Moody's: CRE Prices Fall 8.6% in April
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CalculatedRisk on Mon, 06/22/2009 - 10:17am (148 comments)
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green shoots... downward?
Real green shoots will only thrive when there's enough blood in the streets to make good fertilizer.
Bob Dobbs ala War of the Worlds?
Hey Little Spender!
Chinese Consumers Won't Save Us | Newsweek Business | Newsweek.com
"It will take much longer than that for the Chinese to rival Americans as consumers: Chinese incomes are about one tenth those in America, and total consumer spending in dollar terms was about $1.7 trillion in 2007, compared with $12 trillion in the U.S."
I had green shoots in my side yard yesterday. so took a weed whacker to them. is CRE or RRE the weed whacker?
Green shoots downward! We've got one of those upside-down tomato plants going on.
ho-lee sheet
you want doomer pr0n?
get a load of this
http://2.bp.blogspot.com/_FM71j6-VkNE/Sj-9dk-ySkI/AAAAAAAADiE/UYRXOaIcNmU/s1600-h/3650482224_144738df7a_o.jpg
Green shoots, green scores!
Trucks Sit Idle; Rail Traffic Horrific
Mish's Global Economic Trend Analysis: Trucks Sit Idle; Rail Traffic Horrific
CRE: Moldy shoots.
Kinda like up here in NE right now.
Moldy shoots.
PPT has started!
CRE: Moldy shoots.
Kinda like up here in NE right now.
Moldy shoots.
Agree outsider, quite depressing...oh and I will add to it...next week is the fourth...where is the sun!
I am going with the supposition the dollar is on the way out as our nations currency. The replacement currency and the means of distribution are being examined.
Death of the dollar
Is this the death of the dollar? - Telegraph
Japan considers abolishment of hard currency
To fight deflation, abolish cash. Could Japan make reality of ‘science fiction’? - Times Online
Canada moving towards a cashless society
https://www.zoompass.com/info.jsp?content=news
Ridiculous? Think about the simple requirement of required direct deposit and its mandated need for a bank account. Imagine grocery stores refusing to accept cash. Think about the failure of the dollar and the issuance of a new currency where you are given a debit card representing your converted wealth. This might take years but consider the increased power and control given over everyone's day to day life. Only so much gold and silver for those that refuse to use the new digital cash. Barter will go on but the limits of barter exchange are set by the physical mass of what you want to trade.
We will come out of this mess freer or firmly entrenched in a new system with limited freedoms. Either way the existing system has to fail for the new system to be established. I am watching with interest and a certain amount of dread.
If commercial corrects quicker then residential, does it also follow that it over-corrects more?
Based on number of revolving lines of credit being yanked from builders I'd so yes, very much so.
Anecdotally I've been told that the number of builders choosing to simply "cap" properties they were in the process of developing has increased dramatically...you know, like it's some kind of super-fund site, just put a nice concrete veneer on it and call it a decade.
--bh
In case you missed it, it's not too late to apply for a new program at George Mason Univeristy...a sparkling future awaits the lucky 20 selected.....
"Producing Real Estate Leaders of Tomorrow
George Mason University is pleased to announce the launch of a university-wide initiative which will produce the real estate professionals of tomorrow and will further the educational and professional opportunities of real estate industry professionals.
Our newest degree, the Master of Real Estate Development begins September 2009. We are extremely excited about this new program, and are starting to accept applications. We are seeking only 20 outstanding students, so apply now!"
Nullpointer: I missed what your link was trying to say... maybe I just need more caffeine.
Don't worry, come July BB will start buying vintage CMBS and support the market.
Speaking of that, another $7.5B of debt "not" monetized today.
Federal Reserve Bank of New York - Permanent Open Market Operations
Blackhat - it's also possible that with so many more transactions, CRE is a "healthier" market than RRE. As such, price discovery will happen quicker and more accurately, and there is less of a chance of overshooting. RRE on the other hand moves like a friggin' glacier, and it takes a lot to stop its inertia. I think it will overshoot.
Gold and Oil getting smacked around pretty good...Leveraged Speculation at its best....
In case you missed it, it's not too late to apply for a new program at George Mason Univeristy...a sparkling future awaits the lucky 20 selected.....
"Producing Real Estate Leaders of Tomorrow
What is their financial aid like?
I'm thinking going back to school might be a good way to avoid homelessness. You either get scholarships/grants, or you take out student loans. Voila, your housing & meals are paid for for the next 4 years.
Can I patent an idea?
Bovis Lend Lease is the Austrailian CRE giant...now being investigated for fraud...
"Investigators are now scouring records to see if Bovis employees schemed to inflate bills or pay ghost employees, according to several sources familiar with probes by U.S. attorneys in both Manhattan and Brooklyn.
At the moment, prosecutors are looking at what went on at five New York City jobs, some of which are ongoing: the Sept. 11th memorial, a new wing of New York University Hospital, the new Citi Field stadium, a mall in Rego Park, Queens, and demolition of the former Deutsche Bank tower at Ground Zero, the sources said."
Probes shake a giant: Billions in city construction at stake in Bovis money investigation
this should help RE prices!
Many say homeownership no longer a path to wealth - MarketWatch
Danny-
Betcha there any that many transactions in CRE for awhile with prices dropping like its hot.
Outsider-
I think there will be a lot of people graduating with two-year grad degrees in 2011.
nullpointer...yeah that JPM GDP chart is ridiculous. Real GDP growth rates have averaged ballpark 3 to 4% over the last 25 years. And this chart's lowest growth scenario requires 5% real GDP growth...goblins!!
Certainly nobody predicted this....least of which the smarties at Harvard. Hoocouldanode?
creditcriminalslovetarp-
I have to tell you, as a developer, I'm almost scared of the next US real estate boom. I had a recruiter for a US real estate job and I almost wanted to vomit. Development in the US seems unethical right now, sort of like working for the Waffen SS or something,.
Come on. This isn't news. Everyone knows real estate only goes down.
For a long time I've seen a Japanese style future for the U.S. As it turns out, I wasn't pessismistic enough. Maybe Detroit is a closer fit than Japan. D'oh!
Externalized Costs
Most important post today IMO. Hold onto cash. Printing is expensive and that money can be hoarded in cookie jars. All the money printed by the FED has pretty much been electronic transfers to the banks.
Everyone read EC's posts.
Which is worse-if you can develop a re project that makes a profit and creates a living for your workers and their families, who cares what everyone else thinks! It's a mano y mano right now..
Angry Saver-
If Detroit is a fit then can we just bulldoze the US and start over?
creditcriminalslovetarp-
Yeah dude, I'm doing that, but in Asia. We actually have something call favorable demographics and household formation here.
Back from a walk in the forest for the trees, also known as the Bretton Woods...
Wildlife seems to have not caught the unemployment disease, and birds twitter in broadband from branches with no limit to what they have to say.
The rule of thumb in CRE is you make your money on the buy. EVERYBODY who bought in April who thought they were paying 70¢ on the dollar is now underwater. Not coincidently 8.6%/mo is 66.6% annualized. Hat tip Lucifer.
Next up; expect a flurry of EPD and then a second seizure in CRE funding. That won't go on long before RRE is forced to join them as the two markets are too closely aligned. Those Early Payment Defaults will doubtless cause a large uptick in regional lenders playing BFF.
Tim waiting quotes
"It will take much longer than that for the Chinese to rival Americans as consumers: Chinese incomes are about one tenth those in America, and total consumer spending in dollar terms was about $1.7 trillion in 2007, compared with $12 trillion in the U.S."
But even with their much lower incomes, the Chinese are buying at least 10% more cars than the US.
Consumer spending in the US is estimated to be 70% of the 14 trillion GDP or $9.8 trillion. Where did the $12 trillion figure come from?
Mish had a blog about two years ago where he estimated that a third of the US GDP was smoke and mirrors including $330 billion from free checking accounts.
homebuilder failure friday-HFF?
Moody's downgrades all ratings on KB Home
KBH Stock Quote - KB Home Stock Quote - KBH Quote - KBH Stock Price
Rob Dawg-
Here's my theory on making money on the buy: be a US investor buying real estate in Asia (say, Mumbai). USD crashes terminally and is worth about as much as the Turkish Lira, while emerging markets bloom through 2020. It's just lots of the good countries, (Saudi, UAE, India) you have to be a local or locally very connected to buy. That's a tough one.
The rule of thumb in CRE is you make your money on the buy.
Please! Pretty please with sugar on top! No Rich Dad, Poor Dad platitudes. Ever!!
Dueling towers fight for tenants in Phoenix
Some highlights:
The two projects will inject more than 1 million square feet of office space into a downtown market where layoffs have created a glut of empty cubicles.
Since the downturn hit, high-end Valley office buildings are offering deep discounts, sweetened with extras. It's common for a large firm to field a 10-year lease offer with 12 to 15 months of free rent, tens of thousands of dollars for tenant renovations and other incentives.
A few years ago, CityScape and One Central Park East probably would have initially offered a large tenant $36 per square foot, said Mudd, whose firm represents some tenant clients. That offer may be $34 per square foot now, he said. Haggling may bring that opening offer even lower, into the high $20-per-square-foot range, he speculated.
During the first quarter of this year, 12 percent of the 2.9 million square feet of Class A office space in downtown Phoenix was vacant. That figure rises to more than 13 percent when subleases are taken into account.
That 13 percent vacancy rate is nearly double the 6 or 7 percent vacancy rate from a few years ago. Downtown landlords with less-upscale Class C space face vacancy rates as high as 30 percent, according to figures compiled by Grubb & Ellis.
Other things have changed, too. Large tenants are vetting their potential landlord's finances, an issue that rarely came up even a year ago, Mudd said. Bankruptcies and other problems in developer circles have scared tenants, who could have millions riding on office-rental agreements, he said.
The first office tenants at CityScape are expected to move in next year. City- Scape has announced leases with several businesses, which will occupy 287,000 of the 563,000 square feet of office space in the building. But the development also has problems.
A key tenant, Wachovia Bank, was acquired by Wells Fargo and now plans to sublease three floors in the building instead of occupying it.
CRE in AZ is gonna be a bloodbath.
As California goes, so goes the rest of the country. If the crash cannot be prevented in California, then it cannot be prevented.
Alexei-
Problem with investing in CRE in AZ is that there is no limit to the supply. You can pick up buildings for free at the auction but some of that stuff will literally be vacant for years. You'll just be paying taxes on it and fighting with the assessor's office all the time.
At that rate in 12 months CRE prices will be negative.
ac-
"At that in 12 months CRE prices will be negative". This could actually happen pretty soon (so to speak) to Latvia and a bunch of European banks invested in Latvia (they will be negative in worth soon). I really see Latvia's crash touching off a little mini-crash and strengthening the dollar soon here.
As California goes, so goes the rest of the country. If the crash cannot be prevented in California, then it cannot be prevented.
Yep. The US is basically bankrupt.
It's astounding to watch spending accelerate as money runs out (borrowing ability, really).
The absolute and growing disconnect with reality is surreal.
BTW, the technical term for this is "Hail Mary Borrowing".
ac (profile) wrote on Mon, 6/22/2009 - 11:53 am
At that rate in 12 months CRE prices will be negative.
Ahhhh, the miracle of compounding. -8.6% for 12 months is -66%. +8.6% for 12 months is+169%.
Which is worse
I am also looking for some E EU countries to go down soon like later this summer or the end of the year.
Sad thing for the US is that all then "New Economy" companies and Social networks have just turned into tools of dissent IMO
YouTube, Twitter, Facebook none of them make money.
"YouTwitFace"
ac-
I spent the weekend in Sana'a, Yemen, this weekend, where i paid 1000 Yemeni riyals for dinner ($5). I sort of reflected that Sana'a has been around for about 2500 years and when Sana'a was a regional Middle East (unlike now) during that 2500 years some day someone in Yemen never thought you'd actually pay more than say 20 riyals for dinner. Never say never on currency devaluation.
Tim 2012-
Will be in Slovenia and Croatia in 52 days and 4 hours for 2 weeks
Time for the afternoon magic show. Let's see if we can pull kermit out of the hat today. Elmo is hungry today though. Someone told him frog legs taste like chicken.
bid to cover ratio on said non-monetized debt from ghost above:
13 week bid-to-cover 2.79
26 week 2.72
Sounds really peachy to me!!!
Ciao
MS
Green shoots = Chia recovery.
The antineutron bomb has already gone off in California. Unlike the neutron bomb that kills all the people and leaves the real estate untouched...
I see it everywhere. A thousand mile stare, going through the motions, short timing, inventory not being replenished, active disinvestment business policies, deferred maintenance, crumbling infrastructure, job preservation behaviors,... It's everywhere but like the boiling frog you need to get out of the pot in order to see it.
I've been away from California for 18 months now after living there for 7 years and can't imagine the antineutron bomb zone it has become.
OT, but here's a link to an article about gas prices (the article predicts no more prices increases in the next 2-3 months, questionable conclusion, I think) that's mostly interesting because it mentions increased attacks on pipelines in Nigeria. During the Bush Administration, I got the impression that the next US military foray might be into Nigeria and any other oil producing nations in Africa (on or offshore). But then I stopped seeing any articles about uprising in Nigeria & particularly the delta region. I wonder if, while many eyes are on Iran, we might miss some interesting international moves & activity in Nigeria & other parts of Africa?
I can't remember (link?) how much oil the US gets from Nigeria & how the US thinks it may get in the future, perhaps energyecon or someone else knows?
A half built live, work and play project with approx. 200 new condo/apts.in the Atlanta suburbs has informed the county that if the developer doesn't get $52 million in tax abatements, he's pulling the plug.
It's everywhere but like the boiling frog you need to get out of the pot in order to see it.
Locally try going to a part of town you haven't been to in a while. It can be kind of shocking.
I went past an old strip mall I hadn't been to in about 2 years and it's completely empty now. It had been fully occupied for at least a decade prior to that.
Which is worse
Why? Well you don't have to say but be careful
I've been utterly cut off from information for 4 days. Can some somebody sum up the activity in just 4 words for me?
I've been utterly cut off from information for 4 days. Can some somebody sum up the activity in just 4 words for me?
Stuff Hitting the Fan!
@ Juvenal
Green Shoots, Shat Brown
Kilroy LOL
Green shoots = chia.. Thats about right. Ever watch long enough to see how long chias survive?
Slovenia - Ljubjlana was supposed to be the next Prague a few years ago and I think it is worth checking out for at least a day. I'm a real estate developer who does lots of urban infill and urban village type projects so I try to see everything I can in Europe. I've been to almost every capital and large city worth seeing in Western and Northern Europe at this point having lived in Europe a few times now. Croatia - I shouldn't have to explain, but the coast is pretty fantastic. Dubrovnik with reference to my urban village interest above. Plus it is going on the euro in a few years and the price of everything jumps when countries accede to the euro.
Can some somebody sum up the activity in just 4 words for me?
they rang a bell
azurite-
It's not alot %-wise. I think the goldman's of the world actually pay to arm the rebel groups in nigeria. Didn't we all get just a little tired of hearing about "strikes in nigeria"? It's alot like the bird-flu scare a few year's ago....I can't remember the name of the hedge-fund but someone was paid to deliver an infected bird into the middle of some town in mexico.
Anyone else remember that?
Ciao
MS
One thing to remember about Eastern Europe is that most of the EU money invested there went to much needed projects from A to Z. Also most of the private side money went to WESTERN companies expanding there, from Ikea to German carmakers and retail giants. I'd say money invested there will be much profitable later on than in similar projects in UK or US.
They will probably experience a big economic crash in near future but so what? As former Soviets they experienced something much worse during the 90's.
Which is worse. I see.. Wow sounds like some fun.
I've been utterly cut off from information for 4 days. Can some somebody sum up the activity in just 4 words for me?
We are totally fu*ked.
Liquidity Disappearing
Liquidity Disappearing - The Market Ticker
I can't remember the name of the hedge-fund but someone was paid to deliver an infected bird into the middle of some town in mexico.
MS wouldn't be surprised. I bet you they put a snake in its claws for symbolism.
Juvenal Delinquent (profile) wrote on Mon, 6/22/2009 - 12:14 pm
I've been utterly cut off from information for 4 days. Can some somebody sum up the activity in just 4 words for me?
Containments fail, decay spreads.
"We will come out of this mess freer or firmly entrenched in a new system with limited freedoms. Either way the existing system has to fail for the new system to be established. I am watching with interest and a certain amount of dread."
Somehow I think all our prophecies will be falsified by events to come. They usually are.
Shill MS thanks for the data on liquidity
Time to break open Goldman like a pinata and let all the cash spill out.
Timmyone-
Agreed that the long-term investments in E Europe will be profitable in the long-term. The tricky part will be not going bankrupt and insolvent between today and that long-term.
Check out the recent article on Riga, Latvia in the NY TImes, there is lots of concern about people actually starving there with the unemployment so high. They are trying to do the "right thing" and cut wages and public expenditures to stay on the euro, but it is leading to massive unemployment, and no government can stay in power.
job preservation behaviors
====
rd - what do you mean?
The Celebrated Jumping Fraud of D.C. County remains hidden in plain sight, i'd imagine.
Latvia is being made to pay for insuring less instability in the western banking sector. Im just so glad that all of my relatives that used to live there are either now abroad, or deceased already, and didnt have to see either the disaster unfolding there.
There is just going to be a lot of emigration from Latvia, and probably Spain (with it's 17% unemployment) as well. That is what this comes down to.
On E. europe
I was talking to a Indian guy from the US about three years ago and he said that he was unable to leave the hotel (Czek Rep I think) with his white female companion because the locals became violent when they saw them together.
"There is just going to be a lot of emigration from Latvia, and probably Spain "
Where do you think they are going to go?
Tim-
Yeah, Europe is funny. In public they're all geeked up Obama being a black president. Behind closed doors, not so much I think. I went to high school in Russia (the Soviet Union) as an exchange student for a few months, and the big insult was to call someone a "yevrei", or Jew. That was 19 years ago.
"There is just going to be a lot of emigration from Latvia, and probably Spain "
Where do you think they are going to go?
We can give them California?...oh wait the Chinese may take that one....my bad.
Spain is already shipping everybody out. Paying them in fact, to stay away for at least three years. Poles, Lats, etc, will go back home. Construction done...see you, byebye. What will they do when they go home...not much. But at least the cost of living is lower. Or at least it was. Now, not so easy to just subsist in those places.
Was there another Hat-Trick BFF?
(throws fedora towards the ice)
snafu
one word does it just fine
"There is just going to be a lot of emigration from Latvia, and probably Spain (with it's 17% unemployment) as well. That is what this comes down to."
As goes Latvia, so goes California?
27 min to close poll : 100 pt up move or down?
OT-- "White House see 10% unemployment in next couple of months."
100 pt up move or down?
Yes.
GDD900-
!00 point wash out down
"Spain is already shipping everybody out. Paying them in fact, to stay away for at least three years."
Really...curious....where did you hear this? Not saying it's not true.
"There is just going to be a lot of emigration from Latvia, and probably Spain (with it's 17% unemployment) as well. That is what this comes down to"
Actually no. Where they are going to go? Jobs markets are pretty lousy everywhere and you'll run out of money much faster if you start travelling across Europe, looking for work. Language barriers are also much bigger than in the US.
I seem to recall that Spain was sending Algerian laborers home...
which is worse - NYTimes article of a few weeks back. WIll try to dig it up for you.
which is worse - NYTimes article of a few weeks back. WIll try to dig it up for you.
even with concessions seeing more and more for lease signs here in central florida. Short Rifin.x , see you at FAZ $13
Citizen Scotto (profile) wrote on Mon, 6/22/2009 - 12:26 pm
job preservation behaviors
rd - what do you mean?
Working extra hours off the books, making sure every rule no matter how silly is followed, no negative personality expressions (political leanings, diets, religious advocacy), that kind of stuff.
Where they are going to go?
How much room do you think there is in the space station?
this market is giving kudlow the green shitz
"
"Spain is already shipping everybody out. Paying them in fact, to stay away for at least three years."
Really...curious....where did you hear this? Not saying it's not true."
This link mentions it, in the context of offering guest workers incentives to leave Spain. And they aren't the only ones doing so -- Japan as well.
Migrants feel the brunt of the economic crisis, but the migration trend continues | World | Deutsche Welle | 15.06.2009
Timmyone-
Where are they going to go? To some place where the unemployment is 10% rather than 17%, and their chances are better. The economy sucks pretty bad here in the Middle East and there are still immigrants looking for work here. It still beats home.
I work for an large, undisclosed real estate developer in the Middle East (it's public, so I can't say on a message board) and I actually had someone walk into my office, which happens to be a corner office, off the street and come in asking for food today. No shit. It was in Arabic and my Arabic isn't real good yet, so I didn't realize it until after I walked out. I felt so bad.....
By saying there will be emigration from Latvia I should have said I was quoting the NY Times (actually IHT) article on Latvia, there. Thanks GD9000 on finding the article....I searched and couldn't find it.
Working extra hours off the books, making sure every rule no matter how silly is followed, no negative personality expressions (political leanings, diets, religious advocacy), that kind of stuff.
IOW, "Be Nice." too bad it takes a crisis to get people to behave.
Which is worse
The US UE is going to 14% so we'll be safe.
Sad thing for the US is that all then "New Economy" companies and Social networks have just turned into tools of dissent IMO
Funny that I should have read this not five minutes after reading the following...
We can start with a telling anecdote. State Department advisor Jared Cohen earlier this week emailed the co-founder of Twitter, requesting that they postpone a scheduled maintenance downtime. The reason? It was a critical moment for the demonstrators, and service needed to go uninterrupted. Twitter complied. The fact that a US government official is able have such pull, while not surprising, tends to get lost in a green wave of reports about social media belonging to “people power”. Who gets to place these calls and get results?
Jack Z. Bratich: The Fog Machine
here is the one article from NYT....havent gone through it again to find if that figure is in there. If not, there is one other place I can check.
As Jobs Die, Europe's Migrants Head for Home - NY Times
That dragon crawling down your arm that cost you a lot of money and pain to show off, might distract employers that can ink a deal with somebody not so illustrated...
ot-fxp is only up 3.8% today.lagging market a little....might be a good scalp to pick up now and sell in am? thoughts
from Economist: Premium content | Economist.com
/snip
Inequalities yawn in labour markets too. In countries like Spain, firms have laid off employees on temporary contracts (many of them young or migrants), rather than spending a fortune shedding staff on permanent contracts, which in Spain offer up to 45 days’ redundancy pay for every year worked.
/endsnip
"Sorry folks, but those "green shoots" are in fact marijuana plants and our President along with his economic advisers have been smoking 'em."
No truer words spoken.
Meanwhile back at the ranch.....SRS to the moon! Too bad it will never see those heady $200 a share days. Sigh...
SRS should get to $60
", see you at FAZ $13 "
Too conservative IMO...
Think about how the banks got to where they are now, SP-wise, and how they are almost done (I think BAC still has some surprises) raising capital.
Easy double from 13.
Ciao
MS
Almost had a cougar sighting (she was only in her late 30's), but can confirm it's a bear market, saw a couple bruins on the trail.
"I went to high school in Russia (the Soviet Union) as an exchange student for a few months, and the big insult was to call someone a "yevrei", or Jew. That was 19 years ago."
I have a hunch that wasn't the word they used.
3-Letter-Monte Carlo = Wall*Street
Watch us bust down through S & P 800 and then pretty soon watch out....it is off to the races to 500. Then pensions and European banks start blowing up....then uh-oh....
a few iwm puts wash away many sins
So what does the Fed announce this week?
Would love to hear your guesses, reasoning and market reaction predictions.
My guess: #1, Wait and see. Reasoning: Fed officials have been suggesting that the market is healing. Market reaction: Ideally - muted across the board. We wait for earnings reports and economic data to come in.
MS , I'm trying not to jinx my FAZ LOL, but since i'm not in SRS that guess ps probably more accurate
Ask yourselves this - if you were Bernanke, and were going to announce a massive increase to QE on Wednesday, what would you want to happen to the equity and commodity markets this week?
All you dollar deflationists are going to be sadly disappointed, I am afraid.
Read the speech again.
http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm
and there goes the low's on the happy index......
Ciao
MS
Sorry Pavel, that's what I heard. It was unfortunately pretty memorable.
Is this the part where someone says "So it begins"?
" So what does the Fed announce this week?
"One relatively straightforward extension of current procedures would be to try to stimulate spending by lowering rates further out along the Treasury term structure--that is, rates on government bonds of longer maturities...The most striking episode of bond-price pegging occurred during the years before the Federal Reserve-Treasury Accord of 1951.10 Prior to that agreement, which freed the Fed from its responsibility to fix yields on government debt, the Fed maintained a ceiling of 2-1/2 percent on long-term Treasury bonds for nearly a decade."
http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm
there are four times as many Chinese earning 1/10th - so if they were to spend like Americans they could spend $4.8T . If they are in fact only spending $1.7T there is considerable room for them to expand spending even at their level of earnings.
is this the part where that comment was lifted straight from market ticker?...
Ciao
MS
gfi - i think the commodities market is much tougher to control than the US equities market. i also think early 50s rate controls are a bit misleading, insofar as there was no equivalent of today's east asian CBs, and, more importantly, the dollar was still gold abroad.
i've been positioning myself for lower equities and higher commodities, thankfully, half of that plan worked well today (even though the other half has been the star in the past couple of months, obviously).
My bad MS I thought I linked it.....thank you
Liquidity Disappearing [Ticker] - MarketTicker Forums
Ghost: How would the markets react to such an announcement? Lets say they announce that we're pegging the 10 - year at 3%.
Do commodities take off? Does the dollar tank? Do financials take off? What about your mortgage markets?
I would imagine such an announcement could blow up a bunch of leveraged positions in the 10-year - as it would be a huge dislocation of a move.
HH-
This may sound oversimplistic however it's much easier to control when you have less competition....furthermore you get the type of results that are self-actualized ala GS's call of oil at $200 last year in the face of one of the largest demand destruction events we've ever seen.
Ciao
MS
It's interesting to live in Asia and see what's going from afar. The thousands of comments on CR over the past 4 years to me come down to this: given the withdrawl of credit from the US and EU economy, our living standards are going to implode down to the rest of the world over the next decade or two. You can explain it 100,000 different ways but that is pretty much it. Say goodbye to the US minimum wage, either de jure or through devaluation. To me that is what ends the crisis.
It's 11pm here on the other side of the world....night everyone.
A huge step forward in the battle against exuberance.
I've been a little busy - have not read some of the threads - I thought this was an interesting article...
The Intermittent Kevin - Find My iPhone works, and it is awesome.
I can't imagine there were all that many 'guest workers' in 1929, as compared to today. Places like Mexico & the Philippines would grind to a halt w/o remittances from abroad.
"however it's much easier to control when you have less competition...."
well, i think that GS call wasn't so outlandish in the context of what seemed like relatively benign hyperinflationary dynamics - as of '07, it really looked like the dollar threatened to fall apart on all fronts.
but that's the irony - all of this reckless gambling (much of it created by a backstop by the clowns who put their names on our paper) resulted in the best year for cash savers, by far, since the 30s.
but back to my point - commodities are global, and a dollar-a-day worker in the 3d world understands the value of just about all of them. not so with equities, they have no natural market once every pension just gives up and goes into treasuries. which supports your point - foreign CBs really don't care what happens to them, they have their own equity ponzi tickers to worry about (CHL, anyone?).
JD - They kept talking about the 'wordsmiths' and how they were put the language together for the Feds press release earlier this week....
Couldnt but help thinking you should somehow get involved if there is a need for wordsmithing...
looks like these markets took despondex, (I miss bobbi batista.) thanx sm_landlord,,,,,world markets have now tor returned to the regularly scheduled programming.
OT-- "White House see 10% unemployment in next couple of months."
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huh, back a few mos ago they predicted that the national U3 would not break 8% if we only passed the stimulus plan
Wow, s&p down over 3%...no one showed up today. Is this a beginning? Forget interesting day, it will be an interesting week....
"How would the markets react to such an announcement?"
Treasuries would rally, as there is no doubt BB could do it, he can buy as much of anything he wants. MBS would follow.
Commodities would rally.
Dollar would sell off initially, but if BB did that, other central banks would follow pretty quickly, so it would snap back. The race to the bottom reaction is pretty quick.
That's my guess.
Whatever happens, we have a Fed Chair who has studied the Depression his whole life, and is control of a fiat currency with no backing whatsoever. He will do whatever it takes to avoid deflation, and BHO will let him.
Green shoots rest in peace!
"Nobel Phelps says it may take 15 years for the US to recover lost wealth"
"Whatever happens, we have a Fed Chair who has studied the Depression his whole life"
that's the amazing thing - it is like someone studied copernicus, kepler, et al in the 17th century and concluded that the vatican was right and galileo wrong. what a shithead.
got it, thanks
ghost-
"BHO will let him"....don't think it's that way at all. He's just the gatekeeper in an empty suit.
AS far as the rest of your argument...could not agree more...deflation doesn't help the system the way it's already set up and, more importantly, how it's already "invested".
over the weekend we had a "news program" about home prices..the only two guests on it were..surprise!..real estate agents and of course the very first thing out of there mouth was "it's a great time to buy"....
I called the station manager and went off on them.....not that it would accomplish much but I felt better!......
Ciao
MS
CNBS is saying we go down to 850 then back up, I'm not buying that bs, The entire ralley was built on the now deceased green shoots, I say a 750 test is a done deal.
"Sorry Pavel, that's what I heard. It was unfortunately pretty memorable."
That is the polite term. Maybe they were taking it easy in your presence.
I have no doubt that the governments will try desperation measures like that, both for social control and to save a few pennies in hope of keeping the system alive. However no matter what they try it simply will not work. Global wage arbitrage means either deflation or collapse, there is no other way except reducing work hours social capital and raising wages
I am voting on collapse as modern social and technical structures are brittle, one moment strong a few moments later, total failure