analysis policy in all the world: tháng 9 2009

Thứ Tư, 30 tháng 9, 2009

Calling All Investors Seeking To Lose Money

Looking to buy some commercial real estate? Interested in the steaming hot (as in fresh manure) Inland Empire? Man, have I got a deal for you.

The package embedded below (see update below) just came across my desk today. It is an offering for a shopping center in Moreno Valley, CA (Inland Empire). The property consists of three ground leased fast food pads (El Pollo Loco, Del Taco and Wendy’s) as well as approximately 22,670 square feet of retail shops in 3 separate buildings all sitting in front of Walmart (not included in offering)...

...The surrounding trade area has been severely impacted by the housing crisis and the commercial market has not fared much better although this is not readily apparent from reading the marketing materials. From the brochure:

The retail market in the Inland Empire continued to be impacted by strong demand and limited existing inventory for retail space in 2006. The overall vacancy rate for 3rd quarter of 2007 raised slightly to approximately 6%, with 14.13 million square feet of retail space under construction and an additional 41.47 million square feet of space planned to be developed. As a result, the Inland Empire is destined to remain the driving force in the Southern Californian economy with a 2008 projection for retail sales to be in excess of $51.6 billion.

I’m pretty sure the Inland Empire is no longer a driving force in the Southern California economy – not in a good way anyway. To support my theory, I have created a visual representation of exactly how the surrounding trade area has fared:

The red star on the right is the subject property. Orange dots represent properties in pre-foreclosure. Yellow dots represent properties up for auction. Green dots represents REO [Ed: foreclosed] properties. White dots represent short sales. Not exactly the depiction of stability.

So all of this is fine – and to be expected for this area. What is not fine and should not be expected is the pricing of this offering... ...it should be noted that the property is being offered with an assumable loan with a current balance of approximately $8,665,000. As far as I can tell, this property is not worth the debt which encumbers it.

...most investors would not be comfortable with a vacancy factor as low as 10% in this trade area. Additionally, my quick look at the property does not even take into account loss of rents for tenant turnover (which will undoubtedly happen in the not-to-distant future) or expenditures for tenant improvement allowances, leasing commissions and carried expenses.

The sale of this property in its current condition and anywhere near the asking price is a lawsuit waiting to happen.

Clearly, there are still some owners out there that have not come to accept the current state of the market. The bid/ask gap remains wide and transaction volume will not return until it narrows. Most of the give will come from the ask side of the equation.

In late July, Tyler Durden relayed this RealPoint graph of commercial mortgage-backed security delinquency rates.

I can just smell the hope and change. It kinda smells like bacon.

Memo to David Frum, re: Sarah Palin

Date: 30 September 2009
To: David Frum
From: Doug Ross
Re: The New Majority

Exhibit A:

Exhibit B:

Any questions?

Linked by: Texas4Palin and Double Plus Undead. Thanks!

Be Civil?

Frances Rice, a retired lawyer and US Army Lieutenant Colonel, is chairman of the National Black Republican Association.

It’s a sure sign that Republicans are winning a debate on issues when Democrats, aided by well-meaning civility police pundits and activists, demand that Republicans stop showing their passion and “be civil”.

I am still waiting for those with such a keen sense of civility to demand that Democrats cease their unrelenting and uncivil, even racist, attacks on black Republicans. I won’t hold my breath.

High on the Democrats’ list of those to be denigrated are accomplished black Republicans who do not toe the Democrats’ liberal agenda line. Shamefully, Democrats do not want poor black children to have as role models any black person who does not engage in victim mongering and works hard to become prosperous rather than become dependent on government handouts.

The message that Democrats gives to poor blacks is despicable. If you remain poor, uneducated and vote for Democrats, we will celebrate your victimhood. If you get a good education, get a good job and vote for Republicans, we will denigrate you as "acting white”, a "sellout”, an "Uncle Tom”, a "House Negro”, a "House N-word", a "Lawn Jockey”, and worse..

Brazenly, on the left-wing Internet website called "The News Blog," Democrats posted a doctored photograph of then Maryland Lt. Governor Michael Steele (now chairman of the RNC) when he was running for a Senate seat, depicting Steele as a "Simple Sambo" with a blackened minstrel-style face, nappy hair and big, think red lips. The cartoon caption read: “Simple Sambo wants to move to the big house”. This contemptible racist stereotype is the same one Democrats used to demean black men during the era of slavery and segregation.

In addition to other outrageous racist images of Dr. Condoleezza Rice produced by several Democrats, cartoonist Jeff Danziger depicted Dr. Rice as an ignorant, barefoot "mammy", reminiscent of the stereotyped black woman in the movie “Gone with the Wind” about the slave era black woman who remarked: "I don't know nothin' 'bout birthin' no babies". This is the type of racist stereotype Democrats used to demean black women during the era of slavery and segregation.

Democrats now love Gen. Colin Powell, but spewed out racist attacks on Powell before he endorsed Obama and embraced the liberal agenda of higher taxes and a bigger government to provide poverty producing handouts to blacks.

A video was shot by WKRN Video Journalist Beau Fleenor at Tennessee State University in Nashville, Tennessee that shows Al Sharpton demeaning Gen. Powell and Dr. Rice, when Sharpton was asked to give his opinions about whether Powell and Rice were “House Negroes". That video can be found on the Internet.

An article that appeared in a Portland, Oregon paper was one of many exposing how hardly a ripple of protest was made by black Democrats when Harry Belafonte publicly denounced Gen. Powell as a "House Negro".

With impunity, the late Democrat Senator Ted Kennedy called black judicial nominees, including Judge Janice Rogers Brown, “Neanderthals”. Democrat Senator Harry Reid slurred Supreme Court Justice Clarence Thomas as an incompetent Negro who could not write good English. “Slap at Thomas stinks of racism,” was the headline of the New York Daily News’ December 7, 2004 editorial.

Even black Democrats will be maligned if they dare step off of the Democratic Party’s political plantation. When black Democrat Juan Williams wrote his book entitled "Enough: The Phony Leaders, Dead-end Movements and Culture of Failure That Are Undermining Black America" that exposed the deplorable conditions in black communities caused by the Democrats running those communities, Williams was denounced on national TV by another black Democrat as a "Happy Negro".

For details about how Democrats during the 1960’s even smeared Dr. Martin Luther King, Jr. who was a Republican, see the article posted on the NBRA website.

“Civility, Ours and Theirs” is an article that provides more details about how Democrats vilify black Republicans while wagging their finger at Republicans about being civil.

Our political discourse can be elevated to the high standards demanded by the civility police only when Democrats are also required to play by the rules of civility.

September Nominees for the 2009 Contractor Awards

Papa B sent these in...

Basking in the economic glow of $20 trillion in deficit spending, President Obama has decided to jet off to Europe to secure the Olympics for Valerie Jarrett, Richard Daley and friends.

Meanwhile, today's release of the PMI index splashed cold water on the administration and the mainstream media (but I repeat myself):

    SEPT CHICAGO PURCHASING MANAGERS INDEX: 46.1 V 52E
    **sub-indices:
    - Prices Paid: 51.3 v 50.0 last
    - New Orders: 46.3 v 52.5 last
    - Employment: 38.8 v 38.7 last
    - Inventories: 38.9 v 27.5 last
    - Supplier Deliveries: 49.3 v 54.6 last
    - Production: 47.2 v 52.9 last
    - Order Backlogs: 36.7 v 45.8 last

Analysis, Spock?

Captain, the overall PMI was dramatically worse than expected.

Prices were up: bad.

New orders were down: bad.

Employment: flat.

Inventories up: bad.

Supplier deliveries down: bad.

Production down: bad.

Order backlogs down huge: really, really bad.

I guess Obama was right when he said, "We are the change we’ve been looking for."

Hat tip: Market Ticker.

Larwyn's Linx: How To Be A 21st Century Bigot

Have a great link you'd like me to review? Drop me an email or reply via Twitter.

SciTech

Phenomics—the Phinal Phrontier: Psychology Today (Oakley)

Cornucopia

Hoskins Cemetary Road: RSM
The Manchurian President: PJM (Vodkapundit)
Weekend Caption Contest Winners: Wizbang

Thứ Ba, 29 tháng 9, 2009

Chicago's Promotional Olympic Videotape Released

Honors Student Derrion Albert's murder, one of hundreds of killings in the city annually, should serve as the flagship video for Chicago's attempt at securing the Olympics.

After all, decades of unbroken Democrat rule have successfully built a culture of urban dependency predicated upon easy access to welfare, food stamps and other "free" social programs. These, in turn, have led to a dramatic increase in single-parent families and a concomitant rise in violent crime.

In The Atlantic Monthly, Barbara Dafoe Whitehead wrote that the relationship between single-parent families and crime "is so strong that controlling for family configuration erases the relationship between race and crime and between low income and crime... The nation's mayors, as well as police officers, social workers, probation officers, and court officials [all] point to family break up as the most important source of rising rates of crime."

Let me repeat that. Control for single-parent families and there are no differences between the races when it comes to crime.

Study after study confirms that the statistical link between the availability of welfare and single-parent families is conclusive. There have been dozens of studies that link the availability of welfare benefits to out-of-wedlock birth. One study found that a 50 percent increase in the value of AFDC and foodstamp payments led to a 43 percent increase in the number of out-of-wedlock births.

Research for the U.S. Department of Health and Human Services showed that a 50 percent increase in the monthly value of combined AFDC and food stamp benefits led to a 117 percent increase in the crime rate among young black men.

Yet the Democrats, the Daley Machine, Valerie Jarrett, Barack Obama, Rahm Emanuel, David Axelrod and their ilk at ACORN and the SEIU continue to advocate for more welfare, more wealth redistribution and, ultimately, more of the same malaise.

In spite of all the studies, all of the research, all of their failed social experiments, Democrats continue to promote policies that are destructive for thousands of young people like Derrion Albert.

One hopes that the International Olympic Committee takes note. And that, someday, Chicago's voters turn these bums out.

The Atomic Mahdi

"We have a strategy drawn up for the destruction of Anglo-Saxon civilization... we must make use of everything we have at hand to strike at this front by means of our suicide operations or by means of our missiles." -- Hassan Abbasi, "strategic adviser" to Iranian president Mahmoud Ahmadinejad

"We are in the process of an historical war between the World of Arrogance [the West] and the Islamic world, and this war has been going on for hundreds of years... Is it possible for us to witness a world without America and Zionism? ...you had best know that this... goal [is] attainable." -- Mahmoud Ahmadinejad

"We have established a department that will take care of England. England's demise is on our agenda." -- Hassan Abbasi

According to 'Twelver' Shi'a Mulims, Imam Hujjat al-Mahdī ( المهدى) is the twelfth Imam and the Mahdi, the ultimate savior of mankind. Twelver Shi'as believe that Muhammad was born in 868 and has been hidden by God (referred to as occultation) to later emerge to fulfill his mission.

Twelver Shi'as cite various references from the Qur'an and reports (Hadith) from Muhammad and the twelve Shi'a Imams. These texts predict the reappearance of Muhammad al-Mahdi which would, in accordance with God's command, bring justice and peace to the world by establishing Islam throughout the world.

Shi'as believe that Muhammad al-Mahdi will reappear when the world has fallen into chaos and civil war emerges between the human race for no reason. At this time, it is believed, half of the true believers will ride from Yemen carrying white flags to Mecca, while the other half will ride from Karbala, in Iraq, carrying black flags to Mecca. At this time, Muhammad al-Mahdi will come wielding God's Sword, the Blade of Evil's Bane, Zulfiqar (Arabic: ذو الفقار, ðū l-fiqār), the Double-Bladed Sword.

As mayor of Tehran, Mahmoud Ahmadinejad is reported to have constructed a boulevard to prepare for the Mahdi. A year later, as Iran's president, he budgeted $17 million for a blue-tiled mosque in Jamkaran that is directly tied to the Mahdi's return.

In 2006, The Washington Post reported:

The expansion [of the city of Qom] is driven by an apocalyptic vision: that Shiite Islam's long-hidden 12th Imam, or Mahdi, will soon emerge -- possibly at the mosque of Jamkaran -- to inaugurate the end of the world. The man who provided $20 million to prepare the shrine for that moment, Iranian President Mahmoud Ahmadinejad, has reportedly told his cabinet that he expects the Mahdi to arrive within the next two years.

In a speech several years ago, Iran's president Mahmoud Ahmadinejad stated, "Our revolution's main mission is to pave the way for the reappearance of the 12th Imam, the Mahdi."

Anton La Guardia, writing in London's Daily Telegraph: "Iran's president actually relishes a clash with the West in the conviction that it would rekindle the spirit of the Islamic revolution and [possibly] speed up the arrival of the Hidden Imam."

In 2007, after an endless series of threatened UN sanctions, Ahmadinejad announced:

As God promised, the oppressors will have their noses rubbed in the dirt. Now they are fulfilling this promise by themselves... Let it be known that in whatever we do, I see the hand of God and the hidden imam at every moment.

Princeton professor Bernard Lewis observes, "There is a radical difference between the Islamic Republic of Iran and other governments with nuclear weapons. This difference is expressed in what can only be described as the apocalyptic worldview of Iran’s present rulers."

On the holy topic of suicide bombing (martyrdom), Ahmadinejad recently asked: "Is there art that is more beautiful, more divine, and more eternal than the art of martyrdom? A nation with martyrdom knows no captivity."

Iran doesn’t fear retaliation if they attack Israel or the United States because a final global struggle against an evil enemy will present them with the privileges of martyrdom as taught in Islam, Lewis wrote. Death is not a deterrent, it is a reward.

The most dangerous leaders in history are those like Hitler, Hirohito and Ahmadinejad, fueled by a totalitarian ideology and a mystical belief system. Ahmadinejad accepts that the return of the 12th Imam is imminent. Furthermore, he is certain of his own duty to hasten the Mahdi's return. This explains the many years of hidden preparation as Iran built its nuclear weapons, which are designed to both mete out punishment to the non-believers and pave the way for the apocalypse.

Given the willful incompetence of the UN and the IAEA, Iran's pursuit of nuclear weapons has continued unchecked.

They are very close now to achieving their goal..

Linked by: Parkway Rest Stop and Carolyn Tackett. Thanks!

A Coffin Shaped Recovery

That's what Darryl Robert Schoon calls our current economic malaise.

There has been much discussion about this recovery, whether it will be a “U”, “V” or a “W” shaped recovery. The answer is none of the above. It is going to be “C -shaped” recovery, but not as in the letter “C” but as in coffin.

The Coffin Shaped Recovery
It would be a miracle if trillions of dollars of debt could be wiped out with one stock market crash and be succeeded by a new bull market driven by another large offering of credit by the Fed....

Lest you think Schoon a lone wolf on this matter, one only need visit a recent post by Karl Denninger at Market Ticker.

• The Fed is literally the entire mortgage market. Yes, really. As Chris Martenson points out (correctly) we have issued roughly $685 billion in new mortgages through August, while The Fed has bought $722 billion of mortgage paper and GSE debt (I argue illegally, and have for months) with printed money. That is, they are the market - not a part of the market. But reality is much worse - there is no market when a central bank simply buys with printed money, intentionally overpaying. After all it's not their money, right? (On the contrary, it's yours they're spending - without your consent! Must be nice eh?)

• Fannie announced a change in lending policies today, effectively tightening mortgage credit. The "new criteria" will get rid of the 50%+ DTIs they used to allow and demand a 620 FICO. This is still massively below anything that can be considered "prudent"; the average FICO is reported to be 680. But Fannie has found that FICOs under 620 are in fact defaulting at a rate nine times higher than those with a higher score (!) Nine times is 900% - that's bad, right? They didn't release the percentage of loans that they had bought with the lower scores - so we don't know how ugly their book is - but remember, The Fed effectively owns all of their current-year issuance. This could end very badly for them - and us.

• We claim that we're "helping homeowners" yet a recently-run study by Amherst (on Bloomberg this morning) shows that missing just one payment on your house places the probability of eventual default at 75%. Miss two and the probability is 95%. Any loan against which there is a "reasonable likelihood" of default must be reserved against according to GAAP (and just plain common sense) according to its probability of loss and recovery value. Yet most banks don't even consider an account "late" until it reaches 120 days behind! This is outrageously optimistic and is well beyond the threshold of intentional fraud if those numbers from Amherst prove up (and I suspect they do; consider that if you miss a payment you must make two at once to catch up!) Banks are willfully hiding probable losses on these loans for the simple reason that were they to reserve against them they would be instantly recognized as bankrupt. The fact of the matter is that they are bankrupt and our so-called 'regulators' are looking the other way rather than recognize massive control and accounting fraud.

• The Fed has run monetary policy on a "Ponzi" basis for nearly three decades; in only one year out of 28 has their "monetary policy" resulted in improving rather than degrading credit stability1. This is a mathematical fact. We have become inebriated with excessive credit consumption throughout society, including the private and government sectors. This in turn has led government regulators to willfully and intentionally ignore the foundational principle of sound banking: one must never lend more unsecured than one has in excess capital and willfully stick their heads in the sand as credit growth has exceeded GDP expansion. In addition the government has "cooked" both GDP and inflation indices ("CPI") as a means of further justifying bankrupt policies by distorting reported economic statistics.

• We ask "where did the credit go" repeatedly as consumer leverage has risen but personal consumption has risen at a slower rate. There is in fact no mystery: production was offshored to China, India and Vietnam (among others) and replaced with lower-wage "service" jobs. We have used credit as a means of masking our falling real standard of living by engaging in serial Ponzi Finance - first with the Internet Bubble and now with the Housing Bubble. But the Internet Bubble was small potatoes compared to the Housing Bubble, and we've run out of "bigger bubbles" we can blow to take the Housing Bubble's place. As defaults mount the facts are exposed whether we want them to be or not: our earnings power has been severely damaged as a whole by the intentional off-shoring of high-quality jobs and the importation of lower-quality (and lower-wage) workers into the US and we have tried to make up for the deficiency through borrowing. But borrowed money has to be paid back - and we can't make the payments.

• Every nation that has ignored the foundational principles of sound banking and credit for a sufficient period of time has suffered either severe economic depression or monetary collapse. There are no exceptions. The United States and other western nations suffered ugly Depressions in the 1870s and 1930s. Weimar Germany, Zimbabwe, Argentina and others suffered monetary collapses. Going further back Tulip Mania and the Fall of Rome were both caused by monstrous mis-allocation of credit leading to hyperinflation in assets, the monetary supply, or both. The cause of these collapses and depressions is mathematics, not political. It can no more be avoided given improper banking and credit policy than can perpetual motion be achieved.

• A "mere" 7% growth rate - what many economists would call "robust" economic expansion - causes the amount of whatever is being grown (or consumed) to double every 10 years. Each doubling in fact consumes (or grows) more than all of the previous time ever in history put together! Jimmy Carter lost his re-election bid in no small part because he had the audacity to make the (true) statement that this was impossible to continue into the indefinite future in regards to energy consumption. It is equally impossible to continue this into the indefinite future when it comes to GDP or, for that matter, credit.

Two functions of growth, where one is greater than the other, will always eventually run away from one another and, where the larger is dependent on the smaller to be able to be sustained, collapse becomes inevitable2. This is an extension of the above point. In economic terms if credit expansion exceeds real output expansion (since output is necessary to pay the servicing costs of credit of course) collapse of the system is inevitable, with the only variable being the amount of time that elapses before the collapse occurs.

Denninger offers a series of policy prescriptions, but at this point, the odds of any getting implemented are about the same as me winning the Westminster Dog Show with a rabid weiner dog.

As for an imminent recovery? Doctor Housing Bubble reminds us that the vast majority of banks are hiding their desperate financial conditions.

Sept. 23 (Bloomberg) — The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said...

In other words, gear up for round two of the housing bubble burst courtesy of the shadow inventory. 7 million homes may seem like a gigantic number. The reason the number will be huge is because we are now seeing problems in housing due to more historical reasons like unemployment. Obviously a loan modification is pointless if someone doesn’t even have a job.

When you have banks openly acknowledging that more inventory will be hitting the market it is time to prepare and get your facts straight on Alt-A and option ARM products.

Denninger has been sounding the alarm for years.

We have but two choices: we can accept the mathematical reality of compound growth rates and our attempt to cheat math through fraud or we can plunge off the cliff of history, as every other government and economy that has willfully ignored these mathematical realities has done.

Credit demand has effectively collapsed in The United States3 as we have reached the limit of debt service given the degradation of earnings power in the American People along with grossly-imprudent credit expansion. Further attempts to "stimulate the economy" via yet more credit creation cannot succeed, as we have reached the limit of the geometric progression of both credit and output in terms of sustainable debt service.

Attempting to hide credit deterioration will only cause the inevitable contraction of both to be more violent and disorderly.

It is mathematically impossible to prevent the outcome that now faces us; we are choosing only between the violence with which it comes and whether we have control over the process, or whether it will inevitably jump any "fire lines" we try to establish and potentially consume not only many private businesses and individuals but the government itself.

It is time to choose wisely; we face not a matter of politics or "pie in the sky" economics as practiced by ivory-tower academics, but rather the cold, hard mathematical realities that are inviolate and impersonal - the mathematical realities that control our destiny.

Echoing Denninger's conclusion: banks are carrying mortgage paper valued far beyond reasonable fair-market value. This constitutes accounting fraud -- and the same governmental rocket scientists who got is into this mess are still in power perpetuating the fraud.

I won't hold my breath waiting for the prosecutions.

Israel takes early delivery of two additional cruise missile subs

Late this afternoon, Stratfor Research reported that Israel took early delivery of two additional attack submarines from Germany.

Israel has received two German U212 submarines ordered in 2005; delivery had been expected in 2010, Agence France-Presse reported Sept. 29, citing a military spokesman...

...The submarines can launch cruise missiles with nuclear warheads, is designed to have 35 crew members and has a 4,500 kilometer-range (2,800 miles). Israel now has five German submarines.

Among its many countermeasures and defensive weaponry features, the U212 is capable of launching IDAS missiles from its torpedo tubes; the IDAS is used to suppress ASW (anti-submarine) helicopters.

Image: Naval Technology.

A Conservative Calendar Faces Off Against a Progressive Calendar

Larwyn sends along Don Surber's latest news alert: Carrie Prejean will headline the fifth annual calendar of conservative women to benefit the Clare Booth Luce Policy Institute, according to Fox News.

The entire calendar can be found here.

Word has it that Democrats are mobilizing their beauties for a photo shoot, which will feature, among other stunners, Hillary Clinton, Madeline Albright and Helen Thomas.

Update: Don also has the 2010 Sarah Palin Calendar. Countdown to liberal head kerplosions: 3-2-....

Official Chicago Olympics Logo

Spotted at Big Lizards, via WarBicycle.

Is Sarkozy The New Thatcher?

Dan from New York writes:

At last Thursday's Security Council meeting hosted by Obama, French President Sarkozy contradicted, if not mocked, Obama's utopian call for universal nuclear disarmament. Oddly enough, Sarkozy's remarkable retort went virtually unreported by America's Axelrod-run media but did show up last week in Canada's National Post (since pulled from their website) and the UK's Daily Telegraph.

Obama: "We must never stop until we see the day when nuclear arms have been banished from the face of the earth."

Sarkozy: "We live in the real world, not the virtual world. And the real world expects us to take decisions."

"President Obama dreams of a world without weapons … but right in front of us two countries are doing the exact opposite."

"Iran since 2005 has flouted five security council resolutions. North Korea has been defying council resolutions since 1993."

"I support the extended hand of the Americans, but what good has proposals for dialogue brought the international community? More uranium enrichment and declarations by the leaders of Iran to wipe a UN member state off the map," he continued, referring to Israel.

The sharp-tongued French leader even implied that Mr. Obama’s resolution 1887 had used up valuable diplomatic energy.

"If we have courage to impose sanctions together it will lend viability to our commitment to reduce our own weapons and to making a world without nuke weapons," he said.

Mr. Sarkozy has previously called the US president’s disarmament crusade "naive."

Did you ever think you'd live to see the day when a French leader would lecture an American president on "courage"? Will Canada be the next to say "don't go wobbly on us, BHO"?

(Closely) Related: The WSJ noticed too. Today they comment here.

Thứ Tư, 30 tháng 9, 2009

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Thứ Ba, 29 tháng 9, 2009