Pelosi misses global warming rally when her private jet is delayed by snow

I do believe that headline says it all. Interesting that the old fraud’s own office wouldn’t confirm what sort of flight – commercial or private – she was on. Not only does the lady fly private every week back and forth across the country, she insisted on an even bigger jet when she assumed leadership of the House. I’ll go find that link now.

Update: Snopes says it’s not true that she requested a larger jet, only that she wanted a jet that could fly non-stop cross country. Whatever, it does make clear that Miss Green flies a private jet specifically reserved for her use – she’s not flying commercial. Who do you think she is, some auto executive?

Update II: here’s what the lady missed: A protest at the Capital’s own coal-burning power plant. And for those readers miffed at me for using a snowstorm as proof that there is no global warming, these idiots are still insisting that snow storms are caused by the same phenomenon.

The protest on energy and climate comes as Washington digs out from its largest snowfall of the season. Organizers note that climate change causes more extreme weather, and they say the issue is important enough that people are willing to brave the cold.

My Hummer’s greener than your Suburban!

Here’s a 15,000 square foot Florida mansion that its developer calls “green” and is selling for $30,000,000. Is anyone rich enough to afford this also stupid enough to believe he’s saving the planet? Sure; just take a gander at Barbara Streisand’s 30,000 sft  Malibu “eco-cottage”. The only good thing about this monstrosity  is that it’s been built right on the beach so the next Goricane should wipe it from memory.

Dow down

Here’s an interesting analysis, at least for this layman. If we’re headed for a PE of 5X, then either we’re near the bottom, and prices will dawdle sideways for the next 5-10 years while earnings slowly improve and make stocks cheaper, or we’ll emulate the 1930 crash and head straight from here to the bottom, which would be exhilarating as all hell, but kind of disheartening too. Guess we’ll see, eh?

If I had $100,000, I know what I wouldn’t do with it

One of those new battery-powered Tesla sportscars – 0-60 in (-3 ) seconds zoomed by me up the entrance ramp at Exit 2 on I-95 over the weekend. It looked pretty cool, if tiny, but he got stuck in the same traffic as I did so while I may have expended a little more gas in my Honda than he did in his Tesla, we both reached Exit 5 at the same time. I paid $25,000 for the Honda six years ago and it’s still going strong. I think I’ll hang onto my money, at least until I move to some place like New Mexico where I could use the speed capabilities of this little rocket ship. And probably beyond that time, too.

If I had a few tens of millions hanging around in Treasuries

I think I’d emulate this guy, who’s going after distressed real estate 

Fund managers and investors are seeking $92.5 billion for funds to buy properties and debt being sold by developers struggling to repay bank loans or finance construction in the credit crisis, London-based Preqin Ltd. said last week. Corl said he thinks the current property slump that dragged down U.S. prices almost 15 percent last year will only get worse.

“It’s going to be catastrophic across the real estate industry,” Corl, 42, said in an interview. “Most of real estate is going to end up in the distressed category” because REITs and property investors have too much debt and that will increase as occupancies, rents and values fall in the recession, he said.

Corl will be Siguler Guff’s managing director for distressed real estate investments, the New York-based company said today in a statement. He managed about $30 billion of real estate investment assets before leaving Cohen & Steers a year ago.

Corl’s change in investment strategy makes sense because it’s likely “the market is going to completely overreact on pricing to the negative side,” said Rich Moore, managing director at RBC Capital Markets in Solon, Ohio, where he analyzes REITs.

‘Tremendous Opportunities’

“I think there will be tremendous opportunities over the next two to three years in real estate owned by distressed owners,” Moore said in an interview. “If you get real estate where someone is struggling, but the real estate is quite good, I think there will be lots and lots of those. That will create great opportunities for people with money.”

I have a much smaller vision than these people who I assume will be buying up condo projects and commercial real estate, but bailing out some over-extended Greenwich spec builders at, say, 30 cents or even sixty cents on the dollar (the actually expended dollar, not the hoped-for retail price) should eventually return a nice profit.

How now, Dow Cow?

Dow’s down 200+ pts and is now well below (6800) 7,000. Will this set the techs in motion and if so, which way, up or down? My completely uneducated guess is – down.

Overpricing is nothing new in Greenwich

There’s a new listing on the market that I find illustrative of a long time phenomenon in our fair town: going for the moon. It’s a house that sold for $1.050 million back in 1997. The buyers added on and did some renovating and placed it back up for sale for $1.895 million in 2001 and sold it seven months later for $1.385, 27% off original ask. And that was in a good market (well, 9/11 stopped the market that year, but not in June). Now those buyers, having also done some renovating but without adding any additional space, have put it up for sale for $3.3 million, or $1,000 sft for each foot above ground (there’s a finished basement).  Will they get it? That’s not a price I’d have thought to reach for in this market but I’ll defer to the broker. And to the market. I’ll let you know what happens to this.

Tough question

Dear Mr. Fountain,
 I  have a question for you.
We have a home in Old Greenwich which we own out right. Typical Old Greenwich home, great house on a very little lot. We’ve been looking to move to central Greenwich for three years,I’ve seen every home in our price range (which keeps changing) but just haven’t felt like we were getting enough for the money. My husband’s been very bearish (smartly so) for the last two years, so we haven’t made the jump. We still need a larger home for our kids, but don’t know when to start thinking Greenwich real estate is at the bottom. Right now, considering the global economy and the future of the financial market, what do you think is a bargain price for a home that’s been on the market for over a year? 30% off asking? Should we give it another six months? I’d like to know what a bargain looks like in the Greenwich Real Estate market. Thank you

It’s questions like this that prompted me to include the quote of that financial guru last week, to the effect that “if someone tells you he knows where the bottom is, he doesn’t know”.

But I do know what a bargain looks like, I think: When I see a house marked down 50% from its original asking price, even if that first price was ridiculous, it’s a sign that the price reflects the current market. Similarly, when a house falls several hundred thousand dollars below what its seller paid for it in, say, 2003, we’re getting somewhere. 30% off original asking price, a year after a house was listed? Depending on what that first price was, this could be a bargain, or not. I know of at least one broker whose listings routinely sold for 1/2 their listing price, years after first being put up for sale, in the best of markets. 30% off one of those prices still isn’t close. But 30% off a decent price (bear in mind that if it were the right price a year ago, it would have sold) may well be closing in on good value.

Should you give it another 6 months? I don’t know. I’ve said before, the only way we’ll know that the bottom has been reached is when prices rise and stay up and by that time, the really great bargains will be gone. I think my advice would be to go looking now but not to commit unless you find a really desirable house at a good price. If you do, then even if prices continue dropping, you’ll be in a house you like at a price you can afford and all will eventually be right with the world. This isn’t the time to over-pay for a house in the hope that a rising market will bail you out, but there are some good houses out there, right now, at excellent prices, that I think you could do well with. There are far more houses for sale, of course, whose owners and prices need more seasoning. I’d let them ride.

Update: further reflection – don’t forget that while you’re waiting for central Greenwich prices to drop, the value of your existing house is too. Assuming you’re moving from less expensive to more expensive, then that’s probably alright (10% off a million being greater than 10% off $500,000) but Greenwich prices don’t always move in lockstep.

Spec houses and their troubles

I recently received an inquiry from a client about a certain spec house (which I’ve written about before, to its agent’s fury, so I’ll leave the exact identification out this time). The builder has $3 million invested in the land, at least $3.5 million in construction costs and probably $4, and has priced it well above that total in order to recoup his expenses and nab a profit. It’s never going to happen.

At the top of the market, this place might have sold for $6.5 million, in my opinion. If I’m right, the builder was underwater before he even completed the project. But now it’s worth far less and there are nearby comps to prove that. Plus, I’ve shown my client some spec houses whose builders have given up the dream and are willing to walk away with millions of dollars in losses, just to be able to walk away (the curse of personal guarantees). How are you going to get a client back on the farm after he’s seen Paris? Even if it turns out that my client doesn’t want the spec houses he’s seen, he likes their price, and I doubt he’ll be willing to pay an extra $3-4 million for essentially the same house with a layout more to his liking. He’ll probably decide to wait the builder out, and I  wouldn’t blame him.

This is not a positive development for any spec builder without the resources to keep his unsold houses going for a couple more years.

Vanity Fair and the Noels

Haven’t read it yet but Vanity Fair is out with its article on Walter and his Fabulous Five.  Should be fun reading for a snowy day.

UPDATE: Just finished it. Surprisingly sympathetic, all things considered. The reporter must not have invested with FGG.

Other than its name, this tax has nothing to do with Obama Warming

Massachusetts Governor suggests $2 “carbon fee” for parking at Logan Airport.

He wants the parking fee – which requires approval from the Legislature – to be used for improvements to airport-related transit projects, including a proposal to build a new tunnel under South Boston to speed up the Logan-bound Silver Line bus service, and the initial phases of a long-term plan to build a transit loop around the city. Based on Logan’s most recent parking figures, the new fee would probably raise about $5.4 million per year.

Well God bless the man, at least he’s not proposing to spend the money on planting trees in Nepal or waste it on some other look good – do nothing project that Al Gore and his pals endorse (and get rich from).

The danger of missing the tide

31 Riverside Lane

When I was a kid growing up along Ole’s creek my friend Teddy Sumner and I would leave his dock to go fishing in the Sound. We knew that we had to get in within 3 hours of high tide or we’d be stranded but, being kids, if the fish were biting we’d forget about the time and stay out too late and find mud blocking our way home. We’d tie up at the last place with water (usually Timmy Palmer’s dock and walk home. We never really did learn the lesson, we just got a little smarter as we grew up.

I’m reminded of that experience by this house that expired unsold today with an asking price of $1.849 million. The owner paid full asking price: $759,000, for the land in 2006 and built new, then put it up for sale in August, 2008. I suppose he looked at what other new construction had sold for on the street and nudged his price up a bit to account for inflation but, had he looked a little more carefully, he’d have noticed that the tide was dropping, not rising.

59 Riverside Lane sold for $1.7 million in June 2006

40 Riverside Lane sold for $1.897 in July 2006

43 Riverside Lane sold for $1.639 in December ’06

102 Riverside Lane  sold for $1.580 in December ’06

45   Riverside Lane sold for $1.655 in January 2007.

September, 2008 was not the time to try to regain the $1.8s on this street. Don’t take my word for that, take the market’s.

Snow snow snowstorm

Eh? maybe six inches. It’s white and pretty, but where’s my foot? Or, as Reagan said, “where’s the rest of me?” Anyway, streets are clear and if you have somewhere to go, go – you have nothing to fear but ice itself.

Walter Noel and 60 Minutes

I missed last night’s  show on Madoff (in fact, I don’t watch the show, but would have had I known Walt was going to be on) but a reader sends this link to Walter’s letter to CBS.

As far as I can see, Fairfield Greenwich Group’s defense is that they received phony trade confirmations and their clients got their money back when they asked for it – until they didn’t. Doesn’t help their case that Bernie in fact made no trades whatsoever during the years, so “monitoring” wasn’t very deep and the investigation of Madoff Securities was non-existent despite what FGG promised in their promotional materials.

The Fairfield Greenwich Group and its employees are victims of the Madoff fraud.  

Fairfield personnel invested with Madoff alongside our customers, and we appear to have lost 

$60 million of our own money.    

 Over the course of a 20-year relationship, Fairfield received trading confirmations from 

Madoff that purported to reflect the trades he was making for our investors. Our investors 

received over $3 billion in response to redemption requests that were honored promptly and 

without question by Madoff.   

 

 Contrary to speculation that has appeared in the media, Fairfield engaged in continuous, 

ongoing monitoring of Madoff’s activity.  That monitoring and the fact that every redemption 

request was honored — combined with Madoff’s then-impeccable credentials, reputation and 

technology, multiple reviews of Madoff by the SEC, the NASD and numerous auditors and 

investors, high credit ratings assigned to Madoff-related products by Fitch, S&P and Moody’s, 

and an unblemished course of dealing over many years — all contributed to our confidence that 

the investments with Madoff were appropriate and safe.