Chasing the value curve down. We bitch when the ratings agencies get it wrong but now the possibility that they move closer to honest metrics causes upset.
The problem is not with S&P anymore. The problem is with Citibank who presumes to blatantly influence a supposedly independent evaluator doing their job.
"Our preliminary findings indicate that approximately 25%, 60%, and 90% of the most senior tranches (by count) within the 2005, 2006, and 2007 vintages, respectively, may be downgraded."
"what little credibility they have left will be completely gone"
It won't matter now.
Putting everyone on gov't prescribed Zoloft is a diabolical ploy which I didn't anticipate.
Many improbable actions are now possible.
Phase one of the complete and total economic collapse of the US appears to be one month behind us. With the Federal Reserves monetization of the debt and the bankruptcies of Chrysler and GM marking the beginning of phase two, we are going to be in for one crazy summer. Phase two will last about 18 months followed by phase three with much social unrest and anarchy. I just thank God for the complete and total economic collapse because it is the only thing that will make the bad people stop doing what they are doing to us.
I guess the silver lining for all the car companies that have oodles of brand spanking new cars scattered hither and yon, is they can always just call them 2011's and sell em' next year, as who really notices the difference in things automotive anymore, nowadays?
As I mentioned yesterday, SBUX is hoster of choice for the latest wave of MLM marketing scams. I'm in Starbucks almost every day, often for 3-4 hours and I evasdrop on the hard-sell conversations every day. I'd estimate it's perhaps 5% of their customer base.
Kinda creepy.
Couple that with the Zoloft move and I see SBUX headed down.
I just thank God for the complete and total economic collapse because it is the only thing that will make the bad people stop doing what they are doing to us.
Michael, don't tell anyone, but sometimes what the bad people do feels good to me...
SBUX missed the memo. They're not supposed to ask for 25% rent reductions; they're supposed to ask for the lease three months, get one free special.
Win-Win... sort of. SbUX gets relief and the landlord can show mgmt/stockholders they didn't cave & are holding the line... except for a few 'one time expenses'.
They need a consultant basel... hang out your shingle.
broward (homepage, profile) wrote on Fri, 5/29/2009 - 10:29 am
As I mentioned yesterday, SBUX is hoster of choice for the latest wave of MLM marketing scams. I'm in Starbucks almost every day, often for 3-4 hours and I evasdrop on the hard-sell conversations every day. I'd estimate it's perhaps 5% of their customer base.
You have to wonder how much CRE office space Starbucks has diverted to their business model.
Debt Negotiators May Give Little Relief to Consumers (Update1)
By Jamie McGee
May 29 (Bloomberg) -- Ulish Hopkins, a former bus- dispatcher from Chicago, turned to a debt-settlement company last year after piling up about $30,000 in credit-card bills. Seven months later, he owed close to $40,000.
Hopkins says the company told him it could reduce his bills by about 50 percent through negotiations with lenders. He was told to stop paying creditors and to put monthly payments in an escrow account, which the firm used to cover its fees. Instead of reducing his bills, interest and late fees raised his indebtedness and damaged his credit score.
“They never told me that the money I was paying wasn’t going to my debt, it was going to them,” said Hopkins, 59, who quit work in January 2008 after a brain tumor led to surgery. He now receives $1,539 a month in disability checks. “You are better on your own.”
Credit-card delinquencies are at record highs, according to Fitch Ratings, and the U.S. unemployment rate of 8.9 percent is the highest since 1983. As more consumers fall behind on bills, settlement companies often end up adding to the debt burden rather than offering a cost-saving solution, said Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling in Silver Spring, Maryland.
CR - The Citi analyst (Darrell Wheeler) was not saying 6 to 30 percent is draconian, he was saying the lack of lease rollover recognition was making the overall rent assumption draconian. The S&P analysis removes all the existing leases (most of which are, at this point, above current market rates). The Microsoft corporate headquarters building has a lease that expires in 2019. The S&P analysis assumes Microsoft vacates the building tomorrow, the landlord has no recourse power against Microsoft (which they actually would), and it takes 3 to 5 years to re-lease the property at rates 6 to 30% below current market rates. It may not be "draconian", but the valuation is lower than reality.
Rents need to stop falling so RE/CRE prices can catch up, it's not fair to the speculords!
The Danza family negotiated a 10% reduction in next year's lease up in Vancouver BC. The city with supposedly 0.1% vacancy. Danza's are good tenants though.
"Do the scammers buy the scammees coffee? Or is it dutch?"
I know you're joking but I don't know. I actually don't pay much attention until I hear keywords like "investment", "income", "sales", "Ebay", "Twitter", etc. I started sitting in Starbucks in 2006 and this MLM thing seems new, I first noticed it late last year.
exactly what I thought above.....Just seems that each and every "decision" or hint of one is designed to game that portion of the many various programs.
"We have no problem with assuming worst-case market rental drops, but S&P assumes these drops will happen to their already reduced cash flow and are assuming all leases will roll over a three- to five-year period."
They have a problem with the 3-5year period (See SBUX example) and they have a problem with haircutting the lower of cost or market (see REIT rental guidance).
Rents are falling faster than anyone is forecasting. S&P is trying to get ahead of something for once, and everyone jumps on their case.
Drive around the Bay Area if you don't think CRE-CMBS is 6% to 30% below market rates. Instead of Yucca Valley to Nuke Disposal just use all the empty cre in bay area..
Needs to warm up here anyways as it's damn cold lately...
breaking a lease or contracf today has been made much easier due to the Govt meddling....
I really dislike it when people are called sheeple. What bothers me even more is that the job of protecting them from the wolves has become a joke. The idea that you would want to combat evil and protect the poor, elderly, and less than smart has become something that is mocked.
There will always be sheep, wolves, and sheep dogs. Sometimes I think the idea that it is okay to fleece the flock and doing anything about is part of the propaganda that allowed all this to happen. Caring to much about anyone other than yourself is societal suicide.
Tainted but still true. To Protect and Serve the flock is noble. It is the right thing to do.
You know what the F'ed up thing is, here we have what quite possibly is the largest US manufacturer in the country going belly up (GM ), and the market barley notices? like I said the other day we should be popping circuit breakers left and right.
Oh wait that's right this is the " New Economy " circuit breakers are a thing of the past.....my bad.....
Honey toss out those econ 101 text books they no longer apply.
I know you're joking but I don't know. I actually don't pay much attention until I hear keywords like "investment", "income", "sales", "Ebay", "Twitter", etc. I started sitting in Starbucks in 2006 and this MLM thing seems new, I first noticed it late last year.
broward is right - Starbucks, Caribou, etc., are both MLM scam central... I stop in to log on & caffeinate... they are always there with their big plastic 'customized but still obviously Office Max' three rings going through the canned pitch page by page. Quite a scene - you all should listen in sometime.
The [new UAW] contract freezes wages, ends bonuses, eliminates noncompetitive work rules and ends the possibility of a strike until the next contract expires in 2015.
Due diligence can't be outsourced UNLESS those doing the rating & due diligence also have skin in the game & something significant to lose... then it isn't 'outsourcing' as much as it is 'shared coat tails'. That is NOT the current business model on WS.
If an employer put an ad in a newspaper or on the internet hiring people to do minimum-wage work, but he could only pay $4 an hour, there would be a tizzy, and said employer would receive a torrent of abuse from people upset that simple supply vs. demand demanded that such actions be taken, but i'd imagine the positions would be filled rather quickly...
Tainted but still true. To Protect and Serve the flock is noble. It is the right thing to do.
NOVA - I agree except remember... shepherds protect the flock from the wolves so they [the shepherds] can eat them NOT the wolves. That never was a good analogy from the perspective of the 'sheep'.
I'm amazed that we still have never even come close to the breakers. They simply will not allow it. Should have had at least two since early '08.....possibly more. We'll get one when we get a real dislocation however it will not occur in the last hour....which means it doesn't get shut off for the day.
ZeroHedge has a good piece up now on oil trading manipulations...quotes the oil minister of Libya saying "Prices are moving because the speculators are back. Fundamentals do not tally with psychology."
"Shades of THX 1138........George Lucas WAS a visionary."
I saw that film years ago, and the scenes still go through my mind often. I was just thinking about one of them the other day, the one where the protagonist climbs up into the sunlight from the tunnel. Also, the one where the kids come up to the top of the escalator (staircase?).
It is a possible future, perhaps very possible. Prescient.
What a sad day. Today my email had a Websphere Commerce job for $33 for a 3-month contract. The Indians are destroying the software market. That's beyond laughter. I doubt if either the Chinese, Indians or Alpha Male "leaders" realize that the harder they push for "more productivity" to boost profit margins, the faster margins are going to fall, which means more layoffs and less sales.
Thank you for that. I keep thinking of the volunteers who show up when you have a medical emergency. They have probably spent much of their free time training for medical, not financial emergencies. Seems like we are better off if we have some of both kinds.
Phil is a moron (hat tip to VT) he did the same thing last year and sort of ignores that the entire comm. sector is getting goosed. He just happens to be short oil (for over a month) and gets "outraged" that it's not going his way. We all know the fundies don't support it but did that matter last year? Nope....he's repeating his stupidity again.
It can be and always has been, but it has to be done on an individualized basis, using an experienced professional charging by the hour, with another experienced professional looking over his or her shoulder. That is what lawyers do for portfolio lenders.
It can't work for the 2002-06 lending model. It is much too expensive for a low margin business with bank executives who need to skim off more than the entire margin for themselves.
And, of course, the harder that the "producers" work, the more entitled they are to "their share", which means the angrier and more defensive they get about sharing, which of course....
means less and less consumption.
I wish I could remember that religious quote about "bread upon the water".
Yes but the shepards do not run amok among the flock killing just for the joy of it. They realize the flock is their wealth; not a playground to indulge their twisted passions of blood and fun. Except when its been awhile since you have been to town and that cute little ewe keeps following you around...
"why haven't we flattened NK's lauch site with Tomahawks yet? "
We used them for collateral...
Really, that would be a humanitarian disaster of epic proportions. Kim would just end up just starving his people to death or even worse, marching them across the DMZ. Breaking the cease fire and the food for peace programs should be last resorts.
If I was a sneaky NK bastard, i'd have planted a nuke in downtown Seoul, ready to go.
Or at least use the idea of one, to frighten us into not doing anything...
We won't do squat - look at the map... see that big country to the west of NK? I think we owe them something. If anything is going to be done they will do it... if they don't want to do anything then NOTHING will get done. I'm sure Timmay got the memo to hand over to his boss telling him in polite diplomatic speak to sit down and shut up.
One of the reasons China has been hesitant to do anything is that not thrilled about the idea of the US setting up listening posts a few miles from their border. Which is what would happen if Korea became reunited and the South was the one doing it.
MS (profile) wrote on Fri, 5/29/2009 - 11:14 am
dawg - you're in SD? Delayed departure by a day.....to the "western Pacific".... Ciao, MS
I am NOT in San Diego. I am however, having BBQ tonight with a previous CO of the boat.
creditcriminalslovetarp - I think CRE-CMBS rent rates 6 to 30% below current is fine (the bay area is likely closer to 30%). Citi agrees with this, I agree with this, S&P agrees with this. The issue is lease rollover!
Breaking lease contracts can really only be done via bankruptcy (but then the property owner has a quantifiable dollar amount owed which will be settled in bankruptcy court the same as other debt holders). Saying government intervention lease cancellations is an issue is like saying the housing prices are falling because PPG industries released 50,000 gallons of bad paint primarily used in san diego houses.
In this case I agree with Citi - these S&P rating cuts are too harsh. Even if 100% of the loans below a 1.1 dcr default, 100% go into foreclosure, there is a massive 50% average severity of loss rate (even during the great depression it was likely not 50%), and assuming double the standard cost/fees of sale, the rating cuts S&P are proposing are too harsh. Perhaps we can all agree it would be nice if S&P made the assumptions they used public (which was the main thesis of the Citi call this morning).
In this case I agree with Citi - these S&P rating cuts are likely too harsh. Even if 100% of the loans below a 1.1 dcr default, 100% go into foreclosure, there is a massive 50% average severity of loss rate (even during the great depression it was likely not 50%), and assuming double the standard cost/fees of sale, the rating cuts S&P are proposing are way too harsh.
That is reassuring - for a moment I thought you might say they are 'contained'.
How will GM make a profit and pay back the USG ? Is Obama going to be pricing US Cars too? I mean, what's a fair price to the impoverished US consumer ?
He's on both sides of the deal if he likes it or not. Ms Pelosi may demand progressive pricing for autos just like the progressive US Tax code. SHow your 1040 and get a price quote!
Tainted but still true. To Protect and Serve the flock is noble. It is the right thing to do.
That depends on how you define the flock. There are some people who legitimately deserve protection - children, elderly, etc.
The vast majority of the flock these days is people who are being trained that there are no negative consequences in life. The government will give you money if you "can't" work, can't afford your children, get in over your head with debt, don't read the medicine bottle, fail to perform the simplest due diligence on any transaction.
Those are sheeple, and we create new sheeple every time we cushion the blow and prevent them from taking responsibility for themselves.
Cruise missles in NK... why? He hasn't done anything yet? A conventional war would be bad for the US..The odds are against us winning especially since they use women soldiers who are experienced in tantric massage....Are soldiers would most likely fall for the brilliant but cunning $20.00 soldier massage special, where they get your knots out while tying your hands behind your back....
OT: I've about decided that the equities markets aren't going down. We may be stuck at 8500 for awhile. It pretty well makes it such that it's just not worth participating. These prices are too high; a correction isn't being allowed.
dryfly - For the last 5 years my vote has been that valuations are inflated and that rating agencies are being paid by investment bankers to keep ratings high (paid in the form of keeping/losing future business). I feel dirty switching teams in this argument, and I still think CRE prices will be chopped in half, but that does not mean 90% of the 07 vintage super senior CMBS will have a probability of default or severity of loss high enough to lose AAA status.
"If anything is going to be done they will do it... if they don't want to do anything then NOTHING will get done. I'm sure Timmay got the memo to hand over to his boss telling him in polite diplomatic speak to sit down and shut up."
If anything, That big country to the west is encouraging Kim, to drive home to O', Tim and Ben, what the cost of continued T-Bill devaluation will be.
"I still think CRE prices still need to be chopped in half, but that does not mean 90% of the 07 vintage super senior CMBS will have a probability of default or severity of loss high enough to lose AAA status."
How can anything written on '07 have AAA status. AAA should be for near T-Bill or better chance of being paid back in full. The Circit City GGP and Linen n' Things, CMBS are not quite there.
"There are some people who legitimately deserve protection - children, elderly, etc."
The recklessly greedy deserve to be fleeced. Kind of sad, that it is them, the Gov is protecting, and not tomorrow's children who get stuck with the bill, and economic disadvantages going forward.
Blackhalo - AAA's have 20% junior debt. Super Senior's have 30 to 50 percent junior debt (depending on how much prepayment has happened). To make the 07 super seniors take a loss, CRE prices would have to fall around 90 percent. To make them get downgraded from AAA status, CRE prices would have to fall 60% +... though even with that type of decline it would be select bonds, not 90% of the entire 07 cmbs universe as S&P is announcing.
Money doesn’t grow on trees for most of America. We sit down at our kitchen tables and write out checks to the phone-company, electric company, credit card-company, mortgage-company, and auto finance company every month. We clip coupons and go to the grocery store every week to put food in the mouths of our children. This is what our parents did before us.
bankers selling our childrens futures..for more bailouts? the disgrace. it's horrible. too big to fail needs to fail. we neeed LESS bailouts. If you fail U fail. Tons of informative articles.
with CRE prices down 35-40% and 80+% of 2007 issuance being interest-only mortgages (in other words, speculative), basically, every loan is underwater. We should thank S&P for taking action to prevent these loans from becoming the taxpayers burden, even if that wasn't their intent.
Does anyone actually rely on S&P's ratings anymore?
Aside from the Fed, I mean.
If it's not good for wall street, it's not good for main street. I thought we had all accepted this CONcept as fact.
it's going to get uglier and uglier as the rats begin to feel the effects of the poison
Dam missed it!
If they cave in, what little credibility they have left will be completely gone.
Nemo, you beat me to the punch line! The Fed does ... and the Fed will probably change their CMBS TALF requirements.
best wishes
Chasing the value curve down. We bitch when the ratings agencies get it wrong but now the possibility that they move closer to honest metrics causes upset.
The problem is not with S&P anymore. The problem is with Citibank who presumes to blatantly influence a supposedly independent evaluator doing their job.
about as timely as most of it's "changes". I can't help but think this is another "assist" for Timmay's programs.
Ciao
MS
Does anyone actually rely on S&P's ratings anymore?
I think more people now rely on "rantings" which are equally as useless, but have no ill intent.
Tranche Whorefare
"Our preliminary findings indicate that approximately 25%, 60%, and 90% of the most senior tranches (by count) within the 2005, 2006, and 2007 vintages, respectively, may be downgraded."
"what little credibility they have left will be completely gone"
It won't matter now.
Putting everyone on gov't prescribed Zoloft is a diabolical ploy which I didn't anticipate.
Many improbable actions are now possible.
SBUX missed the memo. They're not supposed to ask for 25% rent reductions; they're supposed to ask for the lease three months, get one free special.
So many Arthur Andersons, so little oversight...
wow. how low will GM get today?
Phase one of the complete and total economic collapse of the US appears to be one month behind us. With the Federal Reserves monetization of the debt and the bankruptcies of Chrysler and GM marking the beginning of phase two, we are going to be in for one crazy summer. Phase two will last about 18 months followed by phase three with much social unrest and anarchy. I just thank God for the complete and total economic collapse because it is the only thing that will make the bad people stop doing what they are doing to us.
I guess the silver lining for all the car companies that have oodles of brand spanking new cars scattered hither and yon, is they can always just call them 2011's and sell em' next year, as who really notices the difference in things automotive anymore, nowadays?
As I mentioned yesterday, SBUX is hoster of choice for the latest wave of MLM marketing scams. I'm in Starbucks almost every day, often for 3-4 hours and I evasdrop on the hard-sell conversations every day. I'd estimate it's perhaps 5% of their customer base.
Kinda creepy.
Couple that with the Zoloft move and I see SBUX headed down.
I just thank God for the complete and total economic collapse because it is the only thing that will make the bad people stop doing what they are doing to us.
Michael, don't tell anyone, but sometimes what the bad people do feels good to me...
...they can always just call them 2011's...
No, there are legitimate rules about that. Crash standards, mileage, etc.
SBUX missed the memo. They're not supposed to ask for 25% rent reductions; they're supposed to ask for the lease three months, get one free special.
Win-Win... sort of. SbUX gets relief and the landlord can show mgmt/stockholders they didn't cave & are holding the line... except for a few 'one time expenses'.
They need a consultant basel... hang out your shingle.
Edit: we need a new accounting acronym:
COGOTE - Continuous On Going One Time Expenses.
Problem fixed.
Righty-tightys invoking deities is never good.
6 to 30% decrease in rents. That will leave a mark on the pro-formas.
Broward,
Do the scammers buy the scammees coffee? Or is it dutch?
broward (homepage, profile) wrote on Fri, 5/29/2009 - 10:29 am
As I mentioned yesterday, SBUX is hoster of choice for the latest wave of MLM marketing scams. I'm in Starbucks almost every day, often for 3-4 hours and I evasdrop on the hard-sell conversations every day. I'd estimate it's perhaps 5% of their customer base.
You have to wonder how much CRE office space Starbucks has diverted to their business model.
Debt Negotiators May Give Little Relief to Consumers (Update1)
By Jamie McGee
May 29 (Bloomberg) -- Ulish Hopkins, a former bus- dispatcher from Chicago, turned to a debt-settlement company last year after piling up about $30,000 in credit-card bills. Seven months later, he owed close to $40,000.
Hopkins says the company told him it could reduce his bills by about 50 percent through negotiations with lenders. He was told to stop paying creditors and to put monthly payments in an escrow account, which the firm used to cover its fees. Instead of reducing his bills, interest and late fees raised his indebtedness and damaged his credit score.
“They never told me that the money I was paying wasn’t going to my debt, it was going to them,” said Hopkins, 59, who quit work in January 2008 after a brain tumor led to surgery. He now receives $1,539 a month in disability checks. “You are better on your own.”
Credit-card delinquencies are at record highs, according to Fitch Ratings, and the U.S. unemployment rate of 8.9 percent is the highest since 1983. As more consumers fall behind on bills, settlement companies often end up adding to the debt burden rather than offering a cost-saving solution, said Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling in Silver Spring, Maryland.
“There has been significant growth in the debt-settlement industry based on the economic decline,” Cunningham said. “People are financially distressed and when that happens, the unscrupulous among us seem to come out in droves.”
Debt Negotiators May Give Little Relief to Consumers (Update1) - Bloomberg.com
No downgrades coming, nothing to see here, move along.
CR - The Citi analyst (Darrell Wheeler) was not saying 6 to 30 percent is draconian, he was saying the lack of lease rollover recognition was making the overall rent assumption draconian. The S&P analysis removes all the existing leases (most of which are, at this point, above current market rates). The Microsoft corporate headquarters building has a lease that expires in 2019. The S&P analysis assumes Microsoft vacates the building tomorrow, the landlord has no recourse power against Microsoft (which they actually would), and it takes 3 to 5 years to re-lease the property at rates 6 to 30% below current market rates. It may not be "draconian", but the valuation is lower than reality.
I hope that 6 to 30% decrease includes bankrupt companies that will miss some months, then perhaps go out of business.
Rents need to stop falling so RE/CRE prices can catch up, it's not fair to the speculords!
The Danza family negotiated a 10% reduction in next year's lease up in Vancouver BC. The city with supposedly 0.1% vacancy. Danza's are good tenants though.
"the Fed will probably change their CMBS TALF requirements."
What about PPIP? That is the program that lands a bit more heavily on Joe Taxpayer, and is such and invitation to abuse.
"Citibank who presumes to blatantly influence a supposedly independent evaluator doing their job."
Why stop now? Just because S&P grew a spine and worries about a future SEC looking at the payola problems?
I see Citi's still dancing, it's just that it's due to shooting at their own feet again and again.
What do you want to bet S&P caves this time around, only to write these down to junk within the year.
re: GM what's left of it's short position needs to cover....should make for a quick* trade ala (insert name of your favorite BK'ed institution here)
I'm thinking if it hits .20 (or lower) that may be the trigger. Look at LEH's pattern....
*VERY QUICK IMO
Ciao
MS
"Do the scammers buy the scammees coffee? Or is it dutch?"
I know you're joking but I don't know. I actually don't pay much attention until I hear keywords like "investment", "income", "sales", "Ebay", "Twitter", etc. I started sitting in Starbucks in 2006 and this MLM thing seems new, I first noticed it late last year.
Ahhh, here comes the rush for the exits with GM.
Keep the last 4 hours of trading in GM in mind when we see it again. And again.
I actually don't pay much attention until I hear keywords like "investment", "income", "sales", "Ebay", "Twitter", etc.
Do you ever just start talking loudly "to yourself".
"WOW... THAT SOUNDS LIKE A CLASSIC SCAM!"
speculords!
===
LOL
blackhalo-
exactly what I thought above.....Just seems that each and every "decision" or hint of one is designed to game that portion of the many various programs.
Ciao
MS
Quote from the report
"We have no problem with assuming worst-case market rental drops, but S&P assumes these drops will happen to their already reduced cash flow and are assuming all leases will roll over a three- to five-year period."
They have a problem with the 3-5year period (See SBUX example) and they have a problem with haircutting the lower of cost or market (see REIT rental guidance).
Rents are falling faster than anyone is forecasting. S&P is trying to get ahead of something for once, and everyone jumps on their case.
Maybe the rating agency model just cannot work.
I started sitting in Starbucks in 2006 and this MLM thing seems new, I first noticed it late last year.
=======
It's part of SBUX new business model. I read about it in the annual report.
WC,
Drive around the Bay Area if you don't think CRE-CMBS is 6% to 30% below market rates. Instead of Yucca Valley to Nuke Disposal just use all the empty cre in bay area..
Needs to warm up here anyways as it's damn cold lately...
breaking a lease or contracf today has been made much easier due to the Govt meddling....
Needs to warm up here anyways...
I really dislike it when people are called sheeple. What bothers me even more is that the job of protecting them from the wolves has become a joke. The idea that you would want to combat evil and protect the poor, elderly, and less than smart has become something that is mocked.
There will always be sheep, wolves, and sheep dogs. Sometimes I think the idea that it is okay to fleece the flock and doing anything about is part of the propaganda that allowed all this to happen. Caring to much about anyone other than yourself is societal suicide.
Tainted but still true. To Protect and Serve the flock is noble. It is the right thing to do.
GGP is up 264% in May. The SEC should allow actual gambling with clients' money. probably more transparency in any event.
Broward, no. I was genuinely curious.
valuation is lower than reality
Now there's a phrase I haven't heard in a couple of decades. (heheh)
repeats due to cold fog induced haze...
GM now suffering from the "invent a price" syndrome....
.XXX wait until it gets five digits out.
Ciao
MS
Pravda becomes U.S.
You know what the F'ed up thing is, here we have what quite possibly is the largest US manufacturer in the country going belly up (GM ), and the market barley notices? like I said the other day we should be popping circuit breakers left and right.
Oh wait that's right this is the " New Economy " circuit breakers are a thing of the past.....my bad.....
Honey toss out those econ 101 text books they no longer apply.
GM's all-time-low share price was 47 cents, hit in June 1932.
I know you're joking but I don't know. I actually don't pay much attention until I hear keywords like "investment", "income", "sales", "Ebay", "Twitter", etc. I started sitting in Starbucks in 2006 and this MLM thing seems new, I first noticed it late last year.
broward is right - Starbucks, Caribou, etc., are both MLM scam central... I stop in to log on & caffeinate... they are always there with their big plastic 'customized but still obviously Office Max' three rings going through the canned pitch page by page. Quite a scene - you all should listen in sometime.
"If you see a banker jumping from a rooftop, jump after him; there sure is some profit to be made" - Voltaire
Once you send your fattest cow to the abattoir, dispatching all the others is relatively easy...
GM is just the 1st of many bovines whose time is up~
GM will not even get a vigil at its death bed. Will there be any parties celebrating the death of an old friend I can attend?
The [new UAW] contract freezes wages, ends bonuses, eliminates noncompetitive work rules and ends the possibility of a strike until the next contract expires in 2015.
The Devil Wears Pravda...
Maybe the rating agency model just cannot work.
Due diligence can't be outsourced UNLESS those doing the rating & due diligence also have skin in the game & something significant to lose... then it isn't 'outsourcing' as much as it is 'shared coat tails'. That is NOT the current business model on WS.
Geithner to reassure China that its massive US bond holdings are safe despite concerns.
HA !!!....US economy carries about $20 trillion of excess debt.
Until that debt is eliminated, the idea of a healthy boom is a mirage.
Tsing Tao early today
dry - I guess you can outsource the due diligence when you are also outsourcing the risk (via securitization of opaque instruments)
If an employer put an ad in a newspaper or on the internet hiring people to do minimum-wage work, but he could only pay $4 an hour, there would be a tizzy, and said employer would receive a torrent of abuse from people upset that simple supply vs. demand demanded that such actions be taken, but i'd imagine the positions would be filled rather quickly...
Tainted but still true. To Protect and Serve the flock is noble. It is the right thing to do.
NOVA - I agree except remember... shepherds protect the flock from the wolves so they [the shepherds] can eat them NOT the wolves. That never was a good analogy from the perspective of the 'sheep'.
Gettlefinger just said "an equity value of zero." Ouch.
shill-
I'm amazed that we still have never even come close to the breakers. They simply will not allow it. Should have had at least two since early '08.....possibly more. We'll get one when we get a real dislocation however it will not occur in the last hour....which means it doesn't get shut off for the day.
Ciao
MS
Gettlefinger just said "an equity value of zero." Ouch.
Who said optimism is dead in America? Looks to be live and well at UAW HQ.
the new circuit breaker rules will require a mandatory zoloft dosage from one of the approved dispensers installed on the exchange floor
"GM now suffering from the "invent a price" syndrome...."
Looking forward for the class action against DOW for having them listed, and in the index this long.
ZeroHedge has a good piece up now on oil trading manipulations...quotes the oil minister of Libya saying "Prices are moving because the speculators are back. Fundamentals do not tally with psychology."
From previous thread:
"Shades of THX 1138........George Lucas WAS a visionary."
I saw that film years ago, and the scenes still go through my mind often. I was just thinking about one of them the other day, the one where the protagonist climbs up into the sunlight from the tunnel. Also, the one where the kids come up to the top of the escalator (staircase?).
It is a possible future, perhaps very possible. Prescient.
Who said optimism is dead in America? Looks to be live and well at UAW HQ
UAWHQ..... that's got a ring to it..... it should be GM's new ticker on Monday after it files.
Erin Burnett just used the word 'bupkis' on air... I wonder where she heard that...
Dow Jonestown cocktale
Lemonade kool-aid laced with 10w40 oil
UAWHQ.
If Warren manages to lure GM HQ out there, UAW could take over the Ren Center.
It'll be like Biff's casino in Back to the Future II
What a sad day. Today my email had a Websphere Commerce job for $33 for a 3-month contract. The Indians are destroying the software market. That's beyond laughter. I doubt if either the Chinese, Indians or Alpha Male "leaders" realize that the harder they push for "more productivity" to boost profit margins, the faster margins are going to fall, which means more layoffs and less sales.
Nobody gets it yet.
"Pravda becomes U.S."
Pravda turned into a parrot cage liner in which you can read stories about alien babies and giant cities of glass on the moon.
Old SU joke:
At the newstand: There is no more Pravda (Truth), Sovietskaya Rossiya (Soviet Russia) is sold out, the only thing we have left is Trud (Labor).
Thank you for that. I keep thinking of the volunteers who show up when you have a medical emergency. They have probably spent much of their free time training for medical, not financial emergencies. Seems like we are better off if we have some of both kinds.
why haven't we flattened NK's lauch site with Tomahawks yet?
Broward,
tell that to the UC grad who flips burgers or delivers pizza......
cliff-
Phil is a moron (hat tip to VT) he did the same thing last year and sort of ignores that the entire comm. sector is getting goosed. He just happens to be short oil (for over a month) and gets "outraged" that it's not going his way. We all know the fundies don't support it but did that matter last year? Nope....he's repeating his stupidity again.
Ciao
MS
Putsch yourself in their position, once the truth leaks out about their lies cleverly disguised as statistics...
"Due diligence can't be outsourced"
It can be and always has been, but it has to be done on an individualized basis, using an experienced professional charging by the hour, with another experienced professional looking over his or her shoulder. That is what lawyers do for portfolio lenders.
It can't work for the 2002-06 lending model. It is much too expensive for a low margin business with bank executives who need to skim off more than the entire margin for themselves.
Citizen Scotto (profile) wrote on Fri, 5/29/2009 - 11:10 am
why haven't we flattened NK's lauch site with Tomahawks yet?
Two things. One news cycle timing and two the USS R.R. is still too far out.
And, of course, the harder that the "producers" work, the more entitled they are to "their share", which means the angrier and more defensive they get about sharing, which of course....
means less and less consumption.
I wish I could remember that religious quote about "bread upon the water".
Dryfly,
Yes but the shepards do not run amok among the flock killing just for the joy of it. They realize the flock is their wealth; not a playground to indulge their twisted passions of blood and fun. Except when its been awhile since you have been to town and that cute little ewe keeps following you around...
dawg-
you're in SD? Delayed departure by a day.....to the "western Pacific"....
Ciao
MS
If I was a sneaky NK bastard, i'd have planted a nuke in downtown Seoul, ready to go.
Or at least use the idea of one, to frighten us into not doing anything...
thanks RD,
"the USS R.R. is still too far out."
yeah looks like they just left SD yesterday
dryfly: we need a new accounting acronym:
COGOTE - Continuous On Going One Time Expenses.
How about Continuous Ongoing One Time Intercession Expenses - COOTIE.
"why haven't we flattened NK's lauch site with Tomahawks yet? "
We used them for collateral...
Really, that would be a humanitarian disaster of epic proportions. Kim would just end up just starving his people to death or even worse, marching them across the DMZ. Breaking the cease fire and the food for peace programs should be last resorts.
I wish Marc Faber or Gerald Celente would use(steal) my three Phased Collapse scenario for the current economic catastrophe we are in.
if TBT goes back below 50, I'm loading up again
Lil' Kim broke the cease fire the other day, he wants to party like it's 1953.
If I was a sneaky NK bastard, i'd have planted a nuke in downtown Seoul, ready to go.
Or at least use the idea of one, to frighten us into not doing anything...
We won't do squat - look at the map... see that big country to the west of NK? I think we owe them something. If anything is going to be done they will do it... if they don't want to do anything then NOTHING will get done. I'm sure Timmay got the memo to hand over to his boss telling him in polite diplomatic speak to sit down and shut up.
GM volume at 208M
One of the reasons China has been hesitant to do anything is that not thrilled about the idea of the US setting up listening posts a few miles from their border. Which is what would happen if Korea became reunited and the South was the one doing it.
dry-
with you on that....but we can look like we might which is all we can do in any case.
Ciao
MS
How about Continuous Ongoing One Time Intercession Expenses - COOTIE.
Works for me. Waiting for a Reuters or Bloomie lead... XXX company reports EBITA unaffected by COOTIEs... stock soars.
MS (profile) wrote on Fri, 5/29/2009 - 11:14 am
dawg - you're in SD? Delayed departure by a day.....to the "western Pacific".... Ciao, MS
I am NOT in San Diego. I am however, having BBQ tonight with a previous CO of the boat.
NK is truly a mystery wrapped in an enigma, complete with goose-stepping.
The perfect Black Swan...
creditcriminalslovetarp - I think CRE-CMBS rent rates 6 to 30% below current is fine (the bay area is likely closer to 30%). Citi agrees with this, I agree with this, S&P agrees with this. The issue is lease rollover!
Breaking lease contracts can really only be done via bankruptcy (but then the property owner has a quantifiable dollar amount owed which will be settled in bankruptcy court the same as other debt holders). Saying government intervention lease cancellations is an issue is like saying the housing prices are falling because PPG industries released 50,000 gallons of bad paint primarily used in san diego houses.
In this case I agree with Citi - these S&P rating cuts are too harsh. Even if 100% of the loans below a 1.1 dcr default, 100% go into foreclosure, there is a massive 50% average severity of loss rate (even during the great depression it was likely not 50%), and assuming double the standard cost/fees of sale, the rating cuts S&P are proposing are too harsh. Perhaps we can all agree it would be nice if S&P made the assumptions they used public (which was the main thesis of the Citi call this morning).
If you are a fund manager who still has a ton of GM shares*....WTF are you waiting for???
Astonished by it's ability to stay where it's at...
*not all of them have circled the drain...couldn't have.
Ciao
MS
In this case I agree with Citi - these S&P rating cuts are likely too harsh. Even if 100% of the loans below a 1.1 dcr default, 100% go into foreclosure, there is a massive 50% average severity of loss rate (even during the great depression it was likely not 50%), and assuming double the standard cost/fees of sale, the rating cuts S&P are proposing are way too harsh.
That is reassuring - for a moment I thought you might say they are 'contained'.
"There will always be sheep, wolves, and sheep dogs."
Nova, are you a fan of Bill Whittle (Eject! Eject! Eject!)?
How will GM make a profit and pay back the USG ? Is Obama going to be pricing US Cars too? I mean, what's a fair price to the impoverished US consumer ?
He's on both sides of the deal if he likes it or not. Ms Pelosi may demand progressive pricing for autos just like the progressive US Tax code. SHow your 1040 and get a price quote!
Tainted but still true. To Protect and Serve the flock is noble. It is the right thing to do.
That depends on how you define the flock. There are some people who legitimately deserve protection - children, elderly, etc.
The vast majority of the flock these days is people who are being trained that there are no negative consequences in life. The government will give you money if you "can't" work, can't afford your children, get in over your head with debt, don't read the medicine bottle, fail to perform the simplest due diligence on any transaction.
Those are sheeple, and we create new sheeple every time we cushion the blow and prevent them from taking responsibility for themselves.
Does anybody know how to say "no" any more?
/rant
Comrade Terry,
No. Sorry, never heard of him.
Cruise missles in NK... why? He hasn't done anything yet? A conventional war would be bad for the US..The odds are against us winning especially since they use women soldiers who are experienced in tantric massage....Are soldiers would most likely fall for the brilliant but cunning $20.00 soldier massage special, where they get your knots out while tying your hands behind your back....
http://www.nkeconwatch.com/wp-content/uploads/2006/08/kpa%20women.jpg
NK Army of the Happy Endings.
WC- I stand corrected...
OT: I've about decided that the equities markets aren't going down. We may be stuck at 8500 for awhile. It pretty well makes it such that it's just not worth participating. These prices are too high; a correction isn't being allowed.
/frustrated
dryfly - For the last 5 years my vote has been that valuations are inflated and that rating agencies are being paid by investment bankers to keep ratings high (paid in the form of keeping/losing future business). I feel dirty switching teams in this argument, and I still think CRE prices will be chopped in half, but that does not mean 90% of the 07 vintage super senior CMBS will have a probability of default or severity of loss high enough to lose AAA status.
"If anything is going to be done they will do it... if they don't want to do anything then NOTHING will get done. I'm sure Timmay got the memo to hand over to his boss telling him in polite diplomatic speak to sit down and shut up."
If anything, That big country to the west is encouraging Kim, to drive home to O', Tim and Ben, what the cost of continued T-Bill devaluation will be.
"I still think CRE prices still need to be chopped in half, but that does not mean 90% of the 07 vintage super senior CMBS will have a probability of default or severity of loss high enough to lose AAA status."
How can anything written on '07 have AAA status. AAA should be for near T-Bill or better chance of being paid back in full. The Circit City GGP and Linen n' Things, CMBS are not quite there.
"There are some people who legitimately deserve protection - children, elderly, etc."
The recklessly greedy deserve to be fleeced. Kind of sad, that it is them, the Gov is protecting, and not tomorrow's children who get stuck with the bill, and economic disadvantages going forward.
Blackhalo - AAA's have 20% junior debt. Super Senior's have 30 to 50 percent junior debt (depending on how much prepayment has happened). To make the 07 super seniors take a loss, CRE prices would have to fall around 90 percent. To make them get downgraded from AAA status, CRE prices would have to fall 60% +... though even with that type of decline it would be select bonds, not 90% of the entire 07 cmbs universe as S&P is announcing.
Money doesn’t grow on trees for most of America. We sit down at our kitchen tables and write out checks to the phone-company, electric company, credit card-company, mortgage-company, and auto finance company every month. We clip coupons and go to the grocery store every week to put food in the mouths of our children. This is what our parents did before us.
bankers selling our childrens futures..for more bailouts? the disgrace. it's horrible. too big to fail needs to fail. we neeed LESS bailouts. If you fail U fail. Tons of informative articles.
I came across this interesting site..check it out Econ & Finance Articles Updated Daily
with CRE prices down 35-40% and 80+% of 2007 issuance being interest-only mortgages (in other words, speculative), basically, every loan is underwater. We should thank S&P for taking action to prevent these loans from becoming the taxpayers burden, even if that wasn't their intent.