Daily Archives: September 15, 2008

Boulder Brook now reduced to $4 998. I’ll check
my earlier post on this tomorrow but I.believe it started in April at $8 5 Stupid

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And who’s going to pay those taxes?
Maybe not real estate agents. No contracts today, at all.

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Anticipating a winning election
Democrats planning
gas stamps for po’ folks.
I mention this today in honor of it being quarterly tax payment time. Hang onto your wallets, we’re in for a ride.

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Overpricing houses isn’t an unheard-of-until-now phenomenon
This perfectly nice house was first listed back in June ’02 for $7.995 million. It didn’t sell and it’s appeared and disappeared from the market since then. Today it’s back, asking $6.995. That may or may not be the right price now, but a million less after six years suggests a misplaced optimism back then.

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Lehman price and volume charts
Question for you traders
Lehman opened at $0.26 today, rose as high as 0.34, dropped to 0.15 and is now (well, 15 min. delay) trading at 0.18. The company is bankrupt and almost by definition, the shareholders are wiped out and the shares should be worthless. I can understand someone selling this stuff but who’s buying it? This phenomenon seems to occur in other bankruptcy situations, too, and I’ve never understood it. Shorts who have to buy what they sold? Befuddled old grannies? An explanation would be welcome.

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This is the kind of stupidity that hurts the cause
From a Litchfield paper’s article on a “green” home

The insulation isn’t the pleasant bubble gum or canary hues that distract a person from the carcinogenic dangers of typically used Fiberglas rolls. [emphasis added]Though Fiberglas has a high R value, which is the measure of thermal resistance, it is also very permeable and allows hot and cold air to pass through easily. The zero energy house uses recycled spray-on cellulose, made mostly from old newspaper, that is healthier, fireproof, insect-proof, has a slightly higher R value and at 7.5 inches thick, is nearly impermeable.

Trying to scare people with phony cancer claims is just stupid because, when they discover you know nothing about that, they might begin to wonder if you know anything about the subject at all. Reporters should stick to facts. Opinion bloggers, on the other hand, are free to write whatever damn nonsense we like.

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The (stock)market seems to be bearing up but …
If I recall, we’ve seen the bottom fall out late in the afternoon just before the closing bell. There’s still time for fireworks. Discouraging note: not a single contract has been reported by the MLS as of this posting. They may be too busy over there to post contracts (perhaps they’re on the phone with their stock broker) but you usually see some signs of life after the weekend. Stay tuned.

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What happens to a $3 million house when a $5 million drops to $3.5?
Nothing good, I suspect. I asked this same question a few years ago in my column when I noticed the large number of huge spec mansions going up and I questioned whether they’d all sell. I got no answer because at the time, they did keep selling and at ever-increasing prices. Now they aren’t, and their prices are falling faster than Lehman Brothers’ shares.
If what is really a $5 million house is slashed to that price after stupidly being priced at $8.5 no harm is done, I’d think, because now it’s just competing with its peers. But in this market, what can be said objectively to be worth an absolute amount? What might have been considered a well priced house at $5 million a year ago may not sell today, regardless of what we agents think. If its builder, faced with foreclosure and total loss versus minimizing his losses and getting out while he still can – picture the dilemma of Merrill Lynch’s chief yesterday afternoon – cuts that price to $3.5 the “real” $3.0 million house is going to look like a comparative dog. And, assuming someone can afford $3.5, won’t he buy that instead of the lesser house? And won’t the lesser house have to be marked down to reflect that?

All this is speculation, of course – most of the price reductions I’m seeing simply serve to bring the price closer to reality but I suspect it won’t be long before genuine price cuts drop houses below what we would have considered their fair market value last year. If so, we’ll have a merry time of price restructuring, from the top down. Good for the market and for buyers, eventually, but dispiriting for sellers who’d counted on gaining a fancy price for their home.

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More on Starbucks
O.K., that’s Ahab drowning, not his pal Starbuck but you get the picture, so to speak. I went onto Starbuck’s website this morning to try to lodge a complaint about their discontinuing the sale of Colombian coffee and, so far as I could tell, there’s no one out in Seattle who cares to receive any such message. Want information of buying CDs? Locating a frappe java?
Click away. Got a complaint about actual coffee? Screw you. Well, in this blessed system of sort-of-free markets, I have a response to that.

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Oil Prices Fall below $100.
How can this possibly happen, when oil speculators are capable of setting the price wherever they want?

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Won’t somebody please invent an alternative to oil so we can wash our hands of the Middle East?
Orthodox Vigilante Squads Terrorize Citizens

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Business websites overloaded
I can’t log onto Bloomberg.com or biz.yahoo.com, presumably because they’re overloaded with readers. WSJ.com is working and, here’s a surprise, they expect an anxious day. Too bad my father isn’t still alive – he began working on the Street in 1929 and would no doubt have some perspective to lend on the “sky is falling” crowd.
On the other hand, maybe the sky is falling. Regardless, we’re in for an interesting day, or time.

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Bottom headline of the day
Obama Blames Wall Street Crisis on Republicans. George Bush and Dick Chaney were also spotted placing bombs around the Dot.com boom back in 2000.
Okay, there are two today:
Lindsay Lohan Lashes out at Palin

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Economic Illiteracy
Judging from conversations with my own kids over the years,the basic tenets of capitalism aren’t being taught in our schools. Here’s part of what George Will writes in today’s Newsweek. I wonder whether we can persuade him to come guest lecture at the High School? He’d be useful on a day like today.

But back to Big Box doubling prices after the earthquake. The indignant student, who had first gone to Home Depot for a flashlight, says it “didn’t try to rip us off.” It was, however, out of flashlights. Ruth suggests that the reason Big Box had flashlights was that its prices were high. If prices were left at regular levels, the people who would have got the flashlights would have been those who got to the store first. With the higher prices, “someone who had candles at home decided to do without the flashlight and left it there for you on the shelf.” Neither Home Depot nor the student who was angry at Big Box had benefited from Home Depot’s price restraint.

Capitalism, Ruth reminds him, is a profit and loss system.Corfam—Du Pont’s fake leather that made awful shoes in the 1960s—and the Edsel quickly vanished. But, Ruth notes, “the post office and ethanol subsidies and agricultural price supports and mediocre public schools live forever.” They are insulated from market forces; they are created, in defiance of those forces, by government, which can disregard prices, which means disregarding the rational allocation of resources. To disrupt markets is to tamper with the unseen source of the harmony that is all around us.

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Sally O’Brien died last Friday.
I didn’t want to intrude on her family’s decision when to announce her death but today’s Greenwich Time carries her obituary. Sally was one of the great ladies of real estate and a terrific person of integrity. I loved her quirky listings and I thought the world of her.

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Before Lehman’s collapse eclipses Fannie Mae
The Washington Post today explains how Fannie and Freddie bought Congress. Plenty of blame to toss around, but a good place to start is Dem. Barney Frank

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