Paris, a Roman City

One of the first assignments of the Spring semester (more on my classes in a future post) is Paris, a Roman City, an interactive web page on the archeology of the city -- a historical period that is often overlooked in favor of eras like Haussman's plan -- by France's Ministry of Culture and Communication. It's informative, well-done, and visually rich; well worth browsing.

Relationship Management 101

I received a phone call today from a professor of an esteemed university offering to teach a class on Relationship Management right here on this blog. I was initially skeptical, and it took a bit of persuasion on his part, but once I heard a synopsis from a few of the lessons, I agreed the topic was fine. Still, everything here is free, I insisted.

Eventually we came to terms and the professor agreed to teach a few lessons at the bargain basement price of zero. Without further ado, here is Professor Hardious Knocks of the prestigious School of Hard Knocks, teaching Relationship Management 101. Each lesson in this series is based on current events. There will be written assignment after each lesson. Class is now in session.

Lesson One
Get Your Agreements In Writing.

The stalled real estate market turned Stoneybrook at Venice into a very different community than its residents paid for: a half-built subdivision dotted with slow-moving construction sites and "For Sale" signs.

Many residents of the 560-acre east Venice subdivision said they are willing to weather those inconveniences. But the latest news -- that mega-developer Lennar will dump more than $6 million in costs on homeowners -- has Stoneybrook residents crying foul and preparing a lawsuit.

Lennar had asked the county for designation as a community development district, a special taxing district that issues bonds to pay for things such as drainage and roads. The commission's vote was 3-2 in favor of Lennar's request. The tax will add more than $700 a year to some residents' yearly payments.

Residents said they were under the impression they would only have to pay for future maintenance through their homeowners dues. But commissioners ruled the developer did everything by the book.

The decision, coupled with Lennar recent increase in some homeowner's dues by $200 a year -- another move residents say wasn't properly announced -- has a group of more than 150 Stoneybrook residents ready to take Lennar to court.

Stoneybrook residents loudly applauded a speech by Natiss, in which Natiss threatened a lawsuit and said the "only thing Lennar could be building in this county are license plates while they are wearing their little orange uniforms." Others cited a petition, with more than 150 signatures, protesting the levy. Many residents held signs with slogans such as "we have been Lennarred."

Lennar attorney Dan Bailey called the residents' claims "reckless allegations." He said Lennar made clear there would be more costs when it started selling homes in Stoneybrook.

Today, the complex is about 43 percent sold, which county staff said is less than two-thirds as far along as Lennar hoped. County staff said Lennar will fall almost $8 million short of its revenue goals for its first two years if the sales trend keeps up.

Homework Assignment One

• Discuss the needs to get it in writing and to read the fine print.
  
• Is "by the book" the best way to treat customers?
• Does Lennar care about its relationships once the closing is finished?
• If you have to enter a lottery to start a relationship, what can you expect out of the relationship down the road?
• Is the proposed relationship the homeowners have with a lawyer likely to be beneficial to anyone but the lawyer?
• Does the commission just want the work done regardless of who pays?
• Is the commission just acting to avoid a lawsuit by Lennar?
• Do you even know who your commissioners are?
  

Lesson Two
You are no longer needed. Goodbye.

Centex sees more layoffs to get to 'fighting weight'.
Centex Corp.(CTX) Chief Executive Tim Eller during the company's quarterly earnings call Wednesday said the home builder's headcount is down 17% since the beginning of its fiscal year. "There will be more reductions in the [fiscal] fourth quarter," the CEO said. "We're taking the necessary steps to get our balance sheet and our organization to their fighting weight," he added.

Homework Assignment Two

• You think you have job in an industry going gangbusters.
• You are a loyal employee in for the long haul.
• Does it matter?
• Who are golden parachutes for anyway?
• Do you have a plan in case you are fired?
• Should you?

Lesson Number Three
Blame The Auctioneer

Low bids take glow off property auction
One Cape Coral homeowner left an auction sponsored by the Miloff Aubuchon Realty Group Inc. elated her home fetched a $400,000 bid. Then the bottom fell out.

"The bid came over the Internet. They said there was a computer glitch," said Rosemarie Leibert, 79. "They put it back on auction and the bid was $250,000."
Leibert declined to take the bid. [She] was upset with the auction, calling it a "farce." She believes the bids were too low and the auction didn't deliver serious bidders.

Calling the effort a learning experience, Jeff Miloff, the realty group's sales manager, said another auction planned for March could have different rules.
The bids were so unrealistic the auction showed people didn't do their homework, Miloff said. "The next auction could have suggested opening bids," Miloff said. "People had no sense of what they were bidding. It made no sense."

Homework Assignment Three

• Is the auctioneer to blame for low bids?
• Will any bids come in if there are minimums?
• Who has no sense here, the bidders or the sellers?
• Exactly who was it that failed to do their homework?
• Assign the blame in percentages between the bidders, the sellers, and the auctioneer.
  

Lesson Number Four
Were All In This Together

Foreclosures put added burden on association-run communities.
If you think you're paying more to live in your condo, townhouse or gated community, consider this: It may get worse before it gets better.

Experts fear that with homes selling slowly, owners who can no longer afford payments may soon abandon them. If that happens, those left behind in communities run by associations must make up the missing share of money to maintain roofs, roads, landscaping and pools.

"We're seeing a 100 percent increase in the number of files turned over to us [by associations] for lien and foreclosure," said Gary Poliakoff, whose Fort Lauderdale-based law firm, Becker & Poliakoff, represents 4,200 associations in Florida.

An association's expenses are constant, so budgets are based on the community's number of homes and apartments. "Other owners have to make up the shortfall because service providers aren't going to say, `We feel sorry for you and will reduce the cost,'" said Poliakoff.

Homework Assignment Number Four

• If a condo tower is only 50% sold, who is going to pay those dues for the empty units?
• Should one believe that initial assessment the builder/developer stipulated?
• What happens if your neighbor defaults on his mortgage and the bank owns the property before the condo association failed to get a lien for assessments?
• How will increasing insurance rates affect your neighbor's ability to pay?
• What about the guy 18 stories up who you have never met?
  
• When the tuckpointing fails, how many new relationships will be formed?

Lesson Number Five
Who do you believe?

The 0.8 percent drop in sales in December came after two straight months of improving sales, the first back-to-back sales gains since the spring of 2005.

David Lereah, chief economist for the Realtors, said that even with the December setback, he still believes that sales of existing homes have hit bottom and will start to gradually improve.

"With fingers and toes crossed, it appears that we have hit bottom in the existing home market," he said.

In other economics news, the number of Americans filing applications for unemployment benefits shot up last week by the largest amount in 16 months, reversing two weeks of big declines.

The Labor Department reported that 325,000 newly laid-off workers filed claims for jobless benefits last week, an increase of 36,000 from the previous week. That was the biggest one-week rise since a surge of 96,000 claims the week of Sept. 10, 2005, when devastated Gulf Coast businesses laid off workers following Hurricane Katrina.

But economists said they believe the low point for housing has been reached and they are forecasting a slow rebound in 2007. Because of that optimism, analysts don't believe the slump in housing will drag the overall economy into a recession.

Homework Assignment Number Five

• Is Lereah believable?
• Is the NAR believable?
• Who do you believe?
• If you cross your fingers and toes does it help?
• What about wishing on a star?
• 36,000 more people formed a new relationship with their local unemployment office. Estimate the percentage of those above who were prepared for this new relationship.

Extra Credit Assignment
Lower Your Costs Or You're Fired

Faced with a $195.6 million loss in the fourth quarter, the Miami-based homebuilder is telling subcontractors that it wants further cost cuts or they'll be excluded for six months from future bidding.

Lennar Corp. is asking its homebuilding subcontractors to cut their current charges by 5 percent or more or face a minimum six-month ban on bidding for work, a company executive said late Tuesday.

"As our customers continue to pay us a lower price for our homes, we must in turn pay you a lower price for your services," said a letter circulated to subcontractors in Lennar's Orange Coast, Corona, Temecula and Palm Springs divisions. Roos said similar requests are being made of Lennar subcontractors nationally.

"Every builder is doing the same thing," added Roos, who works in the company's Western region office in Aliso Viejo. "Everybody understands that the market has softened. � I think everybody realizes in times like this � they need to manage their business accordingly."

Roos said 90 percent of the subcontractors in the region had a positive response to the letters.

Extra Credit Homework

• How likely is it that there was a "positive response" from the subcontractors when asked to cut prices?
• Will the subcontractors cut prices anyway?
• Find at least three more "special relationships" involving Lennar and report on them.

Hmmm. There seems to be some questions for Professor Hardious Knocks about this extra credit assignment.

Mr. Plumber: I can't cut my costs I have bills to pay.
Prof. Knocks: It seems you have a relationship problem with your bills. We cover that in Relationship Management 102. The first two lessons are "How to avoid paying your creditors" and "How to terminate expensive relationships."

Mr. Carpenter: This sounds like extortion. My inventory is stacking up and if I cut prices I will lose money on the bid.
Prof. Knocks: It does not matter what your costs are. You can lower your prices and lose money or not lower them and do no business.

Mr. Economist: You can't fool me. This extra credit assignment is really about deflation.
Prof. Knocks: Don't confuse falling prices with deflation or rising prices with inflation. I highly recommend that you take Deflation 101. The first lesson is how to put the horse in front of the cart. But if the Carpenters and Plumbers of the world go bankrupt or if too many of those new relationships at the unemployment line end up in bankruptcy court, then yes, we are talking deflation. I look forward to seeing you in class next semester.

Please email your finished assignments to HardiusKnocks@SchoolOfHardKnocks.Ed
Class Dismissed.

Mish Note: This post originally appeared in Whiskey and Gunpowder.
A few subtle changes since that posting.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com

Mr. Practical on the Yen, Carry Trade, and Credit Expansion

Over the past several years there has been an excellent series of articles on Minyanville written by "Mr. Practical". Today's post, A Letter From Mr. Practical: No Return sums up very nicely, many of the things I have been talking about on this blog. Here is the latest missive from "Mr. Practical":

I have been thinking a lot lately about the state of economics and markets. From an intellectual point of view it is fascinating; from an emotional point of view it is scary.

Oh don�t worry about me. I am parked over here in Japan, long the yen that everyone else in the world is short. I am happy to lend these yen back out at basically zero to speculators since I believe that one day they will be forced to buy them back from me at much higher prices. This will occur when the Bank of Japan will finally be forced by the market to raise interest rates from their ridiculous �free� money levels. When will this be? Well, I think we saw the first strains of rebellion by Thailand a few months ago when it raised margin requirements. Speculation is rampant and they seem the only ones out here with any common sense. Just because they were �cajoled� by their trading partners to reverse course doesn�t mean those strains are still not there.

I am willing to forgo the 5% interest I can earn on other currencies for the expected value of doubling my �money� in a few years or sooner.

The Bank of Japan is a laughing stock. They are inflationists that would make any central banker proud; a country naively being used by others, especially the U.S., to dump liquidity into markets. Yes folks, there is rampant inflation in asset prices. Not only do central bankers of all stripes understate the cost of living, but asset prices like stocks and houses are now in hyper-inflationary territory. Being long assets that are in such a state is like taking a picture of an egg at the height of its toss: it looks fine unless one ponders the inevitable state of it being splattered on the sidewalk. The egg has been going up and up and up and it may go up further, but gravity is doing its work and it will not fail.

In normal times a good deal of market liquidity comes from income and thus savings. Economic production produces excess in certain societies and that excess is saved and invested. A little debt thrown in makes some of those investments happen a little sooner and with a little more return. But that debt is used prudently by those with the brains to have accumulated the necessary capital. Money is precious to them.

But these are not normal times. With GDP growing at 2-3% (I believe this to be overstated) and M3 (broad money) growing at an astounding 13% for the world�s largest economy, we have our first clue that things are not normal. Money is free to any who want to take the risk. When money supply grows you can by definition be sure that debt is growing commensurately. Debt is not used prudently because it is created easily for anyone and everyone out of thin air by central banks. Almost all of the current liquidity is coming from debt creation. This is the definition of inflation.

We now have an amount of debt in the system that would scare a hedge-hog. The only place left of moderate leverage is in some corporate balance sheets (as long as we ignore contingent liabilities like pension obligations and health care benefits). Corporations rapidly de-levered after 2001 (causing asset prices to deflate) due to perceived high risk and now they are rapidly levering again due to perceived low risk. Of course these two things, leverage and risk, are tied at the hip so once this latest and last form of levering is complete the forces of deflation, created themselves by massive inflation, will most likely advance.

Total global debt issuance jumped 14.1 percent from 2005 to a record $US 6.948 TRILLION in 2006. Leading the way once again was the U.S. with total debt issuance in 2006 increasing by 10.1 percent to $US 4.085 TRILLION. With the US economy at about 20% of the global GDP, it has issued debt almost three times its own relative global economic size. The U.S. now has total debt of 3.7 times GDP, a level never seen before.

At some point debt becomes deflationary because there is too much of it and the debt has been used to create even more overcapacity. We are starting to see in the U.S. signs, like sub-prime lending losses and higher home foreclosures, that income cannot support the amount of debt. Has anyone lately driven by a new commercial complex that is half empty while they are building a brand new one right next to it? As a result, new debt begins to have less and less effect on creating growth: in 1980 it took $1 of new debt to create $1 of GDP; in 2000 it took $4 and today it takes $7. We seem to be pushing on a string.

So when people say �there is so much money out there� it is the same thing as saying �there is so much debt out there�. Debt issuance is fueling speculation as this �money� is searching for return, any return, regardless of risk. All rates of return are being driven lower and lower in the search.

So why even look for return? As everyone else searches harder and harder for return and taking greater and greater risk to do it, perhaps the best thing to do is search for lower risk. It looks to me like Sam Zell agrees. This is very hard to do and perhaps that is why only some of the world�s greatest investors like Sam Zell have the patience to do it.

So what can you do about it?

This does not mean short stocks, for that takes timing and I care not to �speculate� on the timing of deflation. Central banks are adamant, but they are wrong, and eventually their methodology of creating new debt to fight the forces of old debt will not work. Instead of getting in the way, I suggest just getting out of the way. First, be prudent. Look carefully at your risks. Deflation hates stocks so be careful there. It also hates debt, so pay it back if you can.

Sincerely,
Mr. Practical

Notice the one thing Mr. Practical is doing that most others are not:
Mr. Practical has his eyes focused on the curves, potholes, and ice on the road ahead rather than looking in the rear view mirror.

A Warning From Trichet

The Financial Times is writing Prepare for asset repricing, warns Trichet.

Current conditions in global financial markets look potentially "unstable", suggesting that investors need to prepare themselves for a significant "repricing" of some assets, Jean-Claude Trichet, president of the European Central Bank, warned at the weekend in Davos.

The recent explosion of structured financial products and derivatives had made it more difficult for regulators and investors to judge the current risks in the financial system, Mr Trichet said.

"We are currently seeing elements in global financial markets which are not necessarily stable," he said, pointing to the "low level of rates, spreads and risk premiums" as factors that could trigger a repricing.

One might look at the statements from Trichet and dismiss them as some sort of contrary indicator. The context in which the statements were made and how they were perceived is at least as important as what he was saying.

Davos Elite Brushes Off Trichet

Rather than perceiving Trichet as a contrary indicator, I am looking at this headline instead: Davos Elite Brushes Off Policy Makers' Warnings of End to Boom.

Bankers, investors, and executives last week arrived at the Swiss resort of Davos giddy about record profits and bonuses. After five days of hectoring by policy makers that they are too complacent, they left just as happy.

"The mood has been totally upbeat," Sunil Mittal, the billionaire chairman of Bharti Airtel Ltd., India's largest mobile-phone operator, said of the 37th annual meeting of the World Economic Forum. "I've never seen a mood like this."

Warnings by central bankers such as Jean-Claude Trichet were batted away by dealmakers like Michael Klein, co-president of Citigroup Inc.'s investment banking unit, and David Rubenstein, managing director at the Carlyle Group Inc. buyout firm. They were confident in their ability to cope with the inevitable slowdown of the world's strongest economic growth in three decades.

"The consensus here in Davos is everybody's thinking it'll be another booming year," Morgan Stanley Chief Global Economist Stephen Roach said.

Emerging markets, led by China and India, are fueling the global expansion and corporate borrowing has never been easier. The amount of debt used to finance European buyouts reached a record high in the third quarter. The risk of owning European corporate bonds dropped to the lowest ever last week, according to credit-default swap traders.

Bond Risk

"The business community, the financial markets, the world economies are all actually in quite good shape," according to John Thain, chief executive officer of NYSE Group Inc.

`Plummeting' Costs

Griffin, who oversees a $12.8-billion hedge-fund group, was more concerned that government policy or too much regulation may send markets south.

"The price of liquidity has plummeted around the world," Griffin said. "It would be heartbreaking if you were to see regulatory or other changes in the marketplace push up the cost of liquidity again because it's been such a boon for the global economy, particularly for capital formation in South East Asia, Latin America and India."

Central bankers such as Axel Weber, head of Germany's Bundesbank, were blunt in their warnings. He said interest-rate increases in Japan will mop up the global liquidity that has helped fuel the financial-market boom of the past four years.

What is really the contrary call?

"The consensus here in Davos is everybody's thinking it'll be another booming year," Morgan Stanley Chief Global Economist Stephen Roach said.

Nearly everyone is giddy and openly dismissing the possibility of stock market plunges even though we have just seen enormous plunges in Mid-East stock markets. The International Herald Tribune is reporting Saudi prince plans big investment in country's sagging stock market.

The Saudi stock market "has reached reasonable levels," Alwaleed said. The Saudi prince said he would invest another 5 billion riyals, or $1.4 billion, in real estate projects in the kingdom.

The Tadawul, the second-worst-performing gauge after Venezuela among global indexes tracked by Bloomberg, dropped on Jan. 24 below 7,000 points for the first time since Oct. 21, 2004. The measure has lost two-thirds of its value since reaching a record in February 2006.

The Saudi stock market has lost two thirds of its value since February 2006. Of course everyone thinks it is impossible for the US to lose even as much as one third, barring some sort of huge interest rate hike or regulatory change.

"The price of liquidity has plummeted around the world," Griffin said. "It would be heartbreaking if you were to see regulatory or other changes in the marketplace push up the cost of liquidity again because it's been such a boon for the global economy, particularly for capital formation in South East Asia, Latin America and India."

Final Thoughts

Mr. Practical and I look at yield spreads, volatility, and options premiums and note that although they may get lower still they are a lot closer to the absolute bottom than any kind of top. On the other hand, willingness to speculate as measured by massive increases in derivatives is certainly nowhere close to a bottom. It remains to be seen whether or not things in derivative land can get even more extreme than now, but what is certain that much of this risk taking is going to be unwound, and most market participants will not like the result. The outcome is not really in doubt. The timeframe, as Mr. Practical points out, is still in play.

Someone posted on my board on the Fool that we could not have deflation with all this "money" floating around. My reply was that a massive expansion of money and credit is actually a prerequisite for an asset based deflationary bust. Every deflationary bust in history was preceded by an enormous asset bubble and/or credit expansion bubble that bust. Today we have both and it is harder and harder to keep that balloon filled. In 1980 it took $1 of new debt to create $1 of GDP; in 2000 it took $4 and today it takes $7. All of that extra credit is serving no productive means. It is pure speculation and it will be unwound.

Mr. Practical is correct about the carry trade as well. It will eventually be unwound. Therefore long term bullishness on the Yen seems to be justified. Short term, however, I am still sticking with my idea that there may be a huge breakdown in the Yen that causes some mammoth problem somewhere. If that happens I think we will see an enormous whipsaw that I want no part of. Thus from a personal practical standpoint I am sitting on the sidelines. Nonetheless I will have a few charts out shortly, to discuss the Yen in closer detail.

I sense the same thing in interest rates. Very few seem to think long term rates are headed lower even as commercials are starting to build a nice long position in the long bond and are slowly unwinding the short position in the 10-yr note. Commercials are now net long the 2-yr, 5-yr, and 30-yr treasury futures according to the latest commitment of traders report.

I am not sure what will pop this global credit bubble, but I suspect it will not be higher US interest rates or a rising Yen. More that likely it will be either pure exhaustion, something totally off everyone's radar, or simply the reverse of some scenario that everyone expects.

Thanks to Minyanville for sharing the wisdom of "Mr. Practical".

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/

Vacancies Soar / Lending Standards Rise

The US Dept of Commerce released the Report on Residential Vacancies and Homeownership on January 29th.

The report shows national vacancy rates in the fourth quarter 2006 were 9.8 percent for rental housing and 2.7 percent for homeowner housing. A couple of charts better describes what is actually happening.

Homeowner Vacancy Rates



The above chart thanks to Empty Homes Everywhere by Mike Larson.

The following chart is from the Census Bureau.
The last two columns were added by me.

Total US Housing Inventory



A whopping 13% of housing inventory is currently vacant. The rate seems to be increasing at a fairly rapid clip as well. For those who think commercial and/or multifamily construction will pick up where individual residential home sales left off, please take a look at rental vacancies sitting at a 9.8%.

According to the Census Bureau ...
There were an estimated 126.7 million housing units in the United States in the fourth quarter 2006. Approximately 109.9 million housing units were occupied: 75.8 million by owners and 34.2 million by renters. Both the number of owner-occupied units and the number of renter-occupied units were higher than a year ago.

Approximately 1.67 16.7 million homes are sitting vacant in the US (also shown in the above chart). Mammoth supply is being added right as I type as evidenced by all of the homebuilding still going on, and all of the condo towers etc that are still under construction. [Mish note: typo corrected]

Inquiring minds might be asking "Who is going to be buying those homes?".

Lending Standards

Following is an email from a mortgage broker that I received just last week. He wishes to remain anonymous. Today seems to be a good day to post it.

Mish,

Here is the start of lenders getting more conservative when it comes to declining markets. This is Wells Fargo's new policy. This will mean any property in an area that is listed on their declining value list or the appraiser has noted it on the appraisal, the LTV (loan to value) will be cut by 5%. So in reality, if a property has been appraised at $500K and the borrower wants 100% financing the most he will get will be 95% LTV or less depending on the underwriter.

$500K - 5% is $475K a decline of $25K per loan amount on the minimum. Think of the borrowers that are already at 100%? I believe most if not all of San Diego County should be in the declining list. With this as well as appraisers having a hard time bringing in values as well as being very nervous not to push values anymore, there will be a lot of upside down people.

Let's see. Loan standards are tightening, subprime lenders are going bust, inventories are soaring, cancellations are high, prices are falling, and the bottom is in.

Hmmm. One of those does not seem to fit in. Dave Lereah, which one is it? One look at those whopping vacancies should be enough to convince anyone that there is massive and growing supply. One look at the changes in lending standards should be enough to convince anyone that the pool of eligible buyers is shrinking as well. Who now does not have a house that wants one and can afford one? Is there pent up demand or pent up supply? And the recession has not even officially hit... yet. Just who is going to be buying those homes?

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/

30 in 30

Here's a wrap-up of my 30 buildings/places in 30 days:

















Also see my 30in30 Flickr set.

30 in 30: #30

In thinking about how to complete this series on my urban exploration of New York City this last month, part of me wanted to present something new and rarely seen. At the same time, part of me wanted to present something that's been around a while, something that I know somewhat well. I opted for the latter, presenting here the Storefront for Art and Architecture by Steven Holl and Vito Acconci, which I featured on my weekly page way back in 1999, shortly after I started that page.



When I walked by the storefront recently I saw the trademark swinging panels in the closed position. It was Tuesday, so the gallery was supposed to be open, meaning the panels should also be open. Upon opening the entry door stepping inside I discovered why the panels were closed: for the Clip/Stamp/Fold exhibition, the inside surface of this wall was completely covered with a grid of rectangular images, the covers of the magazines on display.



Ever since (and probably before) working on a student-run journal in college many moons ago, I've had a fondness for architectural publications, so I was looking forward to this exhibition, subtitled "The Radical Architecture of Little Magazines 196X�197X." It catalogs a time, "when a remarkable outburst of publications disseminated and catalyzed a range of experimental practices." The exhibition makes this outburst known, overwhelming the visitor with what must be thousands of covers on the gridded wall; opposite are descriptions of the various magazines on curved plastic panels; in between are plastic bubbles containing the actual magazines; lastly, plastic domes hang from the ceiling with audio by various contributors and voices of the magazines.



The exhibition requires a prolonged (or repeated) visit to take in the numerous magazines and their descriptions. Even without the time on my visit I was impressed by the output, coming at a time when architects built little and found a means of expression in words and images on paper. Perhaps this sort of output has been supplanted by blogs and other online ephemera, though -- like books -- there's much to be said for something that can be held in your hands, carried with you, and shared with others. It makes me want to start up my own little magazine!



Apparently others have also been impressed by the exhibition, as its closing date has been moved from January 31 to February 24. For those of you who can't make it, the online companion is a great resource, with descriptions of each magazine in an interactive timeline.

Directions:
The gallery is located at 97 Kenmare Street (at Cleveland Place) in Manhattan's Little Italy area. It can be reached by the 6 to Spring; N,R to Prince; B,D,F,V to Broadway Lafayette.

Previously:
#1 - Church of the Crucifixion
#2 - 40 Mercer Residences
#3 - Dichroic Light Field
#4 - Juan Valdez Flagship
#5 - IAC/InterActiveCorp
#6 - South Court of NYPL
#7 - Louis Vuitton Store
#8 - Ironworkers Local 580
#9 - Korean Presbyterian Church
#10 - Roosevelt Island
#11 - Stabile Hall (Pratt)
#12 - Terian Design Center (Pratt)
#13 - Higgins Hall (Pratt)
#14 - Broken Angel
#15 - Alessi Store
#16 - Irish Hunger Memorial
#17 - Issey Miyake Tribeca
#18 - Stuyvesant Town
#19 - Shake Shack
#20 - Socrates Sculpture Park
#21 - Skyscraper Museum
#22 - Taschen Store
#23 - George Washington Bridge Bus Station
#24 - George Washington Bridge
#25 - skinklinic
#26 - Blue Condominiums
#27 - Sleepwalkers
#28 - Melrose Community Center
#29 - APEX

What lens should I purchase to go with the Canon Rebel XT?

Question: What lens should I purchase to go with the Canon Rebel XT?
The Rebel XT is going to be my first dSLR. What is the best choice for a lens to use instead of the kit lens? I'm looking for something reasonably priced, but of better quality than the kit lens. I would say I'm more interested in portraits than landscapes. Also, is image stabilization in a lens very expensive, and is it worth the extra money? Thank you very much for your help!

Answer from Brenda: Another contender to compare against the 50mm is the Canon 35mm f/2.0 lens. It's built more solidly than the 50mm and also gives slightly sharper results (although I don't have any complaints about image quality on the 50mm, the 35 is a little better). Also, it may be more flexible in terms of focal length. The 50mm will get you some good close-up face/ head/ shoulders portraits, but may not be wide enough for general use whereas the 35mm (times the 1.6x of the camera body) equals 56mm, which is awfully close to a 'general' field of view and should yield good results under typical daily conditions.
If you can play with both before you buy, do so. I think one or the other will suit your needs.

Unemployment - A Lagging or Coincident Indicator

In the last two recessions unemployment was a lagging indicator peaking approximately 18 months after the recession officially ended. In the four recessions between 1970 and 1982 unemployment was a coincident indicator, starting to rise with the recession and pretty much peaking as the economy was just starting to recover. In no instances was unemployment a leading indicator.

The chart speaks for itself.



The above chart thanks to Bart at NowAndFutures.
(Click on chart for an enhanced view)

Conclusion

Those expecting some sort of huge advance warning in unemployment stats in advance of the next recession are unlikely to find it.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/

Monday, Monday

My weekly page update:

Bronx Museum of the Arts in The Bronx, New York by Arquitectonica.

The updated book feature is Sensory Design by Joy Monice Malnar and Frank Vodvarka.

Some unrelated links for your enjoyment:

architect studio
"Architect's word = architect's world." (added to sidebar under blogs::architecture)

dezeen
A new online design magazine that provides "breaking news about what's happening in the design world and shows designers' latest work." (added to sidebar under blogs::design)

DesignNotes
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30 in 30: #29

The Lehman College Physical Education Facility (APEX) in the Bronx by Rafael Vinoly was completed in 1994. What started as a conventional facility became a building that defines the college's northern edge and also provides a ceremonial gateway to the campus from this edge.



The street elevation of the complex is highly unremarkable, a concrete and glass wall that is more the latter than the former. The only relief comes at the aforementioned gateway opening. Once one moves through this opening to the south side of the building, the building changes character. "The building�s roof, a segmented convex curve, descends almost to the ground." Right of the image above are below-grade tennis courts. At left is the view below.



This campus-side elevation could have been extremely overpowering, though the architect skillfully breaks up the expansive roof into sections so that it doesn't appear unrelenting. While it may not "disappear from view" per the architect's intentions, as the campus's north edge it straddles that dividing line between ground and sky, like it's reaching for both at the same time.



On the day I visited, a basketball game was going on, allowing me access inside to see how the submerged gymnasium allows such a low roof. Additionally, this roof shape allows for seating to rise along with it, a sensible solution to the program which also stacks classrooms along the street edge. Nearing fifteen years old, the building's form works well as an icon for the campus, though its exterior and interior appear in need of some maintenance, something normal in the high-maintenance realm of secondary education.



Directions:
The building is located on the Lehman College campus in the Bronx on the south side of West Bedford Park Boulevard between Goulden and Paul Avenues. It can be reached by the 4 to Bedford Pk Blvd Lehman College.

Previously:
#1 - Church of the Crucifixion
#2 - 40 Mercer Residences
#3 - Dichroic Light Field
#4 - Juan Valdez Flagship
#5 - IAC/InterActiveCorp
#6 - South Court of NYPL
#7 - Louis Vuitton Store
#8 - Ironworkers Local 580
#9 - Korean Presbyterian Church
#10 - Roosevelt Island
#11 - Stabile Hall (Pratt)
#12 - Terian Design Center (Pratt)
#13 - Higgins Hall (Pratt)
#14 - Broken Angel
#15 - Alessi Store
#16 - Irish Hunger Memorial
#17 - Issey Miyake Tribeca
#18 - Stuyvesant Town
#19 - Shake Shack
#20 - Socrates Sculpture Park
#21 - Skyscraper Museum
#22 - Taschen Store
#23 - George Washington Bridge Bus Station
#24 - George Washington Bridge
#25 - skinklinic
#26 - Blue Condominiums
#27 - Sleepwalkers
#28 - Melrose Community Center

30 in 30: #28

The Melrose Community Center by Agrest + Gandelsonas in the South Bronx is "primarily geared towards teenagers, providing them with facilities for activities such as athletics, arts and crafts, videos, and computing," according to the architects.



The project is composed of two distinct volumes: an ovoid piece containing a gymnasium and a bar piece containing classrooms. Both are linked by the entrance. The above view shows what would be the back of the building, though here it is at its most transparent with the single-loaded corridor of the bar facing the lawn and street beyond. The front door and its hard horizontal and vertical planes shown below is a much different character. This side facing the housing blocks that the community center serves.



While the character of the bar building is "two-sided," the ovoid piece is consistent around its perimeter. Staggered aluminum panels sit above a concrete block base. A small window near the entry gives a peek into the gymnasium's interior. If this solid form were rectangular rather than oval, with sharp edges rather than a continuous soft surface, the "symbolic aspect of the project ... in its social function for the local residents who live amongst one of New York City�s highest crime rates" might be much different.



Down the street from this project is the Bronx County Hall of Justice by Rafael Vinoly. The massive, 775,000 s.f. complex consists of an unrelenting facade on 161st Street but a sensitively-handled courtyard to the rear. I bring this up because in this courtyard is a circular chamber that recalls this earlier Community Center both in uniqueness of form (set against orthogonal buildings) and material treatment (solid with sloping element). Perhaps Vinoly saw this earlier success and incorporated a similar feature into his more high-profile commission.



Directions:
The building is located at the southeast corner of Morris Avenue and 156th Street. It can be reached by the B,D,4 to 161 St Yankee Stadium.

Previously:
#1 - Church of the Crucifixion
#2 - 40 Mercer Residences
#3 - Dichroic Light Field
#4 - Juan Valdez Flagship
#5 - IAC/InterActiveCorp
#6 - South Court of NYPL
#7 - Louis Vuitton Store
#8 - Ironworkers Local 580
#9 - Korean Presbyterian Church
#10 - Roosevelt Island
#11 - Stabile Hall (Pratt)
#12 - Terian Design Center (Pratt)
#13 - Higgins Hall (Pratt)
#14 - Broken Angel
#15 - Alessi Store
#16 - Irish Hunger Memorial
#17 - Issey Miyake Tribeca
#18 - Stuyvesant Town
#19 - Shake Shack
#20 - Socrates Sculpture Park
#21 - Skyscraper Museum
#22 - Taschen Store
#23 - George Washington Bridge Bus Station
#24 - George Washington Bridge
#25 - skinklinic
#26 - Blue Condominiums
#27 - Sleepwalkers

Consumer Advocacy

Someone claiming to be a "consumer advocate" told the Senate Banking Committee that to make things "fair", There should be an annual fee on credit cards for those that do not carry a balance.

Let's take a look at the twisted logic:

In a Senate hearing targeting credit card practices, one consumer advocate suggests an annual fee might lighten the load on those who pay high penalties.

In most instances today, it would be silly to pay an annual fee for a credit card simply because most cards don't have them anymore. But in a Senate Banking Committee hearing examining credit card practices this week, one consumer advocate suggested those who pay their balances in full every month (about half of all cardholders) should pay a small annual fee to credit card companies.

Why? To pay their fair share.

Those who carry balances on which they pay interest and fees are subsidizing cardholders with no revolving balance who may even be in rewards programs, said lawyer Michael Donavan of Philadelphia-based Donavan and Searles. He represents those who have unwittingly fallen into many of the sandtrap fees and penalties embedded in hard-to-understand credit card agreements.

Restoring small annual fees on cards used by "non-revolvers" would bolster revenues for card issuers, who then in turn might not make life so expensive for those with revolving balances.

But, Donovan testified, "it's not a question of financial literacy and never will be." The problem as he sees is it is the ability of credit card issuers to change the terms of the agreement with just 15 days' notice.

"The credit card is one of the only contracts in common law anywhere in which the superior bargaining entity can change its terms at anytime for any reason," Donavan said. "If they can change the contract on an existing balance, then they will always have an unfair advantage."

What Donavan is proposing is nothing but socialist nonsense. A law requiring an annual fee would do two things:

1. Penalize the prudent
2. Reward the spendthrifts

Had it not been for Donavan's complaint about credit card companies being able to change contract terms at will for any reason, a reasonable person might have wondered if he was a banking industry shill rather than some sort of consumer advocate. His concern over contract changes seems to indicate otherwise. But if Donavan really wants to be a consumer advocate I think he should pursue the legality of those contracts and take a good hard look at current bankruptcy laws instead of attempting to punish the prudent. If anything, Donavan should be encouraging those with balances to pay them off rather than punish those who do.

There is no need to punish the prudent anyway. After all credit card companies make a profit off card transactions by charging merchants a processing fee on every transaction. Enough is enough.

Credit Card History

In 1996, the U.S. Supreme Court in Smiley vs. Citibank lifted the existing restrictions on late penalty fees. In response fees have soared.

Usury Laws

According to BankRate.com there are Few protections left for consumers.

Some states don't have usury caps, and in those that do, federal law usually supersedes state law when it comes to setting rates and fees.

This trend began in the late 1980s. Most big banks packed up and moved their credit card operations to "debtor-friendly" states such as Delaware, said Steven Palmer, managing partner and a specialist in usury law at Palmer, Allen & McTaggart, a corporate law firm in Dallas.

The lure was "being able to charge higher fees," Palmer said. "When some of the banks left Texas, several of the credit card operations were spun off. Mercantile National Bank became Mcorp and they transferred to Wilmington, Delaware. That became Lotmus, which is now FirstUSA. [Mish note: FirstUSA became Bank One in a merger. Then Bank One merged with JPMorgan/Chase].

No limit on rates in 26 states

There are 26 states that have no limit on what bank credit card issuers can charge for interest rates, according to the American Bankers Association. Issuers in 27 states have no limit on what they can charge for annual fees.

California, Delaware, South Dakota and Tennessee are among the states offering the least protection. These four states currently have no maximums on the following:

� delinquency fees
� cash advance fees
� over-the-limit fees
� transaction fees
� stop payment fees
� ATM fees
� mandatory grace period

Consumer Protection

If that was not enough "juice" to squeeze in and of itself, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 attempts to make consumers debt slaves forever. Some provisions of the new law as referenced in the above link are as follows:

• Increasing the amount of paperwork which must be filed by every debtor, requiring pre-filing Credit counseling and post-filing financial education for debtors whose debts are primarily consumer debts, increased filing fees, and increasing attorney obligations in a manner that, collectively, will increase the cost of filing for bankruptcy.
• Making it more difficult for individuals to receive a Chapter 7 discharge. A means test is to be imposed on would-be filers to test if they have enough disposable income to fund a Chapter 13.
• Making Chapter 13 less attractive by, amongst other things, requiring five year payment plans (for above median debtors) rather than the three year plans that were previously the norm.
• Allowing creditors to pursue collection remedies without court permission in various circumstances such as offsetting tax refunds, pursuing tax and domestic relations litigation in all respects except the final turnover of assets from the estate, establishing wage assignments in domestic relations actions, repossessing vehicles and personal property subject to loans or leases 45 days after the first meeting of creditors in cases where no court action has been taken regarding that property, and allowing evictions that completed the court process prior to the filing of the petition or involve endangerment to property or drug use to proceed.
• Requiring that debtor counsel conducts an investigation of their clients' filings and be personally liable for them, not present under prior law. In addition, bankruptcy filings will now be subject to audit in a manner similar to tax returns.

Exactly what consumer protections can anyone find in the above law? I suggest there are none. In fact, whenever "protection" of any kind is listed in any bill there is a near certain guarantee that it provides anything but protection for whatever is supposedly being protected.

Consumer advocates wanting to do something worthwhile might attempt to get the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 rewritten or better yet scrapped altogether.

That "consumer protection" law was as one sided as things can get. Not only do credit card companies get to charge rates that can only be construed as usury, they justify those high rates because of default risk, then they manage to get legislation passed to minimize the risk of default while still charging enormously high rates.

To top it all off, some "consumer advocate" comes along proposing socialist claptrap that things would be more "fair" if credit card companies would just charge everyone still more fees.

This sequence of events is exactly the kind of nonsense one sees when a problem is not rectified at the source. The source is poor legislation in the first place. In an attempt to fix problems with poor legislation, additional legislation cresting new problems (usually without fixing the original problem) is put on top of it. The process continues over years and years until someone comes along proposing a misguided "solution" that amounts to making everyone pay still more.

Two possible ways to fix the general problem

1. Eliminate all corporate lobbying and corporate campaign contributions
2. Eliminate the middleman

Number one should be self explanatory. If Senators and Congressmen did not get campaign contributions and wining and dining by corporate lobbyists, perhaps they could think on their own and do what is needed instead of what corporations want. As it stands now, bills may as well be written by the corporate lobbyists with the deepest pockets, because in practice that is exactly what is happening. That brings up solution number two.

Number two is not self explanatory but the middleman in this case is a bunch of Senators and Congressmen who can not think for themselves. Instead they pass legislation written by corporate lobbyists. Every bill is so loaded up with provisions written by lobbyists that those voting do not even understand what they are voting on. Heck, not only do they not understand what is in the legislation, in many instances they have not even read the bills they are passing in the first place. The way around this problem is to simply eliminate the middleman and instead directly elect corporate lobbyists. That way, when someone runs for office you know how they will vote.

To make idea number two idea work a full disclosure law would be needed. Such a law would require statements from candidates like the following: My direct sponsors are the NRA, Pfizer, and Exxon Mobil. My indirect sponsors are the "Citizens For Wonderfully Clean and Ozone Free Air" and the "Coalition for Fruitful and Responsible Gun Legislation". Please note that the former is 100% funded by Exxon Mobil and the latter is 100% funded by the NRA. Rest assured that any legislation I pass will be in the interests of my direct sponsors. If and only if my direct sponsors do not have a position on any particular issue, will I be allowed to vote according to my conscious. Should there be a conflict of interest between sponsors, the sponsor contributing the most money to my campaign will get the nod. "

Note: The above example in italics is pure sarcasm. There is no such thing as "Citizens For Wonderfully Clean and Ozone Free Air" nor is there a "Coalition for Fruitful and Responsible Gun Legislation". Any resemblance of those names to actual corporate names is unintended and purely accidental. Thus Exxon Mobil and the NRA support no such organizations that I am aware of.

Since neither of those solutions is likely anytime soon I simply ask those who purport to be consumer advocates take a position that actually benefits consumers. Is that too much to ask?

Mish addendum:
Those who agree or disagree with this post can email their comments to Donovan and Searles at their "contact us" form:

Please feel free to reference this blog
Consumer Advocacy
http://globaleconomicanalysis.blogspot.com/2007/01/consumer-advocacy.html

Or simply put this insanity in your own words.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/

30 in 30: #27

Sleepwalkers is a video installation by Doug Aiken that is currently on display (until Feb. 16) on the facades of the Museum of Modern Art in Midtown Manhattan. The images project "the nocturnal journeys of five city inhabitants," played by Tilda Swinton, Donald Sutherland, Chan Marshall (Cat Power), Seu Jorge, and Ryan Donowho.



The piece is described as a broken narrative, without beginning or end, where the characters "entwine across the building's surfaces in combinations that change cyclically throughout the course of the evening." On my visit this entwining was apparent as movement was consistent across the different images or stories. Unfortunately it was way too cold to stick around and take in the full cycle.



This is not only the first large-scale public artwork in the United States for the artist but also the first artwork to engage MoMA's latest expansion by Yoshio Taniguchi. To fully experience the piece one must walk from the 53rd side, along the western end of the museum, and end in the courtyard where the most images are displayed.



In the courtyard five of the eight images are displayed. These images are projected onto the museum's glass curtain walls. I'm guessing that by darkening the interior spaces that the effect of a readable image is created, rather than adding a film to the glass to achieve the same. Regardless of technical details, the impact on the courtyard space is undeniable.



Directions:
MOMA is located at 11 West 53rd Street, between Fifth and Sixth Avenues. It can be reached by the B,D,F,V to 47-50 Sts Rockefeller Center.

Previously:
#1 - Church of the Crucifixion
#2 - 40 Mercer Residences
#3 - Dichroic Light Field
#4 - Juan Valdez Flagship
#5 - IAC/InterActiveCorp
#6 - South Court of NYPL
#7 - Louis Vuitton Store
#8 - Ironworkers Local 580
#9 - Korean Presbyterian Church
#10 - Roosevelt Island
#11 - Stabile Hall (Pratt)
#12 - Terian Design Center (Pratt)
#13 - Higgins Hall (Pratt)
#14 - Broken Angel
#15 - Alessi Store
#16 - Irish Hunger Memorial
#17 - Issey Miyake Tribeca
#18 - Stuyvesant Town
#19 - Shake Shack
#20 - Socrates Sculpture Park
#21 - Skyscraper Museum
#22 - Taschen Store
#23 - George Washington Bridge Bus Station
#24 - George Washington Bridge
#25 - skinklinic
#26 - Blue Condominiums