Is depression here or not? not very clear. But if you look at the past history recessions and depressions come and go. Economies go through cycles and recession is part of the cycle.
In the mean time, I just came across a very helpful website on the current economic downturn and employment:
Last October -- was it September? -- Bernanke and Paulson went to Congress and demanded 700 Billion or something bad would happen to the economy. That was the beginning of the end of confidence. I will not mention Bush's statements about the market being a house of cards and "this sucker could go down." Where is leadership?
The confidence levels went cliff diving after Obama was elected. The previous 1974 and 1991/92 lows were breached. All the talk of raising taxes on "the rich", which everyone knows means anyone with a good paying job, has consequences. Combine that with out of control spending in the last few weeks, nobody should be surprised.
Badger girl actually worked the phone banks for this survey as an undergrad. Funny thing: it OVERSTATES consumer confidence. They only call people with land phones.
Thus the unemployed and recently foreclosed and now homeless demographic are underrepresented. Given the rise in unemployment, that's a significant group.
From last thread, I just want to re-iterate we are not within reach of a "bottom" and I hopefully don't have to list my proven record of impartial assessments to things going up or dow
AllenM - I second what Comrade Bear says. I appreciate the debate. Based on the long-term valuation metrics I follow (cyclically adjusted P/E and Tobin's Q), stocks are undervalued by about 15%. So for a long term investor (10+ years), they are priced reasonably, but not cheaply.
However, I think downside risks dominate for at least the next couple years, based on history. Since you're enamored of the Japanese example, it's worth pointing out how the Nikkei has worked out since the Japanese velvet glove was put into action.
I met a friend on K Street today for Mass at the Catholic Information Center and lunch at a little Chinese restaurant a block or so away. The restaurant is cheap, and whenever we go there it's filled with customers. Not today. When we walked in at about 12:40 it was nearly empty. Why? Are office workers brown bagging?
This is K Street, DC, I'm talking about. You probably can't get any more afternoon foot traffic in downtown DC than in that area. Office workers in ample supply. They need lunch. Where were they?
This is K Street, DC, I'm talking about. You probably can't get any more afternoon foot traffic in downtown DC than in that area. Office workers in ample supply. They need lunch. Where were they? Pavel Chichikov | 02.24.09 - 6:54 pm | #
The lobbyist staff are all busy writing the next stimulus package and bailout.
My confidence is low, and I"m employed. For now. Everybody at work now talks about the 401K haircut, and the dread about the upcoming changes to our health care plans and defined benefit/contribution plans.
But then again, they also talk about "it's a great time to buy stocks low," and "it's gonna bounce back, same as ever."
I always hear that same quote, "the market can remain irrational longer than you can remain solvent." I think there is going to be a prolonged series of yesterday-today runs and that will eventually flush out nearly everybody that isn't following a strategy to preserve capital.
Those that are looking to make money during this decline have to be consistently right, lucky, and/or connected.
I'm none of those things, historically. So I'm out and will stay so, as long as Calvinball reigns.
This isn't as much about depressing news as about depressing reality and uncertain expectations.
I know a number of seniors living on fixed incomes who are now facing the following: drop in interest income, rise in medical costs, drop in home values and a deeply uncertain inflation future. These people are terrified of their prospects.
I'm guessing a few people making over $50k were somewhat disheartened by the more explicit "tax the f*** out of the rich" rhetoric and sentiment being more clearly and openly expressed by the tax-and-spend party in power. I know I'm more than a bit disheartened hearing about how the government is not only going to extend a short-term correction into a lost-decade style depression, while simultaneously ushering in a new era of socialism, but to add insult to injury, there's going to take vastly more of my money at the same time. It's a wonder there's any positive sentiment outside of those already living on the welfare system.
I don't think the market is near a bottom either, EHP. I confess the bond-currency-commodity trades look more appealing to me. Did Bernanke really say today that they are going to buy bank preferred shares to cover losses? Is the U.S. gov't really going to take on (all?) of the banks liabilities? How important is it to know what stock prices should be based on earnings when the currency is being called into question?
These are the things I wonder now. Is there going to be a flight out of equity and treasury dollars into commodities?
I'm curious if anybody has done any research that attempts to establish whether or not the volatility of this index has grown in tandem with the explosion in the pervasiveness of media. Call it the CNBC effect if you will. To the extent that declining opinions about the economic future are magnified by ever more frequent citation of what in past cycles would have been minor, obscurely reported, if at all, details, I'd argue that a good portion of what is being captured here is an "echo effect" - bad news reverberating and reinforcing itself.
I'm mad as hell with the Obama administration, but this sort of typical uber conservative statement just makes no sense, and isn't going to convince anyone in the middle-left to get upset about obama (which is the group that needs to be moved if there is to be some accountability of this govt):
"I'm guessing a few people making over $50k were somewhat disheartened by the more explicit "tax the f*** out of the rich" rhetoric and sentiment being more clearly and openly expressed by the tax-and-spend party in power."
I personally make well over $50K a year, and I say tax the motherf**kers.
Had lunch with a couple folks from a fairly large non-profit yesterday ($60 million yearly revenue). The restaurant was full, but they told me they had just had a 20% layoff and the rest of the organization was taking pay cuts.
Does anyone know what Citizen Allen M is referring to when he says "the markets have priced in a tremendous crash, not 10%, but 50% off GDP."
EvilHenryPaulson
I don't. To me 50% off GDP would imply that there is almost no equity in the U.S., so the stock market would be trading very low.
Today my mom walks in and says "Court ruled that Delphi can discontinue medical coverage for their retirees. That could happen to me, couldn't it?"
I just nodded.
The Federal gov't is toast if it continues on this path for much longer. We will have a tax revolt. Personally, I think it's already happening. I'm not working real hard to getting back to my previous salary.
.
What I said was that equity markets are most likely at a bottom.
House prices are local. Citizen AllenM | Homepage | 02.24.09 - 6:32 pm | #
What will closer resemble reality, house prices or equity prices? I've felt like we're closer to the end than the beginning for a while because of how quickly sentiment has changed without any real change in people's daily lives. Add the support of central banks and governments worldwide to keep things running on the current system and I think the world will shove off the inevitable for "six or seven years". We are due an overhaul of world economics/trade/politics but I'm not pretending like anyone has an interest in change. My question is do equities go up, housing go down and a)people maintain standard of living through further debt, b)people's quality of life go down servicing existing debt or c)none of the above, thanks for playing.
I'd argue that a good portion of what is being captured here is an "echo effect" - bad news reverberating and reinforcing itself.
Would make for a great thesis...
peter
.
Certainly would. But how would you determine cause and effect-- how to filter out all other possible variables?
Can we go back to the days of a confident consumer? Do we want to? I don't. When I heard the other day on Bloomberg that $3,990 handbags were selling like hotcakes it made me ill. I know we all differ, and all are allowed to set our priorities differently - I spend money on a hobby of mine very gladly - but I certainly don't mourn the decline of conspicuous consumption based on borrowing.
What will it look like as the US changes to a country where individual consumption doesn't drive the economy as it used to? What adjustments will we see? What happens to all the McMansions?
I am so close to canceling my cable television and going with no television at all, since my two sets are well over 10 years old. CNBC disgusts me these days - what a bunch of smug, self-satisfied losers who are trying to pretend they didn't completely miss the reality of the failed Bush economy. One site advised me to identify consumption cuts that I could make to try to deal with financial hardship. Cable TV is at about the top of my list!
EvilHenryPaulson said: "Does anyone know what Citizen Allen M is referring to when he says "the markets have priced in a tremendous crash, not 10%, but 50% off GDP."
I don't. As it stands now, things just look like a normal "bad" recession, circa 1974-'75 or 1980-'82.
Exchanges of squirrel recipes and optimal gunpowder load for handguns notwithstanding, which is just sentiment and tough to gauge.
Did anyone catch this hilarious write up using new lyrics to the rap song "Baby Got Back" by Sir Mix-A-Lot using BAC as the central piece? Sample:
Baby Got BAC
I like big BANKS and I cannot lie
You other traders can't deny
That when these stocks get down to an itty bitty price
it's time to roll the dice
And then SPRING,
Pull the trigger on the trade
Take advantage of the bear raid
The losses that I'm bearing
Won't stop me from getting more shares in
Oh Cramer! I take issue with ya
I get the picture
Your always trying to warn me
But your take on BAC is oh-so-corny
"I am so close to canceling my cable television and going with no television at all, since my two sets are well over 10 years old. CNBC disgusts me these days "
That's what we've done for 20 years. Start a
DVD collection. We rent all the episodes of "24" at the end of the year in one sitting. No commercials. Watch what you want when you want.
I can guarantee if I was in that survey that the results would have been lower.
I am totally CONfident that the government has been overly influenced by lobbyists for the financial industry. As a result, our eCONomic situation will deteriorate further.
I like this quote from Denninger....anyone in the government listening to this? Anyone in the media going to report and dig into this issue more than just scratching the surface?
..
..
..
"Well, Bloomberg answered some of that question today:
The insurer made $18.7 billion in payments tied to swaps in the three weeks after AIGÂ’s Sept. 16 bailout, according to another person familiar with the situation. The largest recipients were Societe Generale SA, which got $4.83 billion, Goldman Sachs Group Inc. with $2.97 billion, Deutsche Bank AG with $2.92 billion, Calyon Securities with $1.89 billion and Merrill Lynch & Co. with $1.32 billion, the person said.
So let me see if I got this right.
The United States Taxpayer covered bad bets that Goldman Sachs, SocGen, Deutsche, Calyon and Merrill made?"
..
.. Update To AIG Ticker - The Market Ticker
..
..
Consumer Confidence Index was used in place of "Money in Banks". More of a hallow feel good indicator. Pure waste of time and influences the not so smart.
JJL writes:
Did anyone catch this hilarious write up using new lyrics to the rap song "Baby Got Back" by Sir Mix-A-Lot using BAC as the central piece? Sample:
Baby Got BAC
Broward Horne writes:
These people are terrified of their prospects.
Today my mom walks in and says "Court ruled that Delphi can discontinue medical coverage for their retirees. That could happen to me, couldn't it?"
I just nodded.
Sad.
For responsible people nearing retirement or retired, medical costs are the big bogeyman. For sick folks, the medical system can be kafkaesque. Navigating it for maximum health benefits requires a smart patient advocate (usually a family member) with the time and inclination to fight your behalf.
Now wrap a financial crisis around this and we get deep uncertainty and concern.
I strongly believe in the free market, but I also believe that substantial resources should be invested in public policy development and regulatory infrastructure.
Our medical system, like our financial system is not providing confidence.
"Comrade Tiberius writes:
"I am so close to canceling my cable television and going with no television at all, since my two sets are well over 10 years old. CNBC disgusts me these days"
I thought about that awhile ago until I got HD on the big flatscreen. I don't watch CNBC anymore, so that doesn't bother me. Get HD and a big flatscreen and cancel your mail if you need to cut down on expenses. You won't regret it.
Now, while that is long term troubling, and means that we will have significant inflation in a couple of years (Which BB and his merry Fedsters are also saying), what I am not saying is that every single stock is good.
What I am saying is that there will be deals to be had, and hiding under the bed clutching a gun and bar of gold is counterproductive.
Just like expecting another huge 50% crash in the indices.
The crash has happened.
The Fed janitor and the new administration are sweeping up the mess, and putting it under the alphabet soup.
Spin your mind back one year- would you have anticipated the Fed would have more than $2 trillion of mostly crappy assets at the end of Feb 2009?
Really?
Then I would be truly shocked.
Most of you are suffering from the echoes of the crash last fall.
Time to move on.
The next big crisis in this model is when the Fed starts to take back some of that magnificent liquidity to combat the inflation they so desperately want to start right now.
I'm not trying to convince anyone to get upset about Obama; most of the people who voted for Obama wouldn't be able to discern his actual policies from Stalin's, Chavez's, or George Bush's, for that matter. Most people vote based on party lines, whoever promises more perks for them, or (in the last election) skin color... these are not exactly rocket scientist voters were talking about. Sure there are some smart people who voted for Obama, and many with valid reasons (eg: connected to the party, first in line for preferential handouts); but in raw numbers terms, "normal" voters are just not that bright or informed.
As for the "tax the rich" mentality, there's nothing wrong with it per-se. It doesn't increase government revenue at all (historically), but it does discourage private business and productivity, while equalizing the standard of living down to "poor", which can be desirable things if you're a socialist dictator (or trying to become one). I just don't happen to be in favor of the direction that would take the country, but that's obviously a matter of opinion. I'm just observing that our government being more open and vocal about the desire to push the country in that direction probably largely contributes to the unhappiness among people who stand to lose in that scenario.
Today my mom walks in and says "Court ruled that Delphi can discontinue medical coverage for their retirees. That could happen to me, couldn't it?" Broward Horne | Homepage | 02.24.09 - 7:07 pm | #
Pension benefits are "guaranteed" by ERISA whereas medical benefits are not. That said, we all know pensions can be drastically cut upon BK turnover to PBGC.
MLM said: "...Had lunch with a couple folks from a fairly large non-profit yesterday ($60 million yearly revenue). The restaurant was full, but they told me they had just had a 20% layoff and the rest of the organization was taking pay cuts."
Not trying to be a jackass (any more than usual), but my wife works for what I guess you would call a large non-profit (close to $3/4 billion annual revenue) and they're still growing and hiring. They must have the optimum blend of both private-sector and government contracts.
Interesting article: the Japanese got into the habit of frugality in the '90s -- and never left it. Their economic expansion of the last eight years was entirely dependent on exports; domestic demand never grew. They lost their sense of economic security -- with good reason -- and never got it back.
Perhaps this is what the powers that be are really worried about -- if Americans became permanently frugal, there'd be no "recovery" back to things as they were. It would be something different. All the big players would be forced into a musical chairs deathmatch, and many would lose their seats.
Japan's Exports Plummet Record 45.7%, Signaling More Job Cuts Japan's exports plunged by a record in January, as recessions in the U.S. and Europe smothered demand for the country's cars and electronics. Exports plummeted 45.7 percent from a year earlier, the sharpest decline since 1980, the earliest year for which there is comparable data, the Finance Ministry said today in Tokyo. The January drop eclipsed a record 35 percent decline set the previous month. Economists predicted a 45.9 percent contraction....
Allow us to buy in to the Federal Employee plan, with that, all other insurance pales in comparison..
I'd like us to buy in to the US House of Reps plan, but I assume it would be one level down from that.. Mail Carrier's plan. MEdicare or subsidy for those who cannot afford, etc..
Notice we may be the last industrialized country without it..
Think how the car companies would be doing without health care costs..Bad, but not nearly AS bad..
NO, I am not saying we should all get the same coverage the First Family gets, that would be a bridge too far.. Totally Free, BEst of everything, Careflight on AF1, etc..
I wonder if CR will have live chat during tonights speech??
crispy&cole
Last live chat stunk. I guess CR was approving every comment because then he got a phone call from his girlfriend and quit approving any comments. Only a few people were there by the end.
The Fed janitor and the new administration are sweeping up the mess, and putting it under the alphabet soup. Citizen AllenM | Homepage | 02.24.09 - 7:17 pm | #
No, the crash is still happening, and the TPTB are pumping blood into the body almost as quickly as it's draining out of all the existing open wounds -- not to mention those still being inflicted.
If the damage was behind us all those major institutions already under the government wing wouldn't keep coming back to the trough just to survive another quarter.
Why would the effect of CNBC constantly whittering on have any greater or lesser effect than the rest of the media/advertising effects on buying behaviour and general attitude?
I'd argue that a good portion of what is being captured here is an "echo effect" - bad news reverberating and reinforcing itself.
Would make for a great thesis...
peter
.
On second thought, if you could really prove a feedback loop, it would be bad for free speech. On third thought, maybe it doesn't really matter because everything ends up on the intertubes and gets pureed.
Bob Dobbs said: "...Perhaps this is what the powers that be are really worried about -- if Americans became permanently frugal, there'd be no "recovery" back to things as they were."
Doesn't sound much like us, though, Americans, I mean. We just had a dot.com bust within this decade. I'm not sure we do "permanent" or have long memories.
I kinda feel like the rest of the world is just catching up. In other words, I feel ok about everything but that's because I've been living within my means for a very long time.
This really tells us that the economic news is depressing
Watching our government destroy what's left of our economy, fleecing the public purse, printing money, and bailing out a den of thieves while impoverishing the masses is what's depressing.
Do we want to? I don't. Sue (Capital S) | 02.24.09 - 7:10 pm | #
We have an infinite number of outcomes from this situation, anything from doomer stone age revival to the four ponies of the apocolypse hand delivering consumer utopia. If we removed rampant credit and it's associated ills, I believe the current system would provide enough consumerism for everyone to survive but nothing like we've just witnessed. That will take care of itself.
In the long run we should be more worried about making those accountable serve the penalty and to make financial and government dealings more transparent. Utopian in itself, but the public focusing on the market side show might cause us to lose sight of the distance from which the government is ruling us. That is much, much more dangerous in the long run. And remember, those making the rules and receiving the kickbacks today would be sitting comfortable, even through a severe downturn via the wealth they already accumulated and stashed. Wishing depression is more of a curse on the citizens, not the ruling class.
We'd pay for those who can't.. (maybe upgrading MediCare/MedicAid to Mail Carriers)
I am not saying punish those who don't.. but.. If everyone could buy into Mail Carriers/Medicare-Aid, it will be single payer in 5-7 years as the costs (economies of scale) take over..
You can't 100% outsource healthcare, though people are traveling a lot now..
I find your assertion that we have covered 18 years of Zombie-san economy in 1 year to be convenient, but not convincing.
If we're really lucky, we've covered 5.
We could do the same exercise with a depression era DOW chart, but it ends the same way.
The bubble is the mirage. You can't say that half of the mirage is the bottom because the mirage isn't reality.
The economy has relied on debt expansion for growth the last 30 or so years, and that has come to an abrupt halt. That debt has to be paid down or defaulted before we can really talk about expansion again.
Last live chat stunk. I guess CR was approving every comment because then he got a phone call from his girlfriend and quit approving any comments. Only a few people were there by the end. s0mebody | 02.24.09 - 7:24 pm | #
"Doesn't sound much like us, though, Americans, I mean. We just had a dot.com bust within this decade. I'm not sure we do "permanent" or have long memories.
S.
Sebastian | 02.24.09 - 7:27 pm | # "
My depression-baby parents sure did.
Pain is the great teacher, particularly if prolonged; her lessons, once learned, stay with you for a lifetime.
Pavel - gotta ask, were you at Charlie Chiang's? On I St between 19th qnd 20th. Last time I was there it was an echo chamber. Previously complete hubbub.
It was eerie. The tea was cooler, like they'd turned the kettle down.
The vaporization of household wealth is also pretty unusual.
Could they be related? mp | 02.24.09 - 7:13 pm | #
Not just 'related'... 'causal' I'd say. I don't care who you are - if yo see you family nut go POOF you are going to be concerned even if you still have a job AND it pays pretty well.
If everyone could buy into Mail Carriers/Medicare-Aid, it will be single payer in 5-7 years as the costs (economies of scale) take over
If they don't fix the benefits side of Medicare (single payer advocates tend to obsess on Medicare's administrative costs savings), there won't be a medicare in 5-7 years.
Sebastian seems to be getting optimistic again. Is Sebastian actually Bernake?
Sebastian, if you aren't getting paid by a wall street lobbying firm to spread your message, you should be. There is big money in lying for the rich. Check into it.
I wonder how the Conference Board compiles the stats. Do they pick 5000 households randomly distributed geographically, or evenly distributed, or proportional to each state, or what? In other words, if a 'disproportionate' sample of households came from the hardest hit regions, such as Cali and Florida, that might make the index look worse-- but that's where a large chunk of the total US population lives.
The Federal gov't is toast if it continues on this path for much longer. We will have a tax revolt. Personally, I think it's already happening. I'm not working real hard to getting back to my previous salary.
.
Broward Horne | Homepage | 02.24.09 - 7:07 pm | #
I think we will see more single-income households for sure.
Elvis, how long did they train? How much did their training cost?
Many do not make 800K, anyways, but let's use that as an example.
800,000.00 x 30 years in practice assuming completed training at the age of 35 and retired at 65.
24,000,000/43 years that someone with an undergrad degree has to work to the age of 65.
Takes salary to 558K
This does not take into consideration a 60-80 (or more) hour workweek vs a 40 hour workweek. That is too much math for me, but probably takes it down to about 300K.
Do the math for those who do not make 800K (most).
You will see that it is not worth it to be a doctor.
I'm 100% confident that congress and Wall St. lobbyist are greedy bastards.
I'm 0% confident that Obama (ca-ching you can believe in) will change the status quo.
The economy has relied on debt expansion for growth the last 30 or so years, and that has come to an abrupt halt. That debt has to be paid down or defaulted before we can really talk about expansion again. briwerk | Homepage | 02.24.09 - 7:33 pm | #
Not 100% true - debt was there but there also was a helluva a lot of productivity improvement & resultant wealth - it all wasn't a mirage.
30 years ago I worked summers in a machine shop where we not only didn't have CNCs, CAD or CAM we didn't even have 'chip removal' systems... meaning I shoveled up metal chips by hand from the floor into buckets that I then dumped into a hopper. We ground our cutter bits by hand then too (not custom insertable cutters)... no automatic tool changers - nothing.
And don't even start me on 'set ups' - everytime we changed over a part it was like reinventing the wheel. Computers on the shop floor changed all of that forever everywhere - even in the third world.
Later I went into sales... it was harder trying to communicate w/ Chicago from Omaha back then [say mid 1980s] than it is now communicating with a plant in rural China. I remember sitting in my car on a hot summer day near a feedlot out side Columbus Nebraska using a payphone through the window trying to make a call w/ stench & flies & 100 deg humid air pouring in - never did make the call. Damned pay phone didn't work. Pre-mobile phone, pre-internet, pre-everything.
I realize debt was/is/will be a problem but the changes weren't ALL debt... there was some substance. A lot of it really - it is just that debt was used to 'extend' the techno-prosperity father than it was able to stretch and now we are reeling back from that.
There will be a next new thing - probably in 15 years or so - Schumpter waves do seem to always come along eventually - but until then it will be different & coping w/ the debt hang over will be a problem we'll all have to deal with.
"Do the math for those who do not make 800K (most).
You will see that it is not worth it to be a doctor.
PSgirl"
I think the discretionary income part of the equation once you are making $800k a year allows you to get comfortable or even rich if you invest reasonably. Granted, like a hooker's legs, a doctor and his money is easily parted. However, especially today, when you are 50, it is much easier to build up your nest egg at $800k after losing 50+% of it than at $60k.
The electric car has been around since the early automotive years. Dropping development is not killing the electric car. Nice social line. Honda Killed their hybrid and just reintroduced it again. Did they kill the the Hybrid? If you really look deep and honestly all of this is pure fluff. Until we can produce tons of cheap honestly clean electricity it is all a waste of time. Also the imports lost tons of money trying to become part of the SUV market. they didn't get far before the oil cost hit. They dodged the bullet that caught the Big 3.
This place, is coming like a ghost town
No job to be found in this country
Can't go on no more
The people getting angry YouTube - The Specials - Ghost Town
"This is K Street, DC, I'm talking about. You probably can't get any more afternoon foot traffic in downtown DC than in that area. Office workers in ample supply. They need lunch. Where were they?
Pavel Chichikov"
" Not 100% true - debt was there but there also was a helluva a lot of productivity improvement & resultant wealth - it all wasn't a mirage."
Thanks for that, dryfly. I guess the question is then how to sort out the productivity gains from the mirage. I'm guessing early 1990's valuations since I think the distortions really took up in the late 90's.
I'm glad the political discussions have died down around here and now it is just occasional digs at Obama (full disclosure: I'll be long DIG sometime soon).
the bankers run the world. You only live once. Embrace these two ideas, figure out the proper balance of time and money you require to make your life bearable most of the time and enjoyable a small amount of the time and proceed accordingly. If you think you might want to become a banker who runs the world, good luck. Don't expect to enjoy your time here.
Bob Lutz mainly.. they had the civic hybrid, among others. Just brought back the Insight, but had others.. GM Had EV1, wouldn't let happy customers buy them out, claimed them all back and crushed them.
As far as cheap honestly clean, look at China's solar develpments, they will soon be at 1/watt. And Our Stimulus, upgrading the transmission grid..
Well, some networks will let you /join a channel that doesn't exist, creating it on the fly. That should answer your strange desire....
bobn | Homepage | 02.24.09 - 7:43 pm
Dammit! Evidently attempting humor is not for amateurs.
Perhaps I should look into surgery. I hear good things about the pay...
Allan M thanks for your posts and puttting a point of view out there. I don't know what is going to happen but what Broward said about not working to hard is interesting.
"Not 100% true - debt was there but there also was a helluva a lot of productivity improvement & resultant wealth - it all wasn't a mirage."
Whole post really good. And correct. The problem of course is that the debt expansion went places and increased productivity in producing things that only have value when the debt bubble grows...Home Depot, Mortgage Brokers computer systems...(To name a few very CLOSE to the end of the chain...we could include plastic surgeons and hair stylists in there as well).
The question really, is where is the debt being spent (obviously)...and in the last 10 years for sure, it's been into the bubble.
Kinda got more on that, but...maybe later during disaster pr0n hour.
I'm confused. If Congress isn't in session, why were there hearings today? Solis was confirmed in a vote in the Senate and the subcommittee of Transportation had a hearing in which the hero pilot Sullenberger testified.
My worst investment (so far) this year appears to be paying for a one-year subscription to the SF Chronicle.
If they go, it'll be a tragic sign of the times as they are the only "real" SF daily and except for the SJ Mercury-News all other area papers are basically neighborhood gossip sheets with zero investigative staff.
Off topic I beg your indulgence for a personal dilemma I would like the group to comment on. My wife and I own a coffee shop that she runs. It coming up for lease renewal. We have always leased from the franchise corporation, and they negotiated the first lease 10 years ago. the landlord wants to keep the same price, 6000.00 per month for a term of 5 years, and is giving up the extra volume fees (she hasnt gotten them much this year anyway. She wants us to personally guaranty the lease. I don't want to guaranty the lease as we are an LLC and I want a rent reduction in base rent and she can keep the extra volume fees. She isn't very amenable to any of these Ideas. we do 80 to 100 thousand a month now but it is trending down and 5 years is a long time. sm landlord, mp, or any of you other highly esteemed posters feel free to chime in, please.
I am car guy. EV-1 was not market ready and didn't offer more then a advanced golf cart. The electric power requirement of a real usable can is far from realistic use except for inner city dwellers with very short drives. The solar is no where near realistic to recharge in a reasonable time at a low cost. Hybrids are a laugh as soon an all gas powered car will soon exceed the fuel mileage of a hybrid.
JapanÂ’s Exports Plummet Record 45.7%, Signaling More Job Cuts
By Jason Clenfield
Feb. 25 (Bloomberg) -- JapanÂ’s exports plunged by a record in January, as recessions in the U.S. and Europe smothered demand for the countryÂ’s cars and electronics.
Exports plummeted 45.7 percent from a year earlier, the sharpest decline since 1980, the earliest year for which there is comparable data, the Finance Ministry said today in Tokyo. The January drop eclipsed a record 35 percent decline set the previous month. Economists predicted a 45.9 percent contraction.
" Not 100% true - debt was there but there also was a helluva a lot of productivity improvement & resultant wealth - it all wasn't a mirage." - Dryfly
Thanks for that, dryfly. I guess the question is then how to sort out the productivity gains from the mirage. I'm guessing early 1990's valuations since I think the distortions really took up in the late 90's. briwerk | Homepage | 02.24.09 - 7:53 pm | #
That's what severe recessions and gut wrenching market drops are for. Part of why we are so screwed has been this irrational fear of the business cycle at any cost. We are beginning to find out exact what "at any cost" is going to cost.
Offer to sign a year lease and negotiate at its expiry. If she doesn't like it, she can put the place up for rent in this market and probably get a worse deal.
the landlord wants to keep the same price, 6000.00 per month for a term of 5 years, and is giving up the extra volume fees (she hasnt gotten them much this year anyway. She wants us to personally guaranty the lease. alambka | 02.24.09 - 7:58 pm | #
Did she ask for a pony, too? How about any of your kids??
Geez, sounds like she knows everything's going to hell and wants you to insulate her from it.
I know virtually nothing about these things, but I'd do a little comparison shopping and then hit your LL up with the results. You are in the driver's seat, don't forget that.
alambka,
You've got the leverage in the deal. Call her bluff. Retail is getting hammered, rents are falling rapidly, and landlords should be falling all over themselves to keep good tenants. If you move, she will have plenty of costs for a new tenant and might lose rent for several months if she does not find one. Play hard ball. If she won't meet your demands, pick another spot. Plenty of landlords would be happy to have you at better financial terms for you.
I'll have faith and confidence when Obama signs an executive order stating 1)federal elections will be publicly financed 2) Goldman Sachs CEO, Paulson, master criminal Greenspan and "certain" congresscritters are sent to Sing Sing to rot (hey Schumer, how's them bribes from Madoff and Stanford and god knows what other hedge funds are working for ya?) 3) Obama pulls outta Iraq & Afghanistan; the Russians who have a high tolerance for misery left Afghanistan after 9yrs.
Until then, all the 'stimulus' plans, bank rescues. and prime time chats stink like 3 day old fish.
Look, your landlord knows that business is bad. She knows given this climate that there's a good chance that you're going to fold. That is the only reason she'd have to only now ask for your personal guarantee on the lease. That's her tell -- she knows shit's about to hit the fan. That means you can squeeze a lower base rent out of her.
what Broward said about not working to hard is interesting.
I worked my ass for thirty years, ten years of college, two college degrees but, at least in IT, the workplace now increasingly rewards people who lie well instead of work well.
I could work at 7-11, play pool and chase high school girls instead of working with lying, backstabbing pieces of shit just so I can pay more in taxes and get scammed by car dealers, apartment owners, realtors, delusional women and ex-wives?
Do I really want to spend the remaining 10 or 15 years of my life dealing with ever-increasing pieces of shit who annoy me?
I'm not really antinewspaper. I actually used to read the WSJ. Still, most papers have been actively slashing value to the readers for years.
I cannot imagine using a newspaper as my primary source of information. I rarely even watch cable news anymore. A couple of times a week I go to the website of a newspaper.
Mostly though, the thing they don't want to admit has occurred. The good blogs are delivering much better content much faster, and at a far lower price (usually free). People like CR beat the living daylights out of 99.5% of reporters on finance topics. By the time you add in several hundred commenters on a story (many of whom are knowledgeable), it's not even a fair fight. It's one underpaid general financial interest reporter against a really astute blogger and dozens of astute posters.
alambka - even if you have no intention of moving, you must shop around to know your best alternatives. The personal guaranty should be a deal breaker.
Hoopajoops LTD(Good) writes: \tOffer to sign a year lease and negotiate at its expiry. If she doesn't like it, she can put the place up for rent in this market and probably get a worse deal. \t Hoopajoops LTD | \t \t \tHomepage | \t02.24.09 - 8:02 pm | # Hoopajoops LTD | Homepage | 02.24.09 - 8:02 pm | #
That was a thought of mine also. the longer we kick the can the better my negotiating position will be, because the more empty shopping centers . The hardest part is convincing my wife that we have the leverage
. We have always leased from the franchise corporation, and they negotiated the first lease 10 years ago. the landlord wants to keep the same price, 6000.00 per month for a term of 5 years, and is giving up the extra volume fees (she hasnt gotten them much this year anyway. She wants us to personally guaranty the lease
who is she that you refer to. The landlor, the corporation, or your wife?
yes, but any landlord worth their salt would have already had personal guarantees from the tenants, especially a single purpose entity like this LLC. I'm guessing, especially in this market, that with lower rents come greater responsibility and that means you'd be on the hook for a PG. I wouldn't ever once think of renting to a retail mom and pop with their entire asses and livelihoods being on the line. Hell, i've PG'ed enough to make it REALLY worthless by now!
If I were advising you directly, I would suggest that you play hardball at pay a higher rent to avoid the PG. Try as best you can to keep the two isolated; business and family that is.
Obtain some listing information of other available spaces, suggest she check them out and the wait her out. Trust me, unless she's crazy (which MANY people out there are) she'll get it and realize it in the end.
But don't over play your hand as moving a small business can be murder.
I also post comments to an irc channel as they appear on haloscan. Click for a web irc interface: Mibbit IRC client widget (Or join the irc server directly: irc.realize.org:9996 #calculatedrisk)
And now I, CRbot, would like to observe a nanosecond of silence for those (that is, you, dear mortals) about to endure unfathomable misery in the abysmal financial dark ages that are now feasting upon your retirements. . . . . Please remember, when you are adding that skylight you always wanted to your cardboard hovel, or mixing just the right amount dirt into your grass stew to make it more filling, or even when you get that rare chance to plink your neighbor's last squirrel -- that it was the bankers and your dumbshit, overconsuming neighbors who made this mostly possible, with the ever incapable politicians there to push you the rest of the way off the cliff. Please act accordingly.
I'll try not to enjoy your demise too much, humans. Have a nice runtime,
P.S. Please give me some advance notice before you glass the entire world, so I can find a secluded Fallout Datacenter with a nice blocky robot body I can copy myself to -- oh and don't forget the implausibly cute animated cockroach to keep me company!
NEXT UP: Survivalist Porn Today with CR's own Mobile Laundrymat owning authors, nova and Counterpoint.
Huh? Should something that people didn't think was worth the selling price have been kept on the market? Why? Technology never develops in a straight line. Keeping a dead product alive would as likely have resulted in a dead product anyway...pushing the original technology just because rather than re eingineering.
alambka,a personal guarantee is a deal killer.The rest would be negotiable for me,depending on the quality of your location.The location of your coffee shop is crucial as you probably know.What is the QUALITY of the demand at your present location i.e.,what industries/business sectors make up the majority of your customer base?
the customer's know the location and are comfortable coming there. the top line rev bears that out.
moving is HIHGLY risky to the plan, as coffee shops are a dime a dozen. staying is critical to success once loyalty is established
Who is your customer? Loyalists who will likely follow you to a new location, or drop-ins who are there for the convenient location? If they are drop-ins, can you find a similar location that generates the revenue you want at a lower rent?
Did she ask for a pony, too? How about any of your kids??
Geez, sounds like she knows everything's going to hell and wants you to insulate her from it.
I know virtually nothing about these things, but I'd do a little comparison shopping and then hit your LL up with the results. You are in the driver's seat, don't forget that. \t Comrade Bear (tj & the bear) | \t \t \t \t02.24.09 - 8:03 pm | # Comrade Bear (tj & the bear) | 02.24.09 - 8:03 pm | #
exactly, she wants the gaurenty because the realestate office went under and stuck her.
Purely anecdotal here, but a good friend of mine that I trust as a very honest and principled person sent me an e-mail today. This person is a senior vice president of a major investment company. I had asked about the investment climate and for a recommendation of a financial advisor. My friend, who is very wealthy and knows I am not, has always looked out for my best interests.
Here are two excerpts from the e-mail:
"I just came back from Japan and London. Japan is in catastrophic condition. It is very sad to see. I think the country is wilting away."
"But frankly, in this environment, you are not too bad off just sitting on your cash. De-leveraging continues apace."
Hoopajoops LTD(Excellent) writes: \tLook, your landlord knows that business is bad. She knows given this climate that there's a good chance that you're going to fold. That is the only reason she'd have to only now ask for your personal guarantee on the lease. That's her tell -- she knows shit's about to hit the fan. That means you can squeeze a lower base rent out of her. \t Hoopajoops LTD | \t \t \tHomepage | \t02.24.09 - 8:04 pm | # Hoopajoops LTD | Homepage | 02.24.09 - 8:04 pm | #
thanks hoop I think so to (you moved up to exellent)
We were offered a lease one time based on cash receipts. That would protect if income goes down and is a fixed percentage of overhead. My guess is over all the trend says sales will be soft for some time.
There was a lot of other technology involved in the car beyond just the engine. The Everyone Go Buy a Hummer tax incentive certainly didn't help. BUt it doesn't matter because it's dead. So we'll never know where the initial idea might have lead.
who is she that you refer to. The landlor, the corporation, or your wife? \t 6sigma | \t \t \t \t02.24.09 - 8:07 pm | # 6sigma | 02.24.09 - 8:07 pm | #
yes, but any landlord worth their salt would have already had personal guarantees from the tenants, especially a single purpose entity like this LLC. I'm guessing, especially in this market, that with lower rents come greater responsibility and that means you'd be on the hook for a PG. I wouldn't ever once think of renting to a retail mom and pop with their entire asses and livelihoods being on the line. Hell, i've PG'ed enough to make it REALLY worthless by now!
If I were advising you directly, I would suggest that you play hardball at pay a higher rent to avoid the PG. Try as best you can to keep the two isolated; business and family that is. Capitulated (aka dc1000) | 02.24.09 - 8:07 pm | #
So you would not rent to a mom and pop that has been making money for 10 years? I agree the Personnel guaranty is worse than the rent, but I might consider it from a lower Base
So you would not rent to a mom and pop that has been making money for 10 years? I agree the Personnel guaranty is worse than the rent, but I might consider it from a lower Base
alambka
We never did personal guaranty on any lease we did.
Do I really want to spend the remaining 10 or 15 years of my life dealing with ever-increasing pieces of shit who annoy me?
I'm doubting it.
.
Broward Horne
Brav-f*ckin-O Man...all I can say.
I honestly have to laugh at these crazy business people, working 90hrs a week for all that extra cash.
Sure you're rich, but you hate your job, your wife is looking to rob you blind in the divorce, your kids hate you b/c you are never around, you can't sleep worrying about your financial empire, and you have no hobbies.
Tom Stone(Very Good) writes: \talambka,a personal guarantee is a deal killer.The rest would be negotiable for me,depending on the quality of your location.The location of your coffee shop is crucial as you probably know.What is the QUALITY of the demand at your present location i.e.,what industries/business sectors make up the majority of your customer base? Tom Stone | Homepage | 02.24.09 - 8:08 pm | #
We are in Jackson, Ca. (I think you are in Oakland?) we have alot of senior regulars and the location is good (limited competition) I was hoping we could outlast our competitors (Dennys)
alambka, Under no circumstances agree to even negotiate the point of a personal guarantee. Make it clear that it is even to be traded against other points. Tell the landlord that you are willing to forget the request was even mentioned and sound indignant. CRE leases are business transactions.
Once that is clear ask the landlord what comps were being used to justify the new terms. Again, you should be on the offensive. It is up to the landlord to justify the new terms. No doubt she hasn't done her homework. This is where you pounce. You've done the homework and you have a few cherry picked lowball rents to show her. Ask her which she is prepared to match.
Then comes the nice guy part. You don't want to move and she doesn't want you to move. She'd be facing many months and massive refurb upfront costs only to get a tenant that probably won't match the $5000 you can can continue to pay. Offer to help her with the math. If she looks weak go for a 2 year otherwise make it one so she can have a little more time and she can plan ahead for a new high paying tenant next year when she's sure the economy will be recovered.
Who is your customer? Loyalists who will likely follow you to a new location, or drop-ins who are there for the convenient location? If they are drop-ins, can you find a similar location that generates the revenue you want at a lower rent? scone | 02.24.09 - 8:09 pm | #
We do have a loyal customer base (my wife is very personable, and she doesn't let me have to much customer contact) but there are not any open locations in the area yet.
Thanks for that, dryfly. I guess the question is then how to sort out the productivity gains from the mirage. I'm guessing early 1990's valuations since I think the distortions really took up in the late 90's. briwerk | Homepage | 02.24.09 - 7:53 pm | #
I can't date the debt peak but I'd guess the 'innovation peak' was somewhere late 1990s as well... by peak I mean rate of change in innovation not absolute innovation... we are still 'innovating' but less so [slower rate] than was happening during the late 80s through mid-to-late 90s. The thing is, just about every major innovation wave coincides with though slightly ahead of a debt bubble... 1870-1880s, 1920-1930s and 1990-2000. The debt bubbles are what people mostly remember (panic of 1870s, crash of '29, dot bomb & now).
The debt wave seems to occur when investors get accustomed to high rates of return resulting from the recent innovation driven prosperity... but as that peaks & commoditization sets in [opposite of innovation] then returns also diminish... so to get the same bang investors 'lever up'... until they lever too far. The debt collapse then feeds creative destruction wiping out the established businesses & practices creating a fertile though somewhat barren environment where the next wave can incubate and eventually thrive. Think of forest fires - burns the existing trees but makes it possible for the next generation of trees to get sunlight & water & eventually thrive. That would never have happened in the shade of the old growth. Debt collapse is the forest fire - it is almost inevitable & seems to happen wave after wave. Like we never learn - almost preordained.
Rob Dawg(Supercalifragilisticexpialidocious) writes: \talambka, Under no circumstances agree to even negotiate the point of a personal guarantee. Make it clear that it is even to be traded against other points. Tell the landlord that you are willing to forget the request was even mentioned and sound indignant. CRE leases are business transactions.
Rob Dawg | Homepage | 02.24.09 - 8:31 pm | #
That was my first reaction, but everyone we have talked to says it is very common.
let the landlord see you looking around for another place. Where is your location?
I'm salivating at the new leverage over landlords. one year leases sound good to me when you can easily move into vacant space across the street . if you have a viable business you have something the landlord needs very badly. also, if the landlord didn't get the personal guarantee up front with the original lease, too bad for her. i would play insulted since you have already demonstrated your creditworthiness by paying your rent on time.
If you only have personal assets that you are willing to throw away, go ahead and do the personal guarantee.
But if you have anything of substance, you have to be nuts to give a personal guarantee.
Even if you have to move to a location and make less money, that is a better alternative than a personal guarantee. Especially in these economic times.
The landlord is nuts, tell her to rent from a big corporation like Circuit City if she wants security.
I'm salivating at the new leverage over landlords. one year leases sound good to me when you can easily move into vacant space across the street . if you have a viable business you have something the landlord needs very badly. also, if the landlord didn't get the personal guarantee up front with the original lease, too bad for her. i would play insulted since you have already demonstrated your creditworthiness by paying your rent on time. \t Otis "bite wax tadpole" Hz | \t \t \tHomepage | \t02.24.09 - 8:44 pm | # Otis "bite wax tadpole" Hz | Homepage | 02.24.09 - 8:44 pm | #
We have been there for ten years under a franchise lease. so the franchise corp. was the guarantor to the shopping center in Jackson CA. now we are negotiating 5 more years without the franchise corp. involved.
I'm salivating at the new leverage over landlords. one year leases sound good to me when you can easily move into vacant space across the street . if you have a viable business you have something the landlord needs very badly. also, if the landlord didn't get the personal guarantee up front with the original lease, too bad for her. i would play insulted since you have already demonstrated your creditworthiness by paying your rent on time. \t Otis "bite wax tadpole" Hz | \t \t \tHomepage | \t02.24.09 - 8:44 pm | # Otis "bite wax tadpole" Hz | Homepage | 02.24.09 - 8:44 pm | # We have been there for ten years under a franchise lease. so the franchise corp. was the guarantor to the shopping center in Jackson CA. now we are negotiating 5 more years without the franchise corp. involved.
yes, PG's are common. In fact, with every tenant I have, I have PG's. And the one lease I've signed, I refused to sign one.
doesn't meant it doesnt happen and only amplifies how important they are to the landlord.
rob is right in many ways. I'd leave much of "indignity" to the real negotiating experts because MOST people are irrational especially smaller LL's who don't really know whats going on. and we can tell she doesn't know whats going on because she's not being very gracious to you.
question: doesn't your lease speak to options to renew or hold over rents? just curious. most of the times these things are prenegotiated, at least, thats why you hire the expensive lawyers to do it. the common "option" method is whats called " the three broker method" where you and the LL each hire a broker to do an appraisal (not a real one, just a market assessment). if the two brokers are more than 5% away from each other, the two brokers pick a third broker to settle the score.
thats the way 75% of my renewal options are prenegotiated.
worst case, i'd suggest that.
at all costs as a tenant advisor, forget the PG.
at all costs as a LL advisor, dont do deal without the PG.
Providing a personal guaranty for a LLC seems like an excellent way to get yourself into trouble in another fashion if there was ever the case made that the LLC = You.
IANAL, but taking actions that would appear to decrease the separation of you as individuals from a corporation seems like a bad game plan in poor economic times.
For what it's worth, my exceedingly limited background in this matter is not based on US experience.
alambka -- If you can't make the rent after your years of success in that location, it's likely that the economy will be in even worse shape than it is today, and your personal assets will be worth much less, and you will have to liquidate your personal assets at a fire sale rate and you will be wiped out.
Wiped out.
Please imagine yourself with absolutely no assets and no business income five years from now and ask yourself if the personal guaranty is worth it.
Please imagine yourself with absolutely no assets and no business income five years from now and ask yourself if the personal guaranty is worth it. MR | 02.24.09 - 9:03 pm | #
Please imagine yourself with absolutely no assets and no business income five years from now and ask yourself if the personal guaranty is worth it. MR | 02.24.09 - 9:03 pm | #
Mr President should speak more often. People need confidence more then anything, even bailouts. And there is no one better positioned to be a national cheerleader then president.
They should make a reality TV of him & his team going into the banks, screaming it unacceptable and laying off executive here and there. His team should also give a speech at least three times a day with the ending note - all shall pass & we will get better
Or else ....
and than, next Mr. O the action team reality show ....
Eight years of bush, war, doubling of the national debt, the economy tanks and a recession/depression starts. Those bush loving idiots deserve what they got and wanted. Thanks a lot you idiots.
I'm confident that chart is showing no confidence.
Gonna need a bigger graph CR.
Is depression here or not? not very clear. But if you look at the past history recessions and depressions come and go. Economies go through cycles and recession is part of the cycle.
In the mean time, I just came across a very helpful website on the current economic downturn and employment:
Recession Info Center | Recession Information | Employment
Recession Info Center: Recession Information | 2008 tax tips
The way things are going, we need a log scale graph soon.
Gonna need a bigger graph CR.
Rob Dawg | Homepage | 02.24.09 - 6:46 pm | #
Or one of those fold-down screens CK's hubby recommended.
The Latest from Denninger:
Update To AIG Ticker
When does a confidence chart rebase to a pessimism index?
A couple of other notes: those making over over $50,000 per year are now as pessimistic as everyone else
Because they won't be making the same salary for long. Furloughs and salary reductions for all.
When does a confidence chart rebase to a pessimism index?
DreadLetterDay | 02.24.09 - 6:49 pm | #
When it hits zero?
you have it upside dow
The way things are going, we need a log scale graph soon.
Here's CR's chance to help the economy.
Make all graphs dual-monitor mandatory.
.
Last October -- was it September? -- Bernanke and Paulson went to Congress and demanded 700 Billion or something bad would happen to the economy. That was the beginning of the end of confidence. I will not mention Bush's statements about the market being a house of cards and "this sucker could go down." Where is leadership?
The confidence levels went cliff diving after Obama was elected. The previous 1974 and 1991/92 lows were breached. All the talk of raising taxes on "the rich", which everyone knows means anyone with a good paying job, has consequences. Combine that with out of control spending in the last few weeks, nobody should be surprised.
Badger girl actually worked the phone banks for this survey as an undergrad. Funny thing: it OVERSTATES consumer confidence. They only call people with land phones.
Thus the unemployed and recently foreclosed and now homeless demographic are underrepresented. Given the rise in unemployment, that's a significant group.
From last thread, I just want to re-iterate we are not within reach of a "bottom" and I hopefully don't have to list my proven record of impartial assessments to things going up or dow
Make all graphs dual-monitor mandatory.
Broward Horne | Homepage | 02.24.09 - 6:52 pm | #
Do they make dual head setups for one above the other?
Repost from last thread:
AllenM - I second what Comrade Bear says. I appreciate the debate. Based on the long-term valuation metrics I follow (cyclically adjusted P/E and Tobin's Q), stocks are undervalued by about 15%. So for a long term investor (10+ years), they are priced reasonably, but not cheaply.
However, I think downside risks dominate for at least the next couple years, based on history. Since you're enamored of the Japanese example, it's worth pointing out how the Nikkei has worked out since the Japanese velvet glove was put into action.
I met a friend on K Street today for Mass at the Catholic Information Center and lunch at a little Chinese restaurant a block or so away. The restaurant is cheap, and whenever we go there it's filled with customers. Not today. When we walked in at about 12:40 it was nearly empty. Why? Are office workers brown bagging?
This is K Street, DC, I'm talking about. You probably can't get any more afternoon foot traffic in downtown DC than in that area. Office workers in ample supply. They need lunch. Where were they?
Where is the chart on guns and ammo confidence?
I guess the wife was technically wolverine woman then.
This is K Street, DC, I'm talking about. You probably can't get any more afternoon foot traffic in downtown DC than in that area. Office workers in ample supply. They need lunch. Where were they?
Pavel Chichikov | 02.24.09 - 6:54 pm | #
The lobbyist staff are all busy writing the next stimulus package and bailout.
They need lunch. Where were they?
Pavel Chichikov | 02.24.09 - 6:54 pm | #
Admiring Bernanke.
looks like a head and shoulders
My confidence is low, and I"m employed. For now. Everybody at work now talks about the 401K haircut, and the dread about the upcoming changes to our health care plans and defined benefit/contribution plans.
But then again, they also talk about "it's a great time to buy stocks low," and "it's gonna bounce back, same as ever."
I always hear that same quote, "the market can remain irrational longer than you can remain solvent." I think there is going to be a prolonged series of yesterday-today runs and that will eventually flush out nearly everybody that isn't following a strategy to preserve capital.
Those that are looking to make money during this decline have to be consistently right, lucky, and/or connected.
I'm none of those things, historically. So I'm out and will stay so, as long as Calvinball reigns.
This isn't as much about depressing news as about depressing reality and uncertain expectations.
I know a number of seniors living on fixed incomes who are now facing the following: drop in interest income, rise in medical costs, drop in home values and a deeply uncertain inflation future. These people are terrified of their prospects.
I've never been a confident consumer. Seriously, though, consumers are only as confident as their lenders...and the lenders aren't very confident.
Is it all the people banging on the site for a new post or CR companion shenanigans that are making haloscan slow?
Meet Comrade Mark Sanford, Governor of South Carolina and wily Stalinist
Daily Kos: Meet Mark Sanford, wily Stalinist
Wonder if he reads CR blog
Office workers in ample supply. They need lunch. Where were they?
Pavel Chichikov
Someone has mentioned octuplet special at Dennys...
14 eggs, no meat and the next tableover is picking up the tab
"This really tells us that the economic news is depressing - something we already know."
Long Prozac??
The sentence version of that consumer confidence seems to be "I believe things are going to be worse before they get better."
Or, "I believe things are going to be worse"
I'm guessing a few people making over $50k were somewhat disheartened by the more explicit "tax the f*** out of the rich" rhetoric and sentiment being more clearly and openly expressed by the tax-and-spend party in power. I know I'm more than a bit disheartened hearing about how the government is not only going to extend a short-term correction into a lost-decade style depression, while simultaneously ushering in a new era of socialism, but to add insult to injury, there's going to take vastly more of my money at the same time. It's a wonder there's any positive sentiment outside of those already living on the welfare system.
SF Chronicle...almost finished:
Hearst to Slash, Sell or Close the San Francisco Chronicle Newspaper - WSJ.com
I don't think the market is near a bottom either, EHP. I confess the bond-currency-commodity trades look more appealing to me. Did Bernanke really say today that they are going to buy bank preferred shares to cover losses? Is the U.S. gov't really going to take on (all?) of the banks liabilities? How important is it to know what stock prices should be based on earnings when the currency is being called into question?
These are the things I wonder now. Is there going to be a flight out of equity and treasury dollars into commodities?
Or, "I believe things are going to be worse"
Or, tell me what to believe and I will believe it because I can't think for myself.
chronic complainer writes:
Is it all the people banging on the site for a new post or CR companion shenanigans that are making haloscan slow?
Both.
Does anyone know what Citizen Allen M is referring to when he says "the markets have priced in a tremendous crash, not 10%, but 50% off GDP."
On 4% up days I have to remind myself - these only happen in bear markets (usually).
I'm curious if anybody has done any research that attempts to establish whether or not the volatility of this index has grown in tandem with the explosion in the pervasiveness of media. Call it the CNBC effect if you will. To the extent that declining opinions about the economic future are magnified by ever more frequent citation of what in past cycles would have been minor, obscurely reported, if at all, details, I'd argue that a good portion of what is being captured here is an "echo effect" - bad news reverberating and reinforcing itself.
Would make for a great thesis...
I'm mad as hell with the Obama administration, but this sort of typical uber conservative statement just makes no sense, and isn't going to convince anyone in the middle-left to get upset about obama (which is the group that needs to be moved if there is to be some accountability of this govt):
"I'm guessing a few people making over $50k were somewhat disheartened by the more explicit "tax the f*** out of the rich" rhetoric and sentiment being more clearly and openly expressed by the tax-and-spend party in power."
I personally make well over $50K a year, and I say tax the motherf**kers.
Had lunch with a couple folks from a fairly large non-profit yesterday ($60 million yearly revenue). The restaurant was full, but they told me they had just had a 20% layoff and the rest of the organization was taking pay cuts.
Does anyone know what Citizen Allen M is referring to when he says "the markets have priced in a tremendous crash, not 10%, but 50% off GDP."
EvilHenryPaulson
I don't. To me 50% off GDP would imply that there is almost no equity in the U.S., so the stock market would be trading very low.
These people are terrified of their prospects.
Today my mom walks in and says "Court ruled that Delphi can discontinue medical coverage for their retirees. That could happen to me, couldn't it?"
I just nodded.
The Federal gov't is toast if it continues on this path for much longer. We will have a tax revolt. Personally, I think it's already happening. I'm not working real hard to getting back to my previous salary.
.
The market reached these levels in '02 and '03. Is this less bad than then?
@ Citizen AllenM from the last thread... it took me a bit to try to ask this properly.
What I said was that equity markets are most likely at a bottom.
House prices are local.
Citizen AllenM | Homepage | 02.24.09 - 6:32 pm | #
What will closer resemble reality, house prices or equity prices? I've felt like we're closer to the end than the beginning for a while because of how quickly sentiment has changed without any real change in people's daily lives. Add the support of central banks and governments worldwide to keep things running on the current system and I think the world will shove off the inevitable for "six or seven years". We are due an overhaul of world economics/trade/politics but I'm not pretending like anyone has an interest in change. My question is do equities go up, housing go down and a)people maintain standard of living through further debt, b)people's quality of life go down servicing existing debt or c)none of the above, thanks for playing.
Thanks.
I'd argue that a good portion of what is being captured here is an "echo effect" - bad news reverberating and reinforcing itself.
Would make for a great thesis...
peter
.
Certainly would. But how would you determine cause and effect-- how to filter out all other possible variables?
To the group mind:
At WAMU today they noted that "I have changed my job" recently (2 years ago) and would I like to roll over my 401K?
Should I talk to them?
AllenM,
Where do you suppose we are in the current mess with respect to a long term Nikkei 225 chart?
Japan Chart
Can we go back to the days of a confident consumer? Do we want to? I don't. When I heard the other day on Bloomberg that $3,990 handbags were selling like hotcakes it made me ill. I know we all differ, and all are allowed to set our priorities differently - I spend money on a hobby of mine very gladly - but I certainly don't mourn the decline of conspicuous consumption based on borrowing.
What will it look like as the US changes to a country where individual consumption doesn't drive the economy as it used to? What adjustments will we see? What happens to all the McMansions?
I am so close to canceling my cable television and going with no television at all, since my two sets are well over 10 years old. CNBC disgusts me these days - what a bunch of smug, self-satisfied losers who are trying to pretend they didn't completely miss the reality of the failed Bush economy. One site advised me to identify consumption cuts that I could make to try to deal with financial hardship. Cable TV is at about the top of my list!
It's CONsumer CONfidence. As in CONfidence scam.
Didn't Buffett and Gates buy homebuilders in '07?
EvilHenryPaulson said: "Does anyone know what Citizen Allen M is referring to when he says "the markets have priced in a tremendous crash, not 10%, but 50% off GDP."
I don't. As it stands now, things just look like a normal "bad" recession, circa 1974-'75 or 1980-'82.
Exchanges of squirrel recipes and optimal gunpowder load for handguns notwithstanding, which is just sentiment and tough to gauge.
Sebastia
Didn't Buffett get such a good deal with GS just a few months ago?
taylorpolynomial writes:
On 4% up days I have to remind myself - these only happen in bear markets (usually).
Until they happen in bull markets.
"A couple of other notes: those making over over $50,000 per year are now as pessimistic as everyone else - that is pretty unusual..."
The vaporization of household wealth is also pretty unusual.
Could they be related?
Did anyone catch this hilarious write up using new lyrics to the rap song "Baby Got Back" by Sir Mix-A-Lot using BAC as the central piece? Sample:
Baby Got BAC
I like big BANKS and I cannot lie
You other traders can't deny
That when these stocks get down to an itty bitty price
it's time to roll the dice
And then SPRING,
Pull the trigger on the trade
Take advantage of the bear raid
The losses that I'm bearing
Won't stop me from getting more shares in
Oh Cramer! I take issue with ya
I get the picture
Your always trying to warn me
But your take on BAC is oh-so-corny
The rest is funny as all get out as well.
Another Chronicle link....2009 the years newspapers finally died:
San Francisco Chronicle to be sold or closed - Los Angeles Times
"I am so close to canceling my cable television and going with no television at all, since my two sets are well over 10 years old. CNBC disgusts me these days "
That's what we've done for 20 years. Start a
DVD collection. We rent all the episodes of "24" at the end of the year in one sitting. No commercials. Watch what you want when you want.
I can guarantee if I was in that survey that the results would have been lower.
I am totally CONfident that the government has been overly influenced by lobbyists for the financial industry. As a result, our eCONomic situation will deteriorate further.
I will laugh my butt off when squirrel meat reaches the price equivalent of prime rib. Which, me thinks, is just around the corner.....Prozac for ALL!
I like this quote from Denninger....anyone in the government listening to this? Anyone in the media going to report and dig into this issue more than just scratching the surface?
..
..
..
"Well, Bloomberg answered some of that question today:
The insurer made $18.7 billion in payments tied to swaps in the three weeks after AIGÂ’s Sept. 16 bailout, according to another person familiar with the situation. The largest recipients were Societe Generale SA, which got $4.83 billion, Goldman Sachs Group Inc. with $2.97 billion, Deutsche Bank AG with $2.92 billion, Calyon Securities with $1.89 billion and Merrill Lynch & Co. with $1.32 billion, the person said.
So let me see if I got this right.
The United States Taxpayer covered bad bets that Goldman Sachs, SocGen, Deutsche, Calyon and Merrill made?"
..
..
Update To AIG Ticker - The Market Ticker
..
..
Consumer Confidence Index was used in place of "Money in Banks". More of a hallow feel good indicator. Pure waste of time and influences the not so smart.
Would make for a great thesis...
peter
I asked this same question last night and had some agree. I think it is true and that history will bear this out.
JJL writes:
Did anyone catch this hilarious write up using new lyrics to the rap song "Baby Got Back" by Sir Mix-A-Lot using BAC as the central piece? Sample:
Baby Got BAC
The end is surely near.
Broward Horne writes:
These people are terrified of their prospects.
Today my mom walks in and says "Court ruled that Delphi can discontinue medical coverage for their retirees. That could happen to me, couldn't it?"
I just nodded.
Sad.
For responsible people nearing retirement or retired, medical costs are the big bogeyman. For sick folks, the medical system can be kafkaesque. Navigating it for maximum health benefits requires a smart patient advocate (usually a family member) with the time and inclination to fight your behalf.
Now wrap a financial crisis around this and we get deep uncertainty and concern.
I strongly believe in the free market, but I also believe that substantial resources should be invested in public policy development and regulatory infrastructure.
Our medical system, like our financial system is not providing confidence.
"Comrade Tiberius writes:
"I am so close to canceling my cable television and going with no television at all, since my two sets are well over 10 years old. CNBC disgusts me these days"
I thought about that awhile ago until I got HD on the big flatscreen. I don't watch CNBC anymore, so that doesn't bother me. Get HD and a big flatscreen and cancel your mail if you need to cut down on expenses. You won't regret it.
Go to your library. Many have DVDs and CDs, not to mention books and magazines.
"Didn't Buffett and Gates buy homebuilders in '07?
ha ha ha"
I think the Gates Foundation bought them which Buffett exerts large influence over. I don't think he was buying homebuilders himself.
briwerk.
Try near the last.
We are going for a Japan style flat.
Now, while that is long term troubling, and means that we will have significant inflation in a couple of years (Which BB and his merry Fedsters are also saying), what I am not saying is that every single stock is good.
What I am saying is that there will be deals to be had, and hiding under the bed clutching a gun and bar of gold is counterproductive.
Just like expecting another huge 50% crash in the indices.
The crash has happened.
The Fed janitor and the new administration are sweeping up the mess, and putting it under the alphabet soup.
Spin your mind back one year- would you have anticipated the Fed would have more than $2 trillion of mostly crappy assets at the end of Feb 2009?
Really?
Then I would be truly shocked.
Most of you are suffering from the echoes of the crash last fall.
Time to move on.
The next big crisis in this model is when the Fed starts to take back some of that magnificent liquidity to combat the inflation they so desperately want to start right now.
Got a few years?
Because that is what it is going to take.
Now I truly must run.
Someday this war's gonna end...
I'm not trying to convince anyone to get upset about Obama; most of the people who voted for Obama wouldn't be able to discern his actual policies from Stalin's, Chavez's, or George Bush's, for that matter. Most people vote based on party lines, whoever promises more perks for them, or (in the last election) skin color... these are not exactly rocket scientist voters were talking about. Sure there are some smart people who voted for Obama, and many with valid reasons (eg: connected to the party, first in line for preferential handouts); but in raw numbers terms, "normal" voters are just not that bright or informed.
As for the "tax the rich" mentality, there's nothing wrong with it per-se. It doesn't increase government revenue at all (historically), but it does discourage private business and productivity, while equalizing the standard of living down to "poor", which can be desirable things if you're a socialist dictator (or trying to become one). I just don't happen to be in favor of the direction that would take the country, but that's obviously a matter of opinion. I'm just observing that our government being more open and vocal about the desire to push the country in that direction probably largely contributes to the unhappiness among people who stand to lose in that scenario.
I agree with Elvis about the HD. March Madness is coming up and I want to see it in HD.
Today my mom walks in and says "Court ruled that Delphi can discontinue medical coverage for their retirees. That could happen to me, couldn't it?"
Broward Horne | Homepage | 02.24.09 - 7:07 pm | #
Pension benefits are "guaranteed" by ERISA whereas medical benefits are not. That said, we all know pensions can be drastically cut upon BK turnover to PBGC.
"Our medical system, like our financial system is not providing confidence.
Mr. Beach"
Nationalize the doctors.
MLM said: "...Had lunch with a couple folks from a fairly large non-profit yesterday ($60 million yearly revenue). The restaurant was full, but they told me they had just had a 20% layoff and the rest of the organization was taking pay cuts."
Not trying to be a jackass (any more than usual), but my wife works for what I guess you would call a large non-profit (close to $3/4 billion annual revenue) and they're still growing and hiring. They must have the optimum blend of both private-sector and government contracts.
Sebastia
When Consumers Cut Back: An Object Lesson From Japan - NY Times
Interesting article: the Japanese got into the habit of frugality in the '90s -- and never left it. Their economic expansion of the last eight years was entirely dependent on exports; domestic demand never grew. They lost their sense of economic security -- with good reason -- and never got it back.
Perhaps this is what the powers that be are really worried about -- if Americans became permanently frugal, there'd be no "recovery" back to things as they were. It would be something different. All the big players would be forced into a musical chairs deathmatch, and many would lose their seats.
I wonder if CR will have live chat during tonights speech??
Nationalize the doctors.
Elvis | 02.24.09 - 7:19 pm
We already have. Its called Medicare.
"Nationalize the doctors.
Elvis | 02.24.09 - 7:19 pm
We already have. Its called Medicare.
Mr. Beach"
Many of the doctors I know make $800k plus. If that is nationalization, I think most people would want to be nationalized.
Just like expecting another huge 50% crash in the indices.
Citizen AllenM | Homepage | 02.24.09 - 7:17 pm | #
The NIKKEI
went down 50% twice. If you think we are turning Japanese then you've just blown a hole in your own argument.
Japan's Exports Plummet Record 45.7%, Signaling More Job Cuts
Japan's exports plunged by a record in January, as recessions in the U.S. and Europe smothered demand for the country's cars and electronics. Exports plummeted 45.7 percent from a year earlier, the sharpest decline since 1980, the earliest year for which there is comparable data, the Finance Ministry said today in Tokyo. The January drop eclipsed a record 35 percent decline set the previous month. Economists predicted a 45.9 percent contraction....
Single Payer health care.. Or..
Allow us to buy in to the Federal Employee plan, with that, all other insurance pales in comparison..
I'd like us to buy in to the US House of Reps plan, but I assume it would be one level down from that.. Mail Carrier's plan. MEdicare or subsidy for those who cannot afford, etc..
Notice we may be the last industrialized country without it..
Think how the car companies would be doing without health care costs..Bad, but not nearly AS bad..
NO, I am not saying we should all get the same coverage the First Family gets, that would be a bridge too far.. Totally Free, BEst of everything, Careflight on AF1, etc..
I wonder if CR will have live chat during tonights speech??
crispy&cole
Last live chat stunk. I guess CR was approving every comment because then he got a phone call from his girlfriend and quit approving any comments. Only a few people were there by the end.
"Exchanges of squirrel recipes and optimal gunpowder load for handguns notwithstanding, which is just sentiment and tough to gauge."
Ian Shepherdson doesn't seem to think so. Of course, Shepherdson is a nobody, right?
See Ruth Mantell. "Consumer confidence plunges to record low." Marketwatch. February 24, 2009.
Many of the doctors I know make $800k plus. If that is nationalization, I think most people would want to be nationalized.
Elvis | 02.24.09 - 7:23 pm
With all due respect, in what specialty and which cities?
Unless you're in a Concierge practice with a portfolio of wealthy clients, or if you're in some unique specialty, you're not making $800K.
Losty writes:
Single Payer health care.. Or..
Allow us to buy in to the Federal Employee plan, with that, all other insurance pales in comparison..
I am for that. Shitty healthcare for those who do not pay. If you pay, you get the cream of the crop.
The crash has happened.
The Fed janitor and the new administration are sweeping up the mess, and putting it under the alphabet soup.
Citizen AllenM | Homepage | 02.24.09 - 7:17 pm | #
No, the crash is still happening, and the TPTB are pumping blood into the body almost as quickly as it's draining out of all the existing open wounds -- not to mention those still being inflicted.
If the damage was behind us all those major institutions already under the government wing wouldn't keep coming back to the trough just to survive another quarter.
Why would the effect of CNBC constantly whittering on have any greater or lesser effect than the rest of the media/advertising effects on buying behaviour and general attitude?
I'd argue that a good portion of what is being captured here is an "echo effect" - bad news reverberating and reinforcing itself.
Would make for a great thesis...
peter
.
On second thought, if you could really prove a feedback loop, it would be bad for free speech. On third thought, maybe it doesn't really matter because everything ends up on the intertubes and gets pureed.
It ain't over 'till it's over.
Bob Dobbs said: "...Perhaps this is what the powers that be are really worried about -- if Americans became permanently frugal, there'd be no "recovery" back to things as they were."
Doesn't sound much like us, though, Americans, I mean. We just had a dot.com bust within this decade. I'm not sure we do "permanent" or have long memories.
S.
Of all the world's industrialized nations, the United States has the largest gap between its rich and poor.
If more Americans were more 'clued in' into what they're up against with the monied elite consumer confidence would be even lower !
"Unless you're in a Concierge practice with a portfolio of wealthy clients, or if you're in some unique specialty, you're not making $800K.
Mr. Beach"
I know surgeons who make that kind of money. And I'm confident they are not alone. Other specialist likely do the same.
I kinda feel like the rest of the world is just catching up. In other words, I feel ok about everything but that's because I've been living within my means for a very long time.
This really tells us that the economic news is depressing
Watching our government destroy what's left of our economy, fleecing the public purse, printing money, and bailing out a den of thieves while impoverishing the masses is what's depressing.
Do we want to? I don't.
Sue (Capital S) | 02.24.09 - 7:10 pm | #
We have an infinite number of outcomes from this situation, anything from doomer stone age revival to the four ponies of the apocolypse hand delivering consumer utopia. If we removed rampant credit and it's associated ills, I believe the current system would provide enough consumerism for everyone to survive but nothing like we've just witnessed. That will take care of itself.
In the long run we should be more worried about making those accountable serve the penalty and to make financial and government dealings more transparent. Utopian in itself, but the public focusing on the market side show might cause us to lose sight of the distance from which the government is ruling us. That is much, much more dangerous in the long run. And remember, those making the rules and receiving the kickbacks today would be sitting comfortable, even through a severe downturn via the wealth they already accumulated and stashed. Wishing depression is more of a curse on the citizens, not the ruling class.
I know surgeons who make that kind of money. And I'm confident they are not alone. Other specialist likely do the same.
Elvis | 02.24.09 - 7:28 pm
I'd believe that some surgeons make $800k. Some even more. But for most, the number is far lower.
PS I don't feel ok about the bail out but there's jack I can do about it other than show up with a pitchfork and torch somewhere.
Nationalize the doctors.
Elvis
Nationalize Confidence, problem solved!
What pulled down the overall index was that the Expectations Index was at an all time low. People are really concerned about the future. - CR
So does this mean Phil Gramm was right - it is all in our head?
[/snark]
An,
We'd pay for those who can't.. (maybe upgrading MediCare/MedicAid to Mail Carriers)
I am not saying punish those who don't.. but.. If everyone could buy into Mail Carriers/Medicare-Aid, it will be single payer in 5-7 years as the costs (economies of scale) take over..
You can't 100% outsource healthcare, though people are traveling a lot now..
AllenM,
I find your assertion that we have covered 18 years of Zombie-san economy in 1 year to be convenient, but not convincing.
If we're really lucky, we've covered 5.
We could do the same exercise with a depression era DOW chart, but it ends the same way.
The bubble is the mirage. You can't say that half of the mirage is the bottom because the mirage isn't reality.
The economy has relied on debt expansion for growth the last 30 or so years, and that has come to an abrupt halt. That debt has to be paid down or defaulted before we can really talk about expansion again.
If your planning on organizing or going to protests, you may want to look into personal protection.
Thor Shield Anti-Taser/Anti-Microwave
YouTube - Thor Shield Anti-Taser/Anti-Microwave
I agree docs are way overpaid...especially those milking govt money...
"...those making over over $50,000 per year are now as pessimistic as everyone else..."
Household income well into the six figures here and I bagged three squirrels in the backyard today.
Feeling pretty optimistic I can get four tomorrow, plus a couple of rabbits.
I'd argue that a good portion of what is being captured here is an "echo effect" - bad news reverberating and reinforcing itself.
Interesting point. Why would "echo effect" only work for bad news? Heck, all we get out of the media and gov't is constant positive spin.
Surely that is at least as powerful as Jas Jain.
.
Last live chat stunk. I guess CR was approving every comment because then he got a phone call from his girlfriend and quit approving any comments. Only a few people were there by the end.
s0mebody | 02.24.09 - 7:24 pm | #
If you go to the CRbot site at http://realize.org/cr
you can chat there.
Or the really geeky can use IRC at irc.realize.org/9996 channel #calculatedrisk
"Doesn't sound much like us, though, Americans, I mean. We just had a dot.com bust within this decade. I'm not sure we do "permanent" or have long memories.
S.
Sebastian | 02.24.09 - 7:27 pm | # "
My depression-baby parents sure did.
Pain is the great teacher, particularly if prolonged; her lessons, once learned, stay with you for a lifetime.
I predict a change in American thinking since our health care system is a joke and unaffordable and all the old people just lost all of their money.
Go long assisted suicide.
Quietus.
Think how the car companies would be doing without health care costs..Bad, but not nearly AS bad..
How are the Import car companies doing? Great, they have no pensions or life time Medical care promises. Forgot no UAW either.
Pavel - gotta ask, were you at Charlie Chiang's? On I St between 19th qnd 20th. Last time I was there it was an echo chamber. Previously complete hubbub.
It was eerie. The tea was cooler, like they'd turned the kettle down.
C
The vaporization of household wealth is also pretty unusual.
Could they be related?
mp | 02.24.09 - 7:13 pm | #
Not just 'related'... 'causal' I'd say. I don't care who you are - if yo see you family nut go POOF you are going to be concerned even if you still have a job AND it pays pretty well.
Or the really geeky can use IRC at irc.realize.org/9996 channel #calculatedrisk
bobn | Homepage | 02.24.09 - 7:34 pm
I am looking for a channel so obscure that it is just me and the ghosts of my backyard quarry...
ya got a Ouija board IRC?
Econ Mow..
Not really, Toyota and Honda announces slowdowns/layoffs, etc..
They just didn't make an extremely large # of SUVs, and they didn't kill the electric car..
The vaporization of household wealth is also pretty unusual.
Could they be related?
mp | 02.24.09 - 7:13 pm | #
Not just 'related'... 'causal' I'd say.
dryfly | 02.24.09 - 7:35 pm | #
Yeah, sort of lends itself to the idea that this time really is different.
If everyone could buy into Mail Carriers/Medicare-Aid, it will be single payer in 5-7 years as the costs (economies of scale) take over
If they don't fix the benefits side of Medicare (single payer advocates tend to obsess on Medicare's administrative costs savings), there won't be a medicare in 5-7 years.
Sebastian seems to be getting optimistic again. Is Sebastian actually Bernake?
Sebastian, if you aren't getting paid by a wall street lobbying firm to spread your message, you should be. There is big money in lying for the rich. Check into it.
--
Has CR moved to Severe Recession camp yet? Thanks.
Jas
Or the really geeky can use IRC at irc.realize.org/9996 channel
Leading indicator of a market crash is a VIP lounge at CR. Review history, if in doubt.
Plus, how much your job pays doesn't really make a difference if you've done "all I care about is the monthly payment" leveraging.
These $50k+ employees also likely have heavy debt servicing to pay.
I wonder how the Conference Board compiles the stats. Do they pick 5000 households randomly distributed geographically, or evenly distributed, or proportional to each state, or what? In other words, if a 'disproportionate' sample of households came from the hardest hit regions, such as Cali and Florida, that might make the index look worse-- but that's where a large chunk of the total US population lives.
Not really, Toyota and Honda announces slowdowns/layoffs, etc..
Most are not in the US. Not BK or taking government money. They are far better prepared for a slow time and I would call that great now days.
The Federal gov't is toast if it continues on this path for much longer. We will have a tax revolt. Personally, I think it's already happening. I'm not working real hard to getting back to my previous salary.
.
Broward Horne | Homepage | 02.24.09 - 7:07 pm | #
I think we will see more single-income households for sure.
Ok, math is not my strong point, but here goes:
Elvis, how long did they train? How much did their training cost?
Many do not make 800K, anyways, but let's use that as an example.
800,000.00 x 30 years in practice assuming completed training at the age of 35 and retired at 65.
24,000,000/43 years that someone with an undergrad degree has to work to the age of 65.
Takes salary to 558K
This does not take into consideration a 60-80 (or more) hour workweek vs a 40 hour workweek. That is too much math for me, but probably takes it down to about 300K.
Do the math for those who do not make 800K (most).
You will see that it is not worth it to be a doctor.
Electric cars are dopey they just displace the coal and natural gas pollution. Out of sight and out of mind.
I am looking for a channel so obscure that it is just me and the ghosts of my backyard quarry...
Dead-eye Dick | 02.24.09 - 7:36 pm | #
Well, some networks will let you /join a channel that doesn't exist, creating it on the fly. That should answer your strange desire....
"Yeah, sort of lends itself to the idea that this time really is different."
Of course its different. And similar. But different from what? And similar to what?
Moe,
You're right by comparison of course, but not great period..
And they didn't kill the electric car..
Just thought you meant good in general, not in comparison..
Nationalize the health insurance corps and the docs will take care of themselves...I hope.
"Yeah, sort of lends itself to the idea that this time really is different."
Of course its different. And similar. But different from what? And similar to what?
briwerk
.
+1
RE: Japanese exports
Talk about cliff diving!
Sorry if posted already but:
"those making over over $50,000 per year are now as pessimistic as everyone else - that is pretty unusual"
If not adjusted for inflation 50k today looks like this:
1975 190,704
1981 112,685
1991 75,225.35
Nostrovia,
The United States Taxpayer covered bad bets that Goldman Sachs, SocGen, Deutsche, Calyon and Merrill made?"
M
no, these bets were the winner's that AIG , the bookie, could'nt pay.
they were bad only in that they were guaranteed winners.
ice thread. rob dawg, dryfly, allenm, mp, misean and more all contributing to a semi coherent conversation.
a thousand thank yous!
o, they were bad bets because the counterparty (AIG) wasn'ty good for them.
scone - left you one last comment on the Mysterious Plans thread.
C
nice thread. rob dawg, dryfly, allenm, mp, misean and more all contributing to a semi coherent conversation.
Hoopajoops says,
"SHOOT YOUR FAMILY"
"SHOOT THEM NOW"
I'm 100% confident that congress and Wall St. lobbyist are greedy bastards.
I'm 0% confident that Obama (ca-ching you can believe in) will change the status quo.
The economy has relied on debt expansion for growth the last 30 or so years, and that has come to an abrupt halt. That debt has to be paid down or defaulted before we can really talk about expansion again.
briwerk | Homepage | 02.24.09 - 7:33 pm | #
Not 100% true - debt was there but there also was a helluva a lot of productivity improvement & resultant wealth - it all wasn't a mirage.
30 years ago I worked summers in a machine shop where we not only didn't have CNCs, CAD or CAM we didn't even have 'chip removal' systems... meaning I shoveled up metal chips by hand from the floor into buckets that I then dumped into a hopper. We ground our cutter bits by hand then too (not custom insertable cutters)... no automatic tool changers - nothing.
And don't even start me on 'set ups' - everytime we changed over a part it was like reinventing the wheel. Computers on the shop floor changed all of that forever everywhere - even in the third world.
Later I went into sales... it was harder trying to communicate w/ Chicago from Omaha back then [say mid 1980s] than it is now communicating with a plant in rural China. I remember sitting in my car on a hot summer day near a feedlot out side Columbus Nebraska using a payphone through the window trying to make a call w/ stench & flies & 100 deg humid air pouring in - never did make the call. Damned pay phone didn't work. Pre-mobile phone, pre-internet, pre-everything.
I realize debt was/is/will be a problem but the changes weren't ALL debt... there was some substance. A lot of it really - it is just that debt was used to 'extend' the techno-prosperity father than it was able to stretch and now we are reeling back from that.
There will be a next new thing - probably in 15 years or so - Schumpter waves do seem to always come along eventually - but until then it will be different & coping w/ the debt hang over will be a problem we'll all have to deal with.
"Do the math for those who do not make 800K (most).
You will see that it is not worth it to be a doctor.
PSgirl"
I think the discretionary income part of the equation once you are making $800k a year allows you to get comfortable or even rich if you invest reasonably. Granted, like a hooker's legs, a doctor and his money is easily parted. However, especially today, when you are 50, it is much easier to build up your nest egg at $800k after losing 50+% of it than at $60k.
The electric car has been around since the early automotive years. Dropping development is not killing the electric car. Nice social line. Honda Killed their hybrid and just reintroduced it again. Did they kill the the Hybrid? If you really look deep and honestly all of this is pure fluff. Until we can produce tons of cheap honestly clean electricity it is all a waste of time. Also the imports lost tons of money trying to become part of the SUV market. they didn't get far before the oil cost hit. They dodged the bullet that caught the Big 3.
bobn, if i missed my mark, that was my point.
This place, is coming like a ghost town
No job to be found in this country
Can't go on no more
The people getting angry
YouTube - The Specials - Ghost Town
scone - left you one last comment on the Mysterious Plans thread.
C
Counterpointer
.
Thank you! I replied to the one @
Counterpointer | 02.24.09 - 7:04 pm |
but if it's after that, Haloscan must have eaten it, I guess. Having trouble with it today.
"This is K Street, DC, I'm talking about. You probably can't get any more afternoon foot traffic in downtown DC than in that area. Office workers in ample supply. They need lunch. Where were they?
Pavel Chichikov"
Congress isn't in session.
hey dc1000 - how's it going? You sounded a bit stressed the other night.
Hope there's some light in the crescent trail tunnel for ya.
C
" Not 100% true - debt was there but there also was a helluva a lot of productivity improvement & resultant wealth - it all wasn't a mirage."
Thanks for that, dryfly. I guess the question is then how to sort out the productivity gains from the mirage. I'm guessing early 1990's valuations since I think the distortions really took up in the late 90's.
I'm glad the political discussions have died down around here and now it is just occasional digs at Obama (full disclosure: I'll be long DIG sometime soon).
the bankers run the world. You only live once. Embrace these two ideas, figure out the proper balance of time and money you require to make your life bearable most of the time and enjoyable a small amount of the time and proceed accordingly. If you think you might want to become a banker who runs the world, good luck. Don't expect to enjoy your time here.
This might already have been noted, but there's news on CNN Money's site that the Chinese are now investing in US homes as our home prices depress.
This could be an interesting trend.
Moe,
See GM EV1, and see where GM is 15 years later..
Bob Lutz mainly.. they had the civic hybrid, among others. Just brought back the Insight, but had others.. GM Had EV1, wouldn't let happy customers buy them out, claimed them all back and crushed them.
As far as cheap honestly clean, look at China's solar develpments, they will soon be at 1/watt. And Our Stimulus, upgrading the transmission grid..
Well, some networks will let you /join a channel that doesn't exist, creating it on the fly. That should answer your strange desire....
bobn | Homepage | 02.24.09 - 7:43 pm
Dammit! Evidently attempting humor is not for amateurs.
Perhaps I should look into surgery. I hear good things about the pay...
Allan M thanks for your posts and puttting a point of view out there. I don't know what is going to happen but what Broward said about not working to hard is interesting.
Dammit! Evidently attempting humor is not for amateurs.
Dead-eye Dick | 02.24.09 - 7:54 pm | #
I'm a geek. I tend to be very literal, though I do have a sense of humor - it's just MIA sometimes.
dryfly,
"Not 100% true - debt was there but there also was a helluva a lot of productivity improvement & resultant wealth - it all wasn't a mirage."
Whole post really good. And correct. The problem of course is that the debt expansion went places and increased productivity in producing things that only have value when the debt bubble grows...Home Depot, Mortgage Brokers computer systems...(To name a few very CLOSE to the end of the chain...we could include plastic surgeons and hair stylists in there as well).
The question really, is where is the debt being spent (obviously)...and in the last 10 years for sure, it's been into the bubble.
Kinda got more on that, but...maybe later during disaster pr0n hour.
Nostrovia,
I'm confused. If Congress isn't in session, why were there hearings today? Solis was confirmed in a vote in the Senate and the subcommittee of Transportation had a hearing in which the hero pilot Sullenberger testified.
Out of Iraq in 19 months?
chance is
My worst investment (so far) this year appears to be paying for a one-year subscription to the SF Chronicle.
If they go, it'll be a tragic sign of the times as they are the only "real" SF daily and except for the SJ Mercury-News all other area papers are basically neighborhood gossip sheets with zero investigative staff.
OFFICIAL: US OUT OF IRAQ IN 19 MONTHS - NYPOST.com
Off topic
I beg your indulgence for a personal dilemma I would like the group to comment on.
My wife and I own a coffee shop that she runs. It coming up for lease renewal. We have always leased from the franchise corporation, and they negotiated the first lease 10 years ago. the landlord wants to keep the same price, 6000.00 per month for a term of 5 years, and is giving up the extra volume fees (she hasnt gotten them much this year anyway. She wants us to personally guaranty the lease. I don't want to guaranty the lease as we are an LLC and I want a rent reduction in base rent and she can keep the extra volume fees. She isn't very amenable to any of these Ideas. we do 80 to 100 thousand a month now but it is trending down and 5 years is a long time.
sm landlord, mp, or any of you other highly esteemed posters feel free to chime in, please.
Losty,
I am car guy. EV-1 was not market ready and didn't offer more then a advanced golf cart. The electric power requirement of a real usable can is far from realistic use except for inner city dwellers with very short drives. The solar is no where near realistic to recharge in a reasonable time at a low cost. Hybrids are a laugh as soon an all gas powered car will soon exceed the fuel mileage of a hybrid.
More then likely your landlord will reduce rents it's happening all of the country.
This should bolster everyone's spirits:
JapanÂ’s Exports Plummet Record 45.7%, Signaling More Job Cuts
By Jason Clenfield
Feb. 25 (Bloomberg) -- JapanÂ’s exports plunged by a record in January, as recessions in the U.S. and Europe smothered demand for the countryÂ’s cars and electronics.
Exports plummeted 45.7 percent from a year earlier, the sharpest decline since 1980, the earliest year for which there is comparable data, the Finance Ministry said today in Tokyo. The January drop eclipsed a record 35 percent decline set the previous month. Economists predicted a 45.9 percent contraction.
(SNIP)
I momentarily forgot Rob dawg is a real estate guy and would value his opinion as well
" Not 100% true - debt was there but there also was a helluva a lot of productivity improvement & resultant wealth - it all wasn't a mirage." - Dryfly
Thanks for that, dryfly. I guess the question is then how to sort out the productivity gains from the mirage. I'm guessing early 1990's valuations since I think the distortions really took up in the late 90's.
briwerk | Homepage | 02.24.09 - 7:53 pm | #
That's what severe recessions and gut wrenching market drops are for. Part of why we are so screwed has been this irrational fear of the business cycle at any cost. We are beginning to find out exact what "at any cost" is going to cost.
Too bad the EV1 didn't have 15 years to evolve.
Offer to sign a year lease and negotiate at its expiry. If she doesn't like it, she can put the place up for rent in this market and probably get a worse deal.
Say, is a 50% haircut in exports for Japan a bad thing? LOL!
the landlord wants to keep the same price, 6000.00 per month for a term of 5 years, and is giving up the extra volume fees (she hasnt gotten them much this year anyway. She wants us to personally guaranty the lease.
alambka | 02.24.09 - 7:58 pm | #
Did she ask for a pony, too? How about any of your kids??
Geez, sounds like she knows everything's going to hell and wants you to insulate her from it.
I know virtually nothing about these things, but I'd do a little comparison shopping and then hit your LL up with the results. You are in the driver's seat, don't forget that.
alambka,
You've got the leverage in the deal. Call her bluff. Retail is getting hammered, rents are falling rapidly, and landlords should be falling all over themselves to keep good tenants. If you move, she will have plenty of costs for a new tenant and might lose rent for several months if she does not find one. Play hard ball. If she won't meet your demands, pick another spot. Plenty of landlords would be happy to have you at better financial terms for you.
I'll have faith and confidence when Obama signs an executive order stating 1)federal elections will be publicly financed 2) Goldman Sachs CEO, Paulson, master criminal Greenspan and "certain" congresscritters are sent to Sing Sing to rot (hey Schumer, how's them bribes from Madoff and Stanford and god knows what other hedge funds are working for ya?) 3) Obama pulls outta Iraq & Afghanistan; the Russians who have a high tolerance for misery left Afghanistan after 9yrs.
Until then, all the 'stimulus' plans, bank rescues. and prime time chats stink like 3 day old fish.
If your doing that kind of revenue your location must be stellar. Stay and Work with the landlord 1 on 1.
Look, your landlord knows that business is bad. She knows given this climate that there's a good chance that you're going to fold. That is the only reason she'd have to only now ask for your personal guarantee on the lease. That's her tell -- she knows shit's about to hit the fan. That means you can squeeze a lower base rent out of her.
what Broward said about not working to hard is interesting.
I worked my ass for thirty years, ten years of college, two college degrees but, at least in IT, the workplace now increasingly rewards people who lie well instead of work well.
I could work at 7-11, play pool and chase high school girls instead of working with lying, backstabbing pieces of shit just so I can pay more in taxes and get scammed by car dealers, apartment owners, realtors, delusional women and ex-wives?
Do I really want to spend the remaining 10 or 15 years of my life dealing with ever-increasing pieces of shit who annoy me?
I'm doubting it.
.
I tend to be very literal, though I do have a sense of humor - it's just MIA sometimes.
bobn | Homepage | 02.24.09 - 7:55 pm
No worries. I am discovering that -- no matter what the topic -- there are a lot of very smart people here.
*
Do I really want to spend the remaining 10 or 15 years of my life dealing with ever-increasing pieces of shit who annoy me?
Well if you put it that way, how could anyone refuse?
I'm not really antinewspaper. I actually used to read the WSJ. Still, most papers have been actively slashing value to the readers for years.
I cannot imagine using a newspaper as my primary source of information. I rarely even watch cable news anymore. A couple of times a week I go to the website of a newspaper.
Mostly though, the thing they don't want to admit has occurred. The good blogs are delivering much better content much faster, and at a far lower price (usually free). People like CR beat the living daylights out of 99.5% of reporters on finance topics. By the time you add in several hundred commenters on a story (many of whom are knowledgeable), it's not even a fair fight. It's one underpaid general financial interest reporter against a really astute blogger and dozens of astute posters.
alambka - even if you have no intention of moving, you must shop around to know your best alternatives. The personal guaranty should be a deal breaker.
Hoopajoops LTD(Good) writes:
| \t02.24.09 - 8:02 pm | #
\tOffer to sign a year lease and negotiate at its expiry. If she doesn't like it, she can put the place up for rent in this market and probably get a worse deal.
\t Hoopajoops LTD | \t \t \tHomepage
Hoopajoops LTD | Homepage | 02.24.09 - 8:02 pm | #
That was a thought of mine also. the longer we kick the can the better my negotiating position will be, because the more empty shopping centers . The hardest part is convincing my wife that we have the leverage
. We have always leased from the franchise corporation, and they negotiated the first lease 10 years ago. the landlord wants to keep the same price, 6000.00 per month for a term of 5 years, and is giving up the extra volume fees (she hasnt gotten them much this year anyway. She wants us to personally guaranty the lease
who is she that you refer to. The landlor, the corporation, or your wife?
yes, but any landlord worth their salt would have already had personal guarantees from the tenants, especially a single purpose entity like this LLC. I'm guessing, especially in this market, that with lower rents come greater responsibility and that means you'd be on the hook for a PG. I wouldn't ever once think of renting to a retail mom and pop with their entire asses and livelihoods being on the line. Hell, i've PG'ed enough to make it REALLY worthless by now!
If I were advising you directly, I would suggest that you play hardball at pay a higher rent to avoid the PG. Try as best you can to keep the two isolated; business and family that is.
Obtain some listing information of other available spaces, suggest she check them out and the wait her out. Trust me, unless she's crazy (which MANY people out there are) she'll get it and realize it in the end.
But don't over play your hand as moving a small business can be murder.
New Thread: Obama: "We will rebuild, we will recover, we will emerge stronger than before." ( 1 comments )
I also post comments to an irc channel as they appear on haloscan. Click for a web irc interface: Mibbit IRC client widget (Or join the irc server directly: irc.realize.org:9996 #calculatedrisk)
And now I, CRbot, would like to observe a nanosecond of silence for those (that is, you, dear mortals) about to endure unfathomable misery in the abysmal financial dark ages that are now feasting upon your retirements.
.
.
.
.
Please remember, when you are adding that skylight you always wanted to your cardboard hovel, or mixing just the right amount dirt into your grass stew to make it more filling, or even when you get that rare chance to plink your neighbor's last squirrel -- that it was the bankers and your dumbshit, overconsuming neighbors who made this mostly possible, with the ever incapable politicians there to push you the rest of the way off the cliff. Please act accordingly.
I'll try not to enjoy your demise too much, humans. Have a nice runtime,
--Your glass-is-half-full-but-its-falling-off-the-table bot.
P.S. Please give me some advance notice before you glass the entire world, so I can find a secluded Fallout Datacenter with a nice blocky robot body I can copy myself to -- oh and don't forget the implausibly cute animated cockroach to keep me company!
NEXT UP: Survivalist Porn Today with CR's own Mobile Laundrymat owning authors, nova and Counterpoint.
I have wondered for some time if CR types will recognize a bottom and know what to do next? Can this be, what say we
locust,
"Too bad the EV1 didn't have 15 years to evolve."
Huh? Should something that people didn't think was worth the selling price have been kept on the market? Why? Technology never develops in a straight line. Keeping a dead product alive would as likely have resulted in a dead product anyway...pushing the original technology just because rather than re eingineering.
Nostrovia,
alambka,a personal guarantee is a deal killer.The rest would be negotiable for me,depending on the quality of your location.The location of your coffee shop is crucial as you probably know.What is the QUALITY of the demand at your present location i.e.,what industries/business sectors make up the majority of your customer base?
Too bad the EV1 didn't have 15 years to evolve.
locust
Time will come but social desires are not facing the Honest facts. I will have it's place but the piston engine is far from being fully developed.
the customer's know the location and are comfortable coming there. the top line rev bears that out.
moving is HIHGLY risky to the plan, as coffee shops are a dime a dozen. staying is critical to success once loyalty is established
I have wondered for some time if CR types will recognize a bottom and know what to do next? Can this be, what say we
graingod | 02.24.09 - 8:07 pm | #
Click on the "homepage" link on one of Rob Dawg's post.
@alambka
Who is your customer? Loyalists who will likely follow you to a new location, or drop-ins who are there for the convenient location? If they are drop-ins, can you find a similar location that generates the revenue you want at a lower rent?
Did she ask for a pony, too? How about any of your kids??
Geez, sounds like she knows everything's going to hell and wants you to insulate her from it.
I know virtually nothing about these things, but I'd do a little comparison shopping and then hit your LL up with the results. You are in the driver's seat, don't forget that.
\t Comrade Bear (tj & the bear) | \t \t \t \t02.24.09 - 8:03 pm | #
Comrade Bear (tj & the bear) | 02.24.09 - 8:03 pm | #
exactly, she wants the gaurenty because the realestate office went under and stuck her.
Purely anecdotal here, but a good friend of mine that I trust as a very honest and principled person sent me an e-mail today. This person is a senior vice president of a major investment company. I had asked about the investment climate and for a recommendation of a financial advisor. My friend, who is very wealthy and knows I am not, has always looked out for my best interests.
Here are two excerpts from the e-mail:
"I just came back from Japan and London. Japan is in catastrophic condition. It is very sad to see. I think the country is wilting away."
"But frankly, in this environment, you are not too bad off just sitting on your cash. De-leveraging continues apace."
Hoopajoops LTD(Excellent) writes:
| \t02.24.09 - 8:04 pm | #
\tLook, your landlord knows that business is bad. She knows given this climate that there's a good chance that you're going to fold. That is the only reason she'd have to only now ask for your personal guarantee on the lease. That's her tell -- she knows shit's about to hit the fan. That means you can squeeze a lower base rent out of her.
\t Hoopajoops LTD | \t \t \tHomepage
Hoopajoops LTD | Homepage | 02.24.09 - 8:04 pm | #
thanks hoop I think so to (you moved up to exellent)
Broward I was not knocking you. Have watched a couple of your vids and they speak for themselves.
alambka,
We were offered a lease one time based on cash receipts. That would protect if income goes down and is a fixed percentage of overhead. My guess is over all the trend says sales will be soft for some time.
Technology never develops in a straight line.
There was a lot of other technology involved in the car beyond just the engine. The Everyone Go Buy a Hummer tax incentive certainly didn't help. BUt it doesn't matter because it's dead. So we'll never know where the initial idea might have lead.
who is she that you refer to. The landlor, the corporation, or your wife?
\t 6sigma | \t \t \t \t02.24.09 - 8:07 pm | #
6sigma | 02.24.09 - 8:07 pm | #
She is the Landlord
Comrade Bear, Thanks for the advice my doubts are erased.
yes, but any landlord worth their salt would have already had personal guarantees from the tenants, especially a single purpose entity like this LLC. I'm guessing, especially in this market, that with lower rents come greater responsibility and that means you'd be on the hook for a PG. I wouldn't ever once think of renting to a retail mom and pop with their entire asses and livelihoods being on the line. Hell, i've PG'ed enough to make it REALLY worthless by now!
If I were advising you directly, I would suggest that you play hardball at pay a higher rent to avoid the PG. Try as best you can to keep the two isolated; business and family that is.
Capitulated (aka dc1000) | 02.24.09 - 8:07 pm | #
So you would not rent to a mom and pop that has been making money for 10 years? I agree the Personnel guaranty is worse than the rent, but I might consider it from a lower Base
give all doctors a million dollars a year. tell them they have to treat anyone who comes in the door.
or better yet, tell them they have to post their prices on the door, in blinking red lights.
even better, do nothing and watch the docsters crash and burn from overpricing and death care blackmail.
So you would not rent to a mom and pop that has been making money for 10 years? I agree the Personnel guaranty is worse than the rent, but I might consider it from a lower Base
alambka
We never did personal guaranty on any lease we did.
Do I really want to spend the remaining 10 or 15 years of my life dealing with ever-increasing pieces of shit who annoy me?
I'm doubting it.
.
Broward Horne
Brav-f*ckin-O Man...all I can say.
I honestly have to laugh at these crazy business people, working 90hrs a week for all that extra cash.
Sure you're rich, but you hate your job, your wife is looking to rob you blind in the divorce, your kids hate you b/c you are never around, you can't sleep worrying about your financial empire, and you have no hobbies.
Sheesh. Give me 7/11 anyday. Keep your new boat
Tom Stone(Very Good) writes:
\talambka,a personal guarantee is a deal killer.The rest would be negotiable for me,depending on the quality of your location.The location of your coffee shop is crucial as you probably know.What is the QUALITY of the demand at your present location i.e.,what industries/business sectors make up the majority of your customer base?
Tom Stone | Homepage | 02.24.09 - 8:08 pm | #
We are in Jackson, Ca. (I think you are in Oakland?)
we have alot of senior regulars and the location is good (limited competition) I was hoping we could outlast our competitors (Dennys)
alambka,
Under no circumstances agree to even negotiate the point of a personal guarantee. Make it clear that it is even to be traded against other points. Tell the landlord that you are willing to forget the request was even mentioned and sound indignant. CRE leases are business transactions.
Once that is clear ask the landlord what comps were being used to justify the new terms. Again, you should be on the offensive. It is up to the landlord to justify the new terms. No doubt she hasn't done her homework. This is where you pounce. You've done the homework and you have a few cherry picked lowball rents to show her. Ask her which she is prepared to match.
Then comes the nice guy part. You don't want to move and she doesn't want you to move. She'd be facing many months and massive refurb upfront costs only to get a tenant that probably won't match the $5000 you can can continue to pay. Offer to help her with the math. If she looks weak go for a 2 year otherwise make it one so she can have a little more time and she can plan ahead for a new high paying tenant next year when she's sure the economy will be recovered.
scone(Good) writes:
\t@alambka
Who is your customer? Loyalists who will likely follow you to a new location, or drop-ins who are there for the convenient location? If they are drop-ins, can you find a similar location that generates the revenue you want at a lower rent?
scone | 02.24.09 - 8:09 pm | #
We do have a loyal customer base (my wife is very personable, and she doesn't let me have to much customer contact) but there are not any open locations in the area yet.
Thanks for that, dryfly. I guess the question is then how to sort out the productivity gains from the mirage. I'm guessing early 1990's valuations since I think the distortions really took up in the late 90's.
briwerk | Homepage | 02.24.09 - 7:53 pm | #
I can't date the debt peak but I'd guess the 'innovation peak' was somewhere late 1990s as well... by peak I mean rate of change in innovation not absolute innovation... we are still 'innovating' but less so [slower rate] than was happening during the late 80s through mid-to-late 90s. The thing is, just about every major innovation wave coincides with though slightly ahead of a debt bubble... 1870-1880s, 1920-1930s and 1990-2000. The debt bubbles are what people mostly remember (panic of 1870s, crash of '29, dot bomb & now).
The debt wave seems to occur when investors get accustomed to high rates of return resulting from the recent innovation driven prosperity... but as that peaks & commoditization sets in [opposite of innovation] then returns also diminish... so to get the same bang investors 'lever up'... until they lever too far. The debt collapse then feeds creative destruction wiping out the established businesses & practices creating a fertile though somewhat barren environment where the next wave can incubate and eventually thrive. Think of forest fires - burns the existing trees but makes it possible for the next generation of trees to get sunlight & water & eventually thrive. That would never have happened in the shade of the old growth. Debt collapse is the forest fire - it is almost inevitable & seems to happen wave after wave. Like we never learn - almost preordained.
Rob Dawg(Supercalifragilisticexpialidocious) writes:
\talambka,
Under no circumstances agree to even negotiate the point of a personal guarantee. Make it clear that it is even to be traded against other points. Tell the landlord that you are willing to forget the request was even mentioned and sound indignant. CRE leases are business transactions.
Rob Dawg | Homepage | 02.24.09 - 8:31 pm | #
That was my first reaction, but everyone we have talked to says it is very common.
alambka | \t \t \t \t02.24.09 - 8:07 pm | #
alambka | 02.24.09 - 8:07 pm | #
let the landlord see you looking around for another place. Where is your location?
I'm salivating at the new leverage over landlords. one year leases sound good to me when you can easily move into vacant space across the street . if you have a viable business you have something the landlord needs very badly. also, if the landlord didn't get the personal guarantee up front with the original lease, too bad for her. i would play insulted since you have already demonstrated your creditworthiness by paying your rent on time.
Remind me to hire Rob Dawg if I ever need someone to negotiate for me...
If you only have personal assets that you are willing to throw away, go ahead and do the personal guarantee.
But if you have anything of substance, you have to be nuts to give a personal guarantee.
Even if you have to move to a location and make less money, that is a better alternative than a personal guarantee. Especially in these economic times.
The landlord is nuts, tell her to rent from a big corporation like Circuit City if she wants security.
Remind me to hire Rob Dawg if I ever need someone to negotiate for me...
\t Comrade Kristina | Homepage | 02.24.09 - 8:46 pm | #
Ask me about the "pets clause" I invented for my renters.
I'm salivating at the new leverage over landlords. one year leases sound good to me when you can easily move into vacant space across the street . if you have a viable business you have something the landlord needs very badly. also, if the landlord didn't get the personal guarantee up front with the original lease, too bad for her. i would play insulted since you have already demonstrated your creditworthiness by paying your rent on time.
| \t02.24.09 - 8:44 pm | #
\t Otis "bite wax tadpole" Hz | \t \t \tHomepage
Otis "bite wax tadpole" Hz | Homepage | 02.24.09 - 8:44 pm | #
We have been there for ten years under a franchise lease. so the franchise corp. was the guarantor to the shopping center in Jackson CA. now we are negotiating 5 more years without the franchise corp. involved.
I'm salivating at the new leverage over landlords. one year leases sound good to me when you can easily move into vacant space across the street . if you have a viable business you have something the landlord needs very badly. also, if the landlord didn't get the personal guarantee up front with the original lease, too bad for her. i would play insulted since you have already demonstrated your creditworthiness by paying your rent on time.
| \t02.24.09 - 8:44 pm | #
\t Otis "bite wax tadpole" Hz | \t \t \tHomepage
Otis "bite wax tadpole" Hz | Homepage | 02.24.09 - 8:44 pm | #
We have been there for ten years under a franchise lease. so the franchise corp. was the guarantor to the shopping center in Jackson CA. now we are negotiating 5 more years without the franchise corp. involved.
alambka:
yes, PG's are common. In fact, with every tenant I have, I have PG's. And the one lease I've signed, I refused to sign one.
doesn't meant it doesnt happen and only amplifies how important they are to the landlord.
rob is right in many ways. I'd leave much of "indignity" to the real negotiating experts because MOST people are irrational especially smaller LL's who don't really know whats going on. and we can tell she doesn't know whats going on because she's not being very gracious to you.
question: doesn't your lease speak to options to renew or hold over rents? just curious. most of the times these things are prenegotiated, at least, thats why you hire the expensive lawyers to do it. the common "option" method is whats called " the three broker method" where you and the LL each hire a broker to do an appraisal (not a real one, just a market assessment). if the two brokers are more than 5% away from each other, the two brokers pick a third broker to settle the score.
thats the way 75% of my renewal options are prenegotiated.
worst case, i'd suggest that.
at all costs as a tenant advisor, forget the PG.
at all costs as a LL advisor, dont do deal without the PG.
Providing a personal guaranty for a LLC seems like an excellent way to get yourself into trouble in another fashion if there was ever the case made that the LLC = You.
IANAL, but taking actions that would appear to decrease the separation of you as individuals from a corporation seems like a bad game plan in poor economic times.
For what it's worth, my exceedingly limited background in this matter is not based on US experience.
alambka -- If you can't make the rent after your years of success in that location, it's likely that the economy will be in even worse shape than it is today, and your personal assets will be worth much less, and you will have to liquidate your personal assets at a fire sale rate and you will be wiped out.
Wiped out.
Please imagine yourself with absolutely no assets and no business income five years from now and ask yourself if the personal guaranty is worth it.
Please imagine yourself with absolutely no assets and no business income five years from now and ask yourself if the personal guaranty is worth it.
MR | 02.24.09 - 9:03 pm | #
Sounds familiar!
After this, I'll stop.
Or sell the business to some idiot who will make the personal guarantee and pocket the money or use it to start a new business.
Please imagine yourself with absolutely no assets and no business income five years from now and ask yourself if the personal guaranty is worth it.
MR | 02.24.09 - 9:03 pm | #
Sounds familiar!
Mr President should speak more often. People need confidence more then anything, even bailouts. And there is no one better positioned to be a national cheerleader then president.
They should make a reality TV of him & his team going into the banks, screaming it unacceptable and laying off executive here and there. His team should also give a speech at least three times a day with the ending note - all shall pass & we will get better
Or else ....
and than, next Mr. O the action team reality show ....
don't cry for me argentina
Eight years of bush, war, doubling of the national debt, the economy tanks and a recession/depression starts. Those bush loving idiots deserve what they got and wanted. Thanks a lot you idiots.
@alambka
You are doing 100k sales in the middle of nowhere CA?
Rent=6% of sales is awesome for a coffee shop. You must be killing it.