The Death Knell of Manhattan Property Prices!

jesus.. if this turns out to be true, there's going to be many nervous financial employees for the next few years.

For what it's worth, bankers at bulge firms are being told that this year they're essentially working for their salaries.

Just think of all the out-of-work Wall-Streeters scrambling jobs...but there won't be any! It'll take a long time for the industry to absorb the slack. Somehow I don't think it ends with Bear as well. Next week should be interesting as the vultures place their bets on who will be the next Bear.

It's true, bugelrex. Check out wsj.com - their lead story. Bear has no choice but to sell; worse would be bankruptcy, which would rock the financial markets to their feet. I don't think the government will let that happen - it would lead to another depression.

Who's going to buy property at these prices, now that Manhattan has no more White Knight?

Fortunately, the rest of the economy is doing just fine - for now. But watch out if this problem isn't resolved in the short-term. Countrywide is gone. Bear Stearns is gone. Merrill is slashing. Lehman may succumb. Citigroup is apparently planning 30,000 job cuts around the world.

Unfortunately, only JPMorgan and BofA are strong enough to wipe up the mess, and now they've made their deals. Maybe Wells could step in, or Royal Bank, or Santander, or Barclays, but I don't see that happening: why would they want these units?

Things are going to get rough in Manhattan, make no doubt about it.

But where are my Rosy Scenario people? Where is Malraux, with his now infamous "Idiot's Thread." What more does he want? The Dow to fall to 8,000?

The only thing we have to fear is fear itself.. and stevejhx

The sky is falling ! The sky is falling!!!

Faustus, investment bankers don't have a salary. They live and die on their bonuses. Where are they going to go, and how are they going to afford their mortgages?

It's a hangover from a real long party. And I've taken a lot of [expletive deleted] over the past few months b/c I said this was going to happen. I said investment-bank profits were inflated because no one knew what these securities were worth. I said loose money led to a disequilibrium between wages and property prices. I said everything was going to head back to its historic norms.

Where's Spunky? Where's Malraux? Where are all my detractors? How are they going to make their claim that real estate is the very place to be in Manhattan, when the people they claimed were propping up prices - the financial people - are all being fired?

Tony: if this isn't a falling sky - or skyline - what would you say is?

Where's your argument? 14,000 Bear employees - all in NYC - wiped out. 10% of Merrill - based in NYC - cut. 30,000 Citigroup bankers - headquartered in NY - cut. Lehman - based in NYC - rumored to be in trouble.

Where is all the money to keep these property prices inflated going to come from?

You tell me.

BTW I'm not afraid at all. I have no investments in the United States other than a place on Long Island I bought years ago. And I don't think the real economy is in a recession.

I am here, Stevejhx. I am your detractor. I wouldn't be surprised if the stock market goes up on this news tomorrow or Tuesday, once JP Morgan's stockholders okay it. Could mean we've hit bottom.

You are like a one man panic machine.

Tony - you haven't told me why.

The stock market will be rough for a few weeks, but it'll be fine. We didn't break through the 1-year low on Friday after the Bear announcement. But if Bear is valued at $20 a share, Lehman is going to tank, and there may be another run.

Morgan's stockholders are the important ones. Bears' are.

Stevejhx - that's my point. I know, I have spent many many years on Wall Street, and I've seen this coming for some time as well. Bankers do have a salary, but we're talking $125-200K.

This raises real issues. Not only will demand from the financial world dry up, but co-ops may be more reluctant to approve someone on Wall Street given their job/bonus uncertainty. Especially first-timers.

Tony - sorry you bought in the fall, but if you like your place and intend to stay there for a long time, who cares? Now that you've bought, don't punish yourself by continuing to look at it as an investment.

Tony doesn't have an argument.

His argument is that he just bought his apartment.

Very simple.

Maybe I should stop punishing myself by signing on to the blog!

faustus, I worked for BofA and Price Waterhouse before striking out on my own, and now serve mostly law firms and the financial world. I know what's in these products because I used to audit them, and I've translated the contracts that govern them. I've also been in the NYC and other property markets long enough to know why they tick.

Make no mistake about it, $200,000 is a nice salary, even in NYC - unless you have a $3 million mortgage.

I also agree - if you bought a while ago and plan to stay, you're fine. If you're overstretched, or if you're laid off - a.k.a. fired - or need to sell right away, it won't be pretty.

Housing is never an investment. It's a place to live and enjoy. It shouldn't be seen as paying a dividend. The dividend is the right to live there.

You're right, faustus. The .com bulls rode that cow right down to the bottom, convinced themselves that the "New Economy" warranted infinite P/E ratios because the P was high when there never was any E to begin with.

That died a death. Median property prices that require an $800,000 salary are unsustainable, especially now that all the people who made an $800,000 salary are losing their jobs.

I think - and I'm stretching myself here - that we are, in fact, reaching the bottom of this, and everything will be fine in a few months. Not property prices but the economy as a whole. In NYC we will now begin to feel what the rest of the country has been feeling, and I've consistently predicted a 20% - 25% fall in property prices. Now I think it might be more.

JP Morgan pays $2/share for BSC. That's right, $2. TWO-DOLLARS. It closed at $30/share on Friday.

$2 - is this friggin correct???? Can't be real can it? must be a typo in the news article!

http://biz.yahoo.com/bw/080316/20080316005053.html?.v=1

The transaction will be a stock-for-stock exchange. JPMorgan Chase will exchange 0.05473 shares of JPMorgan Chase common stock per one share of Bear Stearns stock. Based on the closing price of March 15, 2008, the transaction would have a value of approximately $2 per share.

Not only will all of Bear's employees be out of work....all their wealth tied-up in BSC-stock is pretty much wiped out.

It's no typo, ladies and gentlemen:

http://online.wsj.com/article/SB120569598608739825.html?mod=hpp_us_whats_news

$2 a share. That's how massive their losses are. 14,000 NYC employees have just been wiped out.

Lehman may collapse tomorrow.

Where are my detractors now, Tony? Malraux? Spunky? I've been saying this for weeks - it was a bubble. Who's going to support these property prices? Where are all those "Wall Street bonuses" coming from now?

We're reaching the bottom - 1 more firm to go (Lehman) and 2 major restructurings: Citigroup and Merrill Lynch. Still waiting on Morgan Stanley....

Hey Tony, log on now: "The sky is falling ! The sky is falling!!!"

Wow, all that blood, sweat & tears over the years. All gone. Wonder how quickly we'll see the results in the real estate market.

Right now I just feel sorry for Bear employees - I know 2 of them. (Actually I only feel sorry for 1 of them.)

The real-estate boom in Manhattan is now officially over. 14,000 Bear employees work in the city. They are now wiped out. They will probably have to sell their properties, and quickly.

This will spread to Lehman tomorrow. That may be the end of the bloodbath, but Citigroup, Merrill, and Morgan Stanley still have to announce their planned cuts.

holy crap! the FED just cut the discount rate!

http://bloomberg.com/apps/news?pid=20601087&sid=aiI66i481amk&refer=home

stevejhx: I second your expression of sympathy for the employees. Most of the Bear people who set up this disaster are long gone and/or set for life. The people who will lose their jobs and company stock are mostly working stiffs, like the guy who was emptying the trash at the Iraqi Ministry of Defense when the "smart" bombs hit.

"...Where is Malraux, with his now infamous "Idiot's Thread." What more does he want? ..."

First off, I'm right here, stevie.

Secondly, I refer you to the specific post I made on my 'Idiot's' thread, to wit:

"What I've taken serious exception to, and why I started this thread in the first place, are the idiots who make grand, sweeping claims in either direction about the real estate market in Mnahattan based on faulty logic and feeble reasoning. Look, I don't know if even I'd buy right now, unless a very special property came up that was a rare and unique opportunity, and I was a fully informed buyer and sanguine about the current state of the market, and I was not buying to flip but to live there with a long(-ish) time horizon. But as far as the asshats who spout ridiculous predictions laced with their schadenfreude at the possibilty of watching people take a hit on real estate - well, it's just idiotic. Reasonable people can disagree about, and still manage to have a (very) interesting discussion on the state of the real estate market in Manhattan and its direction (up or down)."

Third, to your quote "...Remember: the death of Wall Street was what caused the last major downturn in NYC's property market, from 1988 to 1999...," yeah, I remember it, because I LIVED in NYC then, and bought and sold Manhattan residential property before the crash, through the correction and following ascension, and even bought selected properties in past few years. It's called 'personal experience,' stevejhx. I'm successful at what I do because I don't confuse the deperate neediness to make a point by hammering people over the head with over blown rhetoric, with a calmer (and more relaxed, I must say) approach. My main concerns (actually, my ONLY concerns) are positive cash flow, building equity, and in the end, making lots of money. To do that, I don't have to be a 'bull' or a 'bear.' I don't have to worry if the sky is blue, or if the sky is falling, if the arrows are red or black, or justifying my methodology to anybody but myself. All I have to be able to do is locate opportunity in the midst of confusion.

And there will be LOTS of THAT, my little schadenfreudefruende, in the months to come.

So calm down. Chill. Seriously - the apoplectic seizures you rant on multiple boards (better for you ro just stick to one, maybe?) are gonna give you a brain aneurysm, dude. Easy does it....

holy crap, JPM just bought BS for $2/shr!

Not only did the Fed cut the discount rate, the bigger news is that they opened it to primary dealers. Right now the main concern is that BSC's $2 value essentially confirms that they are insolvent, for all intents and purposes. BSC's equity value/solvency can be looked at as a proxy for the value/solvency of other primary dealers such as LEH, MS, MER, etc, since they're all sitting on the same paper. Bad bad shit. Fed had to open the window to them to protect against runs. Hopefully that will alleviate some concerns. We'll see what happens to the American Peso tomorrow.

Fed bailed out Bear on Friday.

What they're doing tonight is essentially bailing out everyone else.

Good post West81st!

Malraux, glad you're back. All I need now is Spunky, and my evening will be made.

Disregarding your German words, I focus on "based on faulty logic and feeble reasoning." You're right - faulty logic and feeble reasoning is a problem. But it's also what you accused me of, and I said it wasn't true.

I fully agree - there are always "deals" to be found everywhere. There's always a trade in the market. Too bad you can't short apartments (though you can short the Case-Schiller index). But look at the initial post in the Idiot's thread: so, it's 2008, not 2007. What difference does it make.

"De[s]perate neediness to make a point by hammering people over the head with over blown rhetoric"! That's good. I've refrained from ad hominem (Latin!) attacks. I've defended what I said would happen against property bulls who called me all sorts of things.

Well, now I've been proved right. 14,000 very unfortunate people have just been wiped out. Some will have to liquidate quickly. More carnage is coming. My point - my only point - was that it was a bubble.

And it was, and now it just burst.

faustus - they're not bailing out Bear's employees.

There's more bailing coming, so get out your buckets. I feel profoundly sorry for those people.

I haven't looked at everything the Fed has done today, but boy was Cramer right when he said, "They know nothing!" This could have been ameliorated. Avoided, no, but ameliorated yes.

It's not as bad at other banks; they have other lines of business. They will survive. Bear only had a mortgage business. Lehman is also very exposed. The other banks have access to capital and have written down a lot already. BofA and Chase have virtually unlimited access to cheap deposits. It's not that bad for them, but it is for the NYC economy.

stevejhx and faustus - most of the senior bankers (family people) LIVE IN New Jersey, PA and Connecticut. How about them apples.

And guys, this is worse that you can imagine for Bear employees: if they were paid bonuses in stock, which they were, they have to pay tax on those bonuses, but unless they cashed them out, they have no money left.

In other words, their bonuses in 2006 were paid in 2007. They have to pay tax on them. They've just been wiped out.

This is NOT good.

inquirer, you don't know what you're talking about. First, they have to pay NYS and NYC taxes if they live out of NYS but work in the city. And second, there are plenty of them who live in NYC. I know some.

Talking about having your eyes closed to reality.

Here's something from LP1 on a different thread:

"I just listened to Jonathan Miller's clip from Bloomberg. He said he's more concerned about 2009 than 2008. Factors that would bring the market px down are more layoffs (who wants that though). And he's again saying that a full 1/3 of sales are going to foreign investors in Manhattan. In general he says prices are pretty sticky now. :-( for the would-be local f-t buyers that is."

Layoffs? How's about 14,000 people at Bear, 10% at Merrill, 30,000 at Citigroup.

It's sticky until the BSC people have to liquidate to pay their taxes.

stevejhx: Didn't the commuter tax get repealed? And you might want to check on the tax treatment of grants of restricted stock.

inquirer: A lot of the top people in every industry live in the suburbs. It may be somewhat more true of finance than, say, medicine or the arts. But there's plenty of Wall Street money in the Manhattan real estate market.

Well, and those overseas buyers are also stuck in an incredible pickle. Take a look at the charts that show price appreciation yoy from 2002-06. A number of European countries are actually ahead of the US. Grand, global recession ahead.

west81st - no more than from any other industry. Manhattan has never ever been considered affordable It's always been a mixture of projects and luxury. When I got here (in the US) in 1992, everyone was down on real estate, financial industry was in shambles, bankers in brokerage and mortgage industries unemployed, etc. Pendulum, my friend. But even the lowest point of Manhattan real estate is not that awful.
Of course a shitty 2-bed looking at two brick walls with carpet wall to shitty wall is not supposed to sell for $1.5 mil forever. So it will sell for its deserved $850000.

stevejhx:

"...I focus on "based on faulty logic and feeble reasoning." You're right - faulty logic and feeble reasoning is a problem. But it's also what you accused me of, and I said it wasn't true..."

I never accused you of anything. Persecution complex, perhaps?

"...But look at the initial post in the Idiot's thread: so, it's 2008, not 2007. What difference does it make..."

Because it WASN'T 2007 - go back and read the OP. It was 2003, then it was 2004, then it was 2005, then it was 2006, then it was 2007, then it was 2008. Even a stopped clock tells the correct time twice a day steve. It's like me saying every year for the next six years "oh, the market's going to EXPLODE upwards!" - and then congratulating myself on my prescient abilities when the eventuality happens.

"...My point - my only point - was that it was a bubble...

Okay, we got your point, your 'only point.' Great. So what? Anybody with ANY kind of market smarts could have predicted this - it's been no big secret on these boards (me included!), and your calling of a downturn in the market now (no matter how much you hammer us over the head) is no different or better than many people who have been making the same exact prediction in a more gentle, even-handed way for the past 12 months (give or take). What I (and others) are addressing isn't your POV. It's your seemingly angry, holier-than-thou tone of voice in your postings. Maybe you don't mean it to sound that way. Maybe you don't know it comes off that way to others. I don't know. But there does seem to be a certain sense of glee in your postings that things are becoming worse - that people are being financially squeezed - and that is a textbook definition of 'schadenfreude (and please don't disregard the German words, steve).

West81st, the commuter tax was repealed for NYS residents, not for aliens. Mercury, Venus, New Jersey and Connecticut have to pay it. Also, any partner of a partnership doing business in NYC has to pay UBT. And corporations have to pay corporation tax, but Bear probably paid the bank tax.

I don't know the details of how Bear's employees were paid: restricted stock or common stock or cash. If cash, the tax is due this year. Ditto common stock. If restricted stock, the tax is paid when vested, which means it may go back years.

Nonetheless, if your stock is worth $2, and you have to pay tax on, say, restricted stock vested at Thursday's price of $57, you're screwed.

And they're screwed.

inquirer: I first bought in Manhattan in 1998, paid less than the last two owners. The crash started in 1988, took ten years to recover.

My first 2-br 1-ba apt. at Bleecker and Charles cost me $217,500 in 1998. It would sell last week for $1.4 million. I could afford $217,500 in 1998....

Malraux, first, no accusations? "Persecution complex, perhaps?"

Then, here's your Idiot's Thread post, and my response:

We should all remind ourselves of my friend Malraux's first post, those many weeks ago. Let's take them on one at a time:

Malraux: "Dow below 11,000 by the end of 2007!!"

Fact: Down Jones Industrials one year chart: 11,634.82 - 14,198.10. No, we didn't make it quite below 11,000, but came pretty damned close, and who knows where we're going.

Malraux: "Housing market down 20%! - no - 30%! - no - 40%! - no - MORE! - by the end of 2007!!!"

Fact: Case Schiller index down over 10% since 2Q2006, back to 2005 levels, and falling.

Malraux: "The subprime/Alt-A debacle would tank the Manhattan real estate market FOR SURE in 2007!!"

Fact: "Foreclosure filings nationwide jumped 60% in February compared with the same month last year...."

Malraux: "A bad bonus season would tank the Manhattan real estate market FOR SURE in 2007!!"

Fact: Bear Stearns just collapsed, Citigroup working with John Reed to restructure, forecast of 30,000 jobs lost.

Malraux: "High inventory would tank the Manhattan real estate market FOR SURE in 2007!!"

Fact: Bloomberg says real-estate taxes revenues have collapsed, ordered 3% reduction in city budge.

Malraux: "Manhattan real estate selling for fifty cents on the dollar by 1 January 2008!"

Fact: I never remember anybody saying that, and it's a ridiculous thing to say - just Malraux's hyperbole - but the trend is clearly down.

Malraux: "It was ALL GONNA CRASH by the end of 2007!!!"

Fact: 2008 has just begun, and not very auspiciously.

When I wrote this, I just didn't know that Bear would collapse to $2 a share!

And the only "glee" I have, Malraux, is that I am being proved right by the moment. I feel no "schadenfreude" - I did a control-C control-V on that word! - for Bear's employees (except the one I don't like). I feel no - I won't do it again! - for people who overpaid. All I feel - that word again - is that what I said would happen weeks ago is happening. And it will get worse. I was trying to warn people, and was confronted by you, Spunky, and a bunch of other people who called me Chicken Little.

Ain't nothing Little about today's Chicken. And tomorrow's won't be any better.

steve - when did you publicly start talking about all this?

U.S. stock index futures rose on Sunday evening after JP/Bear deal and the unexpected rate cut were announced. S&P 500 futures were up 5.3 points and Dow Jones Industrial Average futures rose 84 points. Nasdaq 100 futures gained 5 points.

urbandigs - weeks ago, when it became apparent to me that stuff was going to go sour faster than I thought, and all I heard was people talking Rosy Scenarios about why Manhattan was a great place to invest in real estate, and why I was such a major a**hole for talking down prices. I gave dozens of economic reasons why this couldn't last: disjoints between incomes and property prices, disjoints between rental and sales carrying costs, AAA-rated bonds being backed with subprime junk, open houses with lines around the block, viva-voce auctions of apartments because there were so many bids on them.

I said then - as I reminded my mother on the phone today since we know Bear Stearns people - that when I saw this property feeding frenzy years ago, I decided to rent. Watch how prices fall now.

FYI I used to be an auditor with BofA and Price Waterhouse. I've seen this stuff. I work as a financial translator now: I've read the contracts establishing exactly what backs these securities up, and how they're chosen. I know people who work at the ratings agencies, and I know what they don't know. (I'm not too impressed with them.) I have a degree in economics. I've been in the property market for 10 years and made millions at it. I bailed out of Miami the day before Hurricane Wilma struck.

I know something about this.

Boy did things collapse fast. This from CNBC: "The Fed will provide special financing to JPMorgan Chase for the deal, JPMorgan Chase said. The central bank has agreed to fund up to $30 billion of Bear Stearns' less liquid assets."

Basically, the Fed is assuming Bear Stearns' risks. Lehman is next. It may or may not survive.

Tony, don't take short-term trends too seriously. Here's the later headline: "HONG KONG (MarketWatch) -- Asian markets suffered steep losses early Monday on worries about global credit markets and a weakening U.S. dollar after J.P. Morgan Chase agreed to buy Bear Stearns Cos. for $2 a share and the Federal Reserve cut the discount rate by a quarter percentage point."

Tony - easy there killa! Knee jerk reaction was up on fed actions, until reality set in and they understood what was going on. As of RIGHT NOW that I am writing this, updated futures are as follows as Asian markets get hurt down 3%

DOW is -186
S&P is -25
NAZ is -33

Why are you so anxious to suppress any positive developments? And seem to have such glee about bad news?

Steve - I thought so. These problems started building over 9 months ago. DO you read my blog? If no, take a few minutes and go back 8 months when I shifted content to macro in an attempt to discuss the severity of these problems.

Mid-October, I really got worried:

http://www.urbandigs.com/2007/10/has_the_hangover_begun.html

http://www.urbandigs.com/2007/10/proof_the_credit_squeeze_is_no.html

http://www.urbandigs.com/2007/10/credit_crunch_part_ii.html

DOW was at 13,900 when I stated this on October 16th and explained WHY (first link above):

"It was clear that equities were drunk on rate cuts, as I posted last week, and I think the street is yet to adapt fully to a world of credit restrictions, solvency issues, global inflation and higher rates. The first credit blip was an 'awakening' of sorts, and for those that think it's completely over, well, stop hitting the snooze button!"

And Oct 20th (3rd link above):

"I started to notice the unraveling of the ABX markets on Monday, about 4 days after the fall began, and the collapse of the mortgage insurers on Wednesday. That led me to write about my 'paranoia' as I stated on Thursday. Now, I don't know how all this will end, but I do know that investors are pulling bids fast from the ABX markets and the mortgage insurance companies. These are NOT normal moves people and it's clear something is going on! Expect another round of uncertainty and media reports on the credit crunch, and the secondary mortgage markets to seize up again leaving no place for holders of these distressed assets to sell positions; which leads me to be very concerned about those entities that are forced to sell to meet debt requirements! I would also expect to hear more bad news from brokerages, hedge funds, banks, and other entities with uncertain exposure to these markets.

For consumers, this probably means that lending rates will tick higher again (or not fall as much as expected with bond yields or future fed rate cuts), lenders will demand higher quality borrowers, underwriting standards will continue to tighten, and fewer loan options will be at your disposal! These are all unavoidable side effects of a credit squeeze, and I'm trying my best to convey to you the warning signs that I am noticing in the tradable markets which may be a clue to the next credit storm. "

This was 5 months ago!

Tony, whom are you talking to, me or urbandigs?

I'm not anxious to suppress anything. But this isn't George II and Iraq: Rosy Scenarios benefit no one. What is positive about the failure of the 5th largest investment bank in the US? What is positive about 14,000 people losing their jobs? What is positive about any of this?

If you could show me one iota of analysis that says I'm wrong, then I'll listen and check it out. But just to say things - Manhattan is a "special" market - without any analysis will lead you to ride this cow right down to the bottom, as happened with the New Economy and the .com bust.

I'm trying to point out reality to someone who it seems to me is wearing pinkish glasses.

what's the positive development?

steve, you really are quite rude.

your post said "...But it's also what you accused ME of, and I said it wasn't true..." (caps mine)

Again I say, I accused YOU, PERSONALLY, of nothing, stevie. You're just MAKING it 'all about you' (no surprise there). It was a GENERAL comment - you know it, I know it, we all know it. I never, ever called you out personally - so don't say that I did something that I did not do.

When did you start talking about this - a few weeks ago? Wow. You're a genius. I don't think anybody else on this board ever saw it coming. Could have never predicted it. I, for one, am completely blindsided. Despite my past posts to the contrary urging judicious caution.

Malraux - For those of us who are not professional real estate investors a Manhattan apartment purchase represents a significant portion of our non-retirement wealth. We will be leveraged in a way that makes a down turn magnify our asset and saved money losses.

Unless you have leveraged your 100% super luxury capital gains that you have posted about you can withstand most levels of decreases. For the rest of us a 10% decline wipes out 50% of our co-op equity if we need to sell due to any of the possible normal life reasons (job loss, illness, transfer etc.) This does not include transaction costs which will eat into even more of our equity if we have to sell in the near term.

Urbandigs, I congratulate you on your analysis, which I didn't do. I look at the markets an investor, not a trader. Property I looked at from a demand vs. supply POV, and said there's waaaay too much demand and not enough supply. I like to be the lowest bidder, not the highest, so I put all of my money in commodities and overseas. After a huge gain last year I've suffered some this year, but knew to stay away from this country. Brazil is still cheap, India is still cheap, Mexico is still cheap (though more vulnerable to a US downturn, perhaps offset by oil and gold). Even China is cheap on a forward P/E basis.

You're fully right about what you say, however. People who've never worked in banks may not know how important credit is to the economy, and how much confidence affects creditworthiness. I've been saying for months now - since the August crash - that we're in a serious deflationary mode. The CPI is up b/c of the stupid "owner's equivalent rent" measure, which doesn't take asset price inflation into account. The Fed knows that, and since OER is 40% of the CPI, they know that as housing prices fall, rents will also go down. They can't do anything about the commodity boom b/c it's predicated on BRIC and (stupid) ethanol. All they can do is watch housing prices fall back to their historic norm, and try to mitigate some of the damage by protecting people who are currently stuck. But over time owners' out-of-pocket carrying costs for buying is exactly equal to the cost of rental. Now it's twice as high in Manhattan. And that housing costs could not increase over time more than incomes, and in 10 years housing prices have increased 700% in Manhattan, whereas incomes have gone up about 50% in that time.

I said you can't rate a security AAA when it's backed by loans to people who can't pay them back. I also said that the Wall Street bonuses were predicated on myths: the marking to market of obscure instruments with no real market price. Or what Warren B. called "marking to myth," which is where I stole it from. All that money that never existed has just been written off for what it was: junk. BSC never earned all those profits they distributed to their shareholders and employees, and now they're gone.

I was called all sorts of things on these threads. All I've ever said is that we will return to the historic norms, and no amount of anything could stop that. Finally people are seeing what I said. The pain is not over, but we're working our way through it.

It doesn't matter who said it first, really. But it gets harder and harder to argue it isn't going to be bad, doesn't it? Anyone who thinks Bear Stearns is the last of the very, very bad news has his or her head in the sand.

Medical students are taught that when you hear hoof beats, think horses--not zebras. That is, most often, the obvious answer is the correct answer. RE will not be immune from this. Correction: RE is not immune from what is happening in the broader markets. The correction is already underway--it just isn't obvious, yet. But it has started. The market is different than March of '07. No, it isn't Armegeddon but the days of arguing whether RE is still business as usual are pretty done.

Malraux, "Stevie"? Really?

Sorry if posting your own words hurts, Malraux. You can quote me liberally, provided it's in context.

My question to urbandigs, kylewest, steve,(and anyone else I may have missed): how much will property prices come down, and how soon will it happen? I think I read steve say it will be more than 20-25%, which seems surprising. Thoughts???

Kylewest, because of their business model - all mortgage-backed securities - BSC is the worst, Lehman the second. Sort of like the monolines. There is love in diversity. Citigroup will survive, albeit radically changed: since I worked at BofA 20 years ago I never understood how their business model worked, and I never understood what insurance had to do with banking except you can own mutual funds in an annuity. (And that little experiment didn't last long, did it??

Merrill Lynch is a great franchise led astray by a megalomaniac, now in good hands. JPM should be Sandy Weill's lesson about what happens when you let your ego get involved in important decisions: Chuck Prince worked out quite nicely, didn't he?

BofA will survive. Morgan Stanley will survive, though it may be integrated into BofA in the medium-term. The wheat is being separated from the chaff, and risk-takers are taking their risks on their chins. Watch for a few hedge fund collapses in the offing.

RE is going to be bad in Manhattan starting tomorrow and lasting for years. There are thousands of overpriced luxury apartments coming online, and not one Wall Street person will be buying. Then move in for the kill, a la 1998 again.

okay stevie, here's the exact quote for the third time, and in context:

"...But it's also what you accused me of, and I said it wasn't true..."

And for the third time, I accused you, personally, of nothing in my OP.

When did you start talking about this - a few weeks ago? Wow. You're a genius. I don't think anybody else on this board ever saw it coming. Could have never predicted it. I, for one, am completely blindsided.

steve - I got my share too as many called me the doom & gloom blogger that is trying to take down Manhattan re. All i was doing was discussing what I was seeing in the markets; and yes I was a trader for 6 years on the street.

Humans are emotional creatures and feelings like denial, greed, anger, frustration, etc..can make people believe anything in their own minds; especially with their investments. When it comes to asset prices (stocks, bonds, housing, whatever..) most people just like being positive; its more fun. If they buy into the asset, generally they are always positive and will fight anyone who says their asset is going down. I learned log ago as a trader not to get married to any position, keep emotion out of it, and trade the order flows and volatility. It was the dot com experience on front lines that I learned to keep my head out of the sand.

If you discuss an opinion that is negative about the economy, someones job, someones asset, etc..you will get their two cents arguing against you. Nobody likes to talk crisis or stock selloff or housing deflation or unemployment rising; but that doesnt mean it is not going to happen. Some people see warning signs far in advance. Others dont. And its that very dynamic that will make the others tag the naysayers with 'doom & gloom' titles.

Its an opinion, and nothing more. Say your thing and move on. In the end, they will likely do what they want regardless of your warnings!

Malraux, I must ignore you from now on. The length of time I've been posting has nothing to do with the validity of what I'm saying or what I have done. Stevie doesn't bother me. In fact, it makes me Wonderful. ;0

khd, that's just my guess. No one can tell you. But you have to go with your instincts and then see what happens. No trader has ever executed 100% good investments, and even Warren B. gets them wrong sometimes. Don't listen to me if you think I'm wrong.

Anyone think the DOW will drop to 11,000 tomorrow?

RE is going to be bad in Manhattan starting tomorrow and lasting for years--Stevejhx

Good now I can finally scooped up an apt for pennies on the dollar. Payday has finally arrived

that's scoop sorry but I am really excited about the bargain basement prices I can get in Manhattan. Thanks Stevejhx for telling us about the bargains that can be had out there.

Urbandigs, you're right. I'm the first guy to sell a bad bet that has no chance of recovering, and move into something better, take my loss and potentially offset it with a gain. I'm not a short-term trader but will move in and out of assets as frequently as needed. Because of how I invest I'm one of the few people who doesn't believe in stop-losses: I see them as way to lock in a loss. I've gone up and down hundreds of thousands of dollars in the market in a single day, and I bite my nails but as long as I'm not close to a margin call, I can sleep soundly at night, though sometimes after a sloe gin and tonic.

Off of property, I'm a firm believer in BRIC: the growth story is just too good. Even China, that I've taken some losses on recently: they'll slow growth, slow inflation, but there's just to much pent-up demand. I've traveled extensively in Latin America & have been in China. I saw what happened to Spain after it joined the EU. Poor people want to be rich, and they don't need us (spendthrift Americans) to get them there. As soon as the fundamentals are wrong, I'll trade out, even at a loss.

Back to NYC: the fundamentals in Manhattan property prices are way off. There's no way around it. Give me a country like Brazil with a forward market P/E of 18 and 10% annual growth and 200,000 million people with resources up the yazoo, and I'll take it. Ditto the billions in India and China. I've seen what other developing countries have done. But people don't make enough money to afford a decent place to live in Manhattan, and that can't last: the fundamentals aren't there.

So, guys, none of this is personal. It comes from an analysis of the fundamentals, and an analysis of the downside risk potential. For instance, a 72-year old semi-retired friend of mine with $100,000 asked me where to invest it. I told her to put it in the bank, because she might need it soon. Another friend asked me where to invest her $10,000. I told her in a CD because she might need it. I'm telling people not to leverage themselves to buy into an overbought Manhattan real-estate agent, and I'm called Chicken Little or worse. Okay, but when you're upside down on your mortgage or ask for a short sale, or have a rental property that you can't rent out for enough to cover your costs, give me a call and maybe I'll buy it from you.

At $2 a square foot.

And "real-estate market," not "agent." Freudian, for sure!

I still cant' believe they're paying $2. The building is worth more.

Kylewest, the only reason I'd be happy if the Dow fell below 11,000 is so I could make fun of Malraux's Idiot Thread, quoted above.

Guys, THINGS ARE NOT THAT BAD. They suck in the property market, where they are that bad, but they're not that bad in the banking sector. Here's the issue: they have these mortgage-backed securities that no one will buy because no one knows what's in them. It's opaque. Yes defaults are up and rising, but that doesn't mean that a bond with a face value of $100 is actually worth the $0 that it has been re-marked to. It's re-marked to $0 because there is no market price for it today. But there may be tomorrow or the next day. JPM is going to make a fortune on this. Buy their stock if it sinks: they got a $30 billion guaranty from the Fed that the Fed knows it will never pay out.

Guys, the banking sector is going through a crisis of confidence. There will be real losses, but not of this magnitude. JUST SIT TIGHT. Watch property prices sink, delinquencies and foreclosures rise, and JPM and BofA will make a fortune.

That is - this is an accounting problem, not a fundamental problem. The fundamental problem is in the housing sector, but as long as people don't need to sell and can make their payments - and most people will be able to make their payments - it'll be fine.

I'd be a LT buyer of JPM and BAC, though I'd wait six months to do it. Those guys are SMART.

Yeah, sma202, the building sure is worth more. So is the business. So is Countrywide. You know, where angels fear to tread.

JPM is BSC's clearing bank. They know what's there. BofA did months of due diligence. They know what's there. They also know it's not a fundamental problem, but a market problem due to accounting standards that will resolve itself over time. Like when Argentina defaulted on its bonds, they went for 20 cents on a dollar. Somebody bought them up, now they go for 90 cents on a dollar.

And so will these CID's, in the medium-term.

I'm telling you that JPM and BAC are two of the smartest firms out there. Buy them in 6 months.

Steve, you might want to chill out. This is obviously not good news re Bear et. al. But you and I have both said that our economically elastic jobs are going well, busy, etc. The Bear-JP statement said something about keeping on Bear employees, so I doubt they will all be out on the street, and at the cheap price they paid for the company they can probably keep more of them on.

Anyway, your "Manhattan RE is going to go bad, starting tomorrow" is over the edge. The market has been slowing down (except luxury) for about six months, and we probably will have a couple of rough quarters, and some median price drops. Could be your're right that things will hit bottom in 18 months when you want to buy. But as someone else said on the board, don't be too quick to jump to the conclusion that something you may eventually want to buy is capable of losing value so quickly.

The IBankers are only part of the Manhattan Real estate story. There are a lot of other factors at work that have kept us from bearing the brunt of the housing bubble burst. I won't list them again: realtively low inventory per population, foreign investment, center of the entertainment and arts world, etc, etc, etc, Ooops, I guess I did just list them.

Anyway, you're right that the economy and the MRE market will be taking some hits, but this "tomorrow" and "over 25%" or whatever is really over the top. Keep in mind that if things get too bad, it might also impact your translating business and my very economically elastic business, so don't wish too hard or get too gleeful. Everything might come down including our revenues if we have a deep, worldwide recession.

In the meantime, may peace be with you.

Holy jesus - $2/ share. That's unreal. I just checked Bloomberg, WSJ, CNBC - they can't all be wrong.

No, NY RE will not free fall overnight but the domino effect is in play.

Bloodbath in the market tomorrow - love my DXD's!

will, I think we agree on more things than not. I do stand behind what I said - the fall starts tomorrow. Luxury's dead. I think we're in for a repeat of 1988 - 1998. Remember the Resolution Trust? Same thing happened, today, & I don't expect Lehman to survive.

Question is, does BAC want an investment bank? Because who else can absorb that sort of loss besides JPM and BAC?

Check out my posts, though: I don't think the "real" banking sector is in any danger. I'd be a bank buyer in 6 months. I made my first mini-fortune when I worked for BofA in the '80's, bought loads of stock for $10, sold for $100. Ditto this: it's an accounting thing. BAC knows it, JPM knows it. Just most people don't. These CID's are probably worth 95% of face value, they're trading for 0%. That's a mighty hefty potential profit. If Jamie D. isn't dancing a jig tonight, he oughta be.

Just FYI, discount "foreign buyers": I heard it in Miami. You're right about population, but not inventory: it's a lot bigger than peeps think it is, b/c developers & agents don't list it all. Implement an MLS - and I petitioned Andrew Cuomo to force one! - and there's over a year's supply out there, and growing. The market here is too opaque, which is just what agents want.

I understand your concern about what I say, though, but just know that I'm a passionate guy. If I'm wrong - and I'm wrong a lot - I'll be the first to admit it. But I'm betting millions that I'm right, though in the short-term there'll be a little pain. For me as a leveraged investor, and for RE investors, though I think I'll recover first.

Stash: it's true. Take will's advice and mine: don't worry about what happens in the market tomorrow. Worry what happens over time, and over time, it's going up. So will RE - it'll just take a much longer time.

Austin looks good, though, if I had any desire to live in TX.

stevejhx - agree mostly with your view here and it also appears you've been through a few more cycles than I so I will generally defer to experience.

However, tough call on the financials. I've been waiting and I'm glad I didn't get in yet b/c I would have been too early. If we have a bleed out early this week on LEH, MS or GS, maybe its time to get in.

re: FAS 157 (at the risk of revealing my true profession) and it's MTM effect on financials - I see it in my firm's business and the more illiquid the security the more you're going to see the valuations fluctuating from quarter to quarter. This is compounded by the liability the Big 4 have and how they are putting us through the ringer before blessing the #'s - all of this does not help. You tell a trader who has $1b of CDS's or CDO's on his books that the accountants need figure out a way to get to its liquidation value and i'll give you one unhappy trader. That's the world we live in right now until this passes.

to reinforce your and Will's point - you're right - a LT horizon is needed to see through the constant barrage of negative news. (but if I want to do some covering tomorrow - can't blame me).

stash17, when I was at BofA was the start of M2M for trading portfolios. I worked for the Big 8 - Arthur Young - & the Big 6 - Price Waterhouse - and BofA. Lived through it. I wouldn't get into any of the banks till the absolute bottom is hit, & we're not there. You can't mark-to-myth, that's the problem. Give it a few months.

Here's what happened: they tried to apply the reinsurance model to securitization: mix and match so that there's no specific risk to anything. But reinsurance - not a perfect industry - has actuaries, who can figure these things out: acts of God, and all. But who knows who will default or not: there's no model, nobody knows who owns what, etc., etc.. So with no model, nobody knows, what can people rely on? There's no model, no history, it's opaque. Well - better not invest at all, then!

And that's what's happened. But I'm sure Jamie Dimond is the happiest human being in the world today. He paid $240 million for a firm worth billions. Watch BAC renegotiate Countrywide, or if there's a run - and there may be - watch the Fed accelerate the sale. LEH may go next week. I see no good signs. But I do know - knowing accountants at AY, PW, BofA - that this is purely accounting, not economic. (I'm an economist by training.) There are fortunes to be made in banks - but I'd wait.

Real estate, however, is dead for years to come.

"Real estate, however, is dead for years to come."

stevejhx, you are the ultimate doom and gloomer. It seems as if urbandigs is a bit jealous that you took his gloom and doom pencil away. I will believe everything you say when I can get a discount on my next Manhattan property. Until then it is all speculation, not fact.

Another thing to think about:

A budget crisis the likes of which NYC has not seen since the 70s.

JuiceMan, you know RE is not a liquid market. It'll take some time for stubborn sellers to figure out that the champagne well is dry.

I'm not a doom-and-gloomer: real everything I've written.

However, speculation was the problem - just not the speculation you're talking about.

see, told you! I consider myself a realist, reading the writing on the wall. Some call this doom & gloom. Well, lookie where we're at now!

l

It'll get better, urbandigs. Here's what people are missing:

"At the same time, JPMorgan would also take on Bear Stearns' mortgage portfolio, worth an estimated $33 billion as of the end of February. Just $2 billion of that amount was made up of subprime, with the remainder made up of both commercial mortgage backed securities as well as other residential mortgage securities."

So of a $33 billion portfolio, 6% of it is subprime. Let's say that 50% of that subprime defaulted, it's still just 3% of its loan portfolio.

This is a classic crisis of confidence. Nothing was wrong with Bear; all that was wrong is there are securities out there that nobody knows what's in them or what they're worth.

So JuiceMan, I'm not a gloomer-and-doomer at all. I believe - feel free to disagree - that from the fundamentals, real estate is way overvalued. However, I think investment banks are even waaaay more undervalued. What is true is that none of this will stop until housing stops sinking, and we're a long way off from that. In fact, it hasn't even started in NYC.

And what you've failed to state is why you think things are hunky-dory. If before Manhattan real estate had the cushion of the financial industry and Wall Street, what does it have propping it up now? Not one Bear employee is getting a bonus. Even if Bear were in a better position, JPM doesn't pay out bonuses like that. Goldman is supposedly sitting on a $3 billion write-off; we'll know this week. Morgan Stanley: they've been awfully quiet.

Where is all the cash going to come from now that "Wall Street" is in a tailspin? Who's going to be issuing mortgages for more than the historic prudent norm: twice your salary, 20% down? I don't see it happening, JuiceMan, but I'm willing to entertain your hypotheses.

And Spunky's, too.

you are obviously new to this board!

Sorry, I hit enter by mistake. As in any economic downturn or "crisis", there are opportunities to make money for the patient investor that has cash. There is no question that the latest round of bad news will further dampen market sentiment, and it may lead to a substantial dry up of demand from ibankers and hedge fund types. However, I am not sure that this will translate into a 25% depreciation of real estate in Manhattan, particularly in prime areas. Real estate is not, primarily, an investment, it is a necessity, and people pay a premium to have the type of home they like where they like, etc. The question, in my mind, is will Manhattan no longer be a desirable place to live for all of the new families that have decided to stay here, as well as foreigners who bought second homes. If the answer is yes, then real estate in Westchester, Bergen County, Greenwich, etc. will go up as people leave New York, and there will be significant pressure to sell at reduce rates. If the answer is no, then I expect we will just have a very slow transactional period where there are modest reductions in price. Clearly, if someone needs to sell right now, a deal can be had. However, most people will simply take their unit off the market, or rent.
My question for Urbandigs is, since he has proven himself most sage on the credit crisis is: putting aside the difficulty for non-qualified buyers to obtain a mortgage. At what point, if ever, do you see mortgage rates becoming low enough to entice buyers to buy as opposed to rent in Manhattan? Also, what impact, if any, do you see the potential downturn in real estate sales having on luxury rentals (condos, coops that rent?).

Ill make a stab at it mh23

Question 1: At what point, if ever, do you see mortgage rates becoming low enough to entice buyers to buy as opposed to rent in Manhattan?

My take: Tough question because I do not believe lending rates is the main reason to buy or rent. My feelings are that this is not a rate affordability issue. It is a general affordability issue combined with declining confidence that the asset may depreciate in the near to medium term. Since nobody wants a depreciating asset, confidence is the more powerful force here. For example, I do not think this is a situation where if rates fall to 5.5% on a 30YR from, 6.5%, people will rush in and buy! People need to feel secure with their jobs, secure with the investment (and I do view it as an investment), secure with their paper wealth (we have neg wealth effect now), and confident enough to pull the trigger on the deal. So, my true feelings is that the question should be focused more on when the credit markets will normalize, which in turn will add clarity to the markets, add confidence to the markets, and rates will likely be lower as risk is repriced back to more 'normal times' levels.

Question 2: Also, what impact, if any, do you see the potential downturn in real estate sales having on luxury rentals (condos, coops that rent?).

My Take: Yes I do see an impact. We are talking about job losses, negative wealth effect, and drop in confidence that will result in consumers changing their spending habits and going into conserve mode. Its a self fulfilling prophecy in times like these because this adds to the slowdown. The high end lux rental market does cater to wall street and I believe rental rates at this level will slowly come down as jobs are lost in this sector and the economy in general proves to be in a recession. Normal cycle. Rents have surged about 50% in the past few years as buyers were priced out of the sales market and rental inventory declined to well below 1%. I expect vacancy rates to rise as landlords are late in reducing rents to where they need to be to get qualified tenants as the economy slows.

mh23, you're drinking the kool-aid: "people pay a premium to have the type of home they like where they like."

You can't pay a premium when nobody will lend you the money, or if all your BSC assets were just marked down to $2.

You're asking the wrong question: "At what point, if ever, do you see mortgage rates becoming low enough to entice buyers to buy as opposed to rent in Manhattan?"

The problem isn't mortgage rates; the problem is that nobody is lending money, regardless of what the rates are. The problem is that all the people who were buying are suddenly bankrupt.

But you did nail one thing on the head: the cost of renting and buying are historically the same. This will stop when that ratio returns. Rentals will go up in price until sellers get realistic about what they're asking. As I've repeatedly said, in Miami Beach, where I used to live, I sold my unit for $1 million the day after Wilma. The apartment 2 floors above mine is now for sale (2.5 years later) for $979,000. The apartment above that is for sale for $750,000. Now, if after nearly 3 years they can't sell the apartment for $750,000, why would somebody be trying to offload it for $979,000?

And a nearly identical, but not quite as nice or big, apartment in the building next door is up for $1.2 million.

Ask what you want, but if you can't sell for $750,000 after 3 years, how can you reasonably ask $1.2 million?

mh23, really: "Most people will simply take their unit off the market, or rent." You can't take your unit off the market if a) you have to move; or b) you have to pay taxes on a bonus paid in BSC stock that is now worthless; or c) you don't have a job (BSC) so you can't pay the mortgage.

Manhattan will remain desirable, but will become affordable for the first time in 5 years.

I should have said in my answer to Question 1 that at this point it is just way to soon to predict the end to this credit turmoil. The level of uncertainty right now is very high and we just dont know how bad it will get, how global economies will fare, how bad the recession will be, how effective fed actions will be, how toxic the books are, who holds what, how far it will spread, etc etc..Too many questions to answer right now.

Remember, we are not even declared in a recession yet. We are yet to see full effects of unemployment or full effects of commodity inflation on corporate profits. Will they be able to pass on costs or not?

Bravo, urbandigs! I agree with everything you say...it complements what I'm saying very nicely.

Where's my Spunk? Where is she?

Except your second post. There are too many questions, that's true, but I'm sure it's not that bad.

Jamie Dimond is dancing a jig. Sandy Weill: what were you thinking with Chuck Prince?

Urbandigs, here's the fix for this, but I don't know if the Republicans will go along with it: the Fed needs to guarantee mortgage-backed paper. Charge a fee, but guarantee it. They'll make a fortune.

They're halfway there with the new facilities they've opened up; they need to take the next step.

Then, on a micro level, they need to grant bankruptcy protection to allow first-home mortgages to be crammed down. The only way to stop a flood of foreclosures is to rework the loans, and nobody will do that voluntarily because they want everybody else to take the hit.

What's happening in this administration is that they're tied to a free-market ideology and refuse to believe that markets sometimes don't function properly, and they overcorrect all the time. This is an overcorrection in finance, an undercorrection in housing (thus far). Finance will come back into equilibrium faster, but housing still has a long way before it becomes affordable again, especially in Manhattan, where it hasn't really started to fall yet.

steve - I am hearing my contacts tell me that friends they know at Bear are preparing to be laid off and are considering bankruptcy protection and selling their properties (note, plural!) because there is no way they will be able to weather their monthly costs that they got used to.

First wall street. Next main street.

its all very sad

Urbandigs, you're right: I've been predicting it (not on this venue) for years. You can't back AAA-rated securities with subprime junk.

Not necessarily Wall Street / Main Street: I worked at BofA when it was teetering in 1985-86. The Feds walked in and said, "Here's your choice: get rid of Sam Armacost (the CEO) or get rid of Sam Armacost." They gave the bank a list of 10 people they considered competent to run the bank.

The Board picked the former CEO A.W. Clausen. He sold everything, but that marked the bottom.

We're at the bottom on Wall Street. Real estate in Manhattan, however, is dead until the historic equilibriums return, and we're a long way from that.

The Feds will have to step in. The question is, will they?

I just saw stevjhx dancing outside bears sterns building with a champagne bottle in his hand. Crowd of people surrounding him wanting to know his opinion on the state of economy, and how they should invest their money. Everyone is commenting how much smarter he is than Warren Buffet.

Stevejhx your posts are so much more informative than Urbandigs. Your a freaking Genius.

Why is Spunky so vindictive?

Hey spunk, you're back! Adding useful comments, too!

I meant to say you're a freaking genius and may I add that one doesn't have to read Urbandigs blogsite they should just read stejhx postings after all he knows everything there is to know about what is exactly going to happen in the future.

bono_vox, we think the spunk's so vindictive because she has a property in escrow.

Folks, i think the most ominous thing in the whole Bear thing is that multi-billionaire Joe Lewis sunk $1 billion into the company last fall, most of which he's now lost. You look back at that decision and wonder, "what was he thinking?"

The cautionary tale here is that we ALL need to struggle against both 1) the lull of conventional wisdom, or 2) a deep-seated investment that our own individual view is right -- being too wedded to our sense of how things WILL be, based on our deep, thorough experience of how things USED to be. To Lewis, Bear Stearns being a worthless brand was unthinkable to him. Such a sad, sad warning to those of us who resist believing that markets EVOLVE -- they don't march forward along the same path that carried them from history into the present.

It's very comforting psychically to think that things will basically not change, at least not in a seismic-shift way. We like to think that bedrock principles are invinciple, aside from slight variations, or tweaks imposed by near-term market shifts. But realizing that underlying market dynamics (stock markets, property markets, credit markets) CAN change that way, rare as it may be, is an important point of investing discipline, IMHO.

Yeah, well, Joe Lewis is a currency trader, not Warren B. (Or me - right spunk!?)

This is very sad for the BSC people, 2 of whom I know, 1 one of whom I'm kind of glad he was wiped out. But I maintain that this "financial crisis" is fake. We just need some transparency in the market, which is currently lacking.

I think my point is more that when people/firms claim that "we're on top of it, we're too smart to blow up in business line XYZ," the statement doesn't mean much unless they're also working hard at protecting themselves from the outside-the-box problems.

Case in point: http://www.bloomberg.com/apps/news?pid=20601109&sid=aIeBgTO_OrN8&refer=news

After all, the market promptly discounts the foreseeable, based on how it thinks history will repeat itself, which is fine until the present day throws a curve ball.

Nobody's too smart to blow up - except My Spunk!

we think the spunk's so vindictive because she has a property in escrow.--stevejhx

I wish I knew what in the world that means but I am not vindictive. I beleive mostly everyone enjoys reading your posts stejhx. They are informative interesting and for the most part very accurate. I congratulate you for forecasting BSC demise a week before it happened. Even Urbandigs has to admire the precise accuracy of your economic predictions.

This is just the beginning. How can you trust anything that these CEO's state. Bears CEO said there was no liquidity problem last week and then the company sells for $2/share. This is a joke. Who is responsible? What about the audits? Free market? Who's next? What are they not telling us? What's amazing is that there are still people saying we are not in a recession. They might be right. We may just skip a recession and border on a deprssion. After all the Fed has never in the history of this country taken these steps to help the banks and the economy. My heart goes out to the hard working people at Bear. However, How is it possible that people who do this for a living be caught holding 40,50,60,70... % of their wealth in one stock? Can anyone explain this mentality. All I can come up with is Greed.