“Americans, while occasionally willing to be serfs, have always been obstinate about being peasantry.” - F. Scott Fitzgerald, The Great Gatsby The Great Gatsby was published in 1925 and chronicles the Jazz Age and captures some of the excess of the roaring 20s.  F. Scott Fitzgerald wrote the novel during a time in which there was booming […]
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■Bank Failure: IndyMac Bank. Lessons from the Great Depression Part XIV. Bank Failures.
■The Lords of Money Speak: Even the Prime Will Fall. Lessons From the Great Depression Part XV. The King JPMorgan Speaks.
■The Sham of our Current Unemployment Rate Numbers: Lessons from the Great Depression: Part X. Data Mining.
■The Day Housing Faced the Plague of Locusts: Lessons from The Great Depression Part XIII. Facing our Own Economic Pilgrimage.
■Home Shopping Crisis Network: When the Ballyhoo Years Turn Into Relics of Excess. Lessons from the Great Depression Part XVI: Items That Sold in the Credit Bubble.

“Americans, while occasionally willing to be serfs, have always been obstinate about being peasantry.”
- F. Scott Fitzgerald, The Great Gatsby

The Great Gatsby was published in 1925 and chronicles the Jazz Age and captures some of the excess of the roaring 20s.  F. Scott Fitzgerald wrote the novel during a time in which there was booming economic prosperity and to a certain extent the novel idolizes riches and glamour yet throughout the book there is a slight discomfort of the unchecked materialism.  Even though it is now largely read by most Americans, this book was not popular during its initial publication or subsequent years.  A few years later, the Great Depression took hold and many of the themes in the novel simply did not apply to the large majority of Americans.  To talk about unrestrained prosperity during the 1930s was absurd.  After the Great Depression America had its mind preoccupied with World War II.  Only after these major events did this novel garner any large readership.

The idea of the nouveau riche is something that has always been a part of the American spirit.  Horatio Alger captured this by his popular rags to riches stories during the 19^th century.  So this current era of economic boom is nothing new.  One of my real estate mentors once told me that, “you Californians have all hat and no cattle.  Everyone goes around pretending to own things with money they don’t make.”  This was a few years ago and those words ring loud and clear in what is going on today in our current economic collapse.

The idea of “ownership” has morphed in the last few decades.  Owning something became more about appearances rather than actually having complete possession of material objects.  There is one thing that highlights this point to perfection.  The auto lease.  Chrysler recently announced that through its financing arm that they will not be offering any additional leases:

“(WSJ) A week ago Chrysler LLC announced its financial arm would stop offering leases on new cars and trucks, effective Friday. For some dealers, the move has sparked a boomlet.

“It has been a frenzy,” said Paul Steel, who runs three dealerships in Michigan, including Southfield Chrysler Jeep outside Detroit. “Everyone is trying to get in now on a three-year lease hoping that Chrysler Financial will get back in the game by the time their lease is done.” Mr. Steel has kept his dealerships open until midnight every night since Monday, and he expects his staff will be working until at least 2 a.m. Friday to process all the orders.”

A friend of mine told me that leasing is a way of “hiding the cheese” of those that actually make a good sum of money.  With the current unforeseen spike in fuel prices the large truck market has come to a screeching halt.  Many dealers such as Chrysler, Ford, and GM are getting hammered by people bringing back their trucks from short leases and are finding no market for trucks.  In addition, the value of each leased truck that is brought back is costing them a sizable amount since it has depreciated significantly due to market conditions.  Housing isn’t the only thing that is crashing.  With many of these dealers cutting back, we will start seeing who really has the “cheese” and wealth.

This is part XVII in our Great Depression series:

12. Is the DOW now Tracking with the California Housing Market?

13. The Federal Reserve.

14. Bank Failures.

15. The King JPMorgan Speaks.

16.  Items That Sold in the Credit Bubble.

This phenomena isn’t only a California issue.  The entire automotive industry relied on this easy credit decade and played into the “all hat and no cattle” sociological trend.  The majority of people thought that by simply leasing a car too expensive for them to own that they somehow were wealthy.  What really was unfolding is the same thing as those that purchased homes with Pay Option ARM mortgages and had an artificially low rate.  The entire economy was built on people pretending that they actually owned artifacts of the wealthy when the reality of the situation was that their balance sheets were on the verge of becoming insolvent.

I’ve tried to understand the psychology of this and think that as a society, certain constraints were removed that allowed this excess to flow.  First, the idea of financial prudence was completely removed.  The “greed is good” mentality flowed unchecked.  After all, why do an honest hard day of work when you can get a $10,000 commission check for putting someone in a toxic mortgage?  Why would hedge funds on Wall Street want to invest in sustainable slow growth companies that add value when they can invest in CDOs and MBS that were yielding rates twice or even three times as much?  Instant gratification.  There was really no point in looking ten steps ahead when all the wealth was at your door knocking right now.

The media fed right into this.  It took two to tango.  The majority of those in society now labeled as “consumers” were fed by their opposite side the “producers” and all was well.  People wanted homes, we will build homes.  People wanted huge gas guzzlers, we will build huge gas guzzlers.  People want easy credit, we will give them easy credit.  The unchecked consumption is what we are now dealing with.  That is the problem.  All the solutions being thrown around somehow still have nostalgia for going back to this lifestyle.  We can’t even if we wanted to because we have reached the tipping point of maximum debt.  Take a look at our nation’s debt:

With the backstop to Fannie Mae and Freddie Mac we have virtually guaranteed that the total Federal debt will surpass $10 trillion in the next few months.  As distressing as the above figure is, the American consumer has outdone the actual Federal government.  Take a look at household debt and liabilities:

The American consumer is on the hook for $13.1 trillion in obligations.  This is for mortgage, auto, and consumer debt.  The majority of that debt is with mortgages.  Now the thing that is occurring is that the underlying assets like McMansions with uranium countertops and civilian tanks with spinning chrome rims are actually losing value as we speak.  The debt itself is still valued at the peak price.  Welcome to wealth destruction.  This is actually deflationary since each foreclosure and each leased truck being dropped off at the dealer is forcing someone to take a loss.  The higher prices with fuel and groceries is simply a reflection of our declining dollar.

Given that a large number of people never could really afford a $60,000 SUV or a $600,000 home, prices simply by the law of economics are going to have to come down.  They already are.  This is how the free market should work.  These items are now being valued at their true market rates and not under the decade long Ponzi scheme where the new economic paradigm was, “trade up because it will always go up in value.”  Even with the new FHA guidelines people are now going to have to show their actual income and not their brokers made up $250,000 income from working at Target.  Those with the cheese, that is good credit and incomes to match, will be able to buy assets at vastly discounted prices.  The only reality is this group isn’t as large as many of these companies would like to believe.

Think this isn’t the case?  Here are a few examples of people looking to protect their hats:

“(Slate) Along with free trade and the SUV, another ’90s-era icon that seems to be dying is “casual dining.” The Bennigan’s and Steak and Ale chains closed down and will file for Chapter 7 bankruptcy, “the latest casualties in the so-called casual dining sector, considered a cut above fast food,” as the NYT puts it. Technically, only the 150 or so corporate-owned branches-not the roughly equal number of franchisees-are immediately affected, “but the franchisees now find themselves owning a brand with no corporate cousins,” as the Dallas Morning News points out.”

Think Bennigan’s is the only one feeling the pinch?  How about a local popular chain P.F. Chang’s:

Over the last 5 years, the company is now down by 45%.  I’ve noticed this a couple times during lunch meetings and the foot traffic is demonstrably slower.  Or what about the ultimate resilient Starbucks?  Everyone needs their latte right?

People are cutting back drastically because they have no other choice.  If anything, they are simply trying to realign their balance sheets and now that credit is much more restrictive, it is becoming rather apparent that their spending was all hat.  It is time to seek out the cattle if there is any left.  Yet it isn’t all bad news.  Too early to call a trend but some retailers are actually looking at Great Depression fashion:

“(NY Post) The duds say it all - and it’s depressing.

Taking a cue from the grim economy, this fall’s fashions at Banana Republic, Gap and H&M are featuring a distinctly Depression-era trend of cloche hats, pencil skirts, conductor caps and baggy, vintage-style dresses.

One of the most popular styles appears to hark back to the impish, newsboy getup of the 1930s: baggy trousers, caps, pinstriped vests, oxford lace-up shoes and utilitarian handbags.

“We associate the newsboy look with urban poverty - street kids of the 1930s,” said Daniel James Cole, a professor at the Fashion Institute of Technology.

“Given that we’re in an unstable economy and an uncertain political landscape, it’s possible that a retro style has come back as a way to connect with our heritage.”

Connect with our heritage?  How about connecting with reality.  Amazing that all this talk about recession and depression is happening during a stable time according to some politicians.  We’ve lost jobs for 7 months in a row:

That is the reality of the situation.  What we are learning is much of the cattle that we had was on a short-term lease and now we need to pony up if we want to continue that lifestyle.  Hard to continue funding conspicuous consumption when jobs are being lost.

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The All Hat and No Cattle Nation: Lessons from the Great Depression Part XVII: When Economic Times Cause and Economic Tipping Point.

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Related Posts:
■Bank Failure: IndyMac Bank. Lessons from the Great Depression Part XIV. Bank Failures.
■The Lords of Money Speak: Even the Prime Will Fall. Lessons From the Great Depression Part XV. The King JPMorgan Speaks.
■The Sham of our Current Unemployment Rate Numbers: Lessons from the Great Depression: Part X. Data Mining.
■The Day Housing Faced the Plague of Locusts: Lessons from The Great Depression Part XIII. Facing our Own Economic Pilgrimage.
■Home Shopping Crisis Network: When the Ballyhoo Years Turn Into Relics of Excess. Lessons from the Great Depression Part XVI: Items That Sold in the Credit Bubble.

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Filed under: Deals, Google (GOOG), Next big thing, Small business

Founded in 2002 - during the dark times of the Internet - Friendster became one of the pioneers of the social networking space. The company quickly got traction and even attracted the interest of Google (NASDAQ: GOOG). But, of course, MySpace and Facebook had ultimately beat out Friendster.

Yet, the plucky website hasn’t given up. In fact, the company has announced a $20 million round of venture capital. The investors include heavyweights like IDG Ventures, Kleiner Perkins Caufield & Byers, Benchmark Capital, DAG Ventures and Founders Fund. In all, Friendster has raised $50 million.

Actually, Friendster is ranked as the 9th most trafficked site in the world, with a heavy penetration in Asia where it is the #1 social networking platform. There are about 75 million registered users.

Interestingly enough, Friendster has a broad portfolio of patents, which perhaps can be used as leverage when combating its rivals. What’s more, the company has done quite well in terms of adding features and providing a good user experience.

To help keep things on the right track, Friendster has hired Richard Kimber as its CEO. He was formerly a regional managing director of South Asia for Google. Apparently, he’ll be spending much of his time in Asia, trying to put together partnerships.

While social networking seems to be maturing in the U.S., there still are great opportunities in foreign markets. Furthermore, with $20 million more in the bank, Friendster can broaden its footprint and perhaps be a hot property for an acquisition.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Filed under: Before the bell, Earnings reports, Analyst reports, Analyst upgrades and downgrades, Deals, Yahoo! (YHOO), Apple Inc (AAPL), Cisco Systems (CSCO), Starbucks (SBUX), Market matters, Archer-Daniels-Midland (ADM), Federal Natl Mtge (FNM), Procter and Gamble (PG), Amer Intl Group (AIG), News Corp’B’ (NWS), Alcatel-LucentADS (ALU), Analyst initiations, Economic data, Liz Claiborne (LIZ)

U.S. stock futures were lower Tuesday morning as oil prices continued to decline, with crude falling below $120 a barrel on demand concerns due to the economic slowdown in the U.S. Commodities in general have been declining. Also today, the Federal Reserve will announce its decision regarding interest rates and it is widely expected they will remain unchanged. Similarly, the Fed’s outlook statement about outlook and focus may also remain largely the same according to expectations. Meanwhile, overseas, both the ECB and BoE are expected to leave rates unchanged.

One of Yahoo! Inc. (NASDAQ: YHOO)’s largest shareholders, Capital Research Global Investors, had asked to review the vote in last week’s re-election of the Internet giant’s board. Specifically, I guess, it was surprising the vote showed strong support — 85% — for CEO Jerry Yang. There’s no sense dancing around this issue; basically the shareholder implies suspicions of wrongdoings (or really really incompetent tallying of votes).

Bloomberg reports that analysts now expect Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) to report net losses through the first quarter of 2009 as home-loan delinquencies rise to the highest on record. The the biggest U.S. mortgage-finance companies report tomorrow and according to estimates will show a loss of 74 cents and 60 cents per share respectively. The losses may be greater than expected as we’ve seen before analysts underestimating the credit losses. It will not be pretty.

Continue reading Before the bell: YHOO, FNM, PG, ADM, ALU, AAPL, SBUX …

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Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO), Bristol-Myers Squibb (BMY), ImClone Systems (IMCL)

Bristol-Myers Squibb (NYSE: BMY) has made a $60 a share offer for the part of ImClone (NASDAQ: IMCL) that it does not already own. ImClone chairman Carl Icahn does not think tha$60 is high enough, despite ImClone trading below $40 in June. The offer seems like a pretty good deal, and since BMY owns 17% of ImClone , there is not likely to be another bidder.

According to The Wall Street Journal, ImClone’s board appointed a committee to review last week’s $60-a-share offer, but the biotechnology company said the board’s “preliminary view is that offer substantially undervalues ImClone.”

Icahn should take the money and run. Bristol-Myers clearly has the option to withdraw its bid and watch the stock drop back to $45. Holders of ImClone stock would likely get POed at Icahn, and is it any wonder?

It is not a perfect match, but the ImClone negotiations are starting to shape up the way Microsoft’s (NASDAQ: MSFT) talks with Yahoo! (NASDAQ: YHOO) did. Microsoft needed Yahoo! for its internet strategy. No other company was going to pay a large premium for the portal’s shares. When Microsoft walked away, Yahoo!’s share lost a third of their value.

Icahn has a history of pushing for a better deal. His batting average on recent investments is hardly perfect. He is not doing anyone, including himself, any favors by fighting with Bristol-Myers.

Douglas A. McIntyre is an editor at 247wallst.com.

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Nouriel Roubini, former White House economic advisor and most recently foreseer of the housing and credit bust has a great article in Barron’s where they dig in to his all-to-prescient forecasts of the economy.

Here is just a brief excerpt, but it’s more than worth the entire read.

From Barron’s (via Roubini’s blog RGE Monitor):

LIKE THE EXHORTATIONS OF JEREMIAH TO THE NATION OF Israel before the first temple’s destruction, the warnings of economist Nouriel Roubini fell on deaf ears. For the past two years Roubini, a professor at New York University, has cautioned about a huge housing bubble whose bursting would lead to a 20% drop in home prices; a collapse in subprime mortgages; a severe banking crisis and credit crunch; the near-failure of Fannie Mae and Freddie Mac , and a U.S. recession of a magnitude not seen since the Great Depression. So far, this latter-day prophet of doom has been on the mark, though time will tell about the recession part.

What recourse will the taxpayer have?

The taxpayer’s bill is going to be huge. I estimate this financial crisis will lead to credit losses of at least $1 trillion and most likely closer to $2 trillion. When I made this analysis in February everybody thought I was a lunatic. But a few weeks later the International Monetary Fund came out with an estimate of $945 billion, Goldman Sachs (GS) estimated $1.1 trillion and UBS (UBS) $1 trillion. Hedge-fund manager John Paulson recently estimated the losses would be $1.3 trillion, and late last month Bridgewater Associates came up with an estimate of $1.6 trillion. So, at this point $1 trillion isn’t a ceiling, it’s a floor. And the banks, as I’ve said, have written down only about $300 billion of subprime debt.

How long will it take for the collapse in the banking sector to play out?

It is happening in real time. Many smaller banks are going bust already. More than 200 subprime-mortgage lenders have gone bust in the past year alone. And many community banks will go bankrupt. Community banks usually finance everything: the homes, the stores, the downtown, the commercial real estate, the shopping center. If you are in a town or a municipality where there is a housing bust, the bank is gone. Of three dozen or so medium-sized regional banks, a good third are in distress. That includes the Wachovias and Washington Mutuals of the world. Half of this group might go bankrupt. Even some of the majors could end up technically insolvent, though they might be deemed too big to fail.

Take Citigroup. In 1991 there was a small real-estate bust, though the quarterly fall in home prices was only 4%, based on the S&P/Case-Shiller indices. Citi was effectively bankrupt and signed a memorandum of understanding with the Fed that allowed the government to give the bank regulatory forbearance. Citi was allowed to ride it out and try to recapitalize in a few years, and thereby avoid bankruptcy protection. This time around the S&P/Case-Shiller indices indicate home prices already have fallen 18%. The decline could be as much as 30%, because the excess supply is huge.

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Filed under: International markets, Forecasts, Bad news, Products and services, Management, Competitive strategy, Employees, Japan, Economic data, Workspace, Oil

Over the past year, automakers have struggled to deal with the tough economic conditions in North America, especially the United States. One of the companies that has been able to handle the slowdown better than its peers has been Toyota (NYSE: TM). But the effects are being felt even by the Japanese automaker, as made clear today in the news that the company is laying off 800 workers in one of its Japanese plants.

The 800 workers that are being laid off represent about 10% of the workforce at the company’s plant in southwestern Japan. So far, the company has been able to sidestep the steep losses that its American rivals have been forced to deal with, but this year is proving to be a bit tougher, as the company is now predicting a first annual drop in profit, which would be the first time in the past seven years that the company has seen profit fall.

Toyota has been more fortunate than many automakers, mostly due the fact that the company has a long history of building smaller, more fuel efficient cars. This fact alone has helped it weather the slowdown that record high gasoline prices in the U.S. have helped create. Last Friday, however, the company stated that sales dropped 18.7% in July from the same period last year.

Continue reading Toyota (TM) forced to lay off workers in response to U.S. market

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Before you ring the bell and signal the end of the California housing bubble, there are cities and properties that still defy the laws of economics.  California has corrected hard.  The velocity of the one year correction is unlike anything we have ever seen in the history of our housing market.  Seeing prices drop by […]
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■Real Homes of Genius: Today we Salute you Pacoima. Zillow says $457,000 but Listed at $225,000?
■Real Homes of Genius: Today We Salute you Huntington Park. Tweedledum and Tweedledee of housing. $500,000 Homes in Wonderland.
■Real Homes of Genius: Today we Salute you Stanton.
■Real Homes of Genius: $80,000 off in San Fernando for 865 Square Feet of Joy!

Before you ring the bell and signal the end of the California housing bubble, there are cities and properties that still defy the laws of economics.  California has corrected hard.  The velocity of the one year correction is unlike anything we have ever seen in the history of our housing market.  Seeing prices drop by 38.3% in one year has literally pulled the rug out of thousands of would be sellers.  The California housing market is in the eye of the hurricane and many are shell shocked not knowing what their next move will be.

Part of the unintended consequences of foreclosure is many people are leaving pets behind.  For a variety of reasons, many simply decide to pick up and go and let the pets fend on their own.  The national media has been covering the story of Powder the 44-pound cat who is a victim of the foreclosure crisis:

Powder, initially named “Princes Chunk” was found wandering the streets in New Jersey after her owner gave the cat to a friend who was supposedly going to take the cat to a local shelter.  As it turns out, Powder was left on her own roaming the streets (as much as she could move around).  Of course with all the media coverage the cat will find a home.

In California another problem has been with foreclosed homes with pools that suddenly becoming breeding grounds for mosquitoes.  In fact, local experts have recently attributed larger mosquito populations that correlate to the rise in foreclosures.  One recent estimate puts 4,000 Los Angeles foreclosed homes with having a pool.  Since the notice of default count is rising and many of these are simply foreclosures waiting to happen, we can expect many of these problems to occur in the future.

The notice of defaults usually meant a warning to sell the home.  That normally was the case for years as the California housing market kept rising and rising and homeowners who bit off more than they could chew would simply offload the home into the market normally at a profit.  With massive declining prices and many buyers going in with zero to very little down, any cushion of selling is completely gone.  They are underwater on the mortgage usually by tens if not hundreds of thousands of dollars.  Take a look at the notice of default chart:

The more disturbing trend is many of the NODs are now turning into foreclosures.  Without a jump in home prices, we are virtually guaranteed another year of massively high foreclosures.

I did a recent report analyzing the 270 zip codes in Los Angeles County’s 88 cities and found that only 28 of those zip codes had a positive year over year increase in home prices.  What we can see from the progression of price declines is that the last hold outs in prime areas are still holding hope that there status symbol will keep them above the rest.  Today we are going to look at one of those zip codes in Santa Monica that is still up 28.9% on a year over year basis.  That is correct, as the entire county of Los Angeles is down nearly 40% on a year over year basis, this hold out is still up 28.9%.  Today we salute you Santa Monica with our Real Homes of Genius Award.

The Name Can Only Carry you so Far

Today’s home takes us to the wonderful city of Santa Monica.  Many people out of the state have a hard time understanding why Santa Monica carries such a heavy premium.  First, it is an excellent location.  Near the beach and centrally located to the entertainment zones in Los Angeles.  It also carries the prestige of the 310 area code.  This area code is desired because it carries the affluence of the West Side of Los Angeles that includes Beverly Hills and Malibu as well.

Yet more and more, simply having a home in said area code isn’t enough to command eye-popping prices.  The above home is a perfect example.  It is located in the 90405 zip code in Santa Monica that carries a median price of $1,625,000, an increase of 28.9% over the past year even given the current housing turmoil.  Yet this house isn’t seeing much of that big gain.  This 929 square foot home with 2 bedrooms and 1 bath was initially put on the market for $1,099,000 in May.  Seems like a steep price tag for a place built in 1937 but apparently that doesn’t seem to matter.

After being on the market for over 2 months, they decided to lower the price by $130,000 in June.  In 2 months did the price really drop $130,000 or is this just another example of the pie in sky anyone will pay whatever price because of the 310 area code mentality?  The current price is now at $969,000.  The ad seems to encourage the buyer to think about a “possible room for a pool” or about “double your living area” if you are not content with 929 square feet for nearly $1 million.

If we look at the sales history, someone is still poised to make a nice profit and that is something to be said given the current housing malaise:

Last sale and tax info

Sold 01/19/2007:         $835,000

So if the home were to sell at the current price, we get the following:

$969,000 - $835,000 = $134,000 in profit in one year and seven months.  That profit seems about as much as that $130,000 price reduction.  Even though prices have been jumping in this zip code, sales have been falling.  Another issue is many homes that recently sold in this area, even a few streets away have gone for $600 to $800 per square foot.  At 929 square feet, this puts our math at:

929 x $600 = $557,400

929 x $800 = $743,200

The current price tag puts a $1,043 premium on this place and the market isn’t responding.  We are left with a really stunning range of prices here and since sales are so few, only 3 in June of 2008 for this zip code, it is hard to say how things will play out on this home.  Incomes are high in this area with an adjusted gross income of nearly $100,000 per tax return filed:

*Source:  MelissaData

Given tax write-offs and other deductions, this income understates the actual true income of local households.  So let us assume a person making $150,000 a year wants to purchase this place with 10% down.  Let us run the numbers:

Purchase Price:            $969,000

Down payment:          $96,900

30 year fixed mortgage at 6.52% (PITI):        $6,532/per month

Gross Income:             $150,000 / per year

Net Income:                $7,634 / per month

So with that said, over 85% of this person’s net take home pay is going to pay for housing.  We are simply including the principal, interest, taxes, and insurance.  What if the person wants to add that pool?  What if they want to upgrade the kitchen?  Granite countertops anyone?  A remodel?  Anyone that owns real estate knows that the PITI is only the beginning in expenses.  As you can see even a person with a solid income would be shelling out too much for this home.  In fact, given the current FHA standards this person wouldn’t even qualify for a loan on this place!

Today we salute you Santa Monica with Real Homes of Genius Award.

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Real Homes of Genius: Today we Salute you Santa Monica. 929 Square Feet for $969,000. And You Thought the Bubble was Over.

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Related Posts:
■Real Homes of Genius: Today we Salute you Santa Ana. 498 Square Feet for $440,000, What a Deal!
■Real Homes of Genius: Today we Salute you Pacoima. Zillow says $457,000 but Listed at $225,000?
■Real Homes of Genius: Today We Salute you Huntington Park. Tweedledum and Tweedledee of housing. $500,000 Homes in Wonderland.
■Real Homes of Genius: Today we Salute you Stanton.
■Real Homes of Genius: $80,000 off in San Fernando for 865 Square Feet of Joy!

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GMAC, the financing division of GMC, posted a $2.48 billion dollar loss for the quarter driven by losses tied to its ResCap residential mortgage group and auto lease write downs.  ResCap which has been posting massive losses since the credit crunch began, lost $1.86 billion tied to more mortgage misery. Private equity firm Cerberus Capital owns 51% of ResCap.

From Reuters:

Finance company GMAC posted a $2.48 billion second-quarter loss on Thursday, hurt by a write-down of vehicle leases and mounting losses at its mortgage lending unit.

The loss compared with a profit of $293 million a year earlier. Results included a $1.86 billion loss at Residential Capital LLC, the mortgage unit’s seventh straight quarterly loss, and a $717 million loss in its auto finance business.

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Filed under: Google (GOOG), Microsoft (MSFT), Small business

Some people are startup junkies. No doubt, they want to snag a job in a company that becomes the next Microsoft (NASDAQ: MSFT) or Google (NASDAQ: GOOG).

So, where can they go? Well, there’s a new spot: Startuply.

In fact, the service is free, a good thing for cash-strapped startups.

Basically, a company puts together a profile — so far, there are 176. But it goes beyond the typical fare. For example, there’s information on such things as the work environment , funding, names of investors, revenues and so on.

Besides a sophisticated search engine, Startuply has Web 2.0 features like RSS, widgets, Google maps and social bookmarks.

Startuply is still nascent - there are 690 job postings — but it should be a good resource for the startup crowd.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Filed under: Comcast Cl’A’ (CMCSA), Small business

Dany Levy, who got her start as a journalist, is the mastermind behind the highly successful email newsletter platform, the Daily Candy (established in 2000). She even got investment capital from top players, such as Bob Pittman (the founder of MTV).

Well, this week Comcast (Nasdaq: CMCSA) agreed to shell out $125 million for the Daily Candy.

Basically, the Daily Candy is a purveyor of hip/fashionable content - geared to women. True, there are only 2.5 million email subscribers. However, they are highly desirable for advertisers. The Daily Candy’s user base has a median age of 31; has $75,000 in income; and 96% read the email every day. Oh, and 66% of them have purchased something they read about from the Daily Candy.

Currently, there are local editions in 12 cities. Although, with the heft from Comcast, I’m sure this number will expand. There should also be some nice synergy with the advertiser base as well as cable assets like the E! Entertainment channel.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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