Nice spec house here asking $1.375. Its identical sister sold last year for $1.715 so obviously you’d be buying into a bit of a “price modification” as that Canadian realtor I quoted yesterday said. But heck, for that same price in Greenwich you’d be lucky to get a cape on Bramble Lane. What’s it like to vacation or live in Tucson? Heck if I know. My ancestor Col. Albert Fountain marched through here on his way to fight Confederates and Apaches but he stayed in New Mexico after the war instead of returning so that may say something about the place. Although I understand that they have air conditioning now, and that may change things. Regardless, this looks like an attractive house.
This New York Times article discusses it all at great length but I suspect all the reader needs to know is this:
Moody’s current woes, former executives say, were set in motion a decade or so ago when top management started pushing the company to be more profit-oriented and friendly to issuers of debt. Along the way, the firm, whose objectivity once derived from the fact that its revenue came from investors who bought Moody’s research and analysis, ended up working closely with the companies it rated, and being paid by them.
And in 2000, when Moody’s issued stock to the public for the first time, executives hungry to churn out quarterly profit growth had another incentive to redirect the firm’s focus from low-margin ratings of relatively simple bonds to highly lucrative assessments of much more complex debt securities…..
“Moody’s was like a good watchdog that had regarded the financial markets as its turf and barked and growled when anybody it didn’t know came near it,” said Thomas J. McGuire, a former director of corporate development at the company who left in 1996. “But in the ’90s, that watchdog got muzzled and gelded. It was told to turn into a lapdog.”
Edmund Vogelius, a Moody’s vice president, explained the company’s business model in a 1957 article in The Christian Science Monitor.
“We obviously cannot ask payment for rating a bond,” he wrote. “To do so would attach a price to the process, and we could not escape the charge, which would undoubtedly come, that our ratings are for sale.”
Says here that hedge funders were drowning their sorrows at a party Wednesday. I was under the impression that as long as there is volatility a trader can make money – was I wrong or is something new happening here?
One party attendee shares my own attitude toward the Street’s disaster:
Khandelwal … had no sympathy for those in the mayhem. “You come to a hedge fund to make excessive money, so you know the risks.”
Update: August 2006: “Hedge funds are back – were they ever gone?”
But its commercial real estate market is in awful shape.
There are empty offices, sometimes whole floors. In fact, there is more vacant office, retail and industrial space in the state now than at any time that commercial real estate brokers can remember.
The vacancies fill out the story of where Rhode Island has been, where it stands now and how soon the state’s recession can be turned toward recovery.
“2007 was the year of the crane,” Jay Fluck, executive vice president and partner at CB Richard Ellis/New England, told a crowd of real estate professionals at a conference last week. He referred to all the construction projects that were under way.
“We thought that if we built it, they would come,” he said. “We built it, but they did not come.”
And won’t soon – “2009 is going to be an awful year” the article predicts. The state’s residential market is in just as bad shape but as one happy Rhode Island politician says, “out of adversity comes opportunity”. Sounds like he’s ready to become a spokesman for the NAR.
UPDATE: Well this should certainly help attract business: to fix its highways and bridges which are crumbling due to neglect, the state wants to impose massive new taxes. The comments on this article are good reading – corruption, fraud and sheer incompetence seem to have been the hallmarks of Rhode Island government for a long time.
Horse-drawn carriage rides, stores open, lots of lights and friendly neighbors. It’s a good time. Begins after dark – 6ish?
(update) More information here.
The Raveis OG office just won the “Spirit of Old Greenwich” award from the Garden Club or the OG Chamber of Commerce or whoever passes these things out. I’d be more impressed if they didn’t give an award to every business in town -including, I suspect, the tanning center that’s been closed lo these many months – but heck, it’s something,I suppose. Sort of like my winning a participation award for coming in last at Riverside School’s field days.
Speaking of phony awards, I just learned from a client that he turned down a chance to win a “Connecticut Gold Coast Award” for best builder in town because he’d have had to pay $3,000 for the privilege. I was naive enough to believe that these things were passed out based on an actual poll of the magazine responsible for the award’s readers; he was naive enough to believe that everyone would know it was a sham and pay no attention to the thing. We were both wrong.
Okay, that was Japan, but according to this article, here come the Chinese, ready to snap up our bargain-priced real estate. Before you start polishing your chopsticks and prepare to greet the mythical “foreign buyers” who, some local real estate firms would have you believe are going to bail you out of your home purchase, consider this:
Restrictions on taking money out of China would be an obstacle, he added, but some potential investors had an overseas connection such as a foreign passport that would make it easier.
Property professionals say there is considerable interest among wealthy Chinese, who often hold a high proportion of assets in property, in investing abroad.
“The US market absolutely terrifies me,” said one Shanghai-based real estate executive. “However, there are plenty of people here who think this a great time for bottom-fishing.”
There is opposition in China to SouFun’s plan. “Unless these people need a house in the US to live in, this is senseless,” said Yi Xianrong, a real estate expert at the Chinese Academy of Social Sciences. “A few years ago there was a lot of talk about investing in German real estate but most of the people who did so lost a lot of money.”
I think this article is more about a local entrepreneur hoping to get a free trip to the U.S. than it is about a genuine source of salvation for bank owned real estate.
This Forbes article offers some suggestions. The author seems to think that Keynes would have shoveled huge piles of cash into the economy and he thinks we should do the same. I’m skeptical but not as skeptical as this commentator:
How about this idea? Let’s put all the Keynesian economists on an island so they can form there own perfectly regulated economic system. Then let’s video tape the whole thing as they resort to cannibalism and then slowly starve to death. Then, if some other brainiac ever dares suggest the kind of vile excrescence offered by Mr Bartlett in this article, we can play the tape back to remind ourselves why he should be slathered with bacon grease and thrown naked into a pit full of rabid chihuahuas.
I guess we’re not “all Keynsians now”.