where are all the idiots who made the 2007 doomsday predictions?!?

steve, i was wondering about these iditos as well

malraux still occasionally posts - usually something anti-moi. From time to time I am wrong & admit it - but this?!

Now admittedly, things wouldn't be this bad had the morons in charge not let Lehman go bankrupt and destroyed vast amounts of wealth for no reason but ideology - nonetheless, it happened.

And if people are tired of my tirade against the Lehman bankruptcy, just look at the chart in this article

http://www.msnbc.msn.com/id/27912025/

and identify the date when the slope turns positive.

Or look at a chart of the Dow

http://www.bloomberg.com/apps/quote?ticker=INDU:IND

and identify the date of the crash.

Or look at a chart of the TED Spread:

http://www.bloomberg.com/apps/quote?ticker=.TEDSP%3AIND

and identify the date of the crash.

Real estate did have to fall, but near-depression conditions did not have to be created.

Thanks, Hank.

those were the days! In general, people dont want to believe that the party may end, even when the warning signs are right there in front of them. I wasnt pissed off at anyone and simply took the other side of the argument from those that chose to be eternal optimists and argue that Manhattan is immune to everything and anything. Even today people think this is just your ordinary slowdown.

I got so much sh*t for talking about this stuff 12-14 months ago on urbandigs, and I got emails back then from people accusing me of negative press and trying to take down the Manhattan market; so I can buy back in at a lower price. Lol. Unbelievable how people think media makes markets go down, and not the fundamentals. Even more amazing is how people get so emotional, and tend to look the other way and ignore the writing on the wall if they have any exposure to a market that may be pressured; whether it be on the asset side or on the commission side.

Well spoken, UD.

I maintain that it didn't have to be this bad, we didn't have to lose so much wealth, prices would not have fallen this quickly had the Lehman debacle not occurred. But we're stuck with it, and it will take us months to recover, during which time the property market will continue to erode.

I took the flak, too.

yes you did. We share the same ending to the story, so to speak. But we do differ on other things, like gold trade and Lehman bankruptcy. Fuld played a big role in the bankruptcy, and honestly, I think he played a tough hand with KDB, if they really did have any interest to begin with, and expected a rescue if he didnt get the deal he wanted with KDB.

I just feel they had to draw the line somewhere, make an example of one big firm, and Lehman was the least big one that would cause damage but not bring down the entire system like a Citi failure would.

"I think he played a tough hand with KDB"

I agree that his arrogance knows no bounds - even today - but neither did Stan O'Neal's. Nonetheless, an AIG solution and slow unwind would have been the better outcome. Look at the charts.

It was more an ideological decision by Paulson.

its the day after thanksgiving...whats going on today...ohh Steve is still whining like a runt about Lehman...Quelle suprise.

if thay had saved lehman they would have let another financial institution fail (merrill, citi)that would have caused the market to fall just as quickly. The fact that it was lehman means nothing.

you are talking out of your ass when you say things like the market would not be as bad had they saved Lehman...this was destined.

Your rants about Paulson ar so disingenuous and ridiculously biased as well...I have yet to haar you mention the fact that our next treasury secretary was the driving force behind lehman's collapse. Not to mention the fact that he is an acolyte of Bob Rubin...a man who has yet to face the fire for his responsibility in this mess.

face it no one person or policy is the cause of your losing money...you are the cause

stop whining

Ah, flmd - spoken like a true Republican!

"they would have let another financial institution fail"

Just plain stupid. The primo lessons from the Great Depression were:

1) Don't let banks go bankrupt
2) Don't constrict the money supply
3) Don't restrict trade.

"this was destined."

Yes. As was 9/11, Katrina, Iraq, Afghanistan, and housing.

IN FACT, THEY WERE ALL BILL CLINTON'S FAULT!

All their fault.

"ridiculously biased as well"

Absolutely not. Look at the charts.

"our next treasury secretary was the driving force behind lehman's collapse"

Actually not. He argued against it. He argued for further regulation, for regulation of CDS's, and the like. When an investment banker told him the best way for financial firms to be regulated was "self-regulation," his answer was that "self-regulation is to regulation as importance is to self-importance."

"a man who has yet to face the fire for his responsibility in this mess."

That's right. It all occurred 10 years ago when Rubin was Treasury Secretary. Maybe it's Volcker's fault too, and Greenspan had nothing to do with anything. But Ronald Reagan single-handedly ended the Cold War and brought down the Soviet Union.

You ideologues, neo-cons really have got to overcome your betrothal to theory, and accept responsibility for the failure of your policies. Then maybe you'll win an election, instead of stealing one.

steve: I am a democrat, I happn to be an unbiased one. Please...stop stating things I did not state.

you have a horrible habit of distorting what people say to make your own ridiculous points.

Geithner did not argue to save Lehman...that is bs...

by the way steve haven't you mentioned in the past that you never voted for democrats until this past election...

You are such a liar...I'm sure you will respond by stating you have been an independent your entire life

http://www.newyorker.com/online/blogs/jamessurowiecki/2008/11/geithner-and-le.html

You are a Democrat - and an "unbiased" one. You must be a Democrat who supports Paulson: "Your rants about Paulson ar so disingenuous and ridiculously biased as well."

Look at the charts. It did NOT need to happen. Wealth was eradicated at a rate faster than at any time since 1933. The UK government just took over RBS - no one would invest capital in it. The US is effectively taking over Citi. And so on.

"Face it no one person or policy is the cause of your losing money...you are the cause"

Yes, I see. Clearly. Clearly I should have double shorted everything on September 15, because I should have KNOWN the stock market would fall 33% in a month. Because it does that all the time.

EVERYONE should have double-shorted everything on September 15. We should have predicted the TARP, then the non-TARP, now the new TARP. We should predict constant policy shifts. We should predict who the government will pick as a winner and who it will pick as a loser.

BTW I did lose money but I also kept plenty of cash. Just - I'm afraid to invest it right now because I don't know what they're likely to do next.

Bursting bubbles are relatively easy to predict. Incompetence is not.

"haven't you mentioned in the past that you never voted for democrats until this past election... "

Never have I said such a thing. I have been a registered Democrat since I was old enough to vote, and the only Republican I ever voted for for president was George I against Dukakis.

I did vote for Giuliani and Bloomberg for mayor, and Pataki against I don't know who the Democrats put up that year. Other than that, I have voted Democratic all of my life.

I tend, however, to be middle of the road. I'm fairly conservative on economic matters, fairly liberal on social matters. Almost Libertarian, as JuiceMan once accused me of being.

But not Ron Paulish.

However, we digress.

Where are all the idiots who made the 2007 doomsday predictions?!?

Spunky! Come out, come out wherever you are!

I do not "support" Paulsen. I am just tired of your constant rants blaming him for not saving Lehman...it is just silly. He, Bernanke, and Geithner were all involved in this decision.

maybe you should have doubleshorted...how could you have not seen that for Real estate in ny to fall ergo wall street must fall and they must fall hard...how did you miss that in your real estate analysis

"how did you miss that in your real estate analysis"

For losses in the stock market? Do you not know that the two are uncorrelated?

I love that NewYorker blog: Geithner really had nothing to do with Lehman being allowed to fail...by the way he'd make a great treasury secretary...Steve please...

Even as a democrat it would be foolish not to recognize that Bob Rubin shares blame in what hs occurred at Citi...along with Sandy Weill, Chuck Prince and the Board of Directors.

If you're referring to Ruben at Citi - that's one thing.

If you're referring to Ruben at Treasury ... which is what I understood ... that's different.

isn't it funny that in a bear market theories like correlation get thrown out the window and everything goes down together?

Hmm. Yeah, the economy has tanked but all things considered, Manhattan RE has not. It may be sluggish and slow, but relative to other assets, it has held up. I still say, "it's the economy, stupid." RE here can't help but be impacted by the overall economy somewhat. True, the IBs etc would seem to make it worse, but the inventory/population ratio is still very, very low, even if it goes to 12-15,000.

Steve: Not to over-simplify and with all due respect, you've been totally wrong overall. You said the macroeconomy was going to be ok but Manhattan RE was going to tank. It's kind of been the opposite.

"You said the macroeconomy was going to be ok but Manhattan RE was going to tank."

I said the macroeconomy was fine earlier in the year when everyone was saying we were in a recession. I said it all the way through September, and it was corroborated by all my friends who work in the private sector. If you look at the charts, the real downturn in spending, and the real uptick in unemployment, did not begin until credit was choked off which is, not coincidentally, after Lehman's bankruptcy.

"but the inventory/population ratio is still very, very low"

Actually, no. The annual absorption rate in Manhattan over the past 10 years has been about 8,500 units. This year it is likely to be less than half that when you discount properties that went into contract before the calamity started. That is a 3-year supply of property.

"in a bear market theories like correlation get thrown out the window and everything goes down together?"

That's not a bear market. That is deflation, which is a very dangerous thing.

What I find interesting is that how now, people launch assaults claiming that "no duh, even a donkey knew that real estate was going to drop" (donkey's are actually smart animals, smarter than horses).

The old skoolers here, and this includes stevejhx because of the volume he's posted even though he's a relatively newer member, know how is was NOT obvious and how much backlash we used to get.

Then came the argument that "even a broken clock is right once a day", which was another one of those "sour grapes" commentaries.

Think about- if you are about to shackle yourself with a 30-yr mortgage, what's the difference of 1 year going to make between 2007/2008? The trade-off in risk if prices collapse is simply not justifiable. Yet people couldn't understand this.

I disagree with steve on lots of things, especially his real estate analyses, and I call him out on his BS quite often, but on the Lehman matter I have to say that I think he is dead on. Things would still be negative even if the government had supported Lehman, but letting it fail was a huge mistake that made things a lot worse than they had to be.

"and I call him out on his BS quite often"

In your mind.

"Yet people couldn't understand this."

Absolutely correct, MMAfia - hence the extra risk involved in buying as against future rent risk.

Historically (except for the Great Depression) stock markets rebound quickly. I think we're looking at a V-shaped recovery here, given all the money being thrown at the problem.

Real estate, on the other hand, is illiquid.

"Historically (except for the Great Depression) stock markets rebound quickly."

as a phd in finance i have to tell you that you're not correct here, neither on usa nor abroad.

true, it's a very common common-place

Just look at the the recent threads steve started regarding long-term growth in real estate values and the mortgage deduction benefit. All the commenters saw how I exposed steve's inaccuracies and lies.

The Obama recovery has begun. Things are going to get better and better.

January 2010:

Dow 14,000
Unemployment 6.5%
Overall Nat. RE: Up 3% over January 2009
Overall Manhattan RE: Down 3% over January 2009

January 2011:

Dow 15,500
Unemployment 5.9%
Overall Nat. RE: Up 3% over January 2010
Overall Manhattan RE: Up 7% over January 2009
Best Bonus Season Since Jan. 2008

January 2012:

Dow 16,500
Unemployment 4.9%
Overall Nat. RE: Up 5% over January 2011
Overall Manhattan RE: Up 5% over January 2011
Renewed economic confidence from defecit reduction resulting from combination of end of Bush tax cuts and new tax revenue from workers re-entering the workforce.

The Obama Recovery has begun.

http://www.cnbc.com/id/27956130

"rebound quickly"

compared to real estate, methinks they do.

Really, steve? I'm surprised. You LOVE to keep rehashing this old thread and constantly bringing up your "vindication" like a grade schooler. I always thought some people here were a bit harsh on you - now you're no better than them.

bjw, what are you talking about?

"regarding long-term growth in real estate values"

I used Dr. Shiller's values, not mine own.

"and the mortgage deduction benefit."

Every next benefit is calculated at your marginal rate. All benefits together are calculated at your effective rate. It is not possible to pick and choose which deduction to apply first - they are all applied at the same time.

"All the commenters saw how I exposed steve's inaccuracies and lies."

Really? Which ones have posted a theory or a datum to prove what you have "exposed"?

You're ignored again, btw.

And LICC, one last thing. Here's why you're wrong regarding the effect of the mortgage interest deduction, a hypothetical example:

You make $100,000. You are in the 33% marginal tax bracket, 25% effective tax bracket, meaning you paid $25,000 in total tax. You are a renter. You then buy a house. You have $5,000 a year in mortgage interest. Your tax goes down by $5,000 * .33 = $1,650.

Your new tax burden is $25,000 - $1,650 = $23,350. You are now in the 33% marginal tax bracket, but your effective tax bracket is 23.35%. You have reduced your total tax by $1,650 / $25,000 = 6.6%, not by 33%, because to the best of my knowledge, $1,650 does not equal 33% of $100,000.

When it does, you will be correct. Until then, I am correct.

Never should a tax deduction benefit be measured by a person's effective tax rate, especially for deductions that are taken after formulating AGI, since deductions are taken from the top. steve consistently shows such a fundamental ignorance of a fairly basic concept, and is arrogant about it, that it makes you wonder how anyone can consider anything he says with any level of seriousness.

In steve's example, you are paying $416.67 ($5,000 per year) a month in mortgage interest, but after the tax deduction, your after-tax cost is $279.17 ($3,350 per year). That is 33% less than the pre-tax cost. The benefit is measured by the marginal tax rate of 33%, not the effective tax rate of 23.35%. Thanks for proving my point and showing once again that you are incorrect.

"bjw, what are you talking about?"

The fact that you continue to obsess over the "Where are the idiots" thread, which, by the way, was a pretty valid one. All malraux was railing against was the few posters who maniacally predicted doom and gloom for YEARS, always saying it was right around the corner, then revising their "predictions" as needed. He never operated under the premise that some of these things would NEVER happen. Huge difference. I know you're relatively new to this board (though you've probably posted far more than any single person here), but you have to appreciate the context there.

I think spunky beat me, bjw, and I've been posting for about a year.

I have no problem with what malraux said and within the context (it predates me) it may have been correct. My issue is the greater issue - and this is a criticism levied directly at malraux, who made a comment about my comments - that predictions must be timed to the minute, or to the decimal point, to be correct.

They need not be.

"since deductions are taken from the top."

Deductions are taken after AGI - on the back page, from Schedule A. Specifically on line 40 of the 1040, and mortgage interest is deducted on line 10 of Schedule A.

Thank you for proving that you don't know what you're talking about.

If you pay 25% of your income in tax, and that is reduced to 23.35% of your income, the benefit is worth 6.6% of your total tax, not 33%. You insist on applying deductions a) before AGI, which is illegal, and b) in the order you choose. They're all taken at the same time, so they have the same weight.

By your theory state and local income taxes and property taxes should be calculated first as deductions since they occur first on Schedule A. But then of course they're the first to be phased out under AMT.

LICC not around to defend his claim that deductions are taken before AGI is calculated?

LMAO.

Along with everything else he's said.

Malraux will respond when he's done trolling for knockoff Damien Hirst diamond-encrusted jockstraps on ebay.

When he's finished stuffing his safety-deposit box with gold coins.

Where is Scrooge when you need him?

And LICC?

"how did you miss that in your real estate analysis"

For losses in the stock market? Do you not know that the two are uncorrelated?"

OMG you are so stupid. How the heck could they be uncorrelated? Do you think more than 1 step forward?

but you have to appreciate the context there."

It is funny to see how angry someone can get.
What does Paulson have to do with a stock market, real estate and commodity bubble that burst?

[You make $100,000. You are in the 33% marginal tax bracket, 25% effective tax bracket, meaning you paid $25,000 in total tax. You are a renter. You then buy a house. You have $5,000 a year in mortgage interest. Your tax goes down by $5,000 * .33 = $1,650.

Your new tax burden is $25,000 - $1,650 = $23,350. You are now in the 33% marginal tax bracket, but your effective tax bracket is 23.35%. You have reduced your total tax by $1,650 / $25,000 = 6.6%, not by 33%, because to the best of my knowledge, $1,650 does not equal 33% of $100,000.]

Holy #(#&, you finally get it! That's exactly what we've been saying this entire time! $5000 in mortgage interest really means $5000 - $1650 = 3350 in actual money out of your pocket! That when doing rent vs. buy math, you only count $3350 and not $5000 against the cost of buying! WOW, I never thought this day would come!

Now, learn to add state and city tax in to the mix - I know its *real* hard to swallow your pride and admit you were wrong a second time - you did attempt to make fun of me to no end for thinking I pay above 40% in total taxes.

exbreezy, even go to millersamuel.com - everywhere, including NYC, the stock market is uncorrelated to the real estate market.

Fact.

"What does Paulson have to do with a stock market, real estate and commodity bubble that burst?"

Look at the charts. Starting September 17, 2008. Then get back to me.

tech_guy = LICC, what are you talking about? "That's exactly what we've been saying this entire time!"

Creepy - referring to yourselves as "we".

No one EVER doubted how much money came out of your pocket. What EVERYONE with a BRAIN doubted was that the amount was 33%. The amount of the benefit refers to how much tax you're paying. Everyone KNOWS that the next dollar will be taken out at your marginal rate. But overall, since your marginal rate depends on each and every deduction you take, you must take them all at once.

"$5000 in mortgage interest really means $5000 - $1650 = 3350 in actual money out of your pocket!"

Absolutely, positively right. As long as you have EACH AND EVERY prior deduction. If you don't, then the figure is different.

Your benefit in the example, licc = tech_guy, is 6.6%, the difference between your income tax before and after the deduction.

"No one EVER doubted how much money came out of your pocket. What EVERYONE with a BRAIN doubted was that the amount was 33%. The amount of the benefit refers to how much tax you're paying. Everyone KNOWS that the next dollar will be taken out at your marginal rate. But overall, since your marginal rate depends on each and every deduction you take, you must take them all at once."

You are hilarious! Who counts a tax deduction in terms of what percentage it is of your existing tax burden? :::crickets::: For someone who claims to freely admit when you're wrong, you really have an amazingly difficult time admitting that you're wrong! Not a *single* person besides yourself thinks LICC or me or anyone else believed what you described - you really need to get your reading comprehension skills checked. While I'm at it, not a single person besides yourself thinks LICC and me are the same person.

By your own definition, you don't have a brain, as you doubted that very fact ad nauseum here:

http://www.streeteasy.com/nyc/talk/discussion/6009-same-apartment-for-rent-and-for-sale

tech_guy = licc: LMAO.

We are talking about how to weight a tax benefit. "Who counts a tax deduction in terms of what percentage it is of your existing tax burden?"

Everybody but you. And your alter-ego, LICC.

"you really need to get your reading comprehension skills checked."

Since I'm a translator by profession, they must be pretty high.

If your overall tax burden is decreased by 6.6%, that is the value of that deduction at your income level. You seem to think that by reducing your tax burden by 6.6%, that the benefit is worth 33%.

Here's why it's not: lose your job and have no income, and it's not worth DAMNED thing.

I'll wait for someone else, *anyone*, to tell me that when they do rent vs. buy math on a potential apartment purchase, that the ratio of the tax benefit to their current tax burden plays a factor.

I'm so glad you do such a good job of making yourself look stupid :) Its quite entertaining!

tg >< LICC. Thanks! Best comment of the night.

You make $100,000. Your tax goes down from $25,000 to $23,350. Anyway you count it, it's a tax reduction of 6.6%. That's why economists the world over use your EFFECTIVE tax rate, not our MARGINAL tax rate.

Of COURSE your TAX goes down by your marginal rate every next deduction you take, but your cost doesn't. The price of any good is the marginal cost of production. But your TOTAL cost is not the marginal cost. It is the TOTAL cost.

So sorry. You lost.

There goes steve trying to talk in circles to cover up how incredibly wrong and just plain stupid his assertions are regarding measuring the mortgage deduction benefit. steve, you are fooling no one. The more you keep at it, the more people see how utterly clueless you are. The numbers above, in your example no less, show how wrong you are. Maybe you have delusion issues . . .

"The numbers above, in your example no less, show how wrong you are."

:)

"I got so much sh*t for talking about this stuff 12-14 months ago on urbandigs, and I got emails back then from people accusing me of negative press and trying to take down the Manhattan market; so I can buy back in at a lower price. Lol. Unbelievable how people think media makes markets go down, and not the fundamentals. "

UD -

100% agreed... and you should post some of the best comments.... would be hilarious to see some of 'em now.

> So sorry. You lost.

Yes, anyone still involved in that conversation lost... a LONG time ago.

> The price of any good is the marginal cost of production.

No, its not.

> But your TOTAL cost is not the marginal cost. It is the TOTAL cost.

You learned this today? Econ 101? Total cost = total cost. Or was that kindergarde?