Daily Archives: February 23, 2010

Who knew? Toxic Credit-Suisse fund soars

Up 72% in 2009.

Shares in a $5 billion pool of toxic assets distributed as 2009 bonus pay for Credit Suisse Group investment bankers returned 72% last year, people familiar with the situation said.

Known as the Partner Asset Facility, the plan was originally billed as a way for Credit Suisse bankers to “eat their own cooking.”

The pool is largely made up of commercial mortgage-backed securities and leveraged-loan products Credit Suisse sought to offload in late 2008 as it scaled back its own risk-taking. The fund assets originally included debt of a Japanese shopping center, a mining company and a U.S. supermarket chain.

When the fund was unveiled in January, 2009 Credit Suisse bankers groused about the plan, fearing the securities would register few gains. Some bankers argued that they hadn’t contributed to Credit Suisse’s 2008 net loss. A number of them had hoped for cash bonuses instead.

But Credit Suisse’s timing now appears impeccable. The fund’s 72% increase for 2009 compares with a 23.5% rise in the Standard & Poor’s 500-stock index and an 18.8% gain in the Dow Jones Industrial Average. Credit Suisse shares rose 60% over 2009.

Even the bankers who sold this stuff thought they were dealing in er, barnyard material. Only problem: they can’t withdraw their gains until 2014. Seems fair to me.

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If you haven’t seen this yet, check it out

Girl stuck in empty airport makes great use of her time. Funny.

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Of course it is, but imagine if Rumsfeld had said this

Gates: Anti-war sentiment in Europe is threat to peace.

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Well I don’t know, a good cockatoo is hard to find

Polly want a baby?

Louisiana woman sentenced for selling two children for a cockatoo, cash.

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When a third is not enough

Two years ago, when 32 Twin Lakes Drive (Gilliam Lane to the rest of us) came up for sale asking $15 million, I pointed out that the tired old house had long ago lost its water access and land and was now just a moldering wreck with waterviews, hardly worth that sum.

The owner must be gradually beginning to realize he was sold a bill of goods by his listing agent because he’s been slowly reducing his price and it hit $10 million a few minutes ago, just before the closing bell. That’s a good start – assessment is $4.560, which seems like a good ending for this place.

How could the owner have been so gullible? Well, this is the guy who allowed himself to be blackmailed by Internet hookers thrice, twice by the same girl. Hope springs eternal.

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Second cut

613 Steamboat Rd

This new construction opened at $8.75 million in September and is down today to $7.450. I guess its value depends on how much someone appreciates being close to I-95 and the train. To me, 6,000 sq. ft (with I’d guess 2,000 of that underground) on 0.21 of an acre just doesn’t do it, no matter how beautiful the finish work.

But it does offer convenience, and the owner can always stroll down a few yards to the public dock to fish and brush up on his spanish with the limo drivers who hang out there. I mean, have you checked the cost of Berlitz these days?

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FDIC: “Problem banks” soar

Up 27% from 3rd quarter, pace of failures expected in quicken. This might actually be good news for home buyers because the people who made bad loans will be gone and their replacements won’t need to worry about defending themselves. Their job will be, I hope, to get rid of the problem loans and that should introduce a more flexible negotiation stance. Should.

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Okay, if harelips won’t drive you away, how about this?

Greenwich Time has now added pop up avatars who audibly pitch cheap vacations. I realize I can switch to a better browser and block these but our obsolete, dated Greenwich MLS only works with Windows Explorer so that’s my default mode. Why does this paper work so hard to annoy readers? I know why I do it – it’s part of my shtick – but I can’t discern GT’s reasoning.

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Die Hard 8

57 Byram Shore Road is a lovely old house with waterviews but not much land anymore. It has been for sale since January 1, 2005 when it debuted at $5.775 million and in the ensuing years has seen eight price adjustments, including two ill-fated price increases. Today it dropped from $3.950 to $3.750 million. Assessment is $1.2 million.

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2003 pricing

15 Pemberwick

Sold for $585 in 2003, listed today for $625,000 which, allowing for some negotiation, is pretty much its 2003 price. Assessment is only $438,000, but I think the broker’s made an intelligent stab at reasonably pricing this house.

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Turkey’s Muslim government cracks down on secularists

The dominos are falling.

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Breaking news from 1812

Napolean's army retreats

Record snowfall in Moscow

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This sounds about right

BusinessInsider: no way the feds stop buying mortgage backed securities. Of course, this means that we have in effect nationalized the housing market, but we already knew that, and think of the synergies: buy a house, get a Government Motors Volt!

There’s been a lot of discussion lately (and on CNBC this morning) about whether the Fed really will discontinue its purchases of mortgage-backed securities (MBS).

 No doubt the issue will come up today and tomorrow while Chairman Bernanke is on the hill.

But you should ignore this debate.

Remember that in December Obama announced a complete blank-check bailout of Fannie Mae and Freddie Mac, a move that enables them to snap up any quality of MBS in any quantities.

When the Fed stops buying mortgage-backed securities, Fannie and Freddie can easily pick up the slack. There’s no chance MBS will go unbought, the only question is who will be buying them.  And it doesn’t matter, because the Fed and the GSEs are all now organs of the same government.

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Bidding war “winner” has second thoughts?

1 Grove Lane

This beautiful house was listed for $3.350 back in 2006 and sold via bidding war for $3.550. Now it’s back for sale at $3.495. It’s listed by brother Gideon and owned by a friend of mine, so no harsh comments allowed! And it is a nice house.

UPDATE: Okay, went to its open house. It is still nice. The owners spent $800,000 adding a three-car garage, redoing all the wiring, carving a beautiful master bedroom suite from three or four rooms, replacing the bathrooms, etc. Will that be enough to move it in this market? The only way to tell is to put it up for sale and see, which is what’s been done.

The front yard is noisier than I remember, probably because Deerfield was wet today, and this lot does indeed about the former office of Gary Gallo. The latter is a plus: think of the fun your children will have conducting treasure hunts with their friends and searching for Dr. Gallo’s stash!

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ObamaCare = balloon mortgage

Kicking the can down the road. So says Professor Jacobson at Legal Insurrection.

Put aside all the other criticisms, one thing becomes clear: The plan does nothing to control health care costs, and everything to increase those costs.

There are no market mechanisms to encourage consumers to price shop or to introduce price competition into the health care industry.

To the contrary, the plan continues the trend towards divorcing consumers from price decisions as to services and products; there also is no incentive to decrease demand because a large percentage of the population will receive government subsidies.

Yet because of the new insurance price control mechanism, the private insurance system will not be allowed to recoup the costs of such coverage.

This is a balloon which must burst, and it will several years down the road.

The result of the burst will be a collapse of the private insurance sector, and a government unable to pick up the pieces without severely rationed care (even if coverage remains expansive in theory, the care will not be available).

Obama’s plan (and so too the House and Senate versions) is the worst of all worlds. It is a replica of the housing bubble, thrill for the first few years, and then the bill becomes due without any way to pay for it.

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What, teaching them a profession isn’t “inspirational”?

Bridgeport youth “leader” charged with Faganism.

A Bridgeport man who billed himself as an “inspiration speaker” to inner-city youths was arrested by Greenwich police Monday and charged as the mastermind behind string of robberies throughout the region.

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