2010: Another Leg Down (House, Stocks, Commodities)

Great! Let's check in with last year's predictions while we're at it:

http://streeteasy.com/nyc/talk/discussion/2047-today-starts-the-official-downfall

"GDP slowing, wall street going sour, miss expectations, miss earnings, dollar sinking. Real estate even in Manhattan will decline. Mark this thread. I promise you this is the start of a decline and price-readjustments. Wall Street earnings will sour and the economy will be moving into a recession for the 08 elections. On a final note, the FED will also have a huge problem as they are forced to raise interest rates to 5.5 this fall/winter, mortgages will re-adjust. The reason the FED will be forced to re-adjust is because the DOLLAR is getting destroyed and we depend on foreign investment for our survival. If we do not maintain increased rates, then they will go to Europe, where the ECB is in rate-hike mode.

Remember this post. It will be of value to you all. I call a 15% correction coming in Manhattan real estate before January, 2008. Just watch! Especially the area under 1M will be hit most."

Fair enough : mortgage rates are around 5.5, probably a bit early on that 15% correction, and you totally missed the boat on the under 1m market. That is where the sales are happening; upper end getting crushed. Wall St. missed forecasts for the first half of the year, so you get a pass there; however, you didn't exactly predict the fabulous year most banks had in '09.

How about this cutie?
http://streeteasy.com/nyc/talk/discussion/5746-the-future-new-york-in-2010

HimWhoKnows
about 14 months ago

New York in 2010? Life in NY will be different than life in NY was in 2007. Gone will be the excess consumption, the Ibanker lifestyle, the 30 year olds with 1M condos. All of that will be gone.

A new standard of living will bless Manhattan. Return of culture and arts community will rebalance what was once the true heart of NY. Real estate prices will fall. Your 1 BR will be back to 300K and your typical studio will fall back to 100K. The next 2 years hundreds more hedge funds will close down and up to a total of 400-500K finance jobs in city will have been trimmed.

New York will lose it's notch as financial capital of the world. Instead it will share it's wealth with multi-polar financial system where NY will no longer serve as the "empire of finance'.

As Unemployment spikes, to a height of 15% in manhattan, crime will increase. New and upcoming areas in the city will see impoverished development and a contraction of wealth.

Euro-dollars will dry up as the globalized wealth of credit comes to an end. the new world will bring down prices to those pre-credit boom.

This is good for some, but bad for others. One thing is certain is that NY will be very different than New YOrk of 2007. More banks will fail, more people will lose their jobs.

Rents will decrease providing more multi-cultural influences to the city and price sales will rapidly decline allowing those who saved to invest.

New York City will feel very different for as much as the next decade, but we will still have the museums, we will still have the parks and we will still have our friends. That's what is important, the rest is only "illusioned" material.

Regards,

J

Yeah, how's that working out? 1-bedrooms still not averaging $300k, not even close. Finance bouncing back. Crime DOWN, New York not that different from 2007 except that rents are a wee bit lower (small mercies). It is still the financial capital; other contenders have been harder hit.

You might want to polish up that crystal ball, it doesn't seem to be serving you so well these days.

LOL! Thanks, evnyc.

"Stock market drops 5-10%"

Sure did.

My pleasure, any time, NWT!

Nicely done evnyc, HimWhoKnows should change his name to HimWhoKnowsShat

thanks, JM!

@ NWT-

the only reason 08-09 didn't become a complete breakdown was because we socialized losses and privatized gains with all sorts of crazy backstops, bailouts and $$$ galore of taxpayer funds. this works temporarily, but the amount of IOU's in the system is too big for the taxpayer to take on.

only a fool would think "everything is beautiful".

hilarious...there is a point at which dead-certain predictions cross the line into _______ [pick a word]

@ NWT

i did expect a more severe 2009, however i did not expect people to favor throwing the u.s. currency on the line in order to preserve institutions that help cause the problem.

my point on all this is it's IMPOSSIBLE to replace the amount of credit from 01-07 that was in our system, because that credit was illusioned (built on fraud).

also equities were very oversold in March, it's traditional to have a nice and surprising retracement on the onset of the next leg down.

I do agree with the first sentence, by the way.

"People continue walking away from mortgages , extreme high debt, more collapse in real estate prices, consumer deterioration, credit contraction, re-emergence of toxic assets, bad collatarol, drop value of outstanding debt, struggles of paying off debt on all sectors."

I don't think that's terribly questionable. What I do think might prove erroneous is the idea that there will be a second wave down. My take is that there might be another bump down, softened by the extensions of intervention measures, but that it will not be severe and that we'll be winding this down over the long term, rather than the short term crash.

brokers and sellers dont believe the bubble. they are the equivalent of buying the nasdaq in mid 2000 thinking that its cheap and coming back..that it "has to come back"..sorry

@evenyc-

rumors have it the Fed has been buying 50% of IOU's (tbills) at some of the auctions. in the event china or japan face internal problems they won't have the reserves to continue buying the massive amount of loans we need to take to pay our interest and fund our liabilities.

Recovery looks lackluster and the U.S. government liabilities look difficult to tackle. I see treasury having a difficult time raising $$$ to serve the ever increasing debt w/ out our larger shareholders (China /Japan) perhaps getting a more influential stake in u.s. policy. but the problem is both china/japan have internal problems and i wouln't be surprised if japan in 2010 stopped buying treasuries or became net seller of treasuries.

lackluster performance at auctions indicate yields will likely have to go far higher so we can service our debt. there's really no way out. we have out of control spending and borrowing. some could even argue it's the Ponzi of all Ages. Borrow to pay out interest...until the music stops.

HWK, let's get some actual data on that and not rely on rumors. Do you have a link?

Recovery looks lackluster for now. Jobs are a big problem. So far auctions are doing better than many expected, and everyone agrees that interest rates will have to rise and they are showing signs of doing so. The US's spending problems definitely have to be addressed, but again, I think we'll take the gradual approach and no one is really in a position to challenge us on that. If China stops buying our debt, their currency appreciates, and they really, really don't want that to happen. So while it's an issue, I do think that it's a long-term one and would be very careful about predicting when that music will stop.

you can compare current conditions to the 01-05 housing bubble. consumer thought they could borrow and "live the life" on borrow now pay later schemes ( subprime, etc), but the day of reckoning came when interest rates moved up and the liabilities overtook the homeowners assets thus bringing the individual into the house of pain.

same thing is now going on, but instead of the individual it's the govt who likely feels rates will remain extremely low and so they are borrowing at unimaginable levels.

it's scary, but everyone always thinks short-term instead of long term. sure it felt great buying a house in 02-03-04-05 on an interest rate only mortgage, but it was nothing but a teaser.

I hope Obama and Co. realize that borrowing and spending got us into the problem. We need to produce and then save. Consumer IOU's is failed model for our entire system. And i'm only saying this because I care for the good people of this country and hope for the best in the United States, be it 2010 ot 2020 or heck even 2100.

@ evnyc, this is how dire and illusioned things really are (in regards to treasury data/purchases).

http://www.zerohedge.com/article/federal-reserve-accounts-50-q2-treasury-purchases

Yes, another oracle with a murky crystal ball writing for a blog with a specific slant:

http://nymag.com/guides/money/2009/59457/

"As it happens, the founder is a 30-year-old Bulgarian immigrant banned from working in the brokerage business for insider trading. A former hedge-fund analyst, he%u2019s also a zealous believer in a sweeping conspiracy that casts the alumni of Goldman Sachs as a powerful cabal at the helm of U.S. policy, with the Treasury and the Federal Reserve colluding to preserve the status quo. His antidote? A purifying market crash that leads to the elimination of the big banks altogether and the reinstatement of genuine free-market capitalism."

Perhaps a wee hint in his analysis, even if he is on occasion correct?

Oh come on, HimWhoKnows. Nobody thinks everything is beautiful, and no need to be defensive.

What was funny was seeing yet another mish-mash of truism and retreaded prognostication come by, and then a few minutes later evnyc dug up the 2009 version. It's not as if I ever read that stuff.

Sorry, hint of bias.

We're okay as long as we are fairly self-sufficient in food (may have to say good-bye to CA vegetables in the winter) and water. Energy is another story, but if sufficient political will exists, nuclear plants can be built.

What's funny is the guy who calls a major downturn right but is off on the percentages gets "corrected" by someone who called UP.

I knew this would happen....

Who called up? I have never called up. I just think that some of the bulls are a little too certain in their predictions. You should always question your sources and revise your thesis in light of new information.

Ah, lunch is over for me. I meant some of the bears, just as plenty of the bulls were far too certain in their predictions that housing would go up for ever without reference to fundamentals.

Sorry. But himwhoknows knows that not in a million yrs would I have thught we would be USA, where with a ss# you can get a mortgage from uncle sam! Countrywide 2.0. Did anyone vote to change america into a mortgage shop?

Evnyc, if you think the interest rate gyrations that is pitting savers vs. Spenders and tax credits which is pitting tax payers vs. Ppl who are better off renting haz zero effect on re then id love to smoke what you are smoking.

Sorry, but this is kicking the proverbial can

Yes, it may be, Westie, but nobody knows how long that will go on. Not you. Not me, and definitely not HWK. And ZeroHedge is still a biased blog that maybe gets a few things right - but you're not gonna know what they are in advance. That's the only smoke I'm smoking.

> You should always question your sources and revise your thesis in light of new information.

I don't disagree.

"What's funny is the guy who calls a major downturn right but is off on the percentages gets "corrected" by someone who called UP."

If somebody said RE would be up 10% they would be more accurate than HWK(very little).

You don't get points for being so far off the mark in your projections, especially when you say "Remember my post" and your post is shown to be waaayyy off target.

When you shoot your mouth off like that you also don't get a mulligan when you are wrong. ("however i did not expect people to favor throwing the u.s. currency on the line in order to preserve institutions that help cause the problem.")...but...but...you told us THAT YOU KNEW!!! Guess what...not so much.

The way i look at is a depression due to the contraction of MS and people unable to meet there IOU's won't be that bad. In may actually bring some of us more together and put strong morals/values back on our table. It was hard work, good values and morals which made the United States a leader. It was also free market and real freedom that attracted the world to come here. It was and to some degree is still a land of opportunity.

However intervening in markets, over-regulating, and now forcing taxpayers/savers to prop up failed institions who can now back-channel $$$ into larger bonuses is not the american vision of prosperity.

nothing has been learned from the Panic of 2008, and that is why the shock of 2010-2011 is still to come. Wall Street has failed to be overhauled, Glass-Stegall has yet to repealed and bubbles are rising on speculative risky assets.

Obama has too many things on his plate, i can't imagine Volcker and Summers see eye to eye. I think there's inner tension brewing but not disclosed. I also think the Banks have no idea how to value various collatoral and products and in good thanks due to the removal of "mark to market" accounting real-time values of the stuff they're holding is far less than what's on paper.

again all opinions are of my opinion. I'm huge fan of the good people we have in this great country, what i dont always agree on is all the intervention and lack of transparency.

Privatizing Gains and Socializing Losses is not American!

Permit me a quiet snort of derision here. Demographics drove those golden years of growth, just as they're part of the drain now. Those delightful morals you're so proud of also discriminated against women, minorities, and gays, and tanked public investment in education and technology over the past thirty years. Good luck remaining a world leader by going back to those good ol' days of moral uprighteousness and other horse emissions.

> and tanked public investment in education

Actually, we spend more on public education than ever before... it just that many of the liberal ideas in spending it simply wasted it (just look at NYC/the UFT/etc.)

also, in terms of technology, wasn't the spending that drove creation of the internet.... military spending. Well, that and Al Gore.

Enyc? Huh? The last 30 yrs have been great for minorities....... There are more openly gay ppl then ever, more women in medicine, and more minorities in higher education/elite schools.

I should know, I'm a transgender, ivy MBA, gay minority married to a female doc...... See. Hey did you see Chad Bono. That's one ugly dude.

there's been more "opportunities" from 1970-2000 than ever other time in U.S. History. We're not spending on science and technology, we're spending on bombs and financial bailouts.

if you have 15 min watch investment legend Julian Robertson from Tiger. Just listen , learn and prepare.

http://www.investmentpostcards.com/2009/10/02/julian-robinson-us-may-face-armageddon-if-japan-and-china-dont-buy-debt/

"Your 1 BR will be back to 300K and your typical studio will fall back to 100K."

Can you please tell me where these $100k studios are?

"On a final note, the FED will also have a huge problem as they are forced to raise interest rates to 5.5 this fall/winter, mortgages will re-adjust. The reason the FED will be forced to re-adjust is because the DOLLAR is getting destroyed and we depend on foreign investment for our survival."

Well, at least you got that prediction right... NOT!

http://streeteasy.com/nyc/sale/466153-coop-330-east-90th-street-yorkville-new-york

getting closer to 100k

"Fair enough : mortgage rates are around 5.5,"

Himwhoknowssquate did not predict that mortgage rates would be 5.5%. He said the federal funds rate would, which never even came close to happening.

Alpo, tell us about the accuracy of your predictions.
Hell, the accuracy of your statements about the current situation.

Hell, you're the guy who said "THE MARKET IS NOT DOWN 20%. SHOW ME JUST ONE EXAMPLE".

You are the last person on this board who should be talking about the accuracy of others' predictions... other than admitting yours were the worst.

Westie, I was unclear. "traditional" values such as HWK espouses a yearning to return to were highly discriminatory. And this country's investment in science/tech/education has been in constant decline over the past 30 years. Two separate issues I hurriedly combined into a single unclear sentence. Also I'm sure you're an adorable transgendered MBA gay minority.

I would really like to know when longing for the rose-hued past became a viable economic policy, HWK. Or longing for economic and social collapse, for that matter.

@ The-President,

The 5.5% fed funds rate prediction was made over 2 years ago, around early 2007 or late 2006. Feds fund rate did go up...

i also predicted over 2 years ago the financials would get hammered which did happen.

I'm just urging caution, to seek safety with risky assets. We had a great run-up, which is to be expected but the run-up as been based on artificial stimulus and massive doses of govt intervention.

pay attention to the markets in FEB when some of the FED's liquidity programs EXPIRE.

Just a suggestion - you may wish to change your name to HimWhoGuesses,SometimesIncorrectly. As waverly so accurately points out, your name implies something else entirely.

In any event, this was fun, let's do it again next year.

yes, evnyc... but did you see Chad Bono?

Uh, I haven't had that privelege, Westie. Are you going to scar my retinas? Because I will fight back with a unicorn. Purple this time.

"I should know, I'm a transgender, ivy MBA, gay minority"

So you got into your ivy busines sschool on affirmative action? Why am I not surprised?

"The 5.5% fed funds rate prediction was made over 2 years ago, around early 2007 or late 2006. Feds fund rate did go up...

i also predicted over 2 years ago the financials would get hammered which did happen."

Ok, fine. You got 2 predictions right. But 95% of everything else you said was completely and utterly wrong. There are no $300k 1 bedrooms or $100k studios. The ibanker lifestyle is NOT gone. NY is still the financial capital. And we did not lose antyhing close to 500k finance jobs. Crime is DOWN. And your unemployment prediction of 15% is off by 50%.

@ The_President-

Stages/Sequences of events have been slightly postponed. you'll get that 1 BR doorman prestigious building unit for 300K. I promise you that. Everyone from mom, dad, to 90% of CNBC is optimistic the worst is over. The thing is Mickey Mouse accounting won't last forever.

In my view, A new wave of financial turmoil, just when everyone thought we were out of the hoods will send shockwaves through global markets forcing all sorts of gyrations (stocks, currencies and interest rates).

so you were way off and you are still in denial? Wow. You should really change your name to HimWhoKnowsShit.

I think all the Armageddon distracts from the fact that we don't need anything like it for real estate to drift down another 30%. All we need is for far fewer people to make a little less money in the financial industry and for rates to nudge up just a bit.

alpie, you're rather full of yourself these last couple of days. shall we look for your prognostications?

My predictions:

Unemployment down next week and trending down all through 2010. Down below 7.5% year end.
New job creation, expansion already has begun.
GDP averages 3.5% growth in 2010.
Stock market (Dow) up over 12,500 by January 2011.
Manhattan RE prices up 7% first half,then leveling off till Spring of 2011, when it will surge because of depleted inventory.
Inflation virtually non-existent except for oil prices; interest rates tick up slightly.
Dems keep losses to a minimum in 2010; Cuomo elected NY governor.

el presidente...are you coming close to posting with frequency and bravado?

@ will-

hope your right! :)!

Will...that's some fantasy for Manhattan RE you have there. What's going to deplete this condo inventory this quickly? Perhaps each employee at Goldman will buy several condos with their bonus this year.

Thanks evnyc. this is funny. Can't believe HimWhoKnows still making predictions. Dude you should probably start giving weather predictions; hopefully you'd be more accurate at that :)

> Ok, fine. You got 2 predictions right. But 95% of everything else you said was completely and utterly wrong.

And the guy who is 100% wrong is complaining because???

> The ibanker lifestyle is NOT gone

Alpo, we know you live in New Jersey, so why are you talking about things you clearly know nothing about. Once again, you have no idea what you are talking about.

2010 - stock market up, NYC RE down. It's really that simple. GL.

Well, that would be nice.

But I already got that in spades in 2009, and I don't need to be greedy... so I'm taking some profits.

interesting comments. bsexposer stock market up int 2010? that's my prediction also.

keeping a watch on this thread.

HimWhoKnows posted @ DOW 10,577

Start Monday @ Dow 10,428.

1.7% gain for HWK.

@ Counciler, 1.7%?

try 5.7%, not bad for 1 month return:)

its not over.

there was an article in january that said the dow would bounce between 10-11K this year. Like most things -- overshot at 12K -- pundits calling -- going to 15K -- below 10K in a month...

deflation all over the place

http://www.nydailynews.com/news/politics/texas-man-woman-bathroom-check-gender-article-1.2622029