wiegie Posted June 5, 2009 Share Posted June 5, 2009 believe it or not, this is actually pretty good news (yep, the unemployment rate spiked up to 9.4%, but the slowing rate of overall job losses is the more important statistic) (And, no, this does not mean that I think we are out of the woods by any stretch of the imagination) Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted June 5, 2009 Share Posted June 5, 2009 believe it or not, this is actually pretty good news (yep, the unemployment rate spiked up to 9.4%, but the slowing rate of overall job losses is the more important statistic) (And, no, this does not mean that I think we are out of the woods by any stretch of the imagination) arent the previous months revisions more important? Quote Link to comment Share on other sites More sharing options...
WaterMan Posted June 5, 2009 Share Posted June 5, 2009 There's not enough fast food jobs to cover these job losses. And until we actually start making jobs, we're in the woods. Quote Link to comment Share on other sites More sharing options...
wiegie Posted June 5, 2009 Author Share Posted June 5, 2009 arent the previous months revisions more important? I don't think so--it's true that they revised the job losses from April downward by 25,000, and while that revision is good news, I think the "goodness" of May numbers is even better. (man, it sure seems weird to argue that losses of more than 1/3 of a million jobs is a good sign, but that is the world we are living in right now) Quote Link to comment Share on other sites More sharing options...
TimC Posted June 5, 2009 Share Posted June 5, 2009 (And, no, this does not mean that I think we are out of the woods by any stretch of the imagination) I don't think we're ever going to see the "clearing" that was the past bubble again. The "woods" is where we'll stay. People need to get used to the idea that this is the new reality and they won't see the stock market at 14,000 or house prices at pre-recession levels or jobs plentiful and cheap money anymore. I think we're slowly grinding down to reality. Calling this a recession implies that it is a dip and it will rise again. Perhaps it will in 20 years or more, but we are back to reality after the boom. The reality is your house was not worth what it was years ago and it won't worth that again for decades, if ever. You won't be able to borrow cheap and easy anymore. Debt will be expensive. Jobs are no longer plentiful. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted June 5, 2009 Share Posted June 5, 2009 I don't think we're ever going to see the "clearing" that was the past bubble again. The "woods" is where we'll stay. People need to get used to the idea that this is the new reality and they won't see the stock market at 14,000 or house prices at pre-recession levels or jobs plentiful and cheap money anymore. I think we're slowly grinding down to reality. Calling this a recession implies that it is a dip and it will rise again. Perhaps it will in 20 years or more, but we are back to reality after the boom. The reality is your house was not worth what it was years ago and it won't worth that again for decades, if ever. You won't be able to borrow cheap and easy anymore. Debt will be expensive. Jobs are no longer plentiful. u are so negative bro! Quote Link to comment Share on other sites More sharing options...
TimC Posted June 5, 2009 Share Posted June 5, 2009 u are so negative bro! Of course, everything will be fine again as soon as our trillions in debt get into the system. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted June 5, 2009 Share Posted June 5, 2009 I don't think we're ever going to see the "clearing" that was the past bubble again. The "woods" is where we'll stay. People need to get used to the idea that this is the new reality and they won't see the stock market at 14,000 or house prices at pre-recession levels or jobs plentiful and cheap money anymore. I think we're slowly grinding down to reality. Calling this a recession implies that it is a dip and it will rise again. Perhaps it will in 20 years or more, but we are back to reality after the boom. The reality is your house was not worth what it was years ago and it won't worth that again for decades, if ever. You won't be able to borrow cheap and easy anymore. Debt will be expensive. Jobs are no longer plentiful. I largely agree with this and am actually happy about it. I'm hoping it's a reset, not a dip. We all lived in la-la land for a quarter century and those days aren't coming back any time soon. If they do, this will all happen again. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted June 5, 2009 Share Posted June 5, 2009 I largely agree with this and am actually happy about it. I'm hoping it's a reset, not a dip. We all lived in la-la land for a quarter century and those days aren't coming back any time soon. If they do, this will all happen again. we have a very short memory. rules and regulations need to be put in place for this not to happen again. and there also needs to be responsiblity on the part of business and the individual. that wont happen. Quote Link to comment Share on other sites More sharing options...
i_am_the_swammi Posted June 5, 2009 Share Posted June 5, 2009 (edited) I don't think we're ever going to see the "clearing" that was the past bubble again. The "woods" is where we'll stay. People need to get used to the idea that this is the new reality and they won't see the stock market at 14,000 or house prices at pre-recession levels or jobs plentiful and cheap money anymore. I think we're slowly grinding down to reality. Calling this a recession implies that it is a dip and it will rise again. Perhaps it will in 20 years or more, but we are back to reality after the boom. The reality is your house was not worth what it was years ago and it won't worth that again for decades, if ever. You won't be able to borrow cheap and easy anymore. Debt will be expensive. Jobs are no longer plentiful. Pretty much spot on except for a couple items. Debt will again be reasonable once buyers come to grips with the "new reality", or the resetting of real estate values (as we in the commerical market are calling it). The transaction market in the hotel industry has ground to a halt, because the delta is so large right now between what sellers think their assets are worth, and what buyers are willing to pay. Whats going to break this trend is the foreclosure/distressed asset market, which we predict will come to earnest in another 6-9 months. Banks don't want to be real estate owners, and as they take on more and more assets from bankrupt owners, they will eventually come to the realization that they need to dispose of these assets at significant write-downs (70-80% of the debt is what we are targeting as our purchase price). The market will again take a beating when this process begins to play out, as it isn't until these write-downs are actually realized that the company books the loss...major banks/insurance companies/pension funds/REITS will take huge hits to their earnings when this comes to fruition. It is why most lenders are currently trying everything possible to negotiate 6-12 month work-outs, hoping the economy rebounds and these assets can once again cover their debt service, and thus delaying their need to take these write-downs. Most experts, though, think it is like trying to put a band aid on a deep, gushing cut. However, once the process plays itself out, and the market can move forward based on these new values, we anticipate a return to a somewhat reasonable level of normalcy in regard to lending practives. But you are correct: real estate values were deftly inflated over the last 4-7 years, and the prices you are seeing today are not "deep discounts"...they are indeed our new reality. Edited June 5, 2009 by i_am_the_swammi Quote Link to comment Share on other sites More sharing options...
westvirginia Posted June 5, 2009 Share Posted June 5, 2009 ... (20-30% of the debt is what we are targeting)... Are you saying the properties will sell for 20-30% of the current debt/book value, or at a 20-30% "discount"? Quote Link to comment Share on other sites More sharing options...
i_am_the_swammi Posted June 5, 2009 Share Posted June 5, 2009 Are you saying the properties will sell for 20-30% of the current debt/book value, or at a 20-30% "discount"? 20-30% discount off the current note. 70-80% of current debt....i fixed my original post. Most pundits are iterating that if you purchased anything after January 2006 leveraged at 75% or greater, your equity is long gone. Quote Link to comment Share on other sites More sharing options...
westvirginia Posted June 5, 2009 Share Posted June 5, 2009 20-30% discount off the current note. 70-80% of current debt....i fixed my original post. Most pundits are iterating that if you purchased anything after January 2006 leveraged at 75% or greater, your equity is long gone. K - my eyes were bugging outta my head. I think you and I have talked but I'm in the Hospitality industry as well. Quote Link to comment Share on other sites More sharing options...
i_am_the_swammi Posted June 5, 2009 Share Posted June 5, 2009 K - my eyes were bugging outta my head. I think you and I have talked but I'm in the Hospitality industry as well. Yep, and if you get involved ith your property's P&L & investment performance, you know the pain your owners are in. The PE firm for which I advise has some horrendous issues which we are currently working thru. Royal Bank of Scotland and Anglo-Irish just gave us a 6-month extentsion on our notes for a handful of assets....we anticipate nothing changing from now until then. From our persepctive, the 6-months basically gives us time to prepare studies which show they'd be better off staying with us and following our plans for the asset, rather than foreclosing and taking on 100% of the risk themselves. But either scenario will require the lenders write-down the debt. Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted June 5, 2009 Share Posted June 5, 2009 that stimulus bill is really working! Quote Link to comment Share on other sites More sharing options...
Pope Flick Posted June 5, 2009 Share Posted June 5, 2009 I don't think we're ever going to see the "clearing" that was the past bubble again. The "woods" is where we'll stay. People need to get used to the idea that this is the new reality and they won't see the stock market at 14,000 or house prices at pre-recession levels or jobs plentiful and cheap money anymore. I think we're slowly grinding down to reality. Calling this a recession implies that it is a dip and it will rise again. Perhaps it will in 20 years or more, but we are back to reality after the boom. The reality is your house was not worth what it was years ago and it won't worth that again for decades, if ever. You won't be able to borrow cheap and easy anymore. Debt will be expensive. Jobs are no longer plentiful. +1 - it is in fact, one of my biggest beefs with Obama. You want 're-education"? - he needs to be getting people on board that the days of 12% annual growth are over, and that 4-5% will be a VERY good thing. Quote Link to comment Share on other sites More sharing options...
i_am_the_swammi Posted June 5, 2009 Share Posted June 5, 2009 interesting timing....this out today, which sumarized the climate flet at the annual NYU Investor Conference held earlier this week in Manhattan. Some snippets, confirming some of my thoughts earlier: 1. This RevPAR decline translates into a 40-50% decrease in NOI at many hotels, and nonrecourse owners are deciding that they are not going to pay the negative carry on debt service, or increasingly, the negative operating losses. 2. Rich Conti of the Plasencia Group: "We are in the "do nothing" stage now. Lenders are doing nothing other than 90 day extensions. There is still a huge disconnect of the bid and ask from buyers and sellers." 3. A few lenders are taking properties back, or borrowers are handing them the keys. The prevailing practice up to now -- particularly in the CMBS world -- seems to have been "extend and pretend" (extend loan maturities and pretend everything is OK). 4. Henry Vickers, AEW: "I think we will see a lot more defaults coming now as borrowers realize their equity is gone." 5. Steve Van, Prism Hotels: "We are projecting that CMBS loan defaults will go from the current default rate of about 2% to an astonishing 8% by the end of this year. And the loan defaults will go from "technical" or maturity defaults to payment defaults as borrowers quit making loan payments. That is when CMBS lenders will start taking properties back." Quote Link to comment Share on other sites More sharing options...
westvirginia Posted June 5, 2009 Share Posted June 5, 2009 interesting timing....this out today, which sumarized the climate flet at the annual NYU Investor Conference held earlier this week in Manhattan. Some snippets, confirming some of my thoughts earlier: 1. This RevPAR decline translates into a 40-50% decrease in NOI at many hotels, and nonrecourse owners are deciding that they are not going to pay the negative carry on debt service, or increasingly, the negative operating losses. 2. Rich Conti of the Plasencia Group: "We are in the "do nothing" stage now. Lenders are doing nothing other than 90 day extensions. There is still a huge disconnect of the bid and ask from buyers and sellers." 3. A few lenders are taking properties back, or borrowers are handing them the keys. The prevailing practice up to now -- particularly in the CMBS world -- seems to have been "extend and pretend" (extend loan maturities and pretend everything is OK). 4. Henry Vickers, AEW: "I think we will see a lot more defaults coming now as borrowers realize their equity is gone." 5. Steve Van, Prism Hotels: "We are projecting that CMBS loan defaults will go from the current default rate of about 2% to an astonishing 8% by the end of this year. And the loan defaults will go from "technical" or maturity defaults to payment defaults as borrowers quit making loan payments. That is when CMBS lenders will start taking properties back." I actually work for a service provider - accounting & payroll software - but we have people getting ridiculous about paying bills right now. I'm sure in many cases they just don't have it, but we can cut them off from their data if we need to. That and the fact we're the lowest cost provider in the marketplace generally means they pay up if they have any sense. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted June 6, 2009 Share Posted June 6, 2009 http://apnews.myway.com/article/20090605/D98KFDRO0.html question.....how are college grads calculated into this number, if at all? Quote Link to comment Share on other sites More sharing options...
WaterMan Posted June 6, 2009 Share Posted June 6, 2009 we have a very short memory. rules and regulations need to be put in place for this not to happen again. and there also needs to be responsiblity on the part of business and the individual. that wont happen. nah let's free market it. no rules. Quote Link to comment Share on other sites More sharing options...
wiegie Posted June 7, 2009 Author Share Posted June 7, 2009 http://apnews.myway.com/article/20090605/D98KFDRO0.html question.....how are college grads calculated into this number, if at all? they "seasonally adjust" the data to take into account regular annual fluctuations in the figures Quote Link to comment Share on other sites More sharing options...
Brentastic Posted June 8, 2009 Share Posted June 8, 2009 Pretty much spot on except for a couple items. Debt will again be reasonable once buyers come to grips with the "new reality", or the resetting of real estate values (as we in the commerical market are calling it). The transaction market in the hotel industry has ground to a halt, because the delta is so large right now between what sellers think their assets are worth, and what buyers are willing to pay. Whats going to break this trend is the foreclosure/distressed asset market, which we predict will come to earnest in another 6-9 months. Banks don't want to be real estate owners, and as they take on more and more assets from bankrupt owners, they will eventually come to the realization that they need to dispose of these assets at significant write-downs (70-80% of the debt is what we are targeting as our purchase price). The market will again take a beating when this process begins to play out, as it isn't until these write-downs are actually realized that the company books the loss...major banks/insurance companies/pension funds/REITS will take huge hits to their earnings when this comes to fruition. It is why most lenders are currently trying everything possible to negotiate 6-12 month work-outs, hoping the economy rebounds and these assets can once again cover their debt service, and thus delaying their need to take these write-downs. Most experts, though, think it is like trying to put a band aid on a deep, gushing cut. However, once the process plays itself out, and the market can move forward based on these new values, we anticipate a return to a somewhat reasonable level of normalcy in regard to lending practives. But you are correct: real estate values were deftly inflated over the last 4-7 years, and the prices you are seeing today are not "deep discounts"...they are indeed our new reality. What type of 'transaction' are you referring to? Are you in this industry? Quote Link to comment Share on other sites More sharing options...
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