This was a fun article too:

http://money.cnn.com/2008/12/17/news/economy/retail_wasteland/index.htm

Headed out last night to the local Uno Chicago Grill for supper. It was dark and boarded up. The next best pizza here in Southern Mayland really sucks.

We are all Pizza Hut quality now!

Next year will be grim for CRE.

Doesn't that 20% decline in housing starts also mean at least 6 months more of declining residential employment and construction too (at least)?

from the times article, the obligatory "hoocoodanode" comment.

“The trouble that’s emerged is bigger than most of us expected,” Robert M. White Jr., the president of Real Capital Analytics, said in an interview in his Manhattan office, “and the size of the problem that is potentially out there is much greater than we thought we would be able to quantify at this point

At least he said "most of us" and not "anyone".

TLT +4 to over 120 in pre-market. Still not completely hating those Jan 2010 $90 puts I bought when it jumped to the high 90s a few weeks ago, but holy crap.
Assume Crash Positions!

Remember all those bond bears when TNX was at 5%?

This site was crawling with them.

Hoocoodanode...

Bucky still taking a beating.

2.08 going once going twice... how low can it go.
Brontide | 12.17.08 - 9:38 am | #

0.  

Is this Bernanke's way of devaluing the dollar? The baby boomers are so screwed. The rest were screwed anyways.

Residential and cre, 2009 will be the year NYC catches up to Cali and Florida. Given Chase's NY/NJ concentration, JPM may lose its we avoided the worst of it status by this time next year.

Looks like SRS may go sub-60. Keeps setting all time lows.

Yup. Just bought some more. And now I just sit back and wait for next year's all time highs.

MUGABE: BEN IS MY LONG SEPARATED TWIN.

AIG Writedowns May Rise $30 Billion on Swaps Not in U.S. Rescue

Dec. 17 (Bloomberg) -- American International Group Inc., which already has suffered more than $60 billion in writedowns and losses, may have to absorb almost $30 billion more because of flaws in the way its holdings are valued.

AIG Writedowns May Rise $30 Billion on European Swaps (Update1) - Bloomberg.com

from my Datafeed provider:

Current Issue

There is a problem at TSX which is preventing TSX and CVE data from being transmitted. TSX is working to correct. TSX has not provided an estimate when the problem will be corrected.

TSX has halted trading

OT

Come inside the BLINGFENCE

Posted by Jim Leaviss on 17 December 2008 10:19:00 GMT
bondvigilantes.co.uk/blog/

Shock of the morning wasn't the overnight Fed rate cut to zero-ish, nor the acceleration of their Quantitative Easing programme, both of which we'd expected for some time. The shock came with this press release from Deutsche Bank explaining that they wouldn't be calling a Lower Tier 2 (LT2) bank bond.

Many had felt that there would be a credibility issue in not calling debt at this part of the capital structure, and that it might impair a bank's ability to issue cheaply again in the future as well as being seen as a sign of weakness. Now one of the world's biggest banks has taken such a stance however it is likely that every other bank in the world feels able to assess the callability of their outstanding bonds on purely economic grounds. All LT2 bonds should therefore be assessed on a yield to maturity (YTM) basis rather than on yield to call (YTC) - in other words the spreads being offered on bank bonds were unrealistically high if quoted to those shorter call dates.

So LT2 bonds are lower this morning, but a bigger hit is likely in the even more subordinated Tier 1 (T1) market. If banks now feel no moral pressure to call the more senior Lt2 bonds, they will certainly have no compunction about letting T1 bonds extend maturity - to perpetuity if necessary. And coupled with the fact that many T1 bonds will not be able to pay coupons if the bank isn't paying an equity dividend, many investors are going to be left holding zero coupon perpetual bonds. Bond Maths 101 - the zero coupon perpetual bond is the very worst kind of bond you can own.
Posted by Anonymous Monetarist

My calculator doesn't have enough zeros to do the math...

"I've abandoned free-market principles to save the free-market system," Bush told CNN television

Yep. They abandoned them in 1998.

Look how they saved the system.

Anonymous writes:
Rich's SLW pick having a nice run.

Thanks! Remember why I picked it.

I never considered SLW a stock.

It's the purest leveraged play in silver.

It's like the Ultralong of silver.

And I always thought silver would run on weak dollar even better than gold.

Comrade Byzantine_Ruins 9:15 am

.... and the commentariat.

very cool

And in other news, you can't make this up. S.E.C. Issues Mea Culpa On Madoff - NY Times

"One of the commission’s investigative teams that had examined the Madoff firm was headed by a lawyer named Eric Swanson, who served for 10 years as a lawyer at the commission and left in 2006 while he was an assistant director of the office of compliance inspections and examinations in Washington.

In 2007, Mr. Swanson married Shana Madoff, a niece of Bernard L. Madoff and daughter of his brother, Peter Madoff, the firm’s chief compliance officer. Ms. Madoff is the firm’s compliance attorney. "

Off Topic but may be of interest to CR readers. I bought some Tanta wear and asked if they could make a sweat with big block letters with Tanta_Vive! on the front. They responded with an estimated price of $50 bucks which I would pop for if the price doesn't go higher. This could become a colectable so buy now or be forever priced out!

Have taken a bath on SRS- how big a problem is the 'erosion' of the ultra shorts due to leverage?

crap. haloscan ate my long post on SRS.

citizen energycon,

With all do respect it's purchase-power parity.

You can purchase more with fewer dollars, but the dollar can still weaken relative to other currencies that are also weakening...

Yes, it's freaking deflation even if the dollar is tanking, because at this stage which may last a year, maybe more, flight to "safety" is still the marching orders of the day keeping the dollar from really tanking, but we will reverse gears, strip them, and push the hyper-drive system so we end up on the rapidly inflating side of the galaxy...

Let's say two years from now...the question is as an aggregate does EU plus china plus India create a basket currency that will replace USD.

Deflate amongst yourselves.

jeez, economic warfare or just a fight for survival? last one to ZIRP is a voided fiat.

Experts: China likely to follow suit as Fed cuts rate

China may follow the United States when it cut its target funds rate down to virtually zero on Tuesday, analysts said.

Experts: China likely to follow as Fed cuts rate

We have a giant new strip mall here in Panama City called "Pier Park". It's full of specialty shops and high end restaraunts. They are starving to death right now, I guess nobody told these fools that came here to build that this town shuts down for four months a year when the tourists leave. I doubt many of them will make it through the winter as the locals don't make very much money and many are out of work.

Now that they've cranked up the presses, I feel stupid for not buying gold and toilet paper.

Hey Rich,
What do you think of RTP? I know you are a big fan of BHP.

toilet paper dissolves the waste treatment plant. one wonders if the plant will clog up when they are deluged in fed. reserve currency.

Telephone telling
Motorola announces no more raises or 401k contributions

speaking of hourly rates: my dentist charged $2700. for 1.5 hours of work at doing two crowns yesterday. I guess his kids need toys before the end of the year.

I love this market:

CNBC headlines:

# Morgan Stanley Posts Wider-Than-Expected Loss
# Madoff Bail Terms Modified, Hearing Cancelled
# Refinancing Drives Mortgage Applications Up
# Citigroup to Merge Corporate, Investment Banking
# OPEC Shocks with 4.2 Million bpd Oil Output Cut
# Honda Falls on Profit Fears, Nissan Cuts Output

Market reaction:  skyin' 'em, boss!

S&P below 800 and I am buying cash rich, no debt companies.
imperial subject DH | 12.17.08 - 11:04 am | #

Worth making a list of those.  The only ones that spring to my mind are CSCO and MSFT.

UGA Dawg writes:

FYI, if the treasury had spent the 8 trillion that they have spent on saving US, on us, at 78, 425, 000 households that would only be ~101 bucks per household.

I guess they didn't make you take math at UGA? Try again...

You'll be able to tell your grandchildren that you remember when the world had free markets; or at least everyone believed they were.
Freedom is slavery.

Oops, And car, house, and health insurance are blackholes sucking income at an astounding rate. My 8 year old car insurance rates should have expotentially decreased, esp. factoring in my age and safe driving record. Insurance is the biggest, unfettered ponzi scam. Throw the clowns outta the circus and Nationalize insurance.

Blackholios and dark matter

Dec. 17 (Bloomberg)
By James Sterngold

American International Group Inc., which already has suffered more than $60 billion in writedowns and losses, may have to absorb almost $30 billion more because of flaws in the way its holdings are valued.

That's what prosecutions are for.
lawyerliz | 12.17.08 - 11:14 am | #

He won't get prosecuted unless there is a smoking gun specifically saying 'don't audit Madoff'... if all it says is 'less regulation - hands off everyone' then it's administrative judgment. He's perfectly safe... sleeping like a baby. We voted for that and that's what we got.

people are ignoring the oil quota news because nobody believes OPEC.

they all cheat and they all know they cheat.

(Note:  Posted in wrong thread.  ugh)

citizen energyecon writes:
Look at the TNX one year chart - it was right at 4% at the start of November - looking like it will be under 2% for the end of December...
citizen energyecon | 12.17.08 - 9:56 am
---
If you compare the S&P500's performance with the 10 & 30 year bond, the percentage drop is roughly the same.

Recently, the S&P500 broke through the 10 year and is now equal with the 30 year.  These kinds of charts really are Mr. Market's Shock & Awe.

Link:  http://finance.yahoo.com/q/bc?t=...x&c=^GSPC  (CR Companion is dumping on the

Looks like a quota of 25.3 MMBOD would be about 5 MMBOD less than actual production in August...
citizen energyecon

Amazingly people didn't want to burn $147 oil. Turns out that was tradin' oil not consumin' oil. All that nonsense made end users reconsider whether there was a return on using even $90 oil for productive purposes.

The petroleum producing nations have their own liquidity trap. Looks like revenues are roughly 40% of the peak. So, Venezula has the choice of cheating or national unrest. Which do you think they (aka Mellonhead) will chose? Just wait until something breaks and they need to turn to infrastructure experts. You know, the ones they stiffed and nationalized.

Watching oil get crushed yet again here, I'm wondering what the next great bubble will be, once the current treasury bond frenzy is done. Since the world is clamoring for Keynsian solutions, I guess the next great bubble will be government? Now I really want a homestead, canned goods and shotguns.

Flyover Country Report: Took a short trip through corn & bean country just before the snow blew in. More farmers growing hay, keeping beef cows, along with flocks of chickens & geese. Motorhomes are still parked. Many didn't go south this year. Lots of farmsteads need a paint job.

I live in a tiny farming community. Nearest 2 larger cities each have dead malls with most of the shops shuttered. Could fire a cannon in there.

Close family friends sold the stock of their auto parts business last spring. They couldn't sell the biz because several prospective buyers were turned down by the banks. They put the money into a retirement account they've had for years with A.G. Edwards. Advisor told 'em to stick with it 'cause the market would go back up. They lost $100,000.

Another relative has lost $30,000 in his 401K.

In a small perverse way, I think it's a good thing that Madoff's investors are joining the rest of us on Main St. The theft has traveled up the food chain. Was bound to happen. They just didn't believe it would. Who's next?

Yes. US AG Mukasey.

" Turbo writes:
Watching oil get crushed yet again here, I'm wondering what the next great bubble will be, once the current treasury bond frenzy is done. Since the world is clamoring for Keynsian solutions, I guess the next great bubble will be government? Now I really want a homestead, canned goods and shotguns.
Turbo | 12.17.08 - 11:29 am | # "

Even though oil is 'way down, oil-importing nations can boost their national economies by generating energy at home instead of just shipping money to the Arabs and Russians and others, which also turns out to have many unfavorable side effects.

So I've voting for alternative energy.

I wonder who will start dumping their treasury holdings first?

Here are the top 4
China
Japan
UK
Carib Banking Centers(5)
Oil Exporters(3)
TTOD | 12.17.08 - 11:30 am | #

Put me down for the oil exporters - they'll do it to get the cash to offset oil revenue declines so as to cover their domestic spending.

Chinese & Japanese will INCREASE their buy to offset currency manipulation - THEY HAVE TO - or face unrest when export related unemployment skies.

UK? Can't say. Isn't a lot of that in public hands? And the Caribe's are just stalking horses for the others (UK, China, Japan & OPEC) - y/n?

'm looking at the list of distressed properties now. Why can't I find 1600 Pennsylvania Avenue?

It was sold long ago with the capitol building to an anonymous foreign bidder! The deal covered occupants of the two buildings.

" DigiDollarDisaster writes:
Bob dobbs,
what part of shipping worthless dollars to foreign oil suppliers don't you get?
DigiDollarDisaster | 12.17.08 - 11:36 am | # "

Assuming that this is what's happening, it will continue -- how long?

I don't think it's the govvie per se, I think it's about ten guys total trying to manhandle this economy, to it's detriment.
jus sayin | 12.17.08 - 11:30 am | #

Not in farm commodities - farm policy has been targeted at price supports for 70 years or more - since the 30s. Prices are still above the 'deficiency payment' triggers (the other support mechanism) but there are still programs to limit production (conservation reserves & such). They are aimed at supporting prices.

I'm not going to say they are ALL bad - just sayin they are there (and many of them get abused).

A: American chutzpah.

Bob Dobbs writes:
" Turbo writes:
Watching oil get crushed yet again here, I'm wondering what the next great bubble will be, once the current treasury bond frenzy is done.

lawyerliz:

It is
Bloomberg.com:
Government Bonds

Sorry about that. One shouldn't try to do anything when the boss can order you into action at any second.

citizen energyecon - not trolling...OPEC made a massive cut today, why would you make a cut that large when we have "peak oil"?

c'mon energyecon: you're clearly trolling. you can do better.

there is a clear difference between the theory of peak oil and the short/medium term gyrations of price.

for example: the dodo is extinct, no matter what it's feathers sell for.

oops: meant crispy! sorry energyecon.

on haloscan eating comments....
Janosik | 12.17.08 - 10:53 am | #

Or... (shameless plug) use CR Companion! It doesn't discard the text of your comment until it's successfully posted.

"as long as they need to import 75% of what it takes to run their economy. It's not like their resource base is robust. It's just focused.
DigiDollarDisaster | 12.17.08 - 11:42 am | # "

No one's twisting their arm to import it from us, or in dollars. We're not the only big power to turn to in the Middle East anymore.

People were rounded up as cattle into the largest casino congame; 401k's, IRA's, and the pension funds jumped in as well. Wall Street would've tanked a long time ago if people understood as did my grandparents and parents that the stockmarket is legalized gambling. A fixed horse race for the very few. And the very few are well taken care of as the government steps in and bails out these "respectable" amoral, thieving, lying banksters who run the government and own the politicians.

"You can fool some of the people all of the time, and all of the people some of the time, and that's good enough."

Since this thread is hopeless now, this shouldn't be too OT.

Just came off 4 days+ w/no electricity due to ice storms, which in our area of private wells equals no running water either; some regions are not resuming school until after Jan. 1. And I can pretty safely assume that if the electric grid in this country were interrupted, we'd all be in deep doo doo.

Just a report from the front lines. If you're planning on hoarding for potential disaster scenarios, you better have a good plan for running water. And of course heat in cold climates.

Oil will be the "new money" that the world respects and values.

Think about it. If you could denominate every cent you had in anything real over the next 20 years, to protect its value and purchasing power, what would it be?

I think an understanding of oil as the new money will take hold sooner, rather than later. If oil goes back to $40, buy it and hold it. You will be happier.

What's the cost of oil production in Venezuela?

Oil Break-Even Prices
Nation\tUS$/Barrel
Bahrain\t40
Kuwait\t17
Saudi Arabia\t30
U.A.E.\t25
Oman\t40
Qatar\t30
Canada's oil sands\t33

Wall Street would've tanked a long time ago if people understood as did my grandparents and parents that the stockmarket is legalized gambling.

Good point. The next generation or two will know for sure that

"stocks are speculation"

They may even think that

"bonds are speculation"

rich writes:
\tOil will be the "new money" that the world respects and values.
\t rich | \t \t \t \t12.17.08 - 11:52 am
---
Even over the historical big wigs like GLD & SLV?  I understand that Oil translates into Energy which translates into Production.  However, most of the oil is in places away from the industrial centers of the world.  Also, I'm not sure if you can conduct business moving 55 gal drums, or are you thinking of a returning to the ol' Italian "bank benches" and the receipts would be traded.

I don't doubt that Oil will be important, but will it be the primary driver of transactions important?

"Pet peeve. Words mean things."

My pet peeve is the word "MAY," particularly used in contracts, such as:

...the General Partner intends to do everything he can to protect the Limited Partner's interests, but from time to time, he may sell them down the river big time.

MAY means "fully intend to" in prospectus or contract.

Dumping on the URL and it dumped on my text. 
yagij | 12.17.08 - 11:41 am | #

What happened exactly? This needs to be fixed. BTW, until you see the text "Comment Successfully Posted", you should be able to retrieve your text. CR Companion saves it in a config variable. Once you start posting again, though, it will delete it.

A festival. Glutton's anarchy.
Come break the rules it's absolutely free.
Now see, there is a price in paradise.
Just close your eyes and metamorphosise.

You'll get cacooned tonight.

Then you'll be so soon, one of us.
And you're having a ball, oh yes,
You're doing it all

Your filthy world's complete.

Then your face it contorts
into that of a horse
And you've got no more hands and feet.
Watch your paradise turn into Hell.
You've got to buck it up.
You seek and you smell.
Oh well.

You'll get cacooned tonight.
Wear your festoon of frivolity
Make lampoon of dark criminality
It seeps, suckles, strips your personality. Undone

How long can China keep increasing their treasury holdings, when exports to US are tanking and they just diverted $600bil to domestic stimulus?

Janosik writes:
Not to feed Jas too much...
(though he often makes solid points if ever a bit self-righteously and crudely)

...But the "born-and-bred American dopes" line has a little merit...
Janosik | 12.17.08 - 11:45 am | #

When you mean to say "raised", "trained", etc., but instead say "born stupid" and "offspring of parents selected for stupidity", then either your language skills are weak or you're a racist, or you're aiming to manipulate people. In other words, he is effect a troll, despite his otherwise valuable contributions.
I could prove that the line has no merit, by presenting analogous statements about other races and nationalities, ridiculing them for some apparent shortcomings, but simple decency would stop me. Thus, his line is just indecent and crude to me.

GloomBoom Many CRE developers have been refinancing their older projects and using this money to develop new projects and in some cases they end up with loans that are much larger than the cost of land plus the depreciated building cost on their books. If they get forclosed on the IRS will come after them for their "cap Gains Tax." I expect to see a lot of this over the next couple of years.