Sales of existing homes plunged in March by the largest amount in nearly two decades, reflecting bad weather and increasing problems in the subprime mortgage market, a real estate trade group reported today.
The National Association of Realtors reported that sales of existing homes fell by 8.4 percent in March, compared with February. It was the biggest one-month decline since a 12.6 percent drop in January 1989, another period of recession conditions in housing. The drop left sales in March at a seasonally adjusted annual rate of 6.12 million units, the slowest pace since June 2003.
AP via The New York Times
Category: Economics & Business
Real Estate Roller Coaster
US Home prices 1890-2006 adjusted for inflation plotted as a roller coaster graph. It’s a long ride, but gives you some interesting perspective.
Roller Coaster from Speculative Bubble via Freakonomics Blog.
The End of a 1,400-Year-Old Business
The world’s oldest continuously operating family business ended its impressive run last year. Japanese temple builder Kongo Gumi, in operation under the founders’ descendants since 578, succumbed to excess debt and an unfavorable business climate in 2006.
39 generations of your family run the business. How would you like to be the guy that screws it up?
Odd business model
NewMexiKen likes doing business with Amazon.com. I know, they’re killing the local bookstores, and that is indeed a loss — the real local stores like Bound To Be Read, not the Borders and Barnes and Nobles. But I’ve found Amazon usually gives good service at a very good price. (And I get a small kickback every time you use that Amazon link over in the far right column.)
But I thought this was strange.
Monday I was placing an order for my grandsons. Though I hadn’t completed the order, I checked the shopping cart and saw that the shipping address was mine, not Aidan and Mack’s. As soon as I changed the address, the order, and I have to say it this way, “placed itself.” It was gone and — in the few seconds before I could correct it — I was notified the order was being prepared and I couldn’t make changes. (Wrong address, one item not on the order.)
I tracked down an Amazon 800-number, itself no easy feat. Nothing they could do, I was told. The order would have to be shipped to me (in Albuquerque, rather than to the boys in Virginia). Blah, blah, etc. I would just have to return the books. Eventually the customer service rep said she would credit my charge card as soon as the order was shipped (not waiting until the books were returned in other words). I agreed to this.
And, indeed, the order has shipped to me, my card was charged, and then the charge was refunded. I just have to watch for UPS tomorrow and refuse delivery. But wouldn’t you think it would have been easier all around if they had a means to stop an order?
Oh, and here’s the kicker. I went back in and made the correct order for Aidan and Mack. And now the order is partly held up because they don’t have one of the books in stock. Guess what? I know where their last copy of that book is — it’s on its way to me.
A best line and more
“If Republicans in this election vote in such a way as to say a candidate’s personal life and personal conduct in office doesn’t matter, then a lot of Christian evangelical leaders owe Bill Clinton a public apology.”
Former Arkansas Governor Mike Huckabee, a minister, who’s running for president himself. Guess he’s thinking about Rudy and Newt and St. McCain.
At Functional Ambivalent, Tom takes the side of the grumpy tourist who wouldn’t give the Starbuck’s barista his name.
Dan Neil gets to drive a Formula 1 car.
Some come to Vegas to visit the town’s fleshpots or to enrich its fleecing parlors, or simply to pass out by the pool. But in a nation obsessed with cars, sex, speed, diversion and the unholy mingling of same, it’s no surprise that the city of demiurges has become a major destination for people who want to get their wheel freak on.
Here you can rent a Ferrari by the hour, drive a rooster-tailing sand buggy, go roundy-round on the Las Vegas speedway in a 650-horsepower stock car, learn to ride the sickest racing motorcycle the deviants at Honda or Ducati can devise.
At the top of this particular pile of coin-operated thrills, however, is LRS Formula USA, a company that sells mere mortals the chance to wedge, and I do mean wedge, themselves into an full-on, honest-to-Odin F1 car.
“I don’t have little cars,” says LRS principal Pierre-Louis Moroni. “They’re not toys. These are as close to a race-ready F1 car as you can drive, unless you buy one yourself.”
Neil goes on to relate his experience — he’s so low to the ground and the car is so finely suspended, “I could read a newspaper if I ran over it.” $3,395 for four laps if you’re interested.
Glenn Greenwald reports on conversations National Review‘s Ramesh Ponnuru had with Cato Institute’s President Ed Crane.
Crane asked if Romney believed the president should have the authority to arrest U.S. citizens with no review. Romney said he would want to hear the pros and cons from smart lawyers before he made up his mind.
Crane said that he had asked Giuliani the same question a few weeks ago. The mayor said that he would want to use this authority infrequently.
These gentlemen are running to be President of the United States and they are unable to express an understanding of the basic tenets of our Constitution and Bill of Rights.
Gasoline in Albuquerque is $2.65/2.75/2.85 a gallon. Buy your gas early in the day so you can save the several cents a gallon it will go up by nightfall. We need an election to get the price back down again. Photo from Crooks and Liars. Don’t you just love the persistence of the 9/10ths?
The new NewMexiKen design is a work-in-progress, but then isn’t everything?
Short Circuit City
NewMexiKen wrote earlier about the layoffs at Circuit City. Functional Ambivalent shares my point of view:
There are lots of people — me, for example — who will shun Circuit City because it’s clearly run by people who do not deserve my patronage. Will I pay fifty bucks more for my next refrigerator knowing that my money is going to a company that treats its employees with decency? You bet. Will others? Not everyone, but many. By acting as it has, Circuit City has shrunk its possible market. I choose to exercise my market leverage not only in service to money.
Tom has more.
Remind me to never, ever go there again
Circuit City Stores Inc. has a message for some of its best-paid employees: Work for less or work somewhere else.
The electronics retailer on Wednesday laid off 3,400 people who earned “well above” the local market rate for the sort of jobs they held at its stores.
In 11 weeks theyll be able to apply for their old positions — which will come with lower hourly wages.
Buy now and save
Bush administration lawyers urged the Supreme Court today to repeal a nearly 100-year-old rule that bars manufacturers from fixing the retail prices of their products.
They argued that the rigid rule makes it harder for companies to market their products with special displays in retail stores.
. . .The National Assn. of Manufacturers and other business groups want the court to pull back on enforcing the antitrust laws so that companies can promote their brands as they see fit. Sometimes that could mean making contracts with retailers to charge a fixed minimum price for a product.
Since 1911, such contracts have been illegal under the antitrust laws.
The Consumer Federation of America says repealing this rule would allow manufacturers and retailers to set higher prices. It would hurt discounters, as well as shoppers who go online to look for deals, the group said.
Which Online High-Yield Savings Account is Best?
I did some research. I googled for “high yield savings account” and “ING direct” and “HSBC Direct“. I followed promising links (and ads) from the search results. As of March 19th, here are the offers that I was able to find with minimal digging. All of these accounts are FDIC insured.
Details at Get Rich Slowly.
Houses cheaper than cars in Detroit
DETROIT (Reuters) – With bidding stalled on some of the least desirable residences in Detroit’s collapsing housing market, even the fast-talking auctioneer was feeling the stress.
“Folks, the ground underneath the house goes with it. You do know that, right?” he offered.
After selling house after house in the Motor City for less than the $29,000 it costs to buy the average new car, the auctioneer tried a new line: “The lumber in the house is worth more than that!”
As Detroit reels from job losses in the U.S. auto industry, the depressed city has emerged as a boomtown in one area: foreclosed property.
Detroit, a good place to be from.
I’m beginning to think I’ll just keep my money under the mattress
Banks. Yuck.
If you’ve been reading NewMexiKen lately you know how I feel about Capital One Direct Banking. I’d sooner send my money to the widow of a Nigerian oil minister. Still, after a 28 minute call yesterday, I seemingly got some action. I’m told today that I should expect to receive a check within 10 business days. Of course, the person who was going to call me back today did not, but as long as I don’t have to do business with Capital One ever again, who cares?
Some of the Capital One individuals, by the way, were responsive and helpful. Collectively their system was anything but.
Oh, and Capital One’s telephone hold music sounded exactly like a shortwave broadcast of martial-classical type music from Radio Moscow vintage 1960, static included.
But the best banking story is with Bank of America. When I closed out an account last week they included the interest right up to date. However, the interest had not actually been posted and when they zeroed the account it was officially 46 cents overdrawn. Danger, Will Robinson! Account in arrears! There was a $33 dollar charge (for being 46 cents overdrawn). That took another trip back to the bank.
Realtors Hate Levitt
The Freakonomics Blog has an update on Levitt v. The Realtors.
The article included an interesting piece of research by Chang-Tai Hsieh and Enrico Moretti which showed that even during a real-estate boom, the typical agent doesn’t make a whole lot of money. Why not? Because the barriers to entry are so low that a hot real-estate market is soon flooded with new agents, who cannibalize existing agents’ profits.
You can have agent after agent in to discuss a listing and every friggin’ one of them is going to take you through the same damn list of comps as if you just landed from Mars. I tried rolling my eyes. I tried standing up. I tried saying we’d been through them with others. All to no avail. Seems they have a little performance anxiety: “We don’t really do very much, so we must share the little homework we do with you. We simply must.” They might as well just tape it to the refrigerator.
Once again, a dollar coin
Out today. Get yours. Just one dollar.
NewMexiKen’s rant of the day
Capital One sucks.
“Here’s what you need to do sir.”
“Oh, and now here’s what you need to do.”
“Oh, and by the way, today this is what you also need to do.”
Smallest account. Biggest trouble.
I’d put money in a Nigerian oil minister’s hands before I’d deposit a cent in Capital One.
Customer Service
Things NewMexiKen has learned in the past month.
The utility companies in Tucson appear to be staffed with morons.
Chase Bank should be run out of business. Zero cooperation (by telephone at least.)
World Savings is awesome.
Bank of America is pretty darn good.
Verizon has a different story every time you call — but came through pretty well in the end.
Social Security, which has an incredible task, serves us well. And, in my experience, with extraordinary courtesy. Next time you wish to bad mouth a government worker, bite your tongue!
Just How Naughty Are These Ladies?
There’s an article in today’s N.Y. Times about how many women buy luxury items with cash instead of a credit card so their boyfriends or husbands won’t find out and hassle them. “His tastes aren’t as expensive as mine, and he doesn’t understand the need to have so many pricey things,” says one woman who is paying cash for a $2,000 black Chanel tote. “Even though I have my own income, paying for my shopping in cash is so much easier than having a discussion about what I’m buying.”
The woman quoted above is Shalla Azizian, a 50-year-old woman in Manhattan who owns a lingerie boutique. But here’s what I don’t follow:
See what Freakonomics co-author Stephen Dubner questions.
Bits and Pieces
It’s been snowing early this morning at Casa NewMexiKen. Nothing much, just enough to cover the trees and shrubbery and be kind of pretty. That’s especially true if you can just sit here and look at it and not go out.
Yes, I did get the shower faucet fixed. Thanks for asking.
New springs and seats: $3.99
New handle: $10.98
Satisfaction of doing it myself: Priceless
I saw yesterday that the mascot for the Alamosa (Colorado) High School is the Mean Moose. Cool.
Some people have said to me, “Your Mom is from Japan and your Dad is from India, so that makes you half-Asian.” What continent do they think India is in? I mean, 20 percent of American schoolchildren can’t find Earth — on a map of Earth.
That’s comic Dan Nainan quoted by Joe Sharkey in a column in Tuesday’s Times, It’s Not Easy Being a Comic on the Airport Security Line.
NewMexiKen is really enjoying the mellow sounds of The Road to Escondido
I’ve learned there is a new and improved way to construct the code behind the layout of this weblog, so bear with me this next day or so while I make the change. This new approach includes modular inserts for the sidebars.
Cal Berkeley and, to a lesser extent, Stanford are offering speakers and even courses free online via podcasts. UC Berkeley on iTunes U has course lectures in history, psychology, geography, ecology, economics, computer science and much more. Stanford on iTunes U is limited more to one-shot events than classes, but still has an interesting selection. How did we live before the internets?
I read a short item in The New Yorker over the weekend about sugar and corn and ethanol. Really it’s about our convoluted government. Here’s a taste:
In the nineteen-seventies, Brazil embarked on a program to substitute sugar ethanol for oil. Today, every gallon of gas in Brazil is blended with at least twenty per cent of ethanol, and many cars run on ethanol alone, at half the price of gasoline.
What’s stopping the U.S. from doing the same? In a word, politics. The favors granted to the sugar industry keep the price of domestic sugar so high that it’s not cost-effective to use it for ethanol.
Oh, it’s worse than that. Go read.
And Ben Stein had an interesting column, In Class Warfare, Guess Which Class Is Winning. An excerpt:
Mr. Buffett compiled a data sheet of the men and women who work in his office. He had each of them make a fraction; the numerator was how much they paid in federal income tax and in payroll taxes for Social Security and Medicare, and the denominator was their taxable income. The people in his office were mostly secretaries and clerks, though not all.
It turned out that Mr. Buffett, with immense income from dividends and capital gains, paid far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office. Further, in conversation it came up that Mr. Buffett doesn’t use any tax planning at all. He just pays as the Internal Revenue Code requires. “How can this be fair?” he asked of how little he pays relative to his employees. “How can this be right?”
The Google Brilliance Applied to Newspapers and Local Media
Mark Cuban with some provocative (I think) thoughts on marketing. He begins:
The best example of this was when I bought the Dallas Mavericks. When I bought the team the conventional wisdom was that we were in the basketball business. That our customers were entertained by the beauty of the game. In reality our real business was “creating sore throats from screaming and sore hands from clapping”. Sporting events are pretty much the only place where a CEO will scream and yell while sitting or standing right next to a 16 year old with a Mohawk and pierced everything and then hi five him/her when something good happens for their team.
Google realized early on that they are in the traffic monetization business. They started off in the search business, but quickly realized that while continuously improving search was important, continuously improving search and page view monetization was more important.
Even Microsoft Started from Nothing
It was, indeed, Microsoft whose trademark was registered with the New Mexico Secretary of State 30 years ago Sunday. Gates and Allen, as ballsy as any two entrepreneurs ever, came to Albuquerque because Micro Instrumentations & Telemetry Systems here was producing the very first personal computer — and they wrote the software for it.
Here’s a good, quick history of Microsoft from American Heritage.
Quiz Time
This is too easy.
“On November 26, 1976, the Office of the Secretary of State of New Mexico awarded a trademark to a four-man Albuquerque startup headquartered in a two-bedroom apartment.”
What was the company called?
Answer here.
It’s Only Regret If You Regret It
Google $509. You could have had it at $85 (well, maybe) in August 2004.
Apple $88. First mentioned here at around $32 in January of last year.
Shuffle ad. That’s the Prototypes singing.
How Rich Are You This Thanksgiving?
Link via Andrew Tobias.
Stock Options
NewMexiKen knew of course what stock options were and what they’re for, but I remained in the dark about the recent scandal. James Surowiecki has written a brief explanation for The New Yorker. It included this background:
The most common stock options are known as “at the money” options, which let you buy the company’s stock at the price that it had on the day of the grant. They’re valuable only if the stock price rises after you get them. The companies involved in the recent scandal were backdating options to a time when the stock price was lower, making them immediately lucrative. As it happens, companies are perfectly free to issue options priced below the current market: those are called “in the money” options, and they’re worth something right when they’re issued. (If you’re given an option with a strike price of ten dollars when today’s stock price is fifteen dollars, each option can yield an immediate profit of five dollars.) But there’s a rule that companies have to follow when they issue “in the money” options: they have to disclose it in their financial statements.
The backdating companies broke this rule: they reported how many options they were issuing, but conveniently omitted the fact that they had been backdated. In Washington, people say that it’s not the crime that gets you—it’s the coverup. In the case of backdating, the only crime was the coverup.
There’s more detail, including this: “[T]he scandal has metastasized, engulfing more than a hundred companies, sparking criminal indictments, and forcing the departure of high-profile executives.”
Black Tuesday of 1929
Today is the anniversary of Black Tuesday, the stock market crash in 1929 that signaled the beginning of the worst economic collapse in the history of the modern industrial world. Few people saw it coming. The stock market had been booming throughout the 1920s. Brokerage houses had been springing up all over the country, to take advantage of everyone’s interest in investment. There were stories about barbers and messenger boys who’d gotten rich off of overheard stock tips. Americans who ordinarily couldn’t afford to invest their money were taking out loans to buy stock so they wouldn’t miss out.
The stock market didn’t do so well in September of 1929, but nobody really noticed anything was wrong until October 23, when 2.6 million shares were sold in the closing hour of trading. It looked as though the selling would continue on Thursday, October 24, but a group of the most influential American bankers in the country pooled their money and began to buy up the declining stocks, supporting the market. By the end of that day it seemed like everything would be all right.
But on this day in 1929, the bottom fell out of the market. Three million shares were sold in the first half-hour. Stock prices fell so fast that by the end of the day there were shares in many companies that no one would buy at any price. The stocks had lost their entire value.
The front-page story in The New York Times on this day read, “Wall Street was a street of vanished hopes, of curiously silent apprehension and of a sort of paralyzed hypnosis. … Men and women crowded the brokerage offices, even those who have been long since wiped out, and followed the figures on the tape. Little groups gathered here and there to discuss the fall in prices in hushed and awed tones.”
It was the most disastrous trading day in the stock market’s history. The stock market lost $30 billion dollars, more than a third of its value, in the next two weeks.
Mighta Shoulda Woulda
If you bought $10,000 worth of Apple stock when I suggested it here (January 2005), it would be worth over $25,000 today.
If you bought $10,000 worth of Google stock when it became available (August 2004), it would be worth over $55,000 today.
Just sayin’.