Friday, July 14, 2006

New Jersey Choking

From the Star Ledger:

N.J. economy is choking, say two experts
BY BETH FITZGERALD

Two Rutgers University economists plan to issue a report today stating New Jersey has entered an alarming economic decline whose severity is masked by the very affluence that is slowly slipping away.

"New Jersey now faces its most uncertain economic future since the Great Depression," James Hughes and Joseph Seneca write in their 20-page report.
...
With New Jersey's work force 4million strong and growing, and with unemployment relatively low, Hughes said he isn't predicting a recurrence of the Depression's bread-line nightmare. The threat, he said, lurks in the quality of the jobs that are keeping New Jerseyans busy, and the impact of those jobs on long-term prosperity for the state.

Between 2000 and 2005, New Jersey's economy created thousands of relatively low-paying service jobs and government jobs, while private-sector jobs declined. New Jersey also lost many high-paid technology, knowledge and manufacturing jobs during that period, while such jobs were growing in North Carolina, Virginia, Maryland and Florida.

This is disturbing, Hughes said, because New Jersey is an expensive place to live and work and needs high-paid workers to buy its expensive homes and pay the taxes that finance its rich diet of government services.

"It's not that we are entering another Depression -- the problem is that the future is just as uncertain as it was in the 1930s," Hughes said.

80 Comments:

Blogger grim said...

For those who don't believe companies are leaving NJ..

From the Palm Beach Post:

Breath fresheners to kiss N.J. goodbye, relocate to Boynton

The company that has sold a billion bottles of breath drops is moving to Boynton Beach.

Health-Tech Inc., maker of the Sweet Breath brand, will brew up and package its breath drops, strips and mists here.

brings nine employees from its former headquarters in Totowa, N.J., and plans to hire 50 local workers at wages of $8 to $12 an hour, founder and owner Jeff Hirschman said Thursday.

The 30-year-old company, whose sales are $10 million a year, announced its move at a meeting of the Business Development Board of Palm Beach County.
...
He has leased nearly 30,000 square feet at Quantum Park in Boynton Beach and has found business costs here reasonable compared with those in his former home.

"Space is very expensive in New Jersey," he said.
...
As for soaring home prices, Hirschman said Palm Beach County still compares favorably with northern New Jersey.

The nine employees who followed the company here have been pleased by the choices they see in the housing market, said David Hirschman, vice president and son of the founder.

"They're thrilled with what they've been able to afford, especially compared to home prices up north," David Hirschman said.

7/14/2006 05:01:00 AM  
Blogger grim said...

Centex appears to have lost their collective minds with this marketing blunder..

http://www.askmadamezalora.com/?divisionID=1343

grim

7/14/2006 05:45:00 AM  
Blogger Metroplexual said...

Enterprise Florida kicks butt. They are the best econ developers in the country from what I have seen. They practically move you into your new place. NJ is severely lacking in this regard.

7/14/2006 06:01:00 AM  
Anonymous Anonymous said...

NJ is just not business friendly.
Has not been for years.

New Business has a very hard time
considering NJ. Rarely happens.

Taxes to high, quality of living.
Affordable housing,etc.

7/14/2006 06:07:00 AM  
Anonymous Anonymous said...

Isn't Centex a type of plastic explosive? Is that their deal, Grim, if the value of your home declines, they blow it up and you collect on the insurance?

Now THAT sounds like the NJ way.

7/14/2006 06:21:00 AM  
Blogger grim said...

Not to mention they spelled "Guarantee" wrong in the page title..

The Only Builder That Offers The Priceguard Garantee

7/14/2006 06:23:00 AM  
Blogger X-Underwriter said...

Go back 15 or 20 years and NJ was such a technology powerhouse. AT&T, Bell Labs, and Lucent employed half of Morris County. They're all gone and I'm not sure anything has moved in to replace them. I drove by several of the the empty former AT&T buildings last weekend and it made me wonder

7/14/2006 07:01:00 AM  
Anonymous Anonymous said...

This Mills deal is getting ready
to implode.

Xanadu is for sale. The gravedancers are around the project.

7/14/2006 07:29:00 AM  
Blogger grim said...

From Bloomberg:

Riskiest Mortgage Bonds May Underperform, Credit Suisse Says

The riskiest mortgage bonds may underperform the broader market as rising interest rates and a slowing economy make it harder for homeowners with the lowest credit scores to meet debt payments, Credit Suisse said.

Investors demanded 150 basis points more in yield than benchmark rates on average in June to own so-called subprime mortgage bonds, up 10 basis points from the month before, Credit Suisse analysts led by Rod Dubitsky said in a report last week. The spread may widen further as higher borrowing costs lead to more non-payments, the firm said.

Rates on adjustable mortgages are being reset higher because the Federal Reserve has increased its overnight lending rate between banks to a five-year high of 5.25 percent from 1 percent in June 2004. About 85 percent of all mortgages sold in the past two years are floating-rate loans with low introductory rates that reset after two years, according to Citigroup Inc.

``We see an environment of deteriorating credit because of payment shocks,'' said Dubitsky, the top-rated mortgage bond analyst in Institutional Investor magazine's 2005 poll, in an interview this week from his New York office.

The amount of bonds backed by subprime loans has more than doubled since 2001, to a record $476 billion, according to the Bond Market Association, a New York-based trade group of more than 200 securities firms.

Sixty-day delinquencies on adjustable-rate loans issued to the riskiest borrowers in the first half of 2005 rose to 6.61 percent in May from 6.15 percent in April. The comparable figure for so-called subprime mortgages in 2004 was 2 percent, and the rate was 3.84 percent for 2003, Credit Suisse said.
...
About 18 percent of all mortgages issued in the first half of the year were to borrowers considered most likely to default, such as those with high credit-card balances, up from 2.4 percent in 1998, according to the most recent data from the Mortgage Bankers Association. The Washington-based trade group's 2,700 members represent 70 percent of the home-loan business.

7/14/2006 07:54:00 AM  
Blogger grim said...

Citigroup analysts said in a July 7 report that New York subprime adjustable-rate mortgage delinquencies are at their worst levels in eight years, highlighting the danger of lacking geographic diversity in the loans backing the bonds.

Four months after the end of their first year, 5.23 percent of the adjustable-rate subprime mortgages in New York are more than 60 days delinquent, up from 2.78 percent a year ago, said the analysts led by Rahul Parulekar in New York.

7/14/2006 07:54:00 AM  
Anonymous Anonymous said...

Grim,
What was the percentage of these
deals written in NJ?

Subprime has to be a large NJ
market.

7/14/2006 08:03:00 AM  
Blogger delford said...

I have been talking about the decline in NJ jobs for the last few years, and people just laugh. I am Mr. doom and gloom.

I guess the veil of affluence, says it best, the vail of affluence is coveing it up, and that is what makes it more scary. people refuse to see it comong, But I see it, and I hear it,its like the train in the distance, and the rumble is getting louder an louder, ithe train is almost to the station.


Speaking of the veil of affluence, we had a tragedy in Bergen OCunty this week, an idiot killed his two sons, and then himself, in leafy Washington Twp.


Bought that house 5 years ago, after selling his first house also had a house on the shore etc. etc. He was said to be having business problems, and had tried to sell the house on the shore for a year by himself, but with no luck. They finally put it with a broker, a coupl of days before he committed suicide. Reports say he was obssessed with the house, and did not want to sell it.

I wonder how much more of this is out ther, the veil of affluence for whats really a veil of tears.

7/14/2006 08:05:00 AM  
Blogger skep-tic said...

take a look at Detroit. you think that city is ever coming back to prosperity? no way. once an area starts to decline, it feeds on itself. the same thing can happen here.

7/14/2006 08:30:00 AM  
Blogger Richard said...

from the big picture blog. good call and nothing different than what most of us here have been saying.

Housing Leads the Economy Up AND Down

http://bigpicture.typepad.com/comments/2006/06/housing_leads_t.html

7/14/2006 08:30:00 AM  
Anonymous Anonymous said...

Speaking of the veil of affluence, we had a tragedy in Bergen OCunty this week, an idiot killed his two sons, and then himself, in leafy Washington Twp.

That guy was in my Nutley High graduating class.

I read that he was in the payphone business. He HAD to have seen the writing on the wall years ago in that business.

I wonder if the new bankruptcy laws were a contributing factor. There's no earthly reason for killing your kids, though. Because of money? Jeez.

jw

7/14/2006 08:30:00 AM  
Anonymous Anonymous said...

i have a friend who just keeps on going on and on about how home prices will just continue to go up or at least flatten-out... she keeps on saying over and over again that NJ is growing in population and the local economy is good, people want to live here, etc.... i asked her if she realized how much a person could borrow if they made 100K... she had no idea... i said in the old days, the max would be 300K... she has an option-arm... she changed the subject real fast...

7/14/2006 08:37:00 AM  
Blogger grim said...

ignorant complacency

7/14/2006 08:46:00 AM  
Blogger PhantomBuyerNJ said...

There is a perfect storm brewing. The economy as a whole, especially in NJ, has been floating on this real estate bubble. Now that bubble is deflating, and deflating quickly. You add that to higher interest rates due to the fed tying to stem inflation, inflation creaping up despite the feds efforts, falling consumer confidence, and the fact the fed no longer has control over the money supply because China owns most of our national debt, and we've got a major problem on our hands.

Supply side economics is not sustainable in the long term, you'd think we would figure this out after the Regan years. Within the next year, once the real estate bubble pops once and for all, the entire economy, not just Jersey, is in for a quick fall and a hard landing.

Buckle up, because the next year is going to be a bumpy ride.

Great Blog Grimm. My favorite. Keep it up!

7/14/2006 09:12:00 AM  
Anonymous Anonymous said...

What about the lawsuit filed
Did anybody notice the towns
being sued?

7/14/2006 09:14:00 AM  
Blogger delford said...

The Peoples Democratic Republic Of New Jersey.Some of us vote, many do not, but either way it makes no difference, as an activist judicial branch makes all legislation any how.

7/14/2006 09:19:00 AM  
Anonymous Anonymous said...

Within the next year, once the real estate bubble pops once and for all, the entire economy, not just Jersey, is in for a quick fall and a hard landing.

Federal tax revenue is increasing rapidly because of the tax cuts (deficit is also falling) http://powerlineblog.com/archives/revenue%20growth.php
Many (business friendly) states are doing well. It is mainly NJ (and CA) that are in big trouble.

High taxes and activist judges kill the economy. It's that simple.

7/14/2006 09:29:00 AM  
Anonymous Anonymous said...

New Jersey could end up like
Las Vegas, where their are
about 20k homes for sale.

And nobody is buying.

7/14/2006 09:32:00 AM  
Anonymous LeeS said...

All I can say is, working for Citigroup, I know they bought the Lucent campus and have a large base of employees in Warren now. But with the outsourcing trends in major firms, I don't see it lasting, and that goes for pretty much anywhere in the U.S.

Considering that even financial analysts now have to deal with counterparts in India, I don't know how long it can last.

7/14/2006 09:33:00 AM  
Blogger grim said...

As far as I can tell, sexual preference is irrelevant to the economic factors being discussed.

Don't waste a good response with irrelevant BS.

grim

7/14/2006 09:37:00 AM  
Anonymous UnRealtor said...

One word: outsourcing.

Ignoring this phenomenon, or dismissing it as 'simply low-level call center jobs' is a grave mistake.

We're giving away the store and compromising our long term economic leadership to save a few pennies on the short term bottom line.

This will hurt more than NJ, it will hurt the whole US.

People will wake up when its too late...

7/14/2006 09:43:00 AM  
Anonymous Anonymous said...

Roof Collapses at Horton

By Nicholas Yulico
TheStreet.com Staff Reporter
7/14/2006 9:57 AM EDT
Click here for more stories by Nicholas Yulico

D.R. Horton (DHI - commentary - Cramer's Take) fell more than 9% Friday after it reported a drop in third-quarter new-home orders and slashed its full-year earnings forecast.


The largest U.S. homebuilder said that its orders for the quarter ended June 30 fell 4.4% to 14,316 homes from 14,980 a year earlier. The value of the homes sold dropped to $3.8 billion from $4.1 billion.

The company expects to post third-quarter earnings of 93 cents a share, well below analysts' average estimate of $1.30, as compiled by Thomson First Call. The company's forecast includes about 11 cents a share in write-offs related to land option contracts.

"The current home sales environment is characterized by an increase in both existing and new homes available for sale, higher than normal cancellation rates and an increase in the use of sales incentives in many of our markets," said Chairman Donald R. Horton in a statement.

For the full fiscal year, D.R. Horton sees earnings of at least $3.65 a share, compared with its earlier forecast of $5.25 to $5.35. Analysts target full-year earnings of $4.92 a share.

"We think the sharp deterioration in earnings throughout the end of fiscal 2006 likely reflects sharply lower closings and significantly lower margins," Bank of America analyst Daniel Oppenheim wrote in a research note.

He estimates the company's gross margins will fall to 16.2% in the fourth quarter of this year, down from 25.2% in the fourth quarter of 2005.

Oppenheim cut his 2006 EPS target on Horton to $3.65, down from $4.85, and slashed his 2007 target to $1.85, from $2.55, due to faster-than-expected margin declines.

Horton's sentiment echoes warnings from across the industry as builders ratchet down their fiscal 2006 estimates. Several major homebuilders, including Toll Brothers (TOL - commentary - Cramer's Take), KB Home (KBH - commentary - Cramer's Take) and Pulte (PHM - commentary - Cramer's Take), have cut their fiscal-year guidance in the past two months.

Shares of Horton fell 9.1% to $20.77 early Friday.

In other builder news Friday, Raymond James released a report that said contracts for housing sales fell 42% year-over-year in June in the greater Washington area, according to an area realtors groups. Closings declined 38% and the inventory on the market now represents 7.1 months of supply, compared with 1.6 months in June 2005, and 5.9 months in May.

"We continue to believe the Washington, D.C., market is headed lower as excessive speculation and overbuilding will weigh on the market for the foreseeable future," Raymond James analyst Rick Murray wrote.

Public homebuilders that have a major presence in the market include NVR (NVR - commentary - Cramer's Take), Toll Brothers and Hovnanian (HOV - commentary - Cramer's Take).

7/14/2006 09:48:00 AM  
Anonymous Anonymous said...

I can say this about outsourcing. My husband lost his job at BCBS due to outsourcing .. He was a lead developer for there internet website. Its a 90K a year job. About a year later BCBS was calling him to come back along with most of his co-workers because of the time lag and poor communication along with delivery issues. Inda would say yes yes and then the deadline would come and they would need extensions because of the language barrier and the thinking is just different. My cousins wife works for a Financail Company she was for 3 years living on an off in Inda trying to americanize them so they are more familiar with our business practices. Needless to say last year they stopped sending her and have killed the project because now its costing them more money then if they had just used US laborers. This might not always be the case. But I thought I would share.

7/14/2006 10:09:00 AM  
Anonymous Anonymous said...

Crude up to $79.
I think it will hit 80 within next 24 hrs.
http://money.cnn.com/data/commodities/index.html

$100 by Labor Day. That means, $10/gallon at the pumps.

You don't think that will slow things down. What then will the Fed do? They may pause, but I am leaning towards them not. They need to keep the dollar healthy. The Fed doesn't give a rats ass about you and your SUV, just along as the dollar is still strong or getting stronger.

Ahh yes.....say goodbye to real estate.
Hey wait, doesn't RE only go up? lol,,,,,
Man there is one born every minute.

SAS

7/14/2006 10:22:00 AM  
Blogger grim said...

While Outsourcing is still the trend, two new buzzwords more accurately describe the current direction: Nearshoring and Rightshoring.

The drive behind both of these concepts is radically different, rightshoring is driven by cultural compatibility, and nearshoring is being driven by security and geopolical concerns.

Outsourcing business processes to nearshore markets (Canada and Mexico) is becoming very common. In addition, BPOs are finding that nearshore markets are more culturally compatible with the American mindset.

While "Farshoring" is still common, the far shore market isn't isolated to India anymore. Southeast Asia is becoming a hot area, as is Ireland and Eastern Europe.

As far as software development goes, India used to be seen as a silver bullet. Cheap and plentiful developers were seen as the answer to any large-scale software development problem. Unfortunately, companies are realizing that while development costs have fallen dramatically, management costs have skyrocketted to compensate.

grim

7/14/2006 10:26:00 AM  
Anonymous UnRealtor said...

Outsourcing is a new concept, there will be hiccups. Look 10 to 20 years out. This is a silver bullet alright, right into the US, and we're the ones pulling the trigger.

This is a HUGE problem, and it's not going away, or getting smaller, but just the opposite.

7/14/2006 10:42:00 AM  
Blogger Richard said...

could the israel-hamas conflict be the exogenous shock that really brings down the house of cards economy? i've said this for a while. no one, not the fed or anyone else can control every little mechanism to achieve some kind of global soft economic landing from the days of loose money policy. an exogenous shock will render all policies useless, and we might be seeing one right now.

7/14/2006 10:45:00 AM  
Blogger InvestorDavid said...

Not only software development being oursourced to India, many companies are hiring Indian consultants from Indian company at half the rate of consultants from US based companies.

In addition, doctors/hospitals are sending X-ray and Cat scans to Indian radiologists as well as many financial firms are sending accounting jobs to India.

This country is killing itself by outsourcing everything.

7/14/2006 10:53:00 AM  
Blogger Richard said...

with the evolution of technology like the internet the globalization of services was bound to happen. the USA cannot protect itself from these headwinds. what we need to figure out is where we fit into this evolving structure. right now the big problem is wage arbitrage. on a pure cost basis we just can't compete in certain industries with $.60 an hour labor in china. question is do you even want to? i say no. we need to focus on what higher value added services we can provide that they can't. sure at some point these other countries will evolve and be able to do more of what we do but that's all about competition. we need to provide our citizens a.k.a. workforce with the ability to compete in a global climate. i have no problem going toe-to-toe with foreign labor. heck we're still the US of A and became great because of our ability to adapt and prosper.

7/14/2006 11:06:00 AM  
Anonymous Anonymous said...

Investordavid...
Don't forget about health care being exported, as US and other "rich" patients fly to various Asian countries for surgery not covered by insurance.

For example, a hip replacement considered elective here, could cost $25k, but may only be $8k there. My family could get a nice vacation for a little more than our deductible.


http://www.globalhealthnet.com/Page10.html
http://www.tajmedicalgroup.com/

Pat

7/14/2006 11:18:00 AM  
Blogger Space Ghost said...


I drove by several of the the empty former AT&T buildings last weekend and it made me wonder


To the best of my knowledge, most ATT buildings have been taken over by other companies, including Pfizer, Citicorp, VErizon and others. Where are all these empty ATT buildings ?

I also think the threat of outsourcing is overblown, but thats another post.

Personally, I think NJ is fated to become essentially a huge suburb between NYC and Philadelphia. I do not subscribe to the doom n gloom about NJ's future barring a major terrorist attack in NYC

7/14/2006 11:19:00 AM  
Anonymous Anonymous said...

Don't forget about health care being exported, as US and other "rich" patients fly to various Asian countries for surgery not covered by insurance.


I was in the emergency room with my mom a few months back. They ran a few tests on her, then had to wait for the results to be read in Australia and transmitted back via computer.

7/14/2006 11:21:00 AM  
Blogger Space Ghost said...


It is mainly NJ (and CA) that are in big trouble.


CA has a surplus. And so does NY.

The problem with NJ is that most of the highest income people int he state who work in NYC (who've been doing very well) largely pay NY state taxes, not NJ ones. I paid over 10 times as much to NY as I did to NJ, despite the fact that I consume far more NJ services than NY

7/14/2006 11:26:00 AM  
Blogger PhantomBuyerNJ said...

Federal tax revenue is increasing rapidly because of the tax cuts (deficit is also falling) http://powerlineblog.com/archives/revenue%20growth.php
Many (business friendly) states are doing well. It is mainly NJ (and CA) that are in big trouble.

High taxes and activist judges kill the economy. It's that simple.


Annomyous, where did you get this data? Because I have a hard time believeing it. If tax revenues have actually increased, why in the last 6 years have we gone from budget surpluses to the largest deficit in our history? And its only getting worse. High taxes may hurt the ecomomy, but then again, Canada has much higher taxes than we do, and their economy is doing much better than ours, so it it not just the taxes, but what you do with them.

But "activist judges" have absolutely nothing to do with the economy, but rather social policy. Economic policy comes from the executive and legislative branches.

7/14/2006 11:36:00 AM  
Anonymous Anonymous said...

> CA has a surplus.

Are you seriously saying that CA is in decent economical shape? It is on the verge of collapse (Bush tax cuts and economic boom has made things tolerable but the cost of illegal immigration and the unions cannot continue). Some day CA must pay back all those bonds.

Taxpayers and businesses are leaving CA in droves and are replaced by illegals. Arnold has improved things slightly but still - like in NJ - judges and unions are in charge.

7/14/2006 11:36:00 AM  
Blogger Space Ghost said...


Are you seriously saying that CA is in decent economical shape? It is on the verge of collapse (Bush tax cuts and economic boom has made things tolerable but the cost of illegal immigration and the unions cannot continue).


CA has its problems, but its far from the "verge of collapse". Silicon Valley is coming back as a great harbinger of jobs and innovation. Even SoCal is picking up.

And while I try to avoid getting involved in political discussions, the Federal tax cuts had little to do with California's recovery. What did was
1) Most importantly, Monetary policy, which has stimulated an RE boom
2) Recovery in Silicon Valley
3) Some OK budgeting by the Governor (I'm not partisan).

7/14/2006 11:44:00 AM  
Blogger Space Ghost said...


Taxpayers and businesses are leaving CA in droves and are replaced by illegals


What nonsense. CA's tax collections have gone up. Yes, some businesess are leaving CA (CA really needs to improve
its workers comp), but the state has been growing jobs, especially some well paid jobs.

7/14/2006 11:45:00 AM  
Anonymous Anonymous said...

Just a nice little fast fact... 70% of the 2000-2001 fed budget surplus was tax revenue from companies that no longer exist...

7/14/2006 11:45:00 AM  
Blogger Space Ghost said...


But "activist judges" have absolutely nothing to do with the economy, but rather social policy.


Actually, I disagree here. Judge can force policy changes that have economic impacts, e.g. the Abbot decision.

But lets face, its not judges or unions or illegals that have led to the RE bubble. Its monetary policy, loose lending standards and speculation.

7/14/2006 11:48:00 AM  
Anonymous Anonymous said...

Annomyous, where did you get this data?

New York Jazeera, July 9:
"Surprising Jump in Tax Revenues Is Curbing Deficit"

Bloomberg News:
" July 11 (Bloomberg) -- The Bush administration cut its estimate of this year's budget deficit by 30 percent to $296 billion amid a surge in tax collections from corporations and wealthy individuals."

If tax revenues have actually increased, why in the last 6 years have we gone from budget surpluses to the largest deficit in our history?

Ever heard of 9/11, dotcom market crash, War on Terror, dramatic increase on domestic programs, Katrina?

Canada has much higher taxes than we do, and their economy is doing much better than ours

Canada (like Norway, Bahrain etc) have some unique natural advantages.

But "activist judges" have absolutely nothing to do with the economy. Economic policy comes from the executive and legislative branches.

Yes maybe according to the constitution but they have been dictating things like X.Y billion must be spent on this school district etc. NY and CA have the same problem though. I certainly agree that activist judges should not be making this kind of ruling.

7/14/2006 11:49:00 AM  
Blogger Space Ghost said...


Just a nice little fast fact... 70% of the 2000-2001 fed budget surplus was tax revenue from companies that no longer exist...


Can you provide some backing for that statement ? Most of the dotcom companies were not making profits, so they could not contribute tax revenue.

If youre talking about companies that merged into others, they definitely still exist, so its a bogus statement

7/14/2006 11:51:00 AM  
Anonymous Anonymous said...

stock options and IPOs generated a lot of tax revenue in those days (this is happening now as well).

7/14/2006 11:56:00 AM  
Blogger grim said...

While outsourcing and offshoring are related, they are not synonymous. Many of you seem to be using the terms interchangably, so just be aware.

Using ADP to cut my paychecks is outsourcing. Sending my cat scans to India is both outsourcing and offshoring.

I'm part of the camp that believes outsourcing is almost always a great idea. An outsourcer can focus on a single aspect of a business while leveraging economies of scale and efficiency to do that aspect faster and more economically.

Offshoring is a mixed bag, and a much more complicated discussion..

grim

7/14/2006 11:59:00 AM  
Anonymous Anonymous said...

Delford said:"activist judicial branch makes all legislation any how."

Might I add socialist-activist.

7/14/2006 12:00:00 PM  
Blogger Space Ghost said...


stock options and IPOs generated a lot of tax revenue in those days (this is happening now as well).


An IPO does not generate tax revenue for the corporation. Neither do stock options. In fact stock options can be used to reduce income.

Your original claim was


70% of the 2000-2001 fed budget surplus was tax revenue from companies that no longer exist.


That is still unproven and very likely incorrect.

Returning to RE:

The thing that bothers me most about the local economy is the problem of an economic shock if Wall Street Trading revenue dries up. Trading is inherently volatile. A major economic crisis could hurt the local economy badly

7/14/2006 12:01:00 PM  
Blogger Space Ghost said...


Offshoring is a mixed bag, and a much more complicated discussion..


I agree.

FWIW, I know companies like Accenture are hiring strongly again despite having huge offshore divisions in INdia.

7/14/2006 12:02:00 PM  
Anonymous dreamtheaterr said...

InvestorDavid said...
Not only software development being oursourced to India, many companies are hiring Indian consultants from Indian company at half the rate of consultants from US based companies.

In addition, doctors/hospitals are sending X-ray and Cat scans to Indian radiologists as well as many financial firms are sending accounting jobs to India.

This country is killing itself by outsourcing everything.

7/14/2006 11:53:20 AM

You're absolutely right. I came to the US from India for my MBA. I am an IT consultant in Manhattan for one of the big finance guys. But we also have our company's vendors (US companies) getting IT consultants directly from India at half the billing rate. These FOBs (fresh-off-boat) from India are happy on a subsistence salary since 6-8 guys share a 2 bedroom in Jersey City, and live a great life being very frugal and debt-free.

To put things is perspective, my undergrad degree in India (from a Top 5 university in Accounting) cost me $2 a month in tuition. Now how many BS Accounting undergrad in the US coming out of an Ivy League debt-free?

US workers are getting squeezed in all directions. Either jobs go to India, or they come here and work for less since they are accustomed to a lower standard of living.

7/14/2006 12:03:00 PM  
Blogger grim said...

The game only works until the playing field becomes level.

grim

7/14/2006 12:08:00 PM  
Blogger Space Ghost said...

dreamtheaterr, lets see if I understnand this -- you're not squeezing the American workers when you work here, its those other Indians who live in JC who do. Quite unintentionally funny.

7/14/2006 12:08:00 PM  
Anonymous UnRealtor said...

"we need to focus on what higher value added services we can provide that they can't. ... i have no problem going toe-to-toe with foreign labor. heck we're still the US of A and became great because of our ability to adapt and prosper."


Very naive.

Other countries don't view US imports as part of a 'level playing field' but tax them heavily. Japan did so with cars for example.

The US is willingly giving away its strategic advantage. We're sending our top jobs (which includes know-how) to other countries.

The only outcome to this game is a lower US standard of living.

7/14/2006 12:26:00 PM  
Anonymous UnRealtor said...

Canada also doesn't have a military, and relies on the US taxpayer for security.

The entire Canadian army could not even staff America's carrier fleet.

7/14/2006 12:31:00 PM  
Anonymous Unrealtor said...

"Using ADP to cut my paychecks is outsourcing. Sending my cat scans to India is both outsourcing and offshoring."


Unless ADP starts processing your checks in India. :)

My beef is sending US jobs to other countries, regardless of what label is applied.

7/14/2006 12:34:00 PM  
Blogger delford said...

Spaceghost: NJ has always been a huge suburb bwtween NY and Philadelphia, that has been the case for years.

You state as long as there is no terrorist attack etc. etc, I have heard that many times, but with all due respect, you are saying that because you have heard others say it,and just repeat it.

When I ask people who make that statment, they cannot answer, but it sure as heck sounds good.


Re-read the article, and think again.


The majority of people who live in NJ, work in NJ, the quality of jobs being created in state, do not justify the high cost of living here. Plus we are losing or prominence in pharmaceuticals and telecom the high paying white collar jobs with benefits.
Also NJ is not a business firendly state, why locate here. Proximity to NYC?

The NY Times had an article on this about a week ago, and many companies are locating their head quarters in NYC, but keeping the bulk of their operations elsewhere, and NJ is not going to be the elsewhere. WHere I am in BErgen county, there is tons of commericail office space available, much of it sitting vacant or half empty for years.

Please do not mention Wall St money, it is unfortunately one of the biggest myths on this forum, and if you continue to believe this myth, then also believe this one. Wall St will take a dump again it always does, and it always will, and the next one could be especially painful.

Please do nto mention our highly educated work force, lots of other places have highly educated work forces.

It is ironic for a state that sends more of its graduates to out of state schools, then any other state (and I am not talking about just Ivies) to talk about highly educated students. Would it not make sense that those students from NJ who went to out of state schools would have been in those schools with native kids from those states, who would also be highly educated? Are all of them coming here to work in the NYC metro area? No, they are not. WIll companies pay huge salaries becasue the cot of living here is high, sure for the top, but for all the mid management people, and support and operations, and IT, the answer is no.

Its funny as so many parents swear by some of these out of state schools, and believe that Rutgers for instance is not prestigious enough, yet my brother in law is a professor at UCLA, and Rutgers is highly regarded out there.

NJ is not getting it done, when it comes to business and the creation of high paying jobs, its that simple, we have to get away from this mentality that because of proxomity to NYC all will be well, we cannot depend on that, and we have to stop kidding ourselves that we are not in trouble.

7/14/2006 12:40:00 PM  
Anonymous Anonymous said...

PHLX residential housing sector index (HGX)

Fell below its 200 day moving average and continues to drop.

This is a warning that home prices declines are about to accelerate.

Watch out below . And down goes
Fraizer.

Owning a home in NJ that needs to
be sold,, could be like being
handcuffed to a corspe.

7/14/2006 12:46:00 PM  
Blogger Space Ghost said...

delford


have heard that many times, but with all due respect, you are saying that because you have heard others say it,and just repeat it.


No, I'm not relying on what other people say, I'm relying on my own judgement.


WHere I am in BErgen county, there is tons of commericail office space available, much of it sitting vacant or half empty for years.


So tell us where you do stay, and where all this commercial office space, vacant for years, exists. You keep on making comments like "housing prices have already dropped 20% in my area" without mentioning your area. Frankly, I don't trust your comments. Where are you looking for houses ?


Please do not mention Wall St money, it is unfortunately one of the biggest myths on this forum, and if you continue to believe this myth, then also believe this one. Wall St will take a dump again it always does, and it always will, and the next one could be especially painful.


Yes, Wall Street will take a dump again. But I don't know when that will happen and you don't know either. But I see no reason why it should take a permanent dump. NYC is the world's finance capital. And thats not changing for decades. Deal with it.

7/14/2006 12:48:00 PM  
Anonymous dreamtheaterr said...

Space Ghost said...
dreamtheaterr, lets see if I understnand this -- you're not squeezing the American workers when you work here, its those other Indians who live in JC who do. Quite unintentionally funny.

I think you are missing the bigger picture. I said "US workers are getting squeezed in all directions. Either jobs go to India, or they come here and work for less"

Maybe I am squeezing a US worker; maybe I am not. That's an open debate.

But I earn what any MBA from a b-school earns. As an international student, I paid full tuition (that goes into the US economy, and subsidized a citizen's tuition tab), I pay full FICA taxes like anyone else, even though I will never collect it. A little off-topic but .....I can't get free treatment in the ER!

The reality is that real wages in the US will not increase as long as capitalism allows it. US corporations can keep a lid on wages by offshoring/outsourcing. This will decrease the existing standard of living for people in jobs easily outsourced.

My perspective is we have three layers of people fighting for the same job:

1. Sumeone who drew up and studied in the US, and has huge student loans and used to a higher standard of living

2. Someone who came from abroad to the US to study and work here (minimal student loans) to have a higher standard of living

3. Someone direcly from abroad to work here for a lower salary because they can easily afford to (used to lower standard of living and no debt whatsoever).

7/14/2006 12:54:00 PM  
Anonymous dreamtheaterr said...

Space Ghost said...
dreamtheaterr, lets see if I understnand this -- you're not squeezing the American workers when you work here, its those other Indians who live in JC who do. Quite unintentionally funny.

I think you are missing the bigger picture. I said "US workers are getting squeezed in all directions. Either jobs go to India, or they come here and work for less"

Maybe I am squeezing a US worker; maybe I am not. That's an open debate.

But I earn what any MBA from a b-school earns. As an international student, I paid full tuition (that goes into the US economy, and subsidized a citizen's tuition tab), I pay full FICA taxes like anyone else, even though I will never collect it. A little off-topic but .....I can't get free treatment in the ER!

The reality is that real wages in the US will not increase as long as capitalism allows it. US corporations can keep a lid on wages by offshoring/outsourcing. This will decrease the existing standard of living for people in jobs easily outsourced.

My perspective is we have three layers of people fighting for the same job:

1. Sumeone who drew up and studied in the US, and has huge student loans and used to a higher standard of living

2. Someone who came from abroad to the US to study and work here (minimal student loans) to have a higher standard of living

3. Someone direcly from abroad to work here for a lower salary because they can easily afford to (used to lower standard of living and no debt whatsoever).

7/14/2006 12:55:00 PM  
Anonymous dreamtheaterr said...

My apologies for the double post.....

7/14/2006 01:01:00 PM  
Anonymous Anonymous said...

O.K. make nice on Friday, you guys. New Jersey is choking, can we agree on that, at least?

I really am curious, and nobody is answering my Q from another thread:

http://www.zillowblog.com/

"This is just the beginning – we'll add more financing info as we grow."

For 10 points, and a chance to move on to the lightning round, which companies offering 5 minute mortgages will be the first linked at ZillowFinancing?

Pat

7/14/2006 01:04:00 PM  
Blogger Richard said...

"My beef is sending US jobs to other countries, regardless of what label is applied

sending US jobs to other places is one thing, growing your international workforce when doing new hires is another. this is what a good portion of the large companies are doing like IBM, Accenture, etc. = less job growth here. if multinational corporations stay US home based at least we get some tax collection!

7/14/2006 01:15:00 PM  
Blogger Space Ghost said...


I paid full tuition (that goes into the US economy, and subsidized a citizen's tuition tab), I pay full FICA taxes like anyone else, even though I will never collect it. A little off-topic but .....I can't get free treatment in the ER!


1) Unless you went to a public school (and possibly not even then), you did not subsidize a citizen's tution tab
2) Unless you have no intention of getting a permanent residency, you will get FICA back.
3) Anyone can get free treatment in the ER. ERs are required by law to provide that.

Anyway my point was more that people who object to allowing outside non citizens to work in the US generally make no distinction between people who have MBAs in the US and those people who do not and come over short-term.

7/14/2006 01:17:00 PM  
Blogger Space Ghost said...


is is what a good portion of the large companies are doing like IBM, Accenture, etc. = less job growth here. if multinational corporations stay US home based at least we get some tax collection!


Accenture is based in Bermuda, IIRC. They do pay taxes in the US, but only on US income.

7/14/2006 01:18:00 PM  
Blogger delford said...

spaceghost: Well lets see where to start. Unless you have lived through one of Wall Streets dumps, you cannot really appreciate it what it is I am talking about. Forget about the dotcom collapse, there waers some brutal down turns in thr 90's others on this forum who might have been around can verify that.

Wasll St as I said will dump gain, and that will impact on NJ, but as I have been saying, NJ's problems are deeper than what happens on Wall St. Keep in mind that every time Wall St takes a dump, the number of jobs in that industry declines, and they do not come back, it is also the time when the street looks to automate even more, and cut costs and when they cut costs they are brutal, to the point of extreme, and sometimes comical (lets cut the plants and flowers, do not laugh its happened)


For insatnce in the muni bond industry brokers brokers used to be a big part of the business, these guys were highly paid, and were considered essential to the business. Well now all the Fixed Income platforms have put many of these well paid guys and gals out of the business permanently. That is just one example.

NYC may or may not always be the financial capital of the world, I hope it remains so, and I believe it will, but you do not need hordes of people working here, to maintain that, just the rain makers. (the ones who make money, everybody else, and I mean everybody else is just an expense)


As far as where I live its Bergen Co, why wont I say where I live, simply because believe it or not I have made quite a few enemies in mmy town with my belief in the housing bubble, as well as the way our town spends money. Sorry I have alwsys been a contrarian, its much easier to go along, but I cannot help myself, I like to question things, and unfortunatley many times what I hear does not make sense, is ill informed, or just plain BS.


As such I do not know who posts on this board, and so I would rather not possibly be identified to save my family getting any grief. I have gone undergound I do not attend meetings any more, I keep my opinions to myself, becasue my family has to live there. Thsi forum allows me an opportunity to give my views on the bubble as well as other topics when they arise.

As far as the empty space. I suggest you take a trip to Mahwah and Montvale, tons of empty office space. If you need more there is always Rts 4 & 17, for lease and sale signs all over the place.

Like I said in my own town there is a seven story office building that has been almost vacant for years.

NJ has serous problems trying to ratinalize them away in my opinion does no good. Peace.

7/14/2006 01:32:00 PM  
Anonymous Anonymous said...

LP: $719,900
SP: $709,900
OLP: $719,900
LD: 03/16/2006
CD: 06/15/2006
STYLE: Colonial DOM: 12
MLS#: 2257153


SP: $684,000
OLP: $729,900
LD: 04/13/2006
CD: 06/22/2006
STYLE: Colonial DOM: 20
MLS#: 2266776

7/14/2006 01:54:00 PM  
Blogger Space Ghost said...

Delford, I have seen Wall Street downturns. However, I don't know when the next one is coming and you don't know either. FOr now the street is doing very well. You talk about jobs lost due to automation, but there are new jobs being created all the time as more money is managed here. Risk Management and trading is huge these days.

I can understand your desire to keep your home secret. However, I do not know any reason to keep your town secret. I really want to know which Bergen County town has seen prices drop by 20-25%, as you say.

As far as office buildings go, I drive up route 17 all the time. There may be a few FOr Lease signs, but they are vastly overwhelemed by the huge traffic, huge number of retail and commercial sites on the road, and those keep going up. Ikea took over the old clothing store area at the 4/17 intersection. Northern route 17 keeps getting more strip malls. And so on.

Yes, NJ has troubles. But overempahsizing doom and gloom is also wrong.

7/14/2006 01:55:00 PM  
Anonymous Anonymous said...

LP: $799,900
SP: $800,000
OLP: $844,900
LD: 01/12/2006
CD: 06/26/2006
STYLE: Colonial,Custom Home
DOM: 71
MLS#: 2233846


LP: $899,900
SP: $855,000
OLP: $939,900
LD: 03/03/2006
CD: 06/15/2006
STYLE: Colonial
DOM: 90
MLS#: 2253190


LP: $1,295,000
SP: $1,250,000
OLP: $1,295,000
LD: 03/07/2006
CD: 06/29/2006
STYLE: Colonial,Custom Home
DOM: 35
MLS#: 2254342

7/14/2006 02:03:00 PM  
Anonymous UnRealtor said...

A TON of price drops today. The heat is on for sellers as we move half-way through July.

Boooya!

7/14/2006 02:04:00 PM  
Anonymous Anonymous said...

Heard today that a home in Montville
listed at 1.9 lowered to 1,7
is finally selling in the 1.1 range.

New construction was sitting
for over 6 months finished.

owner just wanted to bail.

7/14/2006 02:37:00 PM  
Blogger delford said...

Spaceghost: I never said prices dropped 20 to 25%. I did say asking rpices have dropped 20 to 25% from their peadk in my town.

I have aslo said in other psots that people who have ourcashed in my town in the summer of 2005 have alreday lost money.

Some examples, A 3 bedroom colonial that closed in August of 2005 for 500k, today the same house, one street over which started at 549K in March, is now down to an asking price of 475K its been at that price for a month with still no buyers.


Another example a 2 bed 21/2 bath town house that sold for 490K in Sept of 2005, an identical unit now on the market for 450k, no takers,I could go i hav amny more examples on but hopefully you can get the message. This time last year inventory in my town was exactly 19 single family homes, this time this year the inventory 103, which does not include coop/condos, and speculator/flippers whoa re trying to rent their properties.

If you have been around as you say as far as Wall Street, then you would not be spinning me around with go around arguments. I stand by what I said when these jobs go, they do not come back, and thats a fact. As far as new ones true, but not everybody can manage a hedge fund, and by the way that is probably where you are going to see the next build up.


As far as Rout 4 & 17, IKEA? thats been there for quite some time, but you prove my point, those are the jobs being created, low paying retail jobs, and lets not forget out number one growth industry restaurant jobs.

I think you need to take a better look on 4 and 17, and see what is available there in office space inventory, also like I said Mahwah, Montvale, Park Ridge etc.


Doom and gloom is better then pretending all is well. Like I said and I am not going to go around and around on this with you, but you offer no counter arguments to what I say, just dont worry be happy.

7/14/2006 03:21:00 PM  
Anonymous Anonymous said...

Their are many many open commerical
offices available in nnnj.

7/14/2006 04:28:00 PM  
Anonymous Anonymous said...

Grim

My Real Estate agent keeps sending me 20-25 listings about once a month for the last 18 months. Last listing caught my attention for the lack of DOM (Days on Market) figures. I compared the last listings to the other listings I have received last month which showed the DOM. Some properties overlapped between the two so I was able to figure out the DOM (some were 100 or more).
Is this a new thing in this profession ? is there a new policy to conceal this information from prospective buyers ? Also, I know some sellers drop their price but I can’t find them on the detailed listing anymore.

Please comment.

Cliffy

7/14/2006 05:27:00 PM  
Anonymous UnRealtor said...

Cliffy, it might be time to get another agent, or ask the current agent why the DOM are not shown.

There are several report types they can cend you, ask for the full report.

As for price history, you'll have to track that yourself.

7/14/2006 05:35:00 PM  
Anonymous Anonymous said...

Space Ghost asked "where all this commercial office space, vacant for years, exists."

First hand knowledge...Englewood and Englewood Cliffs.

7/14/2006 06:23:00 PM  
Blogger Richard said...

whoever the anonymous person is listing 'old' sales. those were listed between jan and apr and sold relatively quickly during the 'spring bounce'. the market has since hit a wall. go ahead, ask any realtor. those 'comps' are no longer relevant as prices were agreed upon months ago.

i've heard numerous stories of people that can't even get $40k less for the same property they were getting offers for in the mar-apr timeframe. it's literally a 180 degree turnaround and IMO will only get worse as inventory climbs. the middle east crisis sure doesn't help the puppy dog and sunshine scenario either.

7/14/2006 07:01:00 PM  
Anonymous Anonymous said...

Aren't some of those high paying jobs held by those greedy realtors and brokers. I know a few who are sitting pretty, having screwed over family and friends to get that commission.

jt

7/14/2006 07:16:00 PM  
Anonymous Anonymous said...

Corizines new budget will add a new 1% buyers tax for purchases of homes over 1MM. That adds $10K to the cost for a buyer.

The seller also has to pay a 1% Jim McGreedy sellers tax, which of course is passed on to the buyer.

7/15/2006 06:50:00 AM  

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