hours is good but not exceptional.
America's auto companies are investing in innovation,'' Nardelli said.Chrysler plans to emerge from the current downturn as a lean, agile company.''
Bwahahahahaahahahahahahahaha!
lean and agile...at Chrystler. Well, lean has some probability.
Nostrovia,
"What would you rather buy here, a T-bill at near-ZIRP, the S&P 500, or a house at foreclosure prices? Hmm...)"
I'd rather short longer term Treasuries. And homes do have holding cost. The opportunity costs of the lost cash is itself significant reason enough to hold off buying foreclosures right now.
Elvis,
AIG was exceptional. Swiss RE is the other big reinsurer that I know of. The insurance business happens to be very oligopolistic and lucartive, it has much less to do with investing wisdom
@EHP - don't forget that the CEO is an octogenarian and the market value sans-CEO is unknown!
@Elvis - Tiger Woods was exceptional, as was Warren Buffett. Past performance is not a guarantee of future returns. In fact, in the latter case we can pretty much guarantee a limited supply of future returns, and while his successor might be equally gifted, the market will have doubts until proven otherwise.
Warren was right to buy GS at those lofty levels, otherwise there would not be any GS left to begin with.. lol.
@EHP - agree re: shorting long treasuries, although the 1930s-1940s treasury yield history suggests even that could be a losing trade for a decade. But you were supposed to pick from the limited menu of options! One that I didn't mention was to be long corporate bonds...
Volker the Viking:
"## Please send me your email addy. Meanwhile, I'll check my other pair of pants for the ten billion."
please to forward transaction gaillee@creditsuisse.ru. Also, may check Paulson's pance for loose change such as this. It is a small amount! Hurry before pants go to dry cleaners.
Corporate Wisdom Seeker,
You might want to check out Brad Setser's post today from the new TIC data. General thesis of sovereign wealth funds tried riskier assets in recent years while the USD devalued, got burned, and now account for increased yields on agency/corporate while lower treasuries.
"@Elvis - Tiger Woods was exceptional, as was Warren Buffett. Past performance is not a guarantee of future returns."
I know. Just because I could run 100 feet yesterday, doesn't mean I can run 100 feet today. Except I can.
"Warren was right to buy GS at those lofty levels, otherwise there would not be any GS left to begin with.. lol."
Warren didn't buy GS. He gave them a $5B loan at 10% that might never get paid back and he got warrants.
Warren didn't buy GS. He gave them a $5B loan at 10% that might never get paid back and he got warrants.
Goes to show how shrewd he is, unless GS dissapears from the earth, he would be paid eventually at a good rate of return.
Elvis,
He looked terrible in the 1970s, and he'll look terrible again in his lifetime. It's the sector, not the man, which has provided the strong returns.
"Warren didn't buy GS. He gave them a $5B loan at 10% that might never get paid back and he got warrants."
I believe that BRK wrote alot of the 4B in naked puts that he's getting a lot of grief for through GS.
I wonder whether there's more than meets the eye with Buffet's GS investment.
I do expect central banks to arm themselves while they can by selling gold at what could be a futures delivery demand crush come December, and the Swiss have a big portion of reserves in gold.
Unless a severe emergency develops in Switzerland there will be no more gold sales for a long time and by no means any in the next few months.
http://www.snb.ch/en/mmr/reference/pre_20080929_1/source/pre_20080929_1.en.pdf
... Now that the sales have been concluded, the SNBs gold holdings total 1,040 tonnes. No further reduction in the gold holdings is planned.
Ok
BRK upside: $30bn in cash to do deals in a tight credit environment
BRK downside: it's an insurance company that is hitched to the successes and failures of the general stock market
Quote from the Bloomberg piece on Buffett:
``We are always ready to trade increased volatility in reported earnings in the short run for greater gains in net worth in the long run. That is our philosophy in derivatives as well.''
Essentially that is the opposite of the standard operating procedure of public companies today. In other words, CEO's manage reported earnings quarter by quarter to please Wall ST analysts, at the cost of long term investment in product development. I have to say I'm with Buffett on this one.
"He looked terrible in the 1970s, and he'll look terrible again in his lifetime. It's the sector, not the man, which has provided the strong returns.
EvilHenryPaulson"
EHP, I know. It is all luck. He started with virtually nothing and became the richest man in the world based on luck. Not from understanding cycles. Not from understanding businesses and what to pay for them. It was all luck man. You understand it exactly. That lucky SOB. I'm thinking you could have been him if not for some unlucky choices.
Elvis - Buffffetttt did not start with nothing...his father was very wealthy and an influential politician...
Buffett has two things in his advantage :
- He does not report to anyone and
- He can hold an investment indefinitely.
No one else should follow him if they do not share these characteristics.
cc,
He made his own money the entire way. You assume and don't actually know the truth.
RE, re: gold sales
thanks for the post, but I'll be cynical and take the position they are being deceitful. They haven't limited themselves for selling more gold, especially for an unpredictable crisis. They probably just won't be selling in the near future
I did mention December, and for that I was thinking of the overall global central bank community. They can bail out their own banks that wrote the futures, by reaping strong profits and implicitly suggesting financial stability (through a lower gold price)
I guess the racist crash wave is still ongoing. "Guest", go play with yourself in a corner.
No wonder Buffett and Gates are pals...they have the same backgrounds.
or, perhaps you were just reciting someone else's atrocities, Guest. If so, sorry for maligning you. It is unclear from your post.
Elvis - are you serious? You think he started with zero?
Elvis,
Hank Greenberg made his own fortune too. I'm not calling Buffet stupid, for such an ardent student you should realize that Buffet recognizes his own limitations -- which is exactly what I'm pointing out
"Elvis - are you serious? You think he started with zero?
crispy&cole"
I'm saying he starting working and making his own money when he was about 8. Paper routes, selling gum, pinball machines, you name it. He made his own money and used it to make other money. How is that so hard to understand?
HK is defending it's peg again.
I think the USD should drop after the redemptions are over, which should be end of this week.
Rally isn't doing anyone any good.
I have a bridge for sale...would you like to buy it?
"Buffet recognizes his own limitations -- which is exactly what I'm pointing out
EvilHenryPaulson"
No you are just saying a clearly exceptional man is not exceptional which is a completely ludicrous argument. And you are saying he is just lucky. Just like saying the fastest man in the world isn't fast. He is just lucky.
Elvis,
Are you trying to say that all children who had a paper route and saved their money are bound to be exceptional men? Otherwise I don't see the point of sugar coated anecdotes
"I have a bridge for sale...would you like to buy it?
crispy&cole"
Really, crispy, you have no clue on this subject. You should just quit. By the way, virtually every politician has kids. Why aren't they all one of the richest people in the world? Luck, I tell you. That Warren Buffett is so lucky, it is not fair.
Look at AIG and look at Berkshire. Their performance was until recently highly correlated. Ergo, yes being one of an oligopoly of reinsurers has more to do with their success than do their individual investments
You are beginning to remind me of a man I once met who refused to believe that Trump's companies had gone bankrupt because he never mentioned that in the autobiography
Buffett also served on the Omaha board of education from 1939 to 1942. In 1942 he ran for the U.S. House of Representatives in the Nebraska district in which Omaha was located, winning the Republican nomination in the primary and then the subsequent general election; he was reelected twice. In 1948 he again was the Republican nominee for another term, but was defeated for reelection; however, he was the Republican nominee for the office again in 1950 and won the office back. In 1952 Buffett decided against seeking another term and returned to his investment business Buffett-Falk & Co. in Omaha
"Are you trying to say that all children who had a paper route and saved their money are bound to be exceptional men? Otherwise I don't see the point of sugar coated anecdotes
EvilHenryPaulson"
Not unless they save their money to buy other businesses that make money, and they continue to use that money to buy more and more business that make money. But, the problem is, others don't do that or, if they try, they fail or don't succeed to the level of Warren Buffett.
I just think you are jealous or something. No other reason to make the arguments, because your points hold no water.
Elvis - I am not saying he is smart or a great value investor, I am just saying he didn't start at $0.00.
Drop Warren Buffffetttt off in the middle of Africa at the age of 2 and lets see what he does?
EHP,
I don't think that the SNB can conduct any gold sales in the present political climate. Gold sales (not leases) have to be made public and justified.
Any public admittance by the SNB, at this time, that gold sales have to be conducted would get the electorate on the barricades. The key thing to understand is that the public in Switzerland is concerned about the financial crisis but still is under the firm belief that it will not affect Switzerland anywhere near as much as its neighbors and the U.S.
Therefore any gold sale would destroy public confidence its banking system and in government to a huge degree. Much more so than than the recent forced resignation of federal councilor Samuel Schmid.
Again, only a huge emergency will force the Swiss to dip into their gold reserves in the next few years.
Elvis,
I was trying to knock some sense into you out of charity. I can see now that you wish for no such favour. Adieu
If Chrysler wants to get lean, they can start with Mr. Nardelli. Lot of bean-counter fat to chew there.
RE,
Interesting stuff about the domestic political nature of gold sales in Switzerland. What would you expect to happen if one of UBS or Citigroup was ready to declare bankruptcy and no offers of foreign aid were available.
"Hello Dear Washington friend,"
He writes me all the time.
and a hush fell over the crowd.
would Elvis, CandC, and EHP go round once more on the "buffett Debate"
tune in next time.
CHENEY AND GONZALEZ INDICTED IN TEXAS!
How about this former Real estate reality star
Yahoo! 404 - Page Not Found
It seemed to me that the Treasury saying "No Mas" (thanks Roberto Duran) to any more TARP tomfoolery was a big deal. Kicking the can over to the US Congress makes me even more worried going forward. This is what I wrote about the new development:
"While I am pleased the Treasury has given up the ghost on more cash plowing before years end, I am unsettled thinking about what the new Congress may do come the new year. At least the Treasury and FED guys are schooled in things economic, the Congress only knows how to burn cash for votes. Now they will be at the helm of the USS Bailout, a new class of aircraft super carrier that can rain dollar bills down on any enemy anywhere in the world! It even has it's own helicopters to aid in cash dispersion!"
2009, what year on the chines calendar is it? Year of the Dog or Pig?
YeeeeeeeHaaaaaaaaa!
Recent market activity (DJIA) sure reminds me of the Elway era Denver Broncos. Commanding leads blown for a loss and insurmountable deficits overcome for a win, all in the final 2 minutes, just like clockwork.
Today's stats certainly tell a different story, what with 8 new highs vs. 634 new lows. Its probably more prudent to play Russian roulette than to play the market these days.
The VP has been indicted. YEEEEEEEESSSSSSSSSSSSS!
CSW
On my iPhone so typing sucks but amazingly it figured out to capitalize that p
I have thoughts on revamping systems but I'm always concerned with unintended side effects.
You have to build systems that account for the fact that people are flawed. Imagine if you created.a generic code which never mutated
Thanks that made my day!
It's not swinging from a lamp post with piano wire but it's a start
What would you expect to happen if one of UBS or Citigroup was ready to declare bankruptcy and no offers of foreign aid were available.
I assume you mean Credit Suisse instead of Citigroup.
Obviously this is a very difficult question. IMO the Swiss would attempt to find any avenue possible to rescue the companies first in order to preserve Switzerland as a financial center. That is clearly priority one for ANY Swiss politician. If the very survival of these companies threatens the financial center's survival, they will be let go however unpopular that may be outside Switzerland. As you know, private banking in Switzerland is extremely important to Switzerland if not more important and carries far less systemic risk.
Just my view.
these pro forma deals will collapse once the borrowers run through the interest rate reserves
CR
Then what?
Off-topic: Google is now digitizing+hosting LIFE magazine's photo archives
Perhaps France may be worth visiting should this become a depression
Elvis writes:
"The U.S. economy would suffer a ``catastrophic collapse'' if domestic carmakers fail, General Motors Corp. Chief Executive Rick Wagoner said,"
Wash, rinse, repeat.
Maybe, just maybe they dont like your product, Sir!
I should buy the factory that made Bennie Babies and then ask for a government bailout because the market changed and I was just stupid enough to think "if I made them, they will buy 'em".
Why not buy all three companies. Fire the mgmt, hire retired Honda execs give 'em half of the three companies. Make a usefull enterprise and then go public with a company that has some value. Oh, and drop that (specific) Viagra is a covered med. clause the the Union negotiated into the last few contracts. Better yet boot the unions and hire some unemployed WS boys and girls.
Dammit, he promised me he wouldn't publish that!
Feds say S.F. has more pot clubs than Starbucks, but it might not add up .. It's time to legalize and tax pot.. Pass the bong ... lol Feds say S.F. has more pot clubs than Starbucks, but it might not add up
The VP has been indicted. YEEEEEEEESSSSSSSSSSSSS!
Sam Dimond | 11.18.08 - 7:02 pm | #
~~~~~~~~~~~
say what?
I got a cite on the Cheney "indictment."
http://www.foxnews.com/politics/2008/11/18/cheney-gonale-indicted/
It is my understanding that a sitting VP is immune from such an indictment.
Impeachment by contrast, while theoretically possible, is politically out of the question.
Sam Dimond writes:
The VP has been indicted. YEEEEEEEESSSSSSSSSSSSS
Oh, I smell the smell of a "Pardon" coming on.
Timing is interesting.
Did this blog ever reach a consensus on a name for the upcoming depression? I'm starting to think it might end up being called the Criminal Depression--both for the way we got there and the ensuing action in the streets. This is a very urbanized country with little means to subsist on the land without violence. Guns and butter will have a new meaning.
Switz has a Fed swapline.
Not that it's reducing pressure on the CHF.
Currency wienies are fixing to pile on.
CC
Local news last night report Virginia is short 600 state police because of budget issues
Not that it's reducing pressure on the CHF.
In terms of pressure, this is the real chart to look at and I personally don't see it. (Time Scale = Monthly)
http://www.netdania.com/Products/FinanceChart21/FinanceChart-2-1.asp?symbol=EURCHF|netdania_fxa&name=EUR/CHF
If GM fails all the domestic parts suppliers go under. And we import the parts from China.
Don't bite off your nose to spite your face.
RE - ah, but you will young jedi, you will...
UBS endogenous, Sw data through to Nov 25, exogenous exposure, what's not to like!?
CC
Totally OT, but does anybody know if stopping the Somaii pirates is possible? BBC says US 5th Fleet command has warned that it cannot be "everywhere", and the Saudi's want international effort, presumably the US, to do something. But are nations with a credible navy already overextended..UK, US, and possibly Japan? This as got to add to the problems with shipping.
I know Hilton Head very well, spend a lot of time there. Would love to see Four Seasons pick up the Westin asset on the cheap, the island needs a true luxury hotel.
Either way the leisure economy is in trouble for a little while, frankly so is the main economy....
SR
Boo hoo...no more home ATM to finance the fake boom.
Greedy barbarians have plundered our monetary system.
Kudos to the Fed!
At least the Treasury and FED guys are schooled in things economic, the Congress only knows how to burn cash for votes. JJL | Homepage | 11.18.08 - 7:01 pm | #
Yep, I'm sure glad the smartest guys in the room were running things these past several years. Otherwise we might have accumulated a bunch of debt right before the beginning of a depression.
Honestly, as some previous commenters have surmised, this shouldn't be a surprise. It's one of the worst CMBS deals out there (JPMCC 2008-C2), and you don't have to reach to find credit problems with several of the big loans. I think if you ask buysiders, they'll tell you they avoided this deal.
Not to diminish the fact that 20% of a 8 month old deal is delinquent - that is just unheard of. The overall delinquency in CMBS is like 1/2 a percent - everyone knows it'll go higher, but not 20% - wow!
Fried "Totally OT, but does anybody know if stopping the Somaii pirates is possible?"
How about the gulf oil states hire us mercenaries and hi-tec equipments from the US armed forces who will be manning the hi-tec guns, radar, torpedoes etc. on these ships to ensure safe passage. Purge the pirates so to speak.
FINALLY...
CRE to the rescue to bring more bad news for the economy...it's about time. Eternal optimists think it's a good time to buy stocks. They won't know what hit them after the CRE pop.
crispy&cole writes:
Sorry - I change my URL on here all the time send hidden messages to Sheila Bair
Bakersfield Bubble
Crispy: checked out your blog and liked what I found. Especially the part about SunCal being run by morons! Man, you are so right on there; that is one idiotic development firm and I take great pleasure each time I see one of their hare brained schemes come unraveled. Up here in the bay area they are f-ing up large on Oak Knoll Naval Hospital, Alameda, and also some massive clusterfu*k on Bethel Island east of Brentwood. Seeing as how they were in bed with Lehman their incompetence should come as no surprise to all. Unfortunately the Army Reserve recently chose them to redevelop a portion of the Camp Parks facility in Dublin. Can't wait to see how that one turns out!
Northern Cali: Yes, I think that Fear and Loathing describes the current market very well indeed.