Dory. Marlin.

I can't believe nobody saw this CRE downturn coming.

P.S. Hey Elvis, it was more funny the second, sixth, and twenty-third time.

Several large players means every REIT who was spending money like drunk sailors over the past 5 years. We are all REITs now.

BING!!!!!

HAAHAHAHA!!!!!!

I KNEW IT!

Mortgage rates to 4.5%
Oh, I fricking knew it.

I KNOW Greenspan.
I'v watched this thing for over fifteen years. That's the only way they can prolong the bubble.

I'm a fricking master.

Comrade Pondering the Mess writes:

and they are busy cutting down the evil trees

they are harvesting a renewable energy resource

uh, right. I'll have more on their analysis later. CR

LOL! Let the asswhooping begin!

........

I posted this earlier today:

On Sunday, General Growth was granted a two week extension, until Dec. 12, to repay $900 million in loans. And, Centro, which is facing a Dec. 15 deadline to repay $1.3 billion, said at a special shareholder meeting last Friday that it is attempting to work out further extensions with its lenders.

Both firms are hampered by massive amounts of debt they took on for acquisitions during the height of the real estate boom. General Growth’s long term debt load currently stands at about $24.6 billion. As of June 2008, Centro and its controlled entities had $10.6 billion in total liabilities. As the credit crisis has continued, both have been unable to pay off or refinance that debt. For now, the companies have been able to arrange extensions while exploring other options, including sale of assets and filing for bankruptcy protection. Centro, GGP Find Ways to Hang On

Much more fitting here....

.....

Yes - I saw the article about Global Insight suggesting that the "housing market is now slightly undervalued" - uh, right. I'll have more on their analysis later.

Oh goody! That means this post was like an hordeorve. I love hordeorves.

On a serious note - you don't think they were just talking their book do ya? We know that never happens.

"People need to stop underpricing their homes, so sellers like myself can get top dollar.
Reginald Dwight"

You mean a "rational value." Those other sellers must be irrational.

@ Darth Toll:

The 3x median income is a stupidly simplistic number that doesn't account for many important variables. Remember back in the 1970s when women mostly didnt work, and even if they did their income would not be considered by a bank for affordability because the bank assumed they would pop out children and quit? Most middle class homeowners now have 2 incomes and the banks count both so try 6x if you want to keep with a stupid simple rule of thumb.

People need to stop underpricing their homes, so sellers like myself can get top dollar.
Reginald Dwight | 12.03.08 - 6:04 pm | #

Reggie - it's only temporary, mortgage broker aka Treasury Sec. Hank has prequalified 300 million potential buyers - probably time to hold an open house.

sorry for the re-post from bottom previous thread but asking others to join in

sent one hour ago

talked to his legislative assistant 30 minutes ago

Dear honorable congressman Adam
Smith (9th congressional district, Washington State)

... we are being financially strangled by the banks refusal to lend

these 'banksters" are sitting on the 350 billion that congress has doled out so far.

(plus trillions of swaps at the PDCF TAF TSLF and thru to ABCXYZF)

the wall street and investment bank people dont give a whit about the country...they are sitting on all this liquidity from the fed and treasury in the hopes of saving their empires...

here is the solution.

pleasee sponsor a bill for the creation of...

The Bank of the United States

this new bank owned by the government...ie,the taxpayers

would lend directly to businesses, students, municipalities entrepreneurs etc at competitive rates...

this bank of the US would also lend ,as prudent, to the commercial and investment banks.

but either way the message we would send as a nation is clear

either the banks begin to lend..or we, the people will

for the love of God, do something

the country is slipping into a greater depression while Ben Bernanke and Hank Paulson are more busy trying to save their friends in the banks and on wall street first!!!

respecctfully
(Mxxxxxx Sxxxxx)
mock turtle | 12.03.08 - 6:01 pm | #

In most countries they wouldn't throw in the sink trying to save a sinking turd. We need to cut bait instead of fishing in this vortex....

I know HP and BB need someone to pal around with at the club after Jan 20, but as Obama said ENOUGH!!!

Treasury to provide 4% mortgages for CRE
crispy&cole

A lot of the CRE loans for the last 3 to 4 years were IO or neg-am. Little to no covenants.

The RMBS conduits weren't the only people writing puts for the junkies at Gamblers Anonymous USA....

......

I didn't think Ballamer had any more trees. Didn't they cut them down years ago?

What would a CRE dust bowl look like?

Dubai?

Sham--haven't you seen those post nuclear war video games?

I know a couple of guys who intended to retire in a year who've really taken hits in the stock market. One guy has it worse; to up his investment income last year, he let his investment guy talk him into CRE reits.

Both in their late '60s. They used to dread working until they died. Now they both expect to lose their jobs long before that, involuntarily. Both in manufacturing.

But what if the elites lose one heck of a lot of money and so aren't elite anymore?

Well, it could happen. . .

Hubbert writes:
"The Bank of the United States."

We tried that twice before.

third times a charm

@ Darth Toll: OK I stand corrected, didn't know you were talking household income.

"The Bank of the United States."

We tried that twice before.

~~~

They were both run by the banksters. He is talking about a Public The Bank of the United States.

Ski Bum writes:
"Who is running this circus?"
Werner writes:
"The american voter !"

Do you really think that?

The american voter !
Werner | 12.03.08 - 6:28 pm | #

No way, Werner. Calls to "representatives" against the $700B bailout were massively against it.

Also, I read somewhere that Pelosi only has a trivial presence in her own district.

Reid: Auto bailout lacks enough votes to pass

I guess BK just became an option. Hopefully. The OTHER alternative is too dismal to contemplate.

Auto bailout lacks enough votes to pass

Jeez. I thought that was in the bag. This could be the trigger.

"The wife just told me that also. It's ok, the America I grew up is long gone. If I am looking I will live to see America v 3.01b. Only one problem we outsourced the writing of the code to India. I am going to be looking forward to my new dope ID.
nova: PreFab Ponies | 12.03.08 - 6:36 pm | # "

The local daily has been taken over by MediaNews chain, which concentrates on outsourcing everything it can. One of the former editors says MediaNews is actually looking into outsourcing some reporting tasks to India. No joke. Can't wait to see how that turns out.

i can survive either deflation or inflation but i know what i prefer...

Fire and Ice by Robert Frost

Some say the world will end in fire,
Some say in ice.
From what I've tasted of desire
I hold with those who favor fire.
But if it had to perish twice,
I think I know enough of hate
To know that for destruction ice
Is also great
And would suffice.

1920

so long tand thanks for all the fish!

PCA - what about your previous guarantees?

I'm so furious at this continued robbery I want to do something -- anything -- to divest myself from it. Atlas shrugged style, I want to take my wealth, freeze it out of the system, and go home. I'm thinking of buying a safe (huge safes are pretty cheap, $2000 will get you a big walk-in gunsafe), taking all my cash out of the thieving banks, and throwing things of value into the safe to wait this out. The problem is, if I just throw dollars in there, given that I know the government is actively trying to destroy its currency, they'll be worthless or lose 50% of their value by the time it comes to wtihdraw from the safe and participate gain.

IS the central bank of canada as evil, fucking corrupt, and goddamn evil evil evil as the current motherfuckers? I'm seething, seething with rage.

ow i get a little taste of the feeling that passengers must have experienced in the minutes before the titanic went down
mock turtle | 12.03.08 - 6:47 pm | #

Titanic was mostly a natural hazard. You're thinking Flight 93.

"Geez, I thought those rationalizations went out the window when the bubble burst.
Comrade Bear (tj & the bear) | 12.03.08 - 6:18 pm | #"

There are an awful lot of McMansioners out there who cling to the hope that they will be worth 7-10x some day.

I know it is much more pleasing to deflect the responsibility to Bush, Cheney, the weather, the moon, etc., rather than to face it yourself.
Werner

Werner, do you really think that one of the 330 Million US citizens is culpable in this? What about the non-banker, non-politician guy who pays taxes and pays interest and loses family members in Iraq?

The problem is, if I just throw dollars in there, given that I know the government is actively trying to destroy its currency, they'll be worthless or lose 50% of their value by the time it comes to wtihdraw from the safe and participate gain.

--

Something tells me your concerns won't be bothering you anytime soon if you do in fact buy the vault.

And yes, the Bank of Canada is as bad, but they sure do it in a nicer way.

@ Bob Dobbs

I believe most Reuters reporting was outsourced to India a few years ago. Several other media "big" names have done the same, particularly for any reporting that is repetitive, ie finance as in "GM reported earnings today and blah blah blah."

Given the idiotic level of news reporting and writing these days - plus that most of it is done by phone and email- "reporters" in India can do just as good of a job of asking for quotes (or making them up) and plugging them into a formulaic story/article.

I want my Pony!

"Pines first-grader accused of using knife to rob classmate"

Topic Galleries -- South Florida Sun-Sentinel.com

I haven't read the two income trap because their main solution proposed in excerpts I have read is school vouchers. Which is a horrible idea that would eliminate our public education system.

There are a lot of half baked ideas out there including vouchers as an educational panacea but the premise of the book is that two incomes are only better if you can live on one of them for an extended period of time. If you price your lifestyle off two incomes then you are easily 'trapped'.

Example:

If you need two incomes to afford your home (say the 6X model you suggested above) and if the chance of one of you losing your job long enough over a five year period to lose your house is 30%... then the chance of losing your home in that period is a little over 50% (if my math is right).

And that assumes completely independent job loss probabilities... i.e. no correlation which is probably NOT the case (bad economies increase the risk both lose jobs, good economies decrease the risk neither of them loses their job).

In other wards two incomes increase the risk of disaster IF it takes two incomes to live at the chosen lifestyle level. Obviously if they can live off one income then two incomes becomes 'gravy'.

A six times income house price multiple is VERY dangerous regardless of number of incomes but even more dangerous for TWO income families.

Do the math yourself if you doubt me.

Werner writes:
"I know it is much more pleasing to deflect the responsibility to Bush, Cheney, the weather, the moon, etc., rather than to face it yourself."

Ok then. I see you like to over generalize. Are you in the United States?

Werner is a german, I believe

[The Port Authority of New York and New Jersey attracted no bids from investment banks interested in underwriting a $300 million taxable note offering in another sign that the seizure in credit markets persists.]

No problem. That fits nicely under the TARP.

Hoopajoops LTD writes:
Failing to bail is a reverse tick on Conjure's clock, I believe. Throwing more inept fat men onto the life boat is a forward tick.

You'd think, but my read on MP is that Conjure most definitely believes that TSWHTF if the auto makers are not saved as of last week if not sooner.

Something about cascading unemployment, another 5M people out of jobs, and basically armageddon.

@ Comrade Bear (tj & the bear) | 12.03.08 - 6:33 pm | #

When we are running out of bread at the bread lines - riots really aren't far behind.

Outsider(Unrated) writes:
My wife told me earlier the new "in" thing is hunting for your food.
Saw on the news yesterday that in the first hour of deer hunting in Nantucket, one hunter shot another.
Outsider | 12.03.08 - 7:02 pm | #

I'd still go hunting... if I could do it from a WWII style concrete bunker.

"
I think conjures clock just ticked ahead a little...
Comrade Lurker | 12.03.08 - 6:57 pm | #"

Strange, I would have said the opposite. U.S.G. Borrowing A TARP for the shrinking 3, in response to a collapsing economy and bad business plan, does not seem to be the right direction to go.

Whatever auto sales remain to be had will go the Hondas and Toyotas and Ford, if they survive, who have manufacturing in the U.S. so no jobs will be lost, they will just move. Suppliers will still be selling the same number of parts, just to different buyers.

The unions are screwed though.

"Capital One to acquire Chevy Chase..."

He's funnier than those stupid Vikings.

Did the hunter quarter or debone him? I wonder if he will become steak, hamburger and jerky. Or just jerky and sausage.
Elvis

I learned from a commentor today it is called Longpig.

I learned from a commentor today it is called Longpig.
Barley | 12.03.08 - 7:10 pm | #

Donnerwurst...

Me thinks oil is going to do some funny things tomorrow.

I would, but SRS is so last week. Real gamblers moved on to FAZ and TZA a while ago.

You might want to read this then:

http://paul.kedrosky.com/archives/2008/12/03/triplelevered_e.html

Werner writes:
"I just stated the plain basics ! Nothing helps if you do not see the basics correctly.

And no, I am neither in the US, nor a US-citizen. I just gleefully watch from the outside the results of the financial sanity and honesty in the US (and the occasional collateral damage hitting us)."

No, you did not just state the basics. You made an assumption and then made a generalization about US citizens.

There is no doubt the US government and corporations are f*cked up.

But I think you over estimate the power of US citizens to do anything about it.

Also, I really do not think you have a leg to stand on here. German banks are not blameless.

Werner Writes:
"Yep, we do have some bankers who trusted americans and bought fraudulently AAA-rated american papers. We pay for that now. And it will never happen again. (the trusting I mean)"

Nice deflection and denial. See, I can at least see that US corporations and governance are off the rails. Where as you cannot see where your own governance and corporate structures are at fault.

How about we remove our troops from your soil and you start paying for your own defense.

Hit a nerve? It has not been that long. I understand the desire to put it all behind you. Mass murder is messy business. Have a Turk coworker over for dinner for me.

I am neither German nor am I a racist (against Turks). However, I do know Germany quite well and have spent extended periods in Germany. I doubt that you have or at the very least you stayed rather isolated. Your insight into Germany based on your posts is awfully limited...

nova: Erwacht Ponies!(Unrated) writes:
So Chevy Chase must have had some serious problems. Probably CRE amongst the mess. Capitol One? Thats just ugly. Or perhaps they need Chevy more than Chevy needed them?
nova: Erwacht Ponies! | 12.03.08 - 7:25 pm | #

Operation Too Big To Fail

Inverse etfs...

This may be naive - but given that these are basically a strategy anybody can setup. And that there are some fairly large pools of money floating around these days.

What's to stop somebody - hypothetically - taking positions in the 2x, 3x, ETF's and then moving money in and out of the underlying shares, to whip the ETF up and down. Given the multiple - it shouldn't be too hard to nip in and out for a profit, nu?

What's to stop somebody - hypothetically - taking positions in the 2x, 3x, ETF's and then moving money in and out of the underlying shares, to whip the ETF up and down.

Ever heard of options expiration week?

bgates(Unrated) writes:

"Germans have a right to be smug in many ways - they tend to rent instead of owning places they can't afford, their frugality should be admired in that way."

I do admire the German people for the most part. Many americans were just as frugal though - including myself and most of my family since the last depression.

I resent the way Werner is painting US citizens with a wide brush
and not acknowledging any German participation in this debacle.

Pointing fingers is not helpful especially with the audience here. He is not teaching anyone here anything we don't already know.

Nemo

i'm thinking algorithmic day trading.

-- w

$1.69/gal that is.

"We're on the brink with the U.S. auto manufacturing industry. We're down to months left," Chrysler's vice chairman, Jim Press, told The AP in a separate interview. "If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it's a huge blow. It could trigger a depression."

Um, just a second here. Didn't they need $8 billion to get to the end of the month? Somebody is doing a Paulson here.

ova: Erwacht Ponies! writes:
"Anti-Americanism has its fans. The most vocal being Americans living abroad. Get used to it. Werner is a vulture come to circle over what he thinks is the dying carcass of America. The game has just begun."

Oh I agree totally and I am used to it and I agree with some of it. I think the US has lost the plot as well in a lot of ways.

I also think it is funny that somehow he thinks he will be spared due to an illusion he has about German leadership not having any part in this.

"And yes, I gladly confirm that I am German and live in (southern) Germany."

Thanks for the confirmation.

The comment above in reference to the crime wave in Argentina prompts me to say the following:

As many of you probably know, I live in a remote area. We've been having problems here recently with crime, mainly drug-related thefts and burglaries.

Not long ago, I visited the county sheriff, who told me that he had two--repeat two--deputies to patrol the county at night. One deputy had to remain at the county jail to guard prisoners.

The county deputies no longer have health insurance due to budget cuts. They are barely scraping by. His advice to me, and this is a quote:

"Buy a shotgun. You may need it."

I haven't picked up a weapon since the army, but will soon be purchasing an automatic pistol and a trench broom.

I didn't want it to come to this, but the sheriff told me there is no longer any way his force can respond to a threat on my property in anything approaching a timely manner.

has this ever happen any other time in history? everything at one time.everywhere at the same time.all going down.

"It's interesting how the class conflicts seem to have become a pan-national issue. I guess that's one of the side effects of globalization."

"Workers of the world unite!" j/k

Or, if your an anarchist
"Workers of the world untie!"

Auto unions are considering concessions. That's rich.

"The union is suspending its most ridiculed perk, called the JOBS bank. That program, set up as part of a contract agreement reached between Detroit's Big Three and the union decades ago, pays auto workers 85% of their pay while furloughed. Some workers reported for years to meeting rooms where they would sit and wait for an assignment or be sent to clean public parks. All the while, they would get paid most of their wages."

Quelle sacrifice!

Speed writes:
"Something to consider: the prospect of riots in Iceland is real. Iceland. Riots."

The prospect of riots is real across the globe now. Like others have said - we have only just begun.

The Carpenters - "We've Only Just Begun."
YouTube - carpenters -We've Only Just Begun 

has this ever happen any other time in history? everything at one time.everywhere at the same time.all going down.

Down? What market are you watching.

(grin)

What else can you possibly hedge?
UnitedHealth to Insure the Right to Insurance
Only problem is there's no call price. Yes, we'll sell you insurance, but it'll be $xxx.

Mr. Beach writes:
"The three-year notes, backed by revenue from the bi-state agency that operates airports, river crossings and transit in the New York City area, were placed up for competitive sale this morning.

The deal carried the highest short-term ratings from Moody’s Investors Service, Standard & Poor’s and Fitch Ratings and would have been the largest of its kind in eight months."

Oh, well if those three say it's a good deal, then it must be true. They were spot on with their CDO ratings.

mp you are either in the central time zone or on an island with big turtles.

delete the "all going down"
has it ever happen before like this?

"I'm assuming they want the copper wiring in the Christmas lights..."

There's been a lot of that here, especially when copper scrap was higher in price. Several electrocutions reported in the county newspaper as well.

Not so many lately. They have a good handle on metal prices.

And just like with residential real estate, the CRE bust impacts other suppliers down stream,

Yes, and none more so than tech.

The CRE bust is very negative for tech spending.

And it's equally negative for insurance companies, which are the next shoe to fall. Insurance companies have huge portfolios of CRE-related securities and properties. When life insurance companies start to fall, you will see real panic.

Fairfax County has 400 deer per square mile. This should work out rather well for a few months. Of course no one owns deer rifles anymore. I guess an AR-15 will work.

Parts of Westchester County, 20 miles from New York City, probably have that many deer, too. They eat everything we plant.

And if you are found with a loaded firearm in the state of NY, outside your home, you face mandatory 3.5 years in prison. Like Plaxeco.

Sorry but nothing was "justified". Someone overseas didn't do their homework.

Well, if these securities were really triple A, then the consequences would have minor. But clearly once fraud entered the game, aided and abetted by the SEC, the game became a whole lot more dangerous, to say the least.

Fraud is quite different from screwing.

State Street announced it is cutting 6% of it's workforce, or 1,600-1,800 jobs.

werner:
look no one trusts the us.so why trust us when salesmen come knocking on the door saying we got something so good that it's too good to be true.
maybe a little greed there? dont feel bad cause every man woman and child bought those little devils indirectly or directly.
history's greatest sales job

The vast amount of these securities were rated AAA simply on the model that housing will never go down nationwide in the US. That's not fraud, that's idiocy.

Fraud simply happened in the tail-end of the game.

Actually, they were rated AAA because the rating agencies were making bank rating them AAA.

This is related to what mp mentioned earlier about the Sheriff suggesting the purchase of a firearm: St. Louis city official tells residents to arm themselves: The article requested is no longer available.

has it ever happen before like this?

History doesn't repeat but it often rhymes. 1929. Stock bubble, credit bubble, massive industrial overcapacity, fragile banks, unbalanced global trade - you name it. There were probably even lingering effects of the Florida land bubble, which blew up in 1925.

This is why everyone is re-re-re-debating the causes of the Great Depression and what solved or deepened it. Unfortunately most people touch on about 2 of more than 5 factors at a time.

I remember reading the text of one of the discussions during a ratings discussion and that was basically what was said. Housing will never go down nation-wide. And especially without a recession.

As I said, I believe that the first time that this admission appeared anywhere in public was in late 2006 if not later. If you find an earlier quote I would love to stand corrected.

"We're on the brink with the U.S. auto manufacturing industry. We're down to months left," Chrysler's vice chairman, Jim Press, told The AP in a separate interview. "If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it's a huge blow. It could trigger a depression."

I have a theory that the auto industry's cash burn rate has gone through the roof because they generate cash when they ship cars to dealers, and dealer shipments have slowed even more than sales have declined.

The dealers are worried about their own solvency and are trimming inventory. Just a theory but it would explain the hurry-up panic of the Big 3.

I also believe that all this panic and pressure is having a lasting impact on the car-buying public. It's like reverse advertising. You may see Big 3 market share drop dramatically in 09 because public has lost confidence.

In some ways, isn't all this groveling and demanding as bad for the corporate image as bankruptcy?

comrade swan - excellent post, thanks.

And for Werner - German banks were hardly squeaky clean, as the fine on Deutsche for executing phantom trades bears out. I was just amazed that the fine, at $500k for IIRC bilions in failed trades was so low.

C

From the Global Insight report: "House Prices in America combines a statistical model originally developed by Richard DeKaser, Chief Economist at National City Corporation (Personal Banking - PNC Bank with data largely developed at IHS Global Insight."

National City, if you recall, got taken over by PNC recently. Something about mortgages on overvalued homes falling apart. I wonder if any of the economists at National City have a history of overvaluing homes?

It's my experiment. My husband said I spend so much time on the computer I needed to start a blog or take up World of Warcraft. I am sure that is supposed to be insulting, but I'm not sure why.

I am thinking about mailing tutorials on the bond market to the Treasury Department instead.

Bond Girl --

Not bad! Although I was expecting more snark.

rich- "...isn't all this groveling and demanding as bad for the corporate image as bankruptcy?"

I rather imagine they believe things have reached the point where they have to take their case directly to the public, fearful that Congress might turn them down.

But, yes, I agree, it gives the appearance of groveling. They're not exactly negotiating from a position of strength.