» Posted by Martin Weil on September 25, 2007

Swimming pool in China. Photo from this site.

» Posted by Martin Weil on September 20, 2007

"According to an analysis conducted by Moody's Economy.com, declines will exceed 10 percent in 86 of the 379 largest housing markets. And 290 of the cities will experience price drops of 1 percent or more... Many of the worst hit cities are in Sun Belt areas that experienced outsized home-price growth during the real estate bubble"

This according to a newly released study on CNN's Money. Largest declines forecasted are for the Stockton CA, Palm Bay and Sarasota FL areas (-25%), followed closely by Reno NV, Modesto CA, Detroit, Fresno, Oxnard, and Sacramento CA. The full article and list are here.

» Posted by Martin Weil on September 17, 2007

In the first Forbes 400 [1982], oil was the source of 22.8 percent of the fortunes, manufacturing 15.3 percent, finance 9 percent, and technology 3 percent. By 2006 oil had fallen to 8.5 percent and manufacturing to 8.5 percent. Technology, however, had risen to 11.75 percent and finance to an extraordinary 24.5 percent.
...
The average net worth in 2006 of Forbes 400 members without a college degree was $5.96 billion; those with a degree averaged $3.14 billion. Four of the five richest Americans -- Bill Gates, casino owner Sheldon Adelson, Oracle's Larry Ellison, and Microsoft cofounder Paul Allen -- are college dropouts.
From All The Money in The World. Tip Marginal Revolution

» Posted by Martin Weil on September 15, 2007

Accounting moves to the top in BusinessWeek's 2007 "Best Places to Launch a Career" study.

» Posted by Martin Weil on September 14, 2007

Verizon Wireless customers who don't want their personal and account information sold to marketers will have to opt-out by calling 1-800-333-9956. A notice tucked into recent bills indicated subscribers had 30 days from receiving the notice to do it. From The Consumerist

Note that if you have multiple lines with Verizon, you will need to "opt out" individually for each line.

» Posted by Martin Weil on September 11, 2007

According to this article on Bloomberg, hundreds of average real estate investors lost a total of $250M on deposit at two 1031 exchange firms in Nevada. The lost funds had been placed temporarily with the firms while the investors arranged tax-free exchanges. The two firms are accused of diverting the customer assets to invest in other businesses.

Adding further injury, the defrauded investors will have missed the exchange deadline to purchase a new property and will as a result be liable for the income taxes due on the proceeds from the original property sales.

» Posted by Martin Weil on September 06, 2007

"Remember that hedge fund that was earning you 20% or those can't-miss shares of the subprime mortgage company you picked up? Turns out they were made in a Chinese toy factory. Now, they're radioactive and painted in lead."

David Weidner on Marketwatch wonders why investments, like toys, cannot be subject to a recall.

» Posted by Martin Weil on September 06, 2007

"It is too early to tell how economically important this upheaval will prove. But nobody can doubt its significance for the financial system. Its origins lie with credit expansion and financial innovation in the US itself. It cannot be blamed on "crony capitalism" in peripheral economies, but rather on irresponsibility in the core of the world economy."

What has happened raises important questions...

First, why did this crisis start in the US? The answer is: "The borrowing, stupid"...

Second, what created the conditions for the crisis? It took foolish borrowers, foolish investors and clever intermediaries, who persuaded the former to borrow what they could not afford and the latter to invest in what they did not understand...

Third, why did this crisis escalate? "Contagion" is, as always, the answer...

Fourth, how bad might the impact become? Since Americans borrow in their own currency, the US authorities can, it seems, loosen monetary and fiscal policy at will. Nevertheless, a significant global slowdown is not impossible...

Financial crises are always different in detail and the same in their essence. This one is no exception. It showed the normal pattern of rising prices of assets, expanding credit, speculation, excess, then falling prices, default and finally panic. The new securitised financial markets are meeting a test. We will soon know how far they manage to pass it."

Martin Wolf in the Financial Times

» Posted by Martin Weil on September 04, 2007

"[Home] sellers look backward, remembering what they or their neighbors paid, but buyers look forward, wondering what the house might be worth in a couple of years. Positioned in time looking in different directions, when the market is rising, owners estimate the value less than prospective buyers, and a sale occurs, but when the market is falling, the owners remember the good old days of high prices, and the buyers are thinking about a better deal in a couple of months. Then there is no transaction, unless it is at the high sellers prices. A third story comes from the behavioral economics: It's loss aversion. As long as I don't sell my home, I can comfortably maintain that it is worth what I paid for it."

Professor Ed Leamer of UCLA's Anderson School in a presentation on the underestimated importance of housing to the US economy at Jackson Hole, WY. Link from Calculated Risk.