Japanese Real Estate Fire Sale Announcement
By Conor on September 4, 2008
If you were a publicly listed real estate company in Japan, do you think the best strategy for supporting your share price is to post on your web site that you are “puking your inventories“?
SunCity (8910 JT Equity on Bloomberg), seems to not mind. The stock is now down 95% over the last year and I imagine will be bankrupt soon.
While the real estate market looks ugly here in the States, I think few Americans are aware of the problems this credit crisis has created for the rest of the world. It is not pretty folks…
*image source: Bloomberg.com, Suncity-web.co.jp
Topics: Finance, Japan, Real Estate | 1 Comment »
Bald Eagle Close Up
By Conor on September 3, 2008
In Northern British Columbia, Canada, there are bald eagles everywhere. EVERYWHERE. Especially when fishing on the rivers. That is their prime area to hunt (or, rather, scavenge). At times, we could see several bald eagles in a single tree and several more in the air at the same time.
After catching a fresh sockeye Salmon and lying it up on the beach one morning during my fishing trip, one of bald eagle in particular to interest in MY salmon.
You must remember that bald eagles in general are more scavengers than hunters. As the American symbol and national bird, it is a dissapointing story to hear. But it is quite true that they prefer to gather scraps from others hunts or snag fish that are in their dying stages near the surface or on the seashore.
Well, this particular bald eagle swooped down by our boat before posting up on a log a few hundred feet away to keep an eye on our catch. Due to his closeness and the my frustration with his interest in my fish, I decided to get a little aggressive and have a walk out towards him with my camera. Below, you can follow my footsteps in his direction until I got so close that I begin to almost get intimidated by his size. He must have been 4 feet tall standing up and his claws were massive. Eventually he flew off, but it was quite an experience indeed.
Topics: Forest Green, Travel | No Comments »
Green Taxi Alive and Kicking
By Conor on September 2, 2008
I had such a hectic travel schedule the last 3 weeks (about 23 days) that I have barely been able to sleep, let alone blog. I survived, but to recap briefly, here are a few stats:
- Destinations: Portland, British Columbia, San Diego, Minnesota, Tokyo, Hong Kong, and New Jersey
- Weddings: 4 (yes, in 3 weeks)
- Business meetings: 16
- King Salmon Caught: 1
- Sockeye Salmon: 1
- Hospital Visits: 3
- Flight Hours: 53
- Versions of Green Taxi’s I saw: 4
- Convertible Rental Cars: 1
- Food Poisoning: 1
- Hours of sleep: <140
- Typhoon’s: 1
I’d like to spend the week sharing stories and pictures from my travels.
To begin with, I saw several green taxi’s this trip. Some were green in the functional sense and some were green in color only. This one in Hong Kong was part of a fleet of Taxi’s painted green that serve the outer Hong Kong area only.
Topics: China, Japan, San Diego, Travel | No Comments »
History Repeats with US Housing Collapse
By Conor on August 29, 2008
So few Americans seems to realize that we are repeating history quite close to Japan’s bubble crash of the late 1980’s. I wrote on this in February in “The United States of Japan“, and the market has been a mirror image of what happened in Japan since then.
The Economist has mentioned this many times as well, but never so clearly as their article last week regarding “Lessons from a ‘lost decade’“. While the article explains it all much clearer than I could, one graphic sums up the similarities very easily.
Topics: Finance, Japan, Real Estate | 1 Comment »
Almost Back in Action
By Conor on August 29, 2008
After three weeks of travelling, through Canada, San Diego, Tokyo, and Hong Kong, I have one last weekend Labor Day trip left. I’ll be in Red Bank, New Jersey, enjoying a wedding of one of my best friends from school.
I’ll be back in action with full stories of my trips and plenty of topics of discussion next week. Have a great Labor Day weekend!
Topics: Travel | No Comments »
How the FDIC Will Cause Massive Inflation
By Conor on August 25, 2008
IndyMac failed several weeks back. It will not be the last bank to go under, I think almost everyone agrees about that. Should you be worried about your deposits? Not under $100k. Will those deposits of US Dollar cash be worth anything? Not if too many banks fail.
Here is the formula for massive inflation coming to your America soon. Banks Market to Market -> Banks Fail -> FDIC Runs Out of Cash -> Fed Prints Money. Don’t think it’s a risk? Let me explain.
Mark to Market: Investment Banks have to mark their books to market (this means the fair market price of a security), so they have had to take billions in write-downs over the past year (+$500 billion so far). However, the accounting is different for retail banks and they do not have to mark their books to market. They only have to take losses when the losses actually occur. Since many of the structured Mortgage Backed Securities (MBS) have not yet defaulted, most banks have not written anything off yet. However, if the product is trading at 10 cents on the dollar, the market is betting that these things are going to default sooner or later.
Overvalued Mortgage Books: It is usually not easy to tell what banks are holding on their books. The prime example is Wachovia. It must be holding a lot of crap. Two years ago at the height of the real estate bubble, Wachovia paid $25 billion for Golden West, the nation’s largest option-ARM mortgage broker. With that purchase, they also inherited the $122 billion of mortgages on Golden West’s book. Since then, the option-ARM market has disappeared. Apparently, Wachovia is still one of the very few mortgage brokers out there that will still offer ARM’s, but in all reality, that $25 billion has gone down the drain. Now, what should we assume that $122 billion of mortgages consists of? Probably fairly weak sub-prime ARM’s, due to adjust up over the next 2 years for their clients. Even if that entire book is worth 50 cents on the dollar, the $65 billion they will be losing is fairly significant in comparison to their market cap of $30.5 billion.
Banks Fail: IndyMac failed with $19 billion in deposits. It happened overnight. Nobody saw it coming. The bank reopened the next day as a different entity, but only your first $100k of deposits were insured by the FDIC (Federal Deposit Insurance Corporation). So, of the $19 billion, the FDIC paid back at least $8 billion in insured deposits, and possibly up to $18 billion. More banks will have this happen to them as those with large amounts of mortgages on their books see enough defaults. It is impossible to tell who or when. Columbia Bank and Trust just failed on Friday (only $600 million in deposits). In total, the banking system has $6.84 trillion in banking deposits, with only $274 billion in cash on hand at the banks (the rest has been loaned out to consumers, businesses, developers, etc.). Bernanke may have an idea of who is next, but few others do.
FDIC Runs Out of Cash: The FDIC currently holds $53 billion in cash they have collected from insurance premiums from banks. When IndyMac went under their cash may have dropped below $50 billion. Seem like a lot? Well, in total, the FDIC currently holds cash premiums representing just 0.77% of the assets they are backing. This means that once more than 0.77% of the notional value of all American banks fails, the FDIC will run out of money to pay off depositors. Think more than 0.77% of banks will fail to make it through this mess as their losses begin to mount? Me neither. In the Savings and Loan crisis in the early 1990’s, over 1500 banks failed. So far in 2008, we’ve had nine banks fail. The FDIC has 90 banks on their “watch list”, one of which was NOT Indymac. A US-based independent anlalyst, Institutional Risk Analytics, have identified 700, or 8% of all banks, as “troubled”. And what if one of the big banks fails, like Washington Mutual, Wells Fargo, or the previously-explained risk nightmare of Wachovia? Wells Fargo has over $600 billion in assets; more than six times the current cash on hand at the FDIC.
Fed Prints Money: In truth, the FDIC is not government owned. However, there is no way the US Government would ever not let the FDIC fail. First, it has been branded into our minds over the years that the first $100k of your deposits in FDIC-insured banks are “Backed by the full faith and credit of the US Government”. Secondly, if the Fed will not let the GSE’s (Freddie and Fannie) fail, or god-forbid an Investment Bank like Bear Stearns, there is zero risk of it letting the FDIC fail. So, what do they do? Start printing money. A lot of money.
And retail investors are starting to reduce their risk to non-insured deposits. Banks now offer “CD’s” that guarantee their deposits for up to $50 million. How? Well, they offer a lower interest rate, but they take that chunk of deposits and spread it out over banks across the nation at $100k per clip. You can even access a list of which banks your deposits are spread out across. What does this mean for the Fed? Well, this, along with the natural spreading out of deposits that investors are currently doing, means fewer deposits will go uninsured and the Fed will have to own up to an even larger piece of the defaulting pie.
Inflation is not the end of the world. But over a short period of time it could be deadly. Especially in a recession, since there is no GDP growth to make up for the increase in prices. This is called stagflation and is often viewed as the worst of all “flation’s”. But that is a story for an economist. The real question in all of this will be how quickly the Fed has to print money. If banks fail slowly enough and spread out over enough time, there is a chance that this cause of inflation will not be felt. My bet is that it will be a slow trickle of small banks failing until a bigger bank goes under and everyone realizes this situation. Then we’ll first see a run on the banks (take out your money to be safe, right?), which of course will cause more banks to go under, then we’ll see the inflation hit hard. Which brings us back to a big bank like Wachovia. The impact of that Golden West purchase starting to hit home now?
Topics: Finance, Greenback | 2 Comments »
Dell Reaches Carbon-Neutral Status
By Conor on August 21, 2008
Dell claims they are now carbon-neutral, five months ahead of their internal deadline.
As far as I can tell this is the largest technology company that is carbon-neutral. Anyone know of anything bigger?
Topics: Forest Green, Technology | 1 Comment »
Boycotting Blogs Without RSS
By Conor on August 19, 2008
Over the past two to three years of blog reading I have slowly accumulated a list of blogs that I enjoy tracking. Initially I kept the domains as Favorites bookmarked in Internet Explorer. Next I moved on to an iGoogle homepage which showed the title of a caption of the article if I wanted to dig deeper. Most recently I have have moved to Google Reader for reading all of my blogs.
With Google Reader, I have the ability to organize the blogs I read into folders, share articles I like with my Google friends, save or highlight articles for later, and read through the articles in a few different manners of organization. It passes through key images to the articles and provides and easy link to go to the article directly.
I am fairly set on using this reader for now, but nothing frustrates me more than coming across a blog that I cannot add into Google Reader. Almost every simple blog software creates some sort of RSS or XML feed, but some sites seem to almost shy away from allowing them. I know have a core list of about 20-30 blogs that I read, but I think I have probably read another 10 solid blogs over the past 2 years that should also be on this list.
One of the best recent examples of this is a Gilbert Arenas NBA.com blog that I would to follow. For some reason the NBA, which is usually quite good at leading the way with new technology or ventures, does not understand what RSS feeds can accomplish. With our Basketball.org blog underway, I need to track basketball news and insider life in the NBA is helpful. But for now, I will have to stick with TooMuchRodBenson to get my fix.
So, not that it is anything new, but going forward I will continue to boycott any blogs without an RSS feed. There is just too much other content out there to have to rely on going to the web sites to read the latest articles. News web sites need to take note of this as well. WSJ and ESPN do a good job splitting up news among several feeds, but more sites need to make sectional news feeds available.
Topics: Domains | No Comments »
Gardening for Those With Style
By Conor on August 17, 2008
My first foray into gardening was a success two years ago. I purchased a Dwarf Lime Tree that grew to a few feet tall on my deck and we had limes for Corona’s for a whole summer. Many beers were enjoyed on the deck that first summer listening to Trevor Hall’s, The Lime Tree.
Unfortunately, the tree got sick that winter and I was never able to fully revive it after that. The next few attempts have been hit or miss, although I did get a nice batch of daisies up this Spring.
Now, if your gardening is a bit beyond my expertise, you may want to have a look at HortCouturePlants.com, a new site that caters to the fashionable gardener. They offer a selection of high-quality plants from the worlds best breeders. They also can mix and match for you as you make your garden not only green, but fashionable. As this trend continues, this company is going to be on the forefront of garden fashion.
Topics: Forest Green | No Comments »
Major Solar Energy Discovery
By Conor on August 16, 2008
MIT is ready to announce what they call a “Major Discovery” in the solar energy market. Apparently, they have created a way to store solar energy overnight for much cheaper than ever before.
It has been my understanding that battery technology is the largest bottleneck in the energy sectors growth. The growth in battery and storage technology has been much slower than anything else in the industry. New ways to store any source of power, especially Solar, is extremely beneficial to further energy solutions.
“Inspired by the photosynthesis performed by plants, Nocera and Matthew Kanan, a postdoctoral fellow in Nocera’s lab, have developed an unprecedented process that will allow the sun’s energy to be used to split water into hydrogen and oxygen gases. Later, the oxygen and hydrogen may be recombined inside a fuel cell, creating carbon-free electricity to power your house or your electric car, day or night.”
This group seems to be championing this discovery as something massive. I have yet to read other commentary on this news, but if their comments and motivation is true, this is very exciting news indeed. It will still take a long time to put this into methodology into place, but it is good that the end of the tunnel can be seen.
Topics: Forest Green, Technology | No Comments »
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