Filed under: Next big thing, Small business

Social networks and blogs seem like a perfect fit. Yet, the merging of the two has been elusive.

Now, there may be solution: Tumblr. In fact, the company recently snagged $4.5 million in venture capital. The investors include: Union Square Ventures and Spark Capital.

True, it’s not a big amount. Yet, it’s still impressive in the current environment -in which investors are steering away from social media deals.

Interestingly enough, Tumblr doesn’t even have any revenues. Oh, and the founder — David Karp - is only 22 years old.

OK, so why the interest? Simply put, Tumblr has hit a nerve. Over the past 12 months, the site has hit 15 million monthly uniques and there are 500,000 users who are publishing on the platform. Keep in mind that the firm has only three employees.

For the most part, Tumblr is a simple application, which allows for the creation of so-called tumblelogs. Think of such things as short-form content, like pictures, videos and so on. It’s easy to create tumblelogs (setup is only ten seconds) as well as to share them with your friends.

With the infusion of capital, Tumblr plans to make some important steps, such as adding premium products. And, assuming it’s user base is loyal - which seems to be the case - there is likely to be some traction.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

Tumblr scoops up $4.5 million originally appeared on BloggingStocks on Mon, 15 Dec 2008 15:25:00 EST. Please see our terms for use of feeds.

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Filed under: International markets, Forecasts, Federal Reserve, Recession, Financial Crisis

The dollar and British pound continued to trend lower Monday, as investors large and small once again emphasized the impact of recessions on both continents, and the U.S.’s rising budget deficit.

The dollar fell about 2 cents to $1.3598 versus the euro and about 1 yen to 90.42 versus Japan’s yen. Meanwhile, the euro rose 2 pence to 90.10 pence versus the pound.

Economist Richard Felson said the dollar, which prior to last week appeared to be immune to the extra dollars in supply stemming from U.S. Federal Reserve’s interventions and U.S. Treasury’s TARP borrowing for the bank rescue, now may start to experience the harsher light of day.

“Investors appear to be reassessing how much the dollar will decline as we grapple with the financial crisis and the recession. Earlier, the consensus was that stock, housing, and asset price falls would offset dollar infusions by the Fed and Treasury, but now the calculus appears to be changing,” Felson said. “But dollars don’t appear to be in short supply right now, and that then turns the focus to the U.S.’s poor economic fundamentals, which is leading to dollar selling.”

Further, poor economic fundamentals are at the core of the British pound’s slide versus the euro, Felson added. “The pound is being weighed down by weak economic data, risk aversion, and the conviction that the United Kingdom will experience a deeper recession than the European Union, with a broader and longer-lasting housing slump in the U.K.,” Felson said.

Continue reading Dollar, pound under pressure on deficit, recession concerns

Dollar, pound under pressure on deficit, recession concerns originally appeared on BloggingStocks on Mon, 15 Dec 2008 13:43:00 EST. Please see our terms for use of feeds.

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Possession, they say, is nine-tenths of the law. Unfortunately, when the remaining tenth is a mortgage, both homeowners and renters can find themselves evicted as part of the foreclosure process.

Results of an email survey of community and state homeless coalitions conducted by the National Coalition for the Homeless indicate that nearly 61 percent of respondents were already seeing an increase in homelessness before April 2008 when the report was published. More than 37 percent of those responding stated people were able to rent which researchers believe was an indication that they were former homeowners who had lost their homes through foreclosure. The number of foreclosures has continued to increase since the survey was taken so the number of people who are homeless as a result of foreclosure is also probably grown.

Although the housing market has also slowed, not all of the homes vacated because of foreclosure are remaining empty. Across the country foreclosed and abandoned properties are being occupied by squatters. Most squatting is random and unorganized. People seek temporary shelter then move on. Recently, however, some organized attempts to move homeless people into vacant properties for extended residency are being made.

In California, SignOnSanDiego.com reports that individuals claiming to be part of a religious order called the Sovereign Solomon Brothers Archbishop Corporation Sole are filing false grant deeds on foreclosed properties. They aren’t stopping there, either. They a moving tenants into the properties. some of the tenants may have been made homeless by foreclosure themselves. It is unclear whether the tenants knew their occupation of the property is based on questionable legal grounds. Since the recorder’s office is not responsible for verifying the authenticity of the documents being filed, it is often not until a property is resold and a new owner tries to move in that the situation is recognized. By then, determining who the rightful owner of the property is and who has the right to occupy it can take weeks or longer. At least one person has been arrested and charges with filing false documents in connection with this scheme.

A group of homeless activists calling themselves Take Back the Land has helped six families move into foreclosed properties in Miami, FL, according to the Associated Press (AP). This group also helps the families with used furniture, cleaning supplies and even landscape maintenence. No charges have been filed against either the group or the squatters. The City says it is the responsibility of the prpoerty owner, in this case the mortgage lender, to remove squatters or to file complaints that would allow law enforcement to take action.

It is not only recently vacated property that is being occupied or the homeless who are moving in. An “old house that was not properly locked up” became the hiding place for a fugitive in Vermont, WCAX.com reports. This situation demonstrates the dangers of squatting, both for the squatters and the community. In addition, vacant properties can pose health and fire hazards, as well as attracting criminal elements.

There are no quick fixes for the mortgage crisis, vacant properties or homelessness. The National coalition for the Homeless recommends requiring lenders nationwide to file foreclosure deeds within 30 days of the foreclosure sale in order to help identify the reighful owners and tenants of foreclosed properties. They also advocate protecting any existing agreements with tenants or renters and allowing their leases to survive the foreclosure process rather than automatically evicting them when the ownership fo the property is transferred to the mortage company or bank. Of course, the best solution is to help homeowner avoid foreclosure and prevent homelessness, not just during the current crisis but over the long term.

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The spin is out in full force folks. The Southern California housing numbers are now out and once again they show a dismal and pathetic market. Yet even in the face of falling prices ala the Wal-Mart commercials, you can rest assured that some are going to spin the data for all it […]
Related Posts:
■Foreclosures? Housing Bubble? In Southern California? Impossible!
■Real Homes of Genius: Today we Salute you Compton. Once, Twice, Three times a Short Sale.
■Emerging Economic Trends: Housing Swaps, Frugality, and Selling Homes in Lower Priced Areas.
■C.A.R. says 2007 will see a -2% Drop in California. Does This Feel like a 2% Yearly Drop?
■Doing The Housing Bubble Math Dance for California.

The spin is out in full force folks. The Southern California housing numbers are now out and once again they show a dismal and pathetic market. Yet even in the face of falling prices ala the Wal-Mart commercials, you can rest assured that some are going to spin the data for all it is worth. You also need to remember that the recent data on Southern California is for the month of July, a historically strong month simply because of seasonal factors. In addition, the month of August should look similar to this month but expect the report for September due out in October to show the actual pay option ARM smack down.

But even with seasonality the spinsters are going to use the current minor bump in home sales as a major positive:

“(DQNews) La Jolla, CA—The number of Southern California homes sold last month edged up to its highest level in more than a year as bargain hunters swept up foreclosure properties in affordable neighborhoods, a real estate information service reported.

A total of 20,329 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 16.7 percent from 17,424 the previous month and up 13.8 percent from 17,867 for July a year ago, according to San Diego-based MDA DataQuick.

Last month’s sales count was the highest since 21,856 homes were sold in March 2007, though it still fell 23 percent short of the average July sales total since 1988, when MDA DataQuick’s statistics begin. From last September through June, sales for each month were at an all-time low for that particular calendar month, with the exception of April which was the next lowest. Last month’s sales total was the first since September 2005 to rise above the year-ago level.”

Bargain hunters? Foreclosures in affordable neighborhoods? Isn’t that an oxymoron? If the neighborhood was affordable in the first place you wouldn’t be seeing large number of foreclosures but that is an entirely different subject. Even though this report is trying to spin the 21,856 sales as a significant jump it is nowhere close to the sales that occurred during the bubble frenzy. Take a look at this data:

July 2004: 32,988

July 2005: 31,069

July 2006: 25,628

July 2007: 17,867

July 2008: 20,329

It helps to put things in perspective doesn’t it? Of course they aren’t going to say that sales for Southern California are off by 38% from their peak July month only a few years ago. And when they say that the jump was bolstered by “affordable neighborhoods” what they mean is that the majority of the sales were fueled by the Inland Empire were homes are being sold for whatever the market will take. Let us look at the details of the report:

I first direct your attention to the stunning jump in sales for Riverside and San Bernardino Counties. These two counties make up the Inland Empire. But what the report doesn’t highlight is the actual median price of both these counties. They are now down 34 and 35 percent on a year over year basis and carry a median price of $260,000 and $230,000. Do you realize that Riverside County for example hit a high median price of $432,000 in December of 2006? So if we take that peak price to the current median price we get:

$430,000 - $260,000 = $170,000 (A 39% Discount)

Los Angeles County hit a peak of $550,000 and is now at $400,000. Nice $150,000 discount. Orange County? Orange County had a median price of $645,000 in June of 2007. That is a drop of $184,000 in one year. Would you wait a year for $184,000? I think most would.

Across the board prices are getting hammered. The reason sales jumped last month was in large part to the big jump in the Inland Empire. And of course homes are now selling for 50 to 60 percent off peak sales prices. To think this won’t happen in Los Angeles County and Orange County is simply unrealistic. It will happen. Just wait until the pay option ARM loans in these areas hit their anniversary dates.

You’ll love some of the reasons given for the fall off in prices:

“What we’re looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages. What we’re still not seeing is this level of distress spreading to more expensive or established neighborhoods,” said John Walsh, MDA DataQuick president.

The median price paid for a Southland home was $348,000 last month, down 2.0 percent from $355,000 in June and down 31.1 percent from $505,000 for July 2007. That peak of $505,000 was reached in March, April, May and July of last year.

The median has fallen because of depreciation, especially in inland markets, and because of the steep drop off in home financing in the so-called jumbo category, which until recently was defined as loans above $417,000.

Before the credit crunch hit in August 2007, nearly 40 percent of Southland sales were financed with jumbo loans. Jumbos last month accounted for 15.8 percent of Southland sales.”

First, what qualifies as a more established neighborhood? Are we talking about Malibu or Newport Coast? Sure, those areas are positive but only a fraction of the entire 20,000,000+ people that live in Southern California live there. That reminds me of something said during the Crash of 1929. Mr. Rockefeller during the crash of the Great Depression announced that he was buying stocks while everyone was selling. To paraphrase a market observer, “of course he is buying. He’s the only one left with money.” Well of course these areas are doing fine! They always do well irrespective of the economy. Yet I draw your attention to the chart above again. Every single county is down from 26.9% to 35.2%. That is a major correction in one year and we are yet to see the truly “lousy” mortgages hit the actual market.

Another interesting part of the report is the implication that jumbo loans are somehow hurting the market. Did you look at the overall Southern California median price? It’s at $348,000! You don’t need a stinking jumbo loan anymore. What you need is good credit and a solid income to buy a home and not some banana republic mortgage from the bubble days. Given that our unemployment rate is at 7.3% who really wants to buy a home when their income is at risk? You think those 200,000 state workers are hungry to buy a home given that Arnold is trying to cut them down to the minimum wage? What about all the jobs in housing that are now no longer bringing in good paychecks? If you connect the dots prices are going down because the entire state was turned into a housing casino and mortgages were used as chips.

I recall clearly a few months ago hearing on the radio here in Southern California, these permabull brokers talking about how great the Hope Now program would be for buyers. When this failed, it was going to be the fantastic Fannie Mae and Freddie Mac bailout. Well of course all these idiotic programs failed because they missed one simple yet obvious fact. The economy is in distress! This is like offering lobster to a person with no taste buds. Or offering someone that lives in Palm Springs an Eskimo jacket. They don’t need gimmicks. What we need is for the state to get its budget in order and not offer tax breaks for subprime lenders. We need an infrastructure that is sustainable and not one built around finance, insurance, and real estate. Did people really think that we were going to trade homes to one another ad infinitum? Sure makes that $729,500 loan limit seem like an absolute boneheaded move.

I was going through some of the historical “help” that was going to save the market and have compiled a list here for your mental historical note keeping:

Of course these programs are all failing because they fail to address the structural problems of the system. That is, this was a bubble of epic proportions and the only way to sustain it is to bring back the toxic credit that fueled the market. I was digging through some images I have saved and found this screenshot of Hank Paulson on CNN from December of 2007:

Subprime help is indeed on the way. On the way out the door that is.

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Post from: Dr. Housing Bubble Blog

Southern California Housing Report: New Housing Motto: Foreclosure Data is so Bad, it has to be Good! Median Price Down 31% to $348,000.

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Related Posts:
■Foreclosures? Housing Bubble? In Southern California? Impossible!
■Real Homes of Genius: Today we Salute you Compton. Once, Twice, Three times a Short Sale.
■Emerging Economic Trends: Housing Swaps, Frugality, and Selling Homes in Lower Priced Areas.
■C.A.R. says 2007 will see a -2% Drop in California. Does This Feel like a 2% Yearly Drop?
■Doing The Housing Bubble Math Dance for California.

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Filed under: Major movement, Exxon Mobil (XOM), Citigroup Inc. (C), Bank of America (BAC), MasterCard Inc’A’ (MA), Goldman Sachs Group (GS), Morgan Stanley (MS), Wells Fargo (WFC)

Morgan Stanley (NYSE: MS) shares had plunged by about 25% about an hour ago, while Goldman Sachs (NYSE: GS) shares had dropped about 11%. By now, the declines have moderated with MS down “only” 15% and GS down about 8%.

Other financials, such as Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC) and Citigroup (NYSE: C) aren’t displaying such declines. BAC is down less than 2%, WFC up 0.75% and C is up half a percent.

With no news on either company, it isn’t clear why the two investment banks, recently turned commercial banks, are plunging.

CNBC’s David Faber said one of the reasons Goldman could be down today is a “rumor the firm was involved with the ‘Short Volkswagen’ trade, which has blown up on a massive short squeeze.” Volkswagen (OTC: VLKAY) briefly took over the lead from Exxon Mobil (NYSE: XOM) as the largest market cap firm in the world after the recent spike in share price.

While this may explain Goldman’s stock price decline, it doesn’t Morgan’s, which has been in the news regarding the settlement of Visa (NYSE: V) and MasterCard (NYSE: MA) with Discover (NYSE: DFS). Morgan claims it deserves a piece of the settlement.

Still, this news can’t have caused the stock to plunge. Something else might be in the works.

Update 12:45 pm: Seems the speculation regarding being on the wrong side of a Volkswagen trade applies to Morgan Stanley too. While Morgan’s spokesperson denied any exposure to VW, Goldman declined to comment. Societe Generale, the French bank, saw its shares also hit on a similar speculation regarding a bad bet on VW shares.

Morgan Stanley plunges 25%, Goldman 10%; other financials stable originally appeared on BloggingStocks on Tue, 28 Oct 2008 11:26:00 EST. Please see our terms for use of feeds.

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Filed under: Rants and raves, General Electric (GE), Berkshire Hathaway (BRK.A), Goldman Sachs Group (GS), Chasing Value, Best Stocks for 2008

It was only seven weeks ago that I posted Chasing Value: Considering Berkshire Hathaway… again. At the time, Berkshire Hathaway (NYSE: BRK.B) was trading around $3,850 for the “B” shares.

Well, I think the time for consideration is over and this morning I placed a limit order for the stock. I think the time is right when stories like Berkshire Hathaway at Lowest Close Since Feb. 2007 and my colleague Peter Cohan’s Warren Buffett is not perfect are being trumpeted in the media.

For those who have followed “my pal Warren” Buffett for years, or even decades, these cautionary stories of him losing his edge are as silly as trying to predict where the DJIA will be on a given date. As for Peter suggesting that he was early buying into Goldman Sachs Group (NYSE: GS) or General Electric (NYSE: GE) three weeks ago, well my gosh, it has only been three weeks!

I understand that the prevailing wisdom seems to be running against the buy and hold approach. But three weeks is kind of short to be passing judgment, don’t you think? The DJIA is down 42% while Berkshire is only down 31% from its high of $5059.

Perhaps investors have punished the stock because GS and GE are down. Maybe it is because Berkshire has been buying up railroads and that strategy is less important with oil prices falling 55% since the summer high of $147 a barrel. It could also be because people have lost their minds — who knows?

Continue reading Chasing Value: Berkshire - you’re selling, I’m buying!

Chasing Value: Berkshire - you’re selling, I’m buying! originally appeared on BloggingStocks on Tue, 28 Oct 2008 14:10:00 EST. Please see our terms for use of feeds.

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Another guest post from MG Dungan who went from Wharton to Wall St. to real estate to Blown Mortgage.

Now here’s a lagging indicator for you: at least a year after the fact, the recession is now known to have began in December 2007. A depression comes next, but since there has been only one in the US, there isn’t a generally-accepted definition. So, get out your calculators and old economic textbooks and get ready for a few years of debate.

Employment as a Metric

During the Depression, unemployment was officially 25% and wages (for those who still had jobs) fell 42%.

“In studying the Great Depression, some scholars “mis-measure” employment levels by disregarding jobs the government created by the mid-1930s to spark a recovery. This suggests that for them, a ‘depression’ is a period when the private sector contracts and is unresponsive to fiscal stimulus, irrespective of how activist and effective the public sector may be,” according to James Galbraith, an economist at UT’s LBJ School of Public Affairs. That seems to be where we are right now. Something else not taken into account is the quality of those surviving jobs. Hours, then days were cut to the point where a job could be one day a week per employee, with no benefits, of course.

“Given how deeply poisoned the financial wells are, it’s distinctly possible that even a large fiscal stimulus will not reignite a credit-driven expansion, so that the public sector will have to take the economic lead for three to five years or longer,” Galbraith said. I think that’s a given at this point; Obama seems to think so too.

Employment 2008

According to the Bureau of Labor Statistics, the unemployment rate is 6.7% if you count some of the people. It’s 12.5% if you count more of them. If you were able to count all the unemployed, it would undoubtedly be a lot, a real lot, more than 12.5%.

Measures of Economic Activity

GDP

Another frequently used benchmark to determine economic health or the lack of it is gross domestic product (GDP), the most common measure of a country’s overall economic output. At the depth of the depression, total US economic output fell to $55 billion from $103 billion and world trade plummeted 65% measured in US$. Now, a GDP decline of 10% is sometimes cited as the key marker of a depression, albeit a lagging indicator.

Global Output

The Baltic Dry Index (BDI) is one of the best leading indicators of future economic activity since it measures global raw material and infrastructure demand; it’s a fav of ours too. December’s result (shown below) is also a reflection of the lack of availability of financing for international trade, usually Letters of Credit between banks. When you hear that credit has dried up, at serious issue is a lot more than credit cards and HELOCs.

Get a load of the cliff dive the BDI has taken over the last few months and the lack of a dead-cat bounce since November. Raw materials are not being delivered and finished goods are not being produced.

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Source [blownmortgage]

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