United States Heading towards a Depression?

I'd always start with rents. Are the current rents sustainable. Can they grow? Are they above or below market?

Is the market changing? That is basically a question of demand and supply. What are the vacancy factors in a market? Are they going to go up or down?

Vacancy goes up -> rental rates go down and vice versa. A lot of it is an overview of the local/regional economy.

To me the term risk is a pure function of vacancy, and then a 2ndary function of problem tenants or late payments. Got to factor something in for that. If the space goes vacant how long will it take me to re rent it and how much will it cost.

Then I figure in a cost of capital; basically the rate of borrowing/ mine and the market.

That leads me to a purchase figure.

All in all I'm going to come in with numbers that are always lower than the asking price. Sometimes lots lots lower.

The only way I'll ever get a buy is with a lot of looking. The way this really works is during crashes when the market is reeling and there are a lot of desperate sellers.

When the market is strong that kind of analysis never ends up in a purchase. Then if I think something is worthwhile...or I just have the itch to buy buy but...because I think the market is going up....then I gotta bid high.

That is why a while ago I said become "buds" with the desperate sellers. Make em believe that you're buying that property at such a price is a best deal for them.

Lots of folks do this. One who is famous who is doing it now in the public arena is Buffett. He has always been a value buyer. He buys cheap. He carries lots of cash. He is buying businesses rather than real estate...but real estate are just simple businesses.

He just made two big purchases; a utility at $26.50/share. (It had been at $60-100 for a 5 year period or so with a high in excess of $100 in the last 12 months. Now he just bought a share of Golman Sachs for $5 billion. He has been a value buyer his entire career; pretty much has never varied from it.

He has a thousand times better insights than you and I.

 

He does not see doom and gloom. If he did, I highly doubt he'd be buying anything in either sector at the moment. Now's a wonderful time to buy real estate (if you have liquid cash) as well!

 

Ah...but he does see doom and gloom. He was recently quoted as saying this is going to be a terrible financial time.

Still he is a great buyer. There is a difference I guess from gloom and doom, deep financial problems, and buying at a great price.

He could be wrong going forward with these recent purchases. I'd simply suggest he's been right many many times more than he has been wrong; so I'd bet with him at the current time. He's a great great buyer.

 

Goldman offered him a 10% annual dividend AND he paid 115 when the stock had closed at 125. Buffet ALSO said he never would have made the investment if he didn't think Congress was coming through with the $700-800 billion bailout.

To top it off, the common shareholders got diluted by $5 billion in the deal.

I wouldn't call that a bullish sign on GS, it looks more like death-spiral financing and a high-priced celebrity endorsement deal.

Their business plan hinges on government intervention - to me, this is the definition of failure.

 

Agreed. Anyone with a working brain that can do basic math would've taken this deal too. Buffet making the best of his opportunities, who wouldn't?

 

He has billions more $ to use to act on 'em too... he isn't betting from a short stack, he can afford to gamble more than most of us. The guy *gave* Oklahoma State University $165 million a couple of years ago, and in return I guess they'll give him nice seats at the stadium he funded outta pocket. I'd say overall he has to have made the right investment calls along the way in much greater magnitude than the occasional flop.

Be nice to have that much of a hedge against error, and it probably gives him an edge, but the guy is a genius with the cash to do anything that looks profitable. With the fella thats administering the $700 billion or so in tax funds being a Goldman Sachs alum I'd say Buffett will find he's making a better investment than the taxpayers are gonna make whether they want to or not.

 

There is no doubt about that!

 

Washington Mutual (WH) is bankrupt. It is the largest bank failure in US history. This is unbelievable -- AIG, LEH and WH -- failing within a 2 week period.

http://news.yahoo.com/s/nm/20080926/ts_nm/us_washingtonmutual_jpmorgan_news

 

Yet I still received my daily SPEND MONEY with us letter yesterday. That and an email at 9:25PM last night talking about ... well take a look:

There were even links to check my FICO... And an offer to get more checks to spend money. Money they don't have. I don't get a monthly statement from them because I don't carry a balance, but I get a hell of a lot of offers to spend that money.

Looks like I have another Chase Card, again. Chase bought my mortgage from WaMu two years ago. Seems even then they were on the way out.

Still getting my daily AIG insurance offers. Even after I wrote them and asked them to stop wasting money on postage and killing trees.

What a bunch of phucktards.

 

They wanted your deposits. They don't give a shit if you spend money.

 

What deposits? Its a credit card...

 

That says they want your deposits. There is no way they were extending credit lines, the only money you could spend is what you deposited. If it was anything to do with a credit line then it would be APR not APY.

 

Eek. Never noticed the Y.. I don't bank with them. I just have a CC from them I never use that I had when they were my original lender. Looks like they want both deposits, and me to us the CC.

That only thing that sucks is that WAMU probably had one of the best online interfaces of any CC I've seen.

 

This is certainly going to get worse. What's going to happen when the economy goes into recession and unemployment 7.5%?

Clinton and HUD were pushing the market for years to start the mess and there's trillion more of bad loans.

 

Well on the WaMu front, they were just consumed by another bank, so I don't consider that a bailout, and cannot see where that will cost consumers.

As for the "bailout", it should really be called a loan. If done correctly, the US government stands to make a fuck ton of cash taking over those assets.

I wonder if anyone has done any studies to find out how much of the bad debt out there was accrued under Clinton vs. Bush. That would be an interesting statistic.

 

You know what is funny (perhaps scary?) is that McDonald's CDS are cheaper than that of the U.S.A. I am now investing in apple pies and hamburgers from McDonald's (it's the American thing to do).

If this bill isn't passed by Sunday night when Asian markets open we could see some massive selling.

Everyone's favorite communist country, China, has allowed short selling while everyone's favorite capitalist* country, U.S.A. has banned short selling on many companies stocks. The irony is funny.

 

Admittedly I have selfish reasons to see it pass. I'd much rather see it go through today. The debate tonight is going to be retarded. With a job unfinished, a debate that seeks to talk about defense is gonna have to be completely restructured to talk about the banking and wallstreet goofs.

 

Ill confess I owned WM when it went to nothing

 

Will 700 Billion dollars bail out is sufficient for a 63 Trillion dollar Credit default swap market?

 

No, its just going to raise rates on U.S. public debt in the swap markets

Be certain, this bailout does not address the fundamental problems of having too much debt masquerading as paper money.

If anything, it will cause more large and mid-sized banks to fail - and it will ensure that Goldman and JP Morgan Chase are sufficiently capitalized to purchase collapsing rivals.

Morgan, Rockefeller, Rothschild win again.