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The Great REIT Unravelling Begins? Simon Property Group Defaults on Loan

It's on Reuters. SPG as partner in default for this mall. It also contains other discussed comments that sometimes it's best for a REIT to walk away from a property that is going to underperform. They have also refinanced other malls at interest rates that are OK for a REIT in current conditions (under 8%). Add to that the completed stock offering, and they are in better shape than most.

www.reuters.com/articl...

Personally, I still don't like the sector. While the new offering raised cash, it is dilutive. Add that to recent change to pay 90% of dividends in stock instead of cash. SPG will hold up better in this storm than others, but we still don't know how long or strong this downturn will be. Like buying Wynn as best casino. It might be, but the business stinks, so you just lose smaller amounts of capital.

I'd stay with tech, healthcare, and energy, along with some pure defensive stocks. And a little gold. Too much risk elsewhere.

Thursday Outlook: Commodities, Global Markets

A+ today. Not only great charts and a few running jokes (we need them), but poetry in the prelude. Just keep on pressing that altruistic quest, even if it doesn't quite get you to the Cayman Islands . You've earned the Don Quixote seal of approval. Da Boyz are the modern day wind mills that we tilt against at our own pearl. Let's all hope for a better outcome.

New York Real Estate: A Shoe Still Dropping?

Slightly different, but what about SL Green Realty Corp (SLG), a commercial and retail real estate REIT in NY? $13.42, Cap $ 765 Million

Bad Now? It Was a Lot Worse in the Early '80s

Sickofthehype is right, and I hope this is a joke. 4 charts and 3 focus on inflation. Of course, a deflationary crisis is going to "look better" on a chart than an inflationary enviroment.

The employment chart is hopelessly out of date. Both Reagan and Clinton changed the defintion and calculation. Using old benchmarks, our current unemployment rate might be upwards of 13%.

Real wages have fallen & real savings are down since 1982, and we are just starting our own lost decade. 1972 - 1982 was bad. 2002 to 2007 was a mirage with the housing bubble. No real growth.

Market collapse and all consumer implications from October 2007 to ??? will be worse when everything is finally unleveraged.

This Week, Friday Could Be Lucky

Gasoline / Oil chart with widening crackspread is criminal. Refinaries are reducing capacity to increase their margins.

Energy is also a reduced factor in CPI (account for core / non-core numbers).

Higher energy will not stop deflation. In fact, the opposite. As the consumer continues to contract spending; every extra dollar spent on energy means one less dollar available for housing, cars, consumer products, or even health care. Less overall spending and demand = more inventory = more price slashing = more deflation.

A St. Louis Fed President today also echoed deflation as currently the number one problem.

www.marketwatch.com/ne...

$10 an Hour Pay Gap = Billions of Extra Dollars a Year

"you can't beat the Southern states." Well can't argue with you there. How do elect politicians that make policy that drag all wages down and be proud?

The worst un-American part is that to get Toyota, Honda, BMW, and other companies to build in the south, not only were ensured low non-union wayes, but THE SENATORS GAVE THESE FOREIGN AUTO COMPANIES U.S. TAXPAYER DOLLARS TO SUBSIDIZE BUILDING, CAPITAL AND OTHER RELOCATION COSTS BUILD HERE. What hypocrites, no subsidies for US makers, but I have to pay FOREIGN companies to come in and under cut American companies. Not just hypocrites, but treasionous putting other countries in front of our own.

As far as wages, don't forget to compare top management wages between U.S. companies and foreign ones. If you outraged at the disadvantage of high wages, remember the top CEOs in the US make 17 times more than CEOs in Eurpore on average and 22 times more than Japan's CEOs on average. Little more than the $10 difference among workers. Where's the screams for their immediate wage concessions for management, where the decisions that led to our situation were made?

Boeing Losers - Cramer's Mad Money (9/25/08)

BA will be fine.

How's that WB working for him? He should be writing checks to his viewers now.

SEC Will Ban Short Selling: America's Leaders Break Down

How is this any different than Nixon's wage and price controls in the 1970's that led to crushing inflation? How can you have a healthy market if only one side is allowed to trade? I can't even think of a good example that explains how bad this is. Basically, the government is taking over the free market (if it truly exists) and telling every business they can't lower prices to attract buyers. This is going to create yet another artificial bubble that is going to inflate very quickly due to short interest, but when the rule lifted, likely lead to crash of epic size.

Each solution the Treasury and Fed have come up with this year has been worse than the last. Lowering rates, printing money, creating inflation - and still the markets are locked as they were months ago. Does anyone think this will correct the underlying problems of poorly priced assets and bad debt? No, this is playing with the sticker price only.

Bank of America / Merrill: Shotgun Marriage

I don't get it. 2 big reasons.

1 - Didn't they learn about buying distressed assets after the Countrywide fiasco. Their open bid was at $18 a share for about 25% of the company. Months later, the in for a penny, in for pound theory takes over and they have to buy the rest of the company for about $5 a share or lose the original investment to bankruptcy. Bottom line, they didn't know the exposure. NEVER buy anything if you don't understand the balance sheet and risks hidden within.

2 - I understand there is little overlap in the businesses, so BoA has largest consumer deposit in the U.S., picked up the largest U.S. mortgage company earlier this year, and this round out the bank with one of the largest investment banks. However, this one stop shop for all things has been tried and has/is failing. Does CITIGROUP come to mind??? Why would they want to round out their bank after that model?

Only thing that makes sense is the Federal Reserve forced it, after BoA wouldn't be bullied into buying Lehman. All potential buyers wanted a Fed backstop with Lehman and the Fed said no. But that doesn't mean they didn't get some other consessions from the Fed in buying Merrill. Wonder what BoA's value does this week if Merrill has to announce an update of their balance sheet and there are more losses than perviously thought.

The $29 a share buyout price is pegged to current BoA value which is almost $34 a share. BoA 52 week low was $18.44 and if this merger is a drag like Countrywide, then BoA will certainly drop this week. 10% to 20% wouldn't surprise me. $28.50 for BoA wouldn't surprise me.

Options Trader: Tuesday Outlook

Phil enjoy your columns and normally agree you. There two issues with the MER deal that I think you should reconsider.

"You will hear CNBC et al scream "20 cents on the dollar" all day long."

About 20 minutes after the market open, Faber was still reading the deal and found that the purchase is being funded 75% by MER. So, the real purchase price is not $6.7 Billion, unless the fund buyer can eventually turn a profit. Otherwise, there is basically a chargeback to MER. At 75% funding, worst case is they could only be getting 5 cents on the dollar. So some of the talking heads are using that number now. Only the bulls are sticking to the 20 cents as a positive spin.

Second, this isn't the final write-down. This represented $11.1 Billion of CDOs on the books from their last report. Even after last night's purge, they still have $8.8 Billion left, and we know for certain based on the last transaction that it is not worth that much.

Who's to Blame for IndyMac's Failure?

Unless your head was in the sand, everyone knew Indymac was going down. They made their bed years ago by issuing alt-a (liar) loans in California, the biggest real estate bubble in the country. The stock has been a slow motion train wreak for 15 months. When Schumer spoke, the stock was already down to 80 cents. And Schumer caused it. Right.

Managment is first to blame. They setup this house of cards.

However, Schumer (who I agree is a world class blow hard), is 100% correct that the regulators should have put an end to the shady business practices long ago. If I fault Schumer for anything, it's why did he wait this long to speak out?

As for John Reich, just look at his resume. While not a political hack and has plenty of banking experience (not a "hellava job" Brownie, from FEMA guy), he is a Bush appointee. His career was built in the Republican party, having spent 12 years on the staff of Florida Senator Connie Mack and worked his way up to basically chief of staff for his office. He is trying to cover his own a** and defending the boss that appointed his.

This administration believes in unregulated capitalism and the policy from the top down is to let businesses govern themselves. So agencies have a hands off policy. When businesses are not regulated - those who are reckless, unknowledgeable, or just greedy; will push to get away with whatever they can.

Options Trader: Tuesday Outlook

"7 cents a gallon would bankrupt the county?? Are you that stupid??"

No he's not. It's called sarcasm. In case you don't get that, he also posted a link to the group that did argue that point - The Heritage Foundation. They just might be stupid enough to believe it. Even more likely, is they are just doing their usual, pimping for big business under the guise of protecting conservative ideals (meaning BIG PROFITS FOR BIG BUSINESS, uhhh I mean individual liberty and freedom, yada, yada).

Perini Showing Collateral Damage of Tightening Credit and Slowing Economy

Credit markets are on lockdown. The developer, with Merrill Lynch, Hyatt and other went looking for financing and nothing. Deutsche Bank just annouced they are foreclosing according to 3/15 online Wall Street Journal article. This was down $10, not percent, on just the default notice and with the bank promising payment on completed work. Now how far does it drop now that financing fell through and foreclosure is filed? Low was $26, but the stock has recovered and in fact hit $40 last week.