The Carlyle Group has retained Goldman Sachs to find buyers for defense and aviation portfolio company Arinc, according to Bloomberg. The deal could be worth upwards of $1 billion, with private equity firms expected to express interest.
The latest report from First American CoreLogic shows that 11.3 million properties with mortgages are now in a negative equity position. If we add in those “near” negative equity we find that roughly 30 percent of all homes with a mortgage balance are underwater. For California, that number is higher with 35 percent of homes […]
a
The latest report from First American CoreLogic shows that 11.3 million properties with mortgages are now in a negative equity position. If we add in those “near” negative equity we find that roughly 30 percent of all homes with a mortgage balance are underwater. For California, that number is higher with 35 percent of homes with a mortgage being placed in the negative equity camp. If we ran the numbers for Alt-A and option ARM loans I wouldn’t be surprised to see that number above 70 percent. The market is clearly still in deep distress. As I have stated from the start, we will have no real recovery until job growth enters the picture. This is such an obvious statement but the banking and real estate industry seemed fixated on housing as the panacea to a full economic recovery. Housing and the banking industry led us into this mess to begin with.
I took a look at data from the Employment Development Department (EDD) of California and last year was another record year for California in terms of unemployment claims paid out:
“(EDD) A record high 1.4 million Californians were certifying for UI benefits in November 2009, according to the most recent information available. In all of 2009, EDD paid $20.2 billion in UI benefits that not only helped sustain families during this difficult time, but also helped support local communities struggling to survive the economic pressures.
The prior record of UI benefits paid in a single year was set not too long ago in 2008, when the EDD paid out $8.1 billion in UI benefits to out of work Californians.
That’s a 149 percent increase in the total UI dollars pumped into the State’s economy in 2009 at a rate of about $80 million a day.
The $20.2 billion paid in benefits in 2009 translates into an economic impact of about $32 billion dollars when you look at how UI dollars spent on basic necessities leads to further spending in the general economy. The U.S. Department of Labor estimates the economic multiplier is $1.60 for every dollar paid out in UI benefits.”
Did you get that? In 2008, an already bad year $8.1 billion in UI benefits were paid out. Last year, that number went up to $20.2 billion and we are still near the peak unemployment rate of 12.4 percent:
Source: BLS
I’ve had this conversation with a few colleagues in the real estate industry. Whenever they mention that California real estate is at a bottom I always ask them what industry is going to make up for the million and more jobs lost. They don’t have an answer. Heck, in the 1990s it was all about the tech sector so that was supposedly going to give every Californian with basic HTML coding abilities and a Geocities account a $60,000 a year job with no college degree. When that bubble burst, it then was every Californian was going to work for the real estate industry making $100,000 simply by popping on a suit or a skirt and pushing mortgages or property in the mania of the century. That bubble burst. So what gig is next? Can we at least get some jobs going before we start jumping on another real estate price bandwagon?
One major flaw with the current thinking in the housing market is assuming mortgage rates are somehow going to stay low forever:
Examine the above chart very carefully and enjoy that sub-5 percent rate because that is not going to last. We are at the lower bound. Even if we revert to historical averages of 9 percent, that will absolutely tank the California housing market. Keep in mind that a large part of the above is because of the Federal Reserve buying up $1.25 billion in agency mortgage backed securities debt. That game is quickly ending and this in itself has probably shaved off 100 to 200 basis points. In other words, mortgages are going to get more expensive.
But let us show this massive disconnection with another on the ground example in Pasadena. We’ll even pick a prime zip code in the area. Today we salute you Pasadena with our Real Homes of Genius Award.
Pasadena Dislocation
I decided to pull data on 91105 zip code in Pasadena. A middle class two income area where the median home price is now $657,000 (down 25 percent from last year). So certainly this area has seen a correction but is the correcting over? A good way to measure market metrics is looking at lease rates and home prices for the immediate area. First, let us look at our home for sale:
The above home is listed as a short sale which now seems to be gaining further momentum thanks to programs like HAFA. The home is a 3 bedroom and 2 baths home and is listed at 1,978 square feet. It has been on the market for over 40 days. Let us look at previous sales history:
Last Sale Info:
Sold 08/17/2006: $1,000,000
Not too long ago this was a million dollar home and the current list price is $949,000. So I went ahead and tried to search for a rental in the immediate area. These are hard to find but are extremely illuminating in giving us a sense of whether current prices are too high or low. So I found this home on the next street over:
The rental is a 2 bedrooms and 2 baths home listed at 1,504 square feet. The current asking rent is $3,500. Now let us run some numbers. We’ll assume that you are putting 20 percent down for the home purchase:
20 percent down payment: $189,800
The latest tax data shows the home running $11,381 in taxes in 2009. So we’ll assume the monthly carrying costs:
$4,310 (PI) + $948 (T) + $395 (I) = $5,653 for each monthly payment
I’m assuming for the insurance that you are actually vigilant enough to get earthquake insurance in California (many homeowners don’t even have this). So this is a significant difference. But let us assume you buy this home. And rates increase modestly to 7.5 percent in five years and you plan to sell. What is the future buyer looking at?
$5,308 (PI) + $948 (T) + $395 (I) = $6,651 for each monthly payment
With a modest interest rate increase, the payment jumps up $1,000 to $6,651. This is why we have a lot of correcting to do. Rates are artificially low and many are assuming the current environment is going to stay this way for a long time. It will not. I’ve mapped out these properties just in case you think they are miles apart:
Are these homes exactly the same? Of course not. But this is as close as you are going to get to seeing the insanity in the mid-tier of the market. Now here is the reason ignoring jobs and subsequently income data will lead to additional corrections. Let us assume you gross $10,000 a month in Pasadena and want to buy this home. Can you?
Not even close. Your monthly payment is up to $5,653 and you are netting $6,731. Sure you can up your withholdings but that won’t change the numbers drastically. Your housing payment remains fixed.
When I see examples like this it tells me we still have another phase to this housing story. Today we salute you Pasadena with our Real Homes of Genius Award.
Did You Enjoy The Post? Subscribe to Dr. Housing Bubble’s Blog to get updated housing commentary, analysis, and information.
.gif)
a
Cisco as part of a self-proclaimed "revolutionary" event today launched a new router system meant for the very highest levels of Internet and cellular carriers. The CRS-3 is roughly three times faster than the previous Cisco best and theoretically provides as much as 322 terabits per second (Tbps) when it's attached to a suitable network. With that much bandwidth, a carrier could serve 1 billion videos at the same time or serve the entire population of San Francisco with 1Gbps Internet access....
Cisco as part of a self-proclaimed "revolutionary" event today launched a new router system meant for the very highest levels of Internet and cellular carriers. The CRS-3 is roughly three times faster than the previous Cisco best and theoretically provides as much as 322 terabits per second (Tbps) when it's attached to a suitable network. With that much bandwidth, a carrier could serve 1 billion videos at the same time or serve the entire population of San Francisco with 1Gbps Internet access....
The WSJ delves into the trials and tribulations of trying to build a gigabit fiber network out to even the 50,000 homes at the low ends of Google's goals for their trial network. It could cost up to $1 billion, and Google's already mentioning to people it's asking for help, like Case Western Reserve University's Lev Gonick, whose building gigabit fiber to 104 homes, that "we have a lot to learn." Oh boy, sign me up. (Actually, do sign me up.) [WSJ]
Filed under: Bad News, Economic Data
February was an expensive month for the insurance industry, with a multibillion dollar price tag. It’s easy to focus on the magnitude 8.8 earthquake in Chile, but there were other disasters, too. The Haiti earthquake added to the economic and insured losses and others that may not have claimed many headlines but did tick the cost to insurers and reinsurers higher. A new report by Aon Benfield (AON) runs through the damage caused in February, showing that the shortest month still found a way to be expensive.
The quake in Chile is estimated to have caused $2 billion to $8 billion in insured losses, to which you need to add $2.1 billion for Windstorm Xynthia, not to mention many eight-figure insured losses that will chip away at the industry’s coffers. Haiti wasn’t all that pricey, Aon says, because “insurance penetration is far greater than in Haiti.”
Continue reading 2010 Catastrophe Losses Already Half Last Year’s Total
2010 Catastrophe Losses Already Half Last Year’s Total originally appeared on BloggingStocks on Mon, 08 Mar 2010 14:30:00 EST. Please see our terms for use of feeds.
Read | Permalink | Email this | Comments
Tumblr, one of the simplest blogging platforms around, is doing really well. Situated between Wordpress, which requires a bit more effort to create and organize content, and Twitter, which requires almost no effort but also doesn’t offer many features, Tumblr is the perfect tool for users w...
Continue reading at Mashable »
Join the conversation about this story »
comScore has just released its US online video rankings for January 2010, and the results aren’t positive. Overall views dropped by around 2.5%, with 32.4 billion in January vs. 33.2 billion in December. And Hulu, which celebrated crossing the 1 billion view milestone for the first time in December, dipped back down to 903 milion views. The drop can’t be blamed entirely on seasonality, either, — January 2009’s overall video views were up 4% over December 2008.
Rankingwise, there weren’t many changes. Google Sites (which is essentially YouTube) is still the reigning champion, with Hulu and Microsoft Sites still rounding out the top three. Fox Interactive Media fell from 4th to 6th place as its views dropped from 550 million December to 293 million in January.
By Paul Kiel, ProPublica.
The Treasury Department received $1.5 billion in a sale last week of Bank of America's common stock warrants. It also invested another $15.3 billion into Fannie Mae. After shrinking for several months, taxpayer exposure to the bailout jumped in February, due to Fannie Mae’s receiving another $15.3 billion.
The toll stands at $315.3 billion. That number accounts for not only the bailout money still outstanding, but also the revenue that the government has collected from recipients. Included in that revenue is $1.5 billion the Treasury Department received last week for its auction of Bank of America’s common stock warrants. Altogether, the government made a profit of about $4.6 billion through its investment in Bank of America.
Check out our frequently updated Bailout Scorecard for the complete rundown. Our comprehensive list of bailout recipients accounts both for the TARP and the separate bailout of Fannie Mae and Freddie Mac. All told, the government has lent, invested or spent about $515 billion in the bailout so far.
The Treasury has pumped a total of $75.2 billion into Fannie since the government takeover in September 2008. Together with money invested in Freddie, the total comes to $125.9 billion. Freddie has continued to take losses, but hasn’t required more government money since last May.
According to its proposed budget for 2011 (PDF) the administration expects to invest a total of $188 billion in the two companies – meaning that about $62.1 billion in bailouts are still to come. Some experts have criticized that estimate as being too low.
Meanwhile, the administration has punted on the problem of what to do with the two companies. Last year, officials said that they’d offer a broad plan this February. That plan never came. Testifying before Congress late last month, Treasury Secretary Tim Geithner said Treasury would offer some "principles and broad objectives" sometime this year, with the goal of offering a concrete proposal next year.
So expect the current state of affairs to continue for at least another year. The companies are in government conservatorship, which means that while they’re under the close watch of the Federal Housing Finance Agency, they’re still nominally separate from the government. The government keeps the companies solvent; in return, the companies say they’ve made stabilizing the housing market their priority.
ProPublica is America's largest investigative newsroom. Sign up for our daily email here.
As Governor Paterson returns to Albany today to headline a symposium about a revived penny-per-ounce soda tax, he's picked up some more support from Mayor Bloomberg, who's always up for taxing vice. "In these tough economic times, easy fixes to our problems are hard to come by," said Bloomberg during his radio address yesterday. "But the soda tax is a fix that just makes sense. It would save lives. It would cut rising health care costs. And it would keep thousands of teachers and nurses where they belong: in the classrooms and clinics." Bloomberg had supported a tax on sugary soft drinks last year, but backed away after an "enormous outcry." Now, it seems, the time has come.
"What I think you’re seeing is really a momentum shift in favor of doing it," Dr. Richard F. Daines, the state health commissioner, tells the Times. According to Daines, the new tax "differs from the one proposed last year in that it would be levied directly on soda producers and the estimated $1 billion in annual revenue would be dedicated to the health care budget, rather than to the general fund." Bloomberg says tax revenue would also benefit education. According to experts, a 10 percent soda tax would cut consumption by 8 percent and make $14.9 billion for the state in its first year.
The future of Disney merchandising will hit a lot more demographics than the mostly kid-oriented stuff of today, if Disney has any say over it. Disney has already angered theater chains by shortening the theatrical release window on its new movie-like product Alice in Wonderland, cutting into theaters' profit models in order to bump up the DVD release date. But CNBC notes that it's also launching the "most wide-ranging array of consumer products ever" for a Disney flick--and that includes thousand dollar necklaces, nail polish, and dresses that cost as much as $600.
Disney's consumer products chief Andy Mooney told CNBC that they don't expect to actually sell much of the high end stuff, but that raw sales aren't the point:
Disney's consumer products chief Andy Mooney says it's really about creating a "halo" for the brand.
The media giant wants fashionable adults to think Disney and its brands are cool, not cheap or tacky. Inclusion in a fashion magazine and fashion-forward looks does just that.
[...]
Mooney tells us that he expects 'Alice' to yield a consumer products line that will last for a decade. How much is it worth this year? He wouldn't say, other than it's somewhere between $100 million and $1 billion. The better the movie does, the better these products will sell.
Google's effort to turn YouTube into a money-making machine may finally be starting to come to fruition. While the company isn't releasing any official numbers, the latest reports from analysts paint a very optimistic picture for the video site in terms of revenue. A Citigroup analyst estimates that YouTube will bring in $945 million in revenu... (read more)
LONDON/FRANKFURT (Reuters) - Germany’s biggest cable television firm Kabel Deutschland on Monday published a prospectus for its 700 million euros ($958 million) initial public offering, making a trade sale very unlikely.
A series of failed IPOs in the last three months have lowered expectations of strong investor demand for public equity sales.
Private equity players have speculated, even after KDG announced its IPO plan on Feb. 23, that the deal could turn into a last-minute trade sale with the planned flotation acting as a smokescreen.
When German peer Unitymedia was sold to Liberty Global (LBTYA.O) in November the company’s planned IPO had not yet reached the stage of a published prospectus.
KDG has now announced, via a prospectus, that existing shareholders including private equity firm Providence aim to raise 700 million euros by offering up to 45 million secondary shares. A further 6.75 million shares would be offered in a potential overallotment offering - otherwise known as a “greenshoe option”.
KDG shares will begin trading on the Frankfurt Stock Exchange on Mar. 19. (Reporting by Daisy Ku; Editing by Jon Loades-Carter)
YouTube is on course to generate more than $1.1 billion in revenue by 2011, with Google sharing $397 million of that with content owners – including record labels.
At least, that’s the prediction from Citigroup analyst Mark Mahaney, who’s been crunching numbers based on the revenue-to-page ad revenues at MySpace, applying that ratio to YouTube based on its comScore traffic numbers.
Mahaney thinks YouTube generated $727 million of gross revenues last year, sharing $254 million of it with content owners. The sharing figures are based on 50% of YouTube’s revenue coming from videos where it has a revenue-sharing deal with a partner, who get 70% of those revenues.
We could add an extra layer – although this is about as shonky maths as you get. Recently, analytics firm Sysomos claimed that music videos account for 30.7% of all views on YouTube. If music took a 30.7% share of the $254 million distributed to content owners last year, that’d be just under $78 million…
Most webmasters and Internet users agree that Internet Explorer 8 marked a huge step in compatibility, security and performance over previous versions of Internet Explorer. The web browser is still lacking behind, especially in the performance field but managed to catch up or even surpass the other popular web browsers in the security field.
The Web Browser Comparative Test, a test that is conducted in every quarter of the year, came to the conclusion that Microsoft’s Internet Explorer 8 protects the best from socially engineered malware. Socially engineered malware is defined by the testers as a webpage link that leads directly to a malicious payload.
All web browsers in the test, except the Opera browser, managed to increase their effectiveness at blocking malware in the browser. Microsoft’s Internet Explorer scored best by successfully stopping 85% of all threats in the web browser followed by Firefox and Safari with 29%, Google Chrome with 17% and Opera with less than 1%.
Microsoft attributes the security increase in Internet Explorer 8 to a variety of security features including the SmartScreen Filter which is blocking more than 3 million urls per day.
The SmartScreen Filter uses a special URL Reputation Service (URS) with data centers hosted around the world and has evaluated over 250 billion URLs to help keep Internet Explorer 8 users safe! Every day, the SmartScreen Filter URS processes about 4.1 billion URLs looking for malicious websites and files; and since it was first introduced in Internet Explorer 7, the URS has processed over 5.7 trillion requests!
There have been reports in the past that Microsoft sponsored the studies conducted by NSS Labs. According to a post dating back to last year the company approached all browser developers and only Microsoft Research agreed to the sponsoring so that the study could be created.
The study can be downloaded in pdf format from the NSS Labs website.
Last year the House passed legislation to block Seneca Indians from selling cigarettes through the mail, a business that, combined with their gambling empire, nets them $1 billion annually. But now, thanks to aggressive political practices, the western New York Nation may be back in tobacco. The Times reports their success is due to a “campaign of back-room lobbying and public political threats” but a Seneca spokesman says they're playing by the rules. “Isn’t that the way things go in the American system?” asked Richard Nephew, co-chairman of the Seneca Nation’s foreign relations committee. “It is something new for us to actively get involved in the American political process,” he said. “But we are trying to learn what works in America, and I guess making political contributions is something that works.”
It looks like these mobile applications aren’t a fad, as a new report from research2guidance said the global app market could generate $15.65 billion in revenue in four years.
This is great growth from the $1.94 billion apps generated in 2009 and the customer base for these apps is expected to grow from 100 million in 2009 to 970 million by 2013. We all know apps have been around for a long time but you have to give Apple (NSDQ: AAPL) credit for kicking off this surge of interest with its App Store. Now, every major player has its own centralized app store and consumers are demanding these programs on their devices. While we’re seeing extreme success stories like Plants vs. Zombies, the money in apps is not quite enough yet for a large, thriving ecosystem. It looks like we’re not too far away from that though, so be prepared for some really cool stuff to come to your handsets.
[Via TechCrunch]
Related News from IntoMobile:
Big In Japan, which has built an impressive lead in mobile barcode reading, today announced the acquisition of Snappr, a pioneer in the space but nonetheless one that has failed to gain much traction and floundered late last year. It’s a move that could go a long way toward finally moving the needle for quick response (QR) codes in the U.S.
Big In Japan already boasts a huge hit with its ShopSavvy app, which enables users to scan traditional UPC barcodes to receive product and pricing information from online and local retailers. ShopSavvy was an early hit on Android before coming to the iPhone in November; more than 1 million Americans use ShopSavvy to scan upwards of 1 billion barcodes each day, according to the developer.
A San Francisco-based startup, Snappr built its business on technology that reads QR codes — those odd-looking squares that can store far more information than traditional barcodes. QR codes have gained substantial traction among mobile users in some overseas markets as an interactive advertising tool, among other things, but have yet to gain much momentum in the U.S. Google is hoping to change that by making QR codes the foundation of its Favorite Places, a Yelp-type offering that distributes unique codes to businesses for consumers to scan.
Big In Japan said it will integrate Snappr’s technology into ShopSavvy, enabling the app to read both UPC codes and QR codes. The company hopes to attract the attention not just of consumers, but also of brands, which can use QR codes in traditional media to create interactive mobile marketing campaigns. And while terms of the deal weren’t disclosed, Snappr’s status as a member of CrunchBase’s deadpool indicates the price tag couldn’t have been very high.
Related content from GigaOM Pro (sub req’d):
Why Google’s “Favorite Places” Will Push QR Codes Into the Mainstream
Image courtesy Flickr user CoCreatr.
TechCrunch found an interesting study by analyst firm research2guidance. The study claims that the mobile application market place could grow from a $1.94 billion business in 2009 to a $15.65 billion business in 2013; a growth rate of around 807%. The study also predicts the smartphone user base to grow from 100 million to 1 billion in that same time frame. Numbers like these should certainly get the attention of major corporations and could be the motivating factor in the proliferation of corporate mobile applications. Currently, only 10% of the Fortune 2000 are engaging their customer base with a mobile application. This got us wondering… what corporate mobile app do you use frequently? I personally use the Bank of America and New York Times applications almost daily.
TechCrunch found an interesting study by analyst firm research2guidance. The study claims that the mobile application market place could grow from a $1.94 billion business in 2009 to a $15.65 billion business in 2013; a growth rate of around 807%. The study also predicts the smartphone user base to grow from 100 million to 1 billion in that same time frame. Numbers like these should certainly get the attention of major corporations and could be the motivating factor in the proliferation of corporate mobile applications. Currently, only 10% of the Fortune 2000 are engaging their customer base with a mobile application. This got us wondering… what corporate mobile app do you use frequently? I personally use the Bank of America and New York Times applications almost daily.
