GDP Dropped 6.2% in Q4

Friday, February 27, 2009

Ouch.

Who wants to take a swing at Q1?

Previously, I said a 6% drop. Do I hear 10%?


Manhattan Real Estate: It’s Over

Thursday, February 26, 2009

The stories are now coming in fast and furious. The years of excess inventory. The tens-of-thousands of unsold condos. Prices plummeting. Manhattan (and Brooklyn) heading due south (no Miami pun intended).

It didn’t take a genius to figure this out, just look at any of the new condo developments at night. They’re empty.

Plus, Nouriel Roubini was talking about this years ago, long before the real estate/Wall Street bubble popped.

At any rate, here are some of the stories:

Dumbo Goes Down
Harlem, Too

An Insider on Inventory Piling Up:

1. inventory now at 11,000 listed homes, condos and coops in manhattan which is almost 3x normal
2. inventory actually grew 1200 units over the last 30-days (the attached stats are a couple of weeks old and the listing velocity INCREASED the last 2 weeks)

Condo 50% Off Auctions Coming Soon
Buyers Forfeiting Six Figure Deposits
Buyers Organizing Because They Paid Too Much (for Shoddy Buildings)

The talk is of a return to prices as they were in the mid-90s; $500/sq. ft. or less in prime Manhattan.


Japan’s Exports Halved

Wednesday, February 25, 2009

From Reuters:

Exports plunged a record 45.7 percent in January from a year earlier, Ministry of Finance data showed on Wednesday, roughly matching a median market forecast.

Exports to Asia sank 46.7 percent, the fourth straight month of decline, with shipments to China falling 45.1 percent.

Many Japanese companies ship automobile and consumer electronics parts to assembly lines in Asia, from which final products are shipped to countries across the globe.

A collapse in global demand since late last year, which caught most manufacturers off guard, has led to a sharp increase in inventories and forced many leading Japanese companies to slash production at an unprecedented pace.

With Eastern Europe on the brink and Japan already in depression, America’s “sneeze” has turned into the world’s sepsis.


Obama Gets It

Tuesday, February 24, 2009

I was getting worried.

Very impressed with the speech tonight.

Looking forward to his budget and to seeing how he plans to pay for all of his initiatives and still reduce the deficit.

I am skeptical that we will do the right thing, but I believe Obama will do the best that can be done.

Having read this profile of Rahm Emanuel, I am also coming around on the stimulus bill. It was, it seems, the best measure possible under the circumstances, and I do believe it will provide a boost.

This was the speech he needed to make. Positive, inspiring, hopeful. For a night, at least, he took away the fear.


Apocalypse Accelerated?

Sunday, February 22, 2009

Is Europe on the brink? Read this piece from the Telegraph (UK):

If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.

Austria’s finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria’s GDP.

“A failure rate of 10pc would lead to the collapse of the Austrian financial sector,” reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a “monetary Stalingrad” in the East.

Um, I wrote in the previous post that I was going to start buying stocks. This article has definitely given me pause. Go ahead and read it…I dare you.


Buy Now

Sunday, February 22, 2009

Ok, I hesitate to write this one because I believe that the economy is still heading down and we are on the verge of a global depression.

But…

The stock market has just reached near its 10-year low and I believe this mark is roughly the floor. That is not to say that the market won’t test this bottom again and that we are going to have years of, on average, a flat return.

But…

I’m going to buy now.

There are global stimulus efforts afoot, which will create a temporary boost, and there will be opportunities for both active trading gains and, if you’ve got thirty or forty years, tremendous long-term returns.

This is a dark moment. Maybe the darkest yet.

But…

That’s the time to buy. Just don’t do it if you need the money soon and/or can’t stomach the roller coaster. I also warn you that I, like everyone else, have no idea what’s going to happen. I’m going on gut and a sense that you stay calm when everyone else is panicking.

Remember, Cassandra was right.

In this case, I’m just betting – and it is a bet – that I can make money while she screams.


Obama Housing Bailout Blues

Wednesday, February 18, 2009

This is, again, the moral hazard writ large.

If you have a mortgage you can’t afford, you’re going to get relief. To every renter who has been responsible and waited and saved, you get nothing but more of your dream deferred. By artificially attempting to prop up housing prices, the market will not reset to it’s true value.

Waiting for home prices to become affordable again? Waiting for all the air to come out of the real estate bubble?

Obama’s got two words for you. T.S.

There is no incentive to do the right thing, and plenty to do wrong. That is the lesson of our time.