I made a comment on Facebook yesterday…..
by Tom on May 5, 2009
in Market Musings, banks
about being frustrated with unrealistic market expectations. I thought I’d take a minute and explain what I meant a bit more:
- I feel that the media and the government are overly simplifying the Chrysler bankruptcy and downplaying what it’s going to mean to the overall economy.
- I’ve talked to 5 people in the last 5 business days who either have overly optimistic views on what their house is worth or expect that their house will sell within 30 days even though the average marketing time is, I’m guestimating over 180 days.
- And then there’s the banking system. I’m not going to say much about it other than to hand the “reigns” over to Dr. Roubini who is much more eloquent and more knowledgeable than I could claim to be.
Are things calmer than they were 6 months ago? Yes they are. But there are still a lot of issues brewing and a lot more challenges underneath the surface.
Does that mean that I’m “anti real estate?” Absolutely not. I think that this is a market that calls for calm reason and analytical calculations. It’s not a time for emotions to override the details of what the market is saying.
Now there’s a certain reader out there (you know who you are, Jeff) who is going to accuse me of going all “Michigan” on him. He’s going to say that I’m justifiably jaded due to living in an auto industry state that’s been in a recession since before the year on the calendar started with a “2.” He might be a little bit right but if you look at what I’m saying above, it’s a call, not for negativity, but a call for reason, rational thinking and crunching numbers.
Now read what Dr. Roubini says about the banking system, take a deep breath and we’ll continue on…..
Thanks for listening!
Tom Vanderwell
We Can’t Subsidize the Banks Forever – WSJ.com
The results of the government’s stress tests on banks, to be released in a few days, will not mark the beginning of the end of the financial crisis. If we are to believe the leaks, the results will show that there might be a few problems at some of the regional banks and Citigroup and Bank of America may need some more capital if things get worse. But the overall message is that the sector is in pretty good shape.
This would be good news if it were credible.
Tom,
Certain parts of the rest of the country are experiencing what we have been going through here in Michigan. Phoenix comes to mind. Their market is off 50% from peak, while ours is down 40% or so. Few others in the country have any idea of the pain we feel here in Michigan. It’s different here in the SE corner of the state, where the auto industry (once) dominated. Over on the west side of the state, you’ve felt it, but not nearly as bad as over here. Yeah, I know, the rest of the state looks at SE Michigan as an entirely different state, and perhaps that’s good.
As far as readers outside of Michigan, they’ve got their own problems to address. You wrote about that once before, as I recall. I wouldn’t trade my problems for theirs, as I’ve got enough pet Alligators already. But suffice it to say that few others around the country give a rat’s behind about the auto industry and the effect the Chrysler and GM troubles will have on us in Michigan. Frankly, I can’t blame them. Their own pet Alligators are biting them. But for anyone outside of the state of Michigan to pontificate on “Michigan’s problem,” we’ll keep mum when (not if) their state experiences what we’ve got going on here. And there won’t be any crocodile (or Alligator) tears flowing in Michigan.
Thanks Tom! It’s great to see someone who is on the same page. I am the eternal optimist, but I’m also a realist!