{"id":196618,"date":"2008-04-08T16:40:00","date_gmt":"2008-04-08T21:40:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/04\/08\/economics-update-484\/"},"modified":"2008-04-08T16:40:00","modified_gmt":"2008-04-08T21:40:00","slug":"economics-update-484","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/04\/08\/economics-update-484\/","title":{"rendered":"Economics Update"},"content":{"rendered":"<p>Busy day in real estate, we have:<\/p>\n<ul>\n<li>The <a href=\"http:\/\/www.cnbc.com\/id\/24011575\">pending home sales index falling to 84.6<\/a>, the lowest number since its creation in 2001.  Home sales are down 21.4% year over year.<\/li>\n<li>We have the <a href=\"http:\/\/www.afp.com\/english\/news\/stories\/newsmlmmd.6bf48a90ce926a80a0167f095788537e.701.html\">IMF estimating that the US real estate meltdown will cost $945 billion<\/a>.   Looks like we will hit the trillion dollar mark, because we haven&#8217;t hit bottom.  (Just to pat myself on the back, I said &#8220;trillions&#8221; in <a href=\"http:\/\/40yrs.blogspot.com\/2007\/07\/on-hedgefundsubprime-meltdown.html\">July of 2007<\/a>).<\/li>\n<li>In the UK, we are seeing a decline in house prices too, only for them this is the <span style=\"font-weight: bold;\">second time around<\/span> (see <a href=\"http:\/\/www.cnbc.com\/id\/24008908\">here<\/a> and <a href=\"http:\/\/bloomberg.com\/apps\/news?pid=20601206&amp;sid=aktDymERL_dU&amp;refer=realestate\">here<\/a>)<\/li>\n<ul>\n<li>It looks like the <a href=\"http:\/\/www.bloomberg.com\/apps\/news?pid=20601109&amp;sid=apDrda0CMUn8&amp;refer=home\">Bank of England may be forced to slash rates<\/a> in order to keep the housing from dropping too sharply.<\/li>\n<\/ul>\n<li>Se are seeing <a href=\"http:\/\/www.msnbc.msn.com\/id\/23997412\">short sales<\/a>, where the house is sold for less than the principal owed skyrocketing.<\/li>\n<ul>\n<li>For example, In Las Vegas, <a href=\"http:\/\/www.lvrj.com\/business\/17380589.html\">More than half of Las Vegas home sales in March were foreclosures or short sales<\/a>.<\/li>\n<\/ul>\n<\/ul>\n<p>Of course with any of these situations, you will inevitably find the highly placed moron, and today&#8217;s is <a href=\"http:\/\/money.cnn.com\/2008\/04\/08\/news\/newsmakers\/Morgan_CEO.ap\/index.htm?postversion=2008040812\">Morgan Stanley CEO John Mack<\/a>, who is saying that he thinks that the credit crunch is, &#8220;in the final innings&#8221;.  If you have money in Morgan, <span style=\"font-weight: bold;\">get it out now<\/span>.<\/p>\n<p>Why am I so certain about this?  Because the <a href=\"http:\/\/money.cnn.com\/2008\/04\/08\/news\/economy\/Fed_auction.ap\/index.htm?postversion=2008040811\">Fed auctioned another $50 billion banks in their<\/a> &#8220;crap for cash&#8221; program, which has now &#8220;auctioned&#8221; $310 billion to banks for their worthless mortgage paper.<\/p>\n<p>If that doesn&#8217;t convince you, how about <a href=\"http:\/\/money.cnn.com\/2008\/04\/08\/news\/companies\/GMAC.ap\/index.htm?postversion=2008040812\">GMAC looking down the barrel of a ratings cut<\/a>, which means that people who might want to buy a car will find it even <span style=\"font-weight: bold;\">more<\/span> difficult to get a loan to do so.<\/p>\n<p>Of course, Mack thinks that things are looking up because <a href=\"http:\/\/www.reuters.com\/article\/mergersNews\/idUSWNAS711120080408\">private equity firm TPG just put $7 billion into WaMu<\/a>, which implies to him that private equity is on its way to a comeback.<\/p>\n<p>Nope&#8230;.Dead cat bounce.  WaMu&#8217;s only virtue is that it&#8217;s better, and only a bit better, than Countrywide.<\/p>\n<p>For an idea of how badly things are going, note that <a href=\"http:\/\/money.cnn.com\/2008\/04\/08\/news\/companies\/Student_loans.ap\/index.htm\">First Marblehead is at risk of imploding<\/a>.  Note that FM is a <span style=\"font-weight: bold;\">student-loan services provider<\/span>.  It should basically be <span style=\"font-weight: bold;\">impossible<\/span> for them to lose money.<\/p>\n<p>This is federally guaranteed, and cannot be discharged through bankruptcy, but given that their insurer, The Education Resources Institute Inc., just filed for bankruptcy, all bets are off.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Busy day in real estate, we have: The pending home sales index falling to 84.6, the lowest number since its creation in 2001. Home sales are down 21.4% year over year. We have the IMF estimating that the US real estate meltdown will cost $945 billion. Looks like we will hit the trillion dollar mark, &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[973,1004,1045,1088,985],"tags":[],"class_list":["post-196618","post","type-post","status-publish","format-standard","hentry","category-economy","category-finance","category-insurance","category-real-estate","category-regulation"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196618"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=196618"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196618\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=196618"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=196618"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=196618"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}