The Great Recession - post mortem

[Edward64]

Some news in the past week indicates some major players believe we are in a recession now.

The official definition (ex. 2 qtrs of negative growth) would seem to indicate we cannot be in an official recession now (ex. 4Q 2007 did not have negative growth, or at least not until it has been revised).

Other than for my 401K/IRA and gas prices, I don't personally feel the "recession" as my house value has not declined much if at all and think I am in pretty good shape with my employer (ex. won't be the first to be let go).

Wanted to setup a poll and see how you vote. Regardless of an official recession, do you think we are close to bottoming out and then rebounding, or do you think there will be worse to come.

[Noop]

How long does a recession last?

[JPhillips]

Just looking at projections for mortgage and other loan defaults says we're not close to the bottom.

[Grammaticus]

from economy.com

Recession Primer
Media reports and economics textbooks often define recession as two consecutive quarters of negative GDP growth. While this is the conventional wisdom, it is not quite accurate, at least in the U.S. In fact, the definition is more complex and subtle than that. The Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) dates the peaks and troughs of the economy's growth; over the decades this activity has made it the de facto arbiter of recession.

The NBER panel defines recession as a "significant decline in economic activity spread across the economy, lasting more than a few months." A number of gauges are used, principally real GDP, income, employment, industrial production and sales, both wholesale and retail.

Unfortunately for forecasters and policymakers, the NBER's methods take time. Because the committee waits until the data are unambiguous, it often decides a recession has occurred months after it has started--and sometimes after it has ended.

(Importantly, the NBER only dates recessions for the U.S. as a whole—not for individual states or metropolitan areas. Moody's Economy.com fills that gap, estimating business-cycle peaks and troughs monthly for all 50 states and 381 metropolitan areas.)

[Galaril]

No disrespect but anyone inculding Bush who says we aren't in a recession or heading into one are fucking idiots. Believe me I felt it firsthand, being that I got laid off and it was because of the slow down in the economy effecting are clients budgets for 08.

[DaddyTorgo]

gonna get worse before it gets better. For sure

[DaddyTorgo]

No disrespect but anyone inculding Bush who says we aren't in a recession or heading into one are fucking idiots. Believe me I felt it firsthand, being that I got laid off and it was because of the slow down in the economy effecting are clients budgets for 08.

oh I think you should say it with disrespect intended. It's pretty much clear-as-day right now, regardless of what the NBER indicators say at the moment.

[Edward64]

Just looking at projections for mortgage and other loan defaults says we're not close to the bottom.

I was hoping all of that was known and factored into our "efficent markets" and that the banks revealed all their losses.

[Edward64]

How long does a recession last?

It varies according to the below. 1981 was <1 year.

http://www.economicshelp.org/blog/recession/how-long-do-recessions-last/

[Noop]

It varies according to the below. 1981 was <1 year.

http://www.economicshelp.org/blog/recession/how-long-do-recessions-last/

Thank You Sir.

[Edward64]

Spent sometime reading articles.

Here's a comparison to the 1990-91 recession


For the most part, the U.S. economy bounces back from hard times quickly. The downturn in the early 1990s is instructive. It had a similar starting point to the rocky period we're in. Then, as now, a financial shock related to the housing market caused problems. Then it was the collapse of the savings and loan industry.

Today it's the subprime crisis. The 1990-91 recession lasted eight months, and unemployment eventually peaked at 7.8% - not a staggering number but still more than 50% higher than the current rate. Home prices in the top 10 metropolitan areas fell 8.3% during the downturn and its aftermath. Today they're off 5% from their 2006 peak. Recovery in the 1990s was slow: It took until 1996 for housing to start rising again.

The stock market moved faster. It dropped 21% but bottomed out in three months. If we did enter a recession this past December, as many economists think, a replay of 1990-91 would mean further market declines now followed by a rebound later in the year. Not a terrible scenario. Unfortunately, it's not the only possibility.

http://money.cnn.com/2008/02/08/pf/recession_proof.moneymag/index.htm?postversion=2008022709

For anyone interested, the article was more on survival strategies for a recession.

[Edward64]

Maybe a sign of it bottoming out sooner rather than later. Bear Stearns bites the dust.

Bear Stearns, facing collapse because of the mortgage crisis, agreed Sunday evening to be bought by JPMorgan Chase for a bargain-basement price of less than $250 million, the two companies announced.

Bear Stearns’s stock price of $30 on Friday represented a yawning 62 percent discount to the $80 book value that the firm has reported, reflecting the broad view among investors that the fallout from the credit crunch has permanently devastated Bear’s core mortgage operations. JPMorgan’s bid of $2 a share, however, represents a 97.5 percent discount.

JPMorgan appears to have concluded that the business of one of Wall Street’s oldest investment banks is worth far less than the value of the firm’s Midtown Manhattan skyscraper, which is probably worth at least $1 billion.


http://www.nytimes.com/2008/03/16/business/16cnd-bear.html?ref=business

Not sure I understand how this can go through at such a steep discount. Reminds of of post USSR when the robber barons got some Soviet assets at a steal.

[Sidhe]

Dude, why would that be a sign of it bottoming out sooner, given that BS is being forced into sale to stave off a panic in the Asian markets?

[Edward64]

Dude, why would that be a sign of it bottoming out sooner, given that BS is being forced into sale to stave off a panic in the Asian markets?

Under the assumption you agree the market is a 'leading indicator' of the economy ...

The uncertainty and volatility in the market is because it does not know of the full extent of the housing/subprime mess. This is the first (?) big bank to fail, more may come but until the shakeout occurs, I don't think the public/market will regain its footing.

When the market recovers stability and growth, the recession/downturn will also end. You can't have the latter without the former.

[Masked]

Maybe a sign of it bottoming out sooner rather than later. Bear Stearns bites the dust.


http://www.nytimes.com/2008/03/16/business/16cnd-bear.html?ref=business

Not sure I understand how this can go through at such a steep discount. Reminds of of post USSR when the robber barons got some Soviet assets at a steal.

It will probably go through because $2/share is better than nothing. BS essentially can no longer operate. If BS becomes insolvent, then the shareholders would get nothing.

[kcchief19]

Not sure I understand how this can go through at such a steep discount. Reminds of of post USSR when the robber barons got some Soviet assets at a steal.
After closing at around $30 a share, BS was trading at $.09 in after hours trading since then. The $2 a share actually marks a significant premium, although the holders of the stock aren't getting a haircut, they're getting a completely shave.

You'll get the usual nonsense blaming subprime lending, but this collapse was due to complete systemic poor investments, decisions and actions throughout the company's entire portfolio and business model.

[Edward64]

It will probably go through because $2/share is better than nothing. BS essentially can no longer operate. If BS becomes insolvent, then the shareholders would get nothing.

I get that but what I don't get is this.

I am sure there are other financial institutions (domestic and/or overseas) that would have paid more for the $1B NY building alone?

This looks as if the Government basically handed BS to JP without allowing a competitive bid. From a layman, it would have been better for the Government to take it over (ala S & L in the early 90s) and then sell it at a better price?

I wonder if this means BS stock price will go down to approx $2 Monday?

[cartman]

I get that but what I don't get is this.

I am sure there are other financial institutions (domestic and/or overseas) that would have paid more for the $1B NY building alone?

This looks as if the Government basically handed BS to JP without allowing a competitive bid. From a layman, it would have been better for the Government to take it over (ala S & L in the early 90s) and then sell it at a better price?

I wonder if this means BS stock price will go down to approx $2 Monday?

But by buying the company you are also acquiring the exposure to their overextended positions. Which I've heard figures of $250 to $400 billion bandied about for BS.

[digamma]

And yes, BSC will trade right around $2 (and in line with JPM's) until the deal closes.

[Chief Rum]

This looks as if the Government basically handed BS to JP without allowing a competitive bid.

Nothing has changed for JP since the 19th century. :)

[Edward64]

But by buying the company you are also acquiring the exposure to their overextended positions. Which I've heard figures of $250 to $400 billion bandied about for BS.

Okay, I get this. The severe discount factors in the "risk" of $250-$400B which is something the government (or other banks) would not want to incur.

Deep down, I still think there were some nod-and-wink-wink between JP and the Government that were not offerred to other domestic or overseas institutions that may have been interested.

BTW. Wiki says the S&L bailout totalled $160B in 90s dollars.

http://en.wikipedia.org/wiki/Savings_and_Loan_crisis

[cartman]

The government hasn't had a chance to weigh in on this yet. The Fed has guaranteed to help cover some of the exposure, but that was before the talk of this buyout happened. The only people to agree on this so far are the boards of JP Morgan Chase and Bear Stearns.

[DaddyTorgo]

wow. That's crazy (Bear Stearns)

[Edward64]

The government hasn't had a chance to weigh in on this yet. The Fed has guaranteed to help cover some of the exposure, but that was before the talk of this buyout happened. The only people to agree on this so far are the boards of JP Morgan Chase and Bear Stearns.

Per the NY article quoted above.

Over the weekend, Bear Stearns, with the Federal Reserve and Treasury Department patched in by conference call from Washington, held the equivalent of a speed-dating auction, with prospective bidders holed up in a half dozen conference rooms at its Madison Avenue headquarters.

While the talks were taking place, Bear Stearns was simultaneously preparing a bankruptcy filing in the event the deal had fallen through, underscoring the severity of the firm’s troubles.

While the firm toyed with suitors including the big private equity firms Kohlberg Kravis Roberts & Company, which had its roots at Bear Stearns, and J.C. Flowers & Company, the only meaningful bidder was JPMorgan, headed by Mr. Dimon, who slept less than four hours the entire weekend.

Interestingly I know the article has been updated with this. This passage was NOT there when I first referred to it. People working late at NY times.

[Flasch186]

watch CNBC this week and you could see Fireworks IMO

[Cringer]

I say it gets worse. I have been saying for a good year now that transportation costs are going to start jacking up prices eventually. Companys are going to be 1)paying higher transportation fees to move product or 2)paying a higher fuel surcharge to have their product moved. Basically the same thing, an increase in what is being paid.

The price of fuel keeps going up and up, and it really doesn't look like it will stop sometime soon. It is going to make it's impact felt with all this other stuff going on around it IMO. It is also going to force another round of small trucking companies to shut down just when the survivors may have been finding away to survive with the fuel prices.

Just my 2 cents.

[Edward64]

watch CNBC this week and you could see Fireworks IMO
I read the other thread ... you said up +1000 pts?

[Logan]

My best friend's father was a long-time Lehman employee...he survived the first two big rounds of layoffs before falling on Wednesday. Thankfully, since he was pretty close to retirement, they did right by him, giving him enough severance that would allow for him to reach his retirement date so he'd get his full benefits.

I have two other good friends, one being my roommate, who just got massive promotions within Lehman. With the talk that they could be next to go bust, they're both literally shaking.

[Flasch186]

I read the other thread ... you said up +1000 pts?

well i said down 1000 is what I expect by the end of the week but becuase the stock market usually does the opposite of what I expect it will probably go up a ton. its the contra-flasch theorem.

[Edward64]

My best friend's father was a long-time Lehman employee...he survived the first two big rounds of layoffs before falling on Wednesday. Thankfully, since he was pretty close to retirement, they did right by him, giving him enough severance that would allow for him to reach his retirement date so he'd get his full benefits.

I have two other good friends, one being my roommate, who just got massive promotions within Lehman. With the talk that they could be next to go bust, they're both literally shaking.
Sorry to hear about your friend's dad. Good to hear it worked out for him.

I have not heard anything about Lehman? If they work at the Lehman office in NY by Times Square, I remember walking by there after 9pm and there were a couple Lehman guy's waiting to get into Limos ... thought to myself, what a lifestyle.

Good luck to them, it looks as if the auto and financials industry are the 2 most precarious industries ... following textile which went south (ex. sucking sound) in the 90s.

[Edward64]

well i said down 1000 is what I expect by the end of the week but becuase the stock market usually does the opposite of what I expect it will probably go up a ton. its the contra-flasch theorem.
Okay, lets do a post mortem next weekend. If this checks out we will have to start the "contra-flasch theorem" thread.

[Logan]

This should help them out "for now."

http://www.bloomberg.com/apps/news?pid=20601087&sid=afKxJH0i2v.k&refer=home

[cartman]

The news didn't seem to settle the Asian markets too much, as the Nikkei is down 3% at the start.

[Chief Rum]

The news didn't seem to settle the Asian markets too much, as the Nikkei is down 3% at the start.

Isn't this their first real shot at reacting to Bear Stearns at all? (not counting after hours trading)

Markets that haven't opened since then will likely trend downward at the start. I will be more interested to see where they end up.

[cartman]

Isn't this their first real shot at reacting to Bear Stearns at all? (not counting after hours trading)

Markets that haven't opened since then will likely trend downward at the start. I will be more interested to see where they end up.

At the end of the morning trading session, the Nikkei ended up down 4.23%. The afternoon session starts up in an hour and a half.

[Edward64]

At the end of the morning trading session, the Nikkei ended up down 4.23%. The afternoon session starts up in an hour and a half.
Can you send me your link where you can see international markets?

I see the reports via cnn but they don't seem to be realtime updates.

[JPhillips]

Bloomberg.com does international markets.

On Bear Sterns, I've read that the Fed took on 30 billion in "less liquid assets." Was that essentially a 30 billion handout or will it be paid back?

[cartman]

Can you send me your link where you can see international markets?

I see the reports via cnn but they don't seem to be realtime updates.

CNN was where I was getting them. You are correct that they aren't realtime updates, they are usually updated every 30 minutes or so. This is the link I was using:

http://money.cnn.com/data/world_markets/

And looking at the link, the Hang Seng is down 4.98%. All signs are pointing to a Black Monday. :(

[Flasch186]

Bloomberg.com does international markets.

On Bear Sterns, I've read that the Fed took on 30 billion in "less liquid assets." Was that essentially a 30 billion handout or will it be paid back?

I believe it was a 30 billion dollar foreclosure

/rimshot

[DaddyTorgo]

it's gonna be an ugly Monday...

[Edward64]

I know its unfair, but the only thought I have tonight is

"damn Bernanke"

[sterlingice]

Is there some point where we can stop with the Saint Greenspanning and show that he set up a lot of what is coming to fruition right now? Or has that already started and I've just missed it?

SI

[kcchief19]

It will be interesting to see what happens this week. You have to expect some decline tomorrow, I'm betting in the 2-4% range. I would be surprised to see another selloff Tuesday after the Fed meeting if they drop rates as low as some rumors have been going around -- one rumor has a full point drop. If that's the case, it's going to panick investory even more since it will be a sign that the Fed thinks things are going to get worse and they won't have much more room to cut rates further.

But I wouldn't be surprised either to see a quick rebound later in the week. There are a some big earnings reports out this week that could impact the market. But if we see a 5% decline by close Tuesday, there will be some bargain shoppers jumping into the market later this week.

[kcchief19]

Is there some point where we can stop with the Saint Greenspanning and show that he set up a lot of what is coming to fruition right now? Or has that already started and I've just missed it?

SI
I think it's a case of Greenspan getting way too much credit for the market when it was booming and way too much blame now. I really don't think there was anything Greenspan did that got this going.

The only complaint you could lodge against Greenspan is that he kept rates too low for too long. I don't necessarily agree with that.

From my experiences and observations, the problem has been that there has been too much investment money chasing loans. Banks were lending money across the board to people who shouldn't have been getting the loans because they had plenty of money. There was a reason BS was buying so much mortgage debt. There was a demand from investors. This applies to other types of lending as well. There were too many investors looking to buy debt.

I'm not sure economic policy would have addressed that. I do know there is a perception among some people even now that the Fed, the Administration and Congress have been slow to react to the problems in housing because they want money out of housing and bonds and into the stock market. Not sure I agree with that either, but I'm surrounded by people who believe that.

[Julio Riddols]

hxxp://www.gregpalast.com/elliot-spitzer-gets-nailed/

Thought this was interesting. Surreal, but somehow believable, and that amazes me.

[Edward64]

Is there some point where we can stop with the Saint Greenspanning and show that he set up a lot of what is coming to fruition right now? Or has that already started and I've just missed it?

SI
I wasn't even thinking about Greenspan, my statement was directed towards Bernanke only.

Hindsight is 20-20 etc. and the final act has yet to play out but I strongly suspect that Bernanke will take a hit in the economic history books for not acting quickly or aggressively enough 3Q-4Q 2007 when the signs started.

[st.cronin]

I don't think Greenspan can possibly get enough blame. Having said that, I'm still essentially optimistic. The market is in a weird state right now, but I think in a year or less things will good again.

[cartman]

Oops, Cramer was wrong on this one last week. :)

http://www.wjno.com/cc-common/news/sections/newsarticle.html?feed=244038&article=3413726

[SteveMax58]

Going to get worse before it gets better. I dont think enough emphasis can be placed on the consumer being more inclined to spend when their living arrangements feel secure.

The fact that we have a relatively large number of defaulted loans already means that (A) many who overbought, will be renting for a few years and (B) House values have and will continue to drop.

The problem with that is those who did not overbuy, and have & will continue to pay on their homes for the next few years means that by the time the first/second round of "defaultees" are ready to buy, they will be buying from the "responsible" parties that have just lost their a$$, just by paying on time. I would expect this to result in a third round of defaultees who will see this as unfair and not within their interests to continue to pay on a debt that many others have long since recovered from.

I dont think this means everybody...just a reasonably large precentage who bought at or near peak values...and subsequently cannot afford to sell without losing 20-30% at least. I think it would take quite a while for these people to just break even...barring some sort of legislation or assistance.

[SteveMax58]

Dola,

I cant blame the lending institutions enough for this mess. Investors are also culpable...but the lendors in many cases were not even thinking about keeping most of these ridiculous loans.

Just a mess all the way around...but somebody gave these loans out...and it wasnt Greenspan. I'd agree he could have "possibly" done some things to help lessen the mess, but I dont see him as the problem in it.

[Desnudo]

For the original question - other than high gas prices, I haven't seen anything on a personal level to indicate a recession.

[Sidhe]

The price of food has gone up considerably in the last months. When you buy for a family of five, it's more than noticeable. I have to imagine anything that is imported must be more expensive due to the falling dollar too.

[mrsimperless]

The price of food has gone up considerably in the last months. When you buy for a family of five, it's more than noticeable. I have to imagine anything that is imported must be more expensive due to the falling dollar too.

This is what makes me think we're in for a lot of trouble. We're already seeing signs of inflation and yet we're still lowering interest rates. Depending on how long the lag time is on these things it might get really ugly.

[molson]

For the original question - other than high gas prices, I haven't seen anything on a personal level to indicate a recession.

It still feels regional - no sign of trouble in Idaho (and from what I hear, most of the mountain time zone states).

I was upset at something that happened at work a few weeks ago and sent out one resume. Today I'm giving notice and then starting at the new job in two weeks, with a 15% pay raise. I don't know anyone having trouble finding a job out here.

Real Estate is still growing, but more modestly compared to the population growth here.

[Edward64]

74% nationally believes its a recession. Our FOF board is higher than that.

http://money.cnn.com/2008/03/17/news/economy/cnn_recession_poll/index.htm?postversion=2008031712

Three out of four say it's a recession - survey ...

In a telephone poll of over 1,000 adult Americans, 74% said they believe the nation is now in a recession. That figure rose from 66% in February and 61% in January.

Listening to the TV pundits on the Enron mess, I wonder who the Auditors were for Bear Stearns?

[kcchief19]

74% nationally believes its a recession. Our FOF board is higher than that.

http://money.cnn.com/2008/03/17/news/economy/cnn_recession_poll/index.htm?postversion=2008031712

Here's the amazing thing -- the definition of a recession is at least two quarters of negative growth. So far, we haven't even posted one. It's entirely possible 08Q1 could be a negative growth but it's not a guarantee.

My point is that we have a very distorted and twisted version of what a recession is because things have been so good for so long. Hardly anyone under age 30 really knows what a recession is because we've only really had one real recession and one borderline recession since the mid '80s. Good grief, in the '80s we would have killed for 5% unemployment and 6% mortgage rates.

I'm borderline annoyed that people are so spoiled that they see a momentary correction as a recession. Don't take that the wrong way -- I feel for anyone who is losing their job, is having trouble with their mortgage, etc. It's tough all over. I know friends of mine will lose their jobs. But given the mindset of the public, I can't imagine the reaction if we actually have a recession -- and you don't need to look any further than people on this board who use words like "depression." Unreal.

[Edward64]

Here's the amazing thing -- the definition of a recession is at least two quarters of negative growth. So far, we haven't even posted one. It's entirely possible 08Q1 could be a negative growth but it's not a guarantee.

I thought so too, but see Grammaticus post #4.

[Marc Vaughan]

I'm completely bemused at the constant over-reaction to any little snippet of information by the stock market, indeed one of my amusements recently has been watching the experts on bloomberg trying to explain why the market is heading in one direction or another (yes I'm sad).

The problem is that recessions can be self-fulfilling, people are told continually there will be a recession, they start getting cagey and not spending money - companies generate less revenue from this so start laying people off - repeat cycle until recession.

A similar thing can be seen in the stock market by and large with the market expecting bad things so running away from the financial stocks, meaning they fall - cue market experts talking about bank failures, cue withdrawal of major investments and hey presto bank failures ..

The sad thing is that the bears will undoubtably help ensure that at least one more major financial institution falls because this is over - I personally believe Bear Sterns when they indicated that they were liquid until fairly recently.

[molson]

My point is that we have a very distorted and twisted version of what a recession is because things have been so good for so long. Hardly anyone under age 30 really knows what a recession is because we've only really had one real recession and one borderline recession since the mid '80s. Good grief, in the '80s we would have killed for 5% unemployment and 6% mortgage rates.



It almost seems as though people are rooting for a recession. Everyone jumps over every little negative tidbit yelling, "see! see! we're all going down!". I think there's some element of people hoping that Bush's presidency will be remembered even worse.

[Edward64]

It almost seems as though people are rooting for a recession. Everyone jumps over every little negative tidbit yelling, "see! see! we're all going down!". I think there's some element of people hoping that Bush's presidency will be remembered even worse.
The reasoning is IMO there is *no way* the market will stabilize and grow until the psychology of the market is satisfied.

Right or wrong, the market believes we are in a recession.

Right or wrong, the market will not stabilize and grow until it believes we have "hit bottom".

The quicker this happens, the quicker we get through this mess.

Therefore, I guess I am guilty of this thought process ... but it is not Bush related.

[molson]

The reasoning is IMO there is *no way* the market will stabilize and grow until the psychology of the market is satisfied.

Right or wrong, the market believes we are in a recession.

Right or wrong, the market will not stabilize and grow until it believes we have "hit bottom".

The quicker this happens, the quicker we get through this mess.

Therefore, I guess I am guilty of this thought process ... but it is not Bush related.

Good point - recessions in the era of instant media are an interesting thing. Because of all the info, the market and economy is correcting before we even reach the recession. What I wonder is whether that softens the overall blow, or does it just make things worse?

[Anthony]

1. i don't know why the gov't gifted Bear Stearns to JP Morgan. wouldn't it have been better to basically have a "one day sale! hurry hurry, come with your best offers for Bear Stearns, highest bid wins!" type auction. that was unnecessary and i think putting Bear Stearns on the open market would've yielded a higher price.

2. there is a lot of doom and gloom on these financial shows, i have CNBC on over my cube cuz i work in the mutual fund industry. basically this is good for ratings, and its very hard to discern how much of what is being reported is accurately a big deal and what is being fluffed up just to have something to report. obviously we're in a bad way with the economy, but people don't tune in to CNBC when things are going good, if you get what i'm saying. point being there's certain entities that have a vested interest if things are reported a certain way. you can see them reporting with this look of glee.

[Flasch186]

1. i don't know why the gov't gifted Bear Stearns to JP Morgan. wouldn't it have been better to basically have a "one day sale! hurry hurry, come with your best offers for Bear Stearns, highest bid wins!" type auction. that was unnecessary and i think putting Bear Stearns on the open market would've yielded a higher price.


the only people who got fucked were Bear's employees who owned stock and options and investors. This was a huge "fuck you" to them.

For everyone in the other thread chanting morality when it comes to individuals deciding that foreclosure is a viable option I point you in the direction of, well, everywhere else. Until the banks heed Bernanke's advice to negotiate down principle on loans which actually helps the individual INSTEAD of choosing to simply write debt down which doesn't help the individual, morality is standing on a very small soapbox.

[Logan]

1. i don't know why the gov't gifted Bear Stearns to JP Morgan. wouldn't it have been better to basically have a "one day sale! hurry hurry, come with your best offers for Bear Stearns, highest bid wins!" type auction. that was unnecessary and i think putting Bear Stearns on the open market would've yielded a higher price.

Did you miss this excerpt in one of Ed's posts?

Over the weekend, Bear Stearns, with the Federal Reserve and Treasury Department patched in by conference call from Washington, held the equivalent of a speed-dating auction, with prospective bidders holed up in a half dozen conference rooms at its Madison Avenue headquarters.

While the talks were taking place, Bear Stearns was simultaneously preparing a bankruptcy filing in the event the deal had fallen through, underscoring the severity of the firm’s troubles.

While the firm toyed with suitors including the big private equity firms Kohlberg Kravis Roberts & Company, which had its roots at Bear Stearns, and J.C. Flowers & Company, the only meaningful bidder was JPMorgan, headed by Mr. Dimon, who slept less than four hours the entire weekend.

[Marc Vaughan]

For everyone in the other thread chanting morality when it comes to individuals deciding that foreclosure is a viable option I point you in the direction of, well, everywhere else. Until the banks heed Bernanke's advice to negotiate down principle on loans which actually helps the individual INSTEAD of choosing to simply write debt down which doesn't help the individual, morality is standing on a very small soapbox.

This is something I really really don't understand - there is no reason to lower the principle on the mortgages, just to renegotiate the terms so people can afford them surely?

The mortgages which are so problematic for the financial industry at the moment have largely been paid on the lower rates which they were first set at - rather than go "oh god no they're all going to default" why don't the banks just talk to the people involved.

Allow them to extend their 'cheap' rates for another 5-10 years at the cost of them being charged a bulk sum into the price of their mortgage up front (say 3% of their mortgage total).

I'd expect most people would accept because it allows them to retain their house and keep their payments very close to their current levels.

This would mean the mortgages don't default, thus over time the value of said mortgages would rise back up to a more sensible value and trade normally givinig liquidity back to the market.

(and yes I realise that the mortgages in many cases exceed the present value of the house in question - but surely if the mortgage rate is cheaper than renting the equivalent property most people would choose to stay in their house and wait for the prices to recover than flush money away on rent?)

[JPhillips]

The problems in the economy aren't being caused by pessimsts. There is a very real credit problem that's driving this. Financial institutions are still holding hundreds of billions of dollars of what will likely be worthless mortgages, commercial loans, credit card debt, etc. The problem, however, is these things have been packaged and sold so many times that it's unclear what has value and what doesn't. Because of the inability to verify assets/debts financial institutions aren't willing to loan money to anyone but solid credit risks and even then the downturn in the economy and the gloomy prospects for the future make them hesitant.

There's simply no way out of hundreds of billions in bad loans that isn't painful. My problem is that it appears the pain will be centered on the individual borrower while institutions and large shareholders will be bailed out by the government. Privatize the profits and socialize the losses.

[JPhillips]

Here's a fairly understandable primer on what the Fed is doing.

http://www.rgemonitor.com/blog/roubini/249924

This is the most radical change and expansions of Fed powers and functions since the Great Depression: essentially the Fed now can lend unlimited amounts to non bank highly leveraged institutions that it does not regulate. The Fed is treating this run on the shadow financial system as a liquidity run but the Fed has no idea of whether such institutions are insolvent. As JPMorgan paid only about $200 million for Bear Stearns – and only after the Fed promised a $30 billlion loan – this was a clear case where this non bank financial institution was insolvent.


The Fed has no idea of which other primary dealers may be insolvent as it does not supervise and regulate those primary dealers that are not banks. But it is treating this crisis – the most severe financial crisis in the US since the Great Depression – as if it was purely a liquidity crisis. By lending massive amounts to potentially insolvent institutions that it does not supervise or regulate and that may be insolvent the Fed is taking serious financial risks and seriously exacerbate moral hazard distortions. Here you have highly leveraged non bank financial institutions that made reckless investments and lending, had extremely poor risk management and altogether disregarded liquidity risks; some may be insolvent but now the Fed is providing them with a blank check for unlimited amounts. This is a most radical action and a signal of how severe the crisis of the banking system and non-bank shadow financial system is. This is the worst US financial crisis since the Great Depression and the Fed is treating it as if it was only a liquidity crisis. But this is not just a liquidity crisis; it is rather a credit and insolvency crisis. And it is not the job of the Fed to bail out insolvent non bank financial institutions. If a bail out should occur this is a fiscal policy action that should be decided by Congress after the relevant equity holders have been wiped out and senior management fired without golden parachutes and huge severance packages.

[Flasch186]

This is something I really really don't understand - there is no reason to lower the principle on the mortgages, just to renegotiate the terms so people can afford them surely?

The mortgages which are so problematic for the financial industry at the moment have largely been paid on the lower rates which they were first set at - rather than go "oh god no they're all going to default" why don't the banks just talk to the people involved.

Allow them to extend their 'cheap' rates for another 5-10 years at the cost of them being charged a bulk sum into the price of their mortgage up front (say 3% of their mortgage total).

I'd expect most people would accept because it allows them to retain their house and keep their payments very close to their current levels.

This would mean the mortgages don't default, thus over time the value of said mortgages would rise back up to a more sensible value and trade normally givinig liquidity back to the market.

(and yes I realise that the mortgages in many cases exceed the present value of the house in question - but surely if the mortgage rate is cheaper than renting the equivalent property most people would choose to stay in their house and wait for the prices to recover than flush money away on rent?)

oh, whether its the only option wasnt my point, i apologize I only used it as Bernanke's suggested idea, however my point is that right now, as mentioned in the thread about my parents looking at foreclosure, the banks are "writing off debt" which hurts themselves and shareholders while not helping the people who need it most AND helping themselves. If theyre going to write it down anyways, they may as well do it on the front end instead of the backend.

[Anthony]

Did you miss this excerpt in one of Ed's posts?

oof. I guess Drew Rosenhaus was 100% correct when he wrote one of my favorite books "A Shark Never Sleeps".

[Marc Vaughan]

The problems in the economy aren't being caused by pessimsts. There is a very real credit problem that's driving this. Financial institutions are still holding hundreds of billions of dollars of what will likely be worthless mortgages, commercial loans, credit card debt, etc. The problem, however, is these things have been packaged and sold so many times that it's unclear what has value and what doesn't. Because of the inability to verify assets/debts financial institutions aren't willing to loan money to anyone but solid credit risks and even then the downturn in the economy and the gloomy prospects for the future make them hesitant.

But thats what I don't understand - these mortgages aren't 'worthless' ... if you look at them as a whole only a fairly percentage of them have defaulted so far and of those a reasonable number wouldn't have done so if the banks had met them halfway by renegotiating terms.

As such they're largely involvent by their own devices - if they'd talk to the people who owe on the mortgages then surely those 'worthless mortgages' would be worth a bit more.

The system appears to be setup presently with the banks only looking at immediate gains/losses instead of planning to take a lower profit immediately but maximise gains over the long run (ie. renegotiated the terms of the mortgages at lower rates to prevent defaults and keep value in the mortgage itself rather than leaving the banks as property owners).

The other thing I've been surprised not to hear about is simply one of the more stable banks buying up vasts amounts of mortgages which are in default at a huge price down and setting up a property arm - surely if the mortgages are selling for as little ($ for $) as indicated then buying them up and renting them out would be a viable concern?

(serious questions - I haven't studied American economics at all so apologies if these are silly questions)

[cartman]

But thats what I don't understand - these mortgages aren't 'worthless' ... if you look at them as a whole only a fairly percentage of them have defaulted so far and of those a reasonable number wouldn't have done so if the banks had met them halfway by renegotiating terms.

As such they're largely involvent by their own devices - if they'd talk to the people who owe on the mortgages then surely those 'worthless mortgages' would be worth a bit more.

The system appears to be setup presently with the banks only looking at immediate gains/losses instead of planning to take a lower profit immediately but maximise gains over the long run (ie. renegotiated the terms of the mortgages at lower rates to prevent defaults and keep value in the mortgage itself rather than leaving the banks as property owners).

The other thing I've been surprised not to hear about is simply one of the more stable banks buying up vasts amounts of mortgages which are in default at a huge price down and setting up a property arm - surely if the mortgages are selling for as little ($ for $) as indicated then buying them up and renting them out would be a viable concern?

(serious questions - I haven't studied American economics at all so apologies if these are silly questions)

At face value, they aren't worthless, just "underwater". But it's the whole derivatives market that sprung up around them that is causing the pain. That $300K subprime mortgage was wrapped up with a bunch of other subprime mortgages and then repackaged as "prime" and sold as such. Then they were leveraged multiple times, meaning that the exposure created by the single $300K mortgage loan could be multiplied to as high as $3 million. It's almost the same situation that caused the 1929 panic, when margin calls caused the market to crash.

A default on a $300K mortgage where the house value is $250K doesn't just cause a $50K loss, there is the ripple effect dependent on the number of derivatives it was a member of. Based on the 10X example above, the true loss could be as high as $500K, more than the full value of the original mortgage.

[Warhammer]

The problem I have with this crisis is how the Fed is responding to things. The fact that the Fed has been trying to stave off a recession is ridiculous. The key to any free market economy is risk. You can take a low risk investment and make modest gains. Or, you can take a high risk investment and make huge gains, but a good chance to lose it all.

With the actions of the Fed, they are trying to take the risk out of risky investments. Those that make bad decisions will continue to make the bad decisions because they get bailed out.

It might be painful for some of the worst offenders of this crisis to get nailed in the pocketbook, but that is what is necessary for things to work themselves out. It would be painful in the short term, but beneficial in the long term. What has happened instead is the Fed elected to print more money (and has been doing so for quite some time). The result is that inflation has been rising and the dollar has fallen to lows against many global currencies. Sure oil is over $100 per barrel, but what if the dollar was not so weak. We could be looking at $80 per barrel which would not be nearly so daunting. Also, since the Fed is printing more money, that means that the dollars that are in ciculation are worth less, so investors are going to try and move into something less volatile, which means they are also going to sell their securities, driving the dollar down even more.

Basically, I think the Fed should focus on maintaining the value of the dollar and let the economy take care of itself. Sure, things would be painful in the short-term, but once the kinks were worked out of the system, we would be in a much better situation.

[Cringer]

I think the sky is falling. We are all dead. If some of us survive we will be slaves to Costa Ricans. Good luck to the survivors.

[Edward64]

What a day. From morning futures indicating -250 to ending at +21 for the DOW. Small victory for the contra-flasch theorem.

Lehman mentioned in the news as possibly the next one to go.

Fed comes out with a lending-facility to allow wall street companies access short-term funding. I wonder if this could have saved Bear Stearns if it was implemented a week ago?

Per my earlier post, don't wish bad on any company but sooner the better if/when we bottom out.

[Edward64]

The problem I have with this crisis is how the Fed is responding to things. The fact that the Fed has been trying to stave off a recession is ridiculous. The key to any free market economy is risk. You can take a low risk investment and make modest gains. Or, you can take a high risk investment and make huge gains, but a good chance to lose it all.

I don't know but I think there was a good chance for a domino effect on some wall street banks if the Fed had not acted.

I get your analysis of removing risk but I think that was too high-level.

The Fed was trying to prevent a panic (probably worldwide and albeit "short term") that would have had severe reprucussions on the "risk-takers" and "non-risk takers".

[Marc Vaughan]

With the actions of the Fed, they are trying to take the risk out of risky investments. Those that make bad decisions will continue to make the bad decisions because they get bailed out.

I don't know I think the wiping out of 80%+ of Bears value should dissuade a fair few bad decisions in future ;)

If the fed hadn't stepped in and the bank had filed for bankruptcy I'd expect there would have been more of a domino effect as people fled the sector (even more so than ha been seen since) ... if that happened in a big way it'd take a LONG time for things to recover.

[JPhillips]

The only thing I'd add to Cartman is that the loss on a 300k mortgage would be greater. If the house is appraised at 250k the bank will get lower offers due to the fact that everyone knows the bank is losing money every day they hold the property. There are also fees, man hours, home clean up and or/repairs etc. In the end the bank would be lucky to get back 50% even if there was no other exposure through derivatives.

[Flasch186]

Ill say one thing, if my neighborhood is any sign of things to come perhaps things are picking up. We've sold 5 new homes in 16 days :)

[Edward64]

Ill say one thing, if my neighborhood is any sign of things to come perhaps things are picking up. We've sold 5 new homes in 16 days :)
I assume at lower than the original price. Do you know if it was much lower?

There are hardly any for-sale signs in mine anymore, I think most people have decided to wait it out.

My neighbor across the street has been trying to sell his since Halloween with no success (don't know if he got interest but did not want to lower his price). Another neighbor tried to sell his house 4Q 07 but pulled it off the market in Jan.

[cartman]

We still have about a quarter of the houses in my development for sale, along with about 30 undeveloped lots. Partly because of the current financial environment, and partly because of the current HOA lawsuit that is still going on here.

[Flasch186]

I assume at lower than the original price. Do you know if it was much lower?

There are hardly any for-sale signs in mine anymore, I think most people have decided to wait it out.

My neighbor across the street has been trying to sell his since Halloween with no success (don't know if he got interest but did not want to lower his price). Another neighbor tried to sell his house 4Q 07 but pulled it off the market in Jan.

certainly at lower prices but the loans are lowered and fully doc'd.

the number of resales have dropped too, so all in all it seems that the pace through this bottom, while being different from region to region, may be accelerating through this bottom.

plus, what does "original" price mean anyways when it was all jumbled up by appraisals, speculation, etc.

[digamma]

Did you miss this excerpt in one of Ed's posts?

I think time will tell how much of an auction there was, but it is almost certain that the bidders outside of JPM were limited. There was an extraordinary time crunch and a need for either a mammoth balance sheet to take on Bear's obligations or the ability to get viable financing to do the same.

[flere-imsaho]

Thought #1: It's hard to tell if we're in a recession or just if there's a lot of pain out there due to mortgages and the credit crunch. I'm kind of leaning towards the latter. Recession-wise, I think we're kind of "lucky" that this has coincided with the weak dollar, which is propping up a bunch of industries who have (now) rising exports.

Thought #2: Bernanke > Greenspan. Greenspan's great accomplishment was allowing the economy to grow relatively unfettered. A lack of adult supervision of the economy (and, specifically the financial sector) was obviously great for the 90s, but has clearly set up some of the problems we've had in the 00s.

I think we can blame Bernanke somewhat for not stepping in sooner, but the fact of the matter is that he was operating in a huge non-interference wake left by Greenspan. It's only when the shit has really hit the fan (i.e. financial institutions are about to fail) that the financial sector has let him do some real meddling.

Bernanke's modus operandi, however, appears to be to bail out the financial sector at any cost, reasoning that the failure of the market is the worst possible outcome. Worse than pain spread throughout great numbers of borrowers, for instance. Presumably they (i.e. we) can recover eventually, but if enough Bear Stearns go under, the market comes to a grinding halt. And then what do you do?

Much as it pains me to do so, I suppose I agree with this philosophy (which has also been clearly articulated by Treas. Sec. Paulson). However, as a commentator on NPR last night put it, I kind of wish Bernanke would use this opportunity to wring some concessions out of the financial industry regarding self-regulation & general regulation. Let's be clear, these institutions, with their idiotic loans and their extraordinarily complex investment vehicles (which, to this day, the vast majority of them don't understand) are squarely responsible for the position in which the country is today.

Their "self-regulation" completely failed and now to bail them out Bernanke is letting them borrow huge amounts of money with only these very same convoluted (and probably worthless) investment vehicles being used as collateral. What happens if they can't pay back the loans? The American taxpayer pays. Which is, of course, richly ironic in light of the thread about Flasch's parents. :)

As I've said before (on this topic) the proper role of government (and the Federal Reserve, by extension) is to allow the market to be free enough to prosper without hindrance, but no so free so that elements within that market do things that are detrimental to the overall health of the system. The sub-prime mortgage mess is a direct result of the latter, and as the financial industry seems, currently, very uninterested in cleaning up their ways, the Fed should be stepping in to make sure they do so in the future.

Otherwise we're going to go through the same thing (with another type of investment) in about 10-15 years.

[Flasch186]

true, which is why if the banks would simply work on the front end, with people like my parents, perhaps we can stave some of this off but, contrary to what makes the news, the banks will only work with you if you're already 3 months late or so, in les pendins, and suffered the credit hit. Im sure those that only blame the banks will say, "see" and those who blame people like my parents will say "see."

[flere-imsaho]

If this were just a case of bad loans, then we could have equal blame. Blame the people who took out loans they couldn't afford. Blame the banks for lending to people who could afford to pay the loans back. Done.

However, the banks took an already dicey situation and made it exponentially worse by bundling all of these loans into ridiculously complicated investment vehicles that they then sold worldwide. How complex? So complex that Goldman Sachs, of all institutions, decided in late 2006/early 2007 to divest itself of as many of these as possible because a) they didn't trust them and b) they didn't fully understand them.


Anyway, I have a point here. I don't think this feeling of panic, or concern, or whatever you might want to call it amongst Americans about the economy these days, is going to go away until most of the financial sector can say "Yep, we've finally now found all of these and sorted out all the bad loans/investment vehicles/whatever. Some we just wrote off, some we've otherwise subsumed. So there's now 0% uncertainty."

The problem is, I think we're still a long way off from that.

[Flasch186]

so you say short the market :)

[flere-imsaho]

As far as I'm concerned, the stock market is mostly a work of fiction, especially when viewed in the short term. The majority of my investments are in either emerging markets or in holding companies that are run well and are invested in industries that are either a) emerging or b) will have good demand for decades.

Investing in the stock market for the short term is exactly the type of game guys like Jim Cramer make it out to be, and bears little, if any, resemblance to the actual nuts-and-bolts performance of good companies out there.

But, if you have the spare cash, and wish to dabble, it can be a fun way to spend your time (especially if you invoke the counter-flasch theorem). :)

[RedKingGold]

This thread/poll is useless without a trout option.

[Flasch186]

But, if you have the spare cash, and wish to dabble, it can be a fun way to spend your time (especially if you invoke the counter-flasch theorem). :)

guaranteed to make you money

[chesapeake]

Ill say one thing, if my neighborhood is any sign of things to come perhaps things are picking up. We've sold 5 new homes in 16 days :)

My neighborhood had 2 foreclosures auctioned this weekend. I am told that one definitely sold, but the second may not have hit the reserve price.

[st.cronin]

Thought #1: It's hard to tell if we're in a recession or just if there's a lot of pain out there due to mortgages and the credit crunch. I'm kind of leaning towards the latter. Recession-wise, I think we're kind of "lucky" that this has coincided with the weak dollar, which is propping up a bunch of industries who have (now) rising exports.

Thought #2: Bernanke > Greenspan. Greenspan's great accomplishment was allowing the economy to grow relatively unfettered. A lack of adult supervision of the economy (and, specifically the financial sector) was obviously great for the 90s, but has clearly set up some of the problems we've had in the 00s.

I think we can blame Bernanke somewhat for not stepping in sooner, but the fact of the matter is that he was operating in a huge non-interference wake left by Greenspan. It's only when the shit has really hit the fan (i.e. financial institutions are about to fail) that the financial sector has let him do some real meddling.

Bernanke's modus operandi, however, appears to be to bail out the financial sector at any cost, reasoning that the failure of the market is the worst possible outcome. Worse than pain spread throughout great numbers of borrowers, for instance. Presumably they (i.e. we) can recover eventually, but if enough Bear Stearns go under, the market comes to a grinding halt. And then what do you do?

Much as it pains me to do so, I suppose I agree with this philosophy (which has also been clearly articulated by Treas. Sec. Paulson). However, as a commentator on NPR last night put it, I kind of wish Bernanke would use this opportunity to wring some concessions out of the financial industry regarding self-regulation & general regulation. Let's be clear, these institutions, with their idiotic loans and their extraordinarily complex investment vehicles (which, to this day, the vast majority of them don't understand) are squarely responsible for the position in which the country is today.

Their "self-regulation" completely failed and now to bail them out Bernanke is letting them borrow huge amounts of money with only these very same convoluted (and probably worthless) investment vehicles being used as collateral. What happens if they can't pay back the loans? The American taxpayer pays. Which is, of course, richly ironic in light of the thread about Flasch's parents. :)

As I've said before (on this topic) the proper role of government (and the Federal Reserve, by extension) is to allow the market to be free enough to prosper without hindrance, but no so free so that elements within that market do things that are detrimental to the overall health of the system. The sub-prime mortgage mess is a direct result of the latter, and as the financial industry seems, currently, very uninterested in cleaning up their ways, the Fed should be stepping in to make sure they do so in the future.

Otherwise we're going to go through the same thing (with another type of investment) in about 10-15 years.


I agree 100% with this.

[cartman]

Crazy. Bear Stearns shares are trading around $7 per share. Evidently there are quite a few bond holders out there that are willing to take a loss on the stock, in order to have a say in approving the merger. This way, JP Morgan Chase assumes the bond debt, and they'll get full value, instead of having to fight with everyone else in bankruptcy proceedings.

[Edward64]

Damn, the Contra-Flasch theorem at work this week

27 + 420 = almost halfway to the +1000 that it predicted.

[digamma]

Crazy. Bear Stearns shares are trading around $7 per share. Evidently there are quite a few bond holders out there that are willing to take a loss on the stock, in order to have a say in approving the merger. This way, JP Morgan Chase assumes the bond debt, and they'll get full value, instead of having to fight with everyone else in bankruptcy proceedings.

Certainly that is part of the story, but the other huge gorilla in the room is Bear's derivatives exposure. They have like $13T in OTC derivatives exposure (credit default swaps, for example) on their books (this is not all one way, some will net out). Trust me when I say the folks facing Bear would MUCH rather be facing JPM on those trades.

Not to mention that people own CDS on Bear that would cause a huge ripple effect throughout the market if Bear filed.

[Edward64]

I thought this was a pretty interesting read where the bottom may be predicted via 'technical indicators'. According to most of the indicators we are not at the bottom yet.

http://www.kiplinger.com/columns/picks/archive/2008/pick0317.htm

"Fundamental indicators are a blunt knife," says Sam Stovall, chief strategist at Standard & Poor's. "Technical indicators are a sharp needle -- the chances of pinpointing turns are greater."
First is the VIX index of options volatility. Extremely high levels indicate extreme fear -- which is the predominant sentiment when bottoms occur. The recent high was 31.2. Previous readings signifying ends of corrections of bear markets occurred at 45.1 (October 2002), 45.7 (August 1998) and 36.5 (October 1990). According to the VIX, we haven't seen a bottom yet.
Next is the percentage of stocks trading above their average price for the past 200 days. Extremely low readings indicate that a market selloff is overdone and likely to reverse. The recent low was 13.8%. Previous lows: 4.6% (2002), 12.5% (1998) and 11.1% (1990.) No bottom quite yet, according to the 200-day moving average.
Third on the list from Ned Davis Research is the ratio of advancing stocks to the number of declining stocks, averaged over the past 90 days. Extremely low readings indicate an over-sold market. The recent low: 83.9. Past lows: 78.3 (2002), 74.8 (1998) and 73.0 (1990).
...a declining number of stocks hitting 12-month lows on the New York Stock Exchange ...

That number has been up in the mid-500s recently, equivalent to about one in seven stocks hitting new lows. The number, says Stack is "not indicative of a market bottom." Look for the number to contract to fewer than 25 before the market bottoms, he says. Within the first month of a bull market, you'll see fewer than 12 stocks hitting yearly lows.

Well at least the stock market is up 400+ this week.

[JPhillips]

He may be right, but I'm a little skeptical when the Chief Strategist at S&P tells me it's time to buy.

[Flasch186]

I think one of the problems with "the bottom" is most people are looking for "the bottom".

I think we HAVE hit a bottom in the housing crisis and will stay on it for a while. The economy as a whole may not be on the bottom nor with the equities markets. We may see the credit cancer spread into things like auto, credit cards, student loans, etc. whihc could also carry on the "housing" effect. Strictly with housing with variances for regionality I believe we've hit a bottom.

[wade moore]

I think one of the problems with "the bottom" is most people are looking for "the bottom".

I think we HAVE hit a bottom in the housing crisis and will stay on it for a while. The economy as a whole may not be on the bottom nor with the equities markets. We may see the credit cancer spread into things like auto, credit cards, student loans, etc. whihc could also carry on the "housing" effect. Strictly with housing with variances for regionality I believe we've hit a bottom.


I'm not super educated on this stuff, but aren't there a ton of foreclosures looming and don't values continue to go "down" (some will say return to real value, but lower than what they were the previous month)? I know I have seen values in my area go down from the previous month (although by relatively small amounts) and there doesn't seem to be a sign of it stopping.

Not sure how that is bottom? Or is my area different than the rest of the US?

[Edward64]

I actually don't think we've hit the bottom on the housing markets. There is still a large $ amount of future readjusting rates that may/will put alot of people in the hole and make the housing market worse.

From what I've read, this uncertainty will last at least through 2008.

Regarding the equity markets, I am hoping we are close to the bottom. My logic is that investors have (hopefully) accounted for the uncertainty about how much banks are exposed etc. and believe equities are now significantly undervalued.

[Flasch186]

I foresee many of these loans ending up being refinanced through the new fannie and freddie terms and in some cases I assume FHa will be assuming some of the bad debt so that lenders loosen their reigns on refinancing. My thoughts on the bottom assume that the momentum towards "bailout" and FHA, Fannie, and Freddie involvement in refinancing will keep the number of foreclosures lower than the apocolyptic number being thrown about. I also see people taking their homes OFF the market which is another step in the right direction in that people who initially thought that they wanted to sell their existing home to take advantage of the buyer's market when they dont have to are "giving up". that's good too.

[Passacaglia]

Date.......Inventory 25th Pctile Median 75th Pctile
03/17/2008 61,999 $199,000 $289,500 $429,900
03/10/2008 60,823 $199,000 $289,000 $429,900
03/03/2008 60,614 $198,900 $287,250 $429,500
02/25/2008 59,954 $199,000 $286,000 $429,500
02/18/2008 59,427 $199,000 $285,000 $425,900
02/11/2008 58,169 $199,000 $285,000 $429,000
02/04/2008 57,913 $198,900 $284,990 $425,000
01/28/2008 57,373 $198,900 $285,000 $425,000
01/21/2008 56,298 $198,040 $284,900 $425,000
01/14/2008 55,361 $199,000 $285,000 $425,000

Hope the formatting works. Since we're about to buy soon, I've been looking at this web site that tracks home prices in my area. It's going up, but the February prices are 94.7% of Feb 07, and the March prices are 93.3% of March 08, so the increase is only due to seasonality.

[Cringer]

boomshakalaka!

hxxp://www.qctimes.com/articles/2008/03/19/news/iowa/doc47e03e9ea03bd427238845.txt?sPos=3

What started as a small, online grassroots effort now appears to have the potential for something bigger.

Dan Little, the owner/operator of a livestock hauling company in Carrollton, Mo., estimated Tuesday that at least 1,000 other truckers from across the United States have committed so far to joining him in a strike on April 1.

Although none of the truckers interviewed Tuesday at the Iowa 80 Truck Stop, Walcott, which is just off Interstate 80 west of Davenport, has heard of the intended strike, some said they would shut down, too.

Weldon Kinnison, a Virginia trucker who was hauling soft drink from Indiana to Denver, heard about the plans for a strike for the first time Tuesday while stopping at Walcott.

“I’m an owner/operator with the American Truckers Association,” he said. “I’d park my truck for a week with the cattle haulers.

“The fuel is too high, and there’s no reason for it. I don’t listen to the CB (radio) that much, but I guess I’ll start now.”

At issue is the rising cost of diesel fuel, which has reached or exceeded $4 per gallon in at least 17 states. But Little does not expect his strike to bring down the per-gallon price of gas, nor does he expect to have any effect on the oil companies.

“What I would personally like to see is our federal and state governments, until our economy recovers, suspend federal and state fuel taxes,” the 49-year-old said. “The second thing I’d like to see is an oversight committee for truck insurance, which is part of what’s taking us down.

“The average owner/operator is paying $600 to $800 a month for truck insurance. It’s based on personal credit, which means the monthly cost is going up for a lot of truckers because their credit is going down.

“Everything in the world is going up (in price), except for what we do. I lose money if I start my truck, and that truck is paid for — free and clear.”

Mike Hills, a driver from Wyoming, Iowa, said he also would shut down to support Little and the others — if he could.

“I can’t strike with them because I’m company,” he said while at the Walcott truck stop. “If I owned the truck, I’d strike with them. As far as I’m concerned, the gas prices are driving the economy.

“It might be a good thing if the drivers strike. They can’t make payments. Maybe if the oil companies bought all the trucks, things would change. Everything in this country is trucked.”

Hills then removed his wristwatch, using it to explain his point of view: “Every piece of this watch was trucked from somewhere. If you can’t keep up with the trucks, we’re all screwed — not just this country, but the world.”

Keith Deblieck, the owner of a trucking company out of Geneseo, Ill., said that, for many drivers, the time for a strike has come.

“They ought to strike,” he said. “We all ought to. They lose money every day they go out.”

But officials from the Owner-Operator Independent Drivers Association are encouraging truckers to find options to a strike. The trade group represents the interests of more than 160,000 small business trucking companies and drivers.

“If we told our operators to shut down, we’d be slapped with a lawsuit because of anti-trust,” said association spokeswoman Norita Taylor, adding that a poor economic outlook and rising fuel prices are creating “a lot of emotions” among truckers.

“It’s hurting these people who are living paycheck to paycheck,” she said. “People are upset. What can we do?”

One thing the association is trying to do is talk to lawmakers and truckers about making sure that surcharges being charged to shippers are getting back to the people who paid for the gas. Surcharges are supposed to compensate for high fuel charges, but they must be negotiated with each shipper, and the truckers who pay at the pump aren’t always first in line to receive the surcharges.

Even when the surcharges do make it back to the driver, they are not enough.

“I turn down loads every day,” Little said. “The loads aren’t the problem — never have been.

“It’s the only thing I know how to do, driving a truck. But I sold my trailer the other day, and I’m not buying another one until something gets done.

“In no way, shape or form do truckers want to hurt this country. My whole deal on this thing is that I’m shutting down on April 1. Call it a strike, a shutdown or just flat-ass going broke.”

Jim Johnston, president of Owner-Operator Independent Drivers Association, warned that a strike “is not the answer,” saying, “Calling for a strike without the support of the majority would show weakness rather than strength, and the result would be increased economic hardship to the small percentage of truckers who do participate in the shutdown with no gains to justify their sacrifice.”

Little said he has no other choice.

“Our federal government is subsidizing railroads, airlines, banks and farmers,” he said. “Meanwhile, we’re being taxed to death.”

Ok, so not a huge thing really, I just wanted to say boomshakalaka. Why not a huge thing? I don't see a 'trucker strike' doing much, IF it gets off the ground. Let me say that I have heard truck off a trucker strike at least once a year for the last 9 years. Nothing ever happened. Why? Because most drivers drive for a company, and unless it is a small company they are not going to back such a strike. That means most trucks will keep rolling.

I wish them luck though. The crappy part is the talk was always because of what most view as crap pay for a job that never lets you home. Now it is just to survive the fuel prices.

[Edward64]

I agree, I just don't think a trucker strike from independants will do much of anything except make traffic flow easier in big cities! That said, trucker strikes seem to have an effect in France?

Also, JP Morgan may raise the ante to $10/share for Bear Stearns.

http://www.foxbusiness.com/markets/article/futures-rise-possible-10-share-bear-stearns-offer_530338_2.html

According to the Times, JPMorgan Chase (JPM: 45.97, +3.50, +8.24%) executives worked over the weekend to raise their offer price after coming under enormous pressure from Bear Stearns (BSC: 5.96, +0.63, +11.81%) shareholders. If raised to a $10 a share offer price, it would increase the value of Bear to more than $1.1 billion.

[Edward64]

Mon 3/24, futures looking up.

Last week was pretty good for the markets and somewhat lent credibility to the "Contra Flasch" theorem.

Flasch, what say you this week?

[Flasch186]

Ill post it in the financials thread ;)

[Galaxy]

http://www.msnbc.msn.com/id/23781864/

Gas prices rising quickly. Credit getting tight. A falling dollar. How long will this last?

[SFL Cat]

I think we're seeing the bottom now. I think we continue to see some volatility... some major ups and downs for the rest of the year, and things start improving late this year or early next year.

[Edward64]

I think we're seeing the bottom now. I think we continue to see some volatility... some major ups and downs for the rest of the year, and things start improving late this year or early next year.

Same old story. Some say yes, some say no.

http://www.msnbc.msn.com/id/23796366/

Per my assumption in above threads, the stock market is a leading indicator and if it stablizes and/or trends upwards then we may be out of the woods.

---

Flasch predicted volatility and trending higher this week and therefore the contra-flasch theorem predicts a lower market this week.

---

Interestingly, I've lost more % in my 401k than the Dow has dropped.

Dow (high of 14,198 - current 12,532) / 14,198 = 11.73% loss

My 401k has lost approx 19.1%. WTF? Must be from my overseas funds.

[Flasch186]

today is a nice start for the contra-flasch theorem. Spot on for today with very little volatility and slightly down.

[Marc Vaughan]

Interestingly, I've lost more % in my 401k than the Dow has dropped.

Dow (high of 14,198 - current 12,532) / 14,198 = 11.73% loss

My 401k has lost approx 19.1%. WTF? Must be from my overseas funds.

If its anything like my UK pension scheme than thats near 'standard' they always seem to underperform their base a little ...

I'd also say that the fact that one of the 'staples' (ie. financials) has been hard hit will have played into it more than the overseas funds section.

[Edward64]

Okay! Looks like the market is stabilizing and trending upwards in the past 3 weeks. Even with some bad earnings from Financials, the market has not been too spooked.

Assuming markets is a leading indicator, I am pretty optimistic about our economy and the length/breadth of a recession.

[Marc Vaughan]

Okay! Looks like the market is stabilizing and trending upwards in the past 3 weeks. Even with some bad earnings from Financials, the market has not been too spooked.

Assuming markets is a leading indicator, I am pretty optimistic about our economy and the length/breadth of a recession.

Don't presume this on the strength of the market - the market is happily misleading itself about the state of things because of the weak dollar presently imho.

If you factor out the influence of the dollar on the recent profits then you'll find that companies are performing a lot worse than expected in general (so obviously at present invest in companies which do heavy trade abroad - especially in Europe itself).

That being said my 'weather vane' for the American economy is my father in law who works in retail and he thinks its picking up slightly at present .. time will tell.

[Edward64]

Okay, I know this may be an unpopular statement, but I am calling it. The market has hit bottom and it is rebounding. I've read bottom is hit approx 6 months into a recession and as the market is a leading indicator, I am predicting we are on the uptick.

[cartman]

Okay, I know this may be an unpopular statement, but I am calling it. The market has hit bottom and it is rebounding. I've read bottom is hit approx 6 months into a recession and as the market is a leading indicator, I am predicting we are on the uptick.

I'll go with you that the market is a leading indicator, but only when the dollar is stable. With the dollar still dropping, there is a thought out there that foreigners are buying up bargains which are driving DOW30 stocks upwards. So although the market is improving, the capitalization relative to foreign currencies is actually dropping.

[Groundhog]

I can't believe the Aussie dollar is nearly equal with the US. Doesn't seem like that long ago to me when it was less than 0.50c. Great time to buy online, and I've been doing my best to keep the US online companies in business, at least! :D

[Edward64]

Oh, one more thing. If at all possible, please spend your rebate checks on products instead of paying off debt!

If only the rebate checks could have been timed for Nov just before the Thanksgiving sales.

[cartman]

Oh, one more thing. If at all possible, please spend your rebate checks on American products instead of paying off debt!


Fixed that for you. No sense in increasing the trade deficit even further and sending the money offshore.

[Galaxy]

Good luck in finding those cartman.

[Galaxy]

Do, and when, do you guys see the dollar start to turn it around?

[Buccaneer]

Good luck in finding those cartman.

We.re spending nearly all of it on domestic airlines. So there. :)

[Galaxy]

We.re spending nearly all of it on domestic airlines. So there. :)

So fly a Boeing-fleet carrier. :)

[Cringer]

Oh, one more thing. If at all possible, please spend your rebate checks on products instead of paying off debt!

If only the rebate checks could have been timed for Nov just before the Thanksgiving sales.

If someone wants to give me an extra $1200 then I will spend my rebate check on crap. Otherwise I will spend the money as normal money, and buy crap when possible. Gas makes that hard when you have to fill up the tank so much.

[Radii]

Oh, one more thing. If at all possible, please spend your rebate checks on products instead of paying off debt!

If only the rebate checks could have been timed for Nov just before the Thanksgiving sales.

If the government wants people to spend their surplus money on products instead of paying off debt they need to issue debit cards or something else that at least attempts to encourage, if not require, purchase of goods in retail outlets.

The one time your average American thinks about saving money or paying off debt instead of spend spend spend is during times of economic crisis. Handing out checks to your average American during economic crisis and then being surprised when they pay an extra bill or put it in savings is ridiculous of our government.

I've got one credit card left and then I'm 100% debt free. My surplus check is going towards that.

[fantom1979]

If someone wants to give me an extra $1200 then I will spend my rebate check on crap. Otherwise I will spend the money as normal money, and buy crap when possible. Gas makes that hard when you have to fill up the tank so much.

I just filled two 14 gallon tanks for about $50 a piece. I drive two cars that get pretty good mileage, I cannot imagine what the SUV drivers are paying right now.

[fantom1979]

If the government wants people to spend their surplus money on products instead of paying off debt they need to issue debit cards or something else that at least attempts to encourage, if not require, purchase of goods in retail outlets.

The one time your average American thinks about saving money or paying off debt instead of spend spend spend is during times of economic crisis. Handing out checks to your average American during economic crisis and then being surprised when they pay an extra bill or put it in savings is ridiculous of our government.

I've got one credit card left and then I'm 100% debt free. My surplus check is going towards that.

My check is going towards bills and some into savings. I think the checks are a good idea in general, just because the less debt people have, the better the ecomomy should rebound when this is all over.

If the government thinks the checks will be spend on goodies, I dont think they did enough research.

[Marc Vaughan]

Do, and when, do you guys see the dollar start to turn it around?

I have to admit I'm somewhat bemused when I hear commentators say that they expect the dollar to strengthen in the near term ...

I'd have thought that flooding an economy with 'free cash' via. the rebates is hardly the way to either dampen inflation or strengthen the dollar ....

Then again I can't understand why candidates believe that having a fuel tax holiday makes economic sense either (feel free to try and explain this if you know why - I'd be interested to hear why its anything but a short-term measure destinated to grab votes but further destabalise the economy in the long term).

[Marc Vaughan]

I just filled two 14 gallon tanks for about $50 a piece. I drive two cars that get pretty good mileage, I cannot imagine what the SUV drivers are paying right now.

Its about $70 to fill up our Aspen at the moment, that being said I'm back in England at the moment and its over £5 ($10) a gallon here these days ...

http://www.telegraph.co.uk/news/1915537/Petrol-prices-reach-and1635-a-gallon.html

.... do also realise that the UK gallon is a somewhat different size to that in America (1 US gallon = 0.83267384 UK Gallon - so real price of fuel is around $8/US Gallon over here) ...... also do bear in mind that in general cars in England are a lot more fuel efficient than in America ...

[Flasch186]

IMO the rebate checks makes the recession into a W but doesnt end it. I'll be spending mine on bills and gas BUT.....

I TRULY believe that people spend the $ more than once. They have spent it in their heads long before the check even arrives. They buy stuff in the month prior and rationalize it with the impending arrival of the check. Then when the check arrives they'll spend it again (or stats say 40% of it) and then put it in an account that either pays for bills or necessities (thus spending it again).

[Galaxy]

Dola,

I cant blame the lending institutions enough for this mess. Investors are also culpable...but the lendors in many cases were not even thinking about keeping most of these ridiculous loans.

Just a mess all the way around...but somebody gave these loans out...and it wasnt Greenspan. I'd agree he could have "possibly" done some things to help lessen the mess, but I dont see him as the problem in it.

What about the home buyers? I mean, they are buying homes worth more then they can afford (with no down-payments, ect.).

[Flasch186]

What about the home buyers? I mean, they were buying homes worth more then they can afford (with no down-payments, ect.).

Loans are tough to come by right now and AFAIK 100% financing has all but disappeared.

[gstelmack]

I'd be interested to hear why its anything but a short-term measure destinated to grab votes but further destabalise the economy in the long term).

Welcome to American politics!

[Galaxy]

Loans are tough to come by right now and AFAIK 100% financing has all but disappeared.

I know. I was pointing out that everyone has a share of the blame.

[cartman]

Here's something supporting my point that due to the low dollar, foreign purchases of US instruments is on a sharp rise:

http://www.bloomberg.com/apps/news?pid=20601068&sid=aqaLc14pfAe8&refer=economy

[Cringer]

I just filled two 14 gallon tanks for about $50 a piece. I drive two cars that get pretty good mileage, I cannot imagine what the SUV drivers are paying right now.

I think there are plenty of SUV drivers who really don't give a crap. They may say they do, but though don't act like they do. I drove from where I live up here to Waco yesterday, 7 hours. I will do a couple MPH over the speed limit and get some of my best gas mileage with the cruise control set at 70-72. Yet I see nothing but big SUVs flying by me doing 80+ MPH. I know they are decreasing there MPG at the speed, but they clearly feel getting to their off ramp 5 miles down the road 30 seconds earlier just to sit at a red light is better for them.

What about the home buyers? I mean, they are buying homes worth more then they can afford (with no down-payments, ect.).

Home buyers are to blame because there are some dumb ass people out there. We (wife and I) deal in almost nothing but repos, and as I go around to the usual neighborhoods for repos down here to take pictures I look at the person in a house worth $65,000 and they have their two or threes nice cars with 20" wheels and custom paint. I take a picture of their house knowing it is about to be repo'd, then go home and see they haven't even paid their property tax for the last couple years. They are idiots spending money on the wrong crap. Hell, I have had my Chrysler 300 for a year now and have not even had extra tinit put on the windows. I see 300's at some of these houses with the custom grills, add on chrome, wheels, and new paint. That is one reason I don't have a problem making my house payment on a house worth twice as much as theirs though.

Lenders are also to blame. Some local mortgage brokers have in the recent past made up fake documents just to get people approved for loans they should not be getting.

Loans are tough to come by right now and AFAIK 100% financing has all but disappeared.

We got 100% financing 4 years ago thankfully. You are correct is far as I am concerned about now though, as we haven't seen anyone get it for a while. The best you can do is get a grant to cover your down payment, which is not open for everyone.....

[Logan]

Here's something supporting my point that due to the low dollar, foreign purchases of US instruments is on a sharp rise:

http://www.bloomberg.com/apps/news?pid=20601068&sid=aqaLc14pfAe8&refer=economy

Is this really debatable? All of our assets (property and companies especially) are being bought up cheaply by foreign investors.

[Galaxy]

Home buyers are to blame because there are some dumb ass people out there. We (wife and I) deal in almost nothing but repos, and as I go around to the usual neighborhoods for repos down here to take pictures I look at the person in a house worth $65,000 and they have their two or threes nice cars with 20" wheels and custom paint. I take a picture of their house knowing it is about to be repo'd, then go home and see they haven't even paid their property tax for the last couple years. They are idiots spending money on the wrong crap. Hell, I have had my Chrysler 300 for a year now and have not even had extra tinit put on the windows. I see 300's at some of these houses with the custom grills, add on chrome, wheels, and new paint. That is one reason I don't have a problem making my house payment on a house worth twice as much as theirs though.

Lenders are also to blame. Some local mortgage brokers have in the recent past made up fake documents just to get people approved for loans they should not be getting.

Cars are the worst things you could buy in terms of value.





The look rich on credit phase seems to be over. Now you actually have to earn your possessions, it seems. I do agree, every one shares the blame. I'm just not too keen on the government using taxpayer dollars to support those who did.

[SteveMax58]

What about the home buyers? I mean, they are buying homes worth more then they can afford (with no down-payments, ect.).

A little late on the response, but yeah, I know there are plenty of morons out there who bought well above tyheir means...but they are just consumers who tend to take what they can get, and I dont expect them to have the same level of accountability as a financial institution.

I expect financial institutions, who enjoy the benefits of borrowing at the fed rate, to be a little more responsible than flippant knuckleheads who make $30k/yr, and want to purchase $800k houses with <5% down.

But I do agree in one sense...those borrowers do piss me off as well.

[Groundhog]

A little late on the response, but yeah, I know there are plenty of morons out there who bought well above tyheir means...but they are just consumers who tend to take what they can get, and I dont expect them to have the same level of accountability as a financial institution.

I expect financial institutions, who enjoy the benefits of borrowing at the fed rate, to be a little more responsible than flippant knuckleheads who make $30k/yr, and want to purchase $800k houses with <5% down.

But I do agree in one sense...those borrowers do piss me off as well.

Yeah I agree. They are idiots for borrowing what they can't afford, but people often need saving from themselves, and that's where the other idiots who lend the money are supposed to look at how much these people earn and realise that this is a terrible idea and shoot them down.

[Edward64]

1Q 08 at .9% GDP.

Well, I guess the 5 people that voted 'No Recession' were (most probably) right. I'm okay with it, maybe this will start a small rally.

http://money.cnn.com/2008/05/29/news/economy/gdp_revision/index.htm?postversion=2008052911

"Nine-tenths of a percent is not strong on its own right, but if the second quarter does not show decline, it's very unlikely we'll have a recession in 2008," said Wachovia economist Mark Vitner.

The results surpassed the initial estimate released in late April, a 0.6% rate that matched the anemic growth in the fourth quarter.

According to Vitner, the National Bureau of Economic Research (NBER), which determines whether or not the U.S. economy entered a recession, will not vote to label the current sputtering economy "recessionary" if there is no decline in GDP. The most common definition of a recession is two consecutive quarters in which GDP is negative, although the official designation of an economic downturn is based on broader measures as determined by the NBER.

[Flasch186]

Like Buffett said, definition be damned, to main street America it "feels" like we're in a recession.

[Galaxy]

It depends on where oil prices go. If they going up, I don't know how you can avoid a recession.

[JPhillips]

Rising energy prices are one of the reasons we're not technically in a recession, not that that gives most people much comfort.

[Buccaneer]

Still better off than I was 7, 14, 21 years ago, esp. now that I paid off all high-interest debts and both vehicles are paid off as well.

[Galaxy]

Rising energy prices are one of the reasons we're not technically in a recession, not that that gives most people much comfort.

Really?

[Flasch186]

he said technically.

[Galaxy]

he said technically.

I actually mis-read it at first. Long day.

[Flasch186]

This summer will be brutal, IMO, when it comes to the housing market. the Government did not step in in any timely or meaningful manner, as I thought they would, and the bulk of the foreclosures will begin to hit the market in June and continue to climb through the end of the year. How this translates to the broader market, I dont know, other than it will continue to put additional downward pressure on prices. Just my opinion but the call earlier about a bottom may be wrong. Check back in an hour as I could change my mind but this is what Im seeing here and, while not the center of the world, we're kind of in between the apocalypse cities and the cities that have rebounded...kind of in the middle so maybe a decent barometer.

[Buccaneer]

You are in Florida, perhaps the worst housing market in the country (according to cnn.com, 5 of the 7 worse housing markets are in Florida). I don't think it is a good indicator for the rest of the country.

[Flasch186]

NE Florida is not the same as SW or S or C Florida. Not great but not as devastated as those.

[Buccaneer]

NE Florida is not the same as SW or S or C Florida. Not great but not as devastated as those.

I buy that considering the five cities they listed are Miami, West Palm, Orlando, Tampa and Naples.

[Flasch186]

yeah, those areas are destroyed from what I hear. We were able to avoid the massive run up so I dont think we'll see too much more downside BUT the foreclosures have just begun to hit the market in massive amounts and we wont escape those in full. The summers are usually slower anyways but this one has me a bit more nervous.

[Edward64]

This summer will be brutal, IMO, when it comes to the housing market. the Government did not step in in any timely or meaningful manner, as I thought they would, and the bulk of the foreclosures will begin to hit the market in June and continue to climb through the end of the year. How this translates to the broader market, I dont know, other than it will continue to put additional downward pressure on prices. Just my opinion but the call earlier about a bottom may be wrong. Check back in an hour as I could change my mind but this is what Im seeing here and, while not the center of the world, we're kind of in between the apocalypse cities and the cities that have rebounded...kind of in the middle so maybe a decent barometer.
For the Market, I think the housing mess has been factored into all the impacted companies' stock prices assuming the efficient market concept. I am sure the analysts have gone through companies/industries that has/will been impacted and stock prices have adjusted downward accordingly. With the Market stabilized and trending upward, I am optimistic for my 401K.

For the Economy, certainly foreclosures, lower home equity and the impact of oil will impact buying behavior. But unlike late last year when the foreclosure mess was still in denial, it is an acknowledged problem now and government/industry is actively trying to deal with it. Alot of people will still be hurt but overall, I am optimistic.

P.S. I know there are pundits on this board that doubt the impact of the rebate checks but hey, I for one spent it on American companies (albeit foreign made) products and believe there will be some positive impact.

[Edward64]

I buy that considering the five cities they listed are Miami, West Palm, Orlando, Tampa and Naples.
Any opinions of which one is the best area to buy a rental home in anticipation of a rebound? Ex.

Which city is impacted worst?
Which city will rebound first?
After the rebound, which city will appreciate most?

[Flasch186]

whew....from what I hear, only hear and read, those cities are looking bad for a long long time.

[SteveMax58]

Any opinions of which one is the best area to buy a rental home in anticipation of a rebound? Ex.

Which city is impacted worst?
Which city will rebound first?
After the rebound, which city will appreciate most?

I live in the Tampa area currently and while I think we are yet to hit complete bottom, I dont see it getting dramatically worse...although dramatic could be a highly relative term.

If I had to project(and I'm no expert on these things), I would guess that Miami was likely hit hardest, followed by West Palm, Tampa, then Orlando.

Recovery? Miami, then Tampa, then Orlando, then West Palm, then Naples.

Miami & Tampa have reasonably strong economies overall, which will help the housing markets(arguably the 2 biggest drivers of the previous FL housing market spike), next is Orlando(tourism and the like). West Palm I see as a very difficult market to recover as quickly, as even though it is reasonably close to Miami, it is not a tourist hotspot, and is really more of a place for people who's jobs are driven by Miami, but dont want to live in Miami. So commutes are fairly lengthy for many people, and their likely will be a scaling down of lifestyle for that area...which doesnt bode well for the working class there, thus lowering the attraction for new homebuyers to the area.

Naples is a bit of an enigma to me...it could go either way in terms of recovery. It's primarily an area of haves and have nots...not a ton of middle class industries...so who knows? Do investors come in and try to leverage the area, or do the working class go under, thus making it a "rich-only play area".

Sorry...I'm too lazy to check all of my statements for factual accuracy at the moment...but thats my impression having lived in most major areas of the state over time. But I'll say this...looking at pricing in the Tampa area and comparing it to even more rural areas of the state...I have to think Tampa area will recover as well as most other areas, if not quicker.

[Marc Vaughan]

A rebound on house prices won't happen until people believe its happening - its a chicken and egg situation ....

Similarly such 'crashes' are made worse because people believe one is going to happen and so hold off buying, which in turn weakens the market.

(price bubbles are simply the opposite effect where people are desperate to buy and believe houses will rise if they don't get in NOW, hence they over-bid and by effect cause the rises)

[DaddyTorgo]

gee given the news today i think the "getting better" camp definately got it wrong. i think we're just beginning the "2nd leg down"

[Edward64]

gee given the news today i think the "getting better" camp definately got it wrong. i think we're just beginning the "2nd leg down"
Can't argue with your specific statement. Scared to check my 401k balance this weekend.

Although we were not in the formal definition of a recession in 1Q it doesn't mean that we are not in the beginnings of one 2Q.

[Flasch186]

i dont know. 1 day's analysis, especially on a historic day, like today, it's tough to say what is going on.

Some argue the jobs 3 wasnt as bad as stated due to the kids from HS entering the job market.

Oil jumped $10 today on weak news, IMO.

but what the hell do i know, im generally exactly wrong.

[SFL Cat]

Perhaps we're in a volatile Recessory.

[Galaxy]

It's tough to get a handle on things. You have the bad side, then you'll get a glimpse of good news.

[Noop]

So I applied for a job at the hospital and I was told that there was a freeze on hiring. This is the third job that has told me that... How long will this last because I would like to save a little money before I go to law school next year.

[Cringer]

Not a huge problem (well, a big problem for buyers I guess), but a small pain in the butt for us with the fall out of what went on with the mortgage companies. Mergers, and then more mergers. We have a few houses that are kind of 'on hold' with people waiting for responses to their offers because the mortgage/asset management companies have been merging and screwing things up with people not know if their head is in their ass or not. The people at these companies left over that is. We had been dealing with the Houston office of one company for one house, find out one day the office is no longer there. They closed it and no one told people like us who are selling their repos. Took my wife 3-4 days to find out who to deal with now as everyone left in the company tried to pass stuff from that office onto other people.

[law90026]

I actually had an opportunity to speak to some financial analysts about two months back and their view was that the problems are far from over at this time.

They estimated that the total losses that have to be written off for the sub-prime issue is in the region of US$800 billion or so and, at least from a couple of months ago, the write-offs were only at about US$300 billion.

They think that banks/financial institutions are going to slowly release bad news/more write-offs over an extended period of time so as to ensure the economy doesn't completely die overnight but that will also mean that market confidence will be very low and it'll be a long time before the market recovers.

Hopefully the above made some sort of sense since I'm not a financial person by trade.

[SFL Cat]

I'm hearing real estate in South Florida has been flat for the past couple of months...which is better than being in free-fall, like is has been for about a year or so. Whether it starts to come back this year or not will depend a lot on the hurricane season.

[Edward64]

Maybe the worse is still ahead with all the damn uncertainty. Although strangely enough, I've seen 2 additional for sale signs on my street (3 total now) in the past month ... we'll see if they sell.

Regardless of whether or not we were in a recession 4Q 07 and 1Q 08 (which we weren't officially), I concede there is a chance that we can dip into one.

FWIW, there have been some warnings that bonuses/raises won't be as good this year for my big-4 company.

[Neon_Chaos]

Just an outsider's POV.

The US is in recession, and as a consequence, the entire world is basically on a downswing.

[Flasch186]

I too think were heading into a recession in Q3/Q4 which is in contrast to those who think things will pick up then. Considering that usually Im exactly wrong take it FWIW. Housing here has stagnated so I cant imagine that S Florida is finding any footing but what I will say is generally in fliorida Summer selling is tough anyways so if a seller is "ok" leaving prices alone on their house for sale, "cuz its the summer" I can see some flattening but when we get to august/september and the expectations to sell it rise I'd expect to see pricing get more aggressive.

[Galaxy]

Oil broke the $140 mark, Dow took a pretty nice fall.

[BishopMVP]

I think personal anecdotes are only useful for the region you're in. Florida is doing bad right now, Boston/Mass is in kind of a holding pattern/slight recovery, but when I was in Texas everyone I talked to said the economy was taking off (and that seemed to apply to the rest of the Southwest). The US is just so big that unless it is a truly huge event - stagflation of the late 70's, boom of the 1990's - it is not going to hold true across the country.

I'd also like to see some academic studies of the media's role in economics. They certainly overplay the negatives, and that leads to lower consumer confidence, but I suspect the actual impact is minimal. The impact on a poll like this though is huge. A whopping 94% voted for recession when we haven't even had one quarter of negatice growth.

Like they say, economists and the media have correctly predicted 10 of the last 1 recessions.

[Flasch186]

remember we said (along with Buffett) that it may not technically be a recession but for most American's it will feel like one.

[Galaxy]

I think personal anecdotes are only useful for the region you're in. Florida is doing bad right now, Boston/Mass is in kind of a holding pattern/slight recovery, but when I was in Texas everyone I talked to said the economy was taking off (and that seemed to apply to the rest of the Southwest). The US is just so big that unless it is a truly huge event - stagflation of the late 70's, boom of the 1990's - it is not going to hold true across the country.

I'd also like to see some academic studies of the media's role in economics. They certainly overplay the negatives, and that leads to lower consumer confidence, but I suspect the actual impact is minimal. The impact on a poll like this though is huge. A whopping 94% voted for recession when we haven't even had one quarter of negatice growth.

Like they say, economists and the media have correctly predicted 10 of the last 1 recessions.

I see Starbucks is closing 600 stores in the next year and cutting 12,000 people.

I kind of have the same feeling as you. It seems to be hitting certain areas harder than others.

One thing that needs to get re-adjusted is the cost of going out. It seems a dinner out (a basic burger and fries meal, a coke or beer) is pricey. A night out to a movie is pretty expensive as well. Hell, even pizza is starting to get slightly expensive.

[Flasch186]

so is the passing of the housing bill the throes of the bottom?

US housing bill may stem downward spiral: analysts - Yahoo! News (http://news.yahoo.com/s/afp/20080723/pl_afp/useconomypropertyfinance)

[BishopMVP]

One thing that needs to get re-adjusted is the cost of going out. It seems a dinner out (a basic burger and fries meal, a coke or beer) is pricey. A night out to a movie is pretty expensive as well. Hell, even pizza is starting to get slightly expensive.6-6-6 deal? What the hell is this Dominos? :) Food prices are the highest inflationary trend though, even more so than energy. At least the economy seems to be doing better.At the June policy meeting, officials projected that the rate of economic growth by the end of the year would be between 1% and 1.6%, up from 0.3% to 1.2% in their April estimates.And for what it's worth, the high Euro (amongst other factors) is killing European growth rates

Brussels now expects growth of 1.8% this year in the 15-nation eurozone.
This is lower than its November estimate of 2.2%, and below the growth rate of 2.7% recorded in 2007. The Commission said credit market turmoil, slower US growth and surging oil prices would weigh on growth, while inflation would rise to 2.6%.Funny you don't hear about that European recession.<!-- E SF -->

[RomaGoth]

It is very true that the media completely overplays everything, and the economy is no exception. Negativity makes for good headlines I guess, while any positive stories are shoved to the last page or completely ignored entirely.

With that being said, however, my wife (who does the majority of the grocery shopping) says she has noticed a large increase in food prices. One example is the cost of a head of lettuce. It used to cost around $ .50 for a head of lettuce, now it is $1.50. Our food bill has gone up around $30 for the same exact grocery list we have been using for months now. Don't get me started on gas prices. For those of us with children, the cost of everything going up is huge. It affects everything we do, including groceries, travel, and leisure activities.

[JPhillips]

Bishop: I've heard a lot about a global slowdown. Admittedly you don't hear European economic news as often as American on the networks, but theremay be a good reason for that.

[JonInMiddleGA]

With that being said, however, my wife (who does the majority of the grocery shopping) says she has noticed a large increase in food prices.

Easily the biggest run up on grocery prices I can recall in my lifetime. And to be honest, much more noticeable to me than the gas difference over the past year. I've been consistently surprised how little play the food cost difference gets in the media compared to the gas. Never mind any connection between the two, I rarely hear food price increase mentioned, to the point that I had wondered at times whether it was all it my head ... then I looked at the receipt again & knew it was very much for real.

[Schmidty]

Easily the biggest run up on grocery prices I can recall in my lifetime. And to be honest, much more noticeable to me than the gas difference over the past year. I've been consistently surprised how little play the food cost difference gets in the media compared to the gas. Never mind any connection between the two, I rarely hear food price increase mentioned, to the point that I had wondered at times whether it was all it my head ... then I looked at the receipt again & knew it was very much for real.

The food price increase isn't even noticeable around here, since the hippies that live here (90% of the population) have been shopping exclusively at food co-ops for years now. The price of an organic tomato was already $3.99 a pound, so now that the "normal" grocery stores are almost that high, no one (other than me and a few other po' people) even cares.

[flere-imsaho]

Funny you don't hear about that European recession.

This is partly because Europe doesn't rely on consistently aggressive growth to ensure prosperity in the way the U.S. economy does. This is one of the (few) benefits of semi-planned economies.

[ISiddiqui]

Well that and European Central Banks thoughout history have been far more aggressive on combating inflation, meaning that economic growth of ~2% has been considered decent in Europe, while in the US we go for more ~3%.

But yes, there is plenty about a global economic slowdown. It was especially noticable when the Brits had to bail out Northern Rock.

[RomaGoth]

Easily the biggest run up on grocery prices I can recall in my lifetime. And to be honest, much more noticeable to me than the gas difference over the past year. I've been consistently surprised how little play the food cost difference gets in the media compared to the gas. Never mind any connection between the two, I rarely hear food price increase mentioned, to the point that I had wondered at times whether it was all it my head ... then I looked at the receipt again & knew it was very much for real.

Another thing that is in the "hush-hush" category is the fact that food is now being sold with lower portions for the same (or even more) price. Example: a box of cheerios that in the past was 16.5 oz is now being sold in a 15 oz box for the same price (or more in some places). This way, the manufacturers are not losing as much money and the average consumer never notices the decrease in serving size.

[BrianD]

Another thing that is in the "hush-hush" category is the fact that food is now being sold with lower portions for the same (or even more) price. Example: a box of cheerios that in the past was 16.5 oz is now being sold in a 15 oz box for the same price (or more in some places). This way, the manufacturers are not losing as much money and the average consumer never notices the decrease in serving size.

I'm not sure the word "now" was necessary there. This has been going on for years and is a fairly common cost saving measure.

[Galaxy]

Well that and European Central Banks thoughout history have been far more aggressive on combating inflation, meaning that economic growth of ~2% has been considered decent in Europe, while in the US we go for more ~3%.

But yes, there is plenty about a global economic slowdown. It was especially noticable when the Brits had to bail out Northern Rock.

Is Northern Rock an investment bank, or a regular savings and loan bank?

[RomaGoth]

I'm not sure the word "now" was necessary there. This has been going on for years and is a fairly common cost saving measure.

I was just comparing the prices of perhaps a year ago to the ones now as a reflection of the overall increase of the cost of food. I am positive this type of thing has been going on in the past, but it is more noticeable now to the discriminating shopper. :)

[Edward64]

2Q GDP 3.3% is pretty darn good. Most give some credit to the stimulus check (that I promptly spent on a Dell Quad core).

Not out of the woods yet but pretty good week for the market so far.

[Flasch186]

eh, youre leaving out the fact that this number is buoyed by higher than expected exports due to the weak dollar. This parachute will get smaller going forward, unfortunately.

[Buccaneer]

eh, youre leaving out the fact that this number is buoyed by higher than expected exports due to the weak dollar. This parachute will get smaller going forward, unfortunately.

Until Jan. 20, when it will miraculously change.

[flere-imsaho]

Until Jan. 20, when it will miraculously change.

Hell yeah! :D

[Edward64]

Until Jan. 20, when it will miraculously change.
US to Euro is .68 from a low of .62. Dollar seems to be strengthening already or did I misunderstand your Jan 20 comment?

[BishopMVP]

US to Euro is .68 from a low of .62. Dollar seems to be strengthening already or did I misunderstand your Jan 20 comment?Bucc would be referring to Obama (presumably) taking office, and the media narrative switching almost immediately from bad economy to good economy.

[Warhammer]

In my industry things couldn't be better. Contractors are picking and choosing which jobs they bid due to having so much work now. The only problem they are having is a shortage of skilled welders (which is fine by me) and fitters.

[Buccaneer]

My company is having some tough financial times solely due to the plumetting number of new homes (i.e., reduced revenues from new water hookups). We have been enjoying steady growth for 15 years but since we had to put this year's budget together in mid-2007, we ended up overestimating the revenues from hookup, as well as the catch-22 situation of water conservation. However, if you look at our job postings, there are a number of constant high-demand openings, particularly for electric linemen (which there is a nationwide shortage), pipe welders (as Warhammer mentioned) and certain IT positions (which require tons of experience).

[Warhammer]

pipe welders (as Warhammer mentioned)

Have you considered alternate methods of joining pipe?

[Buccaneer]

Have you considered alternate methods of joining pipe?


None of our new pipes are cast iron, it's just repairing older water/gas pipes, valves and connectors.

[Warhammer]

Ah... I work for a company that produces mechanical couplings for piping systems. I've been able to make some in roads in Memphis because contractors here can't find any one that can weld pipe anymore. Plus, for renovations no flame is much safer.

[SFL Cat]

I see things staying soft at least 'til next year.

[stevew]

Am i the only one seeing a massive run-up on gas/food/pretty much every other fucking thing on the planet over the next month? Gustav is going to make us his bitch.

Anyways, it's starting to turn around somewhat at the retail store I work at. Maybe it's just the pre-football run up on TV's, but it was fucking barren for the majority of the spring/early summer. Even moreso than normal IMO.

[sterlingice]

and certain IT positions (which require tons of experience).

That's the thing about IT- there is always a need for people with exorbitant amounts of experience. However, over the past 10 years, entry and mid level jobs have been decimated in this country so it's very difficult to reach those experience levels. It's cheaper to send the entry level stuff overseas and then companies have been working on eliminating "mid level" jobs because they cost too much and make them "entry level" while wanting lots of experience.

SI

[sterlingice]

Anyways, it's starting to turn around somewhat at the retail store I work at. Maybe it's just the pre-football run up on TV's, but it was fucking barren for the majority of the spring/early summer. Even moreso than normal IMO.

Well, really, retail's sweet spot is the 3 months before Christmas. Back-to-school also gets a lot of attention, depending on the industry.

SI

[law90026]

Working in the legal industry (albeit not in the US), the partners have a very pessimistic outlook on the overall economy until 2009.

[Flasch186]

Well if Gustav fucks up the oil installations and that port in NOLA we could see a pretty dramatic spike in gasoline prices over the next few weeks thus giving a nice punch in the face to the consumer and perhaps the economy as a whole. I think the Pres would have to release oil from the strategic reserves at that point....no choice I'd think.

[Crapshoot]

Well if Gustav fucks up the oil installations and that port in NOLA we could see a pretty dramatic spike in gasoline prices over the next few weeks thus giving a nice punch in the face to the consumer and perhaps the economy as a whole. I think the Pres would have to release oil from the strategic reserves at that point....no choice I'd think.

No, he wouldn't. And it would be an idiotic choice for him to do so, although there may be political reasons for doing it.

[JPhillips]

Yikes.

WASHINGTON (AP) -- An industry group says a record 9.2 percent of American homeowners with a mortgage were either behind on their payments or in foreclosure at the end of June, as damage from the housing crisis continues to mount.

[molson]

Yikes.

That's crazy.

At some level, recessions are needed. We need a gas-price fueled recession to get off oil. It won't happen any other way. We need a credit-based recession to get Americans out of the mindset that they're entited to have what they cannot afford. It won't happen any other way.

[Warhammer]

I agree. An occassional recession should avoid the otherwise unavoidable depression.

[Tekneek]

We need a credit-based recession to get Americans out of the mindset that they're entited to have what they cannot afford.

Problem with this is that businesses lose revenue, which then causes them to toss employees overboard, which creates waves that cause problems for other sectors. I see that unemployment has continued to climb and we may end up with a quarter that finally goes negative soon.

Businesses, and Wall Street, need to learn some lessons as well. The sooner they get out of the quarter-to-quarter evaluation process, the better off they and the rest of us may be. Being a slave to what an analyst says about your very next quarterly financial report is a bad way to run a business that you expect to maintain indefinitely. It encourages short term thinking and punishes investments made for long terms, which has never been a recipe for sustainability.

[JPhillips]

Late Friday news dump FTW:

Breaking News 9:01 PM ET:
Government Preparing Plan to Seize Fannie Mae and Freddie Mac, Officials Say

Complete bullshit that preferred shares are going to be protected by the government and common shares devalued instead of wiped out. Socialize the losses!

[Galaxy]

That's crazy.

At some level, recessions are needed. We need a gas-price fueled recession to get off oil. It won't happen any other way. We need a credit-based recession to get Americans out of the mindset that they're entited to have what they cannot afford. It won't happen any other way.

Value Driven: The standard-of-living bubble - Aug. 20, 2008 (http://money.cnn.com/2008/08/18/news/economy/Colvin_next_credit_crunch.fortune/)

[JPhillips]

Could be a busy night.

Lehman looks like it has no buyers and will file bankruptcy.
AIG seems set to announce a major restructuring.
BofA looks set to buy Merrill.

Wonder how all this will play this week. Is it a way out or a foreshadow of a broader collapse of uninsured banks?

[JPhillips]

World markets are down 3-5 percent. Looks like a good day to stay away from CNBC.

[Edward64]

Was going to update this thread with the latest Lehman and Merrill news but you beat me to it.

Just 2 notes of reference from my past.


I remember entering a Merrill brokerage office in the mid-80s in a nice office building thinking 'nice place'.

I remember being in Times Square late one night with a co-worker and we passed by the Lehman office. They had several limos waiting for a pickup and I remeber seeing 2 Lehman bankers (1 older guy, 1 younger guy) waiting outside in the front. I thought 'wow, lucky younger guy, able to be part of the company'.


Sorry to see them go but maybe things are coming to a head and we can get this past us.

[Tekneek]

World markets are down 3-5 percent. Looks like a good day to stay away from CNBC.

On the contrary, it is days like this that make CNBC worthwhile. I watched more of it this morning than I had in quite a while.

[Mac Howard]

Just heard that the major sponsers of my favourite soccer team are going belly up :(

[Logan]

I hope financial history doesn't forget how Dick Fuld completely fucked up Lehman.

[Mizzou B-ball fan]

I hope financial history doesn't forget how Dick Fuld completely fucked up Lehman.

Looks like the Dow will start the day down over 300 points. As warped as it sounds, I can't tell you how excited I am about the relatively low market right now. I am putting quite a bit of money into my 401K over the last year or so. This slow economic period is going to end up being an economic boom for my retirement savings over the long haul.

[Tekneek]

I hope financial history doesn't forget how Dick Fuld completely fucked up Lehman.

It will. The boom-to-bust cycle in our economy is primarily driven by the ability to forget about history and do it all over again.

[DaddyTorgo]

sweet jesus what a weekend

[Galaxy]

Oil has fallen down by about $5, to just over $96 per barrel.

[DaddyTorgo]

AIG next?

The New York Times reported late Sunday night that the company is seeking a $40 billion bridge loan from the Federal Reserve. A source close to the firm said that if AIG does not raise cash and is downgraded by ratings agencies, it may have only 48 to 72 hours to survive.


stock's down ~51% already today

[JPhillips]

Yippee.

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[Galaxy]

I'm not a Greenspan fan. I think he is one of the reasons for the mess we're in.

[Fidatelo]

I'm not a Greenspan fan. I think he is one of the reasons for the mess we're in.

+1

[cougarfreak]

My wife works for Merrill as a CA. We are on eggshells right about now.

[Flasch186]

I'm not a Greenspan fan. I think he is one of the reasons for the mess we're in.

+2

[DaddyTorgo]

jeezus - meltdown in the markets today!

[path12]

I switched my 401k mix from 80/20 stocks/bonds to 40/60 last night. I hope that was the right move, but hearing that Vanguard is heavily invested in AIG stuff makes me pretty damn worried.

[Logan]

This has hit pretty close to home for me. One of my roommates is on a sales desk at Lehman, a girl that's a good friend, she's in HR, and a buddy of mine who is a blast to hang out with, he's over in the asset management division. Sucks for all of them.

I have friends at all the other firms as well, and pretty much the only ones who know they're safe are those at Goldman.

[DaddyTorgo]

yikes Logan - sorry to hear that

[path12]

I have friends at all the other firms as well, and pretty much the only ones who know they're safe are those at Goldman.

Hope so, but GS is down 13% today so far.

[Tekneek]

Hope so, but GS is down 13% today so far.

It's not really unusual for other players in a sector to take hits on a day like this, is it? Their numbers will come back up before the end of the week, I bet.

I was about to liquidate a couple of my investment accounts and I wish I had done it on Friday. Now I will have to wait it out a couple of days to see where we go from here.

[Flasch186]

its actually quite scary how intertwined it all is.

Ive been listening all day and people are really scared about AIG's possible failure and the FED just slammed the door on the idea of a 'bridge loan' but apparently Goldman and JP are being encouraged to help out.

[DaddyTorgo]

It's not really unusual for other players in a sector to take hits on a day like this, is it? Their numbers will come back up before the end of the week, I bet.

I was about to liquidate a couple of my investment accounts and I wish I had done it on Friday. Now I will have to wait it out a couple of days to see where we go from here.

nope, not at all unusual.

[path12]

It's not really unusual for other players in a sector to take hits on a day like this, is it? Their numbers will come back up before the end of the week, I bet.

I was about to liquidate a couple of my investment accounts and I wish I had done it on Friday. Now I will have to wait it out a couple of days to see where we go from here.

I wish I knew enough be able to say. I've been taking a crash course in financial blogs over the past few months and have learned some but not enough to say anything for sure.

I do know that Lehman, Merrill and AIG going down in such a short time with WaMu and Wachovia on the horizon can't be a good thing......especially when as I understand it the FDIC has about $70B in their reserves and WaMu alone is up around $120B in insured deposits.

[Galaxy]

What pisses me off about Greenspan is he blames others for the mess (such as the government running up the deficit, banks not checking themselves, ect.; which are all valid reasons and components of the mess), but he fails to take any responsibility.

[Flasch186]

I hope NoSkillz was able to get out of those commodity positions a while back. I was right but I wasn't patience...not a virtue I do well with unfortunately.

[Tekneek]

I do know that Lehman, Merrill and AIG going down in such a short time with WaMu and Wachovia on the horizon can't be a good thing......especially when as I understand it the FDIC has about $70B in their reserves and WaMu alone is up around $120B in insured deposits.

I know someone whose livelihood is dependent upon WaMu staying solvent (although he does not work for them directly), so their troubles hit close to home. As for Wachovia, I have banked with them since I was in high school, but we had decided we would kick them to the curb earlier this summer and that should be completed very soon.

[path12]

I know someone whose livelihood is dependent upon WaMu staying solvent (although he does not work for them directly), so their troubles hit close to home. As for Wachovia, I have banked with them since I was in high school, but we had decided we would kick them to the curb earlier this summer and that should be completed very soon.

Re WaMu: I know a couple of people also (they're based here) and they're also who I do my joint checking with......but of course I'm small potatoes so not too worried about not being able to access stuff. I'm likely going to move that account to my credit union though just to be safe.

[Marc Vaughan]

Re WaMu: I know a couple of people also (they're based here) and they're also who I do my joint checking with......but of course I'm small potatoes so not too worried about not being able to access stuff. I'm likely going to move that account to my credit union though just to be safe.

I bank through both WaMu and Wachovia - but to be honest I'm not convinced that any American bank is particularly stable at present.

I figure that with WaMu at least there's a decent chance of another institution taking them over because of the nature of their business and the amount of customers they have.

(I'm also small potatoes in the global scheme of things and so not panicing too much about things at present)

[Marc Vaughan]

I hope NoSkillz was able to get out of those commodity positions a while back. I was right but I wasn't patience...not a virtue I do well with unfortunately.

He was mainly playing POT as I recall - while its down I think it'll resume its grind upward in the future once the market stabalises (the company has recently announced its buying back 10% of shares because they consider the company heavily under valued at present which is a good sign imho).

[Logan]

Ouch...sent my roommate an email this morning, no problem...just sent one now:

Delivery has failed to these recipients or distribution lists:

[email protected]
A problem occurred during the delivery of this message. Microsoft Exchange will not try to redeliver this message for you. Please try resending this message later, or provide the following diagnostic text to your system administrator.

[Fighter of Foo]

I bank through both WaMu and Wachovia - but to be honest I'm not convinced that any American bank is particularly stable at present.

I figure that with WaMu at least there's a decent chance of another institution taking them over because of the nature of their business and the amount of customers they have.

(I'm also small potatoes in the global scheme of things and so not panicing too much about things at present)

You can find ratings on all American banks here: Banks and Thrifts Screener - TheStreet.com (http://www.thestreet.com/screener/index.html?src=ratingsindex&tab=3)

[sterlingice]

Logan, May want to remove the email address from the post so that seach bots don't harvest it for spam. Who knows, maybe the system is down...

SI

[Tekneek]

You can find ratings on all American banks here: Banks and Thrifts Screener - TheStreet.com (http://www.thestreet.com/screener/index.html?src=ratingsindex&tab=3)

This doesn't seem to work in Firefox or Safari on a Mac. Is this Windows only?

[Radii]

This doesn't seem to work in Firefox or Safari on a Mac. Is this Windows only?

It appears to only work via Internet Explorer for me.

[Fighter of Foo]

Yeah its IE only :( There's another link that has similar data but I can't remember what it is.

[JPhillips]

WaMu may not be dead, but it's coughing blood. Their credit rating was lowered to junk status.

[Logan]

Logan, May want to remove the email address from the post so that seach bots don't harvest it for spam. Who knows, maybe the system is down...

SI

Haha...his last name isn't actually "last"...just kept the first name in there :). Thanks for thinking of it though.

[Ironhead]

Lets just say I work for one of the companies spread all over the news today. Not a fun day.

[path12]

WaMu may not be dead, but it's coughing blood. Their credit rating was lowered to junk status.

And now down another 10% to $1.81 in after hours trading. Yeesh.

[miami_fan]

What pisses me off about Greenspan is he blames others for the mess (such as the government running up the deficit, banks not checking themselves, ect.; which are all valid reasons and components of the mess), but he fails to take any responsibility.


I have not read this whole thread but I have listened to many of the "experts" speak. Has anyone actually taken any responsibilty for any of this? It seems to me, Greenspan is dong the same exact thing that every other player in this mess has taken.