Ambac probably will go into runoff, although you can essentially say it is there already because the demand for bond insurance has pretty much evaporated (even for the "good" companies). I don't see how they recover from that, although I wasn't really expecting them to be around for the long haul anyway before the downgrade. It is a downward spiral from here for them. I hope this puts a stake in talk about bailing out the bond insurers though.
You can quantify the bejeezus out of finance and accounting, but the economics thing is alot more psychological and logic.
One of the best econ courses I took - also an admin major with econ minor - was international and the give/take and balances between currencies and flows.
Fwiw, I think NYC is a bit "special". First, given with the number of financials there, and the layoffs/downsizing, I'd think they'll take a bigger hit than many/most.
Here, in Chicago, while not great, its not too bad. Most of the "pain to come" lays in high rise residential condos in the South Loop area coming on stream (although many have a floor, or two, maybe three of retail on the bottom floors).
Austrian's like to call it catalactics...the psychological component, and human action...the economic component.
It breaks down to human's act to improve their situation. You move to a different part of the bed because it makes you more comfortable, you close the window, because it is too cold out.
You can't capture that in linear differential equations. And non-linear differential equations cannot be solved.
My area of concentration was currencies and commodities. Studied a lot of the "then" command and control poli-economic systems (Soviet Union and China).
I always argued they WERE "economic" given their objectives. Profs kept bonking me on the head about some guy named Pareto?
Anyway, I always go back to marginal utility because I never got a more quantitative response.
Is the first graph "Asking Rent" axis $/sf/quarter or is it per year? Does 1,000 sf of office space cost you $85 x 1,000 = $85k/quarter ($28.3k/month), like 10 x apartment rental? That's a lot of pony hides to tan.
The problem with Pareto is that it assumes ceterus paribus. Which doesn't exist in the real world. Further, when gov'ts use force to try and create it it just makes matters worse. How can a gov't know that stealing something from someone and giving it to another increases utility?
They can't. There is no such thing as a util. People value things differently.
If I was dehydrated in the desert and had a brick of glod, and would never make it to a water hole, and someone drove up and said I'll trade you a ride to water for your glod...I'd take it. That can't be modeled at all. Nor can some Pareto efficiency exist.
Pareto was another engineer, along with Walrus, who destroyed economics for generations.
When we get back to logical economics is yet to be seen, but this crap does nothing.
Best edumacation that I ever got were the HS/college jobs, just for people education.
How to read someone coming into a room and ascertaining if this guy was in for a one night stand and if he doesn't like the rate, can I offer it for a 6 hour increment without getting smacked. How do I broach the issue?
How to work with laborers and deal with all of the crap that they dealt on the "college kid" until he passed muster? How to give it back to them without getting punched out? How to follow the give/take of lunch chatter as they debated best ways to cure the weed for the best THC content. Seriously, these guys could've been county extension agents.
And then how to give/take on negotiations with pltf attorneys for the liability cases.
The other stuff I forget now.
And no offense cracker, you lost me on the 97.5 yen break stuff. I'll bow to your mastery that it's going to suck.
So can anyone tell me what I should expect for a time-line of transfer of shares from a trust account of a brokerage to a trustee account? Should I expect them to tell me it'll take a few days? Or should I tell them they are lying and there is no reason it should take so long.
Both accounts are at the same brokerage. They should've had time to prepare everything as well... I'm not sure if it involves someone sitting a terminal and inputting stuff into a computer or what... but all they should have to do is hit "enter" or whatever that process is.
I'm hoping its a matter of hours, but expect a day...
How many here are going long double reverse ETFs? The math is interesting if you are holding for periods longer than one day.
For example, if you start out with $100k in a double reverse ETF and the underlying index drops 10% on the first day you make a 20% return. You are now theoretically at $120k. If the underlying index rallies back to the starting point the next day it takes an over 11% increase to get there. You lose 22% of the $120k, or $26,667.
Net is that you lose almost $7000. The index is where it started but you are down 7%.
Something to think about when planning your strategy.
Nice graph on page 17 of the report. NYSE member losses, $25B(forecast) in 2008. Think the expected profits of $9B in 2009 is deliriously optimistic. Many more losses to be realized, I think they'll be glad if it just sneaks into positive territory.
Who needs 2x funds when you can buy the <a href="http://www.earthtimes.org/articles/show/direxion-launches-eight-new-leveraged-etfs,605814.shtml>new 3x ETFs that debuted today. Illiquid and w/o consistent NAV, but give 'em a few months and they'll make a 10% day look tame.
"Jason writes:
Yup, Rumster. Short the double, don't go long the double inverse. Been covered."
Exactly. Didn't know it had been covered. I first shorted the doubles based more on counter party risk, but then started modeling and found more reasons to take that route.
YLSP; I missed your earlier posts about your situation but I became successor trustee in the spring. Went into WaMu, where the brokerage account was held, showed them the official paper work and they cut a check which I picked up the next day. Then deposited it in a WFC account as I knew WaMu was going down hard.
Hope that helps.
It breaks down to human's act to improve their situation. You move to a different part of the bed because it makes you more comfortable, you close the window, because it is too cold out.
You can't capture that in linear differential equations. And non-linear differential equations cannot be solved.
Math works great as a model for a lot of economic thought as long as it is in aggregate & 'statistical'. Similar to 'statistical mechanics' & quantum... you can't predict what a single molecule does in a complex soup or a single electron in a electron shell of an atom - but in aggregate & given measurable conditions you get a pretty reliable 'probability distribution' of the outcome.
I mean if I put hydrogen gas & oxygen gas in a balloon & 'spark' it stat mech will tell me I'll produce quite a lot energy & water... but won't tell me what each molecule will do where or when.
Similar situation in econ - if your central bank jacks up the M's you can bet the aggregate of prices will rise... but that doesn't tell you what some welder in Peoria will do with his money or what he'll buy or when.
Before you do math models you have to ask what you want to learn from the model & how do you plan to use it. If none right & with proper expectation of 'precision' then math & 'logic' dovetail almost perfectly. It's when those expectations get out of whack that they 'diverge'.
[Jason writes:
Yup, Rumster. Short the double, don't go long the double inverse. Been covered]
I had a short UYG called in by my broker during a meltdown. Nuisance. I rather just buy the ultrashorts, despite the risk, at these levels. If the SPX were down around 400 I might rethink.
jus sayin' - I really liked the market action today. Slow constant bleed down right into the close, with nice followthru AH. Lots of econ data thru Friday.
There can't be a lot of buyers emerging at these levels given the steady stream of grim news. CSCO was scary since Chambers is normally very upbeat. 760 is a stones throw from here.
I'm hoping its a matter of hours, but expect a day...
YLSP
Assuming that the securities are held in book entry form, not certificates, it takes a couple of minutes for a back-office clerk to transfer the securities from one account to another once the transfer is authorized.
What takes forever is getting the authorizations to move the securities. Timing of authorization receipt depends on the size ( of the portfolio, the size and degree of centralization at the organization with whom you are dealing, and if any critical decision maker is out of town or on vacation.
Analogy:
Pretend that we are talking about moving money from a saving to a checking account at a bank. If it was a few thousand dollars, any clerk or teller could do it immediately.
If it was $500,000 dollars, it might have to be approved by an assistant branch manager.
If it was $1 million, it might have to be approved by the branch manager or someone downtown at the corporate office.
If the savings account was in the name of an estate and the checking was in your name, the transfer might have to be blessed by attorney who would make certain that all the I letters have dots and all the T letters have cross bars.
Advice:
If you haven't already burned your bridges by screaming at them out of sheer frustration and worry, call them as ask the status of the transfer.
Follow-up in a nice, but persistent, way.
Play dumb.
Tell them what you want to do and ask their advice on how to do it.
Apologize for bothering them since you know that they are probably not the right person for you to be bothering.
Ask for the name and telephone number of the right person.
Call that person and repeat the routine.
Go up the chain of command. Get names and numbers.
Go sideways across the organization. Get names and numbers.
Stay nice.
You are smiling and dialing. Always remember the smile.
If they ask you to stand on your head and rub your tummy, stand on your head and start rubbing, while smiling.
Do this ASAP. Turkey day is coming up. Critical approval authority could be unavailable from November 23 through November 30.
This is not bank; just brokerage and me and 2 other relatives are trustees. They have all the instructions for transfer. It's around assistant branch manager level.
I was pissed because they botched paperwork to all 3 of us trustees which delayed everything over last weekend and into this week. I'm not crying since the market jumped up; but my goal has been to get out ASAP. I'm still assuming all of the other relatives included everything they needed (okay they are smart people, I'm just paranoid).
I thought I had made my intentions clear speaking with the customer service person dealing with our documents a week ago that I wanted this all done ASAP. I will definitely call her up tommorrow morning.
Nemo?
hah!
shit!
who rents?
I thought everybody gets to live for free?
Fifth?
Is NYC similar to other major US cities, or is it in a class of its own? (Serious question.)
I thought NYC was different???
Elvis!
Knurd!
Nostrovia,
Well, we know that with RRE and now CRE going down, down, down, tazes will go up, up, up!
NYC is in for some serious hurt. Glad I am nowhere near there.
Meant to say taxes, but maybe tazers will go up too!
Whoa. That's a lot of green.
Prolly wanna run that by Marketing before you show it to the Board.
looks like all the regulars are here.
somebody say something really stupid.
I'll go first, Ambac files chapter dead on Friday.
The Chrystler and Empire State Building were finished during GD I. They were nigh unto empty for quite some time.
Damn, Mark Twain is better than Nostrodomaus by a mile.
History doesn't repeat..it rhymes.
Knurd!
Nostrovia,
Empire State Building = Dubai or Qatar.
When that well runs dry, dont come cryin to me.
Slide 27: Post Employment Health Benefits.
Ouch. Why is Bloomberg going for a third term?
Cracker,
"Somebody say something really stupid."
Buy home builders long.
That'll do some good. But, we gotta have more Cow Bell though. I think there prices go to eleven.
Knurd!
Nostrovia,
I'm sick of all the mainstream economists perpetual forecasting that things will bottom 2-3 quarters in the future.
There is no way in hell that NYC CRE vacancy tops out in 2009. I don't need to dig through data to tell you that.
Bloombergs castle was just started in Geneva.... has to put in another term whilst livin large in the big apple.
I love how rents aren't projected to decrease below levels seen in 2002-2004.
Good luck with that one, NYC.
Uneconomical, CR? What does one call a situation that is inverse to "economic"?
Note: I was an econ major (and finance) and I never got a substantive answer as to how to quantify the subject in a strictly mathematical sense.
Anyone?
pie inflation,
"Note: I was an econ major (and finance) and I never got a substantive answer as to how to quantify the subject in a strictly mathematical sense."
I too did so, with minors in accounting and business admin.
As an Austrian, the mathematical thing doesn't work.
Economics is logical, not mathematical.
Knurd!
Nostrovia,
Darnit. I drew the old maid.
/back to dunce corner
I love how rents aren't projected to decrease below levels seen in 2002-2004.
And I like how vacancy rates won't rise above 2003 levels.
Um, yeah.
Twenty turd?
@ Comrade von Mise:
"I too did so"
/chuckle
Ambac probably will go into runoff, although you can essentially say it is there already because the demand for bond insurance has pretty much evaporated (even for the "good" companies). I don't see how they recover from that, although I wasn't really expecting them to be around for the long haul anyway before the downgrade. It is a downward spiral from here for them. I hope this puts a stake in talk about bailing out the bond insurers though.
pie inflation,
Knurd!
Nostrovia,
It would be convenient if a city could rescind building permits at times like these.
Comrade Misean is right.
You can quantify the bejeezus out of finance and accounting, but the economics thing is alot more psychological and logic.
One of the best econ courses I took - also an admin major with econ minor - was international and the give/take and balances between currencies and flows.
Bond Girl,
So what happens to all that RMBS they insured?
That's something no one has wanted to touch for nigh unto two years.
Knurd!
Nostrovia,
Night Vision Goggles.
During a blackout in a big city, they pay for themselves. Be aware of the lights suddenly coming back up.
So... is the ECB rate cut priced into the markets? Or will we see a nice jump on that news tommorrow?
surely bondgirl a white knight of regulation wearing scrubs pulls it of the pink sheets, much like Lehman Bros.
Hawley Smoot,
Fwiw, I think NYC is a bit "special". First, given with the number of financials there, and the layoffs/downsizing, I'd think they'll take a bigger hit than many/most.
Here, in Chicago, while not great, its not too bad. Most of the "pain to come" lays in high rise residential condos in the South Loop area coming on stream (although many have a floor, or two, maybe three of retail on the bottom floors).
Just sayi
I can tell you what happens to munis when the insurer is kaput. They get valued on the underlying credit.
Thanks
homedad43,
Austrian's like to call it catalactics...the psychological component, and human action...the economic component.
It breaks down to human's act to improve their situation. You move to a different part of the bed because it makes you more comfortable, you close the window, because it is too cold out.
You can't capture that in linear differential equations. And non-linear differential equations cannot be solved.
Knurd!
Nostrovia,
homedad, best edumacation I ever got was getting dirty in the trenches turning wrenches.
Forex has been a bit tough on me as of late.
97.50 breakdown on the Yen, that will ultimately toy with two dimes is gonna scare most people into a deep slumber of fear and anxiety.
Bong girl,
PuhLEEEZE tell me you're single. "Smart" is SO hot,
CashOnlyHousing writes:
I'm sick of all the mainstream economists perpetual forecasting that things will bottom 2-3 quarters in the future.
Second that. They are full of cowpies.
homedad:
My area of concentration was currencies and commodities. Studied a lot of the "then" command and control poli-economic systems (Soviet Union and China).
I always argued they WERE "economic" given their objectives. Profs kept bonking me on the head about some guy named Pareto?
Anyway, I always go back to marginal utility because I never got a more quantitative response.
Such is life.
Bond Girl,
"I can tell you what happens to munis when the insurer is kaput. They get valued on the underlying credit."
True, but the monolines insured RMBS. So now where?
Knurd!
Nostrovia,
Errr..."Bond girl"...NOT "bong girl", LOL.
CSC...no offense intended...s
dont ever imposter txchick57
No worry for the unemployed, we have government stimulus checks for all.....woohoo
I imagine it is similar.
Insurance is as good as the solvency of the insurer.
PuhLEEEZE tell me you're single. "Smart" is SO hot,
Cause that's all it would take.
"I liked your post. Get in the van."
Might be more effective than driving by women in cross walks and telling them what you'd do to them. That's what I usually do.
It seems to me like their employment figures are a little optimistic, just going off the layoffs that have been rumored for the banks.
Is the first graph "Asking Rent" axis $/sf/quarter or is it per year? Does 1,000 sf of office space cost you $85 x 1,000 = $85k/quarter ($28.3k/month), like 10 x apartment rental? That's a lot of pony hides to tan.
CSC,
And how's that workin' for ya?...G
pie inflation,
The problem with Pareto is that it assumes ceterus paribus. Which doesn't exist in the real world. Further, when gov'ts use force to try and create it it just makes matters worse. How can a gov't know that stealing something from someone and giving it to another increases utility?
They can't. There is no such thing as a util. People value things differently.
If I was dehydrated in the desert and had a brick of glod, and would never make it to a water hole, and someone drove up and said I'll trade you a ride to water for your glod...I'd take it. That can't be modeled at all. Nor can some Pareto efficiency exist.
Pareto was another engineer, along with Walrus, who destroyed economics for generations.
When we get back to logical economics is yet to be seen, but this crap does nothing.
Knurd!
Nostrovia,
Night all
Night, BG.
Bond Girl: I'm wearing a t back.
Best edumacation that I ever got were the HS/college jobs, just for people education.
How to read someone coming into a room and ascertaining if this guy was in for a one night stand and if he doesn't like the rate, can I offer it for a 6 hour increment without getting smacked. How do I broach the issue?
How to work with laborers and deal with all of the crap that they dealt on the "college kid" until he passed muster? How to give it back to them without getting punched out? How to follow the give/take of lunch chatter as they debated best ways to cure the weed for the best THC content. Seriously, these guys could've been county extension agents.
And then how to give/take on negotiations with pltf attorneys for the liability cases.
The other stuff I forget now.
And no offense cracker, you lost me on the 97.5 yen break stuff. I'll bow to your mastery that it's going to suck.
So can anyone tell me what I should expect for a time-line of transfer of shares from a trust account of a brokerage to a trustee account? Should I expect them to tell me it'll take a few days? Or should I tell them they are lying and there is no reason it should take so long.
Both accounts are at the same brokerage. They should've had time to prepare everything as well... I'm not sure if it involves someone sitting a terminal and inputting stuff into a computer or what... but all they should have to do is hit "enter" or whatever that process is.
I'm hoping its a matter of hours, but expect a day...
How many here are going long double reverse ETFs? The math is interesting if you are holding for periods longer than one day.
For example, if you start out with $100k in a double reverse ETF and the underlying index drops 10% on the first day you make a 20% return. You are now theoretically at $120k. If the underlying index rallies back to the starting point the next day it takes an over 11% increase to get there. You lose 22% of the $120k, or $26,667.
Net is that you lose almost $7000. The index is where it started but you are down 7%.
Something to think about when planning your strategy.
Nice graph on page 17 of the report. NYSE member losses, $25B(forecast) in 2008. Think the expected profits of $9B in 2009 is deliriously optimistic. Many more losses to be realized, I think they'll be glad if it just sneaks into positive territory.
Rumster,
Who needs 2x funds when you can buy the <a href="http://www.earthtimes.org/articles/show/direxion-launches-eight-new-leveraged-etfs,605814.shtml>new 3x ETFs that debuted today. Illiquid and w/o consistent NAV, but give 'em a few months and they'll make a 10% day look tame.
Yup, Rumster. Short the double, don't go long the double inverse. Been covered.
-Jaso
"Jason writes:
Yup, Rumster. Short the double, don't go long the double inverse. Been covered."
Exactly. Didn't know it had been covered. I first shorted the doubles based more on counter party risk, but then started modeling and found more reasons to take that route.
ew thread
YLSP; I missed your earlier posts about your situation but I became successor trustee in the spring. Went into WaMu, where the brokerage account was held, showed them the official paper work and they cut a check which I picked up the next day. Then deposited it in a WFC account as I knew WaMu was going down hard.
Hope that helps.
man those 3x are going to move like a rattlesnake...
It breaks down to human's act to improve their situation. You move to a different part of the bed because it makes you more comfortable, you close the window, because it is too cold out.
You can't capture that in linear differential equations. And non-linear differential equations cannot be solved.
Math works great as a model for a lot of economic thought as long as it is in aggregate & 'statistical'. Similar to 'statistical mechanics' & quantum... you can't predict what a single molecule does in a complex soup or a single electron in a electron shell of an atom - but in aggregate & given measurable conditions you get a pretty reliable 'probability distribution' of the outcome.
I mean if I put hydrogen gas & oxygen gas in a balloon & 'spark' it stat mech will tell me I'll produce quite a lot energy & water... but won't tell me what each molecule will do where or when.
Similar situation in econ - if your central bank jacks up the M's you can bet the aggregate of prices will rise... but that doesn't tell you what some welder in Peoria will do with his money or what he'll buy or when.
Before you do math models you have to ask what you want to learn from the model & how do you plan to use it. If none right & with proper expectation of 'precision' then math & 'logic' dovetail almost perfectly. It's when those expectations get out of whack that they 'diverge'.
[Jason writes:
Yup, Rumster. Short the double, don't go long the double inverse. Been covered]
I had a short UYG called in by my broker during a meltdown. Nuisance. I rather just buy the ultrashorts, despite the risk, at these levels. If the SPX were down around 400 I might rethink.
jus sayin' - I really liked the market action today. Slow constant bleed down right into the close, with nice followthru AH. Lots of econ data thru Friday.
There can't be a lot of buyers emerging at these levels given the steady stream of grim news. CSCO was scary since Chambers is normally very upbeat. 760 is a stones throw from here.
nice followthru AH
WFMI came through for me AH... 20% one-day return.
I'm hoping its a matter of hours, but expect a day...
YLSP
Assuming that the securities are held in book entry form, not certificates, it takes a couple of minutes for a back-office clerk to transfer the securities from one account to another once the transfer is authorized.
What takes forever is getting the authorizations to move the securities. Timing of authorization receipt depends on the size (
of the portfolio, the size and degree of centralization at the organization with whom you are dealing, and if any critical decision maker is out of town or on vacation.
Analogy:
Pretend that we are talking about moving money from a saving to a checking account at a bank. If it was a few thousand dollars, any clerk or teller could do it immediately.
If it was $500,000 dollars, it might have to be approved by an assistant branch manager.
If it was $1 million, it might have to be approved by the branch manager or someone downtown at the corporate office.
If the savings account was in the name of an estate and the checking was in your name, the transfer might have to be blessed by attorney who would make certain that all the I letters have dots and all the T letters have cross bars.
Advice:
If you haven't already burned your bridges by screaming at them out of sheer frustration and worry, call them as ask the status of the transfer.
Follow-up in a nice, but persistent, way.
Play dumb.
Tell them what you want to do and ask their advice on how to do it.
Apologize for bothering them since you know that they are probably not the right person for you to be bothering.
Ask for the name and telephone number of the right person.
Call that person and repeat the routine.
Go up the chain of command. Get names and numbers.
Go sideways across the organization. Get names and numbers.
Stay nice.
You are smiling and dialing. Always remember the smile.
If they ask you to stand on your head and rub your tummy, stand on your head and start rubbing, while smiling.
Do this ASAP. Turkey day is coming up. Critical approval authority could be unavailable from November 23 through November 30.
They are used to be screamed at, so stay nice.
"Economics is logical, not mathematical."
Yup. I was lucky enough to have Robert Frank as my advisor, but I couldn't stand the "scientists".
I have running bets that no one will ever ride the 2nd Avenue Subway, supposed to open in 2015 or so, and being feverishly worked on today.
I'm old enough to remember when they abandoned work on it in 1975.
I have running bets that no one will ever ride the 2nd Avenue Subway, supposed to open in 2015 or so, and being feverishly worked on today.
You can do swaps on that?
This is not bank; just brokerage and me and 2 other relatives are trustees. They have all the instructions for transfer. It's around assistant branch manager level.
I was pissed because they botched paperwork to all 3 of us trustees which delayed everything over last weekend and into this week. I'm not crying since the market jumped up; but my goal has been to get out ASAP. I'm still assuming all of the other relatives included everything they needed (okay they are smart people, I'm just paranoid).
I thought I had made my intentions clear speaking with the customer service person dealing with our documents a week ago that I wanted this all done ASAP. I will definitely call her up tommorrow morning.
I won't swap you my 1976 Panasonic 10 speed, which gets me around most of Manhattan faster than the subway.
So to conclude:
Vacancy increase of 6.5% (value down 6.5%)
Rent decrease of 20% (value down 20%)
Cap Rates? I think it is safe to say they will at least move from 5% to above 6% (value down at least 20%).
Adding these 3 components up, NY Office will fall at least 50%. 30% credit support super senior AAA rated CMBS may be tested.